<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [_]
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 Section 240.14a-11(c) or Section 240.14a-12
Badger Paper Mills, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Badger Paper Mills, Inc.
- --------------------------------------------------------------------------------
(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 Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 2, 1995
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the stockholders of Badger
Paper Mills, Inc. will be held at the Riverfront Inn, 1821 Riverside Avenue,
Marinette, Wisconsin, on Tuesday, the 2nd day of May, 1995, at 10 a.m. (Central
Daylight Time), for the purpose of:
1. Electing two directors to serve for a term of two years in Class I of the
Board of Directors. Each director elected shall serve for the remaining two
years of the Class I term expiring in 1997, and until his successor is
elected and qualified.
2. Electing two directors to serve for a term of three years in Class II of the
Board of Directors. Each director elected shall serve for the three-year
term expiring in 1998, and until his successor is elected and qualified.
3. Considering and transacting any other business which may properly come
before such meeting or any adjournment thereof.
Stockholders of record at the close of business on March 10, 1995, are entitled
to notice of and to vote at the meeting or any adjournment or adjournments
thereof.
Your attendance at the Annual Meeting is encouraged. In any event, prompt
execution and return of your proxy will assure your representa tion at the
meeting, and minimize the cost of proxy solicitation. Your proxy may be revoked
at any time prior to its exercise by giving notice to the Company in writing or
in open meeting, but without affecting any vote previously taken.
PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THE PROXY IN THE ENCLOSED, RESTAMPED
ENVELOPE.
BY ORDER OF THE
BOARD OF DIRECTORS
Miles L. Kresl, Jr.
Corporate Secretary
March 27, 1995
<PAGE>
PROXY STATEMENT
BADGER PAPER MILLS, INC.
PESHTIGO, WISCONSIN
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is being solicited by and on behalf of the Board of Directors
of Badger Paper Mills, Inc. (Company) for use at the Annual Meeting of
Stockholders to be held May 2, 1995, at the Riverfront Inn, 1821 Riverside
Avenue, Marinette, Wisconsin, or at any adjournment thereof for the purposes set
forth in the foregoing Notice of Annual Meeting of Stockholders.
The Company will bear the cost of solicitation of all proxies. In addition to
the solicitation of proxies by mail, the Company will request brokers, security
dealers and nominees for others to obtain proxies from and send proxy material
to their principals, and will reimburse such persons for their expenses in doing
so. No soliciting material other than the Notice of Annual Meeting, Proxy
Statement and Form of Proxy will be used.
Any stockholder giving a proxy has the power to revoke it at any time prior to
its exercise by giving notice to the Company in writing or in open meeting, but
without affecting any vote previously taken. Shares represented by the proxy
will be voted as specified unless the proxy is revoked, mutilated or received in
such form or at such time as to render it not votable.
A majority of the shares entitled to vote, represented in person or by proxy,
constitutes a quorum. Directors are elected by a plurality of the votes cast by
the holders of the Company's common stock at a meeting at which a quorum is
present. "Plurality" means that the individuals who receive the largest number
of votes are elected as directors up to the maximum number of directors to be
chosen at the meeting. Shares for which authority is withheld to vote for
director nominees are considered shares present and entitled to vote, but are
not counted as votes cast for such directors. A broker or nominee holding
shares registered in its name, or in the name of its nominee, which are
beneficially owned by another person and for which it does not receive
instructions as to vote from the beneficial owners, has the discretion to vote
the beneficial owner's shares with respect to the election of directors. Any
shares not voted, whether by withheld authority or otherwise, have no impact in
the election of directors
Page 2
<PAGE>
except to the extent the failure to vote for an individual results in another
individual receiving a larger number of votes. The inspectors of election
appointed by the Board of Directors shall count the votes and ballots.
This material is being mailed on or about March 27, 1995. The Annual Report to
stockholders for the year ended December 31, 1994, is enclosed, but is not
considered proxy soliciting material.
