<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
BALLANTYNE OF OMAHA, 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)(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]
NOTICE AND PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AT
THE WESTIN AQUILA HOTEL
1615 HOWARD STREET
OMAHA, NEBRASKA 68102
ON
TUESDAY, MAY 18, 1999 AT 4:00 P.M. (CENTRAL TIME)
<PAGE>
BALLANTYNE OF OMAHA, INC.
4350 MCKINLEY ROAD
OMAHA, NEBRASKA 68112
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 1999
The Annual Meeting of Shareholders of Ballantyne of Omaha, Inc. will be held
at The Westin Aquila Hotel, 1615 Howard Street, Omaha, Nebraska 68102, on May
18, 1999 at 4:00 p.m. for the following purposes:
1. To elect, as Directors, two persons listed in the accompanying Proxy
Statement.
2. To approve an Amendment to the 1995 Stock Option Plan (the "Plan")
limiting the options that any Participant in the Plan can receive in any
calendar year.
3. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
Only those shareholders of record at the close of business on March 31,
1999, (the "Record Date") shall be entitled to notice of the meeting and to vote
at the meeting.
In order to assure a quorum, all shareholders are urged to attend the
meeting or to vote by proxy. In the event you are present at the meeting, you
may withdraw your proxy if you wish to do so, and vote in person.
In order to ensure adequate meeting space, please notify Patricia Coleman at
Ballantyne on or before May 7, 1999 (402) 453-4444, ext. 303, if you are
planning to attend the meeting. Also, for assistance in scheduling overnight
accommodations in Omaha, contact Ms. Coleman. Early reservations are encouraged.
Dated this 16th day of April, 1999.
By Order of the Board of Directors
[SIGNATURE]
John Wilmers
President and Chief Executive Officer
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Ballantyne of Omaha, Inc. (the "Company")
for use at the Annual Meeting of Shareholders to be held on May 18, 1999.
Shareholders of record at the close of business on March 31, 1999 are entitled
to notice of, and to vote at, the meeting and any adjournment thereof. This
Proxy Statement was first mailed to shareholders on April 16, 1999.
VOTING SHARES AND PRINCIPAL HOLDERS
Based upon the records of the Company, Canrad of Delaware, Inc., 14 Commerce
Drive, Cranford, New Jersey 08857, owns 3,238,845 shares, or 25.6% of the
Company's outstanding Common Stock as of March 31, 1999. Canrad of Delaware,
Inc. is a wholly-owned subsidiary of Canrad Inc. which is an indirect,
wholly-owned subsidiary of ARC International Corporation ("ARC"). In addition,
Seamark Asset Management Ltd. filed with the Securities and Exchange Commission
a Schedule 13G on January 28, 1999 indicating that as of October 30, 1998 they
owned 679,250 shares of the Company's common stock. No amendment to this
Schedule 13G has been filed as of the Record Date. In addition, the 679,250
shares have not been adjusted for the 5% stock dividend effected by the Company
on March 1, 1999.
APPOINTMENT AND REVOCATION OF PROXIES
As of the close of business on March 31, 1999, the Company had 12,664,371
shares of outstanding Common Stock, all of which are entitled to vote at the
Annual Meeting.
Each share is entitled to one vote on each matter presented.
Proxies which are properly signed and returned will be voted at the meeting.
Shareholders may specify their preference by marking the appropriate boxes on
the proxy and the proxy will then be voted in accordance with such
specifications. In the absence of such specifications, the proxy will be voted
for the election of the two nominees for Directors, for the amendment to the
1995 Stock Option Plan and in accordance with the instructions of the Board of
Directors as to any other matters. Shareholders who attend the meeting may vote
in person even though they have voted by proxy. A proxy is revocable at any time
before it is voted and a proxy is automatically revoked upon the giving of a
subsequent proxy or by voting in person at the meeting. The Company will bear
the cost of solicitation of proxies, including the charges and expenses of
brokers and others for forwarding solicitation materials to beneficial owners of
stock. In addition to the use of mail, proxies may be solicited by personal
interview, telephone or facsimile.
PROPOSAL 1
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of Directors shall be
fixed from time to time exclusively by the Board of Directors pursuant to a
resolution adopted by a majority of the Board. The Board of Directors has set
such number at seven for 1999.
The Bylaws also provide that the Directors shall be divided into three
classes. The members of each class serve staggered three-year terms. Messrs.
