SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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 Persons (s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on the 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:
<PAGE>
REGAL-BELOIT CORPORATION
____________________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 21, 1999
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 Wednesday, April 21, 1999 at 10:30 A.M.
Central Daylight Time for the following purposes:
1. To elect three Class C 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, 1999.
3. To approve a proposal to amend Section 6 of the Regal-Beloit Corporation
1998 Stock Option Plan.
4. 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.
Only shareholders of record at the close of business on February 26, 1999,
are entitled to notice of and to vote at this meeting.
To assure your representation at the meeting, you are urged to promptly
complete, date, sign and return the enclosed proxy which is being solicited
on behalf of the Board of Directors, whether or not you expect to attend the
Annual Meeting in person. A return envelope is provided. You may revoke
your proxy at any time prior to the voting thereof by written notice filed
with the Secretary of the Company. If you attend the Annual Meeting in
person, you may revoke your proxy at any time prior to the voting thereof,
even if you already returned your proxy.
A copy of the 1998 Annual Report of the Company accompanies this Notice and
attached Proxy Statement.
By Order of the Board of Directors
/s/ Kenneth F. Kaplan
- --------------------------------------------
Kenneth F. Kaplan
Vice President, Chief Financial Officer, Secretary
REGAL-BELOIT CORPORATION
Beloit, Wisconsin
March 12, 1999
<PAGE>1
REGAL-BELOIT CORPORATION
200 STATE STREET
BELOIT, WISCONSIN 53511-6254
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 21, 1999
* * * * * * * *
SOLICITATION AND VOTING
The enclosed proxy for the Annual Meeting of Shareholders (the "Annual
Meeting") to be held April 21, 1999, and any and all adjournments thereof,
is solicited on behalf of the Board of Directors of the Company. This Proxy
Statement, Notice of Meeting and accompanying proxy card are first being
mailed to shareholders on or about March 12, 1999.
The Company will bear the expense of this solicitation of proxies. It is
expected that only solicitations by mail will be used, except that Directors,
Officers or regular employees of the Company may solicit proxies personally,
by telephone or by 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.
On December 31, 1998, the outstanding voting securities of Regal-Beloit
Corporation consisted of 20,911,540 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 26, 1999, will be entitled to vote at
the meeting.
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, unless revoked. In the absence of such
specification(s), shares will be voted FOR the election of all three Class C
nominees for the Board of Directors, FOR the ratification of Arthur Andersen
LLP as the Company's independent certified public accountants for the year
ending December 31, 1999, and FOR approval of the proposed amendment to
Section 6 of the Company's 1998 Stock Option Plan (the "1998 Plan").
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 a plurality of the votes
cast by the holders of Company Common Stock entitled to vote in the election
at the Annual 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, broker non-vote or
instructions on the proxy card to withhold a vote will have no effect on the
election of directors under Wisconsin law. To approve the amendment to
Section 6 of the 1998 Plan, the affirmative vote of a majority of the shares
present or represented and entitled to vote is required. Abstentions will
have no effect on votes for or against the proposal to amend Section 6 of the
1998 Plan, and will thus be disregarded. Broker non-votes will have no
effect on the outcome of the proposals. 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.
In regard to such other matters, abstentions and broker non-votes, which will
not be counted as shares entitled to vote, will have no effect.
<PAGE>2
PROPOSAL 1: ELECTION OF DIRECTORS
The current three-year term of the Class C Directors expires at the forth-
coming Annual Meeting. Unless otherwise directed, proxies will be voted at
the Annual Meeting for the election of nominees, J. Reed Coleman,
Frank E. Bauchiero, and Stephen N. Graff as Class C Directors for a three-year
term until the 2002 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 BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR EACH NAMED NOMINEE.
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, 1998
-----------------
<S> <C> <C> <C> <C>
Number
Principal Occupation, Business Director of Percent of
Name and Age Experience and Other Directorships Since Shares Class
- ------------ ---------------------------------- -------- ------ ----------
Nominees for Election:
Class C Directors
Term Expires in 2002:
J. REED COLEMAN - 65 Chairman and Director, Madison-Kipp 1981 71,854 *
(1) Corporation; Director, Xeruca Corp., Lunar
Corporation and NIBCO, Inc.
