SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ]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 Rule14a-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
P. O. Box 2400
5711 R. S. Boreham, Jr. Street Logo
Fort Smith, Arkansas 72902
March 24, 2000
Shareholders:
You are cordially invited to attend our 2000 Annual Shareholders' Meeting.
On the following pages you will find the Notice of Meeting, which lists the
matters to be conducted at the meeting, and the Proxy Statement. Our
Shareholders' Meeting will also include a review of 1999 activities with an
audio-visual presentation and a discussion of the opportunities and challenges
ahead of us. We believe you will find it interesting.
If you plan on attending the Annual Meeting and need information such as
directions to the Annual Meeting location or lodging suggestions, please contact
the Company's Investor Relations at (501) 646-4711. All shareholders are invited
to attend the meeting in person. However, to assure your representation at the
meeting, you are urged to vote your proxy as soon as possible.
You can now vote electronically over the internet or by telephone. You may also
vote by using a traditional proxy card and mailing it to us in the enclosed
postage-paid return envelope. Detailed voting instructions can be found on your
proxy card. Your vote is important and we appreciate your continued support.
Sincerely,
/s/ R. S. Boreham, Jr.
- ----------------------
R. S. Boreham, Jr.
Chairman
<PAGE>
BALDOR ELECTRIC COMPANY Logo
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
Time: 10:30 a.m., local time
Date: Saturday, April 29, 2000
Location: Breedlove Auditorium of Westark College
5210 Grand Avenue
Fort Smith, Arkansas
Items of Business: 1. To elect directors; and
2. To transact such other business as may
properly come before the meeting and
all adjournments thereof.
Record Date: Only shareholders as of the close of business
on March 10, 2000, are entitled to notice
of, and to vote at, the Annual Meeting and
all adjournments.
Annual Report: Our 1999 Annual Report to Shareholders for
the fiscal year ended January 1, 2000 is
enclosed. This Annual Report is not a part of
the proxy soliciting material.
Proxy Voting: Shareholders of record can vote by one of the
following methods:
1. By telephone
2. By internet, or
3. By proxy card
You may revoke your proxy as described in the
following Proxy Statement.
By order of the Board of Directors
/s/ Lloyd G. Davis
- ------------------
Lloyd G. Davis
Secretary
March 24, 2000
<PAGE>
TABLE OF CONTENTS
Page
General Information..................................................... 1
Date, time, and place of meeting................................... 1
Company location and proxy mailing................................. 1
Voting ............................................................... 1
Shareholders entitled to vote...................................... 1
Quorum............................................................. 1
Vote by telephone.................................................. 1
Vote by internet................................................... 1
Vote by mail....................................................... 1
Vote at the Annual Meeting......................................... 1
Voting by employee-participants.................................... 2
Proxies............................................................ 2
Cost of proxy solicitation......................................... 2
Proposal 1 - Election of Directors...................................... 2
Nominees........................................................... 3
Other directors.................................................... 3
General information about the Board of Directors................... 4
Board of Directors................................................. 4
Executive Committee................................................ 5
Audit Committee.................................................... 5
Stock Option Committee............................................. 5
Nominating Committee............................................... 5
Director compensation.............................................. 5
Security Ownership of Certain Beneficial Owners and Management.......... 6
Executive Compensation.................................................. 8
Summary compensation table......................................... 8
Option grants in last fiscal year.................................. 9
Aggregated option exercises in last fiscal year and FY-end
option values................................................... 10
Change of control arrangements..................................... 10
Compensation committee interlocks and insider participation........ 10
Report of the Board of Directors on Executive Compensation......... 11
Performance graph.................................................. 13
Shareholder Proposals and Nomination Deadlines.......................... 14
Independent Auditors.................................................... 14
Other Matters........................................................... 14
<PAGE>
BALDOR ELECTRIC COMPANY
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
Date, time, and place of meeting ... 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. The meeting will be held as follows:
Time: 10:30 a.m., local time Location: Breedlove Auditorium of Westark College
Date: Saturday, April 29, 2000 5210 Grand Avenue
Fort Smith, Arkansas
Company location and proxy mailing...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 24, 2000.
VOTING
Shareholders entitled to vote ... 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 10, 2000, will be entitled to notice of and to vote at the
Annual Meeting. There were 34,034,148 shares of Common Stock of the Company
outstanding as of the close of business on March 10, 2000. 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.
