SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(3)(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)
___________________________________
(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>
BADGER PAPER MILLS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 13, 1997
To the Shareholders of Badger Paper Mills, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Badger
Paper Mills, Inc. will be held on Tuesday, May 13, 1997, at 10:00 a.m.,
local time, at the Best Western Riverfront Inn, 1821 Riverside Ave.,
Marinette, Wisconsin, for the following purposes:
1. To elect two directors to hold office until the 2000 annual meeting
of shareholders and until their successors are duly elected and
qualified.
2. To consider and act on a shareholder proposal from a group of
shareholders controlled by James D. Azzar (the "Azzar Group") to
establish a committee of directors for the purpose of engaging an
investment banking firm and to facilitate and promote a sale or
merger of the company.
3. To consider and act on any other business as may properly come before
the meeting or any adjournment or postponement thereof.
The close of business on March 25, 1997, has been fixed as the record date
(the "Record Date") for the determination of shareholders entitled to
notice of, and to vote at, the meeting and any adjournment or postponement
thereof.
A proxy for the meeting and a proxy statement are enclosed herewith.
By Order of the Board of Directors
BADGER PAPER MILLS, INC.
/s/ Miles L. Kresl, Jr.
Miles L. Kresl, Jr.
Corporate Secretary
Peshtigo, Wisconsin
April 7, 1997
YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
TO ASSURE REPRESENTATION AT THE MEETING, PLEASE DATE THE ENCLOSED PROXY,
WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, SIGN EXACTLY HOW YOUR NAME
APPEARS THEREON AND RETURN IMMEDIATELY.
<PAGE>
BADGER PAPER MILLS, INC.
200 West Front Street
Peshtigo, Wisconsin 54157-0149
PROXY STATEMENT
For
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 13, 1997
This proxy statement is being furnished to shareholders by the
Board of Directors (the "Board") of Badger Paper Mills, Inc. (the
"Company") beginning on or about April 8, 1997, in connection with a
solicitation of proxies by the Board for use at the Annual Meeting of
Shareholders to be held on Tuesday, May 13, 1997, at 10:00 a.m., local
time, at the Best Western Riverfront Inn, 1821 Riverside Ave., Marinette,
Wisconsin, and all adjournments or postponements thereof (the "Annual
Meeting"), for the purposes set forth in the attached Notice of Annual
Meeting of Shareholders.
Execution of a proxy given in response to this solicitation will
not affect a shareholder's right to attend the Annual Meeting and to vote
in person. Presence at the Annual Meeting of a shareholder who has signed
a proxy does not in itself revoke a proxy. Any shareholder giving a proxy
may revoke it at any time before it is exercised by giving notice thereof
to the Company in writing at or before the Annual Meeting.
A proxy, in the enclosed form, which is properly executed, duly
returned to the Company and not revoked will be voted in accordance with
the instructions contained therein. The shares represented by executed
but unmarked proxies will be voted (i) "FOR" the two persons nominated for
election as directors referred to herein, (ii) "AGAINST" the shareholder
proposal to establish a committee of directors for the purpose of engaging
an investment banking firm and to facilitate and promote a sale or merger
of the Company and (iii) on such other business or matters which may
properly come before the Annual Meeting in accordance with the best
judgment of the persons named as proxies in the enclosed form of proxy.
Other than the election of directors and the shareholder proposal, the
Board has no knowledge of any other matters to be presented for action by
the shareholders at the Annual Meeting.
Only holders of record of the Company's common stock, no par
value (the "Common Stock"), as of the close of business on March 25, 1997,
are entitled to vote at the Annual Meeting. On that date, the Company had
outstanding and entitled to vote 1,945,430 shares of Common Stock, each of
which is entitled to one vote per share.
ELECTION OF DIRECTORS
The Company's By-Laws provide that the directors shall be
divided into three classes, with staggered terms of three years each. At
the Annual Meeting, the shareholders will elect two directors to hold
office until the 2000 annual meeting of shareholders and until their
successors are duly elected and qualified. Unless shareholders otherwise
specify, shares represented by the proxies received will be voted in favor
of the election as directors of the two persons named as nominees herein.