FRANK E. BAUCHIERO - 64 CEO and Director, Walbro Corporation; 1993 10,166 *
(2) former President, Industrial, Dana North
America; Director, Rockford Products
Corporation and M & I Bank of Beloit.
STEPHEN N. GRAFF - 64 Retired Milwaukee Office Managing 1996 5,000 *
(2) 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.
and Super Steel Schenectady, Inc.
</TABLE>
<PAGE>3
<TABLE>
<CAPTION>
Beneficial Ownership of
Company Stock As of
December 31, 1998
-----------------------
<S> <C> <C> <C> <C>
Principal Occupation, Business Director Number of Percent of
Name and Age Experience and Other Directorships Since Shares Class
- ------------ ---------------------------------- -------- --------- ----------
Directors Continuing in Office:
Class A Directors
Term Expires in 2000:
WILLIAM W. KEEFER - 73 Former Chairman, Warner Electric Division 1985 49,328 *
(1) of Dana Corporation.
JAMES L. PACKARD - 56 Chairman, President and Chief Executive 1980 541,898 2.6
(3) (4) (5) (6) Officer of the Company, employed with the
Company since 1979. President and
Director since 1980. Chief Executive
Officer since 1984. Chairman since 1986.
Director, The First National Bank & Trust
Company of Beloit and Clarcor Inc.
HENRY W. KNUEPPEL - 50 Executive Vice President, employed with 1987 274,840 1.3
(4) (5) (6) the Company since 1979. Director and
Executive Vice President since 1987.
President, Marathon Electric
Manufacturing Corporation since 1997.
Class B Directors
Term Expires 2001:
JOHN M. ELDRED - 68 Chairman and Director, The First National 1965 47,628 *
(1) (3) Bank & Trust Company of Beloit.
JOHN A. MCKAY - 65 Former President & COO, Harnischfeger 1992 12,713 *
(2) (7) Industries, Inc.; Director, Sandusky
International Inc. and The First National
Bank & Trust Company of Beloit.
G. FREDERICK KASTEN, JR. - 59 Chairman, CEO and Director, Robert W. 1995 35,088 *
(2) Baird & Co., Inc.
Total Directors as a Group 1,048,515 5.0
<FN>
* Represents less than 1% of the Common Stock
<PAGE>4
(1) The amounts shown for Messrs. Coleman, Eldred, and Keefer include
7,254 shares each for which they have vested but unexercised nonqualified
stock options. The amount shown for Mr. Eldred includes 200 shares held in
an Individual Retirement Account (the "IRA") and 500 shares in a Keogh Plan.
(2) The amounts shown for Messrs. McKay, Bauchiero, Kasten and Graff
include 10,504 shares, 8,166 shares, 5,088 shares and 2,000 shares,
respectively, for which they have vested but unexercised nonqualified stock
options.
(3) The amounts shown for Messrs. Eldred and Packard include 6,206 shares
and 1,416 shares, respectively, held by their spouses as to which they
disclaim beneficial ownership.
(4) The amounts shown for Messrs. Packard and Knueppel include 190,636
shares and 125,000 shares, respectively, for which they have vested but
unexercised options, but which could be exercised within 60 days pursuant
to outstanding option grants.
(5) The amounts shown for Messrs. Packard and Knueppel include 328,500
shares, and 128,930 shares, respectively, as to which they share voting and
investment power with a spouse.
(6) The amounts shown for Messrs. Packard and Knueppel include 21,346 shares
and 17,370 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) or a non-Company sponsored IRA.
(7) The amount shown for Mr. McKay includes 2,009 shares held in a Family
Trust for which he has sole control.
</FN>
</TABLE>
1998 COMMITTEES OF THE BOARD
The standing committees of the Board of Directors are the Audit Committee,
the Compensation and Human Resource 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. The
committee is appointed by 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 accountants' 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 during 1998.
Compensation and Human Resource Committee. The current Compensation and
-----------------------------------------
Human Resource 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" or the "Named Executive Officers") and to
review, formulate, recommend and administer short and long range compensation
programs for Officers and Key Employees. The committee held three meetings
during 1998.
Nominating Committee. Directors who serve on the Nominating Committee are
--------------------
John M. Eldred, Chairman, G. Frederick Kasten, Jr., 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 1998.