Quorum ... A majority of the issued and outstanding shares entitled to vote and
represented in person or by proxy will constitute a quorum for the transaction
of business at the Annual Meeting. Shares represented by properly executed
proxies will be counted for determining whether a quorum exists. The affirmative
vote of the holders of a majority of the shares constituting the quorum is
required to elect directors.
Vote by telephone ... You can vote your shares by telephone as indicated on the
attached proxy card. If you vote by telephone, you do not need to return your
proxy card.
Vote by internet ... You may vote your shares over the internet as indicated on
the attached proxy card. If you vote over the internet, you do not need to
return your proxy card.
Vote by mail ... If you choose to vote by mail, simply mark your proxy, date and
sign it, and return it in the enclosed postage-paid envelope.
Vote at the Annual Meeting ... Your vote by telephone, internet, or mail will
not limit your right to vote at the Annual Meeting. If you are not a shareholder
of record, you must obtain a proxy, executed in your favor, from the holder of
record to be able to vote at the meeting.
<PAGE>
Voting by employee-participants ... 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 to direct the
trustee of the Profit Sharing and Savings Plan how to vote the shares of Common
Stock that are allocated to their accounts. Employee-participants may also use
the methods above - telephone, internet, or mail - to direct the trustee on how
to vote their shares. Instructions on the various voting methods can be found on
the employee-participants direction card. 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.
Proxies ... The persons named in the proxy are authorized to vote the shares of
the shareholders giving the proxy for any nominee except those nominees with
respect to whom authority has been withheld. All shares that have been properly
voted - whether by telephone, internet, or mail - and not revoked will be voted
at the Annual Meeting in accordance with your instructions. Proxies that are
marked to "withhold authority" will have the same effect as if the shares
represented thereby were voted against such nominee or nominees. 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. Properly voted proxies - whether by telephone, internet, or mail - 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.
Cost of proxy solicitation ... The Company will pay for the cost of the
solicitation of proxies. Regular employees of the Company, without additional
compensation, may personally solicit proxies or use mail systems, facsimile,
telephone, or other reasonable means to solicit proxies. 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.
Currently, there is no plan to solicit proxies by specially engaged employees or
other paid solicitors. However, this may be done if deemed necessary later.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Company's Restated Articles of Incorporation and Bylaws, as amended, provide
for a classified Board of Directors. The Board is divided into three classes.
Each class expires at different times. Three members are to be elected to the
Board of Directors in 2000. Each member elected in 2000 will serve for a term of
three years.
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. Each
nominee listed below will be voted FOR unless the shareholder indicates on the
form of proxy that the vote for any one or more of the nominees should be
withheld or contrary directions are indicated.
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, the Board of Directors, in their discretion, may
either reduce the size of the Board or the proxies will vote for a substitute
nominee designated by the Board of Directors.
<PAGE>
Information Regarding the Nominees for Directors
to be Elected in 2000 for Terms Ending in 2003
Merlin J. Augustine, Jr. ... Associate Vice Chancellor for Finance and
Administration at the University of Arkansas in Fayetteville; Chairman of the
Board of Arkansas Science and Technology Authority; Founder and Chief Executive
Officer of the M & N Augustine Foundation for Human Development, Inc.
John A. McFarland ... The Company's President since November 1996, Chief
Executive Officer since January 2000, Executive Vice President - Sales and
Marketing from August 1996 to November 1996, and Vice President - Sales from May
1991 to August 1996.
Robert L. Proost ... Director, Corporate Vice President, Chief Financial
Officer, and Director of Administration of A.G. Edwards & Sons, Inc., a
securities brokerage and investment banking firm which has historically provided
investment banking services to the Company; Director, Vice President, and Chief
Financial Officer of A. G. Edwards, Inc. (NYSE), and of various subsidiaries.
Information Regarding the Directors Who Are Not Nominees for Election
and Whose Terms Continue Beyond 2000 or Expire during 2000
Jefferson W. Asher, Jr. ... Independent Management Consultant providing
assistance to corporations, attorneys, banking institutions, and other
creditors; Director of California Beach Restaurants, Inc. (OTC).
red C. Ballman ... The Company's former Chairman and Chief Executive Officer
(retired).
O. A. Baumann ... The Company's manufacturer's sales representative in St.
Louis, Missouri, from 1947 to 1987 (retired).
R. S. Boreham, Jr. ... The Company's Chairman of the Board since 1981 and Chief
Executive Officer from 1978 through 1992; Director of USA Truck, Inc. (NASDAQ).
