BADGER METER INC, DEF 14A, 1998-04-02

BADGER METER INC
DEF 14A, 1998-04-02
TOTALIZING FLUID METERS & COUNTING DEVICES

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<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:

[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Badger Meter
- -------------------------------------------------------------------------------
(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 (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

LOGO

BADGER METER, INC.

4545 WEST BROWN DEER ROAD
MILWAUKEE, WISCONSIN 53223

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

APRIL 24, 1998

The Annual Meeting of the Shareholders of Badger Meter, Inc. (the
"Company") will be held at THE MILWAUKEE CLUB, 706 North Jefferson Street,
Milwaukee, Wisconsin, 53202, on Friday, April 24, 1998, at 8:30 a.m. local time,
for the following purposes:

1. To approve three proposed amendments to Article Fifth of the
Company's Restated Articles of Incorporation to provide for:

(a) the division of the Board of Directors into three classes having
staggered terms;

(b) limitations on the removal of directors; and

2. To elect ten directors to serve for staggered one-, two- and
three-year terms if the proposed Article Fifth Amendments to the Company's
Restated Articles of Incorporation described at Item 1 above are adopted,
or otherwise to serve for the ensuing year;

3. To approve a proposed amendment to the Company's Restated Articles
of Incorporation to increase the authorized shares of Common Stock from
5,000,000 to 20,000,000 and Class B Common Stock from 5,000,000 to
20,000,000; and

4. 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 February 27, 1998 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

March 27, 1998
<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. local time, Friday, April 24, 1998, at THE MILWAUKEE
CLUB, 706 North Jefferson Street, Milwaukee, Wisconsin 53202, 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 February 27, 1998. As of the record date,
the Company had 2,502,382 shares of Common Stock (the "Common Stock") of the
Company outstanding and entitled to one vote per share, and 1,125,570 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
13,758,082 votes, consisting of 2,502,382 votes represented by outstanding
shares of Common Stock and 11,255,700 votes represented by outstanding shares of
Class B Common Stock. These shares reflect the 2-for-1 stock split effective
April 18, 1997.

This Proxy Statement is being furnished to shareholders of the Company on
or about March 27, 1998.

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 ten 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 ten persons named
below to serve as directors for staggered one-, two- and three-year terms if the
proposed Article Fifth Amendments to the Company's Restated Articles of
Incorporation are adopted, or until their respective successors have been duly
appointed, or until their prior death, resignation or removal.

Listed below are the names of the nominees of the Board of Directors for
the office of director to serve for staggered one-, two- and three-year terms if
the proposed Article Fifth Amendments to the Company's Restated Articles of
Incorporation are adopted or otherwise to serve for the ensuing year, together
with certain additional information concerning each such nominee. The ten
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.

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<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>
CLASS I -- ONE-YEAR TERM:
James L. Forbes........................ 65 Badger Meter, Inc.: President and Chief 1981
President and Chief Executive Officer Executive Officer
Charles F. James, Jr. ................. 66 Milwaukee School of Engineering: Vice 1986
President of Academics. Formerly, University
of Wisconsin -- Milwaukee: Dean of the
College of Engineering and Applied Science.
John J. Stollenwerk.................... 58 Allen-Edmonds Shoe Corporation (a 1996
manufacturer and marketer of shoes): Owner
and President.
James O. Wright, Jr. .................. 52 The Wright Tax Service: Owner. 1978

CLASS II -- TWO-YEAR TERM:
James O. Wright........................ 77 Badger Meter, Inc.: Chairman of the Board. 1948
Chairman of the Board
Robert M. Hoffer....................... 77 WICOR, Inc. (a holding company): Retired 1967
Chairman and Chief Executive Officer.
Wisconsin Gas Company (gas distribution
utility): Retired Chairman and Chief
Executive Officer.
Andrew J. Policano..................... 48 University of Wisconsin: Dean of the School 1997
of Business.
CLASS III -- THREE-YEAR TERM:
Kenneth P. Manning..................... 56 Universal Foods Corporation (an international 1996
marketer of flavors, colors, bioproducts,
yeast & dehydrated vegetables):
President/Chief Executive Officer and
Chairman.
Donald J. Schuenke..................... 69 Northern Telecom Limited (a 1982
telecommunications company): Chairman.
Northwestern Mutual Life Insurance Company:
Retired Chairman and Chief Executive Officer.
Pamela B. Strobel...................... 45 Commonwealth Edison Co. (an electric 1995
utility): Senior Vice President and General
Counsel. Unicom Corp. (parent company of
Commonwealth Edison Co.): Senior Vice
President. Formerly, Sidley & Austin Law
Firm: Partner
</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 665,508
shares of Class B Common Stock. This stock held in the Badger Meter Voting Trust
represents 6,655,080 votes or approximately 48.4% 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 57,786 shares of Common Stock and 314,762
shares of Class B Common Stock as trustees of the Badger Meter Officers' Voting
Trust, for total voting power over 57,786 shares of Common Stock and 980,270
shares of Class B Common Stock, representing 9,860,486 votes or approximately
71.7% 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.

2
<PAGE> 5

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, Journal
Communications, Inc. and United Wisconsin Services, Inc. Mr. Manning is a
director of Universal Foods Corporation, Firstar Corporation and Firstar Trust
Company. Mr. Policano is a director of National Guardian Life Insurance Company.
Mr. Schuenke is a director of A. O. Smith Corporation, Northern Telecom Limited,
Federal Home Loan Mortgage Corporation and Allen-Edmonds Shoe Corporation. Mr.
Stollenwerk is a director of Allen-Edmonds Shoe Corporation, Northwestern Mutual
Life Insurance Company, Firstar Bank Milwaukee, N.A., and Koss Corporation. Mr.
James O. Wright is a director of Marshall & Ilsley Corporation.