Tenney and Geller are Class I Directors; Messrs. Echtenkamp, Chelin and Richards
are Class II Directors; and Messrs. Wilmers and Campbell are Class III
Directors. The terms of the Class I, Class II and Class III Directors expire at
the Annual Meeting of Shareholders to be held in 1999, 2000, and 2001,
respectively.
The Board of Directors has nominated Mr. Arnold Tenney and Mr. Marshall
Geller for election as Class I Directors to serve until the Annual Meeting of
Shareholders in the year 2002.
1
<PAGE>
The proxy holders named in the proxy intend to vote "FOR" the election of
the nominees Mr. Arnold Tenney and Mr. Marshall Geller unless authority to so
vote is withheld. In the unexpected event that any one or both of the nominees
are unable to serve or for good cause will not serve as Directors, the proxy
holders reserve the right to vote for such substitute nominees as are designated
by the Board of Directors.
The chart on the following page sets forth a list of the names and ages of
the two nominees, both of whom are presently serving as Directors. Also listed
are the three Directors whose terms expire in 2000 and the two Directors whose
terms expire in 2001. Included is the past five-year business history of each
Director and nominee and any public company directorships held by such persons,
the year in which each became a Director of the Company and the number and the
percentage of outstanding shares of Common Stock of the Company beneficially
owned by each as of March 31, 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 1, THE ELECTION OF
MESSRS. TENNEY AND GELLER.
[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
2
<PAGE>
<TABLE>
<CAPTION>
DIRECTOR NO. OF
NAME AGE EMPLOYMENT HISTORY SINCE SHARES %(1)
- ---------------------------- --- ---------------------------------------------------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C>
CLASS I: NOMINEES FOR ELECTION
Arnold S. Tenney 56 Chairman of Board since 1992; President and CEO of 1988 321,786(2) 2.49%
ARC since 1978; Chairman of Board and Director of
Cabletel Communications Corp.; Director of ARC.
Marshall S. Geller 60 Chairman and CEO of Geller and Friend Capital 1996 60,779(3) .48%
Partners, Inc., a merchant banking firm, since 1995;
Managing Partner Golenberg & Geller, Inc. from
1991-1993; currently serving as Director of Hexcel
Corp.; Players International, Inc.; iMALL, Inc;
Cabletel Corp.; Stroud's Inc. and Value Vision
International, Inc.
CLASS II: TERM EXPIRES IN 2000
Ronald H. Echtenkamp 65 Retired President and CEO, Prior Vice Chairman of 1993 120,760(4) .95%
the Board, March 1997 to December 1998 prior
President of Company 1981-1997, and CEO of Company
1991-1997; joined the Company in 1969 and served in
various capacities thereafter.
Yale Richards 76 Senior partner in the law firm of Marks, Clare & 1995 38,194(5) .30%
Richards; has privately practiced law since 1947.
Jeffrey D. Chelin 47 Vice President-Finance and Chief Financial Officer 1995 41,081(6) .32%
of ARC since 1992.
CLASS III: TERM EXPIRES IN 2001
John P. Wilmers 54 President and CEO of the Company since March 1997; 1995 212,035(7) 1.65%
previously Executive Vice President of the Company
since 1992; joined the Company in 1981 and served in
various capacities since.
Colin G. Campbell 43 Principal of Intrepid Partners; prior to that, Mr. 1995 35,831(8) .28%
Campbell provided consulting services through the
Castlestone Company since 1993;
</TABLE>
All Executive Officers beneficially own 418,569 shares, including presently
exercisable stock options, or 3.2% of the outstanding Common Stock.(1)(9)
All Directors and Executive Officers as a group (9 persons) beneficially own
1,037,000 shares, including presently exercisable stock options, or 7.69% of the
outstanding Common Stock.(1) (10)
- ------------------------
(1) Based upon 12,664,371 shares of Common Stock outstanding as of March 31,
1999. Each named person is deemed to be the beneficial owner of shares of
Common Stock that may be acquired within 60 days upon exercise of stock
options. Accordingly, the number of shares and percentage set forth next to
the name of such person, all Executive Officers as a group and all
Directors and Executive Officers as a group includes the shares of Common
Stock issuable upon presently exercisable stock options. However, the
shares of Common Stock so issuable upon such exercise by any such person
are not included in calculating the percentage of Common Stock beneficially
owned by any other stockholder.
3
<PAGE>
(2) Includes 52,500 shares of Common Stock held indirectly by Mr. Tenney
through Arnmart Investments Limited, a corporation controlled by Mr. Tenney
and members of his family, 25,988 shares of Common Stock owned directly by
Mr. Tenney, 3,898 shares owned indirectly by Mr. Tenney through his wife
and 239,400 shares purchasable pursuant to presently exercisable stock
options. Does not include 3,238,845 shares owned beneficially by ARC.
