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 ss. 240.14a-11(c) or ss. 240.14a-12
[ALAMO GROUP INC.]
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
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>
[ALAMO GROUP LOGO]
ALAMO GROUP INC.
1502 EAST WALNUT STREET
SEGUIN, TEXAS 78155
Dear Fellow Stockholders:
You are cordially invited to attend the 2000 Annual Meeting of
Stockholders of Alamo Group Inc. to be held on Tuesday, May 2, 2000, at 9:00
a.m. local time, at the Hilton Palacio del Rio Hotel, 200 South Alamo, San
Antonio, Texas. We hope that you will be able to attend the meeting. Matters on
which action will be taken at the meeting are explained in detail in the notice
of meeting and proxy statement accompanying this letter.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the stockholders.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AND REGARDLESS OF THE NUMBER OF
SHARES YOU OWN, PLEASE MARK, SIGN AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED AS SOON AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR
PROXY AND VOTE IN PERSON.
Thank you for your support. We hope to see you at the meeting.
Donald J. Douglass
Chairman of the Board
March 31, 2000
<PAGE>
ALAMO GROUP INC.
1502 East Walnut Street
Seguin, Texas 78155
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 2, 2000
To the Stockholders of
Alamo Group Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Alamo
Group Inc. (the "Company") will be held at the Hilton Palacio del Rio Hotel, 200
South Alamo, San Antonio, Texas, on Tuesday, May 2, 2000, at 9:00 a.m. local
time, for the following purposes:
(1) To elect seven (7) directors to serve until the next annual meeting
of stockholders or until their successors are elected and qualified;
(2) To approve the appointment of Ernst & Young LLP as the Company's
auditors for the 2000 fiscal year; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
In accordance with the By-Laws of the Company, the Board of Directors has
fixed the record date for the meeting at March 15, 2000. Only stockholders of
record at the close of business on that date will be entitled to vote at the
meeting or any adjournment thereof.
Stockholders who do not expect to attend the meeting in person are urged
to sign the enclosed proxy and return it promptly. A return envelope is enclosed
for that purpose.
A complete list of stockholders entitled to vote at the meeting, showing
the address of each stockholder and the number of shares registered in the name
of each stockholder, shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of twelve days commencing April 21, 2000, at the offices of the Company's
Counsel which is Oppenheimer, Blend, Harrison and Tate, Inc. located at 711
Navarro, Suite 600, San Antonio, Texas 78205-1796
By Order of the Board of Directors
Robert H. George
Secretary
Dated: March 31, 2000
<PAGE>
ALAMO GROUP INC.
1502 East Walnut Street
Seguin, Texas 78155
PROXY STATEMENT
The accompanying Proxy, mailed on or about March 31, 2000, is solicited by
the Board of Directors of Alamo Group Inc., a Delaware corporation (the
"Company"), to be voted at the 2000 Annual Meeting of Stockholders to be held on
May 2, 2000, and at any adjournments thereof. The meeting will be held at 9:00
a.m. local time, at the Hilton Palacio del Rio Hotel, 200 South Alamo, San
Antonio, Texas. This Proxy Statement and the accompanying Proxy are being mailed
to Stockholders on or about March 31, 2000. The Annual Report of the Company for
1999, including financial statements, is enclosed.
VOTING AND PROXIES
Only holders of record of common stock of the Company at the close of
business on March 15, 2000 (the "Record Date"), shall be entitled to vote at the
meeting. There were 9,735,809 of 20,000,000 authorized shares of common stock,
par value $.10 per share ("Common Stock"), of the Company issued and 9,695,209
shares of common stock outstanding on the Record Date. Each share of Common
Stock is entitled to one vote. Any Stockholder giving a proxy has the power to
revoke the same at any time prior to its use by giving notice in person or in
writing to the Secretary of the Company.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
2000 Annual Meeting of Stockholders and any adjournment thereof.
Votes cast by proxy or in person at the Annual Meeting will be tabulated
by the inspectors of election appointed by the Company for the meeting. The
inspectors of election will treat abstentions and broker non-votes as shares
that are present for purposes of determining the presence of a quorum.
Abstentions may be specified on all proposals except the election of directors.
Abstentions are present and entitled to vote for purposes of determining the
approval of any matter submitted to the stockholders for a vote and will thus
have the same effect as a negative vote for the item on which the abstention is
noted. If a broker indicates on a proxy that it does not have the discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered present and entitled to vote with respect to that matter.
BENEFICIAL OWNERSHIP OF COMMON STOCK
Listed in the following table are the only beneficial owners that the
Company is aware of as of February 25, 2000, of more than five percent of the
Company's outstanding Common Stock. In addition, this table includes the
outstanding voting securities beneficially owned by its directors, its executive
officers that are listed in the Summary Compensation Table and by its directors
and executive officers as a group.