The Board has no reason to believe that any of the listed nominees will be
unable or unwilling to serve as a director if elected. However, in the
event that any nominee should be unable to serve or for good cause will
not serve, the shares represented by proxies received will be voted for
another nominee selected by the Board. Directors will be elected by a
plurality of the votes cast at the Annual Meeting (assuming a quorum is
present). Consequently, any shares not voted at the Annual Meeting,
whether due to abstentions, broker non-votes or otherwise, will have no
impact on the election of directors. Votes will be tabulated by
inspectors of election appointed by the Board.
Bennie C. Burish and Edwin A. Meyer, Jr., members of the Board
of the Company since 1970 and 1958, respectively, and retired executive
officers of the Company, retired from the Board effective March 1, 1997.
James L. Kemerling was appointed by the Board to fill one of the vacancies
created in Class III by such retirements for the remainder of the Class
III term, which expires in 1999. The Board subsequently reduced the
number of directors to five persons; the four continuing directors and Mr.
Kemerling.
The following sets forth certain information, as of March 25,
1997, about the Board's nominees for election at the Annual Meeting and
each director of the Company whose term will continue after the Annual
Meeting.
Nominees for Election at the Annual Meeting
Class I, Terms expiring at the 2000 Annual Meeting
Claude L. Van Hefty, 58, has served on the Board of the Company since
1994. Mr. Van Hefty has served the Company as Chief Executive Officer
since December 1995 and as President since November 1994. Prior thereto,
Mr. Van Hefty served the Company as Vice President-Fibre Procurement, Vice
President and General Manager of the Company's former Dayton, Ohio
division and Director of Purchases.
Ralph D. Searles, 55, has served as a director of the Company since 1995.
Mr. Searles has been President and Chief Executive Officer of Great
Northern Corporation located in Appleton, Wisconsin, since 1991.
THE BOARD RECOMMENDS THE FOREGOING NOMINEES FOR ELECTION AS DIRECTORS AND
URGES EACH SHAREHOLDER TO VOTE "FOR" BOTH NOMINEES. SHARES OF COMMON
STOCK REPRESENTED BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED "FOR"
BOTH NOMINEES.
Directors Continuing in Office
Class II, Terms expiring at the 1998 Annual Meeting
Earl R. St. John, Jr., 60, has served as a director of the Company since
1986. Mr. St. John has been President of St. John Forest Products, Inc.
and St. John Trucking, Inc., both of which are located in Spalding,
Michigan, since 1962, and is the owner of both companies.
Thomas J. Kuber, 56, has served as a director of the Company since 1995.
Mr. Kuber has been President of K&K Warehousing located in Menominee,
Michigan since 1973, and the Chief Executive Officer of Great Lakes Pulp &
Fibre, Inc., also located in Menominee, Michigan, since 1993.
Class III, Term expiring at the 1999 Annual Meeting
James L. Kemerling, 57, has served as a director of the Company since
March 1997. Mr. Kemerling is a consultant based in Wausau, Wisconsin, and
was Chairman, President and Chief Executive Officer of The Specialty
Packaging Group, Inc., from 1994 to 1996. Mr. Kemerling was President and
Chief Executive Officer of Shade/Allied Inc. from 1990 to 1994. Mr.
Kemerling is also a director of WPS Resources Corporation, a public
utility holding corporation based in Green Bay, Wisconsin.
BOARD OF DIRECTORS
General
The Board has standing Audit, Executive and Compensation
Committees. Mr. Burish and Mr. Meyer were members of each committee prior
to their retirements in March 1997.
The Audit Committee is responsible for reviewing (i) the scope
of annual audit activities, (ii) professional services performed by
auditors approved by the Board and (iii) the independence of such
auditors. The Audit Committee also reviews the annual financial
statements of the Company and such other matters with respect to the
accounting, auditing and financial reporting practices and procedures of
the Company as it may find appropriate or as have been brought to its
attention. Earl R. St. John, Jr. and Ralph D. Searles were members of the
Audit Committee in 1996. The Audit Committee held three meetings in 1996.
James L. Kemerling and Thomas J. Kuber became members of the Audit
Committee in March 1997.
The Compensation Committee reviews executive compensation
policies and also recommends from time to time to the Board compensation
of the elected officers of the Company. Earl R. St. John, Jr. and Thomas
J. Kuber were members of the Compensation Committee in 1996. The
Compensation Committee held two meetings in 1996. James L. Kemerling and
Ralph D. Searles became members of the Compensation Committee in March
1997.
