<PAGE>
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
NN BALL & ROLLER, 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>
NN BALL & ROLLER, INC.
800 TENNESSEE ROAD
ERWIN, TN 37650
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of NN Ball &
Roller, Inc., a Delaware corporation, will be held on May 11, 2000, at 10:00
a.m., local time, at the Renaissance Charlotte Suites Hotel, 2800 Coliseum
Centre Drive, Charlotte, North Carolina, 28217, for the following purposes:
(1) To consider and act upon a proposal that the stockholders approve an
amendment to the Company's Certificate of Incorporation.
(2) To elect two Class III directors, each to serve for a term of three
years;
(3) To consider and act upon a proposal that the stockholders ratify the
selection of PricewaterhouseCoopers LLP as the Company's independent
auditor for the fiscal year ending December 31, 2000; and
(4) To conduct such other business as properly may come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THESE PROPOSALS.
Details regarding these matters are contained in the accompanying Proxy
Statement.
Holders of record of the Common Stock at the close of business on March 20,
2000, are entitled to notice of and to vote at the Annual Meeting.
Please mark, date and sign the enclosed proxy card and return it in the envelope
provided. You may revoke your proxy at any time before the votes are cast at the
Annual Meeting.
By Order of the Board of Directors,
William C. Kelly, Jr.
Secretary
Erwin, Tennessee
April 10, 2000
<PAGE>
April 10, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of NN Ball & Roller,
Inc., which will be held on May 11, 2000 at 10:00 a.m., local time, at the
Renaissance Charlotte Suites Hotel, 2800 Coliseum Centre Drive, Charlotte, North
Carolina, 28217.
The business to be conducted at the Annual Meeting is described in the attached
Notice of Meeting and Proxy Statement. You are urged to read the Proxy Statement
carefully before completing the enclosed proxy card. The Annual Meeting will
include a report on the affairs of the Company presented by management and an
opportunity for questions and comments by stockholders.
To assure your representation at the meeting, please mark, date and sign the
proxy card and return it in the enclosed envelope at your earliest convenience,
whether or not you plan to attend the meeting. If you attend the Annual Meeting,
you may revoke your proxy and vote in person if you so desire.
Sincerely,
Richard D. Ennen
Chairman
<PAGE>
NN BALL & ROLLER, INC.
PROXY STATEMENT
FOR
2000 ANNUAL MEETING OF STOCKHOLDERS
Proxies are being solicited by the Board of Directors of NN Ball &
Roller, Inc. (the "Company"), in connection with the annual meeting of
stockholders to be held on May 11, 2000 at the RENAISSANCE CHARLOTTE SUITES
HOTEL, 2800 COLISEUM CENTRE DRIVE, CHARLOTTE, NORTH CAROLINA, 28217 (the "Annual
Meeting"), for the purpose of considering and acting upon the matters set forth
in the foregoing Notice of Annual Meeting of Stockholders (the "Notice").
Stockholders of record of the Company's common stock, par value $.01 per share
("Common Stock"), as of the close of business on March 20, 2000, will be
entitled to vote at the meeting. On March 20, 2000 (the "Record Date"),
15,244,308 shares of Common Stock were issued and outstanding.
The entire cost of the proxy solicitation is being paid by the Company.
In addition to solicitation by mail, officers and employees of the Company,
without additional remuneration, may solicit proxies by telephone, facsimile
transmission or personal contact. Brokerage houses, banks, nominees, fiduciaries
and other custodians will be requested to forward soliciting material to the
beneficial owners of shares held by them of record and will be reimbursed by the
Company for their expenses in so doing.
The mailing address of the Company's executive office is 800 Tennessee
Road, Erwin, Tennessee 37650. This Proxy Statement and the form of proxy will be
mailed to stockholders on or about April 10, 2000.
VOTING; QUORUM; PROXIES
Each share of Common Stock outstanding on the Record Date is entitled
to one vote on each matter submitted to a vote of stockholders at the Annual
Meeting. A quorum for the conduct of business is established when the holders of
at least a majority of the outstanding shares of Common Stock entitled to vote
in the election of directors are present at the meeting or are represented by
proxy. Representatives of the Company will serve as inspectors of election for
the Annual Meeting.
