<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
BALL CORPORATION
- --------------------------------------------------------------------------------
(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:
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<PAGE>
[LOGO]
BALL CORPORATION
10 LONGS PEAK DRIVE, BROOMFIELD, COLORADO 80021-2510
-------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 28, 1999
-------------
The Annual Meeting of Shareholders of Ball Corporation will be held at the
Corporation's offices, 10 Longs Peak Drive, Broomfield, Colorado, on Wednesday,
April 28, 1999, at 9:00 a.m. (MDT) for the following purposes:
1. To elect three directors for three-year terms expiring at the Annual
Meeting of Shareholders to be held in 2002;
2. To ratify the appointment of the firm of PricewaterhouseCoopers LLP as
independent public accountants for 1999; and
3. To transact any other business as properly may come before the meeting,
although it is anticipated that no business will be conducted other than
the matters listed above.
Only holders of Common Stock of record at the close of business March 1,
1999, are entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
A Proxy Statement appears on the following pages. A copy of the Annual
Report for 1998 is being mailed to you with this Notice of Annual Meeting of
Shareholders and Proxy Statement.
By Order of the Board of Directors
Elizabeth A. Overmyer
CORPORATE SECRETARY
March 15, 1999
Broomfield, Colorado
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND RETURN PROMPTLY YOUR PROXY IN THE
ENCLOSED ENVELOPE.
__________________________
PLEASE NOTE: THE 1999 ANNUAL MEETING WILL BE HELD TO TABULATE THE VOTES CAST
AND TO REPORT THE RESULTS OF VOTING ON THE TWO ITEMS DESCRIBED ABOVE. NO
PRESENTATIONS
OR OTHER BUSINESS MATTERS ARE PLANNED FOR THE MEETING.
<PAGE>
[LOGO]
BALL AND ARE TRADEMARKS OF BALL CORPORATION, REG. U.S. PAT. & TM. OFFICE
<PAGE>
BALL CORPORATION
10 LONGS PEAK DRIVE, BROOMFIELD, COLORADO 80021-2510
-------------
PROXY STATEMENT
MARCH 15, 1999
-------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 28, 1999
-------------
To Shareholders of Ball Corporation:
This Proxy Statement and the accompanying proxy card are furnished to
shareholders in connection with the solicitation by the Board of Directors of
Ball Corporation of proxies to be voted at the Annual Meeting of Shareholders to
be held April 28, 1999, for the purposes stated in the accompanying notice of
the meeting.
A shareholder of the Corporation who has executed and returned a proxy may
revoke it at any time before it is voted, but only by executing and returning to
the Corporate Secretary at 10 Longs Peak Drive, Broomfield, Colorado 80021-2510,
a proxy bearing a later date, by giving written notice of revocation to the
Corporate Secretary, or by attending the meeting and voting in person.
Attendance at the meeting does not, by itself, revoke a proxy.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
At the close of business on March 1, 1999, there were outstanding and
entitled to vote 30,224,047 shares of Common Stock (including the associated
preferred stock purchase rights under the Rights Agreement dated as of January
24, 1996, between the Corporation and The First National Bank of Chicago). Each
share of Common Stock is entitled to one vote. Shareholders do not have
cumulative voting rights with respect to the election of directors.
Based on Schedule 13G filings received to date, the following table
indicates the beneficial owners of more than 5 percent of the Corporation's
outstanding Common Stock:
<TABLE>
<CAPTION>
TITLE OF NAME AND ADDRESS SHARES
CLASS OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
- ------------ ------------------------------------ ------------------- -------------------
<C> <S> <C> <C>
Common Mellon Bank Corporation 2,131,314 7.05
(and certain of its subsidiaries) (sole voting power
One Mellon Bank Center 1,273,039 shares;
Pittsburgh, Pennsylvania 15258 shared voting power
697,175 shares)
(sole dispositive
power
1,344,557 shares;
shared dispositive
power
755,975 shares)
Common Sasco Capital, Inc. 1,940,129 6.42
10 Sasco Hill Road (sole dispositive
Fairfield, Connecticut 06430 power)
(sole voting power
1,184,243 shares)
</TABLE>
1
<PAGE>
The following table lists the beneficial ownership, as of the close of
business on March 1, 1999, of Common Stock of the Corporation, of director
nominees, continuing directors, the Chief Executive Officer and the four other
most highly compensated executive officers and, as a group, of such persons and
other executive officers. Unless otherwise noted, the beneficial owner has sole
voting and investment power.
<TABLE>
<CAPTION>
NAME OF SHARES
TITLE OF CLASS BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENT OF CLASS
- --------------- ------------------------------- ------------------------ ---------------------
<C> <S> <C> <C>
Common Frank A. Bracken 364,915(2) 1.21
Common Howard M. Dean 8,121(3) .03
Common John T. Hackett 4,408 .01
Common R. David Hoover 93,714(4) .31
Common John F. Lehman 8,532 .03
Common George A. Matsik 55,191(5) .18
Common Ruel C. Mercure, Jr. 11,911 .04
Common Jan Nicholson 16,065 .05
Common Raymond J. Seabrook 33,173(6) .11
Common George A. Sissel 188,144(7) .62
Common William P. Stiritz 407,864(8) 1.35
Common Stuart A. Taylor II 0 .00
Common David A. Westerlund 36,702(9) .12
Common All of the above and present 1,320,048 4.37
executive officers as a
group (16)
</TABLE>
- --------------------------
(1) Full voting and dispositive power, unless otherwise noted.
(2) Includes 82,433 shares held in trust for the estate of another family member
for which Mr. Bracken, as cotrustee, has sole voting and shared investment
power, and 6,220 shares owned by his wife, as to which he disclaims
beneficial ownership.
(3) Includes 250 shares owned by Mr. Dean's wife, as to which he disclaims
beneficial ownership.
(4) Includes 1,327 shares owned by Mr. Hoover's wife and 4,770 shares held in
trust for Mr. Hoover's wife, all as to which he disclaims beneficial
ownership, and 50,172 shares which he may acquire during the next 60 days
upon the exercise of stock options.
(5) Includes 25,502 shares which Mr. Matsik may acquire during the next 60 days
upon the exercise of stock options.
(6) Includes 10,695 shares which Mr. Seabrook may acquire during the next 60
days upon the exercise of stock options.
(7) Includes 10,000 shares owned by Mr. Sissel's wife, as to which he disclaims
beneficial ownership, and 109,339 shares which he may acquire during the
next 60 days upon the exercise of stock options.
(8) Includes 100,000 shares owned by Mr. Stiritz' wife, as to which he disclaims
beneficial ownership.
(9) Includes 18,501 shares which Mr. Westerlund may acquire during the next 60
days upon the exercise of stock options.
