<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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
BADGER METER, 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/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- - --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- - --------------------------------------------------------------------------------
(3) Filing party:
- - --------------------------------------------------------------------------------
(4) Date filed:
- - --------------------------------------------------------------------------------
<PAGE> 2
[BADGER METER, INC. LOGO]
BADGER METER, INC.
4545 WEST BROWN DEER ROAD
MILWAUKEE, WISCONSIN 53223
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 1995
The Annual Meeting of the Shareholders of Badger Meter, Inc. (the
"Company") will be held at the offices of the Company, 4545 West Brown Deer
Road, Milwaukee, Wisconsin, 53223, on Friday, April 28, 1995, at 8:30 a.m. local
time, for the following purposes:
1. To elect eight directors to serve for the ensuing year;
2. To adopt the Badger Meter, Inc. 1995 Stock Option Plan; and
3. To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Holders of record of Common Stock and Class B Common Stock of the Company
at the close of business on March 1, 1995 will be entitled to notice of and to
vote at the meeting and any adjournments or postponements thereof. Holders of
Common Stock will be entitled to one vote per share so held. Holders of Class B
Common Stock will be entitled to ten votes per share so held.
Please vote the enclosed proxy form, sign and return it in the envelope
provided. You retain the right to revoke the proxy at any time before it is
actually voted.
By Order of the Board of Directors
Deirdre C. Elliott, Secretary
April 3, 1995
<PAGE> 3
BADGER METER, INC.
4545 WEST BROWN DEER ROAD
MILWAUKEE, WISCONSIN 53223
PROXY STATEMENT
To the Shareholders of
BADGER METER, INC.
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Badger Meter, Inc. (the "Company") to be
used at the Annual Meeting of Shareholders of the Company (the "Meeting"), which
will be held at 8:30 a.m., Friday, April 28, 1995, at the offices of the
Company, 4545 West Brown Deer Road, Milwaukee, Wisconsin 53223, and at any
adjournments or postponements thereof.
Shareholders who execute proxies retain the right to revoke them at any
time prior to the voting thereof by giving notice to the Company in writing or
in open meeting. Unless so revoked, the shares represented by such proxies will
be voted at the Meeting and any adjournments or postponements thereof.
The record date for shareholders entitled to notice of and to vote at the
Meeting is the close of business on March 1, 1995. As of the record date, the
Company had 1,188,607 shares of Common Stock (the "Common Stock") of the Company
outstanding and entitled to one vote per share, and 562,785 shares of Class B
Common Stock (the "Class B Common Stock") of the Company outstanding and
entitled to ten votes per share. As of the record date, the total number of
votes represented by shares of Common Stock and Class B Common Stock was
6,816,457 votes, consisting of 1,188,607 votes represented by outstanding shares
of Common Stock and 5,627,850 votes represented by outstanding shares of Class B
Common Stock.
This Proxy Statement is being furnished to shareholders of the Company on
or about April 3, 1995.
NOMINATION AND ELECTION OF DIRECTORS
At the Meeting, holders of Common Stock and Class B Common Stock, voting as
a single class, shall be entitled to elect eight directors. Directors will be
elected by a plurality of votes cast at the Meeting (assuming a quorum is
present). Consequently, any shares not voted at the Meeting, whether due to
abstentions, broker nonvotes or otherwise, will have no impact on the election
of directors.
Proxies received representing one vote per share of Common Stock or
representing ten votes per share of Class B Common Stock will, unless otherwise
directed, be voted in favor of the election of each of the eight persons named
below to serve as directors until the next Annual Meeting of Shareholders or
until their respective successors have qualified and been elected.
Listed below are the names of the nominees of the Board of Directors for
the office of director for the ensuing year, together with certain additional
information concerning each such nominee. The eight nominees are presently
directors of the Company. If any of the nominees should be unable or unwilling
to serve, the proxies, pursuant to the authority granted to them by the Board of
Directors, shall have discretionary authority to select and vote for substitute
nominees. The Board of Directors has no reason to believe that any of the
nominees will be unable or unwilling to serve.
1
<PAGE> 4
NOMINEES FOR ELECTION AS DIRECTORS
<TABLE>
<CAPTION>
NAME AND POSITION DIRECTOR
WITH COMPANY AGE BUSINESS EXPERIENCE DURING LAST FIVE YEARS SINCE
- - --------------------------------- --- ---------------------------------------------- --------
<S> <C> <C> <C>
James L. Forbes.................. 62 Badger Meter, Inc.: President and Chief 1981
President and Chief Executive Executive Officer.
Officer
Robert M. Hoffer................. 74 WICOR, Inc. (a holding company): Retired 1967
Chairman and Chief Executive Officer.
Wisconsin Gas Company (gas distribution
utility): Retired Chairman and Chief Executive
Officer.
Charles F. James, Jr............. 63 University of Wisconsin Milwaukee: Dean of the 1986
College of Engineering and Applied Science.
Donald J. Schuenke............... 66 Northern Telecom Limited: Chairman. 1982
Northwestern Mutual Life Insurance Company:
Retired Chairman and Chief Executive Officer;
previously President and Chief Executive
Officer.
Warren R. Stumpe................. 69 Radian Corporation (engineering, scientific 1985
and technical services): Vice President
1987-1990 (retired).
Edwin P. Wiley................... 65 Foley & Lardner (law firm): Partner. 1973
James O. Wright.................. 74 Badger Meter, Inc.: Chairman of the Board. 1948
Chairman of the Board
James O. Wright, Jr.............. 49 Wright Tax and Bookkeeping Service: Owner. 1978
</TABLE>
Messrs. James O. Wright, James L. Forbes and James O. Wright, Jr. may be
deemed to "control" the Company because of their voting power over 425,163
shares of Class B Common Stock. This stock held in the Badger Meter Voting Trust
represents 4,251,630 votes or approximately 62.4% of the votes represented by
outstanding shares of Common Stock and Class B Common Stock. (See "Stock
Ownership of Management and Others.") James L. Forbes and James O. Wright each
have additional voting power over 52,823 shares of Common Stock and 86,822
shares of Class B Common Stock as trustees of the Badger Meter Officers' Voting
Trust, for total voting power over 52,823 shares of Common Stock and 511,985
shares of Class B Common Stock, representing 5,172,673 votes or approximately
75.9% of the votes represented by outstanding shares of Common Stock and Class B
Common Stock.
Mr. James O. Wright, Jr. is the son of James O. Wright, Chairman of the
Company.
Certain directors of the Company also serve as directors of other
companies, some of which are publicly held. Mr. Forbes is a director of Firstar
Trust Company, Firstar Corporation, Universal Foods Corporation, and United
Wisconsin Services, Inc. Mr. Hoffer is a director of Applied Power, Inc. Mr.
Schuenke is a director of A. O. Smith Corporation, Northern Telecom Limited and
Federal Home Loan Mortgage Corporation. Mr. Stumpe is a director of Unico, Inc.
Mr. James O. Wright is a director of Marshall & Ilsley Corporation.
COMMITTEES, MEETINGS AND ATTENDANCE
The Board of Directors of the Company has six standing committees: Audit,
Compensation, Compliance, Nominating, Employee Benefit Plans and Technology.
The Audit Committee, which met twice in 1994, consists of Messrs. Hoffer
(Chairman), James and Schuenke. The Audit Committee recommends to the Board of
Directors independent auditors for selection by the Company, discusses with the
independent auditors and internal auditors the scope and results of audits, and
approves and reviews any non-audit services performed by the Company's
independent auditing firm.
2
<PAGE> 5
The Compensation Committee, which met at the end of December, 1993 for
determination of base compensations for the year 1994, and in February, 1995 to
determine bonuses and grants of stock options for 1994, consists of Messrs.
