SCHEDULE 14A
Information Required In Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Ag-Chem Equipment Co., Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
N/A
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
N/A
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| 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:
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(4) Date Filed:
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<PAGE>
AG-CHEM EQUIPMENT CO., INC.
February 3, 2000
TO: THE SHAREHOLDERS OF AG-CHEM EQUIPMENT CO., INC.
You are cordially invited to attend the Annual Meeting of Shareholders
of Ag-Chem Equipment Co., Inc. to be held on Monday, March 6, 2000, at 3:00
p.m., local time, at the Company's offices, located at 5720 Smetana Drive,
Minnetonka, Minnesota. I encourage you to attend. Whether or not you plan to
attend the meeting, I urge you to complete and sign the accompanying form of
Proxy and return it in the enclosed envelope. Also attached for your review are
the formal Notice of Meeting and Proxy Statement.
On behalf of your Board of Directors and employees, thank you for your
continued support of Ag-Chem Equipment Co., Inc.
Very truly yours,
Alvin E. McQuinn,
CHAIRMAN OF THE BOARD AND CEO
<PAGE>
AG-CHEM EQUIPMENT CO., INC.
5720 Smetana Drive
Minnetonka, Minnesota 55343
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 6, 2000
TO: The Shareholders of Ag-Chem Equipment Co., Inc.:
The Annual Meeting of Shareholders of Ag-Chem Equipment Co., Inc. (the
"Company") will be held on Monday, March 6, 2000 at 3:00 p.m., local time, at
the Company's offices, located at 5720 Smetana Drive, Minnetonka, Minnesota.
The items of business are:
1. To elect eight directors to hold office until the next Annual
Meeting of Shareholders or until their successors are duly
elected and qualified;
2. To consider and act upon a proposal to ratify the appointment
of KPMG LLP as independent certified public accountants of the
Company for the fiscal year ending September 30, 2000; and
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record as shown on the books of the Company at the
close of business on January 6, 2000 will be entitled to vote at the meeting and
any adjournment thereof.
THIS NOTICE, THE PROXY STATEMENT, AND THE ENCLOSED FORM OF PROXY ARE
SENT TO YOU BY ORDER OF THE BOARD OF DIRECTORS.
Robert L. Hoffman,
SECRETARY
Date: February 3, 2000
Minnetonka, Minnesota
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR
FORM OF PROXY IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND IN
PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN
PERSON IF THEY DESIRE.
<PAGE>
AG-CHEM EQUIPMENT CO., INC.
5720 Smetana Drive
Minnetonka, Minnesota 55343
---------------
PROXY STATEMENT
---------------
ANNUAL MEETING OF SHAREHOLDERS
MARCH 6, 2000
PROXY SOLICITED BY THE BOARD OF DIRECTORS
This Proxy Statement is furnished to the record holders of shares of
Common Stock of Ag-Chem Equipment Co., Inc. ("Ag-Chem" or the "Company"), a
Minnesota corporation, as of the close of business on January 6, 2000, by order
of the Board of Directors. This Proxy Statement is furnished in connection with
the proxy solicitation by the Board of Directors for the Annual Meeting of
Shareholders to be held on Monday, March 6, 2000, at 3:00 p.m., local time, at
the Company's offices, located at 5720 Smetana Drive, Minnetonka, Minnesota. A
shareholder giving a Proxy may revoke it at any time prior to the commencement
of the Annual Meeting of Shareholders by filing written notice of the
termination of the appointment with an officer of the Company, by attending the
Annual Meeting of Shareholders and voting in person, or by filing a new written
appointment of a proxy with an officer of the Company. This Proxy Statement is
expected to be first mailed to shareholders on or about February 3, 2000.
The Annual Meeting of Shareholders has been called for the purpose of
electing eight directors for a one-year term and ratifying the appointment of
KPMG LLP as the Company's independent certified public accountants for the
fiscal year ending September 30, 2000. All properly executed Proxies received
prior to commencement of the meeting will be voted at the meeting. If a
shareholder directs how a Proxy is to be voted with respect to the business
coming before the meeting, the Proxy will be voted in accordance with the
shareholder's directions. If a shareholder does not direct how a Proxy is to be
voted, it will be voted FOR electing management's nominees as members of the
Company's Board of Directors and FOR ratifying the appointment by the Board of
Directors of KPMG LLP as the Company's independent certified public accountants
for the fiscal year ending September 30, 2000.