(3) Includes 24,948 shares of Common Stock held directly by Mr. Geller, and
35,831 shares purchasable pursuant to presently exercisable stock options.
(4) Includes 73,510 shares of Common Stock owned directly by Mr. Echtenkamp and
47,250 shares purchasable pursuant to presently exercisable stock options.
(5) Includes 1,575 shares owned directly by Mr. Richards and 36,619 shares
purchasable pursuant to presently exercisable stock options.
(6) Includes 41,081 shares of Common Stock purchasable pursuant to presently
exercisable stock options.
(7) Includes 15,160 shares of Common Stock owned directly by Mr. Wilmers and
196,875 shares purchasable pursuant to presently exercisable stock options.
(8) Includes 35,831 shares of Common Stock purchasable pursuant to presently
exercisable stock options.
(9) Includes 33,744 shares of Common Stock owned directly or indirectly by all
Executive Officers and 384,825 shares purchasable pursuant to presently
exercisable stock options.
(10) Includes 216,163 shares of Common Stock owned directly or indirectly by all
Directors and Executive Officers as a group and 820,837 shares purchasable
pursuant to presently exercisable stock options.
ADDITIONAL INFORMATION CONCERNING BOARD OF DIRECTORS
AUDIT COMMITTEE
<TABLE>
<CAPTION>
NAME OF COMMITTEE MEMBERS FUNCTIONS OF COMMITTEE MEETINGS IN 1998
- ------------------------------------------ ----------------------------------------------------- -----------------
<S> <C> <C> <C>
Colin Campbell - Confers with independent accountants
Ronald Echtenkamp regarding scope of examination
Yale Richards
- Recommends to board the engagement of
independent auditors 3
- Reviews reports of independent accountants
- Reviews recommendations about internal
controls
</TABLE>
COMPENSATION COMMITTEE
<TABLE>
<CAPTION>
NAME OF COMMITTEE MEMBERS FUNCTIONS OF COMMITTEE MEETINGS IN 1998
- ------------------------------------------ ----------------------------------------------------- -----------------
<S> <C> <C> <C>
Arnold Tenney - Reviews all compensation agreements for
Ronald Echtenkamp officers of the Company
Colin Campbell
Yale Richards - Evaluates executive officers 2
performance in conjunction with
recommending salary increases
- Coordinates recruitment requirements for
the Company at the executive level
</TABLE>
4
<PAGE>
COMPENSATION OF DIRECTORS
We do not pay directors who are also officers or employees of the Company
additional compensation for their service as directors.
In 1998, compensation for non-employee directors (other than employees of
ARC and Canrad, Inc.) included the following:
- Annual retainer of $15,000 ($20,000 beginning January 1, 1999)
- $1,000 for each Board meeting attended
- $500 for each Board meeting held by telephone conference
- Expenses of attending Board meetings
- Subject to a one time election to decline participation, stock option
grant of 23,625 options
- vesting at a rate of 7,875 shares on the first business day after
election
- vesting an additional 7,875 shares on the first business day after each
annual shareholders meeting, assuming they continue to serve on the
board
- exercise price of all 23,625 options is fair market value on date of
initial grant
- options have a term of five years
- non-employee directors are automatically granted additional options
every three years as long as they continue to serve on the Board
In 1998, compensation for non-employee directors affiliated with ARC or
Canrad, Inc. included the following:
- Mr. Tenney received an option to purchase 157,500 shares of Common Stock
at an exercise price of $10.68. In addition, Mr. Tenney became a party to
a Consulting Agreement effective January 1, 1999 pursuant to which he is
paid $100,000 annually. See "Certain Relationships and Related
Transactions".
- Mr. Chelin received an option to purchase 15,750 shares of Common Stock at
an exercise price of $10.68 in 1998. In addition, Mr. Chelin was granted
an option to purchase an additional 5,250 shares in 1999 at an exercise
price of $9.24.
The Board of Directors held eleven meetings in 1998, three actual and eight
telephonic. One hundred percent attendance for all directors was recorded.
LIST OF CURRENT EXECUTIVE OFFICERS OF THE COMPANY
The following is a list of the names and ages of the current executive
officers of the Company, their business history for the last five years and
their term of office with the Company.
