SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BADGER PAPER MILLS, INC.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
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(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:
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BADGER PAPER MILLS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 9, 2000
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 9, 2000, at 10:00 a.m. local time, at
the Best Western Riverfront Inn, 1821 Riverside Avenue, Marinette, Wisconsin,
for the following purposes:
1. To elect two directors to hold office until the 2003 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
affiliated with James D. Azzar that shareholder approval be required for
any sale, lease or other disposition of assets having a market value in
excess of 5 percent of the aggregate market value of all the Company's
assets, 5 percent of the aggregate market value of the outstanding stock of
the Company, or 10 percent of the earning power or income 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 13, 2000, 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/ Mark D. Burish
------------------------------------
Mark D. Burish
Corporate Secretary
Peshtigo, Wisconsin
April 7, 2000
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 9, 2000
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 7, 2000, in connection with a solicitation
of proxies by the Board for use at the Annual Meeting of Shareholders to be held
on Tuesday, May 9, 2000, at 10:00 a.m. local time, at the Best Western
Riverfront Inn, 1821 Riverside Avenue, 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 first 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 from a
group of shareholders affiliated with James D. Azzar (the "Azzar Group") that
shareholder approval be required for any sale, lease or other disposition of 5
percent or more of the assets 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 13, 2000, are entitled
to vote at the Annual Meeting. On that date, the Company had outstanding and
entitled to vote 1,974,168 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
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to hold office until the 2003 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.
The following sets forth certain information, as of March 13, 2000,
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, Term expiring at the 2003 Annual Meeting
L. Harvey Buek, 58, was appointed to the Board of Directors in May
1998 to fulfill the term of Claude L. Van Hefty, former President and Chief
Executive Officer of the Company who retired in March 1998. Mr. Buek is a
consultant based in Everett, Washington, and served as Interim President of
Badger Paper Mills, Inc. from March through July 1998. Mr. Buek's extensive
experience in the paper industry includes 29 years with Scott Paper Company,
including as Vice President-Everett (Washington) Operations from 1991 to his
retirement in 1994.
Thomas W. Cosgrove, 59, was elected President of the Company and
appointed to the Board of Directors in July 1998 to fulfill the term of Ralph D.
Searles, who retired from the Board in May 1998. Prior to July 1998, Mr.
Cosgrove held various positions with Scott Paper Company (now Kimberly Clark
Corporation) over a 33 year period, including General Manager of Kimberly
Clark's Marinette and Oconto Falls, Wisconsin Divisions from September 1990
until July 1998.
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, Term expiring at the 2001 Annual Meeting
Thomas J. Kuber, 59, 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.
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<PAGE>
John R. Peterson, 43, has served as a director of the Company since
1997. Mr. Peterson has been a Managing Director of Tucker Anthony Incorporated,
Milwaukee, Wisconsin since 1995. From 1982 to 1994, he practiced corporate law
at Godfrey & Kahn, S. C., Milwaukee, Wisconsin.
Class III, Term expiring at the 2002 Annual Meeting
Mark D. Burish, 46, has served as a director of the Company since 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.
James L. Kemerling, 60, has served as a director of the Company since
March 1997. Mr. Kemerling is a consultant based in Wausau, Wisconsin, and is a
director of WPS Resources Corporation, a public utility holding corporation
based in Green Bay, Wisconsin.
BOARD OF DIRECTORS
General
The Board had standing Audit, Compensation and Strategic Planning
Committees in 1999.
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 1999.
John R. Peterson (Chairman), L. Harvey Buek and James L. Kemerling 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 three meetings in 1999.
Mark D. Burish (Chairman) and James L. Kemerling are the members of the
Compensation Committee.
The Strategic Planning Committee meets for the purpose of reviewing,
restructuring, streamlining operations, cost reduction strategies, and business
strategies. The Strategic Planning Committee met five times during 1999. Thomas
J. Kuber (Chairman), James L. Kemerling and Thomas W. Cosgrove were members of
the Strategic Planning Committee.
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.
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The Board held four meetings in 1999. During 1999, 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.