OUTSTANDING SHARES AND VOTING RIGHTS
At the close of business on January 6, 2000, the record date for the
Annual Meeting of Shareholders, there were 9,591,868 shares of Common Stock
outstanding. The Company's only authorized and outstanding class of stock is
Common Stock. Each share of Common Stock is entitled to one vote on each matter
properly coming before the meeting. Cumulative voting for directors is not
permitted. Abstentions and broker non-votes (brokers failing to vote shares of
the Company's Common Stock held in nominee name for customers by proxy) will be
treated as present at the meeting for purposes of determining the existence of a
quorum. With respect to any matter brought to a vote at the meeting, abstentions
will be treated as shares entitled to vote and broker non-votes will be treated
as shares not entitled to vote.
<PAGE>
A list of those shareholders entitled to vote at the Annual Meeting of
Shareholders will be available for a period of ten days prior to the meeting for
examination by any shareholder at the Company's principal executive offices,
5720 Smetana Drive, Minnetonka, Minnesota, and will also be available at the
Annual Meeting of Shareholders.
ELECTION OF DIRECTORS
(PROPOSAL #1)
The Bylaws of the Company provide that at each annual meeting the
shareholders shall determine the number of directors for the ensuing year;
provided, however, that the number may be increased by resolution of the Board
of Directors. The Board of Directors recommends that the nominees named below be
elected. Each Director is elected to serve a one-year term. Directors being
elected at this Annual Meeting of Shareholders will serve until the next Annual
Meeting of Shareholders, or until their successors have been duly elected and
qualified.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock present in person or by proxy at the meeting and entitled
to vote is required for approval of the proposal to elect directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTING THE NOMINEES FOR
DIRECTOR SET FORTH BELOW.
All nominees have consented to serve if elected, but if any becomes
unable to serve, the persons named as proxies may exercise their discretion to
vote for a substitute nominee. The name, age, offices held with the Company,
initial year of service as a director and description of business experience for
each nominee are as follows:
Director
Name Age Company Position Since
- ---- --- ---------------- --------
Alvin E. McQuinn 68 Chairman of the Board, Chief 1963
Executive Officer and Director
Donald D. Pottinger 57 President and Director 1998
John C. Retherford 48 Senior Vice President, Chief 1987
Financial Officer and Director
Mary M. Jetland 38 Senior Vice President, Advanced 1994
Technology and Manufacturing
and Director
Robert L. Hoffman(1) 71 Secretary and Director 1963
G. Waddy Garrett(1)(2) 58 Director 1983
A.J. (Al) Giese(2) 51 Director 1996
DeWalt J. Willard, Jr.(1)(2) 68 Director 1998
- --------------------------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
2.
<PAGE>
ALVIN E. MCQUINN has served as a Director and as Chairman of the Board
since 1963. He has served as Chief Executive Officer since 1976. From 1963 to
1976, and from 1988 to July 1997, Mr. McQuinn served as the Company's President.
Mr. McQuinn serves as President, Chief Executive Officer and a Director of
Lor*Al Products, Inc., Ag-Chem Sales Co., Inc., Ag-Chem Equipment Canada, Ltd.
and Ag-Chem Equipment International Inc., as Chairman and Chief Executive
Officer of Ag-Chem Manufacturing Co., Inc., and as a Supervisory Director of
Ag-Chem Europe B.V., all of which are subsidiaries of the Company. Mr. McQuinn
is the father of Mary M. Jetland.
DONALD D. POTTINGER has served as President of the Company since July
1997. From April 1996 to June 1997, Mr. Pottinger served as the Company's Vice
President of Sales, North America. From November 1994 to March 1996, Mr.
Pottinger was President and Chief Executive Officer of Hickson Kerley, Inc., a
fertilizer company based in Phoenix, Arizona. From January 1994 to November
1994, he worked as an independent consultant with small and mid-sized
agricultural and environmental companies. From 1992 to 1994, he was President of
the Minerals and Chemical Group of the J.R. Simplot Company, a diversified
mining, manufacturing and marketing organization based in Pocatello, Idaho.
