SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
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
Regal-Beloit Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and state
how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Copies to security holders are intended to be released on March 17, 1997.
<PAGE>
REGAL-BELOIT CORPORATION
- ----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 1997
To the Shareholders of Regal-Beloit Corporation:
Notice is hereby given that the Annual Meeting of Shareholders of Regal-Beloit
Corporation, a Wisconsin Corporation (the "Company") will be held at the Company
Headquarters, 200 State Street, Beloit, Wisconsin 53511-6254, on Thursday, April
24, 1997 at 10:30 A.M. Central Daylight Time for the following purposes:
1. To elect three Class A 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, 1997.
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, 1997, as the record date for the
determination of shareholders 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. Shareholders
who are present at the meeting may withdraw their proxies and vote in person if
they wish.
A copy of the 1996 Annual Report of the Company accompanies this notice and
attached Proxy Statement.
By Order of the Board of Directors
Robert C. Burress
-----------------
Robert C. Burress,
Vice President, Treasurer, Secretary
REGAL-BELOIT CORPORATION
Beloit, Wisconsin
March 17, 1997
1
<PAGE>
REGAL-BELOIT CORPORATION
200 STATE STREET
BELOIT, WISCONSIN 53511-6254
- -----------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 24, 1997
* * * * * * * *
SOLICITATION AND VOTING
The enclosed proxy for the Annual Meeting of Shareholders to be held April 24,
1997, 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 facsimile. 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 shareholders on or about March 17, 1997.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On December 31, 1996, the outstanding voting securities of Regal-Beloit
Corporation consisted of 20,644,843 shares of $0.01 par value Common Stock,
each share of which is entitled to one vote. Only shareholders of record at
the close of business on February 28, 1997, 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 December 31, 1996,
except FMR Corp. (Fidelity Investments), 82 Devonshire Street, Boston MA
02109-3614, who owned 1,749,900 shares (8.5%), Wisconsin Investment Board,
121 East Wilson Street, Madison, WI 53703, who owned 1,726,400 shares (8.4%),
and Prudential Insurance Company of America, 751 Broad Street, Newark, NJ
07102, who owned 1,470,490 shares (7.1%). On December 31, 1996, the Directors
and Officers of the Company as a group (11 persons) were beneficial owners of
1,076,695 shares of the Company's Common Stock (including 373,206 shares
subject to options exercisable within 60 days) constituting approximately
5.2% 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.
<PAGE>
If a quorum is present, Directors are elected by a plurality of the votes cast
by the holders of Company Common Stock entitled to vote in the election at the
meeting. "Plurality" means that the individuals who receive the largest number
of votes are elected as directors up to the maximum number of directors to be
chosen at the meeting. An abstention or broker non-vote will have no effect on
the election of directors under Wisconsin law. As to any other matter which
properly comes before the meeting, approval is required by a majority of the
shares represented at the meeting if a quorum of those shares is present.
Abstentions in regard to such other matters will have the same effect as a
negative vote. However, broker non-votes, which will not be counted as shares
entitled to vote, will have no effect.
2
<PAGE>
ELECTION OF DIRECTORS
The current three-year term of the Class A Directors expires at the forthcoming
annual meeting. Unless otherwise directed, proxies will be voted at the annual
meeting for the election of nominees, William W. Keefer, James L. Packard and
Henry W. Knueppel as Class A Directors for a three-year term until the year 2000
annual shareholder meeting and until their successors are duly elected. All 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
December 31,
1996
Principal Occupation, Business Director Number Of Percent
Name and Age Experience and Other Directorships Since Shares (1) Of Class
- ------------ ---------------------------------- ------- ---------- --------
<S> <C> <C> <C> <C>
Nominees For
Class A Directors
Term Expires in
2000:
WILLIAM W. KEEFER-71 Former Chairman, Warner Electric 1985 55,228 *
Division of Dana Corporation.
JAMES L. PACKARD-54 Chairman, President and Chief Execu- 1980 474,741 2.3
(2) tive Officer of the Company, employed
with the Company since 1979. Presi-
dent and Director since 1980. Chief
Executive Officer since 1984. Chair-
man since 1986. Director, The First
National Bank & Trust Company of Beloit.