ELECTION OF DIRECTORS
At their 1985 Annual Meeting, the shareholders adopted the Amended Articles
of Incorporation of Ball Corporation, dividing the Board into three classes, as
nearly equal in number as possible, with directors serving staggered three-year
terms. On April 28, 1999, three persons are to be elected to serve as directors
until 2002, or, in each case until his respective successor is elected and
qualified. Unless otherwise instructed on the proxy card, the persons named in
the accompanying proxy intend to vote for nominees Ruel C. Mercure, Jr., William
P. Stiritz and Stuart A. Taylor II to hold office as directors of the
Corporation until the 2002 Annual Meeting of Shareholders, or, in each case
until his respective successor is elected and qualified. All nominees have
consented to be named as candidates in the Proxy Statement and have agreed to
serve if elected. If, for any reason, any of the nominees becomes unavailable
for election, the shares represented by proxies will be voted for any substitute
nominee or nominees designated by the Board of Directors. The Board has no
reason to believe that any of the nominees will be unable to serve.
All of the directors in Classes I and III, whose terms have not expired, and
Ruel C. Mercure, Jr., and William P. Stiritz, two of the director nominees for
Class II, were previously elected by the shareholders. The other nominee for
Class II, Stuart A. Taylor II, has not been elected by the shareholders. Mr.
Taylor was nominated by the Board of Directors on January 27, 1999, to stand, as
a director in Class II, for election by the shareholders on April 28, 1999.
In accordance with Indiana Business Corporation Law, directors are elected
by a plurality of the votes cast by the shares entitled to vote in the election
at a meeting at which a quorum is present. Abstentions and broker nonvotes are
considered neither votes "for" nor "against." Proxies may not be voted for a
greater number of persons than the three nominees named.
Set forth for each director nominee in Class II and for each continuing
director in Classes I and III are his principal occupation and employment during
the past five years, the period during which he has served as a director and
certain other information.
2
<PAGE>
DIRECTOR NOMINEES AND CONTINUING DIRECTORS
TO BE ELECTED FOR A TERM OF THREE YEARS UNTIL THE 2002 ANNUAL MEETING (CLASS II)
<TABLE>
<C> <S> <C>
Chairman and Chief Director since 1996.
Executive Officer, CDM Member, Audit and Finance
Optics, Inc., Boulder, Committees.
Colorado, since 1997 and
Chairman, WITI Mr. Mercure is a director
Corporation, Boulder, of Applied Magnetics
Colorado, since 1991; Corp., Goleta,
Member of the faculty, California.
University of Colorado,
1988 to
1996; Owner, Colorado
[PHOTO] Venture Management, 1980
to 1988; various
executive aerospace
positions, Ball
Corporation, 1956 to
1980. Age 67.
RUEL C. MERCURE, JR.
Chairman, Chief Executive Director since 1983.
Officer and President, Member, Audit, Human
Agribrands International, Resources and Nominating
Inc., St. Louis, Committees.
Missouri, since March
1998, and Chairman, Mr. Stiritz is a director
Ralston Purina Company, of Agribrands Inter-
St. Louis, Missouri,
since October 1997;
Chairman, President and national, Inc., Ralston
[PHOTO] Chief Executive Officer, Purina Company, Angelica
1982 to 1997. Age 64. Corp., Ralcorp Holdings,
Inc., Reinsurance Group
of America, Inc., and May
Department Stores Co.,
all of St. Louis,
Missouri, and Vail
Resorts Inc., Avon,
Colorado.
WILLIAM P. STIRITZ
Managing Director, CIBC
World Markets, Chicago,
Illinois, since April
1997; Managing Director,
Bankers Trust Company,
Chicago, Illinois,
January 1995 to April
1997; Vice President,
Bankers Trust Company,
July 1993 to January
[PHOTO] 1995; Vice President,
Morgan Stanley & Co.
Incorporated, Chicago,
Illinois, January 1991 to
July 1993; Associate,
Morgan Stanley & Co.
Incorporated, August 1987
to December 1991.
Age 38.
STUART A. TAYLOR II
</TABLE>
3
<PAGE>
TO CONTINUE IN OFFICE UNTIL THE 2000 ANNUAL MEETING (CLASS III)
Chairman of the Board and Director since 1984.
Chief Executive Officer, Member, Executive, Human
Dean Foods Company, Resources and Nominating
Franklin Park, Illinois, Committees.
since January 1989;
President and Chief Mr. Dean is a director of
Executive Officer, 1987 Dean Foods
to 1989. Age 61.
Company, Franklin Park,
[PHOTO] Illinois; Nalco Chemical
Company, Naperville,
Illinois; and Yellow
Corporation, Overland
Park, Kansas.
HOWARD M. DEAN
Managing General Partner, Director since 1994.
CID Equity Partners, Member, Executive, Human
Indianapolis, Indiana, Resources and Nominating
since 1991; Vice Committees.
President of Finance and
Administration, Indiana Mr. Hackett is a director
University, Bloomington, of Irwin Financial
Indiana, 1989 to 1991.
Prior to 1989, he served
as Executive Vice Corporation, Columbus,
[PHOTO] President, Chief Indiana; Meridian
Financial Officer and Insurance Group, Inc.,
Director of Cummins Indianapolis, Indiana;
Engine Company, Columbus, and Wabash National
Indiana. Age 66. Corp., Lafayette,
Indiana.
JOHN T. HACKETT
Vice Chairman and Chief Director since 1996.
Financial Officer, Ball Member, Finance
Corporation, since Committee.
January 1998; Executive
Vice President and Chief Mr. Hoover is a director
Financial Officer, April of ANB Corporation,
1997 to January 1998; Muncie, Indiana, and
Executive Vice President, Datum, Inc.,
Chief Financial
Officer and Treasurer, Irvine, California.
[PHOTO] April 1996 to April 1997;
Executive Vice President
and Chief Financial
Officer, July 1995 to
April 1996; Senior Vice
President and Chief
Financial Officer, August
1992 to July 1995; Vice
President and Treasurer,
September 1988 to August
1992; various financial
R. DAVID HOOVER positions since 1970. Age
53.
Managing Director, Director since 1994.
Portfolio Management, Member, Audit and Finance
MBIA Insurance Committees.
Corporation, New York,
New York, since February Ms. Nicholson is a
1998; Managing Director, director of Rubbermaid
Research and Development, Incorporated, Wooster,
Capital Markets Assurance Ohio.
Corporation
(CapMAC), New York, New
[PHOTO] York, May 1994 to
February 1998; Vice
President and Manager of
Northeast Department for
Citicorp Real Estate, New
York, New York, 1990 to
1994. Age 53.
JAN NICHOLSON
4
<PAGE>
TO CONTINUE IN OFFICE UNTIL THE 2001 ANNUAL MEETING (CLASS I)
<TABLE>
<C> <S> <C>
Of Counsel, Bingham Director since 1995.