Schuenke (Chairman), Hoffer, Wiley and Wright. The Compensation Committee
reviews and establishes all forms of compensation for the officers of the
Company, and administers the Company's benefit plans including the Restricted
Stock Plan, the 1989 Stock Option Plan and the 1993 Stock Option Plan.
The Compliance Committee, which met twice in 1994, consists of Messrs.
Hoffer (Chairman), Stumpe, Wiley, Wright and Wright, Jr. The Compliance
Committee monitors the Company's compliance with the Company's policies
governing activities which include but are not limited to business ethics,
environment, safety, diversity and quality processes.
The Nominating Committee, which met once in 1994, consists of Messrs.
Forbes (Chairman), Stumpe, Wright and Wright, Jr. The Nominating Committee
selects nominees for the Company's Board of Directors and reviews the succession
of executive management. This committee will consider nominees for director
recommended by the shareholders but has no established procedures which must be
followed.
The Employee Benefit Plans Committee, which met twice in 1994, consists of
Messrs. Wright, Jr. (Chairman), Schuenke, Wiley and Wright. The Employee Benefit
Plans Committee oversees the administration of the Company's pension plans,
savings plans, employee stock ownership plans and other retirement plans.
The Technology Committee, which met one time in 1994, consists of Messrs.
James (Chairman), Stumpe and Wright. This committee assesses the development and
maintenance of the technologies used by the Company in all aspects of the
Company's operations.
The Board of Directors held five meetings in 1994. All directors attended
at least 75% of the meetings of the Board of Directors and committees on which
they serve.
DIRECTOR COMPENSATION
All directors who are not employees of the Company were compensated at the
rate of $1,200 for each Board of Directors meeting that they attended and were
reimbursed for out-of-pocket travel, lodging and meal expenses. Directors who
are not employees of the Company were paid additional fees of $750 per month and
were compensated at the rate of $750 for each committee meeting they attended.
Non-employee members of the committees are compensated $1,000 for out-of-town or
all-day meetings.
STOCK OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth, as of March 1, 1995, the number of shares
of the Company's Common Stock and Class B Common Stock beneficially owned by (i)
each director of the Company, (ii) each of the executive officers named in the
Summary Compensation Table set forth below, (iii) all directors and officers of
the Company as a group, and (iv) each person known to the Company to be the
beneficial owner of more than 5% of the Company's Common Stock and/or Class B
Common Stock (as reported to the Securities and Exchange Commission). Beneficial
ownership of shares is reported in the following table and footnotes in
accordance with the beneficial ownership rules promulgated by the Securities and
Exchange Commission. Such rules define "beneficial owner" of a security to
include any person who has or shares voting power or investment power with
respect to such security.
Compliance with these rules results in overlapping beneficial ownership of
shares. Therefore, certain shares set forth in the table below are reported as
being beneficially owned by more than one person. Although the beneficial owners
of shares of Class B Common Stock are deemed to beneficially own an equal number
of shares of Common Stock, due to the convertibility of Class B Common Stock
into Common Stock, no "double counting" with respect to the two classes of
Common Stock is reported.
In the aggregate, approximately 106,622 shares of Common Stock and 512,085
shares of Class B Common Stock, representing an aggregate of 5,227,472 votes or
approximately 76.2% of the votes represented
3
<PAGE> 6
by the aggregate outstanding shares of Common Stock and Class B Common Stock,
are held by directors and officers of the Company as a group.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OF BADGER METER, INC.
COMMON STOCK(1) (UNLESS DESIGNATED AS CLASS B COMMON STOCK)
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
OPTIONS SOLE SHARED OWNED AND
EXERCISABLE BENEFICIAL BENEFICIAL PERCENT OF CLASS
NAME WITHIN 60 DAYS OWNERSHIP(2) OWNERSHIP(2) OUTSTANDING
- - ------------------------------ -------------- ------------ ------------- ----------------
<S> <C> <C> <C> <C>
James O. Wright
Common Stock(1)............. 3,000 542(4) 53,823(3)(6)(8) 57,365
4.8%
Class B Common Stock........ 511,985(3)(5)(6) 511,985
91.0%
James L. Forbes
Common Stock(1)............. 2,700 16,310(3)(4) 52,823(3)(6) 58,005
4.9%
Class B Common Stock........ 27,400(3) 511,985(3)(5)(6) 511,985
91.0%
Robert M. Hoffer
Common Stock(1)............. 3,000 500 3,500
0.3%
Charles F. James, Jr.
Common Stock(1)............. 3,000 300 3,300
0.3%
Donald J. Schuenke
Common Stock(1)............. 3,000 1,500 4,500
0.3%
Warren R. Stumpe
Common Stock(1)............. 3,000 1,000 4,000
0.3%
Edwin P. Wiley
Common Stock(1)............. 3,000 200 3,200
0.3%
Class B Common Stock........ 100 286,200(5)(7) 286,300
50.9%
James O. Wright, Jr.
Common Stock(1)............. 3,000 25 3,025
0.2%
Class B Common Stock........ 6,156(5) 425,163(5)(7) 425,163
75.5%
Robert D. Belan
Common Stock(1)............. 3,533 639(3)(4) 4,172
0.4%
Class B Common Stock........ 5,830(3) 5,830
1.0%
Ronald H. Dix
Common Stock(1)............. 3,533 3,856(3)(4) 66,523(3)(6) 71,232
6.0%
Class B Common Stock........ 8,992(3) 86,822(3)(6) 86,822
15.4%
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY
OPTIONS SOLE SHARED OWNED AND
EXERCISABLE BENEFICIAL BENEFICIAL PERCENT OF CLASS
NAME WITHIN 60 DAYS OWNERSHIP(2) OWNERSHIP(2) OUTSTANDING
- - ------------------------------ -------------- ------------ ------------- ----------------
<S> <C> <C> <C> <C>
William H. Vander Heyden
Common Stock(1)............. 2,700 10,506(3)(4) 200 13,406
1.1%
Class B Common Stock........ 11,250(3) 11,250
2.0%
William J. Shinners
Common Stock(1)............. 3,200 2,771(3)(4) 13,700(6) 19,671
1.6%
Class B Common Stock........ 4,400(3) 4,400
0.8%
All Directors and Officers as
a Group (15 persons,
including those named above)
Common Stock(1)............. 40,866 41,921(3)(4) 68,223(3)(6)(8) 151,010
12.3%
Class B Common Stock........ 70,326(3)(5) 511,985(3)(5)(6) 512,085
(7) 91.0%
William H. Alverson
780 N. Water Street
Milwaukee, WI 53202
Common Stock(1)............. 3,904(7) 3,904
0.3%
Class B Common Stock........ 75,434(5)(7) 75,434
13.4%
William C. Wright
11740 N. Port Washington Rd.
Mequon, WI 53092
Common Stock(1)............. 4,959 3,904(7) 8,863
0.7%
Class B Common Stock........ 75,434(5)(7) 75,434
13.4%
John F. Callan
777 East Wisconsin Ave.
Milwaukee, WI 53202
Class B Common Stock........ 190,000(5)(7) 190,000
33.8%
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Common Stock(1)............. 41,200(9)(10) 41,200
3.5%
Class B Common Stock........ 49,600(9)(10) 49,600
8.8%
Mitchell Hutchins
Institutional
Investors, Inc.
