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 ss. 240.14a-11(c) or ss. 240.14a-12
Bandag, Incorporated
(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
BANDAG, INCORPORATED
Bandag Headquarters
2905 North Highway 61
Muscatine, Iowa 52761-5886
April 5, 2000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 2, 2000
To The Shareholders:
The Annual Meeting of the Shareholders of Bandag, Incorporated, an Iowa
corporation, will be held at the Bandag, Incorporated Learning Center, 2000
Bandag Drive, Muscatine, Iowa, on May 2, 2000, commencing at ten o'clock a.m.,
Central Daylight Time, for the following purposes:
(1) To elect three directors for terms of three years.
(2) To ratify the selection of Ernst & Young LLP as independent auditors
of the Corporation for the fiscal year ending December 31, 2000.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed March 13, 2000 as the record date for the
determination of shareholders entitled to notice of and to vote at the meeting.
You are invited to attend the meeting; however, if you do not expect to
attend in person, you are urged to sign, date and return immediately the
enclosed Proxy, which is solicited by the Board of Directors. You may revoke
your Proxy and vote in person should you attend the meeting.
By Order of the Board of Directors
WARREN W. HEIDBREDER, Secretary
1
<PAGE>
BANDAG, INCORPORATED
Bandag Headquarters
2905 North Highway 61
Muscatine, Iowa 52761-5886
April 5, 2000
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Bandag, Incorporated (the "Corporation") to be
voted at the Annual Meeting of the Shareholders of the Corporation to be held on
Tuesday, May 2, 2000, or at any adjournment thereof, for the purposes set forth
in the foregoing Notice of Annual Meeting. Any shareholder giving a proxy may
revoke it at any time prior to its exercise.
Shareholders of record at the close of business on March 13, 2000, will be
entitled to vote at the meeting or any adjournment thereof. At the close of
business on March 13, 2000, there were 9,089,156 outstanding $1.00 par value
shares of Common Stock and 2,045,075 outstanding $1.00 par value shares of Class
B Common Stock. Each share of Common Stock is entitled to one vote and each
share of Class B Common Stock is entitled to ten votes at the meeting.
The Corporation's Annual Report for the fiscal year ended December 31,
1999, this Proxy Statement and the enclosed form of proxy are being mailed to
shareholders on or about April 5, 2000.
The following table sets forth information as to the Common, Class A Common
and Class B Common shares of the Corporation beneficially owned by each director
and director-nominee, each of the executive officers named in the Summary
Compensation Table and by all directors and executive officers as a group as of
March 13, 2000:
<TABLE>
<CAPTION>
Percentage of
Aggregate
Voting Power
Percentage of Common
of Outstanding Stock
Amount Stock of and Class B
Directors, Nominees and Beneficially Respective Common
Executive Officers Owned[1] Class[1] Stock**
- ----------------------------------------------------------------------------------------------------------
Lucille A. Carver
<S> <C> <C> <C>
Common Stock 2,615,685 29%
Class A Common Stock 3,730,431 39% 47%
Class B Common Stock 1,114,746 55%
- ----------------------------------------------------------------------------------------------------------
Martin G. Carver [2] [3]
Common Stock 112,616 1%
Class A Common Stock 546,084 6% 17%
Class B Common Stock 502,622 25%
- ----------------------------------------------------------------------------------------------------------
Roy J. Carver, Jr.