[PHOTO] Summers Welsh & Spilman, Member, Audit, Executive
Attorneys at Law, and Nominating
Indianapolis, Indiana, Committees.
since June 1994; Deputy
Secretary, U.S. Mr. Bracken is a director
Department of the of First Merchants
Interior, 1989 to 1993; Corporation, Muncie,
Chairman of the Board, Indiana.
Ball-InCon Glass
Packaging Corp., 1987 to
1989. Various corporate
positions, 1972 to 1987.
Age 64.
FRANK A. BRACKEN
Chairman, J. F. Lehman & Director since 1987.
Company, New York, New Member, Finance, Human
York, since November Resources and Nominating
1990; Chairman of the Committees.
Board, Sperry Marine
Inc., Charlottesville, Mr. Lehman is a director
Virginia, November 1993 of OAO Technol-
to May 1996; Managing
Director, Investment
Banking Division, ogy Solutions Inc.,
[PHOTO] PaineWebber Inc., New Greenbelt, Maryland, and
York, New York, January Sedgwick Group PLC,
1988 to November 1990; London, England.
Secretary of the Navy,
Washington, D.C., from
February 1981 to April
1987. Age 56.
JOHN F. LEHMAN
Chairman and Chief Director since 1995.
Executive Officer, Ball Member, Executive
Corporation, since Committee.
January 1998; Chairman,
President and Chief Mr. Sissel is a director
Executive Officer, April of First Merchants
1996 to January 1998; Corporation, Muncie,
President and Chief Indiana.
Executive Officer, April
1995 to
April 1996; Acting
[PHOTO] President and Chief
Executive Officer, May
1994 to April 1995;
Senior Vice President,
Corporate Affairs;
Corporate Secretary and
General Counsel, 1993 to
1995; Senior Vice
President, Corporate
Secretary and General
Counsel, 1987 to 1993;
Vice President, Corporate
Secretary
GEORGE A. SISSEL and General Counsel, 1981
to 1987; various
corporate positions, 1970
to 1981. Age 62.
</TABLE>
5
<PAGE>
CERTAIN COMMITTEES OF THE BOARD
Among the standing committees of the Board of Directors are the Audit,
Nominating and Human Resources Committees.
AUDIT COMMITTEE:
The duties of the Audit Committee are: (a) recommend for nomination by the
Board of Directors the independent certified public accountants who shall
conduct the annual audit of the Corporation; (b) provide assistance to the Board
of Directors in fulfilling its fiduciary responsibilities relating to corporate
accounting and reporting practices, including review by the Committee of
accounting policies, financial statements, annual audit procedures and results,
and general financial disclosure procedures; (c) maintain, through regularly
scheduled meetings as well as informal conferences, a direct line of
communication with the independent accountants to provide for exchanges of views
and information; and (d) review the continuing effectiveness of the
Corporation's accounting and operating conflicts of interest policies. Current
members of the Audit Committee, none of whom are employees of the Corporation,
are Messrs. Stiritz (Chairman), Bracken and Mercure, and Ms. Nicholson. The
Audit Committee met three times during 1998.
NOMINATING COMMITTEE:
The duties of the Nominating Committee are: (a) develop and maintain a list
of qualified candidates to fill vacancies on the Board and aid in attracting
qualified candidates to the Board; (b) recommend to the Board candidates to fill
any vacancies on the Board; (c) recommend to the Board annually a slate of
directors to be elected by the shareholders at the Annual Meeting and recommend
to the Board the inclusion of the slate in the Proxy Statement; and (d)
recommend the compensation for services as director to be paid to nonmanagement
directors. Current members of the Nominating Committee are Messrs. Bracken
(Chairman), Dean, Hackett, Lehman and Stiritz. The Nominating Committee met once
during 1998. The Nominating Committee will consider nominees recommended by
shareholders. Any such recommendation should be in writing and addressed to the
Corporate Secretary, Ball Corporation, 10 Longs Peak Drive, Broomfield, Colorado
80021-2510.
HUMAN RESOURCES COMMITTEE:
The duties of the Human Resources Committee are: (a) approve the salaries of
all elected corporate officers and other employees of the Corporation, as the
Board of Directors may determine and direct from time to time; (b) approve the
Corporation's schedule of salary ranges and grades for all salaried employees;
(c) approve the Corporation's schedule for approval signatures to be required
for salary and employee status changes; (d) approve the Corporation's incentive
compensation program, including its design, participation basis and
participation rates, as they apply to all elected corporate officers and other
employees of the Corporation as the Board of Directors may determine and direct
from time to time; (e) approve major salaried benefit plans, changes, plan
additions, terminations, and discontinuations; (f) direct the administration of
the Corporation's various stock option plans, stock appreciation rights plans,
the restricted stock plans and deferred compensation plans, in accordance with
such plans; (g) designate from time to time those officers and other key
employees of the Corporation and its subsidiaries to whom option and/or
restricted stock awards are to be granted and approve the number of shares to be
optioned and/or granted from time to time to any individual; and (h) perform
such other functions with respect to employee compensation as may be requested
by the Board of Directors. Current members of the Human Resources Committee are
Messrs. Dean (Chairman), Hackett, Lehman and Stiritz. The Human Resources
Committee met five times during 1998.
BOARD MEETINGS
The Board of Directors held six meetings during 1998. No director attended
less than 75 percent of the aggregate of (1) the total number of meetings of the
Board of Directors and (2) the total number of meetings held by all committees
of the Board on which he served.
SHAREHOLDER PROPOSALS
To be eligible for inclusion in the Corporation's Proxy Statement for the
2000 Annual Meeting, proposals of shareholders must be in writing and be
received by the Corporate Secretary at the Corporation's principal executive
offices, 10 Longs Peak Drive, Broomfield, Colorado 80021-2510, by November 16,
1999.
