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)(1) 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 12, 1998
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 12, 1998, 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 2001 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, if such proposal is presented at the meeting.
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 24, 1998, 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.
Mark D. Burish
Assistant Secretary
Peshtigo, Wisconsin
April 8, 1998
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 12, 1998
This proxy statement is being furnished to shareholders by the
Board of Directors (the "Board") of Badger Paper Mills, Inc. (the
"Company" or "Badger") beginning on or about April 9, 1998, in connection
with a solicitation of proxies by the Board for use at the Annual Meeting
of Shareholders to be held on Tuesday, May 12, 1998, 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 24, 1998,
are entitled to vote at the Annual Meeting. On that date, the Company had
outstanding and entitled to vote 1,951,855 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 2001 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.
Claude L. Van Hefty, the Company's former President and Chief
Executive Officer and a former director of the Company, retired from the
Company and the Board on March 12, 1998. The Board has named Harvey Buek
as Interim President and is currently engaged in a search for a new
President and Chief Executive Officer. It is likely that such new
President and Chief Executive Officer will be appointed to fill the
vacancy in Class I of the Board created by Mr. Van Hefty's retirement.
The following sets forth certain information, as of March 24,
1998, 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 II, Terms expiring at the 2001 Annual Meeting
Thomas J. Kuber, 57, has served as a director of the Company since 1995
and Chairman of the Board of Directors since October 1997. Mr. Kuber has
been President of K&K Warehousing located in Menominee, Michigan since
1973, and was Chief Executive Officer of Great Lakes Pulp & Fibre, Inc.,
also located in Menominee, Michigan, from 1993 through September 1997.
John R. Peterson, 41, was appointed to the Board of Directors in October
1997 to fulfill the term of Earl R. St. John, who retired from the Board
in September 1997. Mr. Peterson has been a Managing Director of Cleary
Gull Reiland & McDevitt, Inc., Milwaukee, Wisconsin since 1995. From 1982
to 1994, he practiced corporate law at Godfrey & Kahn, S.C.
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 III, Term expiring at the 1999 Annual Meeting
Mark D. Burish, 44, was appointed to the Board of Directors in May 1997.
Mr. Burish has been President of the Madison, Wisconsin law firm of
Hurley, Burish & Milliken, S.C., the Company's outside counsel, since
1984. Mr. Burish is the son of Bennie C. Burish, a former President and
director of the Company, who retired from the Board in 1997.
James L. Kemerling, 58, 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 was President and Chief Executive Officer of Mosinee Paper
Corporation from 1984 to 1988. Mr. Kemerling is also a director of WPS
Resources Corporation, a public utility holding corporation based in Green
Bay, Wisconsin.
Class I, Term expiring at the 2000 Annual Meeting
Ralph D. Searles, 56, 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.
BOARD OF DIRECTORS
General
The Board had standing Audit, Executive and Compensation
Committees in 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. The Audit Committee held one meeting in 1997. John R.
Peterson (Chairman) and Ralph D. Searles are the members of the Audit
Committee.
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. The Compensation Committee held
two meetings in 1997. Mark D. Burish (Chairman) and James L. Kemerling
are the members of the Compensation Committee.
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. Ralph D. Searles, Mark D. Burish, John R. Peterson and
James L. Kemerling were members of the Executive Committee in 1997. The
Executive Committee held two meetings in 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 nine meetings in 1997. During 1997 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.
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. Directors who are not employees of the Company
receive a quarterly retainer payable in Common Stock with a market value
of $3,000.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of March 24, 1998 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.
Percent of
Shares of Common Stock
Common Stock Beneficially
Name of Beneficial Owner Beneficially Owned Owned
Mark D. Burish, Director . . 14,249(1) *
James L. Kemerling,
Director . . . . . . . . . . 2,469 *
Thomas J. Kuber, Director
and Chairman of the Board . 22,679 1.2%
John R. Peterson, Director . 1,266 *
Ralph D. Searles, Director . 2,269 *
All directors, nominees and
executive officers as a
group (8 persons) . . . . . 46,066(2) 2.4%
Edwin A. Meyer, Jr. . . . . . 337,074(3) 17.3%
James D. Azzar . . . . . . . 276,864(4) 14.2%
Walter F. Adrian . . . . . . 112,000(5) 5.7%
Bennie C. Burish . . . . . . 101,048(6) 5.2%
____________________________
*Denotes less than 1%.
(1) Includes 1,000 shares owned by Mr. Burish's spouse and 400 shares
owned by Mr. Burish's minor children. Mr. Burish disclaims
beneficial ownership of such shares.
(2) In the aggregate, directors and executive officers have sole voting
and dispositive power with respect to 42,406 shares and in the
aggregate, directors and executive officers have shared voting and
dispositive power with respect to 2,300 shares.
(3) Amounts shown include 55,510 shares as to which Mr. Meyer has voting
rights but disclaims beneficial ownership. Mr. Meyer's address is
7255 Cortland Circle, Egg Harbor, Wisconsin 54209.
(4) According to a report of beneficial ownership on an amended Schedule
13D dated February 18, 1998, 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.
(5) 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.