JOHN C. RETHERFORD has served as Senior Vice President and Chief
Financial Officer since March 1994, as Vice President of Finance from 1986 to
March 1994 and as a Director since 1987. Mr. Retherford is also a Director and
Vice President of Lor*Al Products, Inc., Ag-Chem Manufacturing Co., Inc.,
Ag-Chem Sales Co., Inc., Ag-Chem Equipment Canada, Ltd. and Ag-Chem Equipment
International Inc., and a Supervisory Director of Ag-Chem Europe B.V.
MARY M. JETLAND has served as Senior Vice President, Advanced
Technology and Manufacturing since November 1998 and as a Director of the
Company since February 1994. Ms. Jetland served as Vice President, Site Specific
Products from July 1998 to November 1998, as Vice President of Manufacturing
from March 1995 to November 1998, and as Vice President of Corporate Services
from February 1994 to July 1998. From 1989 to February 1994, she served as the
Manager of Corporate Services of the Company. Ms. Jetland is also President and
a Director of Ag-Chem Manufacturing Co., Inc. Ms. Jetland is the daughter of
Alvin E. McQuinn.
ROBERT L. HOFFMAN has served as a Director and the Secretary of the
Company since 1963. Since 1958, Mr. Hoffman has been an attorney with, and a
shareholder of, the law firm of Larkin, Hoffman, Daly & Lindgren, Ltd., based in
Bloomington, Minnesota. He is also a Director of WAM!NET Inc., a public
reporting company based in Bloomington, Minnesota, engaged in the business of
high-speed data transportation.
G. WADDY GARRETT has served as a Director of the Company since 1983.
Since 1978, he has served as the Chief Executive Officer and Chairman of the
Board of Alliance Agronomics, Inc., a Mechanicsville, Virginia holding company
consisting of various companies engaged in manufacturing, distribution and the
custom application of fertilizer. Mr. Garrett is also a Director of Reed
Jewelers, Inc., Willard Agri-Services of Frederick, Inc., located in Frederick,
Maryland, and County Bank of Chesterfield, as well as a publicly-held commercial
printing company, Cadmus Communications Corporation, located in Richmond,
Virginia.
A.J. (AL) GIESE has been a Director of the Company since 1996. Since
March 1998, Mr. Giese has served as President of Cenex/Land O'Lakes Agronomy
Company, a major marketer of crop inputs, located in St. Paul, Minnesota. From
1980 to 1998, Mr. Giese served as Vice President and Senior Vice President. Mr.
Giese is a member of the Board of Directors and serves on the Executive
Committee of
3.
<PAGE>
The Fertilizer Institute, Washington, D.C., an industry trade association
representing approximately 90 percent of domestic fertilizer producers,
manufacturers, retailers, trading firms and equipment manufacturers. Mr. Giese
also is a member of the Board of Directors of the International Fertilizer
Development Center, Muscle Shoals, Alabama.
DEWALT J. WILLARD, JR. has been a Director of the Company since
December 1998. Since 1970, Mr. Willard has been a director and executive officer
of multiple business entities, located in the Eastern part of the United States,
including Willard Agri-Service of Frederick, Inc., located in Frederick,
Maryland and Willard Agri-Service of Lynch, Inc., located in Lynch, Maryland,
which are retail fertilizer and pesticide suppliers; Willard Distribution Co.,
Inc., located in Frederick, Maryland, a wholesale fertilizer dealer; and
AgVenture LLC, an agricultural data processing company located in Frederick,
Maryland. In addition, Mr. Willard is a director and executive officer of five
retail automobile dealerships and three commercial real estate management firms.
Mr. Willard is a director of FCNB Bank, a publicly-held banking entity located
in Frederick, Maryland, and serves on numerous other private company, hospital,
association and non-profit boards of directors.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended September 30, 1999, the Board of Directors
held five meetings and took action by unanimous written consent on three
occasions. None of the members of the Board of Directors proposed for
re-election attended less than 75% of the meetings of the Board of Directors and
Committees of the Board of Directors held during the period in which they served
as a director in the fiscal year ended September 30, 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has appointed two standing committees: (i) the
Audit Committee and (ii) the Compensation Committee.