OUTSTANDING STOCK
There are outstanding 1,956,830 shares of stock at March 10, 1995, all having
voting rights. Each share of outstanding capital stock is entitled to one vote,
and cumulative voting does not pertain to the election of directors.
Only stockholders of record at the close of business March 10, 1995, will be
entitled to vote at the Annual Meeting and all adjournments thereof.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 10, 1995, which is the most recent
practical date, each person or group of persons who is known to the Company to
be the beneficial owner of more than 5% of the Com pany's outstanding common
stock, and about the beneficial ownership of all directors and executive
officers of the Company as a group, and of the prior officer named in the
Summary Compensation Table. See Election of Directors regarding ownership of
stock by other individual directors.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address Beneficial Ownership of Class
---------------- -------------------- ---------
<S> <C> <C>
Walter F. Adrian, Tr. UA 112,000 5.7%
November 1, 1979
Walter F. Adrian
201 Emery Avenue, South
Peshtigo, Wisconsin 54157
Bennie C. Burish 100,948/1/ 5.2%
352 Brown Avenue
Peshtigo, Wisconsin 54157
Edwin A. Meyer, Jr. 391,064/2/ 20.0%
420 Marnie Lane
Peshtigo, Wisconsin 54157
</TABLE>
Page 3
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent
Name and Address Beneficial Ownership of Class
---------------- -------------------- ---------
<S> <C> <C>
James D. Azzar 209,964/3/ 10.7%
Bomarko, Inc.
Extrusions Division, Inc./3/
All directors and
executive officers
as a group (9 persons) 511,172/4/ 26.1%
Robert Strasburg 2,000 0.1%/5/
</TABLE>
/1/Amounts shown do not include 11,500 shares of common stock owned by Donna M.
Burish, Mr. Burish's wife, as to which he disclaims voting and dispositive
powers.
/2/Amounts shown include 45,052 shares of common stock held in the Edwin August
Meyer Trust; Mr. Meyer has voting power as to the shares held in the trust.
Amounts shown also include 50,800 shares owned by Lorraine Meyer, 16,740 shares
owned by Timothy P. Coffey, and 34,960 shares owned by Carol Coffey Sheridan, as
to which Mr. Meyer has voting rights but disclaims beneficial ownership. The
amounts shown do not include 8,312 shares of common stock owned by Gloria L.
Meyer, Mr. Meyer's wife, as to which he disclaims voting and dispositive
powers.
/3/According to a report of beneficial ownership on Form 13D dated March 8,
1995, James D. Azzar ("Azzar"), Bomarko, Inc. ("Bomarko") and Extrusions
Division, Inc. ("EDI") constitute a "group" with respect to the acquisition of
Company common stock. Of the reported shares, 209,864 are owned by Bomarko, and
100 are owned by EDI. Azzar is deemed to beneficially own all of such shares in
his capacity as chairman of the board, chief executive officer and director of,
and investor in, Bomarko, and president, sole director and sole share holder of
EDI. Azzar's address is 201 Cottage Grove, S. E., Grand Rapids, Michigan 49507.
The address of Bomarko's principal office is North Oak Road, P. O. Box K,
Plymouth, Indiana 46563. The address of EDI's principal office is 208 Pioneer
Club Road, East Grand Rapids, Michigan 49506.
/4/A director or executive officer has sole voting and dispositive powers with
respect to 360,920 shares; a director or executive officer has sole voting
rights only with respect to 147,552 shares; and a director or executive officer
has shared voting and dispositive powers with respect to 2,700 shares.
/5/Mr. Strasburg resigned as president and director effective November 15, 1994.
Page 4
<PAGE>
ELECTION OF DIRECTORS
The Company's by-laws provide that the Board of Directors shall be divided into
three classes; the term of each such class shall have regular three-year terms
commencing at the expiration of the respec tive initial terms, and until their
successors are duly elected and qualified. The Board has determined that the
number of directors for the coming year shall be six.
At the 1995 Annual Meeting, two Class I directors and two Class II directors
will be elected. Claude L. Van Hefty was elected to the Board of Directors as a
Class I director by resolution of the Board of Directors on December 19, 1994.