Shares represented by a properly executed proxy will be voted at the
Annual Meeting in the manner specified. In the absence of specific instructions,
shares represented by a properly executed proxy will be voted for approval of an
amendment to the Company's Certificate of Incorporation, for each of the
nominees for election to the Board of Directors named herein and for the
proposal to ratify the selection of PricewaterhouseCoopers LLP to serve as the
Company's independent auditor for 2000.
The Board of Directors does not now intend to bring before the Annual
Meeting any matters other than those disclosed in the Notice, and it is not
aware of any business that any other persons intend to bring before the Annual
Meeting. Should any such matter requiring a vote of the stockholders arise, the
enclosed form of proxy confers upon the persons named therein the discretionary
authority to vote the shares represented by the proxy as they deem appropriate.
A proxy may be revoked at any time before it is exercised by delivery
to the Secretary of the Company of a written revocation or a subsequently dated
proxy and will be deemed revoked if the stockholder votes in person at the
Annual Meeting.
<PAGE>
VOTING RIGHTS AND OUTSTANDING SHARES
Approval of Proposals II and III requires the affirmative vote of a
majority of the shares of Common Stock represented in person or by proxy at the
meeting. Broker non-votes (i.e., shares present by proxy but for which no voting
authority has been given by the beneficial holder) will affect the vote on the
proposals in that they will be treated as a "no" vote and abstentions (shares
not voted by a stockholder present at the Annual Meeting) will be treated as
"no" votes. Because directors are elected by a plurality of the votes cast,
abstentions and broker non-votes will not effect the outcome of the election of
directors.
BENEFICIAL OWNERSHIP OF COMMON STOCK
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows, as of March 20, 2000, the beneficial
ownership of Common Stock by each director, each executive officer named in the
Summary Compensation Table, and all directors and executive officers as a group,
in each case as reported to the Company by such persons.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE
BENEFICIAL OWNER (1) BENEFICIALLY OWNED BENEFICIALLY OWNED (2)
-------------------- ------------------- ----------------------
<S> <C> <C>
Richard D. Ennen . . . . . . . . . . . . . . . . . . . . 2,843,420 18.6%
Michael D. Huff . . . . . . . . . . . . . . . . . . . . 645,217 (3) 4.2%
Roderick R. Baty . . .. . . . . . . . . . . . . . . . . 2,395 *
Frank T. Gentry . . . . . . . . . . . . . . . . . . . . 31,561 *
James L. Earsley . . . . . . . . . . . . . . . . . . . 221,428 (4) 1.4%
Michael E. Werner . . . . . . . . . . . . . . . . . . . 11,287 (5) *
G. Ronald Morris . . . . . . . . . . . . . . . . . . . . 11,000 (6) *
Steven T. Warshaw . . . . . . . . . . . . . . . . . . . 8,000 (7) *
David L. Dyckman . . . . . . . . . . . . . . . . . . . . 8,100 (8) *
Robert R. Sams . . .. . . . . . . . . . . . . . . . . . 50 *
All directors and executive officers as a group . . . . 3,782,458 24.8%
- -------------------------------
</TABLE>
* Less than 1%
(1) The address of the beneficial owner is c/o NN Ball & Roller, Inc., 800
Tennessee Road, Erwin, Tennessee 37650.
(2) The percentage shown as beneficially owned by each person or group
represents the total number of shares of Common Stock shown in the
adjacent column divided by the sum of (i) the number of issued and
outstanding shares of Common Stock as of March 20, 2000, and (ii) all
shares of Common Stock, if any, issuable upon the exercise of stock
options held by such person (but no other person) or group, as
applicable, that were exercisable on March 20, 2000, or which will
become exercisable within 60 days thereafter.
(3) Includes 6,000 shares of Common Stock that Mr. Huff holds as an option
to purchase and 225,000 shares of Common Stock registered in the name
of Mr. Huff's wife.
(4) Includes 2,818 shares of Common Stock registered in the name of
Mr. Earsley's minor son.
(5) Includes 6,000 shares of Common Stock that Mr. Werner holds as an
option to purchase and 5,287 shares of Common Stock registered in the
name of Mr. Werner's wife.
-2-
<PAGE>
(6) Includes 6,000 shares of Common Stock that Mr. Morris holds as an
option to purchase.
(7) Includes 6,000 shares of Common Stock that Mr. Warshaw holds as an
option to purchase.