Common Stock -0- -0-
Class A Common Stock 179,000 2% 14%
Class B Common Stock 400,732 20%
- ----------------------------------------------------------------------------------------------------------
Robert T. Blanchard
Common Stock 200 *
Class A Common Stock -0- -0- *
Class B Common Stock -0- -0-
- ----------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Percentage of
Aggregate
Voting Power
Percentage of Common
of Outstanding Stock
Amount Stock of and Class B
Directors, Nominees and Beneficially Respective Common
Executive Officers Owned[1] Class[1] Stock**
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gary E. Dewel
Common Stock -0- -0-
Class A Common Stock 1,200 * *
Class B Common Stock -0- -0-
- ----------------------------------------------------------------------------------------------------------
James R. Everline
Common Stock 100 *
Class A Common Stock 1,950 * *
Class B Common Stock 350 *
- ----------------------------------------------------------------------------------------------------------
Phillip J. Hanrahan
Common Stock -0- -0-
Class A Common Stock 500 * *
Class B Common Stock -0- -0-
- ----------------------------------------------------------------------------------------------------------
Edgar D. Jannotta
Common Stock 7,000 *
Class A Common Stock 7,000 * *
Class B Common Stock -0- -0-
- ----------------------------------------------------------------------------------------------------------
R. Stephen Newman
Common Stock 2,500 *
Class A Common Stock 6,000 * *
Class B Common Stock -0- -0-
- ----------------------------------------------------------------------------------------------------------
Nathaniel L. Derby II
Common Stock 5,462 *
Class A Common Stock 11,324 * *
Class B Common Stock -0- -0-
- ----------------------------------------------------------------------------------------------------------
Sam Ferrise II
Common Stock 2,344 *
Class A Common Stock 5,458 * *
Class B Common Stock -0- -0-
- ----------------------------------------------------------------------------------------------------------
Warren W. Heidbreder
Common Stock 4,431 *
Class A Common Stock 10,409 * *
Class B Common Stock -0- -0-
- ----------------------------------------------------------------------------------------------------------
John C. McErlane
Common Stock 1,003 *
Class A Common Stock 2,271 * *
Class B Common Stock -0- -0-
- ----------------------------------------------------------------------------------------------------------
All Directors, Nominees and
Executive Officers as a
Group (14 Persons)
Common Stock 2,753,031 30% 78%
Class A Common Stock 4,503,219 47%
Class B Common Stock 2,018,450 99%
===========================================================================================================
* Shares owned constitute less than 1% of shares outstanding and less than 1%
of votes entitled to be cast.
** Shares of Class A Common Stock are non-voting.
</TABLE>
3
<PAGE>
[1] Beneficial owners exercise both sole voting and sole investment power
unless otherwise stated. The Class B Common Stock is convertible on a
share-for-share basis into Common Stock at the option of the shareholder.
As a result, pursuant to Rule 13d-3(d)(1) of the Securities Exchange Act of
1934, a shareholder is deemed to have beneficial ownership of the shares of
Common Stock which such shareholder may acquire upon conversion of the
Class B Common Stock. In order to avoid overstatement, the amount of Common
Stock beneficially owned does not take into account such shares of Common
Stock which may be acquired upon conversion (an amount which is equal to
the number of shares of Class B Common Stock held by a shareholder). The
percentage of outstanding Common Stock is based on the total number of
shares of Common Stock outstanding as of March 13, 2000 (9,089,156 shares),
and does not take into account shares of Common Stock which may be issued
upon conversion of the Class B Common Stock.
[2] Mr. Carver disclaims beneficial ownership of 46,054 shares of Common Stock,
9,525 shares of Class A Common Stock and 525 shares of Class B Common Stock
held by members of his family.
[3] Includes 40,000 shares of Common Stock and 64,100 shares of Class A Common
Stock which Mr. Carver has the right to acquire upon exercise of stock
options within 60 days after March 13, 2000.
Shareholders Owning More Than Five Percent. The following table provides
information concerning persons known by the Corporation to beneficially own more
than five percent of any class of the Corporation's voting securities as of
March 13, 2000, other than the ownership of Lucille A. Carver, Martin G. Carver
and Roy J. Carver, Jr., which is contained in the previous table:
<TABLE>
<CAPTION>
Percentage
Of
Amount Outstanding Percentage of
Beneficially Common Aggregate
Name and Address Owned Stock Voting Power
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dimensional Fund Advisors Inc.(1)
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 480,000 5.3% 1.6%
- --------------------------------------------------------------------------------------------------
Capital Group International, Inc.(2)
11100 Santa Monica Blvd. Ste 1500
Los Angeles, CA 90025-3384 1,134,000[2]) 12.5% 3.8%
- --------------------------------------------------------------------------------------------------
(1) Information shown is based on a Schedule 13G filed with the Securities and Exchange
Commission for the period ended December 31, 1999 by Dimensional Fund Advisors Inc.