1
<PAGE>
AMOUNT AND NATURE
BENEFICIAL OWNER OF BENEFICIAL PERCENT OF
OF COMMON STOCK OWNERSHIP(1) CLASS(2)
------------------------------- -------------------- -----------------
Capital Southwest Venture 2,821,300 (3) 29.1%
Donald J. Douglass 1,130,540 (4) 11.7%
EQSF Advisors, Inc. 1,001,900 (5) 10.3%
Harris & Associates L.P. 799,700 (6) 8.2%
T. Rowe Price Associates, Inc. 626,000 (7) 6.5%
Oran F. Logan 187,150 (8) 1.9%
Ronald A. Robinson 20,000 *
O.S. Simpson, Jr. 25,280 (9) *
William R. Thomas - (10)
James B. Skaggs 100 *
David H. Morris -
Jerry E. Goldress 18,000 *
Robert H. George 13,050 *
Richard J. Wehrle 2,360 *
Geoffrey Davies 750 *
Ian Burden 1,600 *
John C. Moon 9,600 *
All Directors and Executive
Officers as a Group (13 Persons) 1,408,430 14.5%
- ------------------------
* Less than 1% of class
(1) In each case the beneficial owner has sole voting and investment power,
except as otherwise provided herein.
(2) The calculation of percent of class is based on the number of shares of
Common Stock outstanding as of February 29, 2000, 9,695,209 shares.
(3) Includes shares purchased by Capital Southwest Corporation ("Capital
Southwest"), the parent corporation of Capital Southwest Venture
Corporation. Mr. Thomas, a director of the Company, serves as Chairman of
the Board and President of both Capital Southwest Venture Corporation and
Capital Southwest Corporation and shares voting and investment power with
respect to the shares of Common Stock owned by Capital Southwest Venture
Corporation and Capital Southwest Corporation. Mr. Thomas, personally,
disclaims beneficial ownership of these shares. Capital Southwest held
warrants to purchase 62,500 shares of common stock at $16.00 per share that
were exercisable and set to expire on January 3, 2000. Capital Southwest
elected not to exercise the warrants.
(4) Includes 20,000 shares of non-qualified options exercisable for a period
of three years from January 30, 2000. Includes 65,145 shares owned by The
Douglass Foundation, a non-profit organization of which Mrs. Douglass is
the President; 110,000 shares in the Douglass Charitable Remainder
Unitrust, of which Mr. Douglass is trustee; 310,000 shares in the Douglass
Charitable Lead Unitrust of 2000 of which Mr. Douglass is trustee; 63,100
shares owned by Helen D. Douglass, Mr. Douglass' wife. Various members of
Mr. Douglass' family hold shares of stock of the Company which are not
included in this table. Mr. Douglass disclaims beneficial ownership of
these shares.
2
<PAGE>
(5) Based on a schedule 13G dated February 4, 2000 by which EQSF Advisors, Inc.
reported that as of December 31, 1999, it or M. J. Whitman Advisors, Inc.
or Martin J. Whitman, individually had shared voting power over none of
such shares, sole voting power over 1,001,900 such shares, and sole
dispositive power over 1,001,900 of such shares. EQSF Advisors, Inc. has
beneficial ownership in 873,700 shares. M. J. Whitman Advisors, Inc. has
beneficial ownership in 128,200 shares. Martin J. Whitman individually
disclaims beneficial ownership of these shares.
(6) Based on a Schedule 13G dated January 17, 2000, by which Harris Associates
L.P. reported that as of December 31, 1999, it or Harris Associates Inc.
had shared voting power over 799,700 such shares, sole voting power over
none of such shares and sole dispositive power over 577,350 such shares.
Harris Associates L.P. and Harris Associates Inc. have beneficial ownership
in 799,700 shares.
(7) Based on a Schedule 13G dated February 12, 2000, by which T. Rowe Price
Associates, Inc. reported that as of December 31, 1999, it or T. Rowe Price
Small Cap Value Fund, Inc. had shared voting power over none of such
shares, sole voting power over 626,000 of such shares, and sole dispositive
power over 641,000 of such shares. T. Rowe Price Associates, Inc. and T.
Rowe Price Small Cap Value Fund, Inc. have beneficial ownership in 641,000
shares.
(8) Excludes 100 shares owned by Mr. Logan's wife. Mr. Logan disclaims
beneficial ownership of these shares.
(9) Excludes 13,916 shares owned by Mr. Simpson's wife. Mr. Simpson disclaims
beneficial ownership of these shares.
(10) See footnote 3, above.
ITEM 1: ELECTION OF DIRECTORS
The By-Laws of the Company provide that the number of directors which
shall constitute the whole board shall be fixed and determined from time to time
by resolution adopted by the Board of Directors. Currently, the size of the
Board of Directors has been fixed at seven (7) directors. Each director elected
at the annual meeting will serve until the next annual meeting of stockholders
or until his successor is elected and qualified. Unless otherwise instructed,
shares represented by properly executed proxies in the accompanying form will be
voted for the individuals nominated by the Board of Directors set forth below.