Richard E. Jaudes ... Partner at Thompson Coburn LLP, a law firm which provides
legal counsel to the Company; formerly a partner at Peper, Martin, Jensen,
Maichel and Hetlage, a law firm which also provided legal counsel to the
Company.
Robert J. Messey ... Vice President - Financial Services of Jacobs Engineering
Group, Inc. (NYSE), a firm that specializes in engineering, construction, and
architecture.
R. L. Qualls ... The Company's Vice Chairman of the Board since November 1996,
Chief Executive Officer from 1993 through 1997, and President from 1990 through
1996; Director of Bank of the Ozarks, Inc. (NASDAQ).
<PAGE>
General Information Regarding
Current Directors and Nominees for Election
Year of Director Current Term
Name Birth Since Expires
- ------------------------------------------ -------------------- ---------------
Jefferson W. Asher, Jr. 1924 1973 2002
Merlin J. Augustine, Jr. 1943 N/A N/A
Fred C. Ballman 1912 1992 * 2001
O. A. Baumann 1921 1961 2000
R. S. Boreham, Jr. 1924 1961 2001
Richard E. Jaudes 1943 1999 2002
John A. McFarland 1951 1996 2000
Robert J. Messey 1946 1993 2002
Robert L. Proost 1937 1988 2000
R. L. Qualls 1933 1987 2001
* Mr. Ballman was also a Director of the Company from 1944 to 1982.
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. During the fiscal year
ended January 1, 2000 ("fiscal year 1999"), the Board of Directors held four
meetings. Below are the current committee memberships and other information
about the committees of the Board of Directors.
Executive Audit Stock Option Nominating
Name Committee Committee Committee Committee
- -------------------------------------------------------------------------------
Jefferson W. Asher, Jr. Chairman
- --------------------------------------------------------------------------------
Fred C. Ballman
- --------------------------------------------------------------------------------
O. A. Baumann
- --------------------------------------------------------------------------------
R. S. Boreham, Jr. Chairman *
- --------------------------------------------------------------------------------
Richard E. Jaudes *
- --------------------------------------------------------------------------------
John A. McFarland * *
- --------------------------------------------------------------------------------
Robert J. Messey * Chairman
- --------------------------------------------------------------------------------
Robert L. Proost * *
- --------------------------------------------------------------------------------
R. L. Qualls * Chairman
- --------------------------------------------------------------------------------
Meetings held during
fiscal year 1999 8 3 5 1
================================================================================
* Committee membership
<PAGE>
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, as amended. The Executive Committee
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.
Audit Committee ... The Audit Committee performs the following functions:
assists in the selection of independent auditors, directs and supervises
investigations into matters relating to 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.
Stock Option Committee ... The Stock Option Committee administers the Company's
1981 Incentive Stock Plan (the "1981 Plan"), 1987 Incentive Stock Plan (the
"1987 Plan"), and 1994 Incentive Stock Plan (the "1994 Plan"). All of these
plans are employee stock plans. The Stock Option Committee also administers the
1990 Stock Plan for District Managers (the "1990 Plan"). The 1981 Plan and 1987
Plan have expired except for outstanding options. Awards can be made from the
1994 Plan and the 1990 Plan. 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.
Nominating Committee ... The Nominating Committee is responsible for searching
for and reviewing possible candidates for the Board of Directors. The Committee
is also 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.
Director Compensation ... Under the terms of the 1996 Plan, each non-employee
director received an option grant on January 29, 1999. Each grant included: (1)
an option to purchase 3,240 shares of the Company's Common Stock having an
exercise price of $19.8125 (the composite closing price of the Common Stock on
that date), and (2) an option to purchase 2,160 shares of the Company's Common
Stock having an exercise price of $9.90625 (50% of the composite closing price
of the Common Stock on that date). The 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. Only non-employee directors are
compensated for their services on the Board of Directors. A summary of the
quarterly fees paid for board and committee service for fiscal year 1999
follows:
Executive Audit Stock Option Nominating
Director Committee Committee Committee Committee
- ----------- ---------- ------------ ------------- ----------------- ------------
Chairman -- -- $ 3,000 $ 800 --
- ----------- ---------- ------------ ------------- ----------------- ------------
- ----------- ---------- ------------ ------------- ----------------- ------------
Member $ 4,000 -- $ 2,000 $ 800 --
- ----------- ---------- ------------ ------------- ----------------- ------------
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 10, 2000, 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 nominee for election as a
director, each of the executive officers named in the Summary Compensation Table
(the "Named Executive Officers"), and all executive officers and directors as a
group.