The Executive Committee may exercise many of the powers of the
Board 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. Earl R. St. John, Jr., Ralph D. Searles and Thomas J. Kuber
were members of the Executive Committee in 1996. The Executive Committee
held three meetings in 1996. James L. Kemerling was appointed to the
Executive Committee in March 1997.
The Board has no nominating committee. The Board selects the
director nominees to stand for election at the Company's annual meetings
of shareholders and to fill vacancies occurring on the Board. The Board
will consider nominees recommended by shareholders, but has no established
procedures which shareholders must follow to make a recommendation.
The Board held 13 meetings in 1996. Each director attended at
least 75% of the aggregate of the total meetings held by the Board and the
total meetings held by all committees on which each such director served
during 1996.
Director Compensation
Directors who are employees of the Company receive no
compensation as such for service as members of either the Board or
committees thereof. In 1997, directors who are not employees of the
Company will receive a quarterly retainer payable in Company Common Stock
with a market value of $3,000 and a fee payable in Company Common Stock
with a market value of $750 for each committee meeting attended.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of March 25, 1997 by: (i) each
director and nominee; (ii) the executive officer named in the Summary
Compensation Table set forth below; (iii) all of the directors, nominees
and executive officers (including the executive officer named in the
Summary Compensation Table) as a group; and (iv) each person or other
entity known by the Company to own beneficially more than 5% of the class
of Common Stock. Except as otherwise indicated in the footnotes, each of
the holders listed below has sole voting and investment power over the
shares beneficially owned.
Shares of Percent of
Common Stock Common Stock
Name of Beneficial Owner Beneficially Owned Beneficially Owned
Earl R. St. John, Jr.,
Director. . . . . . . . . . . 11,000(1) *
Claude L. Van Hefty, Jr.,
President and Chief Executive
Officer . . . . . . . . . . 4,350(2) *
Thomas J. Kuber, Director . . . 1,010 *
James L. Kemerling, Director . 1,000 *
Ralph D. Searles, Director . . 800 *
All directors, nominees and
executive officers as a group
(9 persons) . . . . . . . . 28,538(3) 1.5%
Edwin A. Meyer, Jr. . . . . . . 360,074(4) 18.5%
James D. Azzar . . . . . . . . 276,864(5) 14.2%
Walter F. Adrian . . . . . . . 112,000(6) 5.8%
Bennie C. Burish . . . . . . . 101,048(7) 5.2%
____________________________
*Denotes less than 1%.
(1) Amounts shown include 11,000 shares of Common Stock held in trust as
to which Mr. St. John has sole voting and dispositive power. 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 power.
(2) Amounts shown include 2,000 shares of Common Stock owned by Mr. Van
Hefty and Karen J. Van Hefty, Mr. Van Hefty's wife, as joint tenants
as to which they share voting and investment power.
(3) In the aggregate, directors and executive officers have sole voting
and dispositive power with respect to 24,038 shares and in the
aggregate, directors and executive officers have shared voting and
dispositive power with respect to 4,500 shares.
(4) Amounts shown include 49,766 shares owned by Lorraine Meyer, and
21,744 shares owned by Carol Coffey Sheridan, as to which Mr. Meyer
has voting rights but disclaims beneficial ownership. The amounts
shown do not include 9,512 shares of Common Stock owned by Gloria L.
Meyer, Mr. Meyer's wife, as to which he disclaims voting and
dispositive power.
(5) According to a report of beneficial ownership on an amended Schedule
13D dated December 10, 1996, James D. Azzar ("Azzar"), Bomarko, Inc.
("Bomarko") and Extrusions Division, Inc. ("EDI") (collectively
referred to as the "Azzar Group") constitute a "group" with respect
to the acquisition of Common Stock. Of the reported shares, 276,664
are owned by Bomarko, and 200 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 shareholder of EDI.
Azzar's address is 208 Pioneer Club Road, East, Grand Rapids,
Michigan 49506. 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.
(6) The share amount listed is from the Schedule 13G dated April 17, 1995
filed with the Securities and Exchange Commission and the Company.
Mr. Adrian's address is 201 Emery Avenue, South, Peshtigo, Wisconsin
54157.