The purpose of the Audit Committee is to recommend the appointment of
the Company's independent certified public accountants, review the scope of the
audit, examine the auditors' reports, make appropriate recommendations to the
Board of Directors as a result of such review and examination and make inquiries
into the effectiveness of the financial and accounting functions and controls of
the Company. The Audit Committee held two meetings during the fiscal year ended
September 30, 1999.
The Compensation Committee is responsible for considering, negotiating,
establishing and modifying the compensation of the officers of the Company. Its
recommendations are subject to approval of the Board of Directors. The
Compensation Committee held one meeting during the fiscal year ended September
30, 1999.
REPORTING UNDER SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires executive officers and directors of the Company, and persons who
beneficially own more than 10 percent of the Company's outstanding shares of
Common Stock, to file initial reports of ownership and reports of changes in
ownership of securities of the Company with the Securities and Exchange
Commission ("SEC"). Officers, directors and persons owning more than 10 percent
of the Company's outstanding Common Stock are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms filed. Based solely
on a review of the copies of such reports and amendments thereto furnished to
4.
<PAGE>
or obtained by the Company or written representations that no other reports were
required, the Company believes that during the fiscal year ended September 30,
1999, all filing requirements applicable to its directors, officers or
beneficial owners of more than 10 percent of the Company's outstanding shares of
Common Stock were complied with.
EXECUTIVE COMPENSATION
The following table sets forth the compensation earned for services
rendered in all capacities to the Company during the Company's fiscal years
ended September 30, 1997, 1998 and 1999 by Alvin E. McQuinn, Chairman of the
Board and Chief Executive Officer, Donald D. Pottinger, President, John C.
Retherford, Senior Vice President and Chief Financial Officer, and Mary M.
Jetland, Senior Vice President, Advanced Technology and Manufacturing. The
Company has no other executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------------- ------------------
Securities
Name and Other Annual Underlying
Principal Position Year Salary Bonus Compensation(1) Options(2)
- ---------------------------------- ------ -------- ------ --------------- ------------------
($) ($) ($) (#)
<S> <C> <C> <C> <C> <C>
Alvin E. McQuinn 1999 337,700 0 0 n/a
Chairman of the Board and 1998 331,000 0 0 n/a
Chief Executive Officer 1997 318,000 50,000 66,780 n/a
Donald D. Pottinger 1999 204,000 0 0 4,000
President 1998 200,000 0 0 n/a
1997 130,000 50,000 27,300 n/a
John C. Retherford 1999 153,000 0 0 4,000
Senior Vice President 1998 150,000 0 0 n/a
and Chief Financial Officer 1997 138,000 40,000 28,980 n/a
Mary M. Jetland 1999 127,500 0 0 4,000
Senior Vice President, Advanced 1998 120,000 0 0 n/a
Technology and Manufacturing 1997 103,000 25,000 18,025 n/a
</TABLE>
- ----------------------------------
(1) Represents profit sharing contributions made by the Company on the
executive officer's behalf.
(2) Represents the number of phantom shares granted, effective December 1,
1998, to the named executive officer pursuant to the Ag-Chem Equipment Co.,
Inc. Key Employee Phantom Stock Bonus Plan.
5.