(6) The share amount listed is from the Schedule 13G dated April 26, 1995
filed with the Securities and Exchange Commission and the Company.
Mr. Burish's address is 352 Brown Avenue, Peshtigo, Wisconsin 54157.
CERTAIN TRANSACTIONS
Mr. Searles, a director of the Company, is president and chief
executive officer of Great Northern Corporation from which the Company
purchased corrugated packaging products totaling approximately $121,000 in
1997 at contracted prices that were competitive with other manufacturers
supplying similar materials.
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 former President and Chief Executive Officer who
retired from the Company in March 1998, and Michael J. Bekes, the
Company's Vice President and Chief Operating Officer, the only other
executive officer that earned over $100,000 in combined salary and bonus
for the fiscal year ended December 31, 1997. The Board of Directors is
currently engaged in a search for a new President and Chief Executive
Officer. The persons named in the table are sometimes referred to herein
as the "named executive officers."
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
Other Securities Long-Term
Annual Underlying Incentive
Name and Compensa- Stock Compensation All Other (2)
Principal Position Year Salary($) Bonus($) tion($)(1) Options(#) Payouts($) Compensation($)
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Bekes 1997 $133,000 -- -- -- -- $19,000
Vice President and 1996 84,570 -- $28,392 -- -- 10,496
Chief Operating
Officer
Claude L. Van Hefty 1997 $175,000 -- -- -- -- $29,019
Former President and 1996 185,096 -- -- -- -- 41,164
Chief Executive 1995 165,189 $45,000 -- -- -- 37,359
Officer
_______________
(1) Except as indicated, 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. Amounts shown for Mr. Bekes in 1996 include
$22,586 of moving expenses paid by the Company.
(2) Consists of (a) payments made by the Company under the Company's
Profit Sharing Plan and Trust for Non-Union Employees in the amount
of $5,381 and $9,153 to Mr. Bekes in 1996 and 1997, respectively, (b)
vacation paid in lieu of time off in the amount of $5,115 and $9,847
to Mr. Bekes in 1996 and 1997, respectively, (c) life insurance
premiums paid by the Company in the amount of $18,576 and $21,576 for
Mr. Van Hefty in 1995 and 1996, respectively, (d) payments made by
the Company under the Company's Profit Sharing Plan and Trust for
Non-Union Employees in the amount of $9,552, $9,492 and $9,500 to Mr.
Van Hefty in 1995, 1996 and 1997, respectively, and (e) vacation paid
in lieu of time off in the amount of $9,231, $10,096 and $19,519 to
Mr. Van Hefty in 1995, 1996 and 1997, 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. This agreement was terminated upon
Mr. Van Hefty's retirement in March 1998.
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 in the middle
of 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 mid-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 1998
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
Mark D. Burish
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 December 31,
1992 in Common Stock, the Standard & Poor's Index and the PF Products
Index.
[performance graph]
<TABLE>
<CAPTION>
December 31, December 31, December 31, December 31, December 31, December 31,
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Badger Paper Mills, Inc. $100 $ 73.06 $ 57.51 $ 93.89 $ 52.56 $ 49.37
PF Products Index 100 110.21 114.84 126.44 139.86 149.97
Standard & Poor's Index 100 110.08 111.53 153.45 188.68 251.63
</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. The Company is not
obligated to present this proposal at the Annual Meeting, so unless the
Azzar Group or another shareholder properly present the proposal at the
Annual Meeting, the proposal will not be introduced as an item of business
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.
SUPPORTING STATEMENT
This shareholder proposal is submitted by Bomarko,
Inc., Extrusions Division, Inc. and James D. Azzar. We are
substantial investors in the Company, owning over 14% of its
shares.
This proposal, which is absolutely not binding, is
resubmitted this year as an opportunity for the shareholders to
offer a vote of "no confidence" in the Board of Directors and
management of the Company. A vote "FOR" this proposal is a way
that you, as a shareholder and investor, can send a message that
you are not satisfied with the results achieved by the Board of
Directors and management to produce value for shareholders.
Last year, the Board of Directors recommended that you
vote against the proposal, arguing that the proposal was "moot."
The Board assured you that it had already created a committee to
review strategic options, engaged an investment banking firm and
was in the process of reviewing strategic alternatives.
You might have actually believed management's
assertions and promises and voted against the proposal last
year. Don't be fooled again this year. For if 1997 has taught
us anything, it is that the Board has not followed through on
its promises. While the Board may have taken some token steps
to appear to be concerned with shareholder value, positive
results have not been achieved.
We believe that the stock price performance of the
Company and its future prospects have been adversely affected by
poor management and questionable strategic decisions. We
question the Company's continuing ability to profitably sell its
products in a highly competitive environment. We believe that
these poor results are tolerated in part because a substantial
portion of the Company's directors are current or former
officers of the Company or are affiliated with concerns which do
business with the Company.
Consequently, we believe that a sale or merger of the
Company or a sale of substantially all of its assets offers the
most likely means to realize the value of the Company.
Please vote "FOR" this proposal and help yourself and
your fellow shareholders prevent further losses in the value of
their investment in the Company. If management opposes this
proposal and you want to vote in favor of it, you must mark the
"FOR" box on the proxy card next to the proposal."