COMMITTEES, MEETINGS AND ATTENDANCE

The Board of Directors of the Company had five standing committees during
1997: Audit, Compliance, Employee Benefit Plans, Management Review and
Technology.

The Audit Committee, which met twice in 1997, consists of Messrs. Hoffer
(Chairman), Manning and Policano and Ms. Strobel. 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.

The Management Review Committee, consisting of Messrs. Schuenke (Chairman),
Hoffer, Stollenwerk and Policano, met in January 1997, May 1997, November 1997,
and January 1998. The Management Review Committee reviews and establishes all
forms of compensation for the officers of the Company and administers the
Company's benefit plans including the various stock option plans. The Committee
also reviews the various management development and succession programs. The
Committee selects nominees for the Company's Board of Directors. The Committee
considers nominees for directors recommended by the shareholders but has no
established procedure which must be followed.

The Compliance Committee, which met once in 1997, consists of Ms. Strobel
(Chairman), and Messrs. James 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 Employee Benefit Plans Committee, which met three times in 1997,
consists of Messrs. Wright, Jr. (Chairman), Schuenke and Wright. The Employee
Benefit Plans Committee oversees the administration of the Company's pension
plan, employee savings and stock ownership plan and other retirement plans.

The Technology Committee, which met twice in 1997, consists of Messrs.
James (Chairman), Manning, Stollenwerk 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 1997. All directors attended
at least 75% of the meetings of the Board of Directors and committees on which
they serve.

DIRECTOR COMPENSATION

The president and CEO is an employee of the Company and receives no
compensation as a director. All other directors are compensated as follows:
Directors were compensated at a rate of $1,200 for each Board of Directors
meeting attended and were reimbursed for out-of-pocket travel, lodging and meal
expenses. Directors were paid an additional fee of $750 per month and were
compensated at the rate of $750 for each committee meeting they attended.
Directors were compensated an additional $250 for out-of-town or all-day
meetings.

Effective January 1, 1996, the non-employee directors of the Company
participate in the same long-term incentive plan as certain members of the
management group. Under the terms of the plan, the directors earn cash bonuses
based on the same earnings growth objectives as other participants. The maximum
amount that

3
<PAGE> 6

a director can earn under the long-term incentive plan is $10,000 to $14,000 per
year, depending on date of award.

STOCK OWNERSHIP OF MANAGEMENT AND OTHERS

The following table sets forth, as of February 28, 1997, 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 236,813 shares of Common Stock and 980,270
shares of Class B Common Stock, representing an aggregate of 10,039,513 votes or
approximately 72.2% of the votes represented by the aggregate outstanding shares
of Common Stock and Class B Common Stock, are beneficially 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)

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>
John J. Stollenwerk
Common Stock(1).......... 9,000 4,391 13,391%
0.5
Pamela B. Strobel
Common Stock(1).......... 9,000 2,900 11,900%
0.4
James O. Wright, Jr.
Common Stock(1).......... 9,000 1,950 10,950%
0.4
Class B Common Stock..... 5,600(5) 665,508(5)(6) 665,508%
59.1
Robert D. Belan
Common Stock(1).......... 15,400 4,508(4) 19,908%
0.8
Class B Common Stock..... 18,018(3) 18,018%
1.6
Ronald H. Dix
Common Stock(1).......... 13,000 10,045(4) 58,086(3) 79,351%
3.2
Class B Common Stock..... 22,416(3) 314,762(3) 314,762%
27.9
William H. Vander Heyden
Common Stock(1).......... 5,400 6,094(3)(4) 400 11,894%
0.5
Class B Common Stock..... 49,154(3) 49,154%
4.4
Richard A. Meeusen
Common Stock(1).......... 6,667 1,121(4) 7,788%
0.3
Class B Common Stock..... 10,352(3) 10,352%
0.9
All Directors and Officers
as a Group (17 persons,
including those named
above)
Common Stock(1).......... 134,534 48,128(3)(4) 59,786(3)(5)(6)(7) 236,813%
9.0
Class B Common Stock..... 197,624(3)(5) 980,270(3)(5)(6) 980,270%
87.1
William H. Alverson
780 N. Water Street
Milwaukee, WI 53202
Class B Common Stock..... 90,868(5)(6) 90,868%
8.1
William C. Wright
11740 N. Port
Washington Road
Mequon, WI 53092
Class B Common Stock..... 90,868(5)(6) 90,868%
8.1
</TABLE>

5
<PAGE> 8

- -------------------------
(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 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 February 27, 1998 (2,502,382 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 57,786
shares of Common Stock and 314,762 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 to December 18, 2022 and thereafter for
additional 30-year renewal periods 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 $2,000,000 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 is pledged to the Company to secure the loans.
The Officers'

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<PAGE> 9

Trust holds shares with a value more than sufficient to cover the credit
line. All officers, including the named executive officers, have purchased
Company stock using this credit facility.

Messrs. Wright, Dix and 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 1,480 shares of
Common Stock and 22,416 shares of Class B Common Stock. Mr. Forbes has sole
investment power over 6,720 shares of Common Stock and 83,576 shares of
Class B Common Stock. Messrs. Belan, Meeusen and Vander Heyden have sole
investment power (but no voting power) over 3,218, 952 and 1,970 shares of
Common Stock and 18,018, 10,352 and 49,154 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, 1,080 shares; James L. Forbes, 5,319 shares; Robert D. Belan, 1,290
shares; Ronald H. Dix, 2,705 shares; Richard A. Meeusen 169 shares; William
H. Vander Heyden, 4,124 shares; and all officers as a group (including
Messrs. Wright and Forbes) 15,392 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 665,508 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) 90,868 of
the shares of Class B Common Stock reported as beneficially owned by Mr.
William C. Wright (which includes the 90,868 shares reported as
beneficially owned by William H. Alverson); (b) 407,504 shares of Class B
Common Stock of the shares reported as beneficially owned by James O.
Wright; (c) 214,960 of the shares of Class B Common Stock reported as
beneficially owned by James O. Wright, Jr.; and (d) 336,544 shares of Class
B Common Stock reported as beneficially owned by M&I Trust Company. Mr.
James O. Wright, Jr. has sole investment power over 5,600 shares of Class B
Common Stock held in the Voting Trust.