Directors Compensation
In 1999, directors received a quarterly retainer payable in Common
Stock with a market value of $3,750.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of March 13, 2000 by: (i) each director
and nominee; (ii) the executive officers named in the Summary Compensation Table
set forth below; (iii) all of the directors, nominees and executive officers
(including the executive officers 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
Beneficially Beneficially
Name of Beneficial Owner Owned Owned
------------------------ ------------ ------------
L. Harvey Buek, Director.................... 4,079 *
Mark D. Burish, Director and
Corporate Secretary....................... 22,487(1) 1.14
Thomas W. Cosgrove, Director and
President................................. 4,230 *
James L. Kemerling, Director................ 6,957 *
Thomas J. Kuber, Director and
Chairman of the Board..................... 71,621 3.63
John R. Peterson, Director.................. 5,754 *
All directors, nominees and executive
officers as a group (10 persons).......... 119,995(2) 6.08
Edwin A. Meyer, Jr.......................... 303,074(3) 15.36
James D. Azzar.............................. 276,864(4) 14.03
Walter F. Adrian............................ 112,000(5) 5.68
Donna M. Burish............................. 112,598(6) 5.71
- ----------------------------
*Denotes less than 1%.
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(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 116,295 shares and in the aggregate,
directors and executive officers have shared voting and dispositive power
with respect to 3,700 shares.
(3) The share amounts listed are from the Schedule 13G dated October 7, 1998,
filed with the Securities and Exchange Commission and the Company. Amounts
shown include 51,510 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 report of beneficial ownership on an amended Schedule 13D
dated February 18, 1998, James D. 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. Mr. 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. Mr. 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 the best information available to the Company as
of the date of this proxy statement. Mrs. Burish's address is 352 Brown
Avenue, South, Peshtigo, Wisconsin 54157.
EXECUTIVE COMPENSATION
Summary Compensation Information
The following table sets forth certain information concerning the
compensation paid by the Company for its last three fiscal years to the
executive officers of the Company who earned over $100,000 combined base salary
and bonus in 1999. The persons named in the table are sometimes referred to
herein as "named executive officers."
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------- -------------
Other Securities
Annual Underlying All Other
Name and Compensation Stock Options Compensation
Principal Position Year Salary($) Bonus($) ($)(1) (#)(1/2) ($)(3)
- ------------------ ---- --------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas W. Cosgrove 1999 $165,786 $12,960 - - $11,536
Pres. & CEO 1998 $ 72,193 - - 20,000 shares $ 2,898
Michael J. Bekes 1999 $146,917 $12,550 - - $16,260
Vice Pres. & 1998 $143,516 - - 10,000 shares $14,040
COO 1997 $133,000 - - - $19,435
Mark C. Neumann 1999 $116,604 $ 9,900 - - $10,102
Vice Pres. Sales 1998 $120,395 $10,000 - 10,000 shares $ 8,948
1997 $ 80,000 - - - $ 6,870
Clifton A. Martin 1999 $ 93,307 $ 7,830 - - $ 8,840
Vice Pres. 1998 $ 83,602 - - - $ 7,894
Badger Flex. Pkg. D iv. 1997 $ 73,713 $ 5,000 - - $13,656
</TABLE>
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(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.
(2) Consists of stock options awarded under the 1998 Stock Option Plan.