Oran F. Logan resigned as member of the Board of Directors and the Company does
not plan on filling this vacancy prior to the Annual Meeting of Stockholders. As
detailed below, the Compensation/Nomination Committee has nominated Jerry E.
Goldress to stand for election. Although the Board of Directors anticipates that
the listed nominees will be able to serve, if at the time of the meeting any
such nominee is unable or unwilling to serve, such shares may be voted at the
discretion of the proxy holders for a substitute nominee. Certain information
concerning such nominees and the other directors, including all positions with
the Company and principal occupations during the last five years, is set forth
below:
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Donald J. Douglass, age 68, founded the Company in 1969 and has served as
Chairman of the Board and Chief Executive Officer of the Company since 1969. Mr.
Douglass resigned his position as Chief Executive Officer on July 7, 1999 and
his position as an employee of the Company on December 31, 1999, but continues
to serve as a director and Chairman of the Board for the Company.
Ronald A. Robinson, age 48, was appointed President, Chief Executive
Officer and director of the Company on July 7, 1999. Mr. Robinson had
previously been President of Svedala Industries, Inc. the U.S. subsidiary of
Svedala Industries AB of Malmo, Sweden, a leading manufacturer of equipment
and systems for the worldwide construction, mineral processing and materials
handling industries. Mr. Robinson joined Svedala in 1992 when it acquired
Denver Equipment Company of which he was Chairman and Chief Executive Officer.
Jerry E. Goldress, age 69, is Chairman and CEO of Grisanti, Galef &
Goldress, Inc. ("GGG"), a turnaround management consulting firm. Mr. Goldress
has been with GGG since 1973 and has been its Chairman since 1981. In his
consulting capacity, he has been President of more than one hundred
manufacturing, distribution, and retail organizations.
David H. Morris, age 58, has been a director of the Company since 1996 and
is currently Chief Operating Officer of YardMart.com. YardMart.com offers
customers the opportunity to purchase recognizable brand name yard and garden
products via the Internet. Mr. Morris had retired as President and Chief
Operating Officer of The Toro Company on November 1995. He had served in this
capacity since December 1988. Mr. Morris was first employed by Toro in February
1979 and served in various executive capacities with Toro and its subsidiaries.
3
<PAGE>
O. S. Simpson, Jr. age 64, has been a director of the Company since
1969. Mr. Simpson has served as the Chairman and CEO of Toddy Products,
Inc., a manufacturer of gourmet coffee, tea concentrates, and coffee makers,
since 1964.
James B. Skaggs, age 62, has been a director of the Company since 1996 and
retired as Chairman of the Board, Chief Executive Officer and President of
Tracor, Inc. in June 1998. Tracor provides leading edge technology to government
and commercial customers worldwide in the areas of information systems,
aerospace, and systems engineering. Mr. Skaggs had been Tracor's CEO, President
and Director since November 1990 and its Chairman of the Board since December
1993.
William R. Thomas, age 71, has been a director of the Company since 1969.
Since 1980, Mr. Thomas has been President, and since 1982, Chairman of the
Board, of Capital Southwest Corporation, a publicly owned venture capital
investment company located in Dallas, Texas.
ADDITIONAL INFORMATION CONCERNING DIRECTORS
None of the nominees for director or the executive officers of the
Company has a family relationship with any of the other executive officers or
other nominees for director. Except for Mr. Skaggs, Mr. Thomas and Mr.
Goldress, none of the directors or nominees is a director of any other
company which has a class of securities registered under, or is required to
file reports under, the Securities Exchange Act of 1934 or of any company
registered under the Investment Company Act of 1940. Mr. Skaggs is a director
of DTM Corporation. Mr. Thomas is a director of Capital Southwest
Corporation, Encore Wire Corporation, Mail-Well, Inc. and Palm Harbor Homes,
Inc. Mr. Goldress is a director of K2 Inc., Applied Magnetics Corp. and
Frontier Insurance Group, Inc.
VOTE REQUIRED. A PLURALITY OF THE VOTES CAST AT THE ANNUAL MEETING IS
REQUIRED FOR THE ELECTION OF EACH INDIVIDUAL NOMINATED BY THE BOARD OF
DIRECTORS. ALL PROXIES WILL BE VOTED FOR UNLESS A CONTRARY CHOICE IS INDICATED.
THE BOARD HAS APPROVED THE SLATE OF DIRECTORS AND
RECOMMENDS ITS APPROVAL BY THE STOCKHOLDERS
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended December 31, 1999, the Board of Directors
held eight meetings. All members of the Board attended at least 75% of the
meetings.