Number of Percent of
Name Shares Class (1)
- ------------------------------------- ------------------- ---------------
The Baldor Electric Company
Profit Sharing and Savings Plan 4,262,958 (2) 10.0 %
P. O. Box 2400
Fort Smith, Arkansas 72902
Fred C. Ballman 3,031,304 (3) 8.9 %
P. O. Box 6638
Fort Smith, Arkansas 72906
R. S. Boreham, Jr. 1,618,414 (4) 4.7 %
O. A. Baumann 454,938 (5) 1.3 %
Lloyd G. Davis 293,918 (6) *
R. L. Qualls 278,037 (7) *
John A. McFarland 268,888 (8) *
James R. Kimzey 240,416 (9) *
Jefferson W. Asher, Jr. 79,459 (10) *
Robert L. Proost 65,040 (11) *
Robert J. Messey 47,889 (12) *
Richard E. Jaudes 1,066 (13) *
Merlin J. Augustine, Jr. 100 (14) *
All executive officers and directors
as a group (19 persons) 6,993,988 (15) 19.8 %
- ---------------
* Less than 1%.
<PAGE>
(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 the Company's 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 10, 2000). The denominator consists of all issued and
outstanding shares of the Company's Common Stock plus those shares that
are issuable upon the exercise of employee stock options referenced
above.
(2) Based on correspondence dated March 10, 2000, 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 4,262,958
shares.
(3) Shared voting and shared investment power over 3,020,504 shares;
includes exercisable options to purchase 10,800 shares.
(4) Shared voting and shared investment power over 189,637 shares; sole
voting and sole investment power over 1,257,032 shares; sole voting and
shared investment power over 1,813 shares in the Profit Sharing and
Savings Plan; includes exercisable options to purchase 169,932 shares.
(5) Shared voting and shared investment power over 427,938 shares; includes
exercisable options to purchase 27,000 shares.
(6) Sole voting and sole investment power over 78,500 shares; shared voting
and shared investment power over 13,334 shares; sole voting and shared
investment power over 18,972 shares and shared voting and shared
investment power over 2,746 shares in the Profit Sharing and Savings
Plan; includes exercisable options to purchase 148,633 shares directly
and 31,733 indirectly.
(7) Sole voting and sole investment power over 171,766 shares; shared
voting and shared investment power over 7,219 shares; sole voting and
shared investment power over 2,046 shares in the Profit Sharing and
Savings Plan; includes exercisable options to purchase 97,006 shares.
(8) Sole voting and sole investment power over 14,803 shares; shared voting
and shared investment power over 82,837 shares; sole voting and shared
investment power over 28,448 shares in the Profit Sharing and Savings
Plan; includes exercisable options to purchase 142,800 shares.
(9) Shared voting and shared investment power over 72,815 shares; sole
voting and sole investment power over 23,579 shares; sole voting and
shared investment power over 8,869 shares in the Profit Sharing and
Savings Plan; includes exercisable options to purchase 135,153 shares.
(10) Sole voting and sole investment power over 70,819 shares; includes
exercisable options to purchase 8,640 shares.
(11) Sole voting and sole investment power over 24,000 shares; shared
voting and shared investment power over 6,480 shares; includes
exercisable options to purchase 34,560 shares.
(12) Sole voting and sole investment power over 2,762 shares; shared
voting and shared investment power over 1,927 shares;
includes exercisable options to purchase 43,200 shares.
(13) Sole voting and sole investment power.
(14) Shared voting and shared investment power.
(15) Sole voting and sole investment power over 1,738,314 shares; shared
voting and shared investment power over 3,913,522 shares; sole voting
and shared investment power over 125,417 shares in the Profit Sharing
and Savings Plan; includes exercisable options to purchase 1,216,735
shares.
<PAGE>
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.