(6) 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: James O.
Wright, Jr., 214,960 shares of Class B Common Stock; William H. Alverson,
90,868 shares of Class B Common Stock; James O. Wright, 407,504 shares of
Class B Common Stock; William C. Wright, 90,868 shares of Class B Common
Stock; and M&I Trust Company, 192,544 shares of Class B Common Stock. All
of these shares are held in the Voting Trust (see note 5 above).

(7) Includes 2,000 shares of Common Stock over which Mr. Wright has shared
investment power and no voting power.

(8) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 169,700 shares of Badger
Meter, Inc. Common Stock and 58,000 shares of Class B Common Stock as of
December 31, 1997, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional
Fund Advisors, Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.

(9) These securities are held in investment advisory accounts of Heartland
Advisors, Inc. As a result, various persons have the right to receive or
the power to direct the receipt of dividends from, or the

7
<PAGE> 10

proceeds from the sale of, the securities. The interests of one such account,
Heartland Value Fund, a series of Heartland Group, Inc., a registered investment
company, relates to more than 5% of the class.

(10) The number of shares shown includes shares held in one or more employee
benefit plans, where the Marshall & Ilsley Trust Company, as custodian, may
be viewed as having voting or dispositive authority in certain situations
pursuant to Department of Labor regulations or interpretations or federal
case law. Marshall & Ilsley Trust Company disclaims beneficial ownership of
the shares.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain information regarding compensation
earned during each of the Company's last three years by 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 1997.

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
---------------------------
ANNUAL COMPENSATION EARNINGS UNDER
-------------------------------------- LONG-TERM SECURITIES ALL OTHER
NAME AND FISCAL OTHER ANNUAL INCENTIVE PLAN UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ($)(4) OPTIONS(#) ($)(2)
------------------ ------ --------- -------- --------------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James L. Forbes............ 1997 349,387 172,500 0 38,759 8,680 2,375
President and Chief 1996 330,356 163,000 0 33,747 8,680 2,250
Executive Officer 1995 306,647 107,105 0 0 0 2,260
William H. Vander Heyden... 1997 219,099 0 0 24,090 5,768 2,375
President -- Industrial 1996 212,235 59,996 29,558(1) 24,090 5,768 2,250
1995 203,480 0 0 0 0 2,260
Robert D. Belan............ 1997 196,002 75,800 0 20,348 4,872 2,375
President -- Utility 1996 181,574 70,680 0 20,348 4,872 2,250
1995 169,033 57,172 0 0 5,000 2,260
Ronald H. Dix.............. 1997 153,064 52,500 0 15,437 3,696 2,375
Vice President Admin. & 1996 143,235 45,850 0 15,437 3,696 2,250
Human Resources 1995 132,980 30,017 0 0 5,000 2,260
Richard A. Meeusen......... 1997 150,126 50,900 0 15,904 3,808 2,375
Vice President -- Finance, 1996 138,913 44,030 0 15,904 13,808 2,040
Treasurer and Chief 1995 18,569 0 0 0 0 0
Financial Officer(3)
</TABLE>

- -------------------------
(1) In 1996, Mr. Vander Heyden was reimbursed for a portion of his estimated
additional income taxes as the result of the expiration of restrictions on
stock granted to him in 1986 pursuant to the Company's Restricted Stock Plan
approved by the shareholders in 1984.

(2) Company contribution to Badger Meter, Inc. Employee Savings and Stock
Ownership Plan (ESSOP).

(3) Mr. Meeusen's employment with the Company began in November 1995.

(4) During 1996, each of the executive officers named in the table was
designated as a participant under the Company's Long-Term Incentive Plan
("LTIP"). The LTIP provides annual cash bonuses to the named officers and
other members of the management group with respect to a four or five year
performance period. The awards are based upon annual attainment of earnings
objectives for the period 1996 to 2000, as established by the Board of
Directors. Maximum annual payments under this plan are $38,759, $24,090,
$20,348, $15,437 and $15,904 for Messrs. Forbes, Vander Heyden, Belan, Dix
and Meeusen, respectively. A maximum of two more annual payments may be made
under the LTIP for the years 1998 to 2000.

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<PAGE> 11

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 1997, 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 1997

The following table sets forth certain information concerning options to
purchase Common Stock granted in 1997 to the individuals named in the Summary
Compensation Table.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL CURRENT
UNDERLYING OPTIONS PRESENT
OPTIONS GRANTED TO EXERCISE OR VALUE AT
TYPE GRANTED EMPLOYEES IN BASE PRICE EXPIRATION DATE OF
NAME OF OPTION(1) (#) FISCAL YEAR ($/SH) DATE GRANT($)
---- ------------ ---------- ------------ ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
James L. Forbes................ Non-Qual 4,237 2.9% $22.50 5/16/07 $37,879
James L. Forbes................ ISO 4,443 3.0% $22.50 5/16/07 $39,720
William H. Vander Heyden....... Non-Qual 1,325 0.9% $22.50 5/16/07 $11,846
William H. Vander Heyden....... ISO 4,443 3.0% $22.50 5/16/07 $39,720
Robert D. Belan................ Non-Qual 429 0.3% $22.50 5/16/07 $ 3,835
Robert D. Belan................ ISO 4,443 3.0% $22.50 5/16/07 $39,720
Ronald H. Dix.................. ISO 3,696 2.5% $22.50 5/16/07 $33,042
Richard A. Meeusen............. ISO 3,808 2.6% $22.50 5/16/07 $34,044
</TABLE>