Of the shares shown, Dimensional Fund Advisors Inc. has sole voting power over
480,000 such shares, and shared voting power over none of such shares and has sole
power to dispose or direct the disposition of all such shares.
(2) Shares shown as beneficially owned is based on a jointly filed Schedule 13G filed
with the Securities and Exchange Commission for the period ended December 31, 1999 by
Capital Group International, Inc. and Capital Guardian Trust Company, affiliated
entities. Of the shares shown, such parties have sole voting power over 929,000 of
such shares, and share voting power over none of such shares and have sole power to
dispose or direct the disposition of all such shares. Such parties disclaimed
membership in a group for all purposes other than the joint Schedule 13G filing.
</TABLE>
4
<PAGE>
Proposal No. 1 - ELECTION OF DIRECTORS
The Articles of Incorporation require election of directors to staggered
terms of three years, providing that three of the directors are elected each
year. Three nominees this year are to be elected for three-year terms.
Proxies will be voted for the election of each of the nominees listed
below, unless the shareholder giving the proxy votes against, or abstains from
voting for, any nominee. If, as a result of unforeseen circumstances, any such
nominee shall be unable to serve as director, proxies will be voted for the
election of such person or persons as the Board may select. Information about
the nominees is set forth below:
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
-------------------------------------------
ROBERT T. BLANCHARD, age 55, since November 1999 has been President of
Strategic & Marketing Services, a consulting firm. On November 1, 1999, Mr.
Blanchard retired from The Procter & Gamble Company where he had been employed
since 1967 and had held numerous positions, including President-Global Skin Care
and Cosmetics (January 1, 1999 to November 1, 1999), President, North American
Beauty Care Sector (1992 to 1998), Vice President/General Manager--Northern
European Division, Vice President/General Manager--Beverages Division, and Group
Vice President, Global Strategic Planning--Health and Beauty Care. Mr. Blanchard
is a director of Best Buy Co., Inc., a retailer of consumer electronics,
computers and software. He is a member of the Audit Committee, Management
Continuity and Compensation Committee, Stock Option Committee and Strategic
Planning Committee. Mr. Blanchard has been a Director since May 1996.
GARY E. DEWEL, age 57, since July 1, 1999 has been Executive Vice
President, Supply Chain, for Clarion Technologies, Inc., Schaumburg, Illinois,
an injection molding business supplier to the automotive industry. In April
1999, Mr. Dewel retired from Solutia Inc., a spinoff of the chemical businesses
of Monsanto Company. Previously, Mr. Dewel was Vice President, Supply Chain, of
Monsanto Company (1994-August 1997) and held several Vice President positions
with Navistar International Corporation (1979-1993). Mr. Dewel is a member of
the Audit Committee, Stock Option Committee and Strategic Planning Committee.
Mr. Dewel has been a Director since August 1997.
R. STEPHEN NEWMAN, age 56, since January 1999 has been Chief Executive
Officer and President of PRIMEDIA Information, Inc., a group of information
operating companies within PRIMEDIA Inc. Mr. Newman continues as Chief Executive
Officer of Bacon's Information, Inc., where he served as Chief Executive Officer
and President from 1994 to 1999 and President and Chief Operating Officer from
1990 to 1994. Mr. Newman is a member of the Audit Committee, Management
Continuity and Compensation Committee, Stock Option Committee and Strategic
Planning Committee. Mr. Newman has been a Director since 1983.