(8) Includes 8,000 shares of Common Stock that Mr. Dyckman holds as an
option to purchase.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of December 31, 1999, the number of
shares of the Company's Common Stock beneficially owned by the only parties
known to the Company's management to own more than 5% of the Company's Common
Stock (other than Richard D. Ennen, for whom information is shown on the
preceding table).
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE
BENEFICIAL OWNER BENEFICIALLY OWNED BENEFICIALLY OWNED
---------------- ------------------ ------------------
<S> <C> <C>
Deprince, Race & Zollo, Inc. . . . . . . . . . . . . . . . 2,028,250 13.3%
201 S. Orange Avenue
Suite 850
Orlando, FL 32801
Wellington Management Company, LLP . . . . . . 1,311,150(1) 8.6%
75 State Street
Boston, MA 02109
Capital Guardian Trust Company . . . . . . . . . . . . . 895,200 5.9%
1110 Santa Monica Boulevard
Los Angeles, CA 90025
Royce & Associates, Inc. . . . . . . . . . . . . . . . . . . 914,000 6.0%
1414 Avenue of the Americas
New York, NY 10019
</TABLE>
(1) Includes 839,150 shares for which Wellington Management Company, LLP,
an investment adviser, reports shared voting power with the beneficial
owners of such shares and 1,311,150 shares for which Wellington
Management Company, LLP reports shared dispositive power with the
beneficial owners of such shares. Wellington Management Company, LLP,
holds all such shares on behalf of its clients and disclaims any
economic interest in the shares.
-3-
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
each of the Company's directors and executive officers, and any beneficial owner
of more than 10% of the Common Stock, is required to file with the Securities
and Exchange Commission (the "SEC") initial reports of beneficial ownership of
the Common Stock and reports of changes in beneficial ownership of the Common
Stock. Such persons also are required by SEC regulations to furnish the Company
with copies of all such reports.
Based solely on its review of the copies of such reports furnished to
the Company for the year ended December 31, 1999, and on the written
representations made by such persons that no other reports were required, the
Company is not aware of any instance of noncompliance with Section 16(a) by its
directors, executive officers or owners of more than 10% of the Common Stock,
except for one inadvertent late filing by each of Mr. Morris, Mr. Werner, Mr.
Warshaw and Mr. Huff.
PROPOSAL I
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for the division of
the Board of Directors into three classes: Class I, Class II and Class III. Only
one class of directors is elected at each annual meeting. Each director so
elected serves for a three-year term and until his or her successor is elected
and qualified, subject to such director's earlier death, resignation or removal.
NOMINEES
Two Class III directors will be elected to the Board of Directors at
the Annual Meeting. The Company has nominated for election Richard D. Ennen and
Roderick R. Baty, each of whom currently is a director. Each of the nominees has
indicated a willingness to continue to serve as a director if elected, but if
either of them shall decline or be unable to serve, the persons named as proxies
intend to vote all shares in favor of the election of such other person who may
be nominated as a replacement by the Board of Directors. If no such other person
is nominated as a replacement, the Board of Directors will reduce the number of
directors to be elected at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
PROPOSAL II
AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO CHANGE THE COMPANY'S NAME TO NN, INC.
The Board of Directors has adopted a resolution proposing that the
Company's Certificate of Incorporation be amended as follows: "The name of
the corporation (hereinafter called the "Corporation") is NN, Inc." The Board
feels the name change better reflects the more diverse business model of the
Company.
If approved by the stockholders, the change of corporate name will
become effective upon the filing of a Certificate of Amendment with the
Secretary of State of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
-4-
<PAGE>
PROPOSAL III
RATIFICATION OF SELECTION OF AUDITORS
The firm of PricewaterhouseCoopers LLP has been selected by the Board
of Directors as the Company's outside auditors for 1999. PricewaterhouseCoopers
LLP has served as the independent auditors of the Company since 1990. Although
it is not required to do so, the Board has determined that it is desirable to
seek stockholders' ratification of the selection of PricewaterhouseCoopers LLP.