- -------------------------
(1) Options identified as "non-qual" are non-qualified stock options for
purposes of the Internal Revenue Code of 1986, as amended. "ISO" options are
incentive stock options and are qualified options for purposes of the Internal
Revenue Code of 1986, as amended. The option base price is the fair market value
of the stock at the time of the grant. Options become exercisable between four
and eight years after date of grant. Termination of employment for any reason
other than death, disability or retirement will result in the cancellation of
the unexercisable options. The term of the options is ten years. The current
present value at date of grant was computed under the Black-Scholes option
pricing model using the following assumptions: risk-free interest rate of 6.5%;
dividend yield of 1%; expected market price volatility factor of 23%; and a
weighted average expected life of seven years.

AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES

The following table sets forth certain information concerning the exercise
in 1997 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, 1997.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FY-END(#) AT FY-END($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
James L. Forbes................ 6,020 $147,648 4,730/12,010 $139,551/$252,899
William H. Vander Heyden....... 1,442 $ 10,635 7,563/7,931 $235,188/$166,641
Robert D. Belan................ 1,218 $ 8,983 15,527/8,399 $480,029/$191,118
Ronald H. Dix.................. 1,524 $ 17,127 13,686/6,782 $421,778/$157,142
Richard A. Meeusen............. 952 $ 7,021 6,428/10,236 $182,395/$251,891
</TABLE>

PENSION PLAN TABLE

The Company maintained a defined benefit pension plan (the "Pension Plan")
covering all domestic salaried employees including the above-named executive
officers. Effective January 1, 1997, the Pension Plan was modified to become a
"cash balance" plan. Under this approach, a participant has an account balance
which is credited each year with dollar amounts equal to 5% of compensation,
plus 2% of compensation in excess of the Social Security wage base. Interest is
credited to the account balance each year at a rate of
9
<PAGE> 12

interest based upon 30-year U.S. Treasury securities. A starting balance was
established for each participant based upon December 31, 1996 accrued benefits
under the prior Pension Plan formula.

Additional annual dollar amounts are credited to the accounts of
participants with Pension Plan participation prior to January 1, 1997. These
additional annual credits are 3% for those with less than 11 years; 4% for those
with 11 to 20 years; and 5% for those with over 20 years. The additional credits
will apply for years after 1996 for each year of continued employment but
limited to the lesser of 15 years or the number of the participant's years of
credited service as of December 31, 1996. At retirement, a participant may elect
a cash payment of the account balance or a life annuity of equivalent value.

Mr. Meeusen is eligible for benefits under the cash balance plan but is not
eligible for benefits under the prior plan's final average pay formula. The
estimated total annual benefit payable to Mr. Meeusen under the cash balance
plan at age 65 is $69,589. This projected benefit was determined assuming no
future increases in pay and interest credited annually to the cash balance
account at a rate of 7%.

The remaining executive officers, because of their ages, are expected to
obtain retirement benefits according to the prior plan's final average pay
formula, which has been retained under the modified Pension Plan as a minimum
benefit for employees who had attained age 50 and completed 10 or more years of
service as of December 31, 1996.

Under the prior formula, 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 30; 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 30.
IRS regulations limit the amount of compensation to be considered in benefit
calculations to $160,000 in 1997, and varying amounts for prior years.
Participants whose compensation is in excess of the IRS limits also participate
in a non-qualified unfunded supplemental retirement plan. Benefits are
calculated to provide the participant the same pension benefits as if there was
no compensation limit.

Based on the assumption that retirement occurs at age 65, the following
table shows the approximate annual retirement benefit payable from either the
funded or unfunded plan to salaried employees retiring in 1997, 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>
$150,000 $20,742 $ 31,113 $ 41,484 $ 51,854 $ 62,225 $ 62,225
175,000 $24,492 $ 36,738 $ 48,984 $ 61,229 $ 73,475 $ 73,475
200,000 $28,242 $ 42,363 $ 56,484 $ 70,604 $ 84,725 $ 84,725
250,000 $35,742 $ 53,613 $ 71,484 $ 89,354 $107,225 $107,225
300,000 $43,242 $ 64,863 $ 86,484 $108,104 $129,725 $129,725
350,000 $50,742 $ 76,113 $101,484 $126,854 $152,225 $152,225
400,000 $58,242 $ 87,363 $116,484 $145,604 $174,725 $174,725
450,000 $65,742 $ 98,613 $131,484 $164,354 $197,225 $197,225
500,000 $73,242 $109,863 $146,484 $183,104 $219,725 $219,725
550,000 $80,742 $121,113 $161,484 $201,854 $242,225 $242,225
</TABLE>

Compensation covered by the Defined Benefit 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.

The above table does not reflect limitations imposed by the Internal
Revenue Code of 1986, as amended (the "Code"), on pensions paid under federal
income tax qualified plans. However, an executive officer covered by the
Company's unfunded program will receive the full pension to which he would be
entitled in the absence of such limitations.

The years of credited service under the Pension Plan for each individual
named in the Summary Compensation Table are as follows: Mr. Forbes (18), Mr.
Vander Heyden (35), Mr. Belan (13) and Mr. Dix (16). The current remuneration
for these individuals for purposes of the Pension Plan is set forth in the
Summary Compensation Table.