DIRECTORS CONTINUING IN OFFICE
------------------------------
ROY J. CARVER, JR., age 56, since August 1984, has been Chairman of the
Board of Directors and Chief Executive Officer of Carver Pump Company,
Muscatine, Iowa. Mr. Carver is President of Carver Aero, Inc., which operates
fixed base operations at airports in Muscatine, Iowa; Davenport, Iowa and
Clinton, Iowa and is also President of River Front Real Estate, Inc., which
operates a chain of hardware stores. Mr. Carver holds directorships in Catalyst,
Inc., Iowa First Bancshares Corp. and Met-Coil Systems Corporation. He is a
member of the Contributions Committee, Management Continuity and Compensation
Committee, Nominating Committee and the
5
<PAGE>
Strategic Planning Committee. Mr. Carver has been a Director since 1982. His
term expires in 2001.
JAMES R. EVERLINE, age 58, is President of Everline & Co., a mergers and
acquisitions/management consulting company. Previously, Mr. Everline was
President, Investment Banking Division, of Henry & Company (1990-December 1991).
Henry & Company is engaged in the venture capital and investment banking
business. Prior to Mr. Everline's employment by Henry & Company, he was a
Partner of Founders Court Investors Inc. (1988-1989) and served as Vice
President, Capital Markets Group, Bank of America (1981-1988). He is a member of
the Audit Committee, Executive Committee, Management Continuity and Compensation
Committee, Nominating Committee and Stock Option Committee. Mr. Everline has
been a Director since 1982. His term expires in 2001.
PHILLIP J. HANRAHAN, age 61, has been for more than five years a partner in
the Milwaukee law firm of Foley & Lardner. In 1999, the Corporation paid fees
for legal services to Foley & Lardner, and the Corporation anticipates that
similar services may be provided by Foley & Lardner in the current fiscal year.
Mr. Hanrahan's fees as a Director are paid to Foley & Lardner, which credits the
sums to the Corporation's legal services account. Mr. Hanrahan is a member of
the Executive Committee and Management Continuity and Compensation Committee.
Mr. Hanrahan has been a Director since August 1997. His term expires in 2001.
LUCILLE A. CARVER, age 82, has for more than five years served as Treasurer
of the Corporation. She is a member of the Contributions Committee and the
Nominating Committee. Mrs. Carver has been a Director since 1957. Mrs. Carver's
term expires in 2002.
MARTIN G. CARVER, age 51, was elected Chairman of the Board effective June
23, 1981, Chief Executive Officer effective May 18, 1982, and President
effective May 25, 1983. Mr. Carver was also Vice Chairman of the Board from
January 5, 1981 to June 23, 1981. He is a member of the Executive Committee,
Management Continuity and Compensation Committee, Nominating Committee and
Strategic Planning Committee. Mr. Carver has been a Director since 1978. Mr.
Carver's term expires in 2002.
EDGAR D. JANNOTTA, age 68. On January 2, 1996, William Blair & Company
converted from a partnership to a limited liability company, at which time Mr.
Jannotta became Senior Director of William Blair & Company, L.L.C. From January
1, 1995 to January 2, 1996 Mr. Jannotta was Senior Director of William Blair &
Company, after having served as Managing Partner for more than five years. He
holds directorships in AAR Corp., Aon Corporation, Inforte Corp., Molex
Incorporated and Unicom Corporation. William Blair & Company, L.L.C. provided
investment banking services to the Corporation in 1999 and the Corporation
anticipates that services may be provided to the Corporation in the current
fiscal year. He is a member of the Management Continuity and Compensation
Committee and the Nominating Committee. Mr. Jannotta has been a Director since
1973. Mr. Jannotta's term expires in 2002.
Directors are elected by a majority of the votes cast (assuming a quorum is
present). Consequently, any shares not voted at the Annual Meeting, whether due
to abstentions, broker non-votes or otherwise, will have no impact on the
election of directors.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
-----------------------------------------
The Board of Directors met thirteen times in 1999.