<PAGE>
OPTION/SAR GRANTS DURING THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Appreciation for
Individual Grants Phantom Stock Grant Term(2)
------------------------------------------------- -----------------------------
Number of Percent of
Securities Total Grants
Underlying to Employees Base Expiration
Name Grants(1) in Fiscal Year Price Date 5% 10%
- ------------------- ---------- -------------- -------- ---------- ----------- -----------
(#) (%) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Alvin E. McQuinn 0 n/a n/a n/a n/a n/a
Donald D. Pottinger 4,000 3.7 11 15/16 11/30/01 0 842
John C. Retherford 4,000 3.7 11 15/16 11/30/01 0 842
Mary M. Jetland 4,000 3.7 11 15/16 11/30/01 0 842
</TABLE>
- ---------------------------------
(1) The Company adopted the Ag-Chem Equipment Co., Inc. 1998 Key Employee
Phantom Stock Bonus Plan (the "Plan") effective December 1, 1998. Under the
Plan, a number of employees were granted "phantom shares." Such phantom
shares do not represent shares of the Company's common stock. Instead,
phantom shares are a method of calculating potential bonus payments to such
employees. All phantom shares will be redeemed on November 30, 2001 if not
sooner called. On the redemption date, the Company is required to make a
cash payment to the employee equal to the difference between the grant
price and the price of shares on the date of redemption. If the market
price on the date of redemption is lower than the grant price, no cash
payment shall be made. If the price of the Company's common stock reaches
$31 15/16, the Company has the right to call and redeem the phantom shares
at that time. The determination whether to call such phantom shares early
will be made solely by the Compensation Committee of the Board of
Directors. Under the Plan, if a participant's employment is terminated, all
rights under the Plan are forfeited unless such termination is the result
of death or permanent total disability, in which case the participant or
his/her estate will receive a cash payment based upon the market price of
the Company's common stock on the date of death or permanent total
disability.
(2) Based upon increases in the market price for the Company's common stock at
the assumed rates from September 30, 1999, the Company's fiscal year end.
At such date, the price of the Company's common stock was $9 7/8.
AGGREGATE OPTION/SAR EXERCISES IN THE FISCAL YEAR ENDED SEPTEMBER 30, 1999 AND
OPTION/SAR VALUES AT SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised In-the-
Shares Acquired on Underlying Unexercised Money Options/SARS at
Name Exercise Value Realized Options at FY-End FY-End(1)
- ------------------- ------------------ -------------- ---------------------- ----------------------------
(#) ($) (#) ($)
<S> <C> <C> <C> <C>
Alvin E. McQuinn n/a n/a n/a n/a
Donald D. Pottinger n/a n/a 4,000 0
John C. Retherford n/a n/a 4,000 0
Mary M. Jetland n/a n/a 4,000 0
</TABLE>
- ---------------------------------
(1) All of the phantom shares have no value give that the market price of the
Company's common stock was less than the base price of the phantom stock
grant as of September 30, 1999.
6.
<PAGE>
COMPENSATION OF DIRECTORS
During the fiscal year ended September 30, 1999, the Company paid each
non-employee director a fee of $3,000 per meeting of the Board of Directors and
$500 per committee meeting. In addition, the Company paid each non-employee
director an annual retainer of $6,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") has responsibility for all
elements of compensation of Ag-Chem officers, including the executive officers
named in the Summary Compensation Table. These elements consist of base salary,
profit sharing and incentive bonus. The Committee is also responsible for
setting the profit threshold for the Company's Profit Sharing Plan. During the
fiscal year ended September 30, 1999, the Committee was comprised of three
outside directors, G. Waddy Garrett, A.J. (Al) Giese and DeWalt J. Willard, Jr.,
who were not officers or employees of Ag-Chem or its subsidiaries and who were
not eligible to participate in any of the plans or programs that the Committee
administers. The Committee makes recommendations on compensation issues which
are subject to the approval of the Board of Directors.
Compensation Philosophy
The Company has a "pay for performance" philosophy for its management
employees including officers. Compensation is dependent upon the annual and
long-term financial performance of the Company, as well as long-term shareholder
return. The Committee has established programs to provide a total compensation
package that will attract highly qualified personnel to Ag-Chem, motivate
individuals to perform at optimum levels, reward outstanding individual
performance and retain valuable employees. The Company's compensation plans can
provide significant cash incentives to the Company's management.
Base Salary and Incentive Bonus
Salaries of the Company's management employees are based in part on the
compensation practices of other companies. The Committee has an independent
consulting firm review the total compensation of the officers to assess the
competitiveness of the Company's compensation program. The Company compares
itself to similarly-sized manufacturing companies located in the Midwest Region
of the United States. There are currently thirteen companies in this comparison
group, which is subject to change as the result of developments in the business
of the Company or the companies in the comparison group. The Company's most
direct competitors for executive personnel are not necessarily the companies
that would be included in a peer group established to compare shareholder
returns. Thus, the compensation peer group is not the same as the peer group
utilized in the Comparative Stock Performance Graph included in this Proxy
Statement. Salaries established by the Committee are also based on the officer's
scope of responsibilities, level of experience and individual performance.