If a shareholder desires to bring business before the 2000 Annual Meeting
which is not the subject of a proposal submitted for inclusion in the Proxy
Statement, he must notify the Corporation in writing by January 30, 2000, or the
proposal will be considered untimely, and management's proxies may exercise
their discretionary authority to vote previously solicited proxies against such
proposal if it is raised at the Annual Meeting.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Corporation of the
Chief Executive Officer and each of the next four most highly compensated
executive officers of the Corporation (the Named Executive Officers) in office
on December 31, 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS
ANNUAL COMPENSATION ---------------------- PAYOUTS
----------------------------------- RESTRICTED SECURITIES ---------
NAME AND PRINCIPAL OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION AWARDS(2) OPTIONS PAYOUTS COMPENSATION(4)
- -------------------------- ---- --------- --------- ------------- --------- ----------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George A. Sissel 1998 $ 650,000 $1,108,444 $1,330,000 $ 559,465 $ 126,462
Chairman and 1997 552,115 796,854 221,032 110,114
Chief Executive Officer 1996 550,000 151,948 114,323
R. David Hoover 1998 365,490 510,888 875,000 246,058 95,521
Vice Chairman and 1997 288,986 421,421 93,433 103,403
Chief Financial Officer 1996 257,876 73,108 107,217
George A. Matsik 1998 359,029 513,194 875,000 195,560(3) 32,935
President (Chief 1997 286,519 382,244 58,143 23,567
Operating Officer,
Packaging Operations)
Raymond J. Seabrook 1998 220,573 254,843 420,000 87,827 37,930
Senior Vice President, 1997 191,687 216,165 33,889 28,274
Finance 1996 178,125 38,063 26,409
David A. Westerlund 1998 209,965 240,446 420,000 79,127(3) 14,207
Senior Vice President, 1997 178,702 195,356 29,060 10,172
Administration 1996 147,237 25,612 8,502
</TABLE>
- ------------------------
(1) As noted in the Report of the Human Resources Committee, Ball Corporation
uses the term Incentive Compensation rather than Bonus. Also noted in the
Report of the Human Resources Committee is the performance level of the
Corporation and each of the operating groups in relation to incentive
targets and the resulting impact on the "bonus" amounts shown above.
(2) These restricted shares were granted after the acquisition of the assets of
the can division of Reynolds Metals Company. This one-time grant was made
pursuant to the acquisition-related, special incentive for senior
executives, as outlined in the Report of the Human Resources Committee and
more fully explained on page 13 of this Proxy. The Restricted Stock
restrictions are designed to lapse in increments, based on achievement of
performance goals related to the successful integration of the acquired
assets and achievement of synergies within the metal beverage operations. If
the restrictions do not lapse in such increments, they will not lapse until
September 23, 2005.
(3) Pursuant to the plan as outlined in the Report of the Human Resources
Committee, part of the award was in Restricted Stock.
(4) The amounts shown in the All Other Compensation column for 1998 consist of
the following:
Mr. Sissel -- above-market interest on deferred compensation account,
$85,370; company contribution to Employee Stock Ownership Plan, $1,200;
company contribution to Employee Stock Purchase Plan, $1,200;
Supplemental Long-Term Disability premium, $2,304; compensation
attributable to the split-dollar life insurance program, $36,388.
Mr. Hoover -- above-market interest on deferred compensation account,
$19,150; company contribution to Employee Stock Ownership Plan, $1,200;
company contribution to Employee Stock Purchase Plan, $1,200;
Supplemental Long-Term Disability premium, $2,304; compensation
attributable to the split-dollar life insurance program, $71,667.
Mr. Matsik -- above-market interest on deferred compensation account,
$28,231; company contribution to Employee Stock Ownership Plan, $1,200;
company contribution to Employee Stock Purchase Plan, $1,200;
Supplemental Long-Term Disability premium, $2,304.
Mr. Seabrook -- above-market interest on deferred compensation account,
$9,343; company contribution to Employee Stock Ownership Plan, $1,200;
company contribution to Employee Stock Purchase Plan, $1,200;
Supplemental Long-Term Disability premium, $2,304; compensation
attributable to the split-dollar life insurance program, $23,883.
Mr. Westerlund -- above-market interest on deferred compensation account,
$9,515; company contribution to Employee Stock Ownership Plan, $1,200;
company contribution to Employee Stock Purchase Plan, $1,200;
Supplemental Long-Term Disability premium, $2,292.
7
<PAGE>
LONG-TERM INCENTIVE COMPENSATION
STOCK OPTION GRANTS AND EXERCISES
The following tables present certain information for the Named Executive
Officers relating to stock option grants and exercises during 1998 and, in
addition, information relating to the valuation of unexercised stock options:
STOCK OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
PERCENTAGE
OF TOTAL
OPTIONS
GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE (PER EXPIRATION PRESENT
NAME GRANTED FISCAL 1998 SHARE) DATE VALUE(4)
- ---------------------------------------------------- --------- ------------ ------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
George A. Sissel.................................... 40,000(1) 5.39 $ 35.9375 04/21/08 $ 422,700
100,000(3) 13.47 35.00 09/23/08 1,015,750
R. David Hoover..................................... 10,000(1) 1.35 35.9375 04/21/08 105,675
15,000(2) 2.02 44.3125 07/22/08 193,988
80,000(3) 10.78 35.00 09/23/08 812,600
George A. Matsik.................................... 8,000(1) 1.07 35.9375 04/21/08 84,540
15,000(2) 2.02 44.3125 07/22/08 193,988
80,000(3) 10.78 35.00 09/23/08 812,600
Raymond J. Seabrook................................. 6,000(1) .81 35.9375 04/21/08 63,405
25,000(3) 3.37 35.00 09/23/08 253,938
David A. Westerlund................................. 6,000(1) .81 35.9375 04/21/08 63,405
25,000(3) 3.37 35.00 09/23/08 253,938
</TABLE>
- ------------------------
(1) Options were granted April 21, 1998, and are exercisable beginning one year
after grant and each year thereafter in 25 percent increments.
(2) Options were granted July 22, 1998, and are exercisable beginning one year
after grant and each year thereafter in 25 percent increments.
(3) Options were granted September 23, 1998, and are designed to become
exercisable in 50 percent, 25 percent and 25 percent increments, after the
Corporation's stock has closed for ten consecutive days on the New York
Stock Exchange Composite Listing at or above $45, $52 and $60 per share,
respectively. If the stock options do not become exercisable based upon
attainment of such closing prices, they will not become exercisable until
September 23, 2003. It is anticipated that this stock option grant is in
lieu of regular stock option grants for the years 1999, 2000 and 2001.
(4) Options with an expiration date of April 21, 2008, have an estimated
weighted fair value, at date of grant, of $10.57 per share based on the
Black-Scholes option pricing model adapted for use in valuing compensatory
stock options under Statement of Financial Accounting Standards No. 123.
Under the same methodology, options with an expiration date of July 22,
2008, have an estimated weighted fair value, at date of grant, of $12.93 per
share. Options with an expiration date of September 23, 2008, have an
estimated weighted fair value, at date of grant, of $10.16 per share. Values
under the Black-Scholes model were estimated using the following weighted
average assumptions: expected volatility of 26.64 percent; risk-free
interest rate of 4.90 percent; expected life of 5.22 years; dividend yield
of 1.31 percent; and no adjustments for risk of forfeiture. The actual
value, if any, an executive may realize will depend on the excess of the
stock price over the exercise price on the date the option is exercised.
Consequently, there is no assurance the value realized by an executive will
be at or near the value estimated by the Black-Scholes model.