1285 Avenue of the Americas
New York, NY 10019
Common Stock(1)............. 107,500 107,500
9.0%
</TABLE>
- - -------------------------
(1) Class B Common Stock is convertible on a share-for-share basis into Common
Stock at any time at the discretion of the holder thereof. As a result, a
holder of Class B Common Stock is deemed to
5
<PAGE> 8
beneficially own an equal number of shares of Common Stock which such
shareholder acquires upon the conversion of Class B Common Stock. However,
in order to avoid overstatement of the aggregate beneficial ownership of
Common Stock and Class B Common Stock, the Common Stock reported as
beneficially owned does not include Common Stock which may be acquired upon
the conversion of Class B Common Stock. Similarly, the percentage of
outstanding Common Stock beneficially owned is determined with respect to
the total number of shares of Common Stock outstanding as of March 1, 1995
(1,188,607 shares), which does not include shares of Common Stock which may
be issued upon conversion of Class B Common Stock.
(2) Unless otherwise indicated, the beneficial owner has sole investment and
voting power or shared voting and investment power over the reported
shares.
(3) The Badger Meter Officers' Voting Trust ("Officers' Trust"), of which James
O. Wright, Ronald H. Dix and James L. Forbes are trustees, holds 52,823
shares of Common Stock and 86,822 shares of Class B Common Stock. The
address of the trustees is 4545 West Brown Deer Road, Milwaukee, WI 53223.
The trustees of the Officers' Trust have the right to vote all shares of
Company stock held therein. Whenever beneficiaries of the Officers' Trust
possessing trust interests representing in the aggregate at least 75% of
all the votes represented in the Officers' Trust direct the sale or other
disposition of shares and dissolution of the trust, the trustees must make
the sale or other disposition. When all of the trustees agree and
beneficiaries possessing trust interests representing in the aggregate a
majority of all of the votes represented in the Officers' Trust give their
written approval of the sale or other disposition of shares, the trustees
may make the sale or other disposition. The Officers' Trust will exist for
30 years from December 18, 1992 and such additional 30 year renewal periods
as follow unless earlier terminated by a vote of beneficiaries holding 75%
or more of the votes in the Officers' Trust or by applicable law.
The Officers' Trust has a $1 million bank credit line used to assist
officers in financing the purchase of Company stock. Loans to the Officers'
Trust are guaranteed by the Company and the stock purchased by the officers
using this credit facility are pledged to the Company to secure the loans.
Twenty-one officers, including the named executive officers, have purchased
Company stock using this credit facility.
Mr. James O. Wright, Mr. Ronald H. Dix and Mr. James L. Forbes all share
voting power in all of the shares deposited in the Officers' Trust.
Beneficiaries of the Officers' Trust have sole investment power over only
those shares individually deposited in the Officers' Trust. Mr. Dix has
sole investment power over 2,480 shares of Common Stock and 8,992 shares of
Class B Common Stock. Mr. Forbes has sole investment power over 13,828
shares of Common Stock and 27,400 shares of Class B Common Stock. Mr.
Belan, Mr. Shinners and Mr. Vander Heyden have sole investment power (but
no voting power) over 170, 1,750 and 8,620 shares of Common Stock and
5,830, 4,400 and 11,250 shares of Class B Common Stock, respectively.
(4) In conjunction with the Badger Meter, Inc. Employee Savings and Stock
Ownership Plan, Common Stock included in the preceding table has been
allocated to the following directors and/or officers as follows: James O.
Wright, 542 shares; James L. Forbes, 2,482 shares; Robert D. Belan, 469
shares; Ronald H. Dix, 1,176 shares; William H. Vander Heyden, 1,886
shares; William J. Shinners, 1,021 shares and all officers as a group
(including Messrs. Wright and Forbes) 8,896 shares. A person who has been
allocated shares pursuant to this plan has sole voting power but no
investment power with respect to these shares.
(5) The Badger Meter Voting Trust ("Voting Trust"), of which James O. Wright,
James L. Forbes and James O. Wright, Jr. are trustees, holds 425,163 shares
of Class B Common Stock. The address of the trustees is 4545 West Brown
Deer Road, Milwaukee, WI 53223. The trustees of the Voting Trust have the
right to vote all shares of Company stock held therein. The Voting Trust
will exist for 30 years beyond the lives of certain members of the Wright
Family, unless earlier terminated by a vote of holders of Voting Trust
certificates representing 75% of the stock then held therein or by
applicable law. Shares held in the Voting Trust include shares reported
above as beneficially owned by other named persons, each of whom may have
shared investment power over the shares listed, as follows: (a) 75,434 of
the
6
<PAGE> 9
shares reported as beneficially owned by Mr. William C. Wright (which
includes the 75,434 shares reported as beneficially owned by William H.
Alverson); (b) 286,200 of the shares reported as beneficially owned by
Edwin P. Wiley; (c) 244,180 of the shares reported as beneficially owned by
James O. Wright; (d) 106,680 of the shares reported as beneficially owned
by James O. Wright, Jr. and (e) 190,000 of the shares reported as
beneficially owned by John F. Callan. Mr. James O. Wright, Jr. has sole
investment power over 6,156 shares of Class B Common Stock held in the
Voting Trust.
(6) Shares have been awarded pursuant to the Company's Restricted Stock Plan,
which provides that a person who has been awarded restricted shares has no
investment power or voting power in the shares but is entitled to receive
the dividends until the expiration of the restricted period. All of the
officers who held restricted shares deposited their stock in the Badger
Meter Officers' Voting Trust on March 10, 1992 (see note 3 above). These
shares are therefore reflected in the preceding table only for Messrs.
Forbes, Wright and Dix solely as trustees of the Officers' Voting Trust.
Restricted shares were also awarded to employees who are not Company
officers. These shares are held by the BMI EBPA Company, which has sole
voting power over those shares. Mr. Dix and Mr. Shinners are general
partners of the BMI EBPA Company, and their shared voting power in these
shares is therefore reflected on the preceding table.
(7) The number of shares shown includes shares which are reported as
beneficially owned solely because such persons are co-trustees of trusts
for the benefit of various Wright family members, as follows: Edwin P.
Wiley, 286,200 shares; James O. Wright, Jr., 106,680 shares; William H.
Alverson, 79,338 shares; James O. Wright, 244,180 shares; William C.
Wright, 79,338 shares; and John F. Callan, 190,000 shares. All of these
shares are held in the Voting Trust. (see note 5 above)
(8) Includes 1,000 shares of Common Stock over which Mr. Wright has shared
investment power and no voting power.
(9) The reported shares are held in the portfolios of advisory clients of
Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor. Dimensional disclaims beneficial ownership of such shares.
(10) Includes 18,000 shares of Common Stock and 20,300 shares of Class B Common
Stock over which Dimensional has sole investment but no voting power.
Persons who are officers of Dimensional also serve as officers of DFA
Investment Dimensions Group Inc. (the "Fund") and The Investment Trust
Company (the "Trust"), each an open-end management investment company
registered under the Investment Company Act of 1940. In their capacity as
officers of the Fund and the Trust, these persons vote 15,000 additional
shares of Common Stock and 20,330 additional shares of Class B Common Stock
which are owned by the Fund and 700 shares of Common Stock which are owned
by the Trust. Dimensional has sole investment power over such shares.