(7) Amounts shown do not include 11,550 shares of Common Stock owned by
Donna M. Burish, Mr. Burish's wife, as to which he disclaims voting
and dispositive power.
CERTAIN TRANSACTIONS
Mr. Searles is president and chief executive officer of Great
Northern Corporation from which the Company purchased corrugated packaging
products totaling $143,200 in 1996 at contracted prices that were
competitive with other manufacturers supplying similar materials.
Mr. Kuber is president of K&K Warehousing to which the Company
made payments in aggregate of $32,000 in 1996. K&K Warehousing provided
storage, handling, pickup and delivery services for raw materials and
finished product at negotiated rates which were competitive with other
warehousemen and contract carriers.
EXECUTIVE COMPENSATION
Summary Compensation Information
The following table sets forth certain information concerning
the compensation earned in each of the last three fiscal years by Mr. Van
Hefty, the Company's President and Chief Executive Officer. No other
Company executive officer earned over $100,000 in the fiscal year ended
December 31, 1996. The person named in the table are sometimes referred
to herein as the "named executive officer."
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
Other Securities Long-Term
Annual Underlying Incentive
Name and Compensa- Stock Compensation All Other (2)
Principal Position Year Salary($) Bonus($) tion($)(1) Options(#) Payouts($) Compensation($)
<S> <C> <C> <C> <C> <C> <C> <C>
Claude L. Van Hefty 1996 $185,096 - -- -- -- $31,068
President and Chief 1995 165,189 $45,000 -- -- -- 28,128
Executive Officer 1994 81,394 -- -- -- 11,909
_______________
(1) The aggregate amount of such compensation for the indicated person
was less than 10% of the total salary and bonus reported for the
named executive officer in the Summary Compensation Table in each
year.
(2) Consists of (a) life insurance premiums paid by the Company in the
amount of $6,500, $18,576 and $21,576 for Mr. Van Hefty in 1994, 1995
and 1996, respectively, and (b) payments made by the Company under
the Company's Profit Sharing Plan and Trust for Non-Union Employees
in the amount of $5,409, $9,552 and $9,492 to Mr. Van Hefty in 1994,
1995 and 1996, respectively.
</TABLE>
Agreements with the Named Executive Officers
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 certainty
and continuity for the Company in the event of a change in control of the
Company. Under the Executive Employment Agreement, Mr. Van Hefty is
entitled to continuation of his salary for up to three years in the event
of the termination of his employment with the Company under certain
circumstances following a change in control covered by the Executive
Employment Agreement. 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.
Report on Executive Compensation
Executive officer compensation is established through
recommendations of the Compensation Committee of the Board. The
Compensation Committee 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 Compensation Committee recommends
executive compensation to the Board, which then makes its decisions as to
such matters after review and deliberation. The Compensation Committee
also is responsible for establishing and administering policies which
govern incentives.
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
Compensation Committee makes a review of compensation for companies
perceived by the Compensation 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 S&P Paper & Forestry
Products Index used in the following performance graph. The Compensation
Committee then establishes base salaries for the various executive officer
positions based on what the Compensation Committee perceives to be the low
range of salaries for positions which, in the Compensation Committee's
judgment, are comparable in responsibilities and function.
Section 162(m) Limitation. It is anticipated that all 1997
compensation to executives will be fully deductible under Section 162(m)
of the Internal Revenue Code and therefore the Compensation Committee
determined that a policy with respect to qualifying the compensation paid
to executive officers for deductibility is not necessary.
BADGER PAPER MILLS, INC.
COMPENSATION COMMITTEE
James L. Kemerling
Thomas J. Kuber
Earl R. St. John, Jr.
Ralph D. Searles
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Burish and Meyer served as members of the Compensation
Committee until their retirement as directors in March 1997, and 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, and as the Chairman of the Board in March 1997. Mr.
Burish retired as the Company's President in May 1991, and served as
interim President from August 1992 to February 1993.