8
<PAGE>
AGGREGATED STOCK OPTION EXERCISES IN 1998
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1998 DECEMBER 31, 1998(1)
SHARES ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------- ----------------- --------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
George A. Sissel........................ -0- $ -0- 159,339 185,000 $ 3,051,640 $ 2,300,000
R. David Hoover......................... 4,334 79,617 73,172 119,500 1,417,955 1,250,250
George A. Matsik........................ -0- -0- 35,252 113,750 678,388 1,164,531
Raymond J. Seabrook..................... 700 3,325 18,635 38,000 348,667 460,375
David A. Westerlund..................... 2,081 41,183 23,001 37,500 417,229 449,688
</TABLE>
- ------------------------
(1) Based on the closing price on the New York Stock Exchange -- Composite
Transactions of the Corporation's Common Stock on December 31, 1998, of
$45.75.
LONG-TERM CASH INCENTIVE
The following table presents information for the Named Executive Officers
concerning the Long-Term Cash Incentive Plan and, in addition, information
relating to the estimated future payouts.
LONG-TERM CASH INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS(2)
NUMBER OF PERFORMANCE PERIOD ----------------------------------
NAME UNITS(1) UNTIL MATURATION THRESHOLD TARGET MAXIMUM
- ---------------------------------------------------- ----------------- ------------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
George A. Sissel.................................... 0 1/1/97 - 12/31/99 $ 223,885 $ 447,769 $ 895,538
R. David Hoover..................................... 0 1/1/97 - 12/31/99 99,670 205,202 410,404
George A. Matsik.................................... 0 1/1/97 - 12/31/99 94,892 195,538 391,076
Raymond J. Seabrook................................. 0 1/1/97 - 12/31/99 36,840 75,551 151,103
David A. Westerlund................................. 0 1/1/97 - 12/31/99 34,810 71,387 142,775
</TABLE>
- ------------------------
(1) Participants are not awarded a number of units. Awards are expressed as a
percentage of average annual salary and "bonus" at target during the
performance period. However, Named Executive Officers, including the Chief
Executive Officer, whose Ball Corporation stock holdings are below the
established guidelines, will receive one-half of their award in Ball
Corporation Restricted Stock.
(2) Estimated future payouts ("earned awards") are based on Ball's total
shareholder return performance, i.e., stock price appreciation plus
dividends, over three-year performance cycles which begin at the start of
each calendar year, relative to the total shareholder return of companies
comprising the S&P Industrials index.
9
<PAGE>
RETIREMENT PLANS
The following table, for purposes of illustration, indicates the amounts of
annual retirement income which would be payable in 1999 to the Named Executive
Officers at normal retirement age 65. The calculation of retirement benefits
under the plans generally is based upon average earnings (base salary only) for
the highest five consecutive years of the ten years preceding retirement.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------
AVERAGE ANNUAL EARNINGS 15 20 25 30 35
- ---------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$150,000 $ 31,415 $ 41,887 $ 52,359 $ 62,831 $ 73,303
200,000 42,665 56,887 71,109 85,331 99,553
250,000 53,915 71,887 89,859 107,831 125,803
300,000 65,165 86,887 108,609 130,331 152,053
350,000 76,415 101,887 127,359 152,831 178,303
400,000 87,665 116,887 146,109 175,331 204,553
450,000 98,915 131,887 164,859 197,831 230,803
500,000 110,165 146,887 183,609 220,331 257,053
550,000 121,415 161,887 202,359 242,831 283,303
</TABLE>
The Corporation's qualified salaried retirement plans provide defined
benefits determined by base salary and years of service. The Corporation has
also adopted a nonqualified supplemental executive retirement plan which
provides benefits otherwise not payable under the qualified pension plan to the
extent that the Internal Revenue Code limits the pension to which an executive
would be entitled under the qualified pension plan. The benefit amounts shown in
the above table reflect the amount payable as a straight life annuity and
include amounts payable under the supplemental retirement plan. Messrs. Sissel,
Hoover and Seabrook participate in a split-dollar life insurance plan, and
supplemental retirement benefits cease thirty days following the termination of
the Corporation's interest in the participant's split-dollar policy.
Average Annual Earnings used under the pension formula to calculate benefits
together with years of benefit service, as of December 31, 1998, for the Named
Executive Officers are: George A. Sissel, $469,591 (28.33 years); R. David
Hoover, $255,002 (28.54 years); George A. Matsik, $225,391 (22 years); Raymond
J. Seabrook, $177,678 (6.21 years); and David A. Westerlund, $155,679 (23.33
years) (offset by benefits received from a prior employer).
TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
Since 1988, the Corporation has maintained a revocable, funded grantor
trust, which, in the event a change in control of the Corporation occurs, would
become irrevocable with funds thereunder to be available to apply to the
Corporation's obligations under two of its deferred compensation plans. Those
plans cover key employees, including the Named Executive Officers. Under the
trust, "change in control" can occur by virtue, in general terms, of an
acquisition by any person of 40 percent or more of the Corporation's voting
shares; a merger in which shareholders of the Corporation before the merger own
less than 60 percent of the Corporation's Common Stock after the merger;
shareholder approval of a plan to sell or dispose of substantially all of the
assets of the Corporation; a change of a majority of the Corporation's Board of
Directors within a 12-month period unless approved by two-thirds of the
directors in office at the beginning of such period; a threatened change in
control, deemed to exist if there is an agreement or public announcement of a
change in control; and by the adoption by the Board of Directors of a resolution
to the effect that a change in control has occurred for purposes of the trust.
The trust was funded as of December 31, 1998, with the net equity of
company-owned life insurance policies on the lives of various employees,
including participants in the plans and with a Letter of Credit that ensures
that the trust will be fully funded in the event of a change in control.
Approximately $17.3 million of net equity under the policies would be available
currently to cover the approximately $50 million of current deferred
compensation account balances of the beneficiaries of the trust. In the event of
a change in control, up to an additional $35 million would be available under
the trust pursuant to the Letter of Credit. If the funds set aside in the trust
would be insufficient to pay amounts due the beneficiaries, then the Corporation
would remain obligated to pay those amounts. In the event of the insolvency of
the Corporation, the funds
10
<PAGE>
in the trust would be available to satisfy the claims of the creditors of the
Corporation. The trust was not established in response to any effort to acquire
control of the Corporation, and the Board is not aware of any such effort.