Ralph D. Searles was elected to the Board of Directors as a Class I director by
resolution of the Board of Directors on February 7, 1995. The By-Laws of the
Company provide that Messrs. Van Hefty and Searles must be re-elected by the
share holders to serve the two-year balance of the current Class I term, which
expires in 1997. The Board of Directors has nominated Messrs. Van Hefty and
Searles for such election.
Thomas J. Kuber was elected to the Board of Directors as a Class II director by
resolution of the Board of Directors on February 7, 1995. The By-Laws of the
Company provide that Mr. Kuber must be re-elected by the shareholders to serve
the three-year Class II term, which expires in 1998. The Board of Directors has
nominated Mr. Kuber for such election. The Board of Directors also nominates
for re-election as Class II director Earl R. St. John, Jr., for the three-year
term to expire in 1998. Mr. St. John currently serves as Director of the
Company.
Unless otherwise revoked, proxies received by the Board of Directors with
authority to vote in the election of directors will be voted for the election
for the respective terms of each of the nominees.
Messrs. Van Hefty, Kuber, St. John, and Searles, if elected, have consented to
serve as directors. The Company has no reason to believe that any of them, if
elected, would be unable to serve as a director. Should any of the individuals
unexpectedly become unable to stand as a nominee for director, the proxy will be
voted in accordance with the best judgment of the person acting under it.
Page 5
<PAGE>
<TABLE>
<CAPTION>
Shares of
Stock
First Beneficially
Principal Occupation for Year Owned on
Name Last Five Years Age Elected March 10, 1995
- ---- ----------------------- --- ------- --------------
<S> <C> <C> <C> <C>
Nominees for Director - Class I - Term Expires 1997
- ----------------------------------------------------
Claude L. Van Hefty President of the Company since 56 1994 2,350/1/
November, 1994; previously
Vice President/Fibre Procurement
of the Company, and Vice
President/General Manager of
the Company's former Dayton,
Ohio division; former
Director of Purchases
for the Company
Ralph D. Searles President and CEO, 53 1995 300/2/
Great Northern Corporation,
Appleton, Wisconsin
Nominees for Director - Class II - Term Expires 1998
- -----------------------------------------------------
Earl R. St. John, Jr. Owner & President, Earl 58 1986 11,000/3/
St. John Forest Products, Inc.,
and St. John Trucking, Inc.,
Spalding, Michigan
Thomas J. Kuber President, K&K Warehousing, 54 1995 1,010/4/
Menominee, Michigan;
CEO, Great Lakes Pulp &
Fibre, Inc.,
Menominee, Michigan
Directors who belong to Class III are not up for election at the meeting this
year. However, for stockholders' information, they are as follows:
Directors - Class III - Term Expires 1996
- -----------------------------------------
Bennie C. Burish Retired, Former President 69 1970 100,948/5/
& Chief Operating Officer
of the Company
Edwin A. Meyer, Jr. Chairman of the Board & 68 1958 391,064/6/
Retired Chief Executive
Officer of the Company
</TABLE>
Page 6
<PAGE>
Except as noted under Stock Ownership of Certain Beneficial Owners and
Management above, no director beneficially owns more than 1% of the common stock
of the Company.
/1/Amounts shown include 2,000 shares of common stock owned by Mr. Van Hefty and
Karen J. Van Hefty, his wife, as joint tenants as to which they share voting and
investment powers.
/2/Mr. Searles is president and CEO of Great Northern Corporation from which the
Company purchased corrugated packaging products totaling $171,860 at contracted
prices which are competitive with other manu facturers supplying similar
materials.
/3/Amounts shown include 11,000 shares of common stock held in trust as to which
Mr. St. John has sole voting and dispositive powers. Amounts shown do not
include 11,000 shares of common stock held in trust for the benefit of Rosemary
St. John, Mr. St. John's wife, as to which he disclaims voting and dispositive
powers.