(3) Consists of (a) payments made by the Company under the Company's Profit
Sharing Plan and Trust for Non-Union Employees in the amounts of $2,898 and
$10,474 to Mr. Cosgrove in 1998 and 1999, respectively; (b) life insurance
premiums paid by the Company in the amount of $1,062 for Mr. Cosgrove in
1999; (c) payments made by the Company under the Company's Profit Sharing
Plan and Trust for Non-Union Employees in the amounts of $9,588, $8,677 and
$10,054 to Mr. Bekes in 1997, 1998 and 1999, respectively; (d) vacation
paid in lieu of time off to Mr. Bekes in the amounts of $9,847, $5,363 and
$5,654 in 1997, 1998 and 1999, respectively; (e) life insurance premiums
paid by the Company in the amount of $552 for Mr. Bekes in 1999; (f)
payments made by the Company under the Company's Profit Sharing Plan and
Trust for Non-Union Employees in the amounts of $4,293, $6,833 and $7,307
to Mr. Neumann in 1997, 1998 and 1999, respectively; (g)vacation paid in
lieu of time off in the amount of $2,577, $2,115 and $2,242 to Mr. Neumann
in 1997, 1998 and 1999, respectively; (h) payments made by the Company
under the Company's Profit Sharing Plan and Trust for Non-Union Employees
in the amounts of $4,306, $4,052 and $5,243 to Mr. Martin in 1997, 1998 and
1999, respectively; (i) vacation paid in lieu of time off in the amounts of
$2,885, $3,346 and $1,783 to Mr. Martin in 1997, 1998 and 1999,
respectively; (j) back pay to Mr. Martin of $212 and $1,263 in 1997 and
1999, respectively; (k) banked vacation pay of $6,139 to Mr. Martin in
1997; (l) life insurance premiums paid by the Company in the amounts of
$114, $496 and $552 for Mr. Martin in 1997, 1998 and 1999, respectively.
Stock Options
The Company did not grant any stock options to named executive
officers in 1999. The following table sets forth the number of exercisable and
unexercisable options held by the named executive officers at the end of 1999.
None of these options were deemed to have any value at the end of 1999 because,
in all cases, the exercise price of the options was greater than the market
value of a share of Common Stock at the end of 1999.
Number of Shares Underlying Options at End of 1999
--------------------------------------------------
Exercisable Unexercisable
----------- -------------
Thomas J. Cosgrove 13,332 6,668
Michael J. Bekes 6,666 3,334
Mark C. Neumann 10,000 0
Clifton A. Martin 6,666 3,334
Agreements with the Named Executive Officers
At the time of his employment in July 1998, the Company and Mr.
Cosgrove entered into an agreement providing for, among other things, his
starting salary, health and other benefits, and life and disability insurance.
The agreement also provides that upon severance of Mr. Cosgrove's employment by
the Company for any reason, the Company will pay him six times his last monthly
base salary as a severance payment.
In December 1998, the Company and Mr. Neumann entered into an
agreement providing for, among other things, certain severance payments to Mr.
Neumann upon the termination of his employment with the Company in certain
circumstances, including a "change in control" as defined in such agreement. If
Mr. Neumann's employment with the Company terminates prior
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to a change in control for any reason other than death, disability, for cause or
voluntarily, then the Company will continue to pay his base compensation for six
months. If Mr. Neumann's employment with the Company terminates within one year
after a change in control for any reason other than death, disability or cause,
then the Company will continue to pay his base compensation for twelve months.
If his employment terminates more than one year after a change in control for
any reason other than death, disability, cause or voluntarily, then the Company
will continue to pay his base compensation for six months; provided that his
decision to terminate his employment after a material diminishment of his duties
or responsibilities or a reduction in his base pay will not be deemed voluntary.
A "change in control" under the agreement is defined as having the same meaning
as a change in control under the 1998 Stock Option Plan.
Certain Relationships and Transactions
One of our directors, L. Harvey Buek, is the owner of LHM-O&M
Consulting, a consulting company that Badger engaged in 1999 to provide general
management and manufacturing consulting services. Badger paid LHM-O&M Consulting
a total of $72,000 for such services in 1999.
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 2000
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
Mark D. Burish, Chairman
James L. Kemerling
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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, 1994 in Common Stock, the Standard & Poor's Index and
the PF Products Index.