The Corporation has change-in-control severance agreements with certain key
employees, including the Named Executive Officers. The agreements are effective
on a year-to-year basis and would provide severance benefits in the event of
both a change in control of the Corporation and an actual or constructive
termination of employment within two years after a change in control. Under the
agreements, a "change in control" can occur by virtue, in general terms, of an
acquisition by any person of 30 percent or more of the Corporation's voting
shares; a merger in which the shareholders of the Corporation before the merger
own 50 percent or less of the Corporation's voting shares after the merger;
shareholder approval of a plan of liquidation or to sell or dispose of
substantially all of the assets of the Corporation; and if, during any two-year
period, directors at the beginning of the period fail to constitute a majority
of the Board of Directors. "Actual termination" is any termination other than by
death or disability, by the Corporation for cause, or by the executive other
than for constructive termination. "Constructive termination" means, in general
terms, any significant reduction in duties, compensation or benefits or change
of office location from those in effect immediately prior to the change in
control, unless agreed to by the executive. The severance benefits payable, in
addition to base salary and incentive compensation accrued through the date of
termination, shall include two times current annual base salary and target
incentive compensation, the bargain element value of then outstanding stock
options, the present value of the amount by which pension payments would have
been larger had the executive accumulated two additional years of benefit
service; two years of life, disability, accident and health benefits;
outplacement services; and legal fees and expenses reasonably incurred in
enforcing the agreements. In the event such benefits, together with other
benefits paid because of a change in control, would be subject to the excise tax
imposed under Section 280G of the Internal Revenue Code, the Corporation would
reimburse the executive for such excise taxes paid, together with taxes incurred
as a result of such reimbursement. The agreements were not entered into in
response to any effort to acquire control of the Corporation, and the Board is
not aware of any such effort.
The Corporation has severance benefit agreements with certain key employees,
including the Named Executive Officers. Notice has been given that these
agreements will terminate on May 1, 2000, pursuant to their terms. The
agreements provide severance benefits in the event of an actual or constructive
termination of employment. "Actual termination" is any termination other than by
death or disability, by the Corporation for cause, or by the executive other
than for constructive termination. "Constructive termination" means, in general
terms, any significant reduction in compensation or benefits, unless agreed to
by the executive. The severance benefits payable, in addition to base salary and
incentive compensation accrued through the date of termination, shall include
two times current annual salary and target incentive compensation; the present
value of the amount by which pension payments would have been larger had the
executive accumulated two additional years of benefit service; two years of
life, disability, accident and health benefits; outplacement services; and legal
fees and expenses reasonably incurred in enforcing the agreements. Upon the
occurrence of a change in control as defined in the change-in-control severance
agreements, the executive is entitled to the greater of each of the benefits
provided in this agreement and each of the benefits provided in the
change-in-control severance agreement, including reimbursement thereunder
resulting from excise taxes which may be incurred as a result of such payments.
The Corporation's current intention is to replace the severance benefit
agreements at the time of their termination with similar agreements which
provide severance and other benefits based on one year's annual salary and
target incentive rather than the current two-year benefit.
DIRECTORS' COMPENSATION
Directors who are not employees of the Corporation receive as compensation a
total target annual retainer composed of a $22,000 annual fixed retainer, plus
an annual incentive retainer based upon the Corporation's actual operating
performance for each fiscal (calendar) year. The annual incentive retainer is
calculated in accordance with the Corporation's performance-based Incentive
Compensation Plan at a rate of 40 percent of the directors' annual fixed
retainer. Both annual retainers are paid 50 percent in cash and 50 percent in
Restricted Stock. The restrictions will lapse upon the director ceasing to serve
as a director, for any reason other than voluntary resignation, in which case
the restrictions will not lapse and the director will forfeit the shares. For
federal income tax purposes, the value of the shares will be taxable to the
recipient as compensation income in an amount equal to the fair market value of
the Corporation's Common Stock on the date the restrictions lapse.
Nonemployee directors receive a fee of $1,000 for attending each Board
meeting; a fee of $750 for attending one or more committee meetings held on any
one day; a fee of $250 per month for serving as chairman of a Board committee;
and a per diem allowance of $500 for special assignments. In addition,
nonemployee members of the Executive Committee receive a fee of $1,000 for
attending each committee meeting. Directors who are also employees of the
Corporation receive no additional compensation for their service on the Board or
on any Board committee.
11
<PAGE>
The Retirement Plan for Nonemployee Directors of Ball Corporation was
terminated on April 23, 1997. Directors received the number of restricted shares
equal to the value of the amount each director would have been entitled to
receive had his account been vested in the Plan. The restrictions will lapse
upon the director ceasing to serve as a director, for any reason other than
voluntary resignation, in which case the restrictions will not lapse and the
director will forfeit the shares.
Under the Ball Corporation 1986 Deferred Compensation Plan for Directors,
nonemployee directors may elect to defer the payment of all or a portion of
their directors' fees, including the annual retainer and the board and committee
meeting fees. Interest is credited annually to the accounts at a rate equal to
the annual average composite yield on Moody's Seasonal Corporate Bond Yield
Index plus 5 percent. The fees, together with credited interest, may be deferred
until no later than the year following the year of retirement as a director and
may be distributed over a period not to exceed 15 years, both as selected by the
director. In order to provide for its liabilities under the Plan, the
Corporation purchased insurance on lives of participating directors.
The 1991 Restricted Stock Plan for Nonemployee Directors of Ball Corporation
authorizes the award of Common Stock of the Corporation to directors who, at the
time of grant, are not employees of the Corporation or any of its subsidiaries.
Messrs. Bracken and Lehman received 1,000-share awards each upon reelection as
directors on April 22, 1998. All participants will receive additional
1,000-share awards each upon reelection for three-year terms. Newly eligible
participants will receive 1,000-share awards each when they are elected or
appointed for initial terms and upon reelection for three-year terms. The
restrictions against disposal of the shares will lapse upon the termination of
the director's service to the Corporation as a director, for whatever reason
other than voluntary resignation, in which case the restriction will not lapse
and the director will forfeit the shares. For federal income tax purposes, the
value of the shares will be taxable to the recipient as compensation income in
an amount equal to the fair market value of the Common Stock on the date the
restrictions lapse.
Effective July 22, 1998, each nonemployee director was granted options to
purchase 10,000 Non-Qualified Stock Option shares of Ball Corporation Common
Stock at $44.3125 per share, which was 100 percent of the fair market value on
that date. The stock options will become exercisable beginning one year after
grant in 25 percent increments and will expire on July 22, 2008. All outstanding
shares not previously vested will become fully vested for exercise upon
attainment of age 70. Upon retirement, a director may, within a two-year period,
exercise his stock option to the extent he is entitled to exercise it at the
date of retirement.
REPORT OF THE HUMAN RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
OVERALL POLICY
The Human Resources Committee (the "Committee") of the Board of Directors
oversees the administration of executive compensation programs and determines
the compensation of the executive officers of Ball Corporation. The Committee is
composed solely of independent, nonemployee directors and employs a compensation
consulting firm to advise and provide input in the course of its deliberations.
Target total compensation of executive officers of the Corporation,
including the Chief Executive Officer, is determined after reviewing the
executive's performance and the pay of similarly situated executives at other
manufacturing firms of similar size (based upon total employment and sales). The
external comparison is based upon the results of an annual report prepared by
the corporate compensation department and reviewed with the compensation
consulting firm employed by the Board of Directors. This report gathers
information from compensation surveys that report on executive level positions
at other manufacturing firms of similar size.