Mr. St. John is the owner and president of Earl St. John Forest Products, Inc.,
from which the Company purchased pulpwood in 1994. See Compensation Committee
Interlocks and Insider Participation.
/4/Mr. Kuber is president of K&K Warehousing to which the Company made payments
in aggregate of $274,702 in 1994. K&K Warehousing provided storage, handling,
pickup and delivery services for raw materials and finished product at
negotiated rates which are competitive with other warehousemen and contract
carriers.
/5/See Note 1 under Stock Ownership of Certain Beneficial Owners and Management.
/6/See Note 2 under Stock Ownership of Certain Beneficial Owners and Management.
BOARD AND COMMITTEE MEETINGS
During the year ended December 31, 1994, the Board of Directors held five
meetings. Each Director attended more than seventy-five percent of the total
number of meetings of the Board and Board committees of which he was a member
during the year, or during the period of member ship when less than the full
year. The Board of Directors has ap pointed executive, compensation and audit
committees. It has no nominating committee.
Page 7
<PAGE>
The audit committee reviews the scope of audits proposed by the independent
public accountants appointed by the Board of Directors, the professional
services performed by such accountants and their independence from management of
the Company. The committee also reviews the annual financial statements of the
Company and such other matters with respect to the accounting, auditing and
financial report ing practices and procedures of the Company as it may find
appropriate or as have been brought to its attention. The members of the audit
committee are Bennie C. Burish, Chairman since October, 1994; Earl St. John,
Jr., and, Edwin A. Meyer, Jr. since December, 1994. Until their resignations
from the Board of Directors in October and December, 1994, Timothy M. Dempsey
and Robert G. Van Dyck also served on the audit committee. The audit committee
met once during 1994.
The compensation committee reviews executive compensation policies and also
recommends from time to time to the Board of Directors compensa tion of the
elected officers of the Company. Its members are Earl R. St. John, Jr.,
Chairman, Bennie C. Burish, and Edwin A. Meyer, Jr. Until his resignation from
the Board of Directors in October, 1994, Timothy M. Dempsey also was a member of
the Compensation committee. The compensation committee met once during 1994.
The executive committee may exercise many of the powers of the Board of
Directors in the management of the business and affairs of the Company in the
intervals between meetings of the Board. While its powers are very broad, in
practice it meets only when it would be impractical to call a meeting of the
Board. The members of the executive committee are Edwin A. Meyer, Jr.,
Chairman; Bennie C. Burish, and Earl R. St. John, Jr. The executive committee
met three times during 1994.
Each Director of the Company receives a $3,000 quarterly retainer while he
serves as Director. Each Director who serves as a member of the executive,
audit or compensation committee will receive $750 for each committee meeting
attended. Directors who are employees of the Company are not paid any fees or
additional remuneration for service as members of the Board or any of its
committees. Please see Execu tive Compensation for certain compensation
arrangements relating to Messrs. Meyer and Burish, as former executive officers
of the Company.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of the Company's
common stock, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers,
Page 8
<PAGE>
directors and greater than 10% shareholders (collectively, "insiders") are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
All publicly-held companies are required to disclose the names of any persons
who fail to make any such filing on a timely basis and the number of delinquent
filings and transactions, based solely on a review of the copies of the Section
16(a) forms furnished to the Company, or written representations that no such
forms were required. On that basis, the Company believes that for fiscal 1994
the Company's insiders have complied with all Section 16(a) filing requirements
applicable to them.
REPORT OF COMPENSATION COMMITTEE ON
ANNUAL EXECUTIVE MANAGEMENT COMPENSATION
Executive officer compensation is established through recommendations of the
compensation committee of the board of directors. The commit tee meets as
necessary to review with the president the performance of executive officers of
the Company, and without him in the evaluation of his services. The committee
recommends executive compensation to the board of directors, which then makes
its decisions as to such matters after review and deliberation. The committee
also is respon sible for establishing and administering policies which govern
incen tives. In addition to the persons named below, Timothy M. Dempsey served
as a member of the compensation committee until his resignation from the
Company's Board of Directors in October, 1994.