<PAGE>5
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 Non-Employee Director of the Company
-----------------------
(currently Messrs. Coleman, Bauchiero, Eldred, Keefer, McKay, Graff and
Kasten) receives an annual fee of $18,000 plus $1,000 and expenses for each
Board meeting attended in person or $750 if attended telephonically. The
Audit, Compensation and Human Resource, and Nominating Committee Chairmen
each receive an additional $2,000 annual fee. Non-Employee 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. The Company provides Non-Employee Directors
with travel and accident insurance benefits. In addition, each Non-Employee
Director receives a non-discretionary stock option grant under the Company's
1998 Stock Option Plan.
There are four regularly scheduled Board of Directors meetings per year.
In 1998, one special Board Meeting was held. During fiscal 1998, 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.
Certain Relationships and Related Transactions. Director John M. Eldred is
----------------------------------------------
the Chairman, and he and Directors Packard and McKay are Directors of The
First National Bank & Trust Company of Beloit (the "Bank"), Beloit, Wisconsin.
During 1998, 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, 1998, the Company
had an outstanding letter of credit with the Bank in the aggregate amount of
$125,000.
SECTION 16(a)
BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
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, the Company
believes that its Officers, Directors, and greater than ten percent (10%)
beneficial owners complied with all applicable filing requirements.
<PAGE>6
SECURITY OWNERSHIP
OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of December 31, 1998, as to
each person (including any "Group" as that term is used in Section 13d-3 of
the Securities Exchange Act) known to the Company to be the beneficial owner
of more than 5% of the Common Stock, shares beneficially owned by each Named
Executive Officer, and Directors and Named Executive Officers as a group.
Except as indicated in the footnotes, all persons listed have sole voting and
investment power.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership Of Class
- -------------------------------------------------------------------------------
<S> <C> <C>
Lazard Asset Management 1,632,960 7.8%
(Lazard Freres & Co. LLC)
30 Rockefeller Plaza
New York, NY 10112-6300
The Prudential Insurance Company 1,370,620 6.6%
of America
751 Broad Street
Newark, NJ 07102-3777
Kenneth F. Kaplan (2) (3) 3,294 *
Henry W. Knueppel (1) (2) (3) 274,840 1.3%
James L. Packard (1) (2) (3) (4) 541,898 2.6%
Total Directors & Officers as a Group 1,051,809 5.0%
<FN>
* Represents less than 1% of the Common Stock
(1) The amounts shown for Messrs. Packard and Knueppel include 190,636
shares and 125,000 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 amounts shown for Messrs. Packard, Knueppel, and Kaplan includes
328,500 shares, 128,930 shares, and 1,500 shares, respectively, as to which
they share voting and investment power with a spouse.
(3) The amounts shown for Messrs. Packard, Knueppel and Kaplan include
21,346 shares, 17,370 shares and 694 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) or a non-Company sponsored IRA.
(4) The amount shown for Mr. Packard includes 1,416 shares held by his
spouse as to which he disclaims beneficial ownership.
</FN>
</TABLE>
<PAGE>7
COMPENSATION
Report of Compensation and Human Resource Committee on Annual Compensation
--------------------------------------------------------------------------
The Compensation and Human Resource Committee of the Board of Directors
(the "Committee") as described above is composed entirely of independent
Non-Employee 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 Named Executive Officers' Compensation. The Committee
---------------------------------------------------------
maintains executive salary and benefits at a level that will permit the
Company to attract and retain the highest quality individuals for 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' overall compensation for 1998 consisted of a cash
salary and a performance bonus. In addition, James L. Packard and
Henry W. Knueppel were granted stock options in the amounts of 25,000 shares
and 20,000 shares, respectively.
Named Executive Officers' Incentive Plan. The Company's Named Executive
----------------------------------------
Officers' Incentive Plan (the "Bonus"), an annual performance bonus program,
is used as an incentive to reward the Named Executive Officers for positive
results of the Company. The Bonus is based exclusively on Return On Average
Shareholders' Equity ("ROE"). Payment is on a sliding scale dependent upon
the Company's ROE. Bonuses are earned only after ROE equals or exceeds 10%.
The Bonus is maximized upon reaching ROE of 20%. Benefits are further
factored depending upon a job responsibility factor. In addition,
discretionary bonuses may also be granted by the Board of Directors.
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.