ANNUAL COMPENSATION
The Committee generally establishes target total annual compensation,
defined as the sum of base salary and incentive compensation at target, for each
of the Corporation's executive officers at approximately the 50th percentile of
what comparable companies are paying. The target total annual compensation level
for each executive, other than the Chief Executive Officer, is determined based
on recommendation from the Chief Executive Officer, together with the
Committee's consideration of the executive's responsibilities, individual
performance and the performance of the executive's area of responsibility. The
Chief Executive Officer's target total annual compensation is similarly
determined in relation to the market's 50th percentile, the Committee's
assessment of individual performance and the financial performance of the
Corporation. For the purpose of determination of target total annual
compensation, the
12
<PAGE>
evaluation of each executive's performance, including the Chief Executive
Officer, is largely subjective and no specific weighting is assigned to any
particular factor.
After the Committee has established the appropriate target total annual
compensation for an executive, base salary is determined by dividing target
total annual compensation by the sum of one plus the executive's incentive com-
pensation participation rate. When target performance, as defined in the Annual
Incentive Compensation Plan (the "Annual IC Plan") discussed below, is attained,
the executive will be paid a total annual compensation which equals that
established by the Committee as appropriate for his performance and when
compared to similarly situated executives at other companies. Incentive
compensation participation rates for executives, including the Chief Executive
Officer, are set by organizational level; for example, the Chief Executive
Officer participates at one rate, senior executive officers participate at
another rate, while other officers participate at lower rates and other key
employees at lower rates yet. The Committee intends that a larger percentage of
an executive's target total annual compensation be at risk, when compared with
compensation survey data. Such data is analyzed to determine the levels of
incentive participation and target total compensation. If the survey data
indicates a target incentive compensation rate of 55 to 60 percent, for example,
Ball Corporation could be expected to use a rate of 65 percent, thereby causing
target total annual compensation to be composed of a lower base salary and a
higher at-risk incentive compensation.
Base salary is referred to as "salary" in the Summary Compensation Table and
incentive compensation actually earned by an executive officer is reported under
the heading "Bonus." Actual incentive compensation earned is driven by the
economic value added targets approved by the Committee at the beginning of the
year. The Annual IC Plan targets are calculated taking into account historical
performance, the company's cost of capital and the capital investment of each
business unit. The resulting targets are set at levels requiring improvement in
economic value added each year. The Annual IC Plan design applies to all
officers and other key employees.
The Annual IC Plan awards incentive compensation to executives based upon
actual performance of the Corporation, or in certain cases the actual
performance of the profit center for which the executive is responsible, in
achieving improvements in economic value added relative to the established
targets. Improvement in economic value added occurs when the ratio of net
operating profit after tax to capital employed in the business increases over
time. It establishes a direct link between incentive compensation and return
earned on capital relative to a specified target return. Economic value added
was selected as the measure for the Corporation's Annual IC Plan because it has
been demonstrated that it correlates closely management's incentive with
shareholder total return.
If actual performance for the year is higher than the target performance
level, then the actual incentive compensation for such year will be higher than
target. Whenever actual performance falls below the target performance level,
the executive will receive incentive compensation less than target. If
performance falls below the minimum acceptable level established in the Annual
IC Plan, then no incentive compensation will be earned, and the executive's
annual compensation will consist only of base salary for the year. The Committee
intends that an executive's target incentive compensation should be a
significant portion of his target total compensation. In the case of the Named
Executive Officers, the portion of target total annual compensation represented
by target incentive compensation ranges from approximately 35 to approximately
45 percent. It is not intended or perceived as a "bonus" but rather as the
component of total compensation which is "at risk" as an incentive, dependent on
operating performance. For the year ended December 31, 1997, actual incentive
compensation for the Named Executive Officers was above target for each named
executive, reflecting above-target performance. The incentive compensation
levels for 1998 reflect the above-target performance of the Corporation as a
whole and for the packaging operations. The aerospace and technologies
operations continued to perform above target levels in 1998. Incentive
compensation for Messrs. Sissel, Hoover, Seabrook and Westerlund was based
entirely on the performance of the Corporation as a whole, while Mr. Matsik's
incentive compensation was based 80 percent on the performance of his area of
profit responsibility and 20 percent on the performance of the Corporation as a
whole.
LONG-TERM INCENTIVE PROGRAM
The Corporation's long-term incentive program consists of two types of
plans, the calculation of which is targeted at the 50th percentile of market,
both based upon the performance of Ball Corporation's Common Stock. The first
type comprises broad-based employee stock option plans designed to encourage
employee stock ownership and to recognize and reward employees for their levels
of responsibility in building shareholder value. Grants of stock options to
employees, including executive officers, are generally made by the Committee
after considering the recommendation of the Chief Executive Officer, based
primarily on the level of the employee's position within the Corporation, taking
into account the number of outstanding and previously granted options. Stock
options granted to the Chief Executive Officer are determined by the Committee
in relation to grant levels of other executive officers within the Corporation
13
<PAGE>
and a subjective evaluation of his past and expected performance as well as the
number of outstanding and previously granted options. As the stock option plans
are long term in nature, grants are determined independently of the shorter-term
Annual IC Plan.
The second part of the Corporation's long-term incentive program is the
Long-Term Cash Incentive Plan. This plan is limited in its participation to
selected key executives, including the Named Executive Officers, who contribute
materially to the success of Ball Corporation and its subsidiaries through their
leadership skills, vision and dedication. The plan provides cash and Restricted
Stock awards on the basis of Ball's total shareholder return performance; i.e.,
stock price appreciation plus dividends, over three-year performance cycles
which begin at the start of each calendar year, relative to the total
shareholder return of companies comprising the S&P Industrials Index. The
performance requirements for the cycle ending December 31, 1998, however, were
based on total shareholder return in relation to the base year of 1996. Named
Executive Officers whose Ball Corporation stock holdings are below established
guidelines receive one-half of their award in Ball Corporation Restricted Stock.
With the acquisition of the assets of the can division of Reynolds Metals
Company, the Corporation implemented an acquisition-related, special incentive
for senior executives, including the Named Executive Officers. This incentive is
designed to incentivize senior management further to deliver significant return
to Ball's shareholders in the form of stock price appreciation resulting from
the successful integration of the acquired assets and the achievement of the
synergies related to the combined metal beverage operations. Participants
received a grant of Restricted Stock and a grant of stock options on September
23, 1998. The Restricted Stock restrictions are designed to lapse in increments,
based on achievement of performance goals related to the successful integration
of the acquired assets and achievement of synergies within the metal beverage
operations during the period October 1, 1998, through December 31, 2001. If the
restrictions do not lapse in such increments, they will not lapse until
September 23, 2005. The stock options are designed to become exercisable in
increments, after the Ball stock price has closed at preestablished prices for
ten consecutive trading days on the New York Stock Exchange Composite listing.