The philosophy of the compensation committee with respect to executive officer
compensation is to position base salaries conservatively low in relation to
perceived comparable market compensation. The commit tee makes a review of
compensation for companies perceived by the committee to be similar, based on
available public information. The companies included in that review are not
necessarily the same as the companies included in the "peer group index" used in
the following performance graph. The committee then establishes base salaries
for the various executive officer positions based on what the committee
perceives to be the low range of salaries for positions which, in the
committee's judgment, are comparable in responsibilities and function.
The committee last increased base salaries in 1992. Because of the Company's
subsequent performance, the committee decided that base salaries would not be
increased in either 1993 or 1994, and that increased compensation, if any, would
need to be paid in the form of bonuses resulting from Company performance.
Page 9
<PAGE>
Balancing performance incentives are provided on the basis of current profitable
Company performance. Historically, a substantial portion of executive officer
compensation has been paid as bonus or incentive compensation. As a result of
the Company's losses during 1993 and 1994, no bonuses have been paid in either
year. Therefore, except for one increase to one executive officer resulting
from a substantial increase in his duties, executive compensation during 1993
and 1994 has been substantially reduced from compensation levels which were paid
for in 1992.
Because the stock of the Company is not actively traded, broad-based incentives
based upon stock ownership (such as stock option plans) generally have not been
recommended by the committee or adopted by the board of directors. As indicated
below, in selected circumstances exceptions were made for individuals,
particularly if they were new to the Company and did not own Company shares,
such as in the case of the Company's previous chief executive officer.
The Company experienced a change in chief executive officers during 1994.
Robert Strasburg resigned as chief executive officer in Novem ber, 1994, and was
replaced by Claude L. Van Hefty, who previously was the Company's Vice
President/Fibre Procurement.
Mr. Robert Strasburg was employed as of February 1, 1993. His salary was
originally negotiated at an annual rate of $150,000. Mr. Strasburg was employed
as a result of an executive search conducted on behalf of the board of
directors. His salary and incentive compensa tion were negotiated with
consideration to compensation the committee believed, on the basis of published
information, was provided to persons similarly employed in the pulp and paper
industry. The companies included in this review were not necessarily the same
as those included in the peer group index. As a result of the salary freeze in
1994, Mr. Strasburg's 1994 salary remained at $150,000.
If operations had been profitable, Mr. Strasburg would have been eligible for a
bonus for 1994, to be determined in the discretion of the board of directors.
Because there were no Company profits prior to Mr. Strasburg's resignation, no
such bonus was paid.
As noted above, incentive compensation based upon stock ownership in the Company
has not been an integral part of executive officer compen sation. From time to
time, however, it has been considered to be important to the initial employment
and retention of executives. Upon his employment, Mr. Strasburg was granted
1,000 shares of common stock of the Company to vest ratably on February 1, 1994
and February 1, 1995. Upon Mr. Strasburg's resignation from the Company, 500 of
those shares were vested and 500 reverted to the Company. The committee had
committed (subject to Mr. Strasburg's continued employment) to make an
Page 10
<PAGE>
additional grant of 10,000 shares of restricted common stock in 1995; however,
Mr. Strasburg's resignation terminated the commitment. The compensation
committee believed that these grants of restricted stock were important elements
of compensation intended to link the interests of Mr. Strasburg and those of the
shareholders at the earliest oppor tunity in the long-term success of the
Company.
During the summer of 1994, Mr. Strasburg requested, and the committee (and
entire board) agreed to a new Key Executive Employment and Severance Agreement
(the "Severance Agreement") for Mr. Strasburg. The Severance Agreement was
intended primarily to provide Mr. Strasburg with protection in the event of a
future change of control of the Company. The Severance Agreement did not
mandate any particu lar level of compensation prior to such a change in control
and did not restrict either party's ability to end the employment relation ship.