A representative of PricewaterhouseCoopers LLP is expected to be
present at the Annual Meeting and will have an opportunity to make a statement,
if he or she so desires, and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at next year's Annual
Meeting must be received by the Company at its executive offices not later than
December 11, 2000 in order to be considered for inclusion in the Company's proxy
statement and form of proxy for such meeting. All notices should be sent to NN
Ball & Roller, Inc., Attention: Secretary, 800 Tennessee Road, Erwin, Tennessee
37650. If the proposal is received by the Company 45 days or fewer prior to the
anniversary of the mailing date of this proxy statement, the persons named as
proxy in the Company's 2001 proxy materials will have the discretionary
authority to vote on the proposal in accordance with their best judgement
without disclosure in this proxy statement of how they indent to vote on the
proposal.
INFORMATION ABOUT THE DIRECTORS
The following table sets forth the names of each current director
(including the nominees for election), their age, their years of service as a
director, the year in which their current term expires and their current
positions with the Company. The table is followed by a more detailed
biographical description for each director.
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE SINCE EXPIRES POSITIONS WITH THE COMPANY
- ---- --- ----- ------- --------------------------
<S> <C> <C> <C> <C>
Richard D. Ennen . . . . . . . . . . 72 1980 2000 Chairman of the Board and Director
Roderick R. Baty . . . . . . . . . . 46 1995 2000 Chief Executive Officer, President
and Director
Michael D. Huff . . . . . . . . . . . 52 1980 2001 Director
Michael E. Werner . . . . . . . . . 55 1995 2001 Director
G. Ronald Morris . . . . . . . . . . 63 1994 2002 Director
Steven T. Warshaw . . . . . . . . . 51 1997 2002 Director
James L. Earsley 54 1999 2002 Director
</TABLE>
Richard D. Ennen is the principal founder of the Company and has been
the Chairman of the Board and a director of the Company since its formation in
1980. He served as Chief Executive Officer of the Company from its inception
until 1997 and as President of the Company from its inception until 1990. In
recent years, Mr. Ennen has focused on the development and implementation of the
Company's business strategy rather than the day-to-day operations of the
Company. Prior to forming the Company, Mr. Ennen held various management and
executive positions with Hoover Precision Products, Inc. (formerly Hoover
Universal, Inc.), a division of
-5-
<PAGE>
Tsubakimoto Precision Products Co. Ltd, including Corporate Vice President and
General Manager of the ball and roller division. Mr. Ennen has over 40 years of
experience in the anti-friction bearing industry.
Roderick R. Baty became President and Chief Executive Officer in July
1997. He joined the Company in July 1995 as Vice President and Chief Financial
Officer and was elected to the Board of Directors to fill a vacant seat in
August 1995. Prior to joining the Company, Mr. Baty served as President and
Chief Operating Officer of Hoover Precision Products from 1990 to January 1995,
and as Vice President and General Manager of Hoover Precision Products from 1985
to 1990.
Michael D. Huff has served as a director of the Company since its
formation in 1980 and as a consultant to the Company since January 1995. From
1980 until his retirement in January 1995, Mr. Huff served as the Chief
Financial Officer, Treasurer and Secretary of the Company. Before joining the
Company, Mr. Huff served as a division controller of Hoover Precision Products,
Inc. from 1975 until 1980. Mr. Huff is a member of the American Institute of
Certified Public Accountants and the Tennessee Society of Certified Public
Accountants.
Michael E. Werner is a management consultant with Werner Gershon
Associates, a management consulting firm specializing in manufacturing companies
that Mr. Werner co-founded in 1982. During the five years prior to starting his
business, Mr. Werner served as Director of Strategic Planning and Business
Development for the Uniroyal Chemical Company. He also has held positions with
the New York Central Company, Western Electric Company and the Continental
Group.
G. Ronald Morris retired during 1999 from Western Industries, Inc., a
contract manufacturer of metal and plastic products. Mr. Morris had served as
President, Chief Executive Officer and director of Western Industries, Inc.
since July 1991. From 1989 to 1991, Mr. Morris served as Chairman of the Board
of Integrated Technologies, Inc., a manufacturer of computer software, and from
1988 to 1989, he served as Vice Chairman of Rexnord Corporation, a manufacturer
of mechanical power transmission components and related products, including
anti-friction bearings. From 1982 to 1988, Mr. Morris served as President and
Chief Executive Officer of PT Components, Inc., a manufacturer of mechanical
power transmission components and related products that was acquired by Rexnord
Corporation in 1988.