Criteria Used in Determining Compensation of the Named Executive Officers,
--------------------------------------------------------------------------
other than the Chief Executive Officer. 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 on position responsibility. Option grants may also
vary.
Stock Option Philosophy. Stock options for 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 upon
whose judgment the Company is dependent 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. The size
and term are based on competitive practice and position levels to ensure
retention and alignment of the Named Executive Officers' long-range interests
with those of the shareholders and the opportunity for the Named Executive
Officers to build a meaningful stake in the Company.
<PAGE>8
The above overview of the Company's compensation policies has been presented
by the following named Directors comprising the Compensation and Human
Resource Committee for the fiscal year ending December 31, 1998.
John A. McKay, Chairman
John M. Eldred
Stephen N. Graff
Compensation and Human Resource Committee Interlocks and Insider
----------------------------------------------------------------
Participation in Compensation Decisions
---------------------------------------
The Compensation and Human Resource 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 First National Bank & Trust
Company of Beloit (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, 1998, the Company
had one outstanding letter of credit with the Bank in the amount of $125,000.
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) AMEX Market Value Index and (3) the Standard & Poor's
Manufacturing Diversified Industrials Index ("S&P") for the period
January 1, 1994 through December 31, 1998. In each case, the graph assumes
the investment of $100.00 on December 31, 1993. 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> <C>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
Regal-Beloit Corporation 100 106 172 160 244 194
AMEX Market Value Index 100 91 115 122 148 151
S&P Manufacturing Diversified Industrials 100 104 146 201 239 277
</TABLE>
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Annual Compensation Long-Term Compensation
------------------- -------------------------------
Awards
--------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ $
$ Other $ Long-Term $
$ Bonus Annual Restricted Stock Incentive All Other
Name Principal Position Year Salary (2) Comp.(3) Stock Options Payouts Comp.(4)
- ------- ------------------ ---- ------ ----- -------- ---------- ------- --------- ---------
James L. Packard Chairman, President, 1998 450,000 336,150 (3) -0- 25,000 -0- 8,821
Chief Executive 1997 375,000 295,000 (3) -0- -0- -0- 7,591
Officer 1996 350,000 252,000 (3) -0- -0- -0- 7,850
Henry W. Knueppel Executive Vice 1998 275,000 180,800 (3) -0- 20,000 -0- 9,523
President 1997 230,000 141,120 (3) -0- -0- -0- 24,157
(5) 1996 215,000 123,840 (3) -0- -0- -0- 9,416
Kenneth F. Kaplan (1) Vice President, 1998 180,000 90,290 (3) -0- -0- -0- 8,371
Chief Financial 1997 150,000 82,000 (3) -0- -0- -0- 16,440
Officer, Secretary 1996 49,629 25,000 (3) -0- 20,000 -0- 420
<FN>
(1) The table reflects compensation to Mr. Kaplan from September 16, 1996,
when he joined the Company. Effective October 25, 1996, Mr. Kaplan was
elected as Vice President, Chief Financial Officer. On April 24, 1997,
Mr. Kaplan was elected to the additional office of Secretary. From 1985
through 1996, Mr. Kaplan was employed with Gehl Company, a public corporation,
serving in the position of Vice President of Finance and Treasurer.
(2) Includes amounts earned in fiscal year, whether or not deferred or payable.
(3) 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.
(4) The amounts shown for Messrs. Packard, Knueppel, and Kaplan include
$6,931 each, as to vested and non-vested contributions to the Company's
Employee Profit Sharing Plan and Trust and $1,890, $2,592, and $1,440,
respectively, for term life insurance premiums.
(5) In 1997, in addition to his position as Executive Vice President,
Mr. Knueppel was appointed to the office of President of Marathon Electric
Manufacturing Corporation.
</FN>
</TABLE>
<PAGE>9
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.
<PAGE>10
Stock Option Plans
------------------
In order to provide long-term incentives to Directors, Officers and Key
Employees of the Company, stock option plans have been adopted by the Board
of Directors and previously approved by the Shareholders.
Regal-Beloit Corporation 1991 Flexible Stock Incentive Plan, as amended,
-----------------------------------------------------------
(the "1991 Plan"). (1,000,000 shares were approved for distribution). The
1991 Plan provides long-term incentives through grants of stock options to
Named Executive Officers and Key Employees. The Committee administers the
1991 Plan including selection of eligible participants, the number and price
of the option shares, and limitations such as the date the option shares
are exercisable, i.e., vested. As of December 31, 1998, 225,844 shares
remained available for future option grants.