7
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers, based on salary and bonus earned during fiscal 1994.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------
AWARDS
ANNUAL COMPENSATION -------------------------
--------------------------------------- RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL FISCAL OTHER ANNUAL STOCK UNDERLYING COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARD(S)($) OPTIONS (#) ($)(3)
- - ------------------------------ ------ ---------- --------- ---------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James L. Forbes............... 1994 $291,891 $90,000 $ 52,000(1) 0 0 $2,002
President 1993 280,935 70,000 0(2) 0 0 2,661
1992 268,313 0 85,205 0 0 2,182
William H. Vander Heyden...... 1994 198,784 48,824 0(2) 0 0 2,002
President -- Industrial 1993 191,697 0 0 0 0 2,305
Division 1992 182,794 0 42,603 0 0 1,828
Robert D. Belan............... 1994 159,119 40,380 0 0 0 2,000
President -- Utility 1993 149,170 49,600 0 0 2,500 2,223
Division 1992 137,998 0 0 $20,100(4) 1,800 1,380
Ronald H. Dix................. 1994 124,925 28,154 28,814(1) 0 0 1,674
Vice President Admin. & 1993 118,677 18,700 0 0 2,500 1,668
Human Resources 1992 111,233 0 0 0 0 1,112
William J. Shinners........... 1994 106,841 24,278 28,814(1) 0 0 1,448
Vice President -- Controller 1993 104,177 16,600 0 0 1,500 1,480
1992 98,983 0 0 0 0 1,063
</TABLE>
- - -------------------------
(1) Messrs. Forbes, Dix and Shinners were reimbursed for a portion of their
estimated additional 1994 income taxes as the result of the expiration of
restrictions on stock granted to them in 1986 pursuant to the Company's
Restricted Stock Plan approved by the shareholders in 1984.
(2) In 1992, Messrs. Forbes and Vander Heyden received a reimbursement of the
additional estimated income tax as a result of the expiration of
restrictions on restricted shares issued to them in 1984.
(3) Company contribution to Badger Meter, Inc. Employee Savings and Stock
Ownership Plan (ESSOP).
(4) Mr. Belan holds 2,200 shares of restricted stock at December 31, 1994 with
an aggregate value of $52,525. Dividends are paid on Restricted Stock and
Restricted Stock becomes freely transferable in the event of a change in
control of the Company.
Certain benefits (including social club dues, automobile and legal and
accounting services) were provided through the Company to the executive officers
named in the table above. In 1994, the aggregate amount of such benefits for
each of the executive officers named in the table did not exceed 10% of such
officer's cash compensation.
OPTION GRANTS IN 1994
There were no options to purchase Common Stock granted in 1994 to the five
individuals named in the Summary Compensation Table.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN 1994 AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning the exercise
in 1994 of options to purchase Common Stock by the five individuals named in the
Summary Compensation Table and the unexercised options to purchase Common Stock
held by such individuals at December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT FY-END(#) FY-END($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - ----------------------------- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
James L. Forbes.............. None N/A 2,700/ 0 $18,225/ 0
William H. Vander Heyden..... None N/A 2,700/ 0 $18,225/ 0
Robert D. Belan.............. None N/A 3,533/2,267 $18,582/$12,193
Ronald H. Dix................ None N/A 3,533/1,667 $22,182/$ 7,918
William J. Shinners.......... None N/A 3,200/1,000 $20,600/$ 4,750
</TABLE>
PENSION PLAN TABLE
Based on the assumption that retirement occurs at age 65, the following
table shows the approximate annual retirement benefit for salaried employees
retiring in 1994, based on the benefit formula described below.
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
ANNUAL -------------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- - ------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $17,292 $25,945 $34,594 $43,242 $51,890 $51,890
150,000 21,048 31,578 42,094 52,617 63,140 63,140
175,000 24,888 37,332 49,776 62,220 74,664 74,664
200,000 28,632 42,948 57,264 71,580 85,896 85,896
250,000 31,524 47,286 63,048 78,810 94,572 94,572
300,000 31,524 47,286 63,048 78,810 94,572 94,572
350,000 31,524 47,286 63,048 78,810 94,572 94,572
400,000 31,524 47,286 63,048 78,810 94,572 94,572
450,000 31,524 47,286 63,048 78,810 94,572 94,572
</TABLE>
Average annual compensation covered by the Pension Plan is a participant's
salary and bonus, as shown in the Summary Compensation Table, whether or not
such compensation has been deferred at the participant's election. Under the
Pension Plan, the monthly pension at normal retirement (age 65) for all
executive officers is equal to the sum of nine-tenths percent (0.9%) of the
participant's average monthly compensation (based on the highest 60 months of
the last 120 months compensation) multiplied by the participant's years of
service, not to exceed thirty; and six-tenths percent (0.6%) of the
participant's average monthly compensation in excess of the taxable Social
Security monthly wage base, multiplied by the participant's years of service,
not to exceed thirty. IRS regulations limit the amount of compensation to be
considered in benefit calculations to $150,000. Notwithstanding these
regulations, a participant's benefit would not be reduced below the benefit
earned through December 31, 1993. The unreduced benefit is reflected in the
above table. Benefits become fully vested after five years of credited service.
Benefits listed in the Pension Plan Table are not subject to any deductions for
Social Security or other offset amounts.
All officers of the Company participate in the Pension Plan. The years of
credited service under the Pension Plan for each individual named in the Summary
Compensation Table are as follows: Mr. Forbes (15), Mr. Vander Heyden (32), Mr.
Belan (5), Mr. Dix (13) and Mr. Shinners (23). The current remuneration for
these individuals for purposes of the Pension Plan is set forth in the Summary
Compensation Table.
In 1990, Messrs. Forbes, Vander Heyden, Dix and Shinners agreed to the
cancellation of substantially all of their post-retirement group term life
insurance in exchange for an unfunded supplemental retirement plan. This plan
provides for the payment of 20% of the participant's final monthly salary for
120 months after
9
<PAGE> 12
retirement. Assuming no increase in salary before retirement they would be paid
additional annual pensions of $59,000, $40,000, $24,800 and $21,000,
respectively.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Committee is composed of
four non-employee directors. Following the Committee's review and approval, all
matters related to executive compensation are reported to the full Board of
Directors for approval.
The powers and duties of the Compensation Committee are:
1. To review and approve all forms of compensation and fringe benefits
for all Corporate Officers, except assistant officers;
2. To review recommendations for and granting of stock options and
administer such other compensation and other forms of benefit plans that
may properly come before this Committee in accordance with the respective
plans;
3. To review and approve annually the corporate incentive plan and
incentives to be paid;
4. To review, and recommend to the board, fees and compensation of
non-employee directors for service on the board or its committees or to the
Company in any advisory capacity;
5. To review and approve the information relative to executive
compensation, including the information which appears in the corporation's
annual proxy statement; and
6. To submit to the Corporate Secretary minutes of each meeting held
by the Committee.
The compensation policies which are used as a general guideline for the
Committee as it carries out its powers and duties are:
1. The design of executive pay programs is intended to attract and
retain qualified executive officers, motivate and reward performance;
2. Achievement of annual incentive compensation levels is dependent
upon the attainment of performance goals as approved by the Compensation
Committee;
3. Long-term incentive programs focus on the enhancement of
shareholder value through the use of stock options; and
4. The Committee will use its judgment to achieve a fair and
competitive compensation structure, utilizing both short-term and long-term
plans, with fixed and variable components.
In making its decisions, the Compensation Committee reviews:
1. Competitive compensation data for organizations of similar size and
similar business activity, considering both base salary and bonus data
separately and on a combined basis;
2. Financial performance for the Company as a whole and various
operating units, relative to prior year, the budget and other meaningful
financial data; and
3. Personal performance, including objectives approved by the
Compensation Committee and on a discretionary basis, where appropriate.
The compensation program for the executive officers of the Company involves
base salaries, short-term incentive bonuses and a long-term program using stock
options.
Base Salaries. Salary rate ranges are established for each officer
position. The rate ranges are reviewed annually by the Compensation Committee,
using data supplied by an independent consulting firm on organizations of
similar size and similar business activity. Similar size for 1994 was deemed as
companies with sales between $50 million and $200 million. The companies in the
performance peer group set forth on page 13
10
<PAGE> 13
may or may not be included in the survey, as that performance peer group is
limited to publicly held companies. The compensation survey incorporates all
companies of similar size, including privately held companies, and has a broader
definition of similar business activity, thereby providing the best basis for
evaluating compensation relative to the companies that compete with the Company
for executives. The data includes both salaries and total cash compensation.