The committee felt that the agreement was appropriate to attempt to provide some
stability to the Company during a period of financial difficulty without
reducing the Company's options prior to any change in control. See Executive
Compensation -- Employment Agreement.
Mr. Strasburg resigned as an officer and director of the Company in November,
1994. In connection therewith, the committee, and the Board, believed it was
appropriate to enter into an agreement to continue certain benefits and salary
payments to Mr. Strasburg for a transition period, as part of the settlement and
termination of any employment-related obligations of the Company to Mr.
Strasburg.
Mr. Van Hefty became chief executive officer of the Company in Novem ber, 1994.
Mr. Van Hefty has been employed by the Company for over 25 years, and had served
since 1993 as the Company's Vice President/Fibre Procurement. Therefore, almost
all of the compensation paid to Mr. Van Hefty during 1994 was determined and
paid prior to his becoming chief executive officer. Mr. Van Hefty's
compensation until November was determined in the same manner as the Company's
other executive officers, as provided above. In view of his substantial
increase in his responsibilities, the Board agreed that the initial annual
salary for Mr. Van Hefty in the new position of chief executive officer would be
at the same level as had been provided to Mr. Strasburg. Because of his
existing stock ownership in the Company, Mr. Van Hefty was not offered any
stock-based compensation. Mr. Van Hefty was not paid any bonus for 1994 because
of the Company's loss for the year.
Because of its current compensation structure, the committee believes that the
Company is unlikely that it will be affected by the provi sions of the 1993
Federal Tax Act, which limits the deductibility of executive compensation in
excess of one million dollars per year. The committee intends to monitor this
matter.
Page 11
<PAGE>
Compensation Committee: Earl R. St. John, Jr., Chairman; Bennie C. Burish;
Edwin A. Meyer, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Burish and Meyer became members of the compensation committee in July
and October, 1993, respectively. Mr. Meyer retired as the Company's Chief
Executive Officer on March 31, 1993, but continues as the Chairman of the Board
of Directors. Mr. Burish retired as the Company's President in May 1991, but
served as Interim President from August, 1992 to February, 1993. The law firm
of Timothy M. Dempsey, a former member of the compensation committee, had served
as counsel to the Company for many years. The Company purchases pulpwood from a
company owned by Mr. St. John. In 1994, the amount of such purchases was
$80,718. The purchases were under contracts issued by Badger Paper Mills, Inc.,
in accordance with its published pulpwood price lists. See Note 2 to the table
under Election of Directors.
EXECUTIVE COMPENSATION
The following table summarizes cash compensation of the Company's chief
executive officer and former chief executive officer, for the year ended
December 31, 1994. No other executive officer of the Company received annual
cash compensation exceeding $100,000 for that period.
<TABLE>
<CAPTION>
===================================================================================================
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
===================================================================================================
AWARDS
OTHER -----------
ANNUAL RESTRICTED ALL OTHER
COMPEN- STOCK COMPEN-
NAME AND SALARY BONUS SATION/1/ AWARDS SATION/1,4/
PRINCIPAL POSITION YEAR ($) ($) ($) ($) ($)
===================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Claude L. Van Hefty 1994 $ 81,394 - - - $ 5,409
President since 11/15/94
- ---------------------------------------------------------------------------------------------------
Robert Strasburg 1994 $148,889 - - - $29,482
Former Chief Executive Officer/ ------------------------------------------------------------------
President/Treasurer/2/ 1993 $137,500 - - $16,750/3/ $ 8,696
===================================================================================================
</TABLE>
/1/The aggregate amount of such compensation for the indicated persons was less
than 10% of the total salary and bonus reported for the named executive officer
in the summary cash compensation table in each year.
/2/Mr. Strasburg resigned as an officer and director of the Company on November
15, 1994.
Page 12
<PAGE>
/3/Represents the difference between the price paid and the most re cently
reporting market closing sale price on the day of purchase of 1,000 shares of
the Company's common stock. The shares were restricted upon purchase; Mr.
Strasburg became vested in 500 shares on February 1, 1994, but forfeited the
remaining 500 shares upon his resignation. The market value of such shares was
$4,625 at December 31, 1994.