If the stock options do not become exercisable based upon the attainment of such
closing prices, they will not become exercisable until September 23, 2003. It is
anticipated that these stock option grants are in lieu of regular stock option
grants to participants for the years 1999, 2000 and 2001.
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
provides that publicly held corporations may not deduct in any one taxable year
certain compensation in excess of $1 million paid to the Chief Executive Officer
and the next four most highly compensated executive officers. One of the primary
responsibilities of the Committee is to provide a compensation program that will
attract, retain and reward executive talent necessary to maximize shareholder
return. Nevertheless, to the extent that any cash compensation for any Named
Executive Officer otherwise deductible for a particular tax year would not be
deductible in that year because of the limitations of Section 162(m), such
compensation will be deferred until retirement.
The foregoing report has been furnished by the following directors and
members of the Human Resources Committee:
Howard M. Dean, Chairman
John T. Hackett
John F. Lehman
William P. Stiritz
14
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in
Ball Corporation's cumulative total shareholder return on its Common Stock with
the cumulative total return of the S&P Composite 500 Stock Index and The Dow
Jones Containers & Packaging Index for the five-year period ending December 31,
1998.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG BALL CORPORATION COMMON,
THE S&P COMPOSITE 500 STOCK INDEX AND THE DOW JONES CONTAINERS & PACKAGING INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BALL CORPORATION S&P 500 DOW JONES: CONTAINERS & PACKAGING
<S> <C> <C> <C>
1993 $100 $100 $100
1994 $106 $101 $101
1995 $96 $139 $109
1996 $92 $171 $138
1997 $127 $229 $157
1998 $167 $294 $137
</TABLE>
Notes: Assumes $100 invested on December 31, 1993.
Total return assumes reinvestment of dividends.
The Dow Jones Containers & Packaging Index total return weighted by
market capitalization.
The Dow Jones Containers & Packaging Index reflects Ball Corporation's
performance against packaging businesses, the Corporation's principal industry
group, and provides an appropriate indicator of cumulative total shareholder
returns. Companies included in the Dow Jones Containers & Packaging Index, in
addition to Ball Corporation, are: Bemis Company, Inc.; Crown Cork & Seal
Company, Inc.; Owens-Illinois, Inc.; Sealed Air Corp.; Sonoco Products Company;
and Temple-Inland, Inc.
15
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS AND CERTAIN
OTHER RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998, PricewaterhouseCoopers LLP rendered audit and non-audit
services to the Corporation. Audit services included examinations of the
consolidated financial statements and statutory financial statements required to
be filed; reviews of quarterly financial data and filings with the Securities
and Exchange Commission; and consultations relating to the application of
generally accepted accounting principles to transactions into which the
Corporation has entered. Non-audit services included advice and consultations
relating to acquisitions and dispositions then being considered by the
Corporation. It is the policy of the Audit Committee of the Board of Directors
to approve in advance the engagement of PricewaterhouseCoopers LLP for all audit
and, except for minor assignments, non-audit services. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting of
Shareholders and to be available to respond to appropriate questions and to make
a statement if they so desire.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends that the shareholders vote for
ratification of the appointment of PricewaterhouseCoopers LLP as independent
public accountants for 1999. If the appointment of PricewaterhouseCoopers LLP is
not ratified by the shareholders, the Audit Committee will select another firm
of independent public accountants for 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's directors and executive officers to file reports of ownership
and changes in ownership of Ball Corporation stock with the Securities and
Exchange Commission and the New York Stock Exchange. Based on its records and
other information, Ball Corporation believes that during 1998 its directors and
executive officers complied with all Section 16 filing requirements, with the
exception of one Form 4 which was filed late for Donald C. Lewis, an executive
officer, covering a stock option exercise.
SOLICITATION AND OTHER MATTERS
The cost of soliciting proxies will be paid by the Corporation. In addition
to solicitations by mail, some directors, officers and regular employees of the
Corporation, without extra remuneration, may conduct solicitations by telephone,
facsimile and personal interviews. The Corporation will reimburse brokerage
firms and other custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy material and annual reports to the beneficial
owners of Common Stock. In addition, the Corporation has engaged Beacon Hill
Partners, Inc., to assist it in the solicitation of proxies, for a fee of
approximately $3,000, plus out-of-pocket expenses.
As of the date of this Proxy Statement, the Board of Directors of the
Corporation has no knowledge of any matters to be presented for consideration at
the meeting other than those referred to above. However, persons named in the
accompanying form of proxy shall have authority to vote such proxy as to any
other matters which do properly come before the meeting and as to matters
incidental to the conduct of the meeting, according to their discretion.
By Order of the Board of Directors
Elizabeth A. Overmyer
CORPORATE SECRETARY
March 15, 1999
Broomfield, Colorado
16
<PAGE>
[LOGO]
BALL CORPORATION
10 LONGS PEAK DRIVE
BROOMFIELD, COLORADO 80021-2510
[LOGO]
<PAGE>
PROXY
BALL CORPORATION PROXY/VOTING INSTRUCTION CARD
10 LONGS PEAK DRIVE, BROOMFIELD, COLORADO 80021-2510
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 28, 1999.
The undersigned hereby appoints Frank A. Bracken, R. David Hoover and
George A. Sissel and each or any of them as Proxies, with full power of
substitution, to vote all shares of Ball Corporation Common Stock entitled to
be voted by the undersigned for the election of directors and on Proposal 2
referred to on the reverse side of this Proxy Card and described in the Proxy
Statement, and on any other business as properly may come before the Annual
Meeting of Shareholders on Wednesday, April 28, 1999, or any adjournment
thereof.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR ITEMS 1 AND 2.
Election of three directors for three-year terms. Nominees are:
Ruel C. Mercure, Jr., William P. Stiritz and Stuart A. Taylor II
You are encouraged to specify your votes by marking the appropriate boxes on
the reverse side.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL PROMPTLY IN THE ENCLOSED
ENVELOPE.
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<PAGE>
/X/ PLEASE MARK YOUR 3101
VOTE AS IN THIS
EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSAL 2.
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FOR WITHHOLD AUTHORITY FOR ALL NOMINEES
1. Election of / / / /
Directors
(see reverse)
To withhold authority to vote for any specific nominee(s), mark the "FOR"
box and write the name of each such nominee for whom you are withholding
authority to vote on the line provided below.
FOR AGAINST ABSTAIN
2. Proposal to ratify the appointment of / / / / / /
PricewaterhouseCoopers LLP as the independent
public accountants of the Corporation.
3. At their discretion, the proxies are authorized to vote upon such other
business as properly may come before the meeting or any adjournment
thereof.
Please sign exactly as name appears at left. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
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SIGNATURE(S) DATE
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