<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. S. Boreham, Jr. 1999 363,000 362,000 0 0 23,400 0 53,975
Chairman 1998 350,000 332,710 0 0 25,000 0 58,657
1997 325,000 320,287 0 0 26,000 0 102,512
John A. McFarland 1999 215,000 215,000 0 0 26,000 0 26,903
President 1998 190,000 171,108 0 0 25,000 0 19,230
1997 160,000 147,825 0 0 26,000 0 20,977
R. L. Qualls 1999 188,000 187,000 0 0 15,600 0 33,879
Vice Chairman 1998 175,000 166,355 0 0 17,000 0 34,256
1997 315,000 310,432 0 0 26,000 0 42,642
Lloyd G. Davis 1999 190,000 150,000 0 0 14,300 0 29,367
Chief Financial Officer, 1998 160,000 129,282 0 0 17,000 0 21,113
Executive Vice President -Finance, 1997 149,000 118,260 0 0 17,333 0 23,241
Secretary, and Treasurer
James R. Kimzey 1999 163,000 127,000 0 0 14,300 0 23,215
Executive Vice President - 1998 157,000 118,825 0 0 17,000 0 19,061
Research and Engineering 1997 149,000 118,260 0 0 17,333 0 23,930
</TABLE>
---------------
(1) The amounts disclosed in this column include contributions by the Company
Profit Sharing and Savings Plan, a defined contribution plan. This is two
plans in one: a profit sharing plan and a 401(k) savings plan. The
Company makes a contribution to the profit sharing plan equal to 12% of
pre-tax earnings for participating companies. The contribution is
allocated among eligible employees in proportion to their total
compensation. The Company makes matching contributions to the savings
plan at a rate no greater than 25% of the first 6% of the participating
employee's compensation. Due to the limits on the total amount of Company
and employee contributions, the above Named Executive Officers did not
receive their full allocation amounts to the Profit Sharing 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 that 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 Executive Officer were calculated using the
interest-foregone method that more accurately reflects the benefit
received by the participant. The fiscal year 1999 amounts in this column
represent Company contributions consisting of the following:
Contributions Contributions Split-Dollar
to the to the Life Insurance
Name Profit Sharing Plan Savings Plan Premiums
- -------------------- ---------------------- ---------------- ---------
($) ($) ($)
R. S. Boreham, Jr. 15,546 2,160 36,270
John A. McFarland 15,546 1,881 9,476
R. L. Qualls 15,546 2,366 15,967
Lloyd G. Davis 15,546 3,000 10,822
James R. Kimzey 15,546 1,992 5,677
<PAGE>
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
Individual Grants
----------------------------------------------------------------
Number of % of Total Market
Securities Options Price
Underlying Granted to Exercise on Grant Date
Options Employees in or Base Grant Expiration Present
Name Granted Fiscal Year Price Date Date Value (1)
- ---------------------- ---------- ------------- --------- -------- --------- ----------
(#) ($/sh) ($/sh) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. S. Boreham, Jr. 18,000 (2) 4.3% 19.44 19.44 2/7/2009 63,180
5,400 (3) 1.3% 9.72 19.44 2/7/2009 53,838
John A. McFarland 20,000 (2) 4.8% 19.44 19.44 2/7/2009 70,200
6,000 (3) 1.4% 9.72 19.44 2/7/2009 59,820
R. L. Qualls 12,000 (2) 2.9% 19.44 19.44 2/7/2009 42,120
3,600 (3) 0.9% 9.72 19.44 2/7/2009 35,892
Lloyd G. Davis 11,000 (2) 2.7% 19.44 19.44 2/7/2009 38,610
3,300 (3) 0.8% 9.72 19.44 2/7/2009 32,901
James R. Kimzey 11,000 (2) 2.7% 19.44 19.44 2/7/2009 38,610
3,300 (3) 0.8% 9.72 19.44 2/7/2009 32,901
</TABLE>
- --------------
(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 the following weighted average variables assumptions: expected
option life of 8 years; interest rate of 5.1%; annual dividend yield of
2.1%; and volatility of 2.3%. 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 composite closing price 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 composite closing price 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 occur.
Until vesting occurs, the restricted shares acquired on exercise of such
options: (a) have dividend rights, (b) may be voted, (c) cannot be sold
or transferred until they are vested, and (d) are forfeitable under
certain circumstances. The options are 100% exercisable six months and
one day following the grant date.