Steven T. Warshaw has served as Senior Vice President of Photronics,
Inc., a global supplier to the semiconductor industry since February 1999. From
1996 to 1999, he served as President of Olin Microelectronic Materials, a
company supplying technologically advanced chemicals, products, and services to
semiconductor manufacturers. Prior to his current position, Mr. Warshaw served
in a variety of positions at Olin since 1974, including President of OCG
Microelectronic Materials and Vice President of Olin's Chemicals Division.
James L. Earsley was elected to the Board effective August 1, 1999. Mr.
Earsley has spent his entire career with Industrial Molding Corporation (IMC)
and was Chairman of the Board at the time of the Company's acquisition of IMC on
July 4, 1999. Mr. Earsley remains involved with the business in a non-employee
consulting role.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Michael E. Werner, a director of the Company, is a principal of Werner
Gershon Associate. Werner Gershon Associates was retained by the Company to help
develop a long-range business strategy for its Plastics Division. During the
latter part of 1999, Werner Gershon Associates worked with the Company to study
their markets and competitors, and defining new business opportunities. The
result of this work, when complete, will be a long-range business plan. The
Company paid Werner Gershon Associates approximately $50,000 for its services in
1999.
James L. Earsley, past Chairman of Industrial Molding Corporation, was
elected to the Board of Directors effective August of 1999. Although no longer
involved in the day-to-day business of IMC, Mr. Earsley
-6-
<PAGE>
was retained by the Company in a non-employee consulting role to Industrial
Molding Corporation and is involved with strategic development. Mr. Earsley
was paid approximately $75,000 for his services in 1999.
STOCKHOLDERS AGREEMENT
The Company and the persons who were stockholders of the Company prior
to its initial public offering are parties to an agreement which provides that,
so long as the Ennen family continues to hold at least 10 percent of the Common
Stock, in the event that Mr. Ennen for any reason ceases to serve as a director
of the Company, such individuals will vote their shares of Common Stock in favor
of a director nominee who is designated by the Ennen family. To the Company's
knowledge, as of March 20, 2000, members of the Ennen family held, in the
aggregate, approximately 20.7 percent of the outstanding shares of Common Stock,
and the other parties to the Agreement held, in the aggregate, approximately
12.9 percent of the outstanding shares of Common Stock.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid an annual
retainer of $15,000 and a fee of $1,000 for each Board or Committee meeting
attended, except that directors do not receive fees for attendance at Committee
meetings held on the same day as a Board meeting. Directors who are employees of
the Company do not receive any compensation for their service as directors.
Directors may elect to defer some or all of the compensation they are provided
by the Company. In addition, each Director who is not an employee of the Company
received 5,000 stock options on July 4, 1999. The exercise price of the options
was $5.94 per share, which was the closing price of the stock on Nasdaq on the
date the option was granted. The term of the options is ten years from the date
of grant. These options become fully vested on January 4, 2000. In the event of
termination of service due to death or disability, the options become fully
vested. The Company also reimburses all directors for out-of-pocket expenses
incurred in attending Board and Committee meetings.
COMMITTEES OF THE BOARD
AUDIT COMMITTEE. The Audit Committee of the Board of Directors consists
of G. Ronald Morris, Michael E. Werner, and Steven T. Warshaw. The Audit
Committee is responsible for recommending the independent certified public
accountants to be selected by the Board of Directors to conduct the annual audit
of the books and accounts of the Company and for reviewing the adequacy and
effectiveness of the internal auditing, accounting and financial controls of the
Company with the independent certified public accountants and the Company's
internal financial and accounting staff. The Audit Committee met one time in
1999.
COMPENSATION COMMITTEE. The Compensation Committee of the Board of
Directors consists of G. Ronald Morris, Michael E. Werner, and Steven T.
Warshaw. The Compensation Committee is responsible for reviewing and approving
the Company's executive compensation policies and practices and supervising the
administration of the Company's employee benefit plans, including the NN Ball &
Roller, Inc. Stock Incentive Plan. The functions of the Compensation Committee
are discussed in further detail in the section entitled "Report of the
Compensation Committee" herein. The Compensation Committee met three times in
1999.
ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
The Board of Directors held six meetings in 1999. Each director of the
Company was present for all of the meetings of the Board of Directors and each
Committee on which such director served.