This process has been used by the Compensation Committee for the past six years.
Based on a review of the data, the Compensation Committee approved a two percent
increase in the rate ranges for 1995. The Compensation Committee approved a
three percent increase in the rate ranges for 1994 at its December, 1993
meeting. The Company's policy is to pay executives at market, so the midpoint of
the rate range reflects compensation for similar positions in organizations of
similar size and similar business. Each of the individual officers' compensation
falls within the appropriate rate range.
In establishing the compensation of each officer, including the
President/Chief Executive Officer, the Compensation Committee is given a
five-year history, including base salary, short-term incentive awards, and
long-term compensation programs. The Committee is also furnished with a schedule
showing the Common Stock and Class B Common Stock ownership of each officer,
including options and restricted shares.
The base compensation for each employee is established by first determining
the employee's position within the applicable rate range and then considering
various performance factors. For those employees who are managers of an
operating unit, the financial performance of that particular unit, relative to
the prior year, the budget and the current economic condition of the market
being served are considered. Other non-financial objectives examined include any
change in market share, new product development, customer service and the
quality attainment of various products. Because the philosophy of the Company is
one of long-term goals and objectives, greater weight is given to the long-term
factors and lesser weight to the annual financial performance for base
compensation considerations.
The base salary increases approved by the Compensation Committee ranged
from 3.0 to 6.5 percent, with the Chief Executive Officer being granted a 5.1
percent increase, after evaluation of the factors set forth above relative to
each individual's circumstances and performance.
Short-Term Incentive Plan. Under the short-term incentive plan, the maximum
bonus payable is 50 percent of base salary for the President/Chief Executive
Officer and 35-40 percent for the other officers. There are three factors to the
short-term incentive plan. The financial factor, generally 50 percent of the
overall bonus potential, is based on the attainment of a certain earnings per
share threshold established for the Company overall or the particular operating
unit, approved at the beginning of each year by the Compensation Committee. The
second factor, generally 25 percent of the incentive bonus potential, is a set
of objectives for each officer, determined in advance and agreed to by the
Compensation Committee. These objectives are non-financial and include such
things as personnel development, product development, systems enhancements and
compliance programs. The third factor, generally 25 percent of the short-term
incentive bonus plan potential, is discretionary, giving the Compensation
Committee the ability to compensate officers for outstanding individual
performance, other than financial and specific items included in their
objectives. Under the terms of the short-term incentive plan, bonuses cannot be
paid on the objective or discretionary factors unless the minimum goal, for the
overall corporation or for one of the operating units, based on earnings per
share, is met. For 1994, the bonuses for the executive officers range from a low
of 22.5 percent to a high of 30.5 percent. The President/Chief Executive Officer
received a bonus of $90,000.
In determining the individual short-term incentive awards, the financial
factor was based on earnings per share of the corporation or the individual unit
and the objective and discretionary factors were based upon the performance of
the individual executive.
Long-Term Compensation Plans/Stock Option Plans. The long-term compensation
programs, presently consisting of the Company's 1989 Stock Option Plan (the
"1989 Plan") and the 1993 Stock Option Plan (the "1993 Plan"), present an
opportunity for officers to gain equity ownership in the Company. All of the
stock options are granted at the market price on the date of grant. At the
February, 1995 meeting, options were granted to a total of 51 employees other
than the individuals named in the Summary Compensation Table for varying amounts
of 300, 500, 1,500 and 2,500 shares. Mr. Belan and Mr. Dix each received an
option for 2,500 shares in 1995. The options were granted in 1995 and will
therefore be set forth in the Option/SAR Grants
11
<PAGE> 14
Table in the 1995 Proxy Statement. Currently there are 232 employees who have
been granted options, representing in excess of 25 percent of the Company's
employees. The number of options granted to the individuals named in the Summary
Compensation Table was based upon and deemed reasonable in view of the number of
options granted to the other participants. Certain executive officers were not
granted stock options because of their participation in earlier long-term
programs, as reflected on the individual ownership schedule provided to the
Committee.
Section 162(m) Limitations. It is anticipated all 1995 compensation to
executives will be fully deductible under Section 162(m) of the Internal Revenue
Code and therefore the Compensation Committee determined that a policy with
respect to qualifying compensation paid to certain executive officers for
deductibility is not necessary.
The foregoing report has been approved by all members of the Committee.
The Compensation Committee
Donald J. Schuenke, Chairman
Robert M. Hoffer
Edwin P. Wiley
James O. Wright
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Messrs. Schuenke, Hoffer,
Wiley and Wright. Mr. Wiley is a partner in the law firm of Foley & Lardner,
Milwaukee, Wisconsin, which has served as legal counsel to the Company for many
years.
Mr. James O. Wright, Chairman of the Board of the Company, has served as a
consultant to the Company since March 1, 1988. An annually renewable consulting
agreement between Mr. Wright and the Company provides for annual fees, payable
in twelve equal monthly installments, and the use of an automobile, for Mr.
Wright's services. The Company believes that the benefits received by Mr. Wright
represent reasonable compensation for his services. During 1994, Mr. Wright was
paid fees of $204,167.
Mr. Wright, a director of the Company, is also a director of Marshall &
Ilsley Corporation. The Company maintains a short-term credit line of
$15,000,000 with the M&I Marshall & Ilsley Bank, a subsidiary of Marshall &
Ilsley Corporation. During 1994, the maximum indebtedness under this short-term
line of credit was $11,800,000. At March 1, 1995, $5,800,000 was the total
indebtedness to the M&I Marshall & Ilsley Bank. The terms of the Company's
credit lines with the M&I Marshall & Ilsley Bank are comparable to those that
would be obtained from an unaffiliated third party.
12
<PAGE> 15
PERFORMANCE GRAPH
The following graph compares on a cumulative basis the yearly percentage
change since January 1, 1989 in (a) the total shareholder return on the Common
Stock with (b) the total return on the American Stock Exchange Corporate Index
and (c) the total return of a peer group made up of 17 companies in similar
industries and with similar market capitalization as selected by an independent
consulting firm. The graph assumes $100.00 invested on January 1, 1989. It
further assumes the reinvestment of dividends. The returns of each component
company in the peer group have also been weighted based on such company's
relative market capitalization.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN OF COMPANY,
PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) BADGER METER PEER GROUP BROAD MARKET
<S> <C> <C> <C>
1989 100 100 100
1990 73.46 90.25 84.80
1991 84.57 98.33 104.45
1992 99.86 95.76 105.88
1993 112.81 98.57 125.79
1994 145.20 118.75 111.12
</TABLE>
* Peer Group consists of Autoclave Engineers, Inc., Badger Meter, Inc., Bio/Rad
Labs, Candela Laser Corp., CEM Corp., Cimco, Inc., Frequency Electronics,
Innovex, Inc., K-Tron International, Inc., Keithly Instruments, Inc., Laser
Precision Corp., Lasertechnics, Inc., Medar, Inc., Moore Products Company,
Newport Corp., Research Frontiers, Inc. and TSI, Inc. Clinical Data, Inc. has
been omitted from this year's Peer Group because it is no longer a
publicly-held company.
PROPOSED BADGER METER, INC. 1995 STOCK OPTION PLAN
GENERAL
The Board of Directors of the Company has adopted the Badger Meter, Inc.