Officers have an annual incentive bonus opportunity with awards based on overall
performance of the Company. The purpose of this incentive is to maintain a
strong correlation between annual pay and overall Company financial results.
7.
<PAGE>
Profit Sharing
The purpose of the Company's Profit Sharing Plan is to encourage
employees to work in a manner, and suggest ideas, that will increase Company
profit. Profit sharing compensation varies and is based on pre-tax profits. If
the Company obtains an acceptable profit level (the "threshold"), then the
Company pays profit sharing compensation to all eligible employees. The
Committee annually sets the profit threshold for the Company and its
subsidiaries. Any increase in the threshold is based on the net income of the
previous year.
Compensation of the Chairman and Chief Executive Officer
The compensation of Alvin E. McQuinn, Chairman of the Board and Chief
Executive Officer, is determined by the same process used for the other officers
of the Company. The only difference is that a higher portion of Mr. McQuinn's
total compensation is variable and at risk by being tied to the Company's
performance. The compensation paid to Mr. McQuinn is also based on subjective
non-financial Company performance measures which include continued growth,
customer satisfaction, management succession and overall quality of the Company.
In the fiscal year ended September 30, 1999, Mr. McQuinn received a
base salary of $337,700, with no discretionary bonus or profit sharing
contribution. Such determination was made by the Compensation Committee and
approved by the Company's Board of Directors. The determination not to pay Mr.
McQuinn a bonus under the Chairman's Annual Performance Incentive Plan was based
on the financial performance of the Company and was made by an independent
consulting firm engaged by the Company to evaluate compensation paid to other
chief executive officers in the Company's industry and to make recommendations
regarding compensation.
Discussion of Corporate Tax Deduction on Compensation in Excess of $1,000,000
Per Year
As part of its responsibilities, the Committee reviews certain measures
of performance for the Company's Chairman of the Board and Chief Executive
Officer that it believes are critical to the overall performance of the Company.
Certain measures of performance, such as succession planning and strategic
planning, are vital to the long-term performance of the Company. Section 162(m)
of the Internal Revenue Code of 1986 (the "Code") prohibits the Company from
deducting as compensation expense, amounts exceeding $1,000,000 per year for
certain officers, unless the payment of such compensation is based on
pre-established objective performance goals approved by the Company's
shareholders. A significant portion of the Chairman of the Board and Chief
Executive Officer's compensation meets the Code's requirement for deductibility.
At the Annual Meeting of Shareholders held in 1995 shareholders approved the
"Chairman's Annual Performance Incentive Plan." The Company believes that
amounts payable to the Chairman of the Board and Chief Executive Officer under
that plan are deductible. A portion of the Chairman of the Board and Chief
Executive Officer's compensation, however, will continue to be based on
critical, subjective measures that may prohibit certain compensation from being
deductible under the Code. The Committee strongly believes that its ability to
evaluate the performance of the Chairman of the Board and Chief Executive
Officer on vital subjective performance measures outweighs the Code's limitation
on such deductibility.
8.
<PAGE>
The foregoing Compensation Committee Report shall not be deemed
incorporated by reference by any statement incorporating by reference this Proxy
Statement, or any portion thereof, into any filing under the Securities Act of
1933 or under the Securities Exchange Act of 1934 and shall not otherwise be
deemed filed under such Acts.
G. Waddy Garrett
A.J. (Al) Giese
DeWalt J. Willard, Jr.
Ag-Chem Equipment Co., Inc. Compensation Committee
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Robert L. Hoffman, a member of the Company's Board of Directors and its
Secretary, is an attorney with, and a shareholder of, the law firm of Larkin,
Hoffman, Daly & Lindgren, Ltd., which currently serves as legal counsel to the
Company and served as legal counsel to the Company during the fiscal year ended
September 30, 1999.
The Company has transactions in the ordinary course of business with
unaffiliated businesses of which certain of the Company's non-employee directors
are officers and/or directors. The Company does not consider the amounts
involved in such transactions material in relation to its business and believes
that any such amounts are not material in relation to the business of such other
businesses or the interests of the non-employee directors involved.