The Audit Committee of the Board of Directors, which consisted of Messrs.
Graf, Morris, and Simpson, met three times during fiscal 1999. All committee
members were present at the meetings except Mr. Simpson who missed one meeting.
Mr. Skaggs replaced Mr. Graf upon his resignation/retirement effective December
31, 1999. The functions of the Audit Committee are to recommend the appointment
of the Company's independent auditors, to review the arrangements for and the
scope of the annual audit, and to review internal accounting controls.
The Compensation/Nomination Committee of the Board of Directors, which
consisted of Messrs. Morris, Skaggs, Simpson and Thomas, met three times during
fiscal 1999. The committee members were present at all the meetings. The
functions of the Compensation/Nomination Committee are to review and make
recommendations concerning the compensation of officers and other key management
personnel, including the granting of stock options and the nomination of
directors and executive officers of the Company. The Compensation/Nomination
Committee does not consider nominees recommended by stockholders of the Company.
4
<PAGE>
REPORT OF THE COMPENSATION/NOMINATION COMMITTEE
THE FOLLOWING PARAGRAPHS CONSTITUTE THE REPORT OF THE
COMPENSATION/NOMINATION COMMITTEE OF THE BOARD OF DIRECTORS (THE "COMMITTEE") ON
EXECUTIVE COMPENSATION POLICIES. IN ACCORDANCE WITH RULES PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION, THIS REPORT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY STATEMENTS OR REPORTS FILED BY THE COMPANY
WITH THE SEC THAT DO NOT SPECIFICALLY INCORPORATE THIS REPORT BY REFERENCE.
The goals of the Company's compensation program are to attract, retain and
motivate competent executive officers who have the experience and ability to
contribute materially to the long-term success of the Company. The principal
elements of compensation for executive officers are base salary, incentive
payments and stock options.
Base salaries were determined by the Committee in March 1999, effective
May 1, 1999, for each of the executive officers and key managers on an
individual basis, taking into consideration individual contributions to the
Company's performance, length of tenure with the Company, surveys of
compensation levels of comparable positions and internal equities among
positions. Among other things, the Committee considered each officer's and key
manager's contributions to the success of the Company's business in recent years
and to its foundation for sustained earnings growth, as well as each
participant's role in achieving a higher level of customer satisfaction,
increased market penetration, and efficient utilization of assets and employees
in his area of responsibility.
The base salary levels for Donald J. Douglass, Chairman and Chief
Executive Officer, and Oran F. Logan, President and Chief Operating Officer,
were determined by the Committee in March 1999 effective May 1, 1999.
Subsequently, Mr. Douglass resigned as Chief Executive Officer on July 7, 1999,
but continued to serve as Chairman of the Board and as an employee of the
Company until December 31, 1999, after which he continued to serve as Chairman
of the Board, but not as an employee. Mr. Logan resigned as President and Chief
Operating Officer effective July 7, 1999, after which he continued to serve as a
director and has agreed to provide consulting services to the Company. Ronald A.
Robinson was appointed President and Chief Executive Officer on July 7, 1999, at
the base salary level determined by the Committee effective that date. The base
salary levels for all of the aforementioned officers were determined by the
Committee based on those factors described in the preceding paragraph.
In addition to base salaries, certain executive officers and key managers
received cash incentive payments in April 1999, the amounts of which were
determined by the Committee on a discretionary basis, taking into consideration
both individual performance and the Company's overall performance during the
prior fiscal year. The Committee approved incentive payments to participating
employees in an aggregate amount of $170,325. The President and Chairman of the
Board did not receive any incentive payments. These payments were expensed and
paid in 1999.
During 1999, the Committee adopted a revised version of the Alamo Group
Incentive Compensation Plan ("ICP"). The ICP is a cash incentive plan which
allows the Committee to reward certain of the Company's upper and mid-level
managers based upon three factors: the overall performance of the Company, the
performance of the segment of the Company in which the employee is expected to
contribute and the individual performance of the respective employee. ICP
payments include a 75% objective component, with the remaining 25% based on
subjective criteria. During February 2000, pursuant to the ICP, the Committee
approved total incentive payments to participating employees, including the
President and the Chairman of the Board, of $394,181. These payments were
accrued in 1999 and payments were made during March 2000.
During 1999, the Committee approved a supplemental retirement benefit for
Mr. Douglass which will be paid at $20,441 per quarter over a period of 14 1/2
years beginning in the year 2000. The single sum cost of the benefit based on an
assumed annual yield of 8% is $707,493, all of which was expensed during 1999.
Also during 1999, the Committee recommended and the Board of Directors approved
the Company entering into a Consulting and Non-Competition Agreement with Mr.
Logan following his resignation. The Company entered into this agreement
effective July 7, 1999, for a period of 2 1/2 years from that date. The
aggregate cost of the agreement is $400,000, all of which was expensed during
1999.