HENRY W. KNUEPPEL-48 Executive Vice President, Operations 1987 228,891 1.1
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>
3
<PAGE>
<TABLE>
<CAPTION>
Beneficial
Ownership of
Company Stock
As Of
December 31,
1996
Principal Occupation, Business Director Number Of Percent
Name and Age Experience and Other Directorships Since Shares (1) Of Class
- ------------ ---------------------------------- ------- ---------- --------
<S> <C> <C> <C> <C>
Class B Directors
Term Expires in 1998:
JOHN M. ELDRED-66 President, The First National Bank 1965 46,028 *
(2) & Trust Company of Beloit; Director,
The First National Bank & Trust Company
of Beloit.
JOHN A. McKAY-63 Former President & COO, Harnischfeger 1992 9,104 *
(2) Industries, Inc.; former Chairman and
CEO of Beloit Corporation; Director,
Sandusky International, Inc., The First
National Bank & Trust Company
of Beloit.
G. FREDERICK KASTEN, JR-57 President, CEO, Robert W. Baird 1995 18,488 *
(2) & Co., Inc.; Director, Robert W.
Baird & Co., Inc.
Class C Directors
Term Expires in 1999:
J. REED COLEMAN-63 Chairman, Madison-Kipp Corporation; 1981 73,654 *
Director, Madison-Kipp Corporation,
Kemper Corporation, Xeruca Corp.,
Lunar Corporation and NIBCO, Inc.
FRANK E. BAUCHIERO-62 President, Walbro Corporation; 1993 8,566 *
former President, Industrial, Dana
North America; former President,
Warner Electric Division of Dana
Corporation; Director, Walbro
Corporation, Rockford Products
Corporation, M & I Bank of Beloit
and Madison-Kipp Corporation.
<PAGE>
STEPHEN N. GRAFF-62 Retired Milwaukee Office Managing 1996 2,600 *
Partner, Arthur Andersen LLP and
Andersen Worldwide S.C.; Director,
Super Steel Products Inc.,
Northwestern Mutual Series Fund,
Inc., Mason Street Funds, Inc.,
Northwestern Mutual Life
Insurance Co., Super Steel
Schenectady, Inc.
<FN>
* Represents less than 1% of the common stock.
4
(1) The amounts shown for Messrs. Keefer, Eldred and Coleman include 25,654
shares each for which they have vested but unexercised nonqualified stock
options. The amounts shown for Messrs. McKay, Bauchiero, Kasten and Graff
include 8,904 shares, 6,566 shares, 3,488 shares and 2,400 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 and 500 shares in a Keogh Plan. The amounts shown for
Messrs. Packard and Knueppel include 154,136 shares and 98,750 shares,
respectively, for which they have vested but unexercised options; 300,000
shares and 111,180 shares, respectively, as to which the indicated persons
share voting and dispositive power with a spouse and 19,189 shares and 15,421 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) Director John M. Eldred is the President, and he and Directors Packard and McKay are Directors of The First
National Bank & Trust Company of Beloit (the "Bank"), Beloit, Wisconsin. During 1996, Regal-Beloit Corporation had
business transactions with the Bank. All transactions were in the ordinary course of business and it is anticipated that
like transactions will continue. As of December 31, 1996, 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. Director G.
Frederick Kasten, Jr. is the President of Robert W. Baird & Co., Inc. ("Baird"). During 1996, Regal-Beloit Corporation
had business transactions with Baird. All transactions were in the ordinary course of business and it is anticipated that
like transactions will continue.
</FN>
</TABLE>
5
<PAGE>
1996 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, 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 1996.
COMPENSATION COMMITTEE. The current Compensation Committee consists of
Directors John A. McKay, Chairman, John M. Eldred, and Stephen N. Graff.
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 (the "Officers") and executives and
to review, formulate, recommend and administer short and long range compensation
programs for Officers and Key Employees. The committee held three meetings
during 1996.
NOMINATING COMMITTEE. Directors who serve on the Nominating Committee are John
M. Eldred, Chairman, G. Frederick Kasten, and William W. Keefer. 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 shareholders. It is suggested
that any such nominees be brought to the attention of the Secretary. No
meetings were held during 1996.