10
<PAGE> 13

In 1990, Messrs. Forbes, Vander Heyden and Dix 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 retirement. Assuming no increase in salary before retirement, they would
be paid additional annual pensions of $68,750, $42,900, and $29,800,
respectively. In 1995, Mr. James O. Wright, Chairman of the Board, and Chief
Executive Officer from 1952-1986, was granted a supplemental retirement pension
funded in part by existing life insurance policies. In 1997, Mr. Wright received
$105,000 from this plan. In February of 1998, the company entered into an
unfunded supplemental retirement agreement with Mr. Wright, which provides for
payments of $140,000 per year commencing in March of 2000 for life. Mr. Belan is
entitled to benefits under a non-qualified supplemental retirement plan for five
years of service which he was granted at the time of his employment. The 13
years of credited service under the Pension Plan consists of five years under
the non-qualified supplemental retirement plan and eight years under the
qualified plan. Benefits are calculated to provide Mr. Belan with the same
pension benefits as if all of his credited service was under the qualified plan.

BOARD MANAGEMENT REVIEW COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Company's executive compensation program is administered by the
Management Review 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 their activities are reported to the full Board of
Directors for approval.

The charter of the Management Review Committee, as set forth in the bylaws,
includes the following powers and duties:

1. To recommend candidates to be nominated by the Board of Directors
for election as directors of the Company at the next succeeding Annual
Meeting of Shareholders;

2. To recommend candidates to fill any unexpired term of the Board
which may occur, and to consider nominees recommended by shareholders;

3. To evaluate director performance;

4. To review and consider management's program for the development
and succession of management, including identifying and developing those
individuals who have the character, intelligence, motivation, education,
stamina, and can successfully perform management duties;

5. To recommend candidates to be nominated by the Board of Directors
for election as Corporate officers and to make recommendations to the Board
of Directors on the ratification of the divisional officers;

6. To evaluate the performance of the Corporate officers;

7. To review and approve all forms of compensation and fringe
benefits for all Corporate officers, except assistant officers;

8. To review recommendations and to grant Stock Options in accordance
with their respective plans;

9. To review and approve annually the Corporate Incentive Plans and
incentives to be paid;

10. To review and recommend to the Board fees and compensation,
including incentive compensation, of non-employee directors for service on
the Board or its committees or to the Company in any capacity;

11. To review and recommend to the Board all forms of compensation and
fringe benefits paid to the non-executive chairman; and

12. 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 should attract and retain
qualified executive officers, motivate and reward performance;

11
<PAGE> 14

2. Achievement of annual incentive compensation levels requires
attainment of performance goals as approved by the Management Review
Committee;

3. Long-term incentive programs must focus on the enhancement of
shareholder value through the use of stock options and long-term cash
incentives; and

4. The Committee uses 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 Management Review 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
product lines, relative to prior year, the budget and other meaningful
financial data; and

3. Personal performance, including objectives approved by the
Management Review Committee and on a discretionary basis, where
appropriate.

The compensation program for the executive officers of the Company involves
base salaries, short-term annual cash incentive bonuses and a long-term program
using stock options and cash incentives.

Base Salaries. Salary rate ranges are established for each officer
position. The rate ranges are reviewed annually by the Management Review
Committee, using data supplied by an independent consulting firm, on
organizations of similar size and similar business activity. The companies in
the performance peer group set forth on page 14 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
consistently used by the Management Review Committee for the past 8 years. Based
on a review of the data, the Management Review Committee approved a 4.0 percent
increase in the rate ranges for 1998. The Management Review Committee approved a
3.5 percent increase in the rate ranges for 1997 at its January, 1997 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 Management Review 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 a product
line or a combination of product lines, 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.

All annual salary increases for executive officers are effective February 1
of the current year. Base salary increases for 1998 approved by the Management
Review Committee ranged from 2.5 to 7.4 percent, with the President/Chief
Executive Officer being granted a 7.2 percent increase, after evaluation of the
factors set forth above relative to each individual's circumstances and
performance.

12
<PAGE> 15

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 two factors to the
short-term incentive plan, financial and objective. The financial factor,
generally 25-40 percent of the overall bonus potential, is based on the
attainment of a certain operating earnings threshold established for either the
Company overall or the particular operating unit, approved at the beginning of
each year by the Management Review Committee, and return on assets employed. The
second factor, generally 10 percent of the incentive bonus potential, is a set
of objectives for each officer, determined in advance and agreed to by the
Management Review Committee. These objectives are non-financial and include such
things as personnel development, product development, systems enhancements and
compliance programs. Under the terms of the short-term incentive plan, bonuses
cannot be paid on the objective factor unless the minimum goal, for the overall
corporation or for one of the product lines, based on operating earnings, is
met. For 1997, the bonuses for the executive officers range from a low of zero
to a high of 50.0 percent. The President/Chief Executive Officer received a
bonus of $172,500.

In determining the individual short-term incentive awards, the financial
factor was based on earnings before taxes for some of the corporate officers and
operating earnings of selected product lines for those officers who have
responsibility for these product lines.

For 1998, the short-term incentive plan will still have the same payout
percentages, but the targets will be operating earnings before taxes and return
on assets employed for various corporate officers and operating earnings and
return on assets employed for selected product lines for those officers who have
responsibility for managing these product lines. In all cases, greater weight is
assigned to the financial factor and less weight to the objective factor. The
return on assets employed will be a maximum 5 percent of salary potential for
the plan participants.

Long-Term Incentive Plans/Stock Option Plans. A long-term compensation
program, which includes the Company's 1989 Stock Option Plan (the "1989 Plan"),
the 1993 Stock Option Plan (the "1993 Plan"), the 1995 Stock Option Plan (the
"1995 Plan") and the 1997 Stock Option Plan (the "1997 Plan"), presents an
opportunity for the officers to gain or increase their equity interests in the
Company. All of the stock options are granted at the market price on the date of
grant.