1998 Stock Option Plan (the "1998 Plan"). (1,000,000 shares were approved
----------------------
for distribution). The 1998 Plan provides long-term incentives to Directors,
Named Executive Officers, and Key Employees of the Company. Administration
and selection criteria for awarding Grants is determined by the Board of
Directors or a committee of two or more Non-Employee Directors. As of
December 31, 1998, 994,400 shares remained available for future option grants.
<TABLE>
<CAPTION>
Option Grants in Fiscal 1998
----------------------------
<S> <C> <C> <C> <C> <C>
Percent
of Total
Number of Options Potential Realizable
Securities Granted To Value at Assumed
Underlying Employees Exercise or Annual Rates of Stock Price
Option In Fiscal Base Price Expiration Appreciation for Option Term (1)
--------------------------------
Name Granted Year ($/Sh) Date 5% 10%
- ---------------- --------- --------- ----------- ---------- ---------------- ---------------
James L. Packard 25,000 30.19% 28-5/8 1/23/08 $751,500 $1,140,500
Henry W. Knueppel 20,000 24.15% 28-5/8 1/23/08 $601,200 $ 912,400
Kenneth F. Kaplan 0 0 0 0 0 0
<FN>
Pursuant to the stock option plans stated above, options to purchase Common Stock of the Company are granted to the Named Executive
Officers, Directors and Key Employees of the Company and its subsidiaries. Stock options totaling 82,800 shares were granted to Key
Employees and Named Executive Officers, and 5,600 shares were granted to Non-Employee Directors in fiscal year 1998.
(1) As of December 31, 1998, the fair market value of the Company's stock was $23.00. Management believes that the potential
realizable values may be misleading because they are based on the exercise price rather than the December 31, 1998 stock price
which was less than the exercise price (under water).
</FN>
</TABLE>
<PAGE>11
Aggregated Option Shares Exercised in 1998 Fiscal Year and Year-End Values
--------------------------------------------------------------------------
The following table contains information concerning stock options exercised
during fiscal year 1998 and fiscal year-end value of unexercised options with
respect to the Named Executive Officers.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
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)
- ------------------ ----------- -------- ----------- ------------- --------------- -----------------
James L. Packard 12,364 $229,507 190,636 60,000 $2,655,433 $948,720
Henry W. Knueppel 8,000 $148,500 125,000 36,000 $1,681,603 $569,232
Kenneth F. Kaplan 1,500 $ 4,590 --- 18,500 ----- $101,750
(1) Total value of exercisable and unexercisable options is based on the
difference between the fair market value ($23.00 as of December 31, 1998) of
the Company's stock and the exercise price of the options at fiscal year-end.
</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
below. These plans are principally the Company's Profit Sharing Plan, Target
Supplemental Retirement Plan and Supplemental Disability Insurance.
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 according to a formula based upon participant
compensation and years of service with the Company. Under the formula, the
amount of compensation that may be taken into account with respect to any
highly compensated Participant, including all Named Executive Officers, is
limited to $160,000 and complies with government regulations. Amounts
allocated to the Company's Named Executive Officers for 1998 are included in
the Summary Compensation Table.
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.
<PAGE>12
Target Supplemental Retirement Plan
-----------------------------------
The Target Supplemental Retirement Plan ("TSRP") limits participants to
Officers and 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 or approved
early retirement, to receive a target supplemental retirement benefit,
which, together with social security and a hypothetical profit sharing plan
balance annualized 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.
These benefits will be reduced by the annual Social Security payment and
the annualized 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
- ---------------- ------- ------- ------- -------- --------
<C> <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 provided to lower paid employees.
The TSRP 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.
Supplemental Disability
-----------------------
The Company also provides supplemental disability insurance for Named
Executive Officers and salaried employees. 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.
None of the Company's Named Executive Officers received disability benefits
during 1998.
<PAGE>13
Executive Termination Benefits Agreements
-----------------------------------------
The Company has no employment contracts with any Named Executive Officers
of the Company. However, the Company has termination benefits (change of
control) agreements (the "Agreements") with the three 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 three times the individual's annual salary then in effect plus the
amount of the individual's highest annual bonus award during the previous
three years and the value of all fringe benefits.