[GRAPHIC OMITTED]
-------------------------------------------------------
Company/Index Dec94 Dec95 Dec96 Dec97 Dec98 Dec99
- --------------------------------------------------------------------------------
BADGER PAPER MILLS INC $100 $163.25 $ 91.38 $ 85.84 $ 88.61 $ 58.15
- --------------------------------------------------------------------------------
S&P 500 INDEX 100 137.58 169.17 225.60 290.08 351.12
- --------------------------------------------------------------------------------
PAPER & FOREST
PRODUCTS-500 100 110.10 121.79 130.59 133.18 186.22
- --------------------------------------------------------------------------------
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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 (who are collectively
referred to as the "Azzar Group"), 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 a member or
an authorized representative of the Azzar Group 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 "Corporation"), hereby approve the addition
of new Article XII to the Corporation's Articles of
Incorporation, which shall read in its entirety as follows:
In addition to any affirmative vote required by law or these
Articles of Incorporation, the affirmative vote of a
majority of the Corporation's outstanding shares of stock
shall be required for the approval of any sale, lease,
exchange, transfer or other disposition, in one transaction
or a series of related transactions, of assets of the
Corporation or a subsidiary of Corporation, other than sales
of products or inventory in the ordinary course of business,
if those assets: (1) have an aggregate market value equal to
at least 5% of the aggregate market value of all the assets,
determined on a consolidated basis, of the Corporation; (2)
have an aggregate market value equal to at least 5% of the
aggregate market value of all the outstanding stock of the
Corporation; or (3) represent at least 10% of the earning
power or income, determined on a consolidated basis, of the
Corporation.
Prior to soliciting approval of such a transaction or
transactions from the Corporation's shareholders, the Board
of Director shall provide the shareholders with a detailed
written report describing the identity of the proposed
transferee; the background of the proposed transaction; the
anticipated economic effects of the transaction on the
Corporation; the Corporation's efforts in soliciting
competing proposals for similar transactions; and a summary
of all other proposals or indications of interest in or for
similar transactions that the Board has received, including
the price or other consideration offered in such proposals
or indications of interest.
Supporting Statement
This proposal is submitted by Bomarko, Inc.,
Extrusions Division, Inc. and James Azzar, investors who own
over 14% of the Corporation's outstanding common stock.
Wisconsin law requires shareholder approval of
sales or dispositions of all or substantially all of a
corporation's property outside the ordinary course of
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business. Thus, as long as "all or substantially all" of the
Corporation's assets aren't involved, the Board could divest
substantial, important assets without soliciting shareholder
approval, and shareholders could find that the character or
value of the Corporation has changed dramatically without
their consent.
While the Board has a fiduciary duty to the
shareholders, we believe that a more open and democratic
process will help ensure that Board decisions which may
fundamentally change the Corporation are in the best
interests of the Corporation and its shareholders. Article
VIII of the Corporation's Bylaws, which requires reports to
the shareholders if the Corporation receives proposals to
acquire the Corporation or all or substantially all of its
assets, implicitly recognizes that shareholders should be
informed of all significant transactions. Why not extend
this concept to similar transactions that, while not rising
to the threshold of a complete sale, could nonetheless have
significant and dramatic effects on the Corporation?"
Board's Statement of Position Against Proposal
Over the past four years, the Azzar Group has submitted numerous proposals for
consideration at annual or special meetings of the Company's shareholders. All
of these Azzar Group proposals have been defeated by wide margins. A number of
these proposals would, like the proposal currently under consideration, have
imposed severe restrictions on how the Company is managed and how the Company's
Board and management make decisions.
At last year's annual meeting of shareholders, the Azzar Group proposed, and the
Company shareholders voted down, a proposal that the Company publicly disclose
every inquiry, discussion and expression of interest relating to the sale or
merger of the Company's business or its assets. This year the Azzar Group
intends to submit a proposal to require public disclosure and then shareholder
approval for much smaller sales of Company assets.