For the year beginning January 1996, the Company established a long-term
incentive plan which was amended in January 1997, whereby members of the
management group could earn bonuses based upon increases in earnings per share
over the prior year. A cash bonus is payable annually for four or five years, if
the annual increase in earnings per share meet the objectives established by the
Board of Directors. During the years, 1996-2000, the maximum annual bonus to be
paid to a participant would be approximately 11.81 percent of his December 31,
1995 base salary. The Committee believes that the long-term incentive plan,
based on increases in earnings per share, ties management compensation to the
shareholders' interest and is reasonable compared to other publicly held
companies of similar size.

At the January 27, 1998 Management Review Committee meeting, no stock
options were granted.

Section 162(m) Limitations. It is anticipated all 1998 compensation to
executives will be fully deductible under Section 162(m) of the Code and
therefore the Management Review 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 Management Review Committee
Donald J. Schuenke, Chairman
Robert M. Hoffer
Andrew J. Policano
John J. Stollenwerk

13
<PAGE> 16

MANAGEMENT REVIEW COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Management Review Committee currently consists of Messrs. Schuenke,
Hoffer, Policano and Stollenwerk. There are no Compensation Committee
interlocks.

PERFORMANCE GRAPH

The following graph compares on a cumulative basis the yearly percentage
change since January 1, 1993 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 14 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, 1993. 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
[LINE GRAPH]
<TABLE>
<CAPTION>
MEASUREMENT
PERIOD
(FISCAL
YEAR BADGER METER PEER GROUP BROAD MARKET
<S> <C> <C> <C>
COVERED) 100.00 100.00 100.00
1993 112.96 105.84 118.81
1994 145.40 130.48 104.95
1995 166.62 175.08 135.28
1996 248.18 235.63 142.74
1997 535.20 255.19 171.76

</TABLE>

* Peer Group consists of Badger Meter, Inc., Bio/Rad Labs, Candela Laser Corp.,
CEM Corp., Frequency Electronics, Innovex, Inc., K-Tron International, Inc.,
Keithly Instruments, Inc., Lasertechnics, Inc., Medar, Inc., Moore Products
Company, Newport Corp., Research Frontiers, Inc. and TSI, Inc.

14
<PAGE> 17

PROPOSED AMENDMENTS TO RESTATED ARTICLES OF INCORPORATION

PROPOSAL TO INCREASE AUTHORIZED COMMON STOCK AND CLASS B COMMON STOCK

Badger Meter, Inc. believes that it is in the best interests of the Company
and its shareholders to provide an adequate supply of authorized and unissued
stock to provide flexibility by allowing shares to be issued without the expense
and delay of a special shareholders' meeting unless it is otherwise required by
law and to provide a supply of authorized but unissued shares which could be
utilized for general corporate purposes, including but not limited to
acquisitions, equity financings, stock dividends, and other stock distributions,
as well as some additional flexibility in risk planning to address attempts to
take control of the Company. Article Third of the Restated Articles of
Incorporation as proposed to be amended is set forth in Appendix A.

The Company believes its current supply of authorized but unissued shares
does not provide the Company with adequate flexibility. On April 18, 1997, the
Company effected a two-for-one stock split in the form of a 100% stock dividend,
thereby doubling the number of shares of Common Stock issued and outstanding. In
addition, as of the Record Date, approximately 600,000 shares of Common Stock
were reserved for issuance pursuant to existing or potential stock options under
the Company's current stock option plans and an additional 164,074 shares of
Common Stock were reserved for distribution pursuant to the ESSOP. Of the
5,000,000 shares of Class B Common Stock presently authorized, 1,125,570 were
issued and outstanding as of the Record Date. Each share of Class B Common Stock
is convertible at the election of the holder thereof into one share of Common
Stock. Accordingly, 1,125,570 shares of Common Stock are currently reserved in
the event of the conversion of all issued and outstanding shares of Class B
Common Stock.

As of the Record Date, there were no understandings, agreements, plans or
commitments legally obligating the Company to issue additional shares of Common
Stock or Class B Common Stock. The proposed increase in the number of shares of
Class B Common Stock is intended to allow the issuance of additional shares of
Class B Common Stock in connection with any stock splits or dividends on the
shares of Common Stock to maintain proportionality with a concurrent increased
number of shares of Common Stock.

VOTE REQUIRED

A majority of the votes present or represented at the Meeting (assuming a
quorum is present) is required for approval of the Authorized Stock Amendment.
The votes represented by the proxies received will be voted FOR approval of the
adoption of the Authorized Stock Amendment, 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 Authorized
Stock Amendment.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY SHAREHOLDERS
VOTE FOR APPROVAL OF THIS AMENDMENT TO THE RESTATED ARTICLES OF INCORPORATION.

PROPOSALS TO AMEND ARTICLE FIFTH

Badger Meter, Inc. believes it is in the best interests of the Company and
its shareholders to promote continuity and stability in the Board of Directors
and thereby reduce the chance of disrupting the Company's strategic plans and
long-term policies. By requiring at least two annual meetings of the
shareholders in order to change the majority control of the Board of Directors,
a majority of the directors at any given time will have prior experience as
directors of the Company. This should have the effect of familiarizing the
directors with the long-term objectives and strategies of the Company, and
allowing the directors to better support management in its focus on the
long-term best interests of the shareholders. Therefore, on February 13, 1998,
the Board of Directors unanimously adopted and recommends that the shareholders
consider and approve

15
<PAGE> 18

three amendments to Article Fifth of the Company's Restated Articles of
Incorporation. These proposed amendments would:

(a) Classify the Board of Directors into three classes, as nearly equal in
number as possible, each of which, after an interim period, will serve
for three years, with one class being elected each year (the
"Classified Board Amendment").