-7-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth for the years ended December 31, 1997,
1998 and 1999, certain information concerning the compensation paid for services
rendered in all capacities by the Company, to each individual who served as the
Chief Executive Officer and to each of the other most highly compensated
executive officers of the Company whose annual salary and bonus in 1999 exceeded
$100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------
NAME AND (1) ALL OTHER
PRINCIPAL --- OPTIONS/ COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) SARS (#) ($) (1)
- -------- ---- ---------- --------- -------- -------
<S> <C> <C> <C> <C> <C>
Roderick R. Baty . . . . . . . . . . . . . . . . 1999 210,137 45,000 85,000 1,057(2)
Chief Executive Officer/President 1998 200,000 0 0 1,196
1997 154,063 20,000 0 712
Richard D. Ennen . . . . . . . . . . . . . . . . 1999 200,000 40,000 0 46,352(2)(3)
Chairman 1998 200,000 0 0 47,408
1997 174,720 20,000 0 46,587
Frank T. Gentry . . . . . . . . . . . . . . . . 1999 124,667 21,000 15,900 652(2)
Vice President - Manufacturing 1998 114,000 0 0 733
1997 106,307 13,000 0 612
David L. Dyckman . . . . . . . . . . . . . . . . 1999 132,478 23,000 18,000 609(2)
Chief Financial Officer/Vice President 1998 78,269 0 40,000 30,018
1997 0 0 0 0
Robert R. Sams . . . . . . . . . . . . . . . . . 1999 103,285 19,000 16,600 810(2)
Vice President - Market Services 1998 118,894 0 0 611
1997 111,104 11,000 2,000 600
- --------------------------
</TABLE>
(1) For all named executives other than Mr. Ennen, amounts for 1999 include
$500 in Company matching contributions under a "401(k)" savings plan
that is open to substantially all of the Company's employees and
officers who have met certain service and age requirements.
(2) Amounts reported for 1999 include $557, $6,767, $233, $109 and $210 in
premiums paid by the Company for supplemental life insurance for the
benefit of Messrs. Baty, Ennen, Gentry, Dyckman and Sams.
(3) This amount for 1999 includes of $39,585 in premiums paid by the
Company on a $1,200,000 life insurance policy for Mr. Ennen, the
proceeds of which are payable to his named beneficiaries.
-8-
<PAGE>
AGGREGATED OPTION EXERCISES IN 1999
AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning stock
option exercises during 1999 and option values at year-end, with respect to
stock options granted to the executive officers named in the Summary
Compensation Table.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY
NUMBER OF UNEXERCISED OPTIONS
SHARES OPTIONS AT YEAR-END (#) AT YEAR-END ($)(1)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Roderick R. Baty . .. . . . . . . 0 - 120,000/115,000 0/$111,350
Richard D. Ennen . . . . . . . . 0 - - -
Frank T. Gentry . . . . . . . . . 0 - 28,800/26,850 0/$20,829
David L. Dyckman . . . . . . . 0 - 8,000/50,000 0/$40,980
Robert T. Sams . . . . . . . . . 0 - 8,000/21,800 0/$20,698
- ----------------------------
</TABLE>
(1) On December 31, 1999, the market price of the Common Stock was $7.25
per share.
EMPLOYMENT AGREEMENT WITH MR. BATY
Mr. Baty has a written agreement to serve as President and Chief
Executive Officer until July 31, 2000 which extends automatically for successive
one-year terms unless either party gives notice of termination. The Company may
terminate the employment of Mr. Baty with or without cause, but if terminated
without cause, Mr. Baty would continue to receive his annual salary, paid on a
monthly basis, for one year from the date of termination. Mr. Baty has also
agreed to a non-competition agreement that ends two years after the conclusion
of his employment with the Company.
EMPLOYMENT AGREEMENT WITH MR. GENTRY
Mr. Gentry has a written employment agreement to serve as Vice
President - Manufacturing until March 31, 2000 that extends automatically for
successive one-year terms unless either party gives notice of termination. The
Company may terminate Mr. Gentry's employment with or without cause, but if Mr.
Gentry is terminated without cause, he would continue to receive his annual
salary, paid on a monthly basis, for one year from the date of termination. Mr.
Gentry has also agreed to a non-competition agreement that ends two years after
the conclusion of his employment with the Company.