<PAGE>
<TABLE>
<CAPTION>
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 In-the-Money Options
Name Exercise Realized (1) at FY-End (#) at FY-End ($) (2)
-------------------- ------------ ---------- -----------------------------------------------------------
(#) ($) (Exercisable) (Unexercisable) (Exercisable) (Unexercisable)
------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
R. S. Boreham, Jr. 8,800 120,543 177,032 0 786,954 0
John A. McFarland 39,520 491,541 142,800 0 639,562 0
R. L. Qualls 7,219 37,254 97,006 0 387,724 0
Lloyd G. Davis 12,066 134,102 183,366 0 1,042,760 0
James R. Kimzey 28,800 407,325 135,153 0 898,378 0
</TABLE>
---------------
(1) Represents the difference between the option exercise price and the
composite closing 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 $18.125 composite closing price of
the Common Stock as reported by the New York Stock Exchange on December
31, 1999, the last trading day of fiscal year 1999, and the exercise
price of the options multiplied by the number of shares of Common Stock
underlying the options. The numbers shown reflect the value of options
accumulated over an nine-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 Stock Option
Committee administers the 1981 Plan, the 1987 Plan, and the 1994 Plan, all Plans
relating to employees. The Executive Committee administers the 1989 Plan and the
1996 Plan, both relating to non-employee directors. The 1981 Plan, the 1987
Plan, and the 1989 Plan have expired except for options outstanding. 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: Richard
E. Jaudes, Robert J. Messey, and Robert L. Proost.
<PAGE>
Report of the Board of Directors on Executive Compensation
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 Officers' 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 report, 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 that 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 1999 resulted in
actual bonuses equaling 44% to 50% of total compensation for the Named Executive
Officers.
<PAGE>
During fiscal year 1999, the Company's Executive Committee of the Board as a
whole performed the functions similar to "CEO" responsibilities. The members of
the Executive Committee are R. S. Boreham, Jr., John A. McFarland, and R. L.
Qualls. Each member of the Company's Executive Committee of the Board is an
employee of the Company and is one of the Named Executive Officers. The total
compensation for each individual member of the Executive Committee is slightly
below the median of comparably sized manufacturing companies. The total
compensation for each member was competitive and reflective of the Company's
performance. The members of the Executive Committee as a whole had 50% of their
total compensation at risk in the form of performance bonuses.
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 composite closing price of the Common Stock
on the date of grant) and non-qualified options to purchase shares of restricted
stock (at 50% of the composite closing price of the Common Stock on the date of
grant) to executive officers and other employees. Grants were made in fiscal
year 1999 to Named Executive Officers 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 ability to impact the Company's performance.
Each member of the Company's Executive Committee of the Board received incentive
stock options to purchase shares of Common Stock. The decision regarding the
number of options granted to each member individually is subjective based upon
the ability of the individual to impact the Company's performance as well as
individual performance and future potential. The members of the Executive
Committee as a whole received incentive stock options to purchase 65,000 shares
of Common Stock, which represented 16% of the total shares granted.
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
1999, the deductibility of the Company's executive compensation was not affected
by the limitation under Section 162(m).
BOARD OF DIRECTORS
R. S. Boreham, Jr. .......................Chairman
Jefferson W. Asher, Jr. Richard E. Jaudes
Fred C. Ballman Robert J. Messey
O. A. Baumann Robert L. Proost
John A. McFarland R. L. Qualls
<PAGE>
Performance Graph
Comparison of Five-Year Cumulative Total Return
Among Baldor Electric Company, the S&P 500 Index, and the
Dow Jones Electrical Components & Equipment Group Index
-----------------------------------------------------------------------------
Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Baldor 100.00 113.67 141.68 169.21 160.75 147.28
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
S&P 500 100.00 137.58 169.17 225.60 290.08 351.12
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
DJ ELQ 100.00 128.57 166.30 189.74 221.85 278.84
-----------------------------------------------------------------------------
Assumes $100 invested at year-end 1994 in
Baldor Electric Company, the S&P 500 Index, and the
Dow Jones Electrical Components & Equipment Group Index
- -----------------------------------------------------------------------------
Compound Annual Growth Rate
- -----------------------------------------------------------------------------
- ------------ --------------------------------------- ------------------------
Baldor $147 8.1%
- ------------ --------------------------------------- ------------------------
- ------------ --------------------------------------- ------------------------
S&P 500 $351 28.6%
- ------------ --------------------------------------- ------------------------
- ------------ --------------------------------------- ------------------------
DJ ELQ $279 22.8%
- ------------ --------------------------------------- ------------------------
<PAGE>
SHAREHOLDER PROPOSALS
Any shareholder of the Company eligible to vote in an election may make
shareholder proposals and nominations for the 2001 Annual Meeting. In order to
be considered for inclusion in the 2001 Proxy Statement and considered at the
2001 Annual Meeting, all shareholder proposals, nominations, and notifications
must: (1) comply with the Company's Bylaws, as amended, and (2) be appropriately
received by the Secretary of the Company on or after September 25, 2000, and on
or before November 24, 2000. The Nominating Committee of the Company's Board of
Directors will consider candidates for Board membership proposed by shareholders
who have complied with these procedures.