5
<PAGE>
From time to time, the Committee has also granted stock options to
executive officers and key employees to align their long-term interests with
those of the stockholders. Stock options are granted at exercise prices not less
than the fair market value of the stock on the date of grant and thus will have
no value unless the value of the Company's stock appreciates. The Committee
believes that these options provide a significant incentive for the option
holders to enhance the value of the Company's common stock by continually
improving the Company's performance.
On August 31, 1999, the stockholders of the Company approved the 1999
Non-Qualified Stock Option Plan ("1999 NQSO Plan") for executive, managerial,
professional or technical employees of the Company, and reserved 400,000 shares
of Common Stock for issuance pursuant to stock options. The Committee
recommended and the Board of Directors approved granting Non-Qualified Options
to purchase 200,000 shares of the Company's Common Stock to Mr. Robinson. The
exercise price for these shares was $8.9375 per share, the closing price of the
Company's Common Stock on the grant date.
On August 31, 1999, the stockholders of the Company also approved
amendments to the 1994 Incentive Stock Option Plan ("1994 ISO Plan") to correct
certain ambiguities and administrative problems with the existing plan. Upon
recommendation by the Committee and approval by the Board of Directors of the
Company, Incentive Stock Options to purchase 50,000 shares were granted to Mr.
Robinson at an option price of $8.9375 per share and Incentive Stock Options to
purchase 51,000 shares were granted to other executive officers and key members
of management, at an option price of $9.25 per share. Both option prices were
the closing price of the Company's Common Stock on the grant date. As of
December 31, 1999, Incentive Stock Options to purchase 101,000 shares remain
outstanding and options on 174,600 shares were available for grant.
Dated: March 31, 2000
William R. Thomas, Chairman
David H. Morris
O.S. Simpson, Jr.
James B. Skaggs
6
<PAGE>
COMPENSATION OF OFFICERS AND DIRECTORS
The following table sets forth a summary of compensation for the fiscal
year ended December 31, 1999, paid by the Company to the Company's Chairman of
the Board, Donald J. Douglass and the five highest paid executive officers of
the Company, as well as the compensation paid to each such individual during the
Company's last three fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------- ------------
SECURITIES
UNDERLYING ALL OTHER
FISCAL SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(4)(5)(6) (#) ($)(7)
- --------------------------- ----- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Donald J. Douglass
Chairman of the Board and 1999 200,000 3,750 -- 20,400
Former Chief Executive 1998 200,000 54,250 -- 20,400
Officer(1) 1997 200,000 105,000 -- 85,673
Ronald A. Robinson 1999 125,314(3) -- -- 1,864
President and Chief 1998 -- -- -- --
Executive Officer(2) 1997 -- -- -- --
Oran F. Logan 1999 116,667 -- -- 128,469(8)
Former President and 1998 200,000 44,250 -- 8,595
Chief Executive Officer(2) 1997 200,000 85,000 -- 57,906
Geoffrey Davies 1999 110,595 24,000 -- 8,741
Managing Director 1998 108,679 44,195 -- 12,010(9)
Alamo Group (EUR) Ltd. 1997 100,173 43,711 -- 11,555(9)
Ian Burden(10) 1999 104,000 24,475 -- 5,592
Vice President 1998 98,667 17,085 -- 4,015
Alamo Marketing 1997 95,000 29,100 -- 3,184
John C. Moon(10) 1999 109,974 10,415 -- 4,133
Vice President 1998 95,167 12,559 -- 3,283
Ag Marketing 1997 88,333 28,100 -- 825
</TABLE>
(1) Mr. Douglass resigned as Chief Executive Officer on July 7, 1999, but
continued to serve as Chairman of the Board and as an employee of the
Company.
(2) Mr. Robinson was appointed President and Chief Executive Officer on July 7,
1999.
(3) Represents a partial salary for Mr. Robinson.
(4) Discretionary bonuses approved and paid in 1999
(5) Bonuses for 1998 include the 1998 Subjective Bonuses and certain
discretionary bonuses paid in 1998.
(6) Bonuses for 1997 include an Objective Bonus earned in 1997 but not paid
until 1998 and a discretionary bonus paid in 1997.
(7) The amounts represent the employee's contribution under the Alamo Group
(USA) Inc. tax-qualified plan (the "401(k) Plan"). In the case of Mr.
Douglass and Mr. Logan the amounts also include restoration payments
pursuant to the Alamo Group Inc. 401(k) Restoration Plan (the "Restoration
Plan"). In 1997 matching contributions that would have been made under the
Company's 401(k) Plan for fiscal years from 1989 to 1997 were $65,873 and
$49,889 for Mr. Douglass and Mr. Logan respectively. The purpose of the
matching contributions that would have been or would be made under the
Company's 401(k) plan but were or would be foregone due to certain
limitations on contributions to 401(k) plans in the Internal Revenue Code
of 1986, as amended and in effect from time to time. The amounts also
include life insurance premiums paid by the Company in the amount of
$13,600 and $2,492 for Mr. Douglass and Mr. Logan, respectively, for each
of fiscal 1997, 1998 and only Mr. Douglass in 1999.