-9-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is responsible for
the oversight of the Company's compensation policies. The membership of the
Compensation Committee during 1999 consisted of G. Ronald Morris, Michael E.
Werner and Steven T. Warshaw. The report of the Committee on executive officer
compensation for 1999 is set forth below.
COMPENSATION PRINCIPLES
The goal of the Company is to structure its compensation arrangements
for executive officers in a manner that will promote the Company's profitability
and enhance stockholder value. In designing its compensation arrangements to
achieve this goal, the Company is guided by the following objectives:
o attracting and retaining qualified and dedicated executives who are
essential to the long-term success of the Company;
o providing compensation packages that are competitive with the
compensation arrangements offered by comparable companies, including
the Company's competitors;
o tying a significant portion of an executive officer's compensation to
the Company's and the individual's performance; and
o directly aligning the interests of management with the interests of the
stockholders through stock-based compensation arrangements.
In 1999, the components of the Company's executive compensation arrangements
consisted of salary, cash bonuses and stock option awards pursuant to the Stock
Incentive Plan.
EXECUTIVE OFFICER COMPENSATION
As a general matter, the Company believes that the interests of the
Company and its stockholders are best served by maintaining a flexible approach
to executive compensation. In this regard, the Company tends to rely on
subjective criteria rather than a preestablished formula. The Committee
currently is considering, however, the implementation of a more formal
compensation structure whereby, for example, specific salary ranges would be
prescribed for particular positions within the Company and bonus awards would be
tied to preestablished criteria.
In 1999, the Compensation Committee requested that Mr. Ennen, the
Chairman of the Company, and Mr. Baty, the Chief Executive Officer of the
Company, make recommendations as to the appropriate salary and number of stock
options, if any, to be granted to each of the Company's executive officers. The
Compensation Committee, following due consideration, adopted substantially all
such recommendations. The Committee delegated authority to Mr. Baty to set the
annual bonus amounts for each of the executive officers of the Company, other
than Mr. Ennen and himself, without further formal approval by the Committee.
SALARY. The salary level for the Company's executive officers generally
is determined biannually. A base salary level is established for each executive
officer by reference to salaries historically paid by the Company to its
executive officers and to salaries paid to executive officers holding comparable
positions with comparable companies in the Company's geographic region. From
time to time the Company also consults published reports that compile salary and
bonus information for small-to-medium sized companies (some but not all of which
may be companies that comprise the Value Line Machinery Industry Stock Index the
performance of which are presented in the "Stock Performance Graph"). The
Company typically targets its base salary levels approximately at the midpoint
of the competitive salary range. The target levels are then adjusted based on a
number of
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<PAGE>
subjective factors, including the executive's scope of responsibility and
individual performance, and to maintain equity within the Company's overall
salary structure.
ANNUAL BONUS. Decisions regarding bonuses to executives are made
annually. As with the Company's other compensation practices, the receipt of a
bonus is dependent, for the most part, upon a subjective evaluation of corporate
performance and of the contribution of the particular individual to the
attainment of such performance.
The bonuses paid to the named executive officers for 1999 are set forth
in the Summary Compensation Table. The most significant considerations
underlying the award of bonuses for 1999 were continued improvement in the
quality of the Company's products and services and the Company's continued
profitabliity.
STOCK INCENTIVE PLAN. Prior to its initial public offering in 1994, the
Company adopted the Stock Incentive Plan under which 1,125,000 shares of the
Company's Common Stock have been reserved for issuance to executive officers and
other key employees, as determined by the Compensation Committee. The Stock
Incentive Plan was amended at the 1999 Annual Meeting by an affirmative vote of
the holders of a majority of the outstanding shares of the Common Stock to
increase the number of shares available for issuance pursuant to awards made
under the plan from 1,125,000 to 1,625,000. The Company awarded options to
purchase, in the aggregate, 539,175 shares of Common Stock to six of its
executive officers and other key employees during 1999. With respect to the
options awarded, the Committee determined, on a subjective basis, and based upon
the recommendations of Messrs. Ennen and Baty, that such awards were appropriate
to reward such officers and other key employees for superior performance and to
provide financial incentives for such officers and employees to continue to
perform in a superior manner.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Company's decisions regarding compensation of its Chief Executive
Officer are guided by the same policies and considerations that govern
compensation of the Company's other executive officers. Mr. Baty's salary was
set at a level that the Committee, after consideration of Mr. Ennen's
recommendation, determined was appropriate in light of the Company's
performance.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended,
precludes any public corporation from taking a deduction for compensation in
excess of $1 million paid to its chief executive officer or any of its other
executive officers. Certain performance-based compensation, however, is exempt
from the deduction limit. No formal policy has been adopted by the Company with
respect to minimizing the risk that compensation paid to its executive officers
will exceed the deduction limit. The Company does not anticipate that any
compensation paid to its executive officers in 1999 will exceed the limit
imposed by Section 162(m).
G. Ronald Morris
Michael E. Werner
Steven T. Warshaw
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<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Company's Common Stock (consisting of stock price performance and reinvested
dividends) from December 31, 1994 with the cumulative total return (assuming
reinvestment of all dividends) of (i) the Value Line Machinery Industry Stock
Index and (ii) the Standard & Poor's 500 Stock Index, for the period December
31, 1994 through December 31, 1999. The Value Line Machinery Industry Index is
an industry index comprised of 49 companies engaged in manufacturing of
machinery and machine parts, a list of which is available from the Company. The
comparison assumes $100 was invested in the Company's Common Stock and in each
of the foregoing indices on December 31, 1994. There can be no assurances that
the performance of the Common Stock will continue in the future with the same or
similar trend depicted on the graph.
[GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL STOCKHOLDER RETURN
DEC.31, 1994 DEC.31, 1995 DEC.31,1996 DEC.31,1997 DEC.31,1998 DEC.31,1999
------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
NN Ball & Roller, Inc . . . . . . . . . . 100.00 210.74 186.92 112.05 76.78 101.10
Value Line Machinery Index . . . . . . . 100.00 137.50 169.47 226.03 290.22 349.08
Standard & Poor's 500 . . . . . . . . . . 100.00 141.70 180.24 276.01 235.78 321.13
</TABLE>
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<PAGE>
ANNUAL REPORT
The Company's 1999 Annual Report to Stockholders, which includes its
Annual Report on Form 10-K for the year ended December 31, 1999, is being mailed
together with this Proxy Statement.
By Order of the Board of Directors,
William C. Kelly, Jr.
Secretary
STOCKHOLDERS ARE REQUESTED TO MARK, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. YOUR PROMPT RESPONSE WILL BE
HELPFUL, AND YOUR COOPERATION WILL BE APPRECIATED.
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<PAGE>
<PAGE>
NN BALL & ROLLER, INC.
800 TENNESSEE ROAD
ERWIN, TENNESSEE 37650
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, AT THE RENAISSANCE CHARLOTTE SUITES HOTEL 2800 COLISEUM
CENTRE DRIVE, CHARLOTTE, NORTH CAROLINA, 28217
The undersigned stockholder hereby appoints Richard D. Ennen and Roderick R.
Baty, and each of them, with full power of substitution and revocation, the
proxies of the undersigned to vote all shares registered in the name of the
undersigned on all matters set forth in the proxy statement and on any other
matters that may properly come before the Annual Meeting and all adjournments
thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
STOCKHOLDER. IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR EACH OF THE
DIRECTOR NOMINEES, FOR THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION AND FOR THE RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE DIRECTOR NOMINEES,
FOR THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION AND FOR THE
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
AUDITORS.
<TABLE>
<S> <C>
Please mark your votes as indicated in the example /X/
1. Election of Directors.
Nominees: Richard D. Ennen, Roderick R. Baty. For, except
vote withheld from the following nominee(s)
------------------------------------------------------------.
/ / FOR / / WITHHELD
2. To approve the amendment to the Company's Certificate of
Incorporation to change the Company's name to NN, Inc.
/ / FOR / / AGAINST / / ABSTAIN
3. For ratification of the selection of PricewaterhouseCooopers
LLP as independent auditors.
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR EACH OF THE DIRECTOR NOMINEES, FOR THE AMENDMENT TO THE STOCK
INCENTIVE PLAN AND FOR THE RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
Note: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as an attorney, 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.
SIGNATURE(S) ______________________
DATE ______________________________
SIGNATURE(S) ______________________
DATE ______________________________