9.
<PAGE>
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total shareholder return,
assuming $100 invested on September 30, 1994, as if such amount had been
invested in each of: (i) the Company's Common Stock; (ii) the stocks comprising
the Dow Jones Industrial Sector-Heavy Machinery; and (iii) the stocks included
in the Dow Jones Industrial Average. The graph assumes the reinvestment of all
dividends (the Company has never paid a dividend). Prices of the Company's
Common Stock are based upon high closing bid prices in the Minneapolis-St. Paul
local over-the-counter market as reported by: (i) Metro Data Company (for the
period 10/1/92 through 4/21/95) and (ii) the Nasdaq National Market (for the
period 4/24/95 through 9/30/98).
The historical stock price performance of the Company's Common Stock
shown below is not necessarily indicative of future performance. The graph below
shall not be deemed incorporated by reference by any statement incorporating by
reference this Proxy Statement, or any portion thereof, into any filing under
the Securities Act of 1933 or under the Securities Exchange Act of 1934 and
shall not otherwise be deemed filed under such Acts.
[PLOT POINTS CHART]
<TABLE>
<CAPTION>
-----------------------------------------------------------
9/30/94 9/30/95 9/30/96 9/29/97 9/30/98 9/30/99
- ---------------------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ag-Chem Equipment Co., Inc. 100.00 336.55 198.62 208.28 135.71 108.91
- ---------------------------- --------- --------- --------- --------- --------- ---------
Dow Jones Industrial Sector-
Heavy Machinery 100.00 113.62 156.04 213.43 134.22 179.34
- ---------------------------- --------- --------- --------- --------- --------- ---------
Dow Jones Industrial Average 100.00 128.03 160.84 221.28 222.29 297.90
- ----------------------------------------------------------------------------------------
</TABLE>
10.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of the close of business on January
6, 2000, the number of shares of Common Stock beneficially owned: (i) by each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock; (ii) by each director and director-nominee
of the Company; and (iii) by all executive officers and directors of the Company
as a group. Unless otherwise indicated, each of the following persons has sole
voting and investment power with respect to the shares of Common Stock set forth
opposite their respective names.
Number of Shares Beneficially Owned
Name and Address --------------------------------------
of Beneficial Owner Shares Percent
- -------------------------------------- ------------ ------------
Alvin E. McQuinn 5,678,998(1) 59.21%
Donald D. Pottinger 440 *
John C. Retherford 87,600(2) *
Mary M. Jetland 47,100(3) *
Robert L. Hoffman 5,458,498(4) 56.91%
G. Waddy Garrett 22,000(5) *
A.J. (Al) Giese 3,300(6) *
DeWalt J. Willard, Jr. 10,000 *
All directors and executive 5,854,638 61.04%
officers as a group (eight persons)
- --------------------------------------
* Less than 1%.
(1) Includes 5,453,298 shares owned by the Alvin E. McQuinn Revocable Trust of
which Mr. McQuinn is a co-trustee and 4,000 shares held by Mr. McQuinn as
custodian for grandchildren.
(2) Includes 62,450 shares owned jointly with Mr. Retherford's spouse and
16,734 shares held of record by Mr. Retherford's minor children. Also
includes 8,416 shares owned of record by two trusts of which Mr.
Retherford is trustee, as to all of which shares Mr. Retherford disclaims
beneficial ownership.
(3) Includes 24,500 shares held of record by Ms. Jetland's spouse and 100
shares held of record by Ms. Jetland's children, as to all of which Ms.
Jetland disclaims beneficial ownership.
(4) Includes 5,453,298 shares owned by the Alvin E. McQuinn Revocable Trust of
which Mr. Hoffman is a co-trustee, and 1,200 shares held by Mr. Hoffman's
spouse.
(5) Includes 6,000 shares held of record by Mr. Garrett's spouse and 800
shares held of record by Mr. Garrett's children.
(6) Includes 3,300 shares held jointly with Mr. Giese's spouse.
11.