/4/Includes the Company's contractual plan contribution on the named executive
officers to the Company's Profit Sharing Trust for Non-Union Employees in the
following amounts: Mr. Strasburg, $9,487 for 1994 and $8,986 for 1993; Mr. Van
Hefty, $4,088 for 1994. Also includes $10,750 paid to Mr. Strasburg in 1994 as
severance pay in connection with the agreement entered between Mr. Strasburg and
the Company. See Employment Agreements.
EMPLOYMENT AGREEMENTS
- ---------------------
In connection with his employment in 1993 as president, the Company entered into
an employment agreement with Mr. Strasburg. The employ ment agreement was not
for any set term. Under the agreement, Mr. Strasburg's annual salary was set at
$150,000. The agreement provides for incentive compensation for 1993 equal to
1.25% of the Company's pre-tax profits, before contributions to profit sharing
trust, with a minimum of 10% of Mr. Strasburg's salary and other W-2 income, and
a maximum of 30% (Mr. Strasburg waived his bonus for 1993.) Subse quently, the
bonus amount was to be set by the Board of Directors. The agreement also
provided for the sale of 1,000 restricted shares of Company common stock to Mr.
Strasburg at $1.00 per share, and provided for the issuance of 10,000 shares of
restricted stock on Mr. Strasburg's second anniversary of employment. The
employment agree ment also provided for Mr. Strasburg's election as a director
of the corporation and reimbursement of certain moving and other expenses.
In August, 1994, the Company and Mr. Strasburg entered into a Key Executive
Employment and Severance Agreement. The Severance Agreement was motivated in
part by Mr. Strasburg's desire to provide more certainty in view of the
Company's continuing losses, and concerns over his position in the event the
Company were to be acquired. Under the Severance Agreement, in the event of
specified changes in control of the Company, Mr. Strasburg would have been
entitled to continuation of his salary for up to three years in the event of
certain termina tions or resignations with cause. The Severance Agreement did
not mandate any particular salary, bonus or benefit level prior to a change in
control.
The employment arrangements with Mr. Strasburg were terminated as a result of
his resignation in November, 1994. As part of an agreement
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<PAGE>
in connection with that resignation, the Company agreed to continue payment of
Mr. Strasburg's base salary, and medical and dental bene fits, through April 30,
1995. Additionally, the Company agreed to pay the difference between such
amounts and any amounts actually paid to Mr. Strasburg in a new position (if
any) for the period May 1, 1995 through July 31, 1995. Such payments were
intended to settle any employment-related obligations of the Company with
respect to Mr. Strasburg.
In January, 1995, the Company and Mr. Van Hefty entered into an Executive
Employment Agreement. The Executive Employment Agreement was motivated by Mr.
Van Hefty's and the Board's desire to provide with certainty and continuity for
the Company in the event the Company were to be acquired. Under the Executive
Employment Agreement, in the event of specified changes in control of the
Company, Mr. Van Hefty would be entitled to continuation of his salary for up to
three years in the event of certain terminations or resignations. The Executive
Employment Agreement does not mandate any particular salary, bonus or benefit
level prior to a change in control, and does not restrict the Company's ability
to terminate Mr. Van Hefty prior to a change in control.
AGREEMENTS WITH RETIRED EXECUTIVE OFFICERS WHO ARE DIRECTORS
In October, 1990, the Board of Directors adopted a Supplemental Executive
Retirement Plan (the "SERP"). The SERP provides additional benefits to
executive employees designated by the board of directors, which include Messrs.
Meyer and Burish. Under the SERP, a participant acquires the right upon
retirement to benefits, payable on a monthly basis for 120 months, which will be
equal to $50,000 on an annual basis. In the event of death of a participant
after retirement, but before payment of benefits in full, his or her spouse
acquires the right to receive the monthly benefits which would have been paid to
the participant had he or she not died. The amounts calculated under the SERP
are not subject to any reduction for Social Security and are not determined
primarily by final compensation or by average final compensation and years of
service.