OTHER INFORMATION ABOUT THE BOARD
The Board of Directors has the responsibility to elect the 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, Graff and Kasten) receives
an annual fee of $15,000 plus $1,000 and expenses for each Board meeting
attended in person or $750 if attended telephonically. The Audit,
Compensation and Nominating Committee Chairmen each receive an additional
$1,250 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 if attended in person or $750 if
attended telephonically, plus expenses for each committee meeting attended.
In addition, the Company provides Directors with certain health, life and
travel insurance benefits.
<PAGE>
During fiscal 1996, no incumbent Board Member attended fewer than seventy-five
percent (75%) of the aggregate of (i) the total number of meetings of the Board
held during the period for which he was a Director and (ii) the total number of
meetings of all committees of the Board on which he served during the period
that he served.
Effective April 24, 1996, under the Regal-Beloit Corporation 1991 Flexible Stock
Incentive Plan, each individual Outside Director was, and will be annually,
granted stock options, stock appreciation rights or any combination thereof
in the amount of 800 shares of Common Stock, at the fair market value as of
the date corresponding to the Annual Shareholders' Meeting, except that the
first grant to an initially elected Outside Director shall be 2,400 shares
granted on the date corresponding to the Annual Shareholders' Meeting at
which the Outside Director is initially elected.
6
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 Outside
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 or reputation
of Regal-Beloit Corporation or its subsidiaries.
Grants to an Outside Director are controlled by the terms and conditions of the
Regal-Beloit Corporation 1991 Flexible Stock Incentive Plan (the "Plan") and the
rules, regulations, agreements, guidelines, instruments and interpretations
issued by the Compensation Committee, except where inconsistent with the
limitations set forth in Section 4 of the Plan.
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 THE NAMED 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.
Named Executive Officers' compensation overall for 1996 consisted of: a cash
salary, a performance bonus and stock options.
<PAGE>
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 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" (the "ROE"). Payment is on a sliding scale dependent upon the
Company's ROE. 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 NAMED EXECUTIVE OFFICERS' OTHER THAN THE
CHIEF EXECUTIVER OFFICER'S COMPENSATOIN. The criteria for determining the cash
salary, annual performance bonus and stock options for the other Named
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 upon position responsibility. Option grants may also
vary and may contain fewer restrictions.
STOCK OPTION PHILOSOPHY. Stock options for the Named 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
ensure retention and alignment of these Named Executive Officers' long-range
interests with those of the shareholders and the opportunity for those Named
Executive Officers to build a meaningful stake in the Company.
7
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, 1996.
John A. McKay, Chairman
John M. Eldred
Stephen N. Graff
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of John A. McKay, Chairman, John M. Eldred
and Stephen N. Graff. Mr. Packard, the Company's Chief Executive Officer, Mr.
Eldred, and Mr. McKay, who are Directors of the Company, serve on the Board of
Directors of the Bank and participate in decisions by the Bank's compensation
committee regarding compensation of its executives. During the past fiscal
year, the Company had business transactions with the Bank. All transactions
were in the ordinary course of business and it is anticipated that like
transactions will continue. As of December 31, 1996, 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.
<PAGE>
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 CUMMULATIVE 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 AMEX Market Value Index and (3) the Standard & Poor's
Manufacturing Diversified Industrials Index ("S&P") for the period January 1,
1992 through December 31, 1996. In each case, the graph assumes the investment
of $100.00 on December 31, 1991. Regal-Beloit Corporation and the S & P data
were supplied by S & P Compustat Services, Inc. AMEX data was supplied by the
American Stock Exchange Equity Research and Development Department.