1995 Stock Option Plan (the "Option Plan") to encourage key employees of the
Company and its subsidiaries to become shareholders or to increase their stock
ownership of the Company. The Option Plan will become effective upon approval by
the affirmative vote of the holders of a majority of the aggregate votes
outstanding on Common Stock and Class B Common Stock of the Company present or
represented at the Meeting (assuming a quorum is present or so represented). It
is intended that certain of the options issued under the Option Plan may
constitute incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the
13
<PAGE> 16
"Code"). The remainder of the options issued under the Option Plan will
constitute nonqualified stock options.
The full text of the Option Plan is set forth as Exhibit A to this Proxy
Statement and this brief description is qualified in its entirety by reference
to the full text of the Option Plan. The Board of Directors of the Company
believes that the Option Plan will promote continuity of management, increased
incentive and personal interest in the welfare of the Company by those who are
primarily responsible for its long-term growth and financial success.
Options may be granted to key employees of the Company and its present and
future subsidiaries. Approximately 250 employees are currently eligible to
participate in the Option Plan.
The Option Plan will be administered by the Compensation Committee of the
Board of Directors (the "Committee") which shall consist of not less than two
directors both of whom at the time they exercise discretion in administering the
Option Plan will not, and for at least one year prior thereto will not have
been, eligible for participation in the Option Plan as employees. The Company's
Board of Directors chooses which directors will serve on the Committee. Subject
to the express provisions of the Option Plan, the Committee has authority to
interpret the Option Plan and make all other determinations necessary or
advisable for the administration of the Option Plan.
The Committee has complete authority, subject to the express provisions of
the Option Plan, to select employees to participate in the Option Plan
("Employees"), and to determine the number of shares subject to each option, the
time at which the option is to be granted, the type of option, the option
period, the option price, and the manner in which the options become
exercisable, and to adopt other provisions as it deems necessary or desirable.
The Option Plan provides for the grant of options representing up to an
aggregate of 100,000 shares of Common Stock, subject to adjustment as discussed
below. If an option granted under the Option Plan expires, is canceled, or
terminates unexercised as to any share of Common Stock subject thereto, or if
shares of Common Stock are used to satisfy the Company's withholding tax
obligations, such shares will again be available for purposes of the Option
Plan. Shares which may be issued under the Option Plan may be authorized but
unissued shares, or shares acquired by the Company and held in its treasury. The
aggregate fair market value of Common Stock with respect to which any incentive
stock options are exercisable for the first time by an optionee during any
calendar year under the Option Plan or any other such plan of the Company shall
not exceed $100,000. Grants of nonqualified stock options are not subject to
this limitation. In the event of any change in the outstanding shares of Common
Stock of the Company by reason of any stock dividend or split, reorganization or
recapitalization, merger, dissolution, combination or exchange of shares or
other similar corporate change, the number of shares of stock subject to the
Option Plan and the aggregate number of shares in outstanding option agreements
shall be equitably adjusted by the Committee.
The option price per share of Common Stock will be fixed by the Committee,
but incentive stock options will not be less than 100% of the fair market value
on the date the option is granted. The Committee will determine the expiration
date of each option, but, in the case of an incentive stock option, such
expiration date will not be later than ten (10) years after the date of grant.
No option shall be assignable or transferable by an optionee except by will or
the laws of descent and may be exercised during the life of the optionee only by
the optionee.
An option may be exercised in full or in part by delivery to the Company at
its principal office of a written notice of exercise specifying the number of
shares with respect to which the option is being exercised. A notice of exercise
will be accompanied by full payment of the option price of the shares being
purchased (a) in cash or its equivalent; (b) with the consent of the Committee,
shares of Common Stock of the Company; or (c) with the consent of the Committee,
any combination of (a) and (b).
The Board of Directors may amend, suspend, or terminate the Option Plan at
any time, except that unless approved by the shareholders, no amendment shall
(i) increase the maximum number of shares issuable under the Option Plan, (ii)
materially increase the benefits to employees under the Option Plan, (iii)
change materially the class of persons eligible to participate in the Option
Plan or (iv) change the number, price,
14
<PAGE> 17
expiration date or make any other material change to the options granted to
directors hereunder. Termination of the Option Plan will not affect the rights
of optionees under options previously granted to them. All unexpired options
will continue until, by their own terms and conditions, they lapse or terminate.
No incentive stock options may be granted after the tenth (10th) anniversary of
the effective date of the Option Plan.
An optionee has no rights as a shareholder with respect to any shares
subject to any option until the date the option has been exercised, the shares
have been fully paid, and a stock certificate has been issued.
No awards have been made to date under the Option Plan. The Company cannot
currently determine the awards that may be granted in the future to key
employees under the Option Plan. Such determinations will be made from time to
time by the Committee. During 1994, no options were granted to directors, named
executive officers or key employees under the Badger Meter, Inc. 1993 Stock
Option Plan (the "1993 Plan") or the Badger Meter, Inc. 1989 Stock Option Plan.
On March 1, 1995, the closing price per share of the Common Stock on the
American Stock Exchange was $22.75.
TAX CONSEQUENCES
Certain options granted under the Option Plan are intended to be "incentive
stock options" as defined in Section 422 of the Code. If an optionee holds the
shares received on exercise of an incentive stock option for at least two years
from the date of grant and one year from the date of exercise, he will recognize
no federal taxable income as a result of exercise and any gain (or loss)
realized by the optionee on the disposition of the stock will be treated as a
long-term capital gain (or loss), and no deduction is allowed to the Company. If
the holding period requirements are not satisfied, the optionee will recognize
ordinary income at the time of disposition equal to the lesser of (i) the gain
realized on the disposition, or (ii) the excess of the fair market value of the
shares on the date of exercise over the exercise price. Any additional gain on
the disposition will be a long-term or short-term capital gain, depending on the
length of time the shares were held. The Company is entitled to a deduction
equal to the amount of ordinary income recognized by the optionee.
Upon exercise of a nonqualified stock option, the excess of the fair market
value of the shares at the time of exercise over the exercise price is taxable
to the optionee as ordinary income. The Company is entitled to a tax deduction
in the same amount at the time income is recognized by the optionee. A
subsequent disposition of the shares will give rise to long-term or short-term
capital gain (or loss), depending on the length of time the shares are held, to
the extent the amount realized from the sale differs from the tax basis, i.e.,
the fair market value of the shares on the date of exercise.
TAX WITHHOLDING
The Company may deduct and withhold from any cash payable to an optionee
such amounts as may be required for the purpose of satisfying the Company's
obligation to withhold federal, state or local taxes as the result of the
exercise of an option. With the consent of the Committee, an optionee may be
permitted to satisfy the Company's withholding tax requirements by electing to
have the Company withhold shares of Common Stock otherwise issuable to the
optionee, or deliver to the Company shares of Common Stock with a fair market
value equal to the amount required to be withheld.
VOTE REQUIRED
A majority of the votes present or represented at the Meeting (assuming a
quorum is present) is required for approval of the Option Plan. The votes
represented by the proxies received will be voted FOR approval of the adoption
of the Option Plan, unless a vote against such approval or to abstain from
voting is specifically indicated on the proxy. Consequently, any shares not
voted at the Meeting, whether due to broker non-votes or otherwise (excluding
abstentions), will have no impact on the outcome of the vote. Shares of Common
Stock and Class B Common Stock as to which holders abstain from voting will be
treated as votes against approval of the 1995 Plan.
15
<PAGE> 18
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY SHAREHOLDERS
VOTE FOR THE ADOPTION OF THE PLAN.