<TABLE>
<CAPTION>
POSITION AND PRINCIPAL OCCUPATION SINCE OFFICER
NAME AGE 1993 SINCE
- ------------------------ --- ------------------------------------------ -----------
<S> <C> <C> <C>
John P. Wilmers 54 Director of Company; President and CEO of 1988
Company since March 1997; previously
Executive Vice President of Company since
1992; Joined Company in 1981 and has
served in various capacities since.
Brad J. French 46 CFO since 1996; Secretary and Treasurer of 1992
the Company since 1992; joined Company as
Controller in 1990.
Ray F. Boegner 49 Senior Vice President; previously Senior 1997
Vice President of Sales; Vice President of
Sales since 1992.
</TABLE>
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid to the
Chief Executive Officer and two other executive officers of the Company whose
total compensation exceeded $100,000 for the fiscal years ended December 31,
1998, 1997, and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------------------
AWARDS
ANNUAL COMPENSATION ------------------------------ PAYOUTS
------------------------------------ RESTRICTED SECURITIES -------------
OTHER ANNUAL STOCK UNDERLYING LTIP
NAME AND BONUS COMPENSATION AWARD(S) OPTIONS/SARS PAYOUTS
PRINCIPAL POSITION YEAR SALARY ($) ($) ($) ($) (#)(7) ($)
(A) (B) (C) (D) (E) (F) (G) (H)
- --------------------------- --------- ----------- --------- ------------ --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John P. Wilmers, 1998 183,058 378,200 196,875
President and Chief 1997 169,950 454,000 181,125
Executive Officer 1996 152,269 215,000 103,950
Brad J. French, 1998 112,577 110,000 87,675
Secretary and Treasurer, 1997 95,275 120,000 77,175
Chief Financial Officer 1996 88,065 60,000 51,975
Ray F. Boegner, 1998 123,125 140,000 100,275
Senior Vice President 1997 108,029 140,000 89,775
1996 95,275 80,000 51,975
<CAPTION>
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($)
(A) (I)
- --------------------------- -------------
<S> <C>
John P. Wilmers,
President and Chief
Executive Officer
Brad J. French,
Secretary and Treasurer,
Chief Financial Officer
Ray F. Boegner,
Senior Vice President
</TABLE>
- ------------------------
(1) Salary includes $3,750 (1998), $4,950 (1997) and $4,269 (1996) for Mr.
Wilmers; $3,000 (1998), $2,775 (1997) and $2,565 (1996) for Mr. French;
$3,586 (1998), $3,029 (1997) and $2,775 (1996) for Mr. Boegner paid by the
Company pursuant to the Retirement and Savings Plan described herein.
(2) Adjusted for 10% stock distribution effected March 8, 1996, 3-for-2 stock
split effected as a 50% stock dividend on March 5, 1997, 3-for-2 stock split
effected as a 50% stock dividend effected June 12, 1998, and a 5% stock
dividend effected on March 1, 1999.
The following table sets forth information with respect to exercised and
unexercised options and SARs, if any, during fiscal year 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
FISCAL 1998 OPTIONS/SARS AT
YEAR END (#) FISCAL 1998 YEAR END
SHARES ------------------- ($)
ACQUIRED ON VALUE EXERCISABLE ("EX") ---------------------
EXERCISE REALIZED UNEXERCISABLE EXERCISABLE ("EX")
NAME (#) ($) ("UN") UNEXERCISABLE ("UN")
(A) (B) (C) (D)(1)(2) (E)(1)
- -------------------------------- ----------- ----------- ------------------- ---------------------
<S> <C> <C> <C> <C>
John P. Wilmers 0 0 187,500(1) $ 615,390("Ex")
("Ex")
Brad J. French 0 0 83,500(1) $ 272,358("Ex")
("Ex")
Ray F. Boegner 0 0 95,500(1) $ 310,270("Ex")
("Ex")
</TABLE>
- ------------------------
(1) Adjusted for 10% stock distribution effected March 8, 1996, 3-for-2 stock
split effected as a 50% stock dividend on March 5, 1997 and for the 3-for-2
stock split effected as a 50% stock dividend on June 12, 1998.
(2) The value in column (e) was determined by using the average of the high and
low trade price ($8.69) on December 31, 1998. The numbers in columns (d) and
(e) have not been adjusted for the 5% stock dividend effected by the Company
on March 1, 1999.
6
<PAGE>
EMPLOYMENT CONTRACTS
Mr. Wilmers was elected President of the Company and Chief Executive
Officer, effective March 1, 1997. The Compensation Committee and the Board of
Directors approved a five year contract for Mr. Wilmers commencing January 1,
1997. Effective January 1, 1999 Mr. Wilmers' base compensation was increased to
$200,000 per year. He is also eligible to participate in the Key Employees'
Bonus Plan and other normal employee benefits.