The Audit Committee met three times in 1999; its functions are to review
major accounting decisions with management and the independent auditors, to
confer with such auditors with respect to the scope and results of the annual
audit, to review the annual audit and evaluate the auditors'
6
<PAGE>
performance, to recommend to the Board of Directors annually the selection of
independent auditors for the ensuing year, to recommend the scope and format of
financial information to be submitted to the Board of Directors, to review the
scope of financial information included in the Annual Report to Shareholders, to
review the program of internal audit for the year, to review the financial data
included in all required governmental reports, and to review the audits of all
pension, profit sharing and other trust funds held for the benefit of employees
of the Corporation. The Committee also reviews various insurance coverages of
the Corporation and the Corporation's compliance with the Foreign Corrupt
Practices Act.
The Management Continuity and Compensation Committee met four times in
1999; its functions are to review, evaluate and determine executive level
compensation, except for the compensation of the Chief Executive Officer, which
is determined by the entire Board of Directors, and to recommend to the Board of
Directors the election of corporate officers.
The Nominating Committee met two times in 1999; its duties relate to the
evaluation and recommendation to the Board of Directors of prospective
candidates for election as directors of the Corporation. The Nominating
Committee will consider recommended nominations for the position of director
which are submitted in writing by the shareholders and addressed to the
Committee in care of the Corporation at Muscatine, Iowa.
The Stock Option Committee met three times in 1999; its function is to
select key employees and to award stock options and restricted stock grants to
those key employees whose judgment, initiative and efforts contribute materially
to the successful performance of the Corporation.
The Strategic Planning Committee met one time in 1999; its function is to
participate in the creation of the Corporation's business objectives, strategies
and action plans; and to review their perspectives on them with the full Board.
This participation is purely advisory and the Committee has no formal approval
role.
REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS
------------------------------------------------
Summary Compensation Information
The following table sets forth certain information concerning compensation paid
for the last three fiscal years to the Corporation's Chief Executive Officer and
each of its four other most highly compensated executive officers as of December
31, 1999, whose total cash compensation exceeded $100,000 in fiscal 1999. The
persons named in the table are sometimes referred to herein as the "named
executive officers."
7
<PAGE>
<TABLE>
Summary Compensation Table
--------------------------
<CAPTION>
========================================================================================================================
Long Term Compensation
========================================================================================================================
Other Annual Restricted Options All Other
Compensation Stock (Number of Compensation
Name and Principal Position Year Salary Bonus [1] Award(s)[2] Shares) [3]
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Martin G. Carver 1999 $ 486,539 $0 $ -0- $ -0- 24,100 $14,086
Chairman of the Board, 1998 497,233 0 78,152 93,926 0 13,890
Chief Executive Officer 1997 345,942 0 124,947 152,171 0 13,722
and President
- ------------------------------------------------------------------------------------------------------------------------
Sam Ferrise II 1999 $ 335,423 $0 $ -0- $ -0- 14,100 $14,086
Executive Vice President, 1998 346,154 0 42,064 51,697 0 13,890
Chief Operating Officer 1997 283,140 0 33,663 40,514 0 13,722
- ------------------------------------------------------------------------------------------------------------------------
Warren W. Heidbreder 1999 $ 320,625 $0 $ -0- $ -0- 9,000 $14,086
Vice President, Chief 1998 329,654 0 26,947 31,310 0 13,890
Financial Officer and 1997 248,406 0 35,406 40,514 0 13,128
Secretary
- ------------------------------------------------------------------------------------------------------------------------
Nathaniel L. Derby II 1999 $ 305,827 $0 $ -0- $ -0- 6,000 $14,086
Vice President, 1998 316,385 0 23,789 26,213 0 13,890
Manufacturing Design 1997 242,508 0 36,424 40,514 0 12,833
- ------------------------------------------------------------------------------------------------------------------------
John C. McErlane 1999 $ 300,894 $0 $ -0- $ -0- 7,000 $14,086
Vice President, Marketing 1998 312,372 0 24,080 28,761 0 13,890
and Sales 1997 184,803 0 9,017 11,858 0 9,948
========================================================================================================================
[1] Amounts shown represent the tax reimbursement or "gross up" with respect to restricted stock awards and certain
other fringe benefits.