7
<PAGE>
(8) Also includes $83,333 in payments under the Consulting and Non-Competition
Agreement dated July 7, 1999 between the Company and Mr. Logan, and $35,778
in compensation relating to the remaining value of Mr. Logan's airpass
previously purchased by the Company.
(9) The amount reflects Alamo Group (EUR) Ltd. contribution to Mr. Davies'
retirement plan in the United Kingdom.
(10) Mr. Burden and Mr. Moon are Vice Presidents-Marketing of Alamo Group (USA)
Inc., a wholly-owned subsidiary of the Company.
AGGREGATED OPTION GRANTS AND EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table presents information with respect to stock options
owned by the named executive officers at December 31, 1999. No stock options
were exercised by the named executives during the fiscal year ended December 31,
1999.
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FY-END (#) AT FY-END ($)
EXERCISABLE(E)/ EXERCISABLE(E)(1)/
NAME UNEXERCISABLE(U) UNEXERCISABLE(U)(2)
---- ------------------- --------------------
Donald J. Douglass 20,000 E --
Ronald A. Robinson(3) 200,000 U 212,500 U
Ronald A. Robinson(4) 50,000 U 53,125 U
Robert H. George 5,000 U 3,750 U
Richard J. Wehrle 5,000 U 3,750 U
Ian Burden 10,000 U 7,500 U
Geoffrey Davies 10,000 U 7,500 U
John C. Moon 10,000 U 7,500 U
All Others 11,000 U 8,250 U
(1) Values of exercised options at year end were calculated based upon a fiscal
year-end market price of $10.00 per share. At fiscal year end, none of the
options were in-the-money.
(2) As of December 31, 1999, all unexercised options were not vested. The value
of unexercised options at year end were calculated based upon a fiscal
year-end market price of $10.00 per share.
(3) Represents non-qualified options for Mr. Robinson.
(4) Represents Incentive Stock Options for Mr. Robinson
DIRECTOR COMPENSATION
At present, each director receives $1,000 for each meeting of the Board of
Directors attended in person, $500 for each meeting of any committee thereof
attended in person, and $500 for each meeting of the Board of Directors or any
meeting of any committee thereof attended by phone. The Company pays directors
who are not employees of the Company an additional $12,000 retainer per year.
For fiscal 1999, all payments to directors were subject to an annual aggregate
limit in fees per director, exclusive of expense reimbursements. The Board of
Directors waived the annual aggregate limit for fiscal 1999 because of the
additional meetings related to the proposed merger with WEC Company. Beginning
in May 2000, payments to directors will no longer be subject to an annual
aggregate limit and only outside directors will be compensated for attending
meetings of the Board of Directors or any committee thereof. Directors are
reimbursed for reasonable expenses incurred as a result of attending meetings of
the Board or committees thereof.
8
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EMPLOYMENT AGREEMENTS
All executive officers of the Company serve at the discretion of the Board
of Directors. The executive officers are appointed to their positions by the
Board until the next annual meeting of directors or until their successors have
been duly qualified and elected.
In April 1998, Severance Agreements were granted to certain officers and
key managers. The Agreements would become effective in the event of a change in
control and they provide salary continuation for periods ranging from twelve
(12) to eighteen (18) months. These Agreements expired on June 30, 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1990 and 1997, the Company loaned amounts totaling $700,000 and
$270,000 respectively to Mr. Douglass. In 1997 and 1998, the Company loaned
$310,000 and $20,000 respectively to Mr. Logan. Proceeds from these loans were
used to pay personal income taxes resulting from the exercise of non-qualified
options. The principal balance bears interest at the mid-term Applicable Federal
Rate which was 5.85% as of December 31, 1999 and is payable quarterly. On
December 31, 1999, pursuant to approval of the Board of Directors, Mr. Douglass'
$700,000 loan was renewed with a maturity date of December 31, 2002. Mr.
Douglass's loan for $270,000, matures on December 31, 2006. At December 31,1999,
the outstanding principal balance on the loans to Mr. Douglass were $700,000 and
$270,000. Mr. Douglass's loans are secured by 100,000 shares of the Company's
Common Stock. On August 24, 1999, the Company agreed to purchase 34,700 shares
of Mr. Logan's stock in the Company at $9.875 per share which was the closing
price on the date of purchase. The proceeds from this purchase were used to pay
off Mr. Logan's loans to the Company of $310,000 and $20,000, respectively, plus
accrued interest.