Mr. French is a party to a five year employment agreement dated May 1, 1998
at an initial base compensation of $110,000 per year. Effective January 1, 1999
Mr. French's base compensation was increased to $125,000 per year. He is also
eligible to participate in the Key Employees' Bonus Plan and other normal
employee benefits.
Mr. Boegner is a party to a five year employment agreement dated November
20, 1996. Effective January 1, 1999 Mr. Boegner's base compensation was
increased to $135,000 per year. He is also eligible to participate in the Key
Employees' Bonus Plan and other normal employee benefits.
KEY EMPLOYEES BONUS PLAN
During 1998 Messrs. Wilmers, French and Boegner participated in the Key
Employees' Bonus Plan (the "Bonus Plan") pursuant to which such employees are
entitled to earn cash bonuses if the Company achieves specific operating levels
that are established by the Board. The calculation of the annual bonus pool is
subject to the approval of the Compensation Committee of the Board. The
distribution of the pool among members of management is determined by Mr.
Wilmers subject to approval by the Compensation Committee. The Chief Executive
Officer, currently Mr. Wilmers, is entitled to receive no more than 40% of the
pool. Amounts paid to Messrs. Wilmers, French and Boegner pursuant to the Bonus
Plan are included in the Summary Compensation Table.
The following table sets forth information with respect to options granted
in 1998 to the executive officers of the Company pursuant to the Company's 1995
Stock Option Plan. In 1998, the Company granted a total of 60,375 stock options
to employees pursuant to the Company's 1995 Stock Option Plan.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ----------------------------------------------------------------------------------------
PERCENT OF VALUE AT ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR ($/SH)(1) DATE 5% ($) 10% ($)
(A) (B)(1) (C) (D) (E) (F) (G)
- ------------------------------- ------------- ------------- ------------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
John P. Wilmers 15,750 (26%) 7.30 12/23/08 11.89 18.93
Brad J. French 10,500 (17%) 7.30 12/23/08 11.89 18.93
Ray F. Boegner 10,500 (17%) 7.30 12/23/08 11.89 18.93
</TABLE>
- ------------------------
(1) Adjusted for the 5% stock dividend effected March 1, 1999.
7
<PAGE>
RETIREMENT AND SAVINGS PLAN
The Company has adopted a Retirement and Savings Plan (the "Plan"), which is
a combination savings and profit sharing plan designed to qualify under Section
401 of the United States Internal Revenue Code of 1986, as amended (the "Code"),
including the provisions of Section 401(k). All full-time employees of
Ballantyne who are at least twenty-one years old and who have completed one year
of service are eligible to participate in the Plan.
Each Participant may contribute an amount up to six percent (6%) of such
Participant's salary to the matching portion of the Plan, and such Participant
may make supplemental contributions up to an additional nine percent (9%) of
such Participant's salary. These supplemental contributions are not eligible for
matching contributions from the Company. Ballantyne's matching contribution is
$.50 for each dollar contributed by the Participant to the matching portion of
the Plan. In addition, the Company may elect, in the discretion of the Board, to
contribute an additional amount. All contributions to the Plan are
nonforfeitable. For 1998, no Participant could contribute more than $10,000 to
the Plan.
Benefits may be distributed to Participants or their beneficiaries, as the
case may be, in the event of a Participant's death, retirement or other
termination of service, or, if the Participant so requests, on reaching age
59 1/2. Participants may be eligible to withdraw benefits in case of hardship.
Contributions to the Plan made by the Company on behalf of Wilmers, French
and Boegner are included in the Summary Compensation Table.
REPORT ON EXECUTIVE COMPENSATION
RESPONSIBILITY; COMPOSITION OF COMMITTEES
The Company has a Compensation Committee which is responsible for reviewing
and recommending to the Board of Directors of the Company annually the
compensation to be paid to the President and Chief Executive Officer of the
Company. The Compensation Committee is comprised of four members of the Board of
Directors, Messrs. Tenney, Echtenkamp, Campbell and Richards.
Mr. Wilmers, in his capacity as President and Chief Executive Officer of the
Company, determines the compensation to be paid to Mr. French and Mr. Boegner,
subject to review by the Compensation Committee.
The Company also has an independent committee, the 1995 Stock Option
Committee, which is responsible for the granting of options under the 1995 Stock
Option Plan of the Company to executive officers, directors and key employees of
the Company. The Stock Option Committee is comprised of Messrs. Campbell, Geller
and Richards.