PROPOSAL 2: 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, 1999 and is submitting
the selection of auditors for approval by the shareholders 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 various
qualified pension plans), Arthur Andersen LLP provided other non-audit
services during the year ended December 31, 1998. 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 Board of Directors will appoint other
independent public accountants as auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR FISCAL 1999.
PROPOSAL 3: APPROVAL OF AMENDMENT TO SECTION 6 OF THE 1998 STOCK OPTION PLAN
In order to continue to attract experienced and capable Non-Employee
Directors in increasingly competitive markets, the Company is proposing an
amendment to Section 6 of the 1998 Stock Option Plan (the "1998 Plan").
Relevant parts of Section 6, which are reprinted exactly from the 1998 Plan,
---------------------------------------------------------------------------
are currently stated as follows:
- -------------------------------
6. NON-EMPLOYEE DIRECTOR GRANTS.
a. (ii) Under the 1998 Plan, each individual Non-Employee Director will
be annually granted stock options, Stock Appreciation Rights or any
<PAGE>14
combination thereof of shares of Common Stock at 100 percent (100%) of the
fair market value as of the date corresponding to the Annual Shareholders'
Meeting. For the years 1998 and 1999, each individual Non-Employee Director
shall be granted 800 shares of Common Stock. For the years 2000 and 2001,
each individual Grant will be increased to 900 shares. For the years 2002
through 2008, each individual Grant will be increased to 1,000 shares.
However, the first Grant to each Non-Employee Director who is initially
elected as a Non-Employee Director or is initially appointed subsequent
to the date of the Annual Shareholders' Meeting of the Company and prior to
the date of the next succeeding Annual Shareholders' Meeting, shall be three
(3) times the number of shares granted to each individual Non-Employee
Director during such applicable year at 100 percent (100%) of the fair market
value at the closing sale price on the date that he or she becomes a director
of the Company.
b. The right to exercise any Grant given to Non-Employee Directors shall
vest immediately upon Grant. Unexercised Grants to Non-Employee Directors
shall terminate the earlier of ten (10) years after the date of Grant or
ninety (90) days after the Non-Employee Director ceases to be a member of
the Company's Board of Directors, unless terminated for Cause as provided
in Section 18.
The proposed amendment to Section 6 of the 1998 Plan is stated as follows:
-------------------------------------------------------------------------
6. NON-EMPLOYEE DIRECTOR GRANTS.
a. (ii) Under the 1998 Plan, each individual Non-Employee Director will
be granted a stock option for 15,000 shares of Common Stock at 100% of the
fair market value at the closing stock price on April 21, 1999 ("Director's
Grant"). 3,000 shares will immediately be exercisable (i.e., vested) on
April 21, 1999. The remainder of the Director's Grant will become exercisable
in the amount of 3,000 shares per year on the date of the Annual Shareholders'
Meeting in each of the next four years as long as the Non-Employee Director
remains in office.
(iii) The Director's Grant to each Non-Employee Director who is
initially elected at a subsequent Annual Shareholders' Meeting or is initially
appointed after an Annual Shareholders' Meeting but prior to the next Annual
Shareholders' Meeting, shall be in an amount equal to the pro rata balance of
15,000 shares of Common Stock for the remainder of the five year period of
the Director's Grant. The Director's Grant shall be at 100% of the fair
market value at the closing stock price on the corresponding date of the
Annual Shareholders' Meeting of the year of election or appointment. As an
example, if a Non-Employee Director is initially elected in the year 2000,
the new Non-Employee Director will be granted 12,000 shares of Common Stock
of which 3,000 shares are immediately exercisable. The remaining 9,000
shares would become exercisable in the amount of 3,000 shares per year on
the date of the Annual Shareholders' Meeting in each of the next three years,
assuming the Non-Employee Director remains in office.
b. Unexercised Grants to Non-Employee Directors shall terminate the earlier
of ten (10) years after the date of Grant or ninety (90) days after the
Non-Employee Director ceases to be a member of the Company's Board of
Directors, unless terminated for Cause as provided in Section 18.
Federal Tax Treatment of Non-Employee Directors Grants. All Grants to
------------------------------------------------------
Non-Employee Directors are non-qualified stock options. The federal tax
treatment was discussed in the Company's 1998 Proxy Statement. There have
been no changes regarding these consequences.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
PROPOSED AMENDMENT TO SECTION 6 OF THE 1998 STOCK OPTION PLAN.