Pursuant to the Company's Executive Loan Program (the "Loan Program") the
Company may make loans from time to time to the Chief Operating Officer, any
Vice President or any other employee of the Company designated by the
Compensation/Nomination Committee of the Board of Directors ("Qualified
Borrowers") to purchase stock of the Company. All loans are secured by the
pledge of the shares being purchased. Under the Loan Program, the maximum
aggregate amount which the Chief Operating Officer may borrow is $400,000 and
the maximum aggregate amount any other Qualified Borrower may borrow is
$200,000. Each loan under the Loan Program bears interest, payable quarterly, at
the base rate of interest as published by Bank of America, N.A. As of the date
hereof, there is outstanding under the Loan Program a total of $110,807 and
$105,185 from Mr. George and Mr. Moon respectively and an aggregate of $100,703
from all other Qualified Borrowers. During 1999, Mr. Logan had an outstanding
loan under the Loan Program of $320,000. Mr. Logan paid off in full the
principal amount and accrued interest on the loan.
On August 31, 1999, the Board of Directors amended the Executive Loan
Program to state that no new loans would be made under the program and all
outstanding loans were renewed and extended for five years from December 31,
1999, with interest payable quarterly and a requirement that at least 10% of the
original loan amount be paid annually with the first such payment due March 31,
2001. All other terms and conditions of the notes and security agreements remain
unchanged.
The Company paid the premium for the life insurance policy in the face
amount of $500,000 for Mr. Douglass. In the event of the death of Mr. Douglass,
the proceeds from the applicable insurance policy will be applied to the payment
of any outstanding loans the decedent may have from the Company, with the
balance, if any, going to his estate. Beginning with the retirement of Mr.
Douglass effective December 31, 1999, the premium for the life insurance policy
will be paid for by Mr. Douglass individually.
The Company entered into a Consulting and Non-Competition Agreement with
Mr. Logan following his resignation on July 7, 1999. This agreement is in
effective for a period of 2 1/2 years from that date. The aggregate cost of this
agreement is $400,000, all of which was expensed during 1999.
9
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Management believes that the transactions described above were on terms no
less favorable to the Company than otherwise available from unaffiliated third
parties. Any future transactions between the Company and its officers,
directors, principal stockholders, affiliates or advisors will be on terms no
less favorable to the Company than those reasonably obtainable from third
parties and will be approved or ratified by a majority of the Company's
independent directors.
STOCK PRICE PERFORMANCE GRAPH
The following graph sets forth the cumulative total return to the
Company's Stockholders during a five-year period ended December 31, 1999, as
well as the performance of an overall stock market index (S&P 500 Index) and the
Company's selected peer group index (Russell 2000 Index).
The Company believes that there does not exist a representative industry
peer group of companies with a similar business segment profile. The Securities
and Exchange Commission has indicated that companies may use a base other than
industry or line of business for determining its peer group index, such as an
index of companies with similar market capitalization. Accordingly, the Company
has selected the Russell 2000 Index, a widely used small market capitalization
index, to use as a representative peer group.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
Among S&P 500 Index, Russell 2000 Index, and Alamo Group Inc. ("ALG")
[LINEAR GRAPH PLOTTED FROM PLOT POINTS BELOW]
Alamo Group Inc (ALG)
CUMULATIVE TOTAL RETURN
----------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
ALAMO GROUP INC. 100 114 111 144 78 73
S & P 500 100 138 169 226 290 351
RUSSELL 2000 100 127 155 204 191 188
The graph assumes $100.00 invested on December 31, 1994 in the Company's Common
Stock or in the S&P 500 Index or Russell 2000 Index including reinvestment of
dividends.
Graph produced by Research Data Group, Inc. 3/16/00
10
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ITEM 2. APPOINTMENT OF AUDITORS
The Board of Directors has appointed the firm of Ernst & Young LLP as
independent auditors to examine the financial statements of the Company for the
2000 fiscal year. Representatives of Ernst & Young LLP are expected to be
present at the Annual Meeting of Stockholders with the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions.
A proposal will be presented at the Annual Meeting to ratify the
reappointment of Ernst & Young LLP as the Company's independent auditors. If
stockholder approval should be withheld, the Board of Directors would consider
an alternative appointment for the succeeding fiscal year. The Board of
Directors recommends that the stockholders approve the appointment of Ernst &
Young LLP.
VOTE REQUIRED. THE AFFIRMATIVE VOTE OF THE MAJORITY OF THE SHARES OF
COMMON STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY AT THE ANNUAL MEETING IS
REQUIRED. ALL PROXIES WILL BE VOTED FOR ADOPTION UNLESS A CONTRARY CHOICE IS
INDICATED.