COMPENSATION PHILOSOPHY
Decisions with respect to executive compensation are made by the
Compensation Committee on an individual basis based upon a number of factors,
including the provisions of any existing employment contract with an executive
officer, evaluation of the executive officer's performance, the level of
responsibility associated with the executive officer's office, recruitment
requirements and the performance of the Company. Compensation of the executive
officers of the Company has historically been structured to motivate, reward and
retain the executive officers consistent with the needs of the Company from time
to time. The major elements of the executive officers' compensation are base
salary, short-term incentive in the form of a bonus payable from the Bonus Plan
and a long-term incentive in the form of options to purchase Common Stock, with
an emphasis on annual bonuses and options.
8
<PAGE>
BASE SALARY
The base salaries of executive officers have historically reflected, and
will continue to reflect their individual contribution. Base salaries have
historically been reviewed annually.
CASH BONUSES
The executive officers participate in a management and sales bonus plan
designated as the Key Employees Bonus Plan pursuant to which they receive cash
bonuses if the Company achieves specific operating levels. The Bonus Pool is
based upon a percentage of operating income, as defined by the Board of
Directors. The calculation of the Bonus Plan Pool will be subject to approval of
the Compensation Committee. The distribution among management is at the initial
determination of Mr. Wilmers but is also subject to approval by the Compensation
Committee. Mr. Wilmers may receive no more than 40% of the pool. Participant
bonuses will continue to be based upon individual performance during the prior
year.
STOCK OPTIONS
The 1995 Stock Option Plan (the "Stock Option Plan") of the Company is
designed to give employees, officers and directors of the Company the incentive
to maximize wealth for shareholders by participating in the long-term growth of
the Company. In 1998, the Stock Option Committee granted employees, officers and
directors (other than non-employee directors who receive options pursuant to the
1995 Outside Directors Stock Option Plan) a total of 265,125 stock options with
exercise prices ranging from $7.30 to $10.68. Options granted to Messrs.
Wilmers, French and Boegner are included in the Aggregated Option/SAR Exercise
chart herein.
As to future options, the Stock Option Committee will consider the number
and terms of the options outstanding when determining to grant options. The
Stock Option Plan currently provides that no member of the Stock Option
Committee can participate in the Stock Option Plan during his membership on the
Stock Option Committee. According to the provisions of the Stock Option Plan,
the Stock Option Committee determines, among other things, the number of shares
of common stock to be optioned, the option price and the term of the option.
The Company's general policy is to grant options with an exercise price
equal to the fair market value of the common stock on the date of grant, said
options vesting immediately and having a ten year term. In no event will options
be granted at less than 85% of the fair market value of the common stock on the
date of grant.
CHIEF EXECUTIVE OFFICER COMPENSATION
As stated earlier, the base annual compensation of Mr. Wilmers was increased
effective January 1, 1999 to $200,000 plus participation in the Key Employees'
Bonus Plan and other normal employee benefits.
The foregoing report is submitted by the Compensation and Stock Option
Committee of the Board of Directors of the Company in accordance with
requirements of the Securities Exchange Act of 1934 and the rules and
regulations thereunder and is not intended to create any contractually binding
employment rights for the benefit of any employee of the Company.
9
<PAGE>
PERFORMANCE GRAPH
The following performance graph shows the cumulative total return on the
Company's Common Stock, the S & P 500 Market Value Index and a peer group for
the period September 7, 1995 (the date upon which the Company's common stock
became publicly traded) through December 31, 1998. The peer group is made up of
five corporations (namely Concord Camera Corp., Accom, Inc., Showscan
Entertainment, Inc., Videonics, Inc. and Sonic Solutions, Inc.). The peer group
is comprised of companies with a market capitalization between approximately $30
million and $50 million, each of which is engaged in the sale of products
related to the theater, motion picture or image capturing or image projection
businesses. The Company is unable to identify, for comparison purposes, any
public industry or line-of-business indices because the small number of
companies offering similar or competing products are divisions or subsidiaries
of much larger, diversified companies.