Board's Statement of Position Against Proposal
THE BOARD UNANIMOUSLY RECOMMENDS THAT COMPANY SHAREHOLDERS VOTE "AGAINST"
THIS SHAREHOLDER PROPOSAL. The Azzar Group has, for the third time,
submitted a proposal to establish a committee of directors for the purpose
of engaging an investment banking firm to facilitate and promote the sale
or merger of the Company or the sale of substantially all of its assets.
The Board believes this shareholder proposal is the latest in a series of
Azzar Group attempts to exert control over Badger's affairs.
Three times in the last two years the Azzar Group has sought to exempt
itself from important provisions of Wisconsin law that generally limit the
voting power of 20% or greater shareholders. Each time, Badger
shareholders defeated the Azzar Group proposal. At last year's annual
shareholder meeting, the Azzar Group made the same proposal now before the
shareholders, and the Company's shareholders voted it down by more than a
three-to-one margin.
The Board has examined, and continues to examine, all options available to
Badger Paper Mills to enhance its business and increase shareholder value.
Thomas J. Kuber, a member of the Board of Directors since 1995, was
appointed Chairman of the Board of Directors on October 1, 1997. Under
Mr. Kuber's direction, the Board has worked to enhance Badger's value and
vitality.
The Board has demonstrated its willingness to seriously consider all
strategic options available to Badger, including sale, merger and
continued operation as an independent company. For example, the Board
retained Paine Webber, Inc. in 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. Additionally, John Peterson, a Managing Director of the
investment banking firm Cleary Gull Reiland & McDevitt, Inc., was
appointed to the Board in October 1997 in part because of his experience
in advising companies with respect to their available strategic
alternatives. The Azzar Group has repeatedly voiced its wish that Badger
sell out or merge with another company; you will recall that the Azzar
Group even discussed purchasing Badger in September 1997 at a price the
Board deemed inadequate. Creating the committee Mr. Azzar and his
affiliates propose adds nothing to Badger's business, particularly in
light of the Board's willingness to consider all strategic options. For
these reasons, the Board urges you to vote "AGAINST" the Azzar Group
proposal.
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"AGAINST" THIS SHAREHOLDER PROPOSAL. For the reason's identified above
under the caption "Board's Statement of Position Against Proposal," the
Board believes the proposal is not in the best interests of the Company
and its shareholders. 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
On July 10, 1997, the Company changed its certifying
accountants. The Board of Directors approved the dismissal of the
accounting firm Coopers and Lybrand LLP ("Coopers & Lybrand") and
concurrently resolved to engage Grant Thornton LLP ("Grant Thornton") in
their place. Thus, Grant Thornton served as the Company's independent
auditors and audited the Company's financial statements for the fiscal
year ended December 31, 1997.
The reports made by Coopers & Lybrand on the Company's financial
statements for 1995 and 1996 contained no adverse opinion or disclaimer of
opinion, nor were such reports qualified or modified as to uncertainty,
audit scope, or accounting principles. Furthermore, during fiscal years
1995 and 1996, and for the interim period ended July 10, 1997, the Company
had no disagreement with Coopers & Lybrand on any matter of accounting
principles or practices, financial statement disclosure, or audit scope or
procedure, which, if not resolved to the satisfaction of Coopers &
Lybrand, would have caused them to make reference to the matter in their
report. No other reportable events occurred within the Company's two most
recent fiscal years.
Representatives of Grant Thornton 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 1999 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 1999 annual meeting must be received by the Company by the close
of business on December 9, 1998.
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, 1997,
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.
Mark D. Burish
Assistant Secretary
April 8, 1998
<PAGE>
PROXY CARD PROXY CARD
BADGER PAPER MILLS, INC.
This Proxy is solicited on behalf of the Board of Directors
for the Annual Meeting of Shareholders to be held on May 12, 1998
The undersigned hereby appoints Ralph D. Searles 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 24, 1998, at the 1998 Annual Meeting of Shareholders
to be held May 12, 1998 at the Best Western Riverfront Inn, Marinette,
Wisconsin, and any adjournment or postponement thereof.
This 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.
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE AND
RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE!
(Continued and to be signed on reverse side.)
<PAGE>
BADGER PAPER MILLS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Election of Directors For Withhold For All
Nominees: T. Kuber, J. All All Except*
Peterson [_] [_] [_]
2. Shareholder proposal to For Against Abstain
Create Board Committee [_] [_] [_]
3. In their discretion, the Proxies are
authorized to vote upon such other
business as may properly come before
the meeting.
* To withhold authority to vote for any
individual nominee, write that nominee's
name on the line provided below:
_________________________________________
The undersigned acknowledges receipt of
the Notice of Annual Meeting of
Shareholders and of the Proxy Statement.
Dated: ___________________________, 1998
THIS AREA RESERVED FOR
ADDRESSING
_________________________________________
Please sign exactly as your name appears.
Joint owners should each sign personally.
Where applicable, indicate your official
position or representation capacity.
__________________________________________________________________________
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING
THE ENCLOSED ENVELOPE