CERTAIN TRANSACTIONS
The Company maintains a short-term credit line of $10,000,000 with Firstar
Bank Milwaukee, N.A. During 1994, the maximum indebtedness under this short-term
line of credit was $5,000,000. At March 1, 1995, $4,975,000 was the total
indebtedness to Firstar Bank Milwaukee, N.A. Mr. Forbes, a director of the
Company, is also a director of Firstar Corporation (the parent corporation of
Firstar Bank Milwaukee, N.A.). The terms of the Company's credit lines with
Firstar Bank Milwaukee, N.A. are comparable to those that would be obtained from
an unaffiliated third party.
The Company maintains a short-term credit line of $15,000,000 with the M&I
Marshall & Ilsley Bank, a subsidiary of Marshall & Ilsley Corporation. During
1994, the maximum indebtedness under this short-term line of credit was
$11,800,000. At March 1, 1995, $5,800,000 was the total indebtedness to the M&I
Marshall & Ilsley Bank. Mr. Wright, a director of the Company, is also a
director of Marshall & Ilsley Corporation. The terms of the Company's credit
lines with the M&I Marshall & Ilsley Bank are comparable to those that would be
obtained from an unaffiliated third party.
Divisions of The Fall River Group supply castings to the Company. During
1994, the Company purchased $9,738,635 of castings from The Fall River Group.
Charles F. Wright, the Chief Executive Officer of The Fall River Group, is a
beneficiary of one of the trusts of which William C. Wright and William H.
Alverson (who each report beneficial ownership of 13.4% of the Company's Class B
Common Stock) are trustees. The amounts paid by the Company for the castings are
at prevailing market rates.
INDEPENDENT AUDITORS
Ernst & Young LLP, the Company's independent auditors for many years, has
been selected to audit the Company and its subsidiaries for 1995.
Representatives of Ernst & Young LLP will be present at the Annual Meeting to
respond to appropriate questions and to make a statement if they desire to do
so.
OTHER MATTERS
The Company has filed an Annual Report on Form 10-K with the Securities and
Exchange Commission for its fiscal year ended December 31, 1994. The Company
will provide a copy of this Form 10-K report without charge to each person who
is a record or beneficial holder of shares of Common Stock or Class B Common
Stock on the record date for the Meeting and who submits a written request for
it. Requests for copies of the Form 10-K should be addressed to Secretary,
Badger Meter, Inc., 4545 West Brown Deer Road, P.O. Box 23099, Milwaukee,
Wisconsin 53223.
The cost of solicitation of proxies will be borne by the Company. Brokers,
nominees and custodians who hold stock in their names and who solicit proxies
from the beneficial owners will be reimbursed by the Company for out-of-pocket
and reasonable clerical expenses.
The Board of Directors does not intend to present at the Meeting any
matters other than those set forth herein and does not presently know of any
other matters that may be presented to the Meeting by others. However, if any
other matters should properly come before the Meeting, it is the intention of
the persons named in the enclosed proxy to vote said proxy on any such matters
in accordance with their best judgment.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors to file reports concerning the ownership of Company
equity securities with the Securities and Exchange Commission and the Company.
Based on the Company's review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that, during the year ended December 31, 1994, its officers and
directors complied with all filing requirements applicable to them, except that
James O. Wright, Jr. inadvertently reported late certain holdings of a family
trust in which
16
<PAGE> 19
he disclaims a beneficial interest and which were required to be reported solely
as a result of his appointment as a co-trustee of the trust.
A shareholder wishing to include a proposal in the proxy statement for the
1996 Annual Meeting of Shareholders must forward the proposal to the Company by
December 5, 1995.
Deirdre C. Elliott
Secretary
April 3, 1995
17
<PAGE> 20
EXHIBIT A
BADGER METER, INC.
1995 STOCK OPTION PLAN
1. PURPOSE
The purpose of the Badger Meter, Inc. 1995 Stock Option Plan (the "Plan")
is to promote the best interests of Badger Meter, Inc. (the "Corporation") and
its shareholders by encouraging key employees of the Corporation and its
subsidiaries to secure or increase on reasonable terms their stock ownership in
the Corporation. The Board of Directors of the Corporation believes the Plan
will promote continuity of management, increased incentive and personal interest
in the welfare of the Corporation by those who are primarily responsible for
shaping and carrying out the long-range plans of the Corporation and its
subsidiaries and securing their continued growth and financial success. It is
intended that certain of the options issued under the Plan may constitute
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code ("Incentive Stock Options") and the remainder of the options issued
under the Plan will constitute non-qualified stock options ("Non-qualified Stock
Options").
2. EFFECTIVE DATE
The Plan shall become effective on the date of adoption by the Board of
Directors of the Corporation (the "Board"), subject to the approval and
ratification of the Plan by the shareholders of the Corporation within twelve
(12) months of the date of adoption by the Board, and all options granted prior
to such shareholder approval shall be subject to such approval.
3. ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee of the
Board (the "Committee") as such Committee may be constituted from time to time.
The Committee shall consist of not less than two members of the Board selected
by the Board, each of whom shall be a "disinterested person" within the meaning
of Rule 16b-3 under the Securities Exchange Act of 1934 ("Exchange Act"), or any
successor rule or regulation thereto. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members. Any decision or determination reduced to writing and
signed by all of the members of the Committee shall be fully effective as if it
had been made by a majority vote at a meeting duly called and held.
(b) Subject to the express provisions of the Plan, the Committee shall have
complete authority to select the key employees to whom options shall be granted,
to determine the number of shares subject to each option, the time at which the
option is to be granted, the type of option, the option period, the option price
and the manner in which options become exercisable, and shall establish such
other terms and conditions of the options as the Committee may deem necessary or
desirable. In making such determinations, the Committee may take into account
the nature of the services rendered by the respective employees, their present
and potential contribution to the success of their respective organizations and
such other factors as the Committee in its discretion shall deem relevant.
Subject to the express provisions of the Plan, the Committee shall also have
complete authority to interpret the Plan, to prescribe, amend and rescind the
rules and regulations relating to it, and to make all other determinations
necessary or advisable for the administration of the Plan. The determinations of
the Committee on the matters referred to in this paragraph 3 shall be
conclusive.
4. ELIGIBILITY
Any key employee ("Employee") of the Corporation or its present and future
subsidiaries, as defined in Section 424(f) of the Code ("Subsidiaries"), whose
judgment, initiative and efforts contribute materially to the successful
performance of the Corporation or its Subsidiaries as determined by the
Committee, shall be eligible to receive options under the Plan.
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5. SHARES SUBJECT TO THE PLAN
The shares which may be issued pursuant to options under the Plan shall be
shares of the Corporation's Common Stock, $1.00 par value ("Stock"), and may be
either authorized and unissued or treasury shares. The total number of shares
for which options may be granted and which may be purchased pursuant to options
under the Plan shall not exceed an aggregate of 100,000 shares, subject to
adjustment as provided in the following sentence and in paragraph 12 hereof. If
an option granted under the Plan expires, is canceled or terminates unexercised
as to any shares of Stock subject thereto, such shares shall again be available
for the granting of additional options under the Plan.
6. OPTION PRICE
The option price per share of Stock shall be fixed by the Committee, but
shall be not less than 50% (100% in the case of Incentive Stock Options) of the
fair market value of the Stock on the date the option is granted. Unless
otherwise determined by the Committee, the "fair market value" of Stock on the
date of grant shall be the closing price for a share of Stock on such date, or,
if such date is not a trading date, the next preceding trading date as quoted on
the American Stock Exchange Transaction Reporting System.
7. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Committee may, from
time to time, grant to Employees options to purchase such number of shares of
Stock and on such terms and conditions as the Committee may determine. More than
one option may be granted to the same Employee. The day on which the Committee
approves the granting of an option shall be considered as the date on which such
option is granted.