The performance graph assumes the value of the investment in the Common
Stock and each index was $100 and that all dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN TO STOCKHOLDERS
<S> <C> <C> <C>
(Assumes $100 investment on September
7,1995)
Ballantyne of Omaha, Inc. Peer Group S&P 500
09/07/95 $100.00 $100.00 $100.00
12/29/95 $111.21 $71.99 $108.82
12/31/96 $301.38 $58.31 $133.78
12/31/97 $409.42 $68.52 $178.41
12/31/98 $300.67 $65.50 $229.39
Total Return Analysis
</TABLE>
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT AGREEMENT
The Company is a party to a management agreement (the "Management
Agreement") with Canrad Inc. dated September 12, 1995. Pursuant to the terms of
the Management Agreement, Canrad Inc. provides services to the Company relating
to overall management and strategic planning and direction, banking
negotiations, treasury functions, investor relations, securities regulatory
compliance, employee and general business insurance programs and asset
acquisitions and sales. The Management Agreement was amended on July 1, 1997 to
reduce the Management Fee charged to Ballantyne by Canrad, Inc. from $25,000 per
month to $12,500 per month. The Management Agreement was again amended on
January 1, 1999 to change certain services provided to Ballantyne by Canrad,
Inc.; specifically, Canrad, Inc. is no longer required pursuant to the
Management Agreement, to make available the services of Arnold Tenney.
CONSULTING AGREEMENT
Effective January 1, 1999, the Company also entered into a Consulting
Agreement with Arnold Tenney. The Consulting Agreement provides that during the
one year term of the contract, Mr. Tenney will assist the Company in the
continued operation of its business and render advice and other services as the
Company and Mr. Tenney mutually agree upon. Mr. Tenney will devote such time to
the business affairs of the Company as he, in his sole judgement and discretion
shall deem necessary for such purposes. In return for these services, the
Consulting Agreement provides for annual compensation of $100,000.
INSURANCE COVERAGE
The Company is included in group health and business insurance programs
maintained by ARC and Canrad Inc. The group health insurance plan is a
self-insured minimum premium plan that is administered through United
HealthCare. The group health insurance plan provides for specific stop loss
coverage in the amount of $75,000 per employee per plan year and aggregate stop
loss based upon the head count of those covered under the plan, including the
Company's employees and certain ARC retirees. The aggregate stop loss level for
the group health insurance plan for the January 1, 1999 through December 31,
1999 plan year is approximately $1,830,000. The Company is charged premiums
which are a set dollar amount based on its monthly head count for the minimum
premium, stop loss and plan administration portions of the program and its
aggregate salary for long-term disability and term life coverage. The Company is
also charged for its claims incurred pursuant to the program.
The business insurance program provides coverage for workers' compensation
and employers liability, general liability, including products and completed
operations, property, automobile and umbrella. The Company's portion of the
business insurance premium is calculated and charged to operations based upon
its allocated share of the coverage provided to that of the entire Canrad Inc.
group. Such allocations are based primarily upon aggregate payrolls, net sales,
asset values and number of automobiles. Most of the policies require annual
audit and adjustment of deposit premiums for differences between estimated
values upon which deposit premiums have been calculated and actual results. An
additional premium is assessed in circumstances where actual values exceed
estimated values and a premium credit is issued for instances where the
estimated values exceed the actual values.
PAYMENTS TO CANRAD
For 1998, the Company paid approximately $1,760,000 to Canrad representing
the insurance premiums and claims described above and other miscellaneous
services excluding management fees.
11
<PAGE>
OTHER
Yale Richards, a director of the Company, is a senior partner of Marks Clare
& Richards, a law firm which performs legal services for the Company from time
to time.
PROPOSAL 2
AMENDMENT TO 1995 STOCK OPTION PLAN
On March 31, 1999 the Board of Directors of the Company adopted an amendment
("Amendment") to the Company's 1995 Stock Option Plan (the "Plan") to place a
limitation of 200,000 options which may be received by any Participant in the
Plan in any calendar year. If this Amendment is approved by the holders of the
majority of the outstanding Common Stock of the Company, no Participant will be
eligible to receive more than 200,000 options in any calendar year. This
Amendment to the number of shares issuable to any Participant in a calendar year
is principally an adjustment to the number originally stated in the Plan. When
the Plan was first adopted in 1995, each Participant was eligible to receive a
maximum of 75,000 options pursuant to the terms of the Plan. In 1998, the 75,000
share limit per Participant was removed by a vote of the shareholders at the
1998 Annual Meeting. Subsequent to removal of the limitation, the Company was
informed by counsel that Section 162(m) of the Internal Revenue Code arguably
requires that a limit be placed on the number of shares received by any
Participant in a calendar year, and that said limit should be approved by the
shareholders.