PERFORMANCE INFORMATION
The following graph compares on a cumulative basis changes
during the past five years in (a) the total shareholder return on the
Common Stock with (b) the total return on the Standard & Poor's 500 Stock
Index (the "Standard & Poor's Index") and (c) the total return on the S&P
Paper & Forestry Products Index (the "PF Products Index"). Such changes
have been measured by dividing (a) the sum of (i) the amount of dividends
for the measurement period, assuming dividend reinvestment, and (ii) the
difference between the price per share at the end of and the beginning of
the measurement period, by (b) the price per share at the beginning of the
measurement period. The graph assumes $100 was invested on January 1,
1991 in Common Stock, the Standard & Poor's Index and the PF Products
Index.
<TABLE>
[Stock Performance Graph]
<CAPTION>
December 31, December 31, December 31, December 31, December 31, December 31,
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Badger Paper Mills, Inc. $100 $ 65 $ 47 $ 37 $ 81 $ 34
PF Products Index 100 114 126 131 145 160
Standard & Poor's Index 100 108 118 120 165 203
</TABLE>
SHAREHOLDER PROPOSAL
Shareholder Proposal and Shareholder Statement in Support of Proposal
Extrusions Division, Inc., 208 Pioneer Club Road, East Grand
Rapids, Michigan, Bomarko, Inc., North Oak Road, Post Office Box K,
Plymouth, Indiana and James D. Azzar, 208 Pioneer Club Road, East Grand
Rapids, Michigan, have notified the Company that they intend to present
the following proposal at the Annual Meeting:
"SHAREHOLDER PROPOSAL
RESOLVED, that the shareholders of Badger Paper Mills,
Inc. (the "Company"), believing that the value of their
investment in the Company can best be maximized through the
immediate sale or merger of the Company, hereby urge the board
of directors to establish a committee of directors who are not
current or former officers or employees of the Company for the
purpose of engaging an investment banking firm, facilitating and
promoting a sale or merger of the Company or a sale of
substantially all of its assets, reviewing and negotiating any
sale or merger of the Company, and making a recommendation to
the board of directors with respect to any such proposal.
SHAREHOLDER SUPPORTING STATEMENT
This shareholder proposal is submitted by Bomarko,
Inc., Extrusions Division, Inc. and James D. Azzar (the
"Shareholders.") The Shareholders are substantial investors in
the Company, owning over 14% of its shares.
The Shareholders believe that the stock price
performance of the Company and its future prospects have been
adversely affected by poor management and questionable strategic
decisions. Recent decisions of the board of directors to sell
timberlands, close a pulp mill, and terminate a sizeable portion
of the Company's work force have, the shareholders believe,
deprived the Company of significant intrinsic value. The
Company's losses are draining the Company of its remaining value
at a rapid rate. The Shareholders question the Company's
continuing ability to profitably sell it's products in a highly
competitive commodity market. The Company's poor stock price
performance is dramatically illustrated by the five year
cumulative total shareholder return performance chart contained
in the Company's 1996 proxy statement.
The Shareholders believe that these poor results are
tolerated in part because half of the Company's directors are
current or former officers of the Company and the other half of
the Company's directors are affiliated with concerns which do
business with the Company. The Company does not have a
nominating committee composed of independent directors for the
purpose of finding independent and qualified individuals to
serve on the board.
Consequently, the Shareholders believe that a sale or
merger of the Company or a sale of substantially all of its
assets offers the most likely means by which the value of the
Company could be realized, free of the constraining effects of
current management. Accordingly, the Shareholders believe that
the Company should hire an investment banking firm and initiate
other steps necessary to achieve a sale or merger of the Company
as promptly as possible.
The Shareholders believe that the longer it takes the
management to implement the sale of the Company, the lower the
price we will receive for our shares due to the extremely high
rate of losses being realized.
The Shareholders recommend that all shareholders vote
"For" this proposal. If management opposes this proposal and
you want to vote in favor of the recommendation, you must mark
the "For" box on the proxy card next to the proposal.
Please vote "For" this proposal and help yourself and
your fellow shareholders realize the value of their investment
in the Company."
Board's Statement of Position
THE BOARD UNANIMOUSLY RECOMMENDS THAT COMPANY SHAREHOLDERS VOTE
"AGAINST" THIS SHAREHOLDER PROPOSAL. The Board has already embarked on an
ongoing strategic review process focused on the long-term success of the
Company and maximizing shareholder value. As part of this strategic
planning process, the Company retained Paine Webber, Inc. in early 1996,
to provide investment banking advice and created a committee of the Board
to work with Paine Webber, Inc. to evaluate various strategic options,
including a possible sale of the Company. The Company had previously
retained Grant Thornton LLP in the fall of 1995 to assist in strategic
planning and evaluation of strategic options.