<TABLE>
<CAPTION>
FIVE YEAR CUMULATIVE PERFORMANCE GRAPH
<S> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996
Regal-Beloit Corporation 163 206 217 355 328
AMEX Market Value Index 111 121 110 139 148
S&P Manufacturing Diversified Industrials 108 132 136 192 264
</TABLE>
8
<TABLE>
<CAPTION>
<PAGE>
SUMMARY COMPENSATION TABLE
Annual Compensation (3) Long-Term Compensation
---------------------------------------------------------
$ Awards $
------
Other $ Long-Term $
$ $ Annual Restricted Stock Incentive All Other
Name Principal Position Year Salary Bonus(3) Comp.(4) Stock Options Payouts Comp.(5)
- ---- ------------------ ---- ------ -------- -------- ---------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
James L. Packard Chairman, President, 1996 368,568 252,000 (4) -0- -0- -0- 7,850
Chief Executive 1995 343,085 233,280 (4) -0- -0- -0- 9,246
Officer 1994 316,347 216,000 (4) -0- -0- -0- 16,850
Henry W. Knueppel Executive Vice 1996 229,594 123,840 (4) -0- -0- -0- 9,416
President, 1995 214,758 115,200 (4) -0- -0- -0- 9,719
Operations 1994 199,393 107,712 (4) -0- -0- -0- 10,500
Robert C. Burress Vice President, 1996 170,330 77,280 (4) -0- -0- -0- 11,000
(1) Treasurer, 1995 162,000 72,960 (4) -0- 10,000 -0- 11,183
Secretary (1) 1994 150,377 68,160 (4) -0- -0- -0- 7,976
Kenneth F. Kaplan Vice President, 1996 49,629 25,000 (4) -0- 20,000 -0- 1,440
(2) Chief Financial
Officer
<FN>
(1) Effective October 25, 1996, Mr. Burress was elected as Treasurer, in
addition to retaining his previous offices of Vice President and Secretary.
Mr. Burress will be retiring from the Company effective April 30, 1997.
(2) The table reflects compensation to Mr. Kaplan from September 16, 1996,
when he joined the Company, to December 31, 1996. Effective October 25, 1996,
Mr. Kaplan was elected as Vice President, Chief Financial Officer replacing Mr.
Burress as Chief Financial Officer. From 1985 through 1996, Mr. Kaplan was
employed with Gehl Company, a public corporation traded on The NASDAQ Stock
Market. From 1987 until his resignation in 1996, he served in the position
of Vice President of Finance and Treasurer.
(3) Includes amounts earned in fiscal year, whether or not deferred or payable.
(4) 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.
(5) Vested and non-vested contributions to the Company's Employee Profit Sharing
Plan and Trust and premiums for term life insurance.
</FN>
</TABLE>
<PAGE>
OWNERSHIP OF COMPANY STOCK AND STOCK EQUIVALENTS BY NAMED EXECUTIVE OFFICERS
To encourage growth in shareholder 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 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 December 31, 1996.
9
<TABLE>
<CAPTION>
SECURITY OF 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 474,741 2.3
Officer, President
Henry W. Knueppel(2)(3) Executive Vice President, 228,891 1.1
Operations
Robert C. Burress(2) Vice President, 158,695 *
Treasurer, Secretary
Kenneth F. Kaplan Vice President, 700 *
Chief Financial Officer
Total as a group 863,027 4.2
<FN>
(1) The amount shown for Messrs. Packard, Knueppel, Burress, and all Executive
Officers as a group include 154,136, 98,750, 22,000 and 274,886 shares,
respectively, for which they have vested but unexercised options, but which
could be exercised within 60 days pursuant to outstanding option grants.
(2) The amount shown for Messrs. Packard, Knueppel and Burress includes 300,000,
111,180, and 136,695 shares, respectively, as to which the indicated persons
share voting and dispositive power with a spouse.
(3) The amount shown for Messrs. Packard and Knueppel includes 19,189 and 15,421
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).
<PAGE>
(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.
</FN>
</TABLE>
AGGREGATED OPTION SHARES EXERCISED IN 1996 FISCAL YEAR AND YEAR-END VALUES
The following table contains information concerning stock options exercised
during fiscal year 1996 and fiscal year-end value of unexercised options with
respect to the Named Executive Officers.