(b) Provide that a director may be removed from office by the shareholders
only for cause (the "Director Removal Amendment").

(c) Provide that Article Fifth can be amended, altered, changed or repealed
only by the affirmative vote of shareholders holding at least seventy
percent (70%) of the voting power of the then outstanding shares of all
classes of capital stock of the Company, considered for this purpose as
a single class (the "Supermajority Vote Amendment").

The Classified Board Amendment, the Director Removal Amendment and the
Supermajority Vote Amendment are sometimes individually referred to herein as an
"Article Fifth Amendment" and are collectively referred to herein as the
"Article Fifth Amendments". Article Fifth of the Restated Articles of
Incorporation as proposed to be amended is set forth in Appendix B. The Company
will not put any of these Article Fifth Amendments into effect unless all of
these Article Fifth Amendments are approved and adopted by Company shareholders.

The Company has Class B Common Stock with 10-to-1 voting power which is
voted primarily by the Wright Family Voting Trust and the Badger Meter Officers'
Voting Trust. Details of the beneficial ownership of the Class B Common Stock
are set forth herein under "Stock Ownership of Management and Others". In light
of the existence of the Class B Common Stock, there is no realistic possibility
today of a hostile takeover of the Company. If, however, the existing voting
control over the Company by the Wright Family Voting Trust and the Badger Meter
Officers' Voting Trust were significantly dissipated (a situation which is not
currently contemplated), the following potential adverse consequences could
result from the adoption of the Article Fifth Amendments.

PROPOSAL TO DIVIDE THE BOARD OF DIRECTORS INTO THREE CLASSES

The Classified Board Amendment may make it difficult to remove one or more
directors not up for election in a given year, who in the opinion of the
shareholders should be removed. In particular, shareholders may be precluded
from replacing a director by simply voting for an alternative candidate at an
annual election, because each director will stand for election only once every
three years. At least two shareholder meetings, instead of one, will be required
to effect a change in control of the Board. Accordingly, a classified Board
limits shareholder participation in determining the management of the Company
and restricts the ability of shareholders to replace directors annually.

The Classified Board Amendment could also have the effect of deterring a
third party from making a takeover proposal and thereby deprive shareholders of
an opportunity to receive a premium over prevailing market prices for the Common
Stock which might otherwise result from such action. Approval of the Classified
Board Amendment will make more difficult or discourage a proxy contest,
assumption of control or removal of an incumbent director even if such result
might be considered by the Board or a majority of holders of Common Stock to be
in their best interests. Accordingly, the Classified Board Amendment could have
the effect of perpetuating the tenure of the Company's present management. The
Board is not aware of any existing or planned effort on the part of any party to
acquire control of the Company by means of a merger, tender offer, solicitation
in opposition to management or otherwise, or to change the Company's management
in any way.

PROPOSAL TO REMOVE DIRECTORS FROM OFFICE ONLY FOR CAUSE

The Company believes that the Classified Board Amendment is desirable
because it will encourage continuity on the Board of Directors. The Director
Removal Amendment restricts the ability of shareholders to remove a director
other than for cause. Under current law, the shareholders can remove a Company
16
<PAGE> 19

director, with or without cause, by the affirmative vote of a majority of the
outstanding shares at a meeting called for that purpose. The protective
provision is not in any way designed to limit or impair the fiduciary duty each
director has to serve the best interests of all shareholders. In light of the
current existing voting control over the Company by the Wright Family Voting
Trust and the Badger Meter Officers' Voting Trust, it is possible that the for
cause requirement may actually serve to better protect the interests of minority
shareholders by making the removal of a dissident director contingent on
establishing cause.

Although the for cause requirement could be adopted through an amendment to
the By-laws of the Company, such a provision would be capable of removal by a
majority vote of the directors. The incorporation of this provision into the
Article Fifth Amendments would require action of shareholders holding at least
seventy percent (70%) of the then outstanding voting power to remove the for
cause requirement. While the Company believes that such a protective provision
is necessary and appropriate to keep the Classified Board Amendment viable, it
does restrict the ability of shareholders to remove a Company director. The
Company believes that this limitation on the ability to remove a director is
necessary to make the Classified Board Amendment effective. In the absence of
the Director Removal Amendment, a hostile acquiror could circumvent the
Classified Board Amendment by removing Company directors without cause. Since
the Board has concluded that it is appropriate to have a classified Board, the
Director Removal Amendment is necessary to make the Classified Board viable.

PROPOSAL TO REQUIRE SEVENTY PERCENT SHAREHOLDER VOTE TO AMEND ARTICLE FIFTH

The Supermajority Vote Amendment is also designed to keep the Classified
Board Amendment viable by limiting the ability of Company shareholders to make
changes in the future to Article Fifth. Without this Supermajority Vote
Amendment, a hostile acquiror could attempt to circumvent the Classified Board
Amendment by seeking to amend the Company's Restated Articles of Incorporation
to amend or remove the classified Board provisions. Although the Supermajority
Vote Amendment does impose a higher threshold for shareholders desiring to amend
Article Fifth in the future, the Company believes that such an amendment is
appropriate in light of the benefits to be derived from the Classified Board
Amendment.

VOTE REQUIRED

A majority of the votes present or represented at the Meeting (assuming a
quorum is present) is required for approval of each of the Classified Board
Amendment, the Director Removal Amendment and the Supermajority Vote Amendment.
The votes represented by the proxies received will be voted FOR approval of the
adoption of each of the Article Fifth Amendments, 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
appropriate Article Fifth Amendment.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY SHAREHOLDERS
VOTE FOR APPROVAL OF THESE AMENDMENTS TO ARTICLE FIFTH OF THE RESTATED ARTICLES
OF INCORPORATION.