THE BOARD HAS APPROVED APPOINTMENT OF
ERNST & YOUNG LLP
AND RECOMMENDS ITS APPROVAL BY THE STOCKHOLDERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During 1999, Richard J. Wehrle was late filing a Form 4 reporting the sale
of Common Stock. Oran F. Logan was late filing a Form 4 covering sale of Common
Stock and failed to file a Form 4 covering sale of Common Stock, but he did
timely file a Form 5 covering this sale. The Company was late filing a Form 3
when Ronald A. Robinson was elected President and Chief Executive Officer.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2001 Annual
Meeting, pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, must be received in writing by the Company at its principal executive
offices not later than November 27, 2000. The Company's principal executive
offices are located at 1502 East Walnut Street, Seguin, Texas, 78155. Please
direct all such proposals to the attention of the President of the Company.
If a stockholder intends to present business at the 2001 Annual Meeting
other than pursuant to Rule 14a-8, to be considered timely pursuant to Rule
14a-4(c), the Company should receive notice of the proposal at least 45 days
before the date on which the Company first mailed its proxy materials for the
prior year's Annual Meeting of stockholders. Therefore, to be considered timely,
the Company should receive notice of a stockholder proposal submitted other than
pursuant to Rule 14a-8 no later than February 15, 2000.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. Proxies may
be solicited through the mail and through telephonic communications, or meetings
with Stockholders or their representatives by directors, officers and other
employees of the Company who will receive no additional compensation therefor.
The Company requests persons such as brokers, nominees and fiduciaries
holding stock in their names for others, or holding stock for others who have
the right to give voting instructions, to forward proxy material to their
principals and to request authority for the execution of the proxy, and the
Company will reimburse such persons for their reasonable expenses.
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OTHER MATTERS
No business other than the matters set forth in this Proxy Statement is
expected to come before the meeting, but should any other matters requiring a
vote of Stockholders arise, including a question of adjourning the meeting, the
persons named in the accompanying Proxy will vote thereon according to their
best judgment in the interests of the Company. If any of the nominees for office
of director should withdraw or otherwise become unavailable for reasons not
presently known, the persons named as proxies may vote for another person in his
place in what they consider the best interests of the Company.
The Company will furnish free of charge to each person whose Proxy is
being solicited, upon the written request of such person, a copy of the
Company's Annual Report on Form 10-K including financial statements and
schedules thereto filed with the Securities and Exchange Commission for the year
ended December 31, 1999. Any request for exhibits should be in writing addressed
to Robert H. George, Secretary, Alamo Group Inc., 1502 East Walnut Street,
Seguin, Texas 78155.
By Order of the Board of Directors
Robert H. George
Secretary
Dated: March 31, 2000
12
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PROXY
ALAMO GROUP INC.
PROXY FOR 2000 ANUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Donald J. Douglass, Ronald A. Robinson or
Robert H. George or any one of them, proxies or proxy with full power of
substitution and revocation as to each of them, to represent the undersigned and
to act and vote, with all powers which the undersigned would possess if
personally present, at the Annual Meeting of Stockholders of Alamo Group Inc. to
be held at 9:00 a.m., local time, at the Hilton Palacio Del Rio Hotel, 200 South
Alamo Street, San Antonio, Texas, Tuesday, May 2, 2000 on the following matters
and in their discretion on any other matters which may come before the meeting
or any adjournments thereof. Receipt of Notice-Proxy Statement dated March 31,
2000 is acknowledged.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
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FOLD AND DETACH HERE
<PAGE>
PLEASE MARK [X]
YOUR VOTE AS
INDICATED IN
THIS EXAMPLE
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
- --------------------------------------------------------------------------------
ITEM 1 - Election of Directors
FOR all nominees WITHHOLD AUTHORITY Donald J. Douglass
(except as specified to vote for all nominees Jerry E. Goldress
below) listed at right David H. Morris
[ ] [ ] Ronald A. Robinson
O.S. Simpson, Jr.
James B. Skaggs
William R. Thomas
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
_______________________________________________________
- --------------------------------------------------------------------------------
ITEM 2 - Proposal FOR ratification of appointment of FOR AGAINST ABSTAIN
Ernst & Young LLP as the Company's auditors for 2000. [ ] [ ] [ ]
ITEM 3 - In their discretion, upon such other business as may properly come
before the meeting.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned.
In the absense of such direction the proxy will be voted FOR the nominees listed
in Item 1 and FOR the Proposal set forth in Item 2.
I PLAN TO ATTEND THE MEETING [ ]
- --------------------------------------------------------------------------------
(Sign exactly as name(s) appears at left. If shares are
held jointly, each holder should sign. If signing for
estate, trust or corporation, title or capacity should be
stated.)
Please date, sign and return this Proxy in the enclosed
business envelope.
Date:____________________________________________, 2000
_______________________________________________________
_______________________________________________________
(Signature if held jointly)
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FOLD AND DETACH HERE