Thus, the Board of Directors adopted an amendment to the Plan and proposes
to you that the limit be set at 200,000 options to any Participant in a calendar
year. The Board of Directors proposes the 200,000 option limit because,
subsequent to the adoption of the Plan with the initial 75,000 option per
Participant limit, the Company effected a 10% stock dividend, a 5% stock
dividend and two 3-for-2 stock splits. The increase in the number of shares from
75,000 to 200,000 reflects these stock dividends and stock splits.
If this proposed Amendment is adopted, the second paragraph of Section 6 of
the Plan will read as follows:
"The maximum aggregate number of Shares that may be issued under the
Plan is 2,079,000 Shares; provided, however, that no more than 200,000
Shares shall be awarded to any Participant in any calendar year. The
limitations on the number of Shares which may be subject to Options
under the Plan and the number of shares which may be awarded to any
Participant in any calendar year shall be subject to adjustment as
provided in Section 10(b)."
No other provisions of the Plan will be changed or altered by this
Amendment. Options may continue to be granted under the Plan through September,
2005. Options granted under the Plan may either be incentive stock options or
non-qualified stock options.
This Amendment will not become effective unless approved by the holders of a
majority of the outstanding Common Stock of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 2 TO
AMEND THE PLAN.
SHAREHOLDER PROPOSALS
In accordance with the rules of the Securities and Exchange Commission,
shareholder proposals must be received by December 31, 1999 to be considered for
inclusion in the Proxy Statement for the 2000 Annual Meeting of Shareholders
which is expected to be held in May, 2000. It is suggested that any shareholder
desiring to submit a proposal, do so by Certified Mail, Return Receipt
Requested. Shareholders should also note that, in addition to the requirement of
timely receipt by the Board of Directors of a proposal as stated above, such
proposal will not be included in the proxy solicitation
12
<PAGE>
material for the 2000 Annual Meeting of Shareholders unless it otherwise
complies with the requirements of Section 14(a) of the Securities Exchange Act
of 1934 and the rules and regulations promulgated and in effect thereunder.
ADDITIONAL INFORMATION
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than 5%
of the Company's stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors, and greater than 5% beneficial owners are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file. Arnold Tenney failed to timely file a Form 4 in 1998. In
addition, Ronald Echtenkamp and Jeffrey Chelin each failed to timely file two
Form 4's in 1998.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP ("KPMG"), certified public accountants, are the
independent public accountants for the Company.
Representatives of KPMG are expected to be present at the shareholders'
meeting and will be given the opportunity to make any statement they might
desire and will also be available to respond to appropriate questions from
shareholders. KPMG has been selected as independent public accountants for the
Company for fiscal 1999.
OTHER MATTERS
The Board of Directors does not know of any other matters to be presented at
the annual meeting. In the event that other business is properly brought before
the meeting, it is the intention of the proxy holders named in the proxy to vote
the proxies in accordance with the recommendation of the Board of Directors.
13
<PAGE>
BALLANTYNE OF OMAHA, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1999
The undersigned hereby constitutes and appoints John P. Wilmers and
Ronald Echtenkamp, with full power to act alone or together, or any
substitute appointed by either of them as the undersigned's agent, attorney
and proxy to vote the number of shares the undersigned would be entitled to
vote if personally present at the Annual Meeting of the Shareholders of
Ballantyne of Omaha, Inc. to be held at the Westin Aquila Hotel, 1615 Howard
Street, Omaha, Nebraska 68102, on the 18th day of May, 1999, at 4:00 p.m. or
any adjournments thereof, as indicated hereon.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF BOTH NOMINEES FOR DIRECTOR, FOR THE
AMENDMENT TO THE 1995 STOCK OPTION PLAN AND WITH DISCRETIONARY AUTHORITY ON
ALL OTHER MATTERS.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF BOTH NOMINEES FOR DIRECTOR, FOR THE AMENDMENTS TO
THE 1995 STOCK OPTION PLAN, AND WITH DISCRETIONARY AUTHORITY ON ALL OTHER
MATTERS.
Please mark your votes as indicated in this example /X/
1. Election of Directors
FOR the two nominees WITHHOLD
(except as marked to the AUTHORITY
contrary to the right) to vote for two
nominees listed to
the right.
/ / / /
Arnold S. Tenney and Marshall S. Geller
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
2. Amendment to 1995 Stock Option Plan
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated: ________________________, 1999
______________________________________________
Signature of Shareholder
______________________________________________
Signature of Shareholder
Please sign exactly as your name appears at the left. When signing as
attorney, executor, administrator, trustee, guardian or conservator, give
full title. All joint trustees must sign.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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