The Board believes that based upon the actions taken by the
Board and the Company to date, the shareholder proposal is moot; the Board
has already created a committee to review strategic options, has already
engaged an investment banking firm and is already in the process of
reviewing strategic alternatives, including a possible sale of the
Company. Since the Company has already taken the actions proposed by the
Azzar Group, the Board urges you to vote "AGAINST" this shareholder
proposal.
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"AGAINST" THIS SHAREHOLDER PROPOSAL. IF THIS PROPOSAL IS PRESENTED AT THE
ANNUAL MEETING, SHARES OF COMMON STOCK REPRESENTED BY EXECUTED BUT
UNMARKED PROXIES WILL BE VOTED "AGAINST" THE PROPOSAL.
Vote Required
The number of votes cast "FOR" this shareholder proposal must
exceed the number of votes cast "AGAINST" this shareholder proposal to
approve this shareholder proposal. Consequently, abstentions and broker
nonvotes will have no impact on the approval or disapproval of the
proposal.
MISCELLANEOUS
Independent Auditors
Coopers & Lybrand L.L.P. acted as the independent auditors for
the Company in 1996. Representatives of Coopers & Lybrand L.L.P. are
expected to be present at the Annual Meeting with the opportunity to make
a statement if they so desire. Such representatives are also expected to
be available to respond to appropriate questions.
Shareholder Proposals
Any shareholder entitled to submit proposals to be considered at
the 1997 annual meeting shall be a record or beneficial owner of at least
1% or $1,000 in market value of Common Stock at the time the proposal is
submitted, shall have held said Common Stock for at least one year, and
shall continue to own said Common Stock through the date on which the
annual meeting is held. Proposals which shareholders of the Company
intend to present at and have included in the Company's proxy statement
for the 1998 annual meeting must be received by the Company by the close
of business on December 8, 1997.
Other Matters
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers to file reports concerning
their ownership of Company equity securities with the Securities and
Exchange Commission and the Company. Based solely upon information
provided to the Company by individual directors and executive officers,
the Company believes that during the fiscal year ended December 31, 1996,
all its directors and executive officers complied with the Section 16(a)
filing requirements.
The cost of soliciting proxies will be borne by the Company. In
addition to soliciting proxies by mail, proxies may be solicited
personally and by telephone by certain officers and regular employees of
the Company. The Company will reimburse brokers and other nominees for
their reasonable expenses in communicating with the persons for whom they
hold Common Stock.
By Order of the Board of Directors
BADGER PAPER MILLS, INC.
/s/ Miles L. Kresl, Jr.
Miles L. Kresl, Jr.
Corporate Secretary
April 7, 1997
<PAGE>
BADGER PAPER MILLS, INC. PROXY THIS PROXY IS SOLICITED
Peshtigo, Wisconsin 54147 ON BEHALF OF THE
BOARD OF DIRECTORS.
The undersigned hereby appoints Claude L. Van Hefty and Mark D. 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 of record by the
undersigned on March 25, 1997, at the 1997 annual meeting of shareholders
to be held May 13, 1997, and any adjournment or postponement thereof.
1. ELECTION OF DIRECTORS.
[__] FOR all nominees listed [__] WITHHOLD authority
below (except as marked to vote for all nominees
to the contrary below). listed below.
CLAUDE L. VAN HEFTY and RALPH D. SEARLES
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW).
_______________________________________________
2. SHAREHOLDER PROPOSAL TO CREATE BOARD COMMITTEE.
[__] AGAINST [__] FOR [__] ABSTAIN
3. 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 SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE TWO SPECIFIED DIRECTOR NOMINEES IN ITEM 1,
"AGAINST" THE SHAREHOLDER PROPOSAL IN ITEM 2, AND ON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING IN ACCORDANCE WITH THE BEST
JUDGMENT OF THE PROXIES NAMED HEREIN.
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 ______________________, 1997 ________________________________
Signature
Please mark, sign, date, and promptly ________________________________
return the proxy card, using the Signature, if held jointly
enclosed envelope.