INDEPENDENT AUDITORS
The Company is presently utilizing the services of Ernst & Young LLP, which has
been the Company's independent auditor 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 December 30, 2000, at
the Company's next regular Board of Directors meeting in April. The Company has
no reason to believe that Ernst & Young LLP will not be reappointed; however, no
final determination has yet been made by the Board of Directors. 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 24, 2000
<PAGE>
( TOP OF FRONT OF PROXY CARD )
[ LOGO ]
COMMON STOCK COMMON STOCK
BALDOR ELECTRIC COMPANY
Proxy Solicited on Behalf of the Board of Directors
for Annual Meeting of Shareholders on April 29, 2000
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 in the
Breedlove Auditorium of Westark College, 5210 Grand Avenue, Fort Smith,
Arkansas, on Saturday, April 29, 2000, at 10:30 a.m., local time, and all
adjournments thereof, and there to vote, as indicated on the reverse side of
this proxy 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.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. In their discretion, the proxies are authorized
to vote upon such other business as may properly come before the meeting and all
adjournments thereof.
If no direction is made, this proxy will be voted FOR the election directors.
PLEASE VOTE, DATE, AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
HAS YOUR ADDRESS CHANGED? _________________________________________________
==============================================================================
DO YOU HAVE ANY COMMENTS? _________________________________________________
==============================================================================
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
( PERFORATION FOR TEAR OFF )
<PAGE>
( BOTTOM OF FRONT OF PROXY CARD )
FOLD AND DETACH HERE
Continental Stock Transfer & Trust Company
is the transfer agent for Baldor Electric Company.
Access to your Baldor shareholder account information and
other shareholder services are now available on the Internet!
www.continentalstock.com
Through this new service, Baldor shareholders can select a Personal
Identification Number or "PIN" to secure access to personal shareholder records.
With a PIN, shareholders can change addresses, receive electronic forms, and
view account transaction and dividend history.
To access this new service, visit the website listed above. From the home page,
select "ContinentaLink Full Service". From there, you can either Test Drive the
service (choose the "Test Drive" button) or you can Sign-Up (choose the
"Sign-Up" button). If you choose to sign-up, enter your taxpayer identification
number or social security number as your ID Number. Your personal Security Code
can be found on the reverse side of this card in the bottom left corner. Enter
any four alphanumeric characters you would like to use for your PIN. Re-enter
the same PIN in the PIN Verification field. Your PIN will be activated
overnight, and you will be able to access your shareholder records the following
day. If you need assistance with this process, please contact Continental at
1-800-509-5586.
<PAGE>
( TOP OF BACK OF PROXY CARD )
Proxy by Mail
Please mark your
votes like this [ X ]
BALDOR ELECTRIC COMPANY COMMON STOCK
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR":
1. Election of Directors For All Withhold For All
Nominees Except
[ ] [ ] [ ]
Nominees: Merlin J. Augustine, Jr., John A. McFarland, Robert L. Proost
To withhold authority to vote for any nominees 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.
-----------------------------------------------------------
Mark box at right if you plan to attend the Annual Meeting on April 29, 2000.
Please be sure to sign and date this Proxy Card.
IF YOU WISH TO VOTE ELECTRONICALLY PLEASE READ THE INSTRUCTIONS BELOW
COMPANY NUMBER:
PROXY NUMBER:
ACCOUNT NUMBER:
Signature ________________ Signature __________________ Date ______________
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 card, please sign all cards and return in the accompanying
postage-paid envelopes.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
( PERFORATION FOR TEAR OFF )
<PAGE>
( BOTTOM OF BACK OF PROXY CARD )
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
VOTE BY TELEPHONE OR INTERNET
[ TELEPHONE GRAPHIC ] [ COMPUTER GRAPHIC ]
QUICK * * * EASY * * * IMMEDIATE
BALDOR ELECTRIC COMPANY
o You can now vote your shares electronically through the Internet or
the telephone.
o This eliminates the need to return the proxy card.
o Your electronic vote authorizes the named proxies to vote your shares
in the same manner as if you had marked, signed, dated, and returned
the proxy card.
TO VOTE YOUR PROXY BY INTERNET
www.continentalstock.com
Have your proxy card in hand when you access the above website. Select
"ContinentaLink Proxy Voting". You will be prompted to enter the company number,
proxy number, and account number to create an electronic ballot. Follow the
prompts to vote your shares.