<TABLE>
<CAPTION>
Number of Total Number of Total Value of
Shares Unexercised Options Held Unexercised, In-The-Money
Acquired On Value At Fiscal Year-End Options Held at Fiscal Year-End
------------------ -------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable(1) Unexercisable(1)
-------- ------- ----------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
James L. Packard 10,000 $140,000 154,136 100,000 $1,936,481 $1,243,700
Henry W. Knueppel 8,000 112,000 98,750 60,000 1,243,146 746,220
Robert C. Burress -- -- 22,000 --- 194,310 --
Kenneth F. Kaplan -- -- -- 20,000 -- 42,500
<FN>
(1) Total value of exercisable and unexercisable options is based on the
difference between the fair market value ($19 5/8 as of December 31, 1996) of
the Company's stock and the exercise price of the options, at exercise or
fiscal year-end.
</FN>
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL 1996
Percent
Number of Of Total Potential Realizable
Securities Options/SARs Value at Assumed
Underlying Granted To Exercise or Annual Rates of Stock Price
Option Employees In Base Price Expiration Appreciation for Option Term
----------------------------
Name Granted Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ---- ------- ----------- ----------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Kenneth F. Kaplan 20,000 24.8 $17 1/2 Oct., 2006 $200,000 $557,800
<FN>
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. Kenneth F. Kaplan was the only Named Executive Officer who
was granted a stock option, in the amount of 20,000 shares. Stock options to
taling 80,500 shares were granted to Key Employees and 7,200 shares were
granted to Directors in fiscal year 1996.
</FN>
</TABLE>
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.
<PAGE>
PROFIT SHARING PLAN
The Company makes an annual discretionary contribution to its tax-qualified
profit sharing plan which covers certain hourly and salaried employees,
including the Named Executive Officers. Eligible employees become
participants in the profit sharing plan on the first January 1 or July 1
after completing twelve (12) months of service and being credited with at
least 1,000 hours of service. 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. Participants have the option to direct the
investment of their accounts in 10% increments. Options include a fixed
income fund, a bond fund, a balanced fund, two equity funds and a
Regal-Beloit Corporation 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 or in Regal-Beloit Corporation stock, provided a
participant's vested interest includes a minimum of 100 shares.
The Company also maintains a profit sharing award program in which it makes an
annual discretionary contribution to be allocated to certain hourly and salaried
employees in accordance with a formula based upon compensation and years of
service 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 1996 are
included in the Summary Compensation Table.
TARGET SUPPLEMENTAL RETIREMENT PLAN
The Target Supplemental Retirement Plan ("TSRP") limits participation to
selected key employees who are designated by the Compensation Committee.
All individuals named in the Summary Compensation Table participate in the TSRP.
Under the TSRP, participants are entitled, upon normal retirement or approved
early retirement, to receive a Target Supplemental Retirement benefit, which,
together with social security and a hypothetical profit sharing plan balance
annuitized over fifteen (15) years, equals the lesser of two percent (2%) of the
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.
11
<PAGE>
These benefits will be reduced by the Social Security payment and the amortized
hypothetical Profit Sharing balance.
<TABLE>
<CAPTION>
Average Annual
Earnings For The
Final Five Years Years Of Credited Service
_____________________________________________________
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 benefits. 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.
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" (the "ROE"). Payments are based on a sliding scale
dependent upon the Company's ROE. Bonuses are earned only after the ROE
equals or exceeds 10%. The Bonus benefits are maximized upon reaching an ROE
of 20%. Benefits are further factored depending upon a job responsibility
factor. Amounts allocated to the Named Executive Officers for 1996 are
included in the Summary Compensation Table.
<PAGE>
REGAL-BELOIT CORPORATION 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 614,946 shares could have been granted under the
Plan which expired in 1992. As of December 31, 1996, 26,386 shares of
Common Stock subject to outstanding options previously granted remain
exercisable.
REGAL-BELOIT CORPORATION 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 Incentive Stock Option Plan (except for certain federal income tax
treatment). Options to purchase up to a total of 450,000 shares (adjusted
for the August 1994 two-for-one stock split) may be granted under the Plan
which expires in 1997. As of December 31, 1996, 261,900 shares of Common
Stock subject to outstanding options previously granted remain exercisable.
12
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).
As of December 31, 1996, 448,132 shares of Common Stock subject to outstanding
options previously granted remain exercisable.