CERTAIN TRANSACTIONS

The Company maintains a short-term credit line of $10,000,000 with Firstar
Bank Milwaukee, N.A. During 1997, the maximum indebtedness under this short-term
line of credit was $6,705,000. At February 27, 1998, $700,000 was the total
indebtedness to Firstar Bank Milwaukee, N.A. Mr. Forbes and Mr. Manning are
directors of Firstar Corporation (the parent corporation of Firstar Bank
Milwaukee, N.A.). Mr. Stollenwerk is a director 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 $25,000,000 with the M&I
Marshall & Ilsley Bank, a subsidiary of Marshall & Ilsley Corporation. During
1997, the maximum indebtedness under this short-term

17
<PAGE> 20

line of credit was $9,638,000. At February 27, 1998, $7,879,000 was the total
indebtedness to the M&I Marshall & Ilsley Bank. Mr. James O. Wright is 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
1997, the Company purchased $12,700,000 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 8.1% 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 1998.
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.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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 solely on a review of the copies of such forms furnished to the Company,
or written representations that no Form 5 was required, the Company believes
that, during the year ended December 31, 1997, all reports required by Section
16(a) to be filed by the Company's insiders were filed on a timely basis.

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, 1997. 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.

A shareholder wishing to include a proposal in the proxy statement for the
1999 Annual Meeting of Shareholders must forward the proposal to the Company by
November 24, 1998.

Deirdre C. Elliott
Secretary

March 27, 1998

18
<PAGE> 21

APPENDIX A

ARTICLE THIRD

The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is forty (40) million shares,
consisting of twenty (20) millions shares of a class designated "Common Stock"
having a par value of one dollar ($1.00) per share, and twenty (20) million
shares of a class designated "Class B Common Stock" of a par value of ten cents
($.10) per share. All issued shares of Common Stock, including shares held in
the Treasury of the Corporation, shall continue to be designated Common Stock.

A-1
<PAGE> 22

APPENDIX B

ARTICLE FIFTH

1(a). There shall be a Board of Directors which shall consist of such
number of Directors as shall from time-to-time be specified in the Bylaws but
which shall not be less than three (3). The Directors shall be divided into
three classes, designated Class I, Class II, and Class III, and all classes
shall be as nearly equal in number as possible. The terms of office of the
Directors initially classified shall be as follows: at the 1998 Annual Meeting
of Shareholders, Class I Directors shall be elected for a one-year term expiring
at the next Annual Meeting of Shareholders, Class II Directors shall be elected
for a two-year term expiring at the second succeeding Annual Meeting of
Shareholders, and Class III Directors shall be elected for a three-year term
expiring at the third succeeding Annual Meeting of Shareholders. At each Annual
Meeting of Shareholders after such initial classification, Directors to replace
those whose terms expire at such Annual Meeting shall be elected to hold office
until the third succeeding Annual Meeting. Each Director shall hold office until
the expiration of his term and until his successor is elected and qualified or
until his earlier death, resignation or removal. If the number of Directors is
changed, (a) any newly created directorships or any decrease in directorships
shall be so portioned among the classes as to make all classes as nearly as
equal as possible, and (b) when the number of Directors is increased by the
Board of Directors and any newly created directorships are filled by the Board
of Directors, there shall be no classification of the additional Directors
until, and the terms of the additional Directors shall expire at, the next
Annual Meeting of Shareholders.

1(b). Removal of Directors. A Director may be removed only for cause and
only by the shareholders by the affirmative votes of a majority of the votes
entitled to be cast upon removing him at a meeting called for the purpose of
removing him, and the meeting notice must state that the purpose, or one of the
purposes, of the meeting is removal of the Director and must state the reason or
reasons why the Director is subject to removal.

1(c). Amendments. Notwithstanding any other provision of these Restated
Articles of Incorporation, the provisions of this Article Fifth shall be
amended, altered, changed or repealed only by the affirmative vote of
shareholders holding at least seventy percent (70%) of the voting power of the
then outstanding shares of all classes of capital stock of the Company,
considered for this purpose as a single class.

B-1
<PAGE> 23
PROXY
1998 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 24, 1998, at The Milwaukee Club, 706 North
Jefferson Street, Milwaukee, Wisconsin, at 8:30 a.m. local time, 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:

1. To amend Article Fifth of the Restated Articles of Incorporation to
provide for:
(a) The division of the Board of Directors into three classes
having staggered terms:
[] FOR [] AGAINST [] ABSTAIN

(b) Limitations on the removal of directors; and
[] FOR [] AGAINST [] ABSTAIN

<TABLE>
<S><C>
2. Election of Directors | | FOR all nominees listed below (except | | WITHHOLD AUTHORITY
as marked to the contrary below) to vote for all nominees listed below
</TABLE>

ONE-YEAR TERM: JAMES L. FORBES, CHARLES F. JAMES, JR., JOHN J. STOLLENWERK
AND JAMES O. WRIGHT, JR. TWO-YEAR TERM: JAMES O. WRIGHT, ROBERT M. HOFFER AND
ANDREW J. POLICANO. THREE-YEAR TERM: KENNETH P. MANNING, DONALD J. SCHUENKE AND
PAMELA B. STROBEL.

(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)

- --------------------------------------------------------------------------------

3. To amend the Restated Articles of Incorporation to increase
authorized shares of Common Stock from 5,000,000 to 20,000,000 and Class B
Common Stock from 5,000,000 to 20,000,000;

and

4. 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)

<PAGE> 24

(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 ARTICLE FIFTH
AMENDMENTS AND THE AUTHORIZATION FOR ADDITIONAL SHARES.

Dated , 1998
---------------------

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.

PLEASE SIGN AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED.