SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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 Rule 14a-11(c) or Rule
14a-12
BALDOR ELECTRIC COMPANY
-------------------------------------------------------
(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>
BALDOR ELECTRIC COMPANY
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD May 2, 1998
To the Shareholders:
The Annual Meeting of Shareholders of Baldor Electric Company,
a Missouri corporation, will be held at the Holiday Inn, 700
Rogers Avenue, Fort Smith, Arkansas, on Saturday, May 2, 1998,
at 10:30 a.m., local time, for the following purposes:
1. To elect directors;
2. To consider and act upon a proposal to amend the Restated
Articles of Incorporation, as amended, of Baldor Electric
Company to increase the authorized shares of the
Company's Common Stock, par value $0.10 per share, from
50,000,000 to 150,000,000 shares;
3. To consider and act upon a proposal to amend the Baldor
Electric Company 1994 Incentive Stock Plan to increase
the number of shares of the Company's Common Stock
authorized for issuance pursuant to awards to be made
thereunder from 2,000,000 to 4,000,000; and
4. To transact such other business as may properly come
before the meeting and all adjournments thereof.
The Board of Directors has fixed the close of business on March
18, 1998, as the record date for the determination of the
shareholders entitled to notice of, and to vote at, the Annual
Meeting and all adjournments thereof.
By Order of the Board of Directors
Lloyd G. Davis
Secretary
March 27, 1998
Even if you expect to attend the meeting in person, please
mark, date, and sign the enclosed proxy and return it in the
enclosed return envelope. The return envelope does not require
postage if mailed in the United States. Shareholders who
attend the meeting may revoke their proxies and vote in person
if they so desire.
<PAGE>
BALDOR ELECTRIC COMPANY
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited on behalf of the Board of
Directors of Baldor Electric Company (the "Company") for use at
the Annual Meeting of its shareholders to be held at the
Holiday Inn, 700 Rogers Avenue, Fort Smith, Arkansas, on
Saturday, May 2, 1998, at 10:30 a.m, local time. If the form
of proxy is executed and returned to the Company, it
nevertheless may be revoked at any time before it is exercised
either by written notice to the Secretary of the Company or by
attending the meeting and voting in person. If no contrary
instructions are indicated on the form of proxy, the proxy will
be voted for the election of the three nominees named herein as
directors and for Proposals 2 and 3. If matters other than
those mentioned herein properly come before the meeting, the
proxy will be voted by the persons named therein in a manner
which they consider to be in the best interests of the Company.
The Company's principal executive offices are located at 5711
R. S. Boreham, Jr. Street, Fort Smith, Arkansas 72908. This
Proxy Statement and the accompanying form of proxy are first
being sent to shareholders on or about March 27, 1998.
The cost of the solicitation of proxies will be borne by the
Company. In addition to the use of the mails, proxies may be
solicited personally or by telephone or facsimile, by regular
employees of the Company, without additional compensation.
Brokerage firms, banks, nominees and others will be requested
to forward proxy materials to the beneficial owners of the
Company's Common Stock held of record by them. No solicitation
is to be made by specially engaged employees or other paid
solicitors.
VOTING
Only the holders of record of the Company's Common Stock, par
value $0.10 per share (the "Common Stock") at the close of
business on March 18, 1998, will be entitled to notice of and
to vote at the Annual Meeting. There were 37,121,707
shares of Common Stock of the Company outstanding as of the
close of business on March 18, 1998. Each share of Common
Stock entitles the holder to one vote on each item of business
to be presented for shareholder vote at the Annual Meeting,
except for the election of directors, in which case cumulative
voting is authorized as described herein under "Election of
Directors".
A majority of the outstanding shares entitled to vote at this
meeting represented in person or by proxy will constitute a
quorum for the transaction of business at the Annual Meeting.
Shares represented by proxies which are marked "withhold
authority" with respect to the election of any one or more
nominees for election as directors, proxies which are marked
"abstain" with respect to Proposals 2 and 3, and proxies which
are marked to deny discretionary authority on other matters,
will be counted for the purpose of determining the number of
shares represented by proxy at the meeting and the presence or
absence of a quorum.
<PAGE> 1
Because the Bylaws of the Company provide for cumulative
voting, those nominees for Director who receive a plurality of
the votes cast are elected as Directors of the Company.
Accordingly, marking the proxy to withhold a vote for one or
more nominees does not have the effect of a vote against that
director, but will have an effect on the number of votes cast
in the election and could affect the outcome.
The affirmative vote of a majority of the issued and
outstanding shares of Common Stock will be required to approve
Proposal 2. The affirmative vote of a majority of the issued
and outstanding Common Stock present in person or by proxy at
the Annual Meeting (assuming a quorum is present) will be
required to approve Proposal 3. Shares represented by proxies
that are marked to deny discretionary authority on other
matters will be treated as shares present and entitled to vote
on those matters, which will have the same effect as a vote
against approval of such proposals. If a broker indicates on
the proxy that it does not have discretionary authority to vote
on a particular matter, the related shares will not be
considered as present and entitled to vote with respect to that
matter. Such so-called "broker non-votes" will have the effect
of a vote against Proposal 2 but will not have any effect on
Proposal 3.
The Company maintains the Baldor Electric Company Employees'
Profit Sharing and Savings Plan (the "Profit Sharing and
Savings Plan"). One of the investment alternatives for
employee-participants is the Baldor Stock Fund. Employee-
participants have the right under the Profit Sharing and
Savings Plan to direct the trustee thereof how to vote the
shares of Common Stock that are allocated to their accounts.
The Profit Sharing and Savings Plan requires the trustee to
vote the shares of Common Stock not yet allocated to the
accounts of employee-participants in proportion to the votes
cast by employee-participants.
PROPOSAL 1:
ELECTION OF DIRECTORS
The Restated Articles of Incorporation and Bylaws of the
Company provide for a classified Board of Directors, with the
Board divided into three classes whose terms expire at
different times. Three members are to be elected to the Board
of Directors in 1998, each to serve for a term of three years.
In the election of directors, each shareholder is entitled to
vote cumulatively. To vote cumulatively in the election of
directors, each shareholder may multiply the number of shares
of Common Stock held by him by the number of directors to be
elected and cast the whole number of votes for one candidate or
distribute them among two or more candidates. There is no
condition precedent to the exercise of these cumulative voting
rights.
The persons named in the enclosed form of proxy intend to vote
such proxy for the election of the three nominees named below
as directors of the Company, unless the shareholder indicates
on the form of proxy that the vote should be withheld or
contrary directions are indicated. If the form of proxy is
signed and returned without any direction given, shares of the
Company's Common Stock will be voted for the election of the
Board's slate of nominees and in their discretion, the persons
named in the proxy are authorized to cumulate and vote the
shares of the shareholders giving the proxy for any nominee
except those nominees with respect to whom authority has been
withheld.
<PAGE> 2
The Board of Directors has no reason to doubt the availability
of the nominees and each has indicated a willingness to serve
if elected. If any nominee shall decline or be unable to
serve, it is intended that, in the discretion of the Board of
Directors, either the size of the Board will be reduced or the
proxies will vote for a substitute nominee designated by the
Board of Directors.
Information Regarding the Nominees for Directors
to be Elected in 1998 for Terms Ending in 2001
Fred C. Ballman ... Former Chairman and Chief Executive Officer
of the Company (retired); Age 85; Present term expires in May
1998; Director of the Company from 1944 to 1982 and since 1992.
R. S. Boreham, Jr. ... Chairman of the Board of the Company
since 1981; Chief Executive Officer of the Company from 1978
through 1992; Director of U.S.A. Truck, Inc.; Age 73; Present
term expires in May 1998; Director of the Company since 1961.
(1)
R. L. Qualls ... Vice Chairman of the Board of the Company
since November 1996; Chief Executive Officer of the Company
from 1993 thru 1997; President of the Company from 1990 to
November 1996; Director of Bank of the Ozarks, Inc. since July
1997; Age 64; Present term expires in May 1998; Director of the
Company since 1987. (2)
Information Regarding the Directors
Who Are Not Nominees for Election
and Whose Terms Continue Beyond 1998
Jefferson W. Asher, Jr. ... Independent Management Consultant
providing assistance to corporations, attorneys, banking
institutions, and other creditors; Director of California Beach
Restaurants, Inc.; Age 73; Present term expires in May 1999;
Director of the Company since 1973. (3)(4)
O. A. Baumann ... The Company's manufacturer's sales
representative in St. Louis, Missouri, from 1947 to 1987
(retired); Age 76; Present term expires in May 2000; Director
of the Company since 1961.
John A. McFarland ... President of the Company since November
1996; Executive Vice President - Sales and Marketing of the
Company from August 1996 to November 1996; Vice President -
Sales of the Company from May 1991 to August 1996; Age 47;
Present term expires in May 2000; Director of the Company since
August 1996. (2)
Robert J. Messey ... Senior Vice President, Chief Financial
Officer, and Director of Sverdrup Corporation, engineering and
architectural firm, since 1993; Partner of Ernst & Young LLP,
international accounting firm, prior to 1993; Age 52; Present
term expires in May 1999; Director of the Company since 1993.
(5)(6)(7)
<PAGE> 3
Robert L. Proost ... Corporate Vice President, Treasurer, and
Director of Administration, A.G. Edwards & Sons, Inc.,
securities brokerage and investment banking, which has
historically provided investment banking services to the
Company; Director of A. G. Edwards & Sons, Inc.; Age 60;
Present term expires in May 2000; Director of the Company since
1988. (6)(7)
Willis J. Wheat ... President Emeritus of Oklahoma City
University; Professor of Management and Marketing, Oklahoma
City University, 1987 through 1995; Age 72; Present term
expires in May 1999; Director of the Company since 1991.
(4)(8)
_______________
(1) Chairman of the Executive Committee
(2) Member of the Executive Committee
(3) Chairman of the Audit Committee
(4) Member of the Nominating Committee
(5) Chairman of the Nominating Committee
(6) Member of the Audit Committee
(7) Member of the Stock Option Committee
(8) Chairman of the Stock Option Committee
Information About the Board of Directors
and Committees of the Board
Board of Directors ... In addition to its normal
responsibilities, the Board of Directors, as a whole, approves
executive compensation and administers the 1981 Incentive Stock
Plan (the "1981 Plan"), which has expired except for options
outstanding. During the fiscal year ended January 3, 1998
("fiscal year 1997"), four meetings of the Board of Directors
were held.
Executive Committee ... Between meetings of the Board, the
Executive Committee is empowered to act in lieu of the Board of
Directors except on those matters for which the Board of
Directors has specifically reserved authority to itself or as
set forth in the Company's Bylaws. The Executive Committee
serves as the Company's compensation committee, by making
recommendations to the Board of Directors, and also administers
the 1989 Stock Option Plan for Non-Employee Directors (the
"1989 Plan"), which has expired except for options outstanding,
and the 1996 Stock Option Plan for Non-Employee Directors (the
"1996 Plan"). Because the Executive Committee is comprised of
those directors who are also executive officers and employees
of the Company, members of the Executive Committee are not
eligible to participate in these two plans. The Executive
Committee held ten meetings during fiscal year 1997.
Audit Committee ... The Audit Committee performs the following
functions: assists in the selection of independent auditors,
directs and supervises investigations into matters relating to
<PAGE> 4
audit functions, reviews with independent auditors the plans
and results of the audit engagement, reviews the degree of
independence of the auditors, considers the range of audit and
non-audit fees, and reviews the adequacy of the Company's
system of internal accounting controls. The Audit Committee is
comprised of non-employee directors. This Committee held three
meetings during fiscal year 1997.
Stock Option Committee ... The Stock Option Committee
administers the Company's 1987 Incentive Stock Plan (the "1987
Plan"), which is expired except for outstanding options, and
the 1994 Plan, both of which are employee stock plans. The
Stock Option Committee also administers the 1990 Stock Plan for
District Managers (the "1990 Plan"). Awards can be made from
the 1994 Plan and the 1990 Plan and the Stock Option Committee
has the exclusive authority to determine which of the eligible
participants are to receive awards and to determine the amount
and the terms and conditions of the awards made to each
participant. The Stock Option Committee is comprised of non-
employee directors. This Committee held four meetings during
fiscal year 1997.
Nominating Committee ... The Nominating Committee is
responsible for proposing a slate of directors for election by
the shareholders at each annual meeting and proposing
candidates to fill any vacancies on the Board. Pursuant to the
Bylaws, any shareholder of the Company eligible to vote in an
election of directors may nominate a person or persons for
election to the Board of Directors by written notice mailed to
the Company not less than 45 nor more than 90 days prior to the
regularly scheduled date set forth in the Bylaws for the annual
meeting of shareholders. The notification to the Company shall
state the name and residence address of the nominating
shareholder and, to the extent known to the nominating
shareholder: the name and principal address of the proposed
nominee, the total number of shares to be voted for the
proposed nominee, the number of shares held by the nominating
shareholder, and the name and residence address of each
notifying or nominating shareholder. The committee will
consider candidates for Board membership proposed by
shareholders who have complied with the aforementioned
procedures. The Nominating Committee is comprised of non-
employee directors, none of whom are currently nominees for
directors to be elected in 1998. This Committee held one
meeting during fiscal year 1997.
Director Compensation ... During fiscal year 1997, each member
of the Board of Directors who was not a Company employee
received $3,700 per quarter for services as a director. Each
director who is a member of the Audit Committee received an
additional $1,800 per quarter for service on that Committee,
except for the Chairman of the Committee who received $2,900
per quarter. Each director who is a member of the Stock Option
Committee received an additional $700 per quarter during fiscal
year 1997. Under the terms of the 1996 Plan, all non-employee
directors received an option grant on January 31, 1997, to
purchase shares of Common Stock of the Company consisting of an
option to purchase 3,240 shares having an exercise price of
$19.22 (the fair market value per share on that date) and an
additional option to purchase 2,160 shares having an exercise
price of $9.61 (50% of the fair market value per share on that
date). Annual option grants become exercisable in five equal
installments beginning on the grant's first anniversary. All
options expire ten years after the grant date.
<PAGE> 5
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 18,
1998, regarding all persons known to the Company to be the
beneficial owners of more than five percent of the Company's
Common Stock. The table also includes security ownership for
each director of the Company, each of the executive officers
named in the Summary Compensation Table (the "Named executive
Officers"), and all executive officers and directors (including
nominees for directors) as a group.
Number of Percent of
Name Shares Class (1)
- --------------------------------- ---------- ----------
The Baldor Electric Company
Profit Sharing and Savings Plan ,3,841,345 (2) 10.0 %
P. O. Box 2400
Fort Smith, Arkansas 72902
Fred C. Ballman 3,034,544 (3) 8.2 %
P. O. Box 6638
Fort Smith, Arkansas 72906
R. S. Boreham, Jr. 1,628,937 (4) 4.4 %
O. A. Baumann 620,216 (5) 1.7 %
R. L. Qualls 314,461 (6) *
Lloyd G. Davis 267,580 (7) *
John A. McFarland 227,792 (8) *
James R. Kimzey 224,967 (9) *
Jefferson W. Asher, Jr. 71,639 (10) *
Robert L. Proost 54,240 (11) *
Robert J. Messey 36,227 (12) *
Willis J. Wheat 20,453 (13) *
All executive officers and
directors as a group
(18 persons) 6,972,270 (14) 18.2 %
_______________
* Less than 1%.
<PAGE> 6
(1) Percentage is calculated in accordance with Rule 13d-
3(d)(1) under the Securities Exchange Act of 1934, as
amended. The numerator consists of the number of shares
of Baldor Common Stock owned by each individual (including
shares issuable upon exercise of employee stock options
which are currently exercisable or exercisable within 60
days of March 18, 1998). The denominator consists of all
issued and outstanding shares of Baldor Common Stock plus
those shares which are issuable upon the exercise of
employee stock options referenced above.
(2) Based on correspondence dated March 24, 1998, received
from the trustee of the Company's Profit Sharing and
Savings Plan, participants in such Plan have sole voting
power and shared investment power over 3,832,894
shares and shared voting and shared investment power over
8,451 shares.
(3) Shared voting and shared investment power.
(4) Shared voting and shared investment power over 121,948
shares; sole voting and sole investment power over
1,356,210 shares; sole voting and shared investment power
over 656 shares in the Profit Sharing and Savings Plan;
includes exercisable options to purchase 150,123 shares.
(5) Shared voting and shared investment power over 587,816
shares; includes exercisable options to purchase 32,400
shares.
(6) Sole voting and sole investment power over 199,066 shares;
sole voting and shared investment power over 1,770 shares
in the Profit Sharing and Savings Plan; includes
exercisable options to purchase 113,625 shares.
(7) Sole voting and sole investment power over 69,000 shares;
shared voting and shared investment power over 6,752
shares; sole voting and shared investment power over
17,438 shares and shared voting and shared investment
power over 2,092 shares in the Profit Sharing and Savings
Plan; includes exercisable options to purchase 130,499
shares directly and 41,799 indirectly.
(8) Sole voting and sole investment power over 20,728 shares;
shared voting and shared investment power over 34,007
shares; sole voting and shared investment power over
21,737 shares in the Profit Sharing and Savings Plan;
includes exercisable options to purchase 151,320 shares.
(9) Shared voting and shared investment power over 56,444
shares; sole voting and sole investment power over 9,272
shares; sole voting and shared investment power over 7,932
shares in the Profit Sharing and Savings Plan; includes
exercisable options to purchase 151,319 shares.
(10) Sole voting and sole investment power over 47,879
shares; includes exercisable options to purchase 23,760
shares.
(11) Sole voting and sole investment power over 24,000
shares; includes exercisable options to purchase 30,240
shares.
(12) Sole voting and sole investment power over 2,400
shares; shared voting and shared investment power over
1,427 shares; includes exercisable options to purchase
32,400 shares.
(13) Shared voting and shared investment power over 15,053
shares; includes exercisable options to purchase 5,400
shares.
(14) Sole voting and sole investment power over 1,781,611
shares; shared voting and shared investment power over
3,915,003 shares; sole voting and shared investment
power over 91,134 shares in the Profit Sharing and
Savings Plan; includes exercisable options to purchase
1,184,522 shares.
<PAGE> 7
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid during each of the Company's last three
fiscal years to each of the Company's Named Executive Officers,
including the CEO.
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term Compensation
-----------------------------
Annual Compensation Awards Payouts
---------------------------- --------------------- -------
Other Restricted Securities All
Annual Stock Underlying LTIP Other
Name and Principal Position Year Salary Bonus Compensation Awards Options Payouts Compensation (1)
- --------------------------- ---- ------ ----- ------------ ---------- ---------- ------- ------------
($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. L. Qualls 1997 315,000 310,432 0 0 26,000 0 42,642
Vice Chairman of the 1996 300,000 307,669 0 0 37,332 0 62,046
Board of Directors 1995 270,000 286,187 0 0 28,000 0 61,554
and Chief Executive
Officer
R. S. Boreham, Jr. 1997 325,000 320,287 0 0 26,000 0 102,512
Chairman of the 1996 275,000 282,030 0 0 37,332 0 98,749
Board of Directors 1995 220,000 256,582 0 0 22,400 0 98,657
John A. McFarland 1997 160,000 147,825 0 0 26,000 0 20,977
President 1996 132,000 110,761 0 0 22,000 0 20,431
1995 120,000 78,948 0 0 14,000 0 19,567
Lloyd G. Davis 1997 149,000 118,260 0 0 17,333 0 23,241
Chief Financial 1996 132,000 110,761 0 0 22,000 0 22,729
Officer, Executive 1995 120,000 78,948 0 0 14,000 0 21,817
Vice President-Finance,
Secretary, and Treasurer
James R. Kimzey 1997 149,000 118,260 0 0 17,333 0 23,930
Executive Vice 1996 128,000 84,096 0 0 22,000 0 23,218
President - Research 1995 120,000 47,369 0 0 10,000 0 23,076
and Engineering
</TABLE>
_______________
(1) The amounts disclosed in this column include contributions
by the Company Profit Sharing and Savings Plan, a defined
contribution plan, which is two plans in one: a profit
sharing plan and a savings plan. The Company makes all
contributions to the profit sharing plan which are equal
to 12% of pre-tax earnings for participating companies.
The contributions are allocated among eligible employees
in proportion to their total compensation. The Company
makes matching contributions to the savings plan at a rate
equal to 25% of the first 6% of the participating
employee's compensation earned and contributed. However,
the above Named Executive Officers did not receive these
full allocation amounts and were limited to a lesser
portion of the Company's contributions to the profit
sharing plan and savings plan. The Company also maintains
a split-dollar life insurance plan for all executive
officers. The Company makes the premium payments on the
split-dollar life insurance policies which vary according
to age and insurance coverage for each officer. Each
executive officer reimburses the Company for a portion of
the premium that represents the full value attributable to
term life coverage. The amounts included as compensation
for each named officer represents the full dollar value of
the premium paid by the Company during the covered fiscal
year less the reimbursement received from each individual.
The fiscal year 1997 amounts in this column represent
Company contributions consisting of the following:
Contributions Contributions Split-Dollar
to the Profit to the Life Insurance
Name Sharing Plan Savings Plan Premiums
($) ($) ($)
------------- ------------- --------------
R. L. Qualls 15,556 2,112 24,974
R. S. Boreham, Jr. 15,556 2,036 84,920
John A. McFarland 15,556 1,700 3,721
Lloyd G. Davis 15,556 1,731 5,954
James R. Kimzey 15,556 1,204 7,170
<PAGE> 8
Option Grants in Last Fiscal Year
Individual Grants
--------------------------------------------------
Number of % of Total Market
Securities Options/SARs Price
Underlying Granted to Exercise on Grant Date
Options Employees in or Base Grant Expiration Present
Name Granted Fiscal Year Price Date Date Value
- ------------------ ------- ----------- ----- ---- ---- -----
(#) ($/sh) ($/sh) (1)
R. L. Qualls 20,000 (2) 4.5% 19.22 19.22 02/03/2007 111,200
6,000 (3) 1.3% 9.61 19.22 02/03/2007 65,640
R. S. Boreham, Jr. 20,000 (2) 4.5% 19.22 19.22 02/03/2007 111,200
6,000 (3) 1.3% 9.61 19.22 02/03/2007 65,640
John A. McFarland 20,000 (2) 4.5% 19.22 19.22 02/03/2007 111,200
6,000 (3) 1.3% 9.61 19.22 02/03/2007 65,640
Lloyd G. Davis 13,333 (2) 3.0% 19.22 19.22 02/03/2007 90,106
4,000 (3) 0.9% 9.61 19.22 02/03/2007 44,634
James R. Kimzey 13,333 (2) 3.0% 19.22 19.22 02/03/2007 90,106
4,000 (3) 0.9% 9.61 19.22 02/03/2007 44,634
_______________
(1) The Company used the Black-Scholes option pricing model to
determine grant date present value. Calculations are
based on a ten-year option term and estimated assumptions
of: a seven-year estimated life; interest rate of 6.5%;
annual dividend yield of 1.7%; and volatility of 16%.
Because the present values are based on estimates and
assumptions, the amounts reflected in this table may not
be achieved.
(2) Incentive stock options to purchase shares of Common Stock
of the Company were granted at the market value of the
Common Stock on the date of grant and are 100% exercisable
six months and one day following the grant date.
(3) Non-qualified options to purchase shares of restricted
Common Stock of the Company were granted at 50% of the
market value of the Common Stock on the date of grant with
full vesting occurring on the fifth anniversary date.
Vesting may be accelerated by early exercise or when
certain events relating to change of the Company's
ownership occurs. The restricted shares purchased on
exercise of such options may be voted but cannot be sold
or transferred until they are vested. The options are
100% exercisable six months and one day following the
grant date.
<PAGE> 9
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Number of
Securities Underlying Value of
Shares Unexercised Unexercised
Acquired on Value Options/SARs In-the-Money Options
Name Exercise Realized (1) at FY-End (#) at FY-End ($)(2)
- ---- -------- -------- --------- ---------
(#) ($) (A) (B) (A) (B)
R. L. Qualls 0 0 113,625 0 1,349,783 0
R. S. Boreham, Jr. 78,060 1,516,680 150,123 0 1,529,930 0
John A. McFarland 11,000 189,985 161,353 0 1,964,267 0
Lloyd G. Davis 12,834 226,889 130,499 0 1,506,524 0
James R. Kimzey 9,506 176,052 151,319 0 2,064,729 0
_______________
(A) Exercisable
(B) Unexercisable
(1) Represents the difference between the option exercise
price and the market price of the Common Stock on the date
of exercise multiplied by the number of shares acquired
upon exercise.
(2) Represents the difference between the $21.94 closing price
of the Common Stock as reported by the New York Stock
Exchange on January 2, 1998, the last trading day of
fiscal year 1997, and the exercise price of the options
multiplied by the number of shares of Common stock
underlying the option. The numbers shown reflect the
value of options accumulated over an eight-year period.
Change-of-Control Arrangements
Pursuant to agreements under the 1987 Plan and the 1994 Plan,
outstanding restricted Common Stock of the Company acquired by
an early exercise of a non-qualified stock option will fully
vest and be free of restrictions without the requirement of any
further act by the Company or shareholder in the event of a
"Change-of-Control" of the Company as defined in those
agreements.
Compensation Committee Interlocks and Insider Participation
Although the Company has no standing compensation committee of
the Board of Directors, the Executive Committee performs
functions similar to those customarily performed by such
committees by making recommendations to the Board; however, the
Board of Directors, as a whole, approves the salary and bonus
remuneration arrangements for directors and executive officers.
The Board of Directors administers the 1981 Plan, which has
expired except for options outstanding, and the Stock Option
Committee administers the 1987 Plan and the 1994 Plan, both
relating to employees. The Executive Committee administers the
1989 Plan and the 1996 Plan, both relating to non-employee
directors. The members of the Executive Committee are the
following directors who are also executive officers: R. S.
Boreham, Jr., John A. McFarland, and R. L. Qualls. The members
of the Stock Option Committee are the following non-employee
directors: Robert J. Messey, Robert L. Proost, and Willis J.
Wheat.
<PAGE> 10
Report of the Executive and Stock Option Committees
The Company applies a consistent philosophy to compensation for
all employees, including senior management. This philosophy is
based on the premise that the achievements of the Company
result from the coordinated efforts of all individuals working
toward common objectives. The Company strives to achieve those
objectives through teamwork that is focused on meeting the
expectations of customers and shareholders.
The Company's Officer's Compensation Plan (the "Plan") is
objective, formula driven, and has been consistently applied
since 1973. The Plan is designed to ensure that an appropriate
relationship exists between executive pay and the creation of
shareholder value. The primary goals of the Plan are to ensure
that total compensation is fair internally, is competitive
externally, and offers performance motivation. For purposes of
this section, total compensation is defined as salary plus
bonus. The Plan combines annual base compensation with a bonus
based upon the Company's performance. The Company believes
that the goals of the Plan are met by providing competitive
compensation which will motivate and retain key employees.
Total compensation for all executive officers is established
within the range of salaries and bonuses for persons holding
similar positions at other comparably-sized manufacturing
companies utilizing independent salary survey data. The survey
data is a composite of all manufacturing companies that are
comparably-sized based upon sales volume. The independent
survey does not provide a detailed list of all participating
companies; however, many of the participating companies are
listed, some of which are included in the performance graph.
In general, the total compensation for all executive officers
is expected to be slightly below the median for similar
positions compared to the independent survey data. This is
accomplished by establishing the annual base portion of
compensation at the low end of the survey with the potential
incentive portion being slightly above the median. This
results in a greater emphasis being placed upon the Company's
performance.
The total compensation individual officers may earn is
subjective based upon the individual's position, experience,
and ability to impact the Company's performance. In
establishing each officer's annual base and potential bonus
portion of compensation, additional consideration includes the
individual's past performance, initiative and achievement, and
future potential, as well as the Company's performance.
The potential bonus pool is based upon the sales and earnings
performance of the Company and the relative weights are 75%
sales and 25% earnings. Compensation attributable to the sales
component increases or decreases in relation to sales.
Compensation attributable to the earnings component increases
if earnings exceed a percentage of shareholders' equity as
determined by the Board of Directors and decreases if earnings
are less than such amount. Each individual executive officer's
participation in the potential bonus pool is determined as
described above and is assigned such that if the Company
achieves its sales and earnings objectives, the salary and
bonus combined will be competitive with the industry and will
remain consistent with the Company's philosophy and the Plan.
The outcome of the Company's sales and earnings for fiscal year
1997 resulted in actual bonuses equaling 44% to 50% of total
compensation for the Named Executive Officers.
<PAGE> 11
The factors considered in determining the compensation package
for the Chief Executive Officer for fiscal year 1997 were the
same as those described above for executive officers. The
total compensation for the Chief Executive Officer is slightly
below the median of comparably-sized manufacturing companies.
This median was obtained from independent salary survey data
which was utilized in the same manner for all executive
officers. The CEO's total compensation was competitive and
reflective of the Company's performance with 50% of the
compensation at risk in the form of a performance bonus. In
1997, 12% of the combined increase in the CEO's total
compensation over 1996 total compensation was the result of
improved sales and earnings.
The Company also maintains stock option plans to provide
additional incentives to executive officers and other employees
to work to maximize shareholder value. The Stock Option
Committee has granted incentive options to purchase shares of
Common Stock of the Company (at the fair market value of the
Common Stock on the date of grant) and non-qualified options to
purchase shares of restricted stock (at 50% of the fair market
value of the Common Stock on the date of grant) to executive
officers and other employees. Grants were made in fiscal year
1997 to named executives and other employees to continue to
encourage long-term growth and profitability. The number of
options granted to each executive officer is subjective based
upon individual performance, future potential, and abilities to
impact the Company's performance.
The CEO received incentive stock options to purchase 26,000
shares of Common Stock, which represented 5.8% of the total
shares granted. The number of options granted was subjective
based upon the CEO's ability to impact the Company's
performance as well as individual performance and future
potential.
The Board of Directors, as a whole, and the Board's Executive
Committee and Stock Option Committee, as appropriate,
continually review the executive compensation policies in
regards to Section 162(m) of the Internal Revenue Code of 1986
as Amended pertaining to the Company's $1,000,000 deductibility
limitation for applicable compensation paid to named executive
officers. In 1997, the deductibility of the Company's
executive compensation was not affected by the limitation under
Section 162(m).
EXECUTIVE COMMITTEE STOCK OPTION COMMITTEE
R. S. Boreham, Jr., Chairman Willis J. Wheat, Chairman
John A. McFarland Robert J. Messey
R. L. Qualls Robert L. Proost
<PAGE> 12
Performance Graph
Comparison of Five-Year Cumulative Total Return
Compound Annual Growth Rate
- ------------------------------
Baldor $258 20.8%
DJ EE $222 17.3%
S&P 500 $252 20.3%
S&P EE $332 27.1%
12/92 12/93 12/94 12/95 12/96 12/97
----- ----- ----- ----- ----- -----
Baldor $100 $132 $152 $173 $216 $258
DJ EE $100 $109 $113 $148 $181 $222
S&P 500 $100 $110 $112 $153 $189 $252
S&P EE $100 $121 $122 $171 $235 $332
Assumes $100 invested at year-end 1992 in Baldor Electric
Company, the Dow Jones Electrical Components & Equipment Group
Index, the S&P 500 Index, and the S&P Electrical Equipment
Composite Index
The Dow Jones Electrical Components & Equipment Group Index (DJ
EE) and the S&P Electrical Equipment Composite Index (S&P EE)
are both measures of the electrical equipment industry and
contain peer companies of Baldor; however, the Dow Jones
Electrical Components & Equipment Group Index has more
participants which relate to Baldor's specific product
industry. For a more relevant comparison, data from both of
these indices is included on the above graph.
<PAGE> 13
PROPOSAL 2:
TO AMEND THE RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF SHARES OF COMMON STOCK,
PAR VALUE $0.10 PER SHARE,
FROM 50,000,000 TO 150,000,000 SHARES
The Board of Directors of the Company has unanimously adopted
resolutions setting forth an amendment to Article Three of the
Company's Restated Articles of Incorporation, to increase the
number of shares of Common Stock, $0.10 per share par value,
which the Company is authorized to issue from 50,000,000 to
150,000,000 shares, and has directed that this proposal be
submitted to the vote of the shareholders at the Annual Meeting
of Shareholders. This proposed amendment will not change the
number of authorized shares of Preferred Stock (no shares of
which are outstanding). To be adopted, this proposal must
receive the affirmative vote of the holders of at least a
majority of the Company's issued and outstanding Common Stock.
In December 1997, the Company issued 8,999,078 shares of Common
Stock in a four-for-three stock split effected in the form of a
33% stock dividend. At March 18, 1998, there were
4,806,587 shares of Common Stock reserved for issuance
pursuant to stock option plans of the Company, and
42,935,436 (86%) of the Company's authorized
number of shares of Common Stock were issued and outstanding or
reserved for issuance, leaving the Company 7,064,564
shares of Common Stock currently authorized for issuance.
The Company's Board of Directors approved a Shareholder Rights
Plan in 1988. The purpose of the Shareholder Rights Plan was
and is to protect all Baldor shareholders from any unfair
takeover attempt. An unfair takeover attempt could be both
costly and time-consuming to defend. Along with having shares
available for the Shareholder Rights Plan, the proposed
increase in authorized shares would also provide the necessary
flexibility for other transactions the Company might take for
proper corporate purposes, including but not limited to those
relating to stock splits, stock dividends, Common Stock rights
or warrants, employee benefit plans, financing programs, or
acquisitions. The issuance of additional shares under certain
of these transactions could possibly be used to make a change
in control of the Company more difficult through dilution. The
Board of Directors is not aware of any present effort to obtain
control of the Company.
The additional shares for which authorization is sought would
be identical with the shares of Common Stock now authorized and
outstanding, and the amendment would not affect the terms or
the rights of the holders of those shares. The Company's
Common Stock has no conversion, preemptive, or subscription
rights and is not redeemable. No further action or
authorization by the shareholders would be necessary prior to
the issuance of the additional shares unless it is required for
a particular transaction by applicable law, regulatory agency,
or rules of any stock exchange on which the Company's Common
Stock may then be listed.
The Company has no present intentions to issue additional
equity capital; however, the Board of Directors of the Company
believes it is in the best interests of the Company and its
shareholders to increase the number of authorized but unissued
shares of its Common Stock at this time. This increase will
provide a reserve of shares of Common Stock available for
issuance upon authorization by the Board for any general
corporate purpose without the necessity of soliciting further
shareholder approval unless required by law, the Company's
Restated Articles of Incorporation, or the rules of any stock
exchange upon which the stock may be listed.
Your Board of Directors recommends a vote
"FOR" this proposal 2.
<PAGE> 14
PROPOSAL 3:
TO CONSIDER AND ACT UPON A PROPOSAL TO AMEND THE
BALDOR ELECTRIC COMPANY
1994 INCENTIVE STOCK PLAN
The 1994 Plan was adopted by the Board of Directors of the
Company on February 7, 1994, and was effective on that date
subject to the subsequent approval by the Company's
shareholders on May 7, 1994. The 1994 Plan was amended by the
Company's shareholders on May 2, 1997, broadening the
definition of eligible employees to include all employees.
Proposed Amendment ... Proposal 3 requests approval to amend
the 1994 Plan to increase the number of shares of the Company's
Common Stock authorized for issuance pursuant to awards made
thereunder from 2,000,000 to 4,000,000; and
General ... The purpose of the 1994 Plan, as originally
approved by the Company's Board and its shareholders, was to
aid in maintaining and developing strong management capable of
assuring the future success of the Company. The Board and the
Company's shareholders subsequently concluded that it would be
in the best interest of the Company if all employees were
allowed the opportunity to be awarded a proprietary interest in
the Company on a favorable basis and, thereby, to have the
ability to share in its prosperity. The Board continues to
believe in this original purpose and the philosophy behind
employee ownership; therefore, to continue to aid in
maintaining and developing strong management capable of
assuring the future success of the Company, the Board
recommends to the Company's shareholders that they approve an
increase in the number of shares reserved under the 1994 Plan.
Benefits ... Four types of benefits may be granted under the
1994 Plan: Stock Options, Restricted Shares, Stock
Appreciation Rights, and Formula Price Shares. The
Administrator may, unless otherwise restricted by the 1994
Plan, make the award of any benefit subject to any provisions
including exercises prices, expiration dates, and other
material conditions as it deems appropriate. It is anticipated
that the Administrator may award any of these benefits to those
officers and employees it designates. In view of the
discretionary authority vested in the Administrator, it is
impossible to estimate the number of shares or other benefits
that may be granted or awarded to any individual or group of
individuals over the life of the 1994 Plan. The Administrator
has never awarded Restricted Stock, Stock Appreciation Rights,
or Formula Price Shares. The consideration to be received may,
at the discretion of the Administrator, consist of cash,
previously owned shares of Common Stock having a market value
at the date of exercise equal to the exercise price, or the
surrender of options having an exercise price sufficient to pay
the exercise price.
Amendment and Termination ... The Board of Directors may
terminate or amend the 1994 Plan at any time or from time to
time without shareholder approval, including amendments that
enlarge the type and value of benefits available under the 1994
Plan. However, the Board of Directors, may not, without
shareholder approval, increase the maximum number of shares
that may be issued under the 1994 Plan (except for appropriate
adjustments as described below), and may not make amendments
required to be approved by shareholders pursuant to certain
laws, regulations, or rules, including federal income tax laws.
If any change is made in the shares of Common Stock of the
Company by reason of any merger, consolidation, reorganization,
recapitalization, stock dividend, split up, combination of
shares, exchange of shares, change in corporate structure or
otherwise, the Administrator shall make appropriate adjustments
in the number of shares authorized and in the number of shares
and exercise price of shares subject to outstanding options.
Federal Tax Consequences ... A discussion of the federal income
tax consequences arising from currently used awards of stock
options to the Company and to a recipient is set forth below.
A Participant will not realize any income, nor will the Company
be entitled to a deduction at the time an Incentive Stock
Option is granted. The following tax results will occur with
respect to an Incentive Stock Option, provided that certain
conditions described below are met: (a) the Participant will
not recognize any income at the time of exercise of his
Incentive Stock Option; (b) the amount by which the fair market
value (determined without regard to short swing profit
<PAGE> 15
restrictions) of the shares at the time of exercise exceeds the
exercise price is an item of tax preference subject to the
alternative minimum tax on individuals; and (c) the difference
between the exercise price and the amount realized upon sale of
the shares of the Participant will be treated as long-term
capital gain or loss. For these tax results to occur, a
Participant may not dispose of the shares of Common Stock
acquired on the exercise of an Incentive Stock Option within
one (1) year after the transfer of such shares to him or within
two (2) years from the date the Incentive Stock Option was
granted to him, whichever is later. In addition, the
Participant must be an employee of the Company or its
subsidiaries at all times during the period beginning on the
date of the grant of an Incentive Stock Option through the day
that is three (3) months before the date of exercise of the
Incentive Stock Option. The Company will not be entitled to a
deduction upon the exercise of an Incentive Stock Option.
A participant will not realize any income at the time a Non-
Qualified Stock Option is granted, nor will the Company be
entitled to a deduction at that time. Upon exercise of a Non-
Qualified Stock Option, the participant will recognize ordinary income
in the case of an exercise of a Non-Qualified Stock Option in
an amount equal to the difference between the option price and
the fair market value of the shares at the time of exercise to
which the Non-Qualified Stock Option pertains. The Company is
generally entitled to a tax deduction in an amount equal to the
amount of ordinary income realized by the participant.
Status of the 1994 Plan ... The maximum number of shares which
can be issued under the 1994 Plan is 2,000,000 (subject to
adjustments in certain events) and such shares may be treasury
shares or authorized and unissued shares. This maximum number
of shares has been appropriately adjusted for stock splits
occurring in September 1995 and December 1997. As of March 18,
1998, options to purchase 1,659,814 shares of Common Stock have
been awarded under the 1994 Plan at exercise prices ranging
from $6.78 per share to $23.72 per share and expiring between
January 3, 2005, and March 1, 2008, and approximately 3,500
employees are eligible to participate in the 1994 Plan.
The last reported sale price of the Company's Common Stock on
the New York Stock Exchange on March 18, 1998, was
$26.69.
Your Board of Directors recommends a vote
"FOR" this Proposal 3.
<PAGE> 16
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at the 1999
Annual Meeting must be received by the Company at its principal
executive offices no later than November 27, 1998, in order to
be considered for inclusion in the proxy materials.
INDEPENDENT AUDITORS
The Company is presently utilizing the services of Ernst &
Young LLP, which has been the Company's independent auditors
since 1972. The Audit Committee and the Board of Directors
will consider the reappointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending
January 2, 1999, at the Company's next regular Board of
Directors meeting in May. The Company has no reason to believe
that Ernst & Young LLP will not be reappointed.
Representatives of Ernst & Young LLP will be present at the
Annual Meeting with an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate
questions.
OTHER MATTERS
The Board of Directors knows of no other matters to be
presented for consideration at the meeting by the Board of
Directors or by shareholders who have requested inclusion of
proposals in the Proxy Statement. If any other matter shall
properly come before the meeting, the persons named in the
accompanying form of proxy intend to vote on such matters in
accordance with their judgment.
March 27, 1998
<PAGE> 17
(FRONT OF PROXY CARD)
BALDOR ELECTRIC COMPANY
Proxy Solicited on Behalf of the Board of Directors
for Annual Meeting of Shareholders on May 2, 1998
The undersigned hereby appoints R. S. Boreham, Jr. and R. L.
Qualls, and each of them, with power of substitution, as
proxies of the undersigned, to attend the Annual Meeting of
Shareholders of Baldor Electric Company, to be held at the
Holiday Inn, 700 Rogers Avenue, Fort Smith, Arkansas, on
Saturday, May 2, 1998, at 10:30 a.m. local time, and all
adjournments thereof, and there to vote, as indicated on the
reverse side of this card, the shares of Common Stock of
Baldor Electric Company which the undersigned is entitled to
vote with all the powers the undersigned would possess if
present at the meeting.
In their discretion, the proxies are authorized to cumulate and
vote the shares of the undersigned for any nominee other than
nominees with respect to whom authority to vote has been
withheld, and to vote upon such other business as may properly
come before the meeting and all adjournments 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 election directors and FOR proposals 2 and 3.
PLEASE VOTE, DATE, AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) hereon. When
signing as Attorney, Executor, Trustee, Guardian, or Officer of
a Corporation, please give title as such. For joint accounts,
all named holders should sign. If you receive more than one
proxy, please sign all cards and return in the accompanying
postage-paid envelopes.
HAS YOUR ADDRESS CHANGED?
_________________________________________________
_________________________________________________
_________________________________________________
DO YOU HAVE ANY COMMENTS?
_________________________________________________
_________________________________________________
_________________________________________________
<PAGE>
(BACK OF PROXY CARD)
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
---------------------------------------------------
BALDOR ELECTRIC COMPANY
---------------------------------------------------
COMMON STOCK
RECORD DATE SHARES:
NAME
ADDRESS
CITY STATE ZIP
Please be sure to sign and date this Proxy.
Date _______________________
Shareholder sign here _________________________________________
Co-owner sign here _______________________________________
THE BOARD OF DIRECTORS RECOMMENDS VOTES "FOR":
1. Election of Directors
[ ] For [ ] Withhold [ ] For All Except
Fred C. Ballman
R. S. Boreham, Jr.
R. L. Qualls
To withhold authority to vote for any nominee listed
above, mark the "For All Except" box and write the name(s)
of the nominee(s) from whom you wish to withhold authority
to vote in the space provided below.
__________________________________________________________
2. Approval of the Amendment to the Restated Articles of
Incorporation, as amended.
[ ] For [ ] Against [ ] Abstain
3. Approval of the Amendment to the Baldor Electric
Company 1994 Incentive Stock Plan.
[ ] For [ ] Against [ ] Abstain
Mark box at right if an address change or comment has been
noted on the reverse side of this card. [ ]
DETACH CARD DETACH CARD
<PAGE>
(FRONT OF DIRECTION CARD)
BALDOR ELECTRIC COMPANY
Annual Meeting of Shareholders on May 2, 1998
The undersigned, a participant in the Baldor Electric Company
Profit Sharing and Savings Plan (the "Plan") hereby directs
Wachovia Bank of North Carolina, N.A., as Trustee (the
"Trustee") of the Plan Trust (the "Trust"), at the Annual
Meeting of Shareholders of Baldor Electric Company, to be held
at the Holiday Inn, 700 Rogers Avenue, Fort Smith, Arkansas, on
Saturday, May 2, 1998, at 10:30 a.m. local time, and all
adjournments thereof, to vote, as indicated on the reverse side
of this direction card, the shares of Common Stock of Baldor
Electric Company which the undersigned is entitled to vote with
all the powers the undersigned would possess if present at the
meeting.
As Trustee, you are authorized to cumulate and vote the shares
of the undersigned for any nominee other than nominees with
respect to whom authority to vote has been withheld, and to
vote upon such other business as may properly come before the
meeting and all adjournments thereof. This direction card,
when properly executed, will be voted in the manner directed
herein by the undersigned participant.
If no direction is made,
voting will be controlled by the terms
of the Plan and the Trust.
PLEASE VOTE, DATE, AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) hereon. When
signing as Attorney, Executor, Trustee, Guardian, or Officer of
a Corporation, please give title as such. For joint accounts,
all named holders should sign. If you receive more than one
direction card, please sign all cards and return in the
accompanying postage-paid envelopes.
HAS YOUR ADDRESS CHANGED?
_________________________________________________
_________________________________________________
_________________________________________________
DO YOU HAVE ANY COMMENTS?
_________________________________________________
_________________________________________________
_________________________________________________
<PAGE>
(BACK OF DIRECTION CARD)
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
-------------------------------------------------------------
BALDOR ELECTRIC COMPANY
-------------------------------------------------------------
PROFIT SHARING AND SAVINGS PLAN
RECORD DATE SHARES:
NAME
ADDRESS
CITY STATE ZIP
Please be sure to sign and date this Direction Card.
Date _______________________
Participant sign here ________________________________
THE BOARD OF DIRECTORS RECOMMENDS VOTES "FOR":
1. Election of Directors
[ ] For [ ] Withhold [ ] For All Except
Fred C. Ballman
R. S. Boreham, Jr.
R. L. Qualls
To withhold authority to vote for any nominee listed
above, mark the "For All Except" box and write the name(s)
of the nominee(s) from whom you wish to withhold authority
to vote in the space provided below.
__________________________________________________________
2. Approval of the Amendment to the Restated Articles of
Incorporation, as amended.
[ ] For [ ] Against [ ] Abstain
3. Approval of the Amendment to the Baldor Electric
Company 1994 Incentive Stock Plan.
[ ] For [ ] Against [ ] Abstain
Mark box at right if an address change or comment has been
noted on the reverse side of this card. [ ]
DETACH CARD DETACH CARD
<PAGE>