8. OPTION PERIOD
The Committee shall determine the expiration date of each option, but in
the case of Incentive Stock Options such expiration date shall be not later than
ten (10) years after the date such option is granted.
9. MAXIMUM PER PARTICIPANT
The aggregate fair market value (determined at the time the option is
granted pursuant to paragraph 7) of the Stock with respect to which any
Incentive Stock Options are exercisable for the first time by an Employee during
any calendar year under the Plan or any other such plan of the Corporation or
any Subsidiary shall not exceed $100,000.
10. EXERCISE OF OPTIONS
An option may be exercised, subject to its terms and conditions and the
terms and conditions of the Plan, in full at any time or in part from time to
time by delivery to the Corporation at its principal office of a written notice
of exercise specifying the number of shares with respect to which the option is
being exercised. Any notice of exercise shall be accompanied by full payment of
the option price of the shares being purchased (a) in cash or its equivalent;
(b) with the consent of the Committee, by delivering to the Corporation shares
of Stock (valued at their fair market value as of the date of exercise, as
determined by the Committee consistent with the method of valuation set forth in
paragraphs 6 and 7); or (c) with the consent of the Committee, by any
combination of (a) and (b).
11. TRANSFERABILITY
To the extent required in order to comply with Rule 16b-3 or unless
otherwise determined by the Committee, no option shall be assignable or
transferable by an Employee other than by will or the laws of descent and
distribution, and may be exercised during the life of the Employee only by the
Employee or his guardian or legal representative.
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12. CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK
In the event of a capital adjustment resulting from a stock dividend, stock
split, reorganization, recapitalization, merger, consolidation, combination or
exchange of shares or the like, the number of shares of Stock subject to the
Plan and the aggregate number, exercise price and class of shares under option
in outstanding option agreements shall be adjusted in a manner consistent with
such capital adjustment; provided, however, that no such adjustment shall
require the Corporation to sell any fractional shares. The determination of the
Committee as to any adjustment shall be final.
13. CORPORATE MERGERS AND OTHER CONSOLIDATIONS
The Committee may also grant options having terms and provisions which vary
from those specified in the Plan provided that any options granted pursuant to
this paragraph are granted in substitution for, or in connection with the
assumption of, existing options granted by another corporation and assumed or
otherwise agreed to be provided for by the Corporation pursuant to or by reason
of a transaction involving a corporate merger, consolidation, acquisition or
other reorganization to which the Corporation is a party.
14. OPTION AGREEMENTS
All options granted under the Plan shall be evidenced by written agreement
(which need not be identical) in such form as the Committee shall determine.
Each option agreement shall specify whether the option granted thereunder is
intended to constitute an Incentive Stock Option or a Non-qualified Stock
Option.
15. TRANSFER RESTRICTIONS
Shares of Stock purchased under the Plan and held by any person who is an
executive officer or director of the Corporation, or who directly or indirectly
controls the Corporation, may not be sold or otherwise disposed of except
pursuant to an effective Registration Statement under the Securities Act of 1933
or except in a transaction which, in the opinion of counsel for the Corporation,
is exempt from registration under such Act. The Committee may waive the
foregoing restrictions in whole or in part in any particular case or cases, or
may terminate such restrictions, whenever the Committee determines that such
restrictions afford no substantial benefit to the Corporation.
16. AMENDMENT OF PLAN
Shareholder approval of any amendment of the Plan shall be obtained if
otherwise required by: (i) the rules and/or regulations promulgated under
Section 16 of the Exchange Act (in order for the Plan to remain qualified under
Rule 16b-3); (ii) the Code or any rules promulgated thereunder (in order to
allow for Incentive Stock Options to be granted under the Plan); or (iii) the
listing requirements of the American Stock Exchange or any principal securities
exchange or market on which the Stock is then traded (in order to maintain the
quotation or listing of the Stock thereon).
17. TERMINATION OF PLAN
The Board shall have the right to suspend or terminate the Plan at any
time; provided, however, that no Incentive Stock Options may be granted after
the tenth (10th) anniversary of the effective date of the Plan as described in
paragraph 2 hereof. Termination of the Plan shall not affect the rights of
Employees under options previously granted to them, and all unexpired options
shall continue in force and operation after termination of the Plan except as
they may lapse or be terminated by their own terms and conditions.
18. TAX WITHHOLDING
(a) The Corporation may deduct and withhold from any cash otherwise payable
to an Employee such amount as may be required for the purpose of satisfying the
Corporation's obligation to withhold federal, state or local taxes as the result
of the exercise of an option. In the event the amount so withheld is
insufficient for such purpose, the Corporation may require that the Employee pay
to the Corporation upon its demand or
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otherwise make arrangements satisfactory to the Corporation for payment of such
amount as may be requested by the Corporation in order to satisfy its obligation
to withhold any such taxes.
(b) With the consent of the Committee, an Employee may be permitted to
satisfy the Corporation's withholding tax requirements by electing to have the
Corporation withhold shares of Stock otherwise issuable to the Employee or to
deliver to the Corporation shares of Stock having a fair market value on the
date income is recognized pursuant to the exercise of an option equal to the
amount required to be withheld. The election shall be made in writing and shall
be made according to such rules and procedures as the Committee may determine,
including, without limitation, such procedures as may be necessary to satisfy
the requirements of Rule 16b-3.
19. RIGHTS AS A SHAREHOLDER
An Employee shall have no rights as a shareholder with respect to any
shares subject to any option until the date the options shall have been
exercised, the shares shall have been fully paid and a stock certificate shall
have been issued.
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PROXY
1995 ANNUAL MEETING OF SHAREHOLDERS
BADGER METER, INC.
The undersigned does hereby constitute and appoint James O. Wright,
James L. Forbes and Deirdre C. Elliott, or any one or more of them, as proxies
for the undersigned at the Annual Meeting of Shareholders of Badger Meter, Inc.
to be held on FRIDAY, April 28, 1995, at the office of the Company, 4545 West
Brown Deer Road, Milwaukee, Wisconsin, at 8:30 a.m., and any adjournments or
postponements thereof, to vote thereat the shares of stock held by the
undersigned as fully and with the same effect as the undersigned might or could
do if personally present at said Meeting or any adjournments or postponements
thereof:
<TABLE>
<S> <C> <C>
1. Election of Directors / / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
JAMES L. FORBES, ROBERT M. HOFFER, CHARLES F. JAMES, JR., DONALD J. SCHUENKE,
WARREN R. STUMPE, EDWIN P. WILEY, JAMES O. WRIGHT AND JAMES O. WRIGHT, JR.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
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2. To adopt the Badger Meter, Inc. 1995 Stock Option Plan,
/ / FOR / / AGAINST / / ABSTAIN
and
3. To transact such other business as may properly come before the meeting,
or any adjournments or postponements thereof,
hereby revoking any other Proxy heretofore executed by the undersigned for such
Meeting. The undersigned acknowledges receipt of the Notice of Annual Meeting
of Shareholders and the Proxy Statement.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
(to be signed on the other side)
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(continued from other side)
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THE PROXY WILL
BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED AND FOR THE ADOPTION OF THE
BADGER METER, INC. 1995 STOCK OPTION PLAN.
<TABLE>
<S> <C>
Dated _____________________________________________________, 1995
Signed __________________________________________________________
(Signature of Shareholder)
Signed __________________________________________________________
(Signature if Jointly Held)
Please sign exactly as your name appears on your stock
certificate as shown directly to the left. Joint owners
should each sign personally. A corporation should sign in
full corporate name by duly authorized officers. When signing
as attorney, executor, administrator, trustee or guardian,
give full title as such.
</TABLE>
PLEASE SIGN AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED.
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