TO VOTE YOUR PROXY BY MAIL
Mark, sign, and date your proxy card above, detach it, and return it in the
postage-paid envelope provided.
TO VOTE YOUR PROXY BY PHONE
1-800-293-8533
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand
when you call. You will be prompted to enter the company number, proxy number,
and account number. Follow the voting instructions to vote your shares.
PLEASE DO NOT RETURN THE ABOVE CARD IF VOTED
ELECTRONICALLY
SECURITY CODE:
<PAGE>
( TOP OF FRONT OF DIRECTION CARD )
[ LOGO ]
PROFIT SHARING AND SAVINGS PLAN PROFIT SHARING AND SAVINGS PLAN
BALDOR ELECTRIC COMPANY
Annual Meeting of Shareholders on April 29, 2000
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 in the Breedlove
Auditorium of Westark College, 5210 Grand Avenue, Fort Smith, Arkansas, on
Saturday, April 29, 2000, 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.
This direction card, when properly executed, will be voted in the manner
directed herein by the undersigned participant. As Trustee, you are authorized
to vote the shares of the undersigned upon such other business as may properly
come before the meeting and all adjournments thereof.
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.
HAS YOUR ADDRESS CHANGED? __________________________________________________
============================================================================
DO YOU HAVE ANY COMMENTS? _________________________________________________
===========================================================================
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
( PERFORATION FOR TEAR OFF )
<PAGE>
( BOTTOM OF FRONT OF DIRECTION CARD )
FOLD AND DETACH HERE
Wachovia Bank of North Carolina, N.A. is the trustee for the
Baldor Electric Company Profit Sharing and Savings Plan.
Access to your Baldor investment elections
are now available on the Internet!
www.wachoviaretirement.com
To access this service, visit the website above. You will be asked for your
Social Security Number and your 4 digit Personal Identification Number (PIN). If
you do not know your PIN, you should call Wachovia at 888-367-7526 as soon as
possible to request a new PIN. Wachovia will mail a new PIN directly to your
home.
<PAGE>
( TOP OF BACK OF DIRECTION CARD )
Proxy by Mail
Please mark your votes like this [ X ]
BALDOR ELECTRIC COMPANY PROFIT SHARING AND SAVINGS PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR":
1. Election of Directors For All Withhold For All
Nominees Except
[ ] [ ] [ ]
Nominees: Merlin J. Augustine, Jr., John A. McFarland, Robert L. Proost
To withhold authority to vote for any nominees 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.
-----------------------------------------------------------
Mark box at right if you plan to attend the Annual Meeting on April 29, 2000.
Please be sure to sign and date this Direction Card.
IF YOU WISH TO VOTE ELECTRONICALLY PLEASE READ THE INSTRUCTIONS BELOW
COMPANY NUMBER:
PROXY NUMBER:
ACCOUNT NUMBER:
Signature ___________________ Signature ___________________ Date ______________
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.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
( PERFORATION FOR TEAR OFF )
<PAGE>
( BOTTOM OF BACK OF DIRECTION CARD )
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
VOTE BY TELEPHONE OR INTERNET
[ TELEPHONE GRAPHIC ] [ COMPUTER GRAPHIC ]
QUICK * * * EASY * * * IMMEDIATE
BALDOR ELECTRIC COMPANY
o You can now vote your shares electronically through the Internet or the
telephone.
o This eliminates the need to return the direction card.
o Your electronic vote authorizes the named proxies to vote your shares
in the same manner as if you had marked, signed, dated, and returned
the direction card.
TO VOTE YOUR PROXY BY INTERNET
www.continentalstock.com
Have your direction card in hand when you access the above website. Select
"ContinentaLink Proxy Voting". You will be prompted to enter the company number,
proxy number, and account number to create an electronic ballot. Follow the
prompts to vote your shares.
TO VOTE YOUR PROXY BY MAIL
Mark, sign, and date your direction card above, detach it, and return it in the
postage-paid envelope provided.
TO VOTE YOUR PROXY BY PHONE
1-800-293-8533
Use any touch-tone telephone to vote your proxy. Have your direction card in
hand when you call. You will be prompted to enter the company number, proxy
number, and account number. Follow the voting instructions to vote your shares.
PLEASE DO NOT RETURN THE ABOVE CARD IF VOTED
ELECTRONICALLY
<PAGE>