<PAGE>
INDEPENDENT AUDITORS
(PROPOSAL #2)
The Board of Directors has appointed KPMG LLP to serve as the Company's
independent certified public accountants for the fiscal year ending September
30, 2000, and to perform other accounting services. Representatives of KPMG LLP
will be present at the Annual Meeting of Shareholders, with the opportunity to
make a statement if they so desire and to respond to appropriate shareholder
questions.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock present in person or by proxy at the annual meeting and
entitled to vote is required to ratify the appointment of KPMG LLP as the
Company's independent certified public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFYING THE APPOINTMENT
OF KPMG LLP AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
SUBMISSION OF SHAREHOLDER PROPOSALS
The rules of the Securities and Exchange Commission permit shareholders
of the Company, after notice to the Company, to present proposals for
shareholder action in the Company's Proxy Statement where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action, and are not properly omitted by Company action in accordance with the
proxy rules published by the Securities and Exchange Commission. Proposals that
shareholders may wish to present at the next Annual Meeting of Shareholders in
2001 must be received by the Company prior to October 5, 2000 to be included in
the Proxy Statement and form of Proxy relating to that meeting.
OTHER PROPOSALS
The Board of Directors of the Company does not intend to present any
business at the meeting other than the matters specifically set forth in this
Proxy Statement and knows of no other business to come before the meeting. If,
however, any other matters should properly come before the meeting, it is the
intention of the persons named in the Proxy to vote the shares represented
thereby in accordance with their best judgment on such matters.
COSTS AND METHOD OF SOLICITATIONS
Solicitations of proxies will be made by preparing and mailing the
Notice of Annual Meeting, form of Proxy and Proxy Statement to shareholders of
record as of the close of business on January 6, 2000. The cost of making the
solicitation includes the cost of preparing and mailing the Notice of Annual
Meeting, form of Proxy and Proxy Statement, and the payment of charges incurred
by brokerage houses and other custodians, nominees and fiduciaries for
forwarding documents to shareholders. In certain instances, officers of the
Company may make special solicitations of proxies either in person or by
telephone. Expenses incurred in connection with special solicitations are
expected to be nominal. The Company will bear all expenses incurred in
connection with the solicitation of proxies for the annual meeting.
12.
<PAGE>
It is important that your shares are represented and voted, whether or
not you plan to attend the meeting. Accordingly, we respectfully request that
you sign, date and mail the enclosed Proxy in the envelope provided as promptly
as possible. Thank you.
BY ORDER OF THE BOARD OF DIRECTORS
Robert L. Hoffman,
SECRETARY
Date: February , 2000
13.
<PAGE>
AG-CHEM EQUIPMENT CO., INC. [FRONT] PROXY
5720 SMETANA DRIVE
MINNETONKA, MINNESOTA 55343
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alvin E. McQuinn and Robert L. Hoffman, and each
of them with full power of substitution, Proxies to represent and vote, as
designated below, all of the shares of the Common Stock of Ag-Chem Equipment
Co., Inc., registered in the name of the undersigned as of the close of business
on January 6, 2000, with the powers the undersigned would possess if personally
present at the Annual Meeting of Shareholders to be held at the Company's
offices, located at 5720 Smetana Drive, Minnetonka, Minnesota, at 3:00 p.m.,
local time, on March 6, 2000, and at any adjournment thereof, hereby revoking
any proxy or proxies previously given.
1. Election of directors:
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees listed
below) below
(To WITHHOLD authority to vote for any individual nominee, draw a line
through the nominee's name below)
ALVIN E. MCQUINN DONALD D. POTTINGER JOHN C. RETHERFORD
MARY M. JETLAND ROBERT L. HOFFMAN G. WADDY GARRETT
A. J. (AL) GIESE DEWALT J. WILLARD, JR.
(CONTINUED, AND TO BE COMPLETED AND SIGNED ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
(CONTINUED FROM THE OTHER SIDE)
[BACK]
2. Proposal to ratify the appointment of KPMG LLP as independent certified
public accountants of the Company for the fiscal year ending September 30,
2000: |_| FOR |_| AGAINST |_| ABSTAIN
3. In their discretion, the appointed Proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Dated ____________________________, 2000
----------------------------------------
(Signature)
----------------------------------------
(Second signature)
PLEASE DATE AND SIGN ABOVE exactly as
your name appears at left, indicating
where appropriate, official position or
representative capacity.