The Board urges shareholders to reject this latest Azzar Group proposal because:
o It is unclear which proposed sales or transfers of Company assets
would be subject to these disclosure and shareholder vote
requirements. For example, a determination that a Company asset
or assets might represent "at least 10% of the earning power or
income" of the Company is a subjective test. Another problem with
the Azzar Group proposal is determining when the threshold tests
have to be satisfied: at the time a letter of intent is signed,
at the time of closing or at all significant dates during the
entire process? Unless the requirements are clear, the Board will
be reluctant to proceed with a transaction without complying with
the burdensome and costly procedures required by the Azzar Group
proposal, including the receipt of shareholder approval.
o The current Azzar Group proposal will discourage potential
parties from dealing with the Company. The public disclosure and
shareholder vote requirements included in the Azzar Group
proposal would deter third parties from negotiating with the
Company. Business acquisitions, and sales of assets, are best
handled
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with confidentiality and secrecy. If the Company is forced to
disclose publicly its business strategy and negotiating posture,
the Company, and the third parties with whom the Company proposes
to deal, will be at a significant competitive disadvantage.
o The procedures for public disclosure and the receipt of
shareholder approval for routine business transactions as
incorporated in the Azzar Group proposal are unusual, cumbersome,
costly and would unnecessarily tie the hands of Company
management in running the business. In addition to the
calculation problems cited above, the Azzar Group proposal would
add significantly to the time, cost and difficulties associated
with ordinary course transactions. On balance, the Azzar Group's
proposal would divert the resources and attention of Company
management from making paper to pushing paper.
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "AGAINST" THIS
SHAREHOLDER PROPOSAL. For the reasons 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
Grant Thornton LLP ("Grant Thornton") served as the Company's
independent auditors in 1999. 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
2001 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 submitted pursuant to Rule 14a-8 under the Securities Exchange Act of
1934, as
13
<PAGE>
amended, which shareholders of the Company intend to present at and have
included in the Company's proxy statement for the 2001 Annual Meeting of
Shareholders must be received by the Company by the close of business December
8, 2000. If the Company receives notice of a shareholder proposal that is
submitted other than pursuant to Rule 14a-8 after February 21, 2001, the notice
will be deemed untimely and the persons named in proxies solicited by the Board
for the 2001 Annual Meeting of Shareholders may exercise discretionary voting
power with respect to such shareholder proposal.
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, 1999, 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/ Mark D. Burish
------------------------------------
Mark D. Burish
Corporate Secretary
April 7, 2000
14
<PAGE>
PROXY PROXY
BADGER PAPER MILLS, INC.
Solicited by the Board of Directors
for the Annual Meeting of Shareholders-May 9, 2000
The undersigned Shareholder of Badger Paper Mills, Inc. hereby appoints Mark D.
Burish and James L. Kemerling, and each of them Proxies, with power of
substitution, to vote at the Annual Meeting of Shareholders of the company to be
held at the Best Western Riverfront Inn, 1821 Riverside Avenue, Marinette,
Wisconsin, on Tuesday, May 9, 2000, at 10:00 a.m., local time, or at any
adjournment or postponement thereof, on the matters described on the reverse
side.
The Board of Directors Favors a Vote FOR All Nominees, AGAINST Item 2, and FOR
Item 3.
(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. [ ]
The Board of Directors Favors a The Board of Directors Favors a Vote
Vote FOR All Nominees. AGAINST The Shareholder Proposal.
1. Election of Directors- 2. Shareholder Proposal
Nominees: that shareholder
01-L. Harvey Buck approval be required
and for any sale, lease
02-Thomas W. or other disposition
Cosgrove of 5% or more of the
assets of the Company.
WITH-
FOR HELD FOR ALL FOR AGAINST ABSTAIN
ALL ALL EXCEPT* [ ] [ ] [ ]
[ ] [ ] [ ]
3. In the discretion of
the proxies, the
transaction of such
other business which
- ----------------------------------- may properly come
*(Except nominee written above.) before the meeting,
all as described in
the Notice of 2000
Annual Meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The Shares Represented By This Proxy
Will Be Voted As Directed on Items
1, 2 and 3, But Where No Direction
Is Indicated, Will Be Voted FOR
Items 1 and 3, and AGAINST Item 2.
Dated: _______________________, 2000
Signature(s)
------------------------
------------------------------------
IMPORTANT: Please sign exactly as
name appears. Joint owners should
both sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign
in full corporate name by the
President or other authorized
officer. If a partnership, please
sign in partnership name by an
authorized person.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE.