<PAGE>15
OTHER ACTIONS BY THE BOARD
At the April 21, 1998 Board of Directors (the "Board") meeting, the Board
unanimously passed a resolution stating: "Neither the Board of Directors nor
the Compensation Committee shall, without the prior approval of the Company's
Shareholders, reprice options granted under the 1998 Stock Option Plan, or
make Restricted Stock awards under the 1998 Stock Option Plan without
appropriate time or performance-based restrictions or allow such restrictions
to subsequently be waived."
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later than
November 12, 1999 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 $2,000 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
/s/ Kenneth F. Kaplan
---------------------------------------------------------
Kenneth F. Kaplan
Vice President, Chief Financial Officer, Secretary
Beloit, Wisconsin
March 12, 1999
APPENDIX 1
REGAL-BELOIT CORPORATION
PROXY FOR ANNUAL MEETING ON APRIL 21, 1999
The undersigned hereby appoints J.L. Packard and K.F. Kaplan 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 26, 1999, at the Annual Meeting of Shareholders to be held on
April 21, 1999 at 10:30 A.M. Central Daylight Time, at Regal-Beloit
Corporation's Corporate Headquarters, 200 State Street, Beloit, WI 53511-6254,
or any adjournment thereof (the Meeting) and thereto vote all shares.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. 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.
Continued and to be signed on Reverse Side. 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, 2 and 3.
<PAGE>16
- ----------------------------------------------------------------------------
| The Board of Directors recommends a vote FOR Proposals 1, 2 and 3. |
- ----------------------------------------------------------------------------
| |
| 1. Election of Class C Directors. FOR WITHHELD |
| Nominees: J. Reed Coleman, |
| Frank E. Bauchiero, Stephen N. Graff ----- ----- |
| |
| ____ |
| | | |
| |____| |
| ------------------------------------------------------------- |
| For all nominees except as noted above
| |
| 2. Proposal to Approve the Appointment of FOR AGAINST ABSTAIN |
| Arthur Andersen LLP as the |
| Independent Auditors of the Company. ----- ----- ----- |
| |
| |
| 3. Proposal to Approve the Amendment to FOR AGAINST ABSTAIN |
| Section 6 of the Company's 1998 |
| Stock Option Plan. ----- ----- ----- |
| |
| |
| 4. 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. |___|
MARK HERE TO DISCONTINUE ANNUAL REPORT MAILING ___
FOR THIS ACCOUNT ONLY. |___|
Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature: Date Signature: Date
----------------- ------ --------------- ------
APPENDIX 2
REGAL-BELOIT CORPORATION
PROXY FOR ANNUAL MEETING ON APRIL 21, 1999
The undersigned hereby appoints J.L. Packard and K.F. Kaplan 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 26, 1999, at the Annual Meeting of Shareholders to be held on
April 21, 1999 at 10:30 A.M. Central Daylight Time, at Regal-Beloit
Corporation's Corporate Headquarters, 200 State Street, Beloit, WI 53511-6254,
or any adjournment thereof (the Meeting) and thereto vote all shares.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. 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.
Continued and to be signed on Reverse Side. 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, 2 and 3.
<PAGE>17
- ----------------------------------------------------------------------------
| The Board of Directors recommends a vote FOR Proposals 1, 2 and 3. |
- ----------------------------------------------------------------------------
| |
| 1. Election of Class C Directors. FOR WITHHELD |
| Nominees: J. Reed Coleman, |
| Frank E. Bauchiero, Stephen N. Graff _____ _____ |
| ____ |
| | | |
| |____| |
| --------------------------------------- |
For all nominees except as noted above |
| |
| 2. Proposal to Approve the Appointment of FOR AGAINST ABSTAIN |
| Arthur Andersen LLP as the Independent |
| Auditors of the Company. ----- ----- ----- |
| |
| |
| 3. Proposal to Approve the Amendment to FOR AGAINST ABSTAIN |
| Section 6 of the Company's |
| 1998 Stock Option Plan. ----- ----- ----- |
| |
| |
| 4. 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
By: Title: Date:
----------------------------- --------------------- ---------
<PAGE>18