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total returns for
the Company, the Standard & Poor's 500 Stock Index (S&P 500), and a Peer Group
Index. The Peer Group Index selected by the Company is the S&P Paper & Forestry
Products Index.
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COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG BADGER PAPER MILLS, S&P 500 INDEX AND PEER GROUP
<CAPTION>
Measurement Period BADGER S&P
(Fiscal Year Covered) PAPER MILLS 500 INDEX PEER GROUP
- ------------------- ----------- --------- ----------
<S> <C> <C> <C>
Measurement Pt-
01/01/89 $100.00 $100.00 $100.00
FYE 12/31/90 $ 70.13 $ 96.90 $ 90.34
FYE 12/31/91 $122.85 $126.42 $114.59
FYE 12/31/92 $ 79.71 $136.05 $131.02
FYE 12/31/93 $ 58.24 $149.76 $144.40
FYE 12/31/94 $ 45.85 $151.74 $150.46
</TABLE>
Assumes $100 invested on January 1, 1989 in each of the Company's common stock,
S&P 500, and the Peer Group. Total return assumes reinvestment of dividends.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The independent accounting firm of Coopers & Lybrand has served as auditors for
the Company since 1944. It is anticipated that a representative of Coopers &
Lybrand will be present at the Annual Meeting.
SUBMISSION OF STOCKHOLDERS' PROPOSALS
Any stockholder entitled to submit proposals to be considered at the next annual
meeting of stockholders shall be a record or beneficial owner of at least 1% or
$1,000 in market value of the Company's common stock at the time the proposal is
submitted, shall have held said stock for at least one year, and shall continue
to own said stock through the date on which the annual meeting is held.
Properly submitted proposals to be presented in the Company's Proxy Statement
for such meeting must be delivered in writing to the Badger Paper Mills, Inc.,
200 West Front Street, Peshtigo, Wisconsin 54157, no later than December 1,
1995.
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OTHER MATTERS
The receipt of any report which may be submitted to the meeting is not to
constitute approval or disapproval of any of the matters referred to in such
report or reports.
The management is not aware of any other matters which may be pre sented at the
Annual Meeting, other than the election of directors, but if other matters do
properly come before the meeting, it is intended that the proxyholders will vote
in respect thereof in accor dance with their judgment in the interest of the
Company, and in accordance with the Company's by-laws.
BY ORDER OF THE BOARD OF DIRECTORS
Miles L. Kresl, Jr., Corporate Secretary
March 27, 1995
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY.
A copy of the Company's annual report on Form 10-K to the Securities and
Exchange Commission (without exhibits) for the fiscal year ended December 31,
1994 will be provided without charge upon written request to:
Badger Paper Mills, Inc.
Office of the Secretary
P. O. Box 149
Peshtigo, Wisconsin 54157-0149
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<PAGE>
BADGER PAPER MILLS, INC.
Peshtigo, Wisconsin 54157
PROXY
This proxy is solicited on behalf of the board of directors.
The undersigned hereby appoints Edwin A. Meyer, Jr. and Bennie C. Burish, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of Badger Paper Mills, Inc., held on record by the undersigned on March
10, 1995, at the annual meeting of stockholders to be held May 2, 1995 or any
adjournment thereof.
1. ____ FOR all nominees listed below ____ WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below). listed below.
(INSTRUCTION: TO WITHHOLD AUTHORITY to vote for any individual nominee, strike a
line through the nominee's name listed below.)
CLASS I: CLASS II:
____ Ralph D. Searles ____ Thomas J. Kuber
____ Claude L. Van Hefty ____ Earl R. St. John, Jr.
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
The proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted FOR Item 1.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized
person.
____ Please check here if you plan to attend the annual meeting in person.
Dated ____________, 1995 ___________________________________________________
Signature
___________________________________________________
Signature, if held jointly
Please mark, sign, date and promptly return the proxy card, using the enclosed
envelope.