<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. As
of December 31, 1996, 130,000 shares of Common Stock subject to outstanding
options previously granted remain exercisable.
SUPPLEMENTAL DISABILITY
The Company also provided supplemental disability insurance for Named Executive
Officers and salaried employees during 1996. 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 Named Executive Officers
received disability benefits during 1996.
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 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".
13
<PAGE>
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, 1997 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, 1996.
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.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later than November
14, 1997 in order to be considered for inclusion in next year's annual meeting
proxy statement.
<PAGE>
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
Robert C. Burress
- -----------------
Robert C. Burress,
Vice President, Treasurer, Secretary
Beloit, Wisconsin
March 17, 1997
14
APPENDIX 1
REGAL-BELOIT CORPORATION
PROXY FOR ANNUAL MEETING ON APRIL 24, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J.L. Packard and R.C. Burress 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 held on record by the undersigned
on February 28, 1997, at the Annual Meeting of Shareholders to be held on
April 24, 1997, at 10:30 A.M. Central Daylight Time, at the Regal-Beloit
Corporation's Corporate Headquarters, 200 Sate Street, Beloit, Wisconsin
53511-6254, or any adjournment thereof (the Meeting) and thereto vote all
shares.
ELECTION OF ALL THREE (3) CLASS A DIRECTORS:
(or if any nominee is not available for election, such substitute as the
Board of Directors may designate).
Nominees:
William W. Keefer, James L. Packard, Henry W. Knueppel
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
Please mark
X votes as in
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 Proposals 1 and 2.
- ------------------------------------------------------------------------|
|The Board of Directors recommends a vote FOR Proposals 1 and 2. |
|-----------------------------------------------------------------------|
| FOR WITHHELD |
|1. Election of Direc- |
| tors (see reverse). ____ ________ |
| |
| |
| |
| |
|2. Selection of Arthur FOR AGAINST ABSTAIN |
| Anderson LLP ____ ________ _______ |
| Independent Autitors. |
| For, except vote witheld from the following nominees(s) |
| _______________________________________________________ |
-----------------------------------------------------------------------|
3. To act on other business that properly comes before the meeting or any
adjournments and matters incident to conduct thereof.
________________________________________________________
Number of Shares Voted
________________________________________________________
Name of Institution
Please date and sign exactly as name appears Signature________ Date______
hereon. Joint owners should each sign.
When signing as attorney, executor, administrator,trustee or guardian,
please give full title as such. Signature________ Date______
APPENDIX 2
REGAL-BELOIT CORPORATION
PROXY FOR ANNUAL MEETING ON APRIL 24, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints J.L. Packard and R.C. Burress 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 held on record by the undersigned
on February 28, 1997, at the Annual Meeting of Shareholders to be held on
April 24, 1997, at 10:30 A.M. Central Daylight Time, at the Regal-Beloit
Corporation's Corporate Headquarters, 200 Sate Street, Beloit, Wisconsin
53511-6254, or any adjournment thereof (the Meeting) and thereto vote all
shares.
ELECTION OF ALL THREE (3) CLASS A DIRECTORS:
(or if any nominee is not available for election, such substitute as the
Board of Directors may designate).
Nominees:
William W. Keefer, James L. Packard, Henry W. Knueppel
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
Please mark
X votes as in
example
This Proxy when executed will be voted in the manner directed herein.
If no direction is made, this Proxy will be voted FOR Proposals 1 and 2.
- ---------------------------------------------------------------------------
|The Board of Directors recommends a vote FOR Proposals 1 and 2. |
|------------------------------------------------------------------------ |
| FOR WITHHELD |
|1. Election of Direc- |
| tors (see reverse). ____ ________ |
| |
| For, except vote withheld from the following nominee(s) |
| _______________________________________________________ |
| |
|2. Selection of Arthur FOR AGAINST ABSTAIN |
| Anderson LLP as |
| Independent Auditors. ____ _______ _______ |
| |
| For, except vote withheld from the following nominees(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 ---------
Please date and sign exactly as name appears Signature________ Date_________
hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. Signature_______ Date_________