[2] At December 31, 1999 the number of shares held and the aggregate market value of restricted stock held by the named
executive officers are as follows: Martin G. Carver, 8,490 shares Common Stock, value $212,250, and 6,560 shares
Class A Common Stock, value $139,400; Sam Ferrise II, 1,720 shares Common Stock, value $43,000, and 1,720 shares
Class A Common Stock, value $36,550; Warren W. Heidbreder, 1,680 shares Common Stock, value $42,000, and 1,500
shares Class A Common Stock, value $31,875; Nathaniel L. Derby II, 1,580 shares Common Stock, value $39,500, and
1,410 shares Class A Common Stock, value $29,963; and John C. McErlane, 585 shares Common Stock, value $14,625, and
585 shares Class A Common Stock, value $12,431. Dividends are paid on the shares of restricted stock prior to
vesting.
[3] Of the amounts shown in this column for 1999 for each of the named executive officers, $13,500 is the Corporation's
contribution under its Salaried Profit Sharing, Retirement and Savings Plan for each of such individuals (of which,
because of limitations under the Internal Revenue Code of 1986, as amended, $8,000 was paid into such Plan and the
balance to be paid by the Corporation outside such Plan) and $586 is the Corporation's contribution to its Bandag
Security Program, a combination defined benefit and defined contribution plan.
</TABLE>
Stock Options
The following table contains information concerning the grant of stock
options under the Company's Stock Award Plan for the year ended December 31,
1999, all of which are reflected above in the Company's Summary Compensation
Table.
8
<PAGE>
<TABLE>
Option Grants in Last Fiscal Year
<CAPTION>
Percentage of
Shares Total Options
Underlying Granted to all Exercise
Options Employees in Price (per Expiration Grant Date
Name Granted (1) Fiscal Year Share (2) Date (3) Present Value(4)
---- ----------- ----------- --------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Martin G. Carver 24,100 40.0% $33.875 2/7/09 $240,036
Sam Ferrise II 14,100 23.4% $33.875 2/7/09 $140,436
Warren W. Heidbreder 9,000 15.0% $33.875 2/7/09 $ 89,640
Nathaniel L. Derby II 6,000 10.0% $33.875 2/7/09 $ 59,760
John C. McErlane 7,000 11.6% $33.875 2/7/09 $ 69,720
(1) These options are nonqualified stock options under the Internal Revenue Code.
(2) An option holder can pay the exercise price of options in cash by delivering previously issued shares of the
Corporation's Class A Common Stock and/or Common Stock, or a combination of both.
(3) Options are exercisable at the rate of 20% per year, beginning February 8, 2000.
(4) The option values presented are based on the Black-Scholes option pricing model adapted for use in valuing
stock options. The actual value, if any, that an optionee may realize upon exercise will depend on the excess
of the market price of the Class A Common Stock over the option exercise price on the date the option is
exercised. There is no assurance that the actual value realized by an optionee upon the exercise of an option
will be at or near the value estimated under the Black-Scholes model. The estimated values under the
Black-Scholes model are based on arbitrary assumptions as to variables such as interest rates, the stock price
volatility and future dividend yield, including the following: (a) an assumed United States Treasury security
rate of 4.9%; (b) stock price volatility of 20.67% (based on six-month stock price history ending February 8,
1999); and (c) a dividend yield of 2.15% (based on the weighted average dividend yield of the Class A Common
Stock for the three years ended February 8, 1999).
</TABLE>
The following table sets forth information regarding the exercise of stock
options and the fiscal year-end value of unexercised options held by the named
executive officers:
<TABLE>
Aggregate Option Exercises in Last
Fiscal Year and Fiscal Year-End Option Values
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options at Options at
Acquired December 31, 1999 December 31, 1999[1]
on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Martin G. Carver 20,000 $18,340 84,820 19,280 $61,680 ---
Sam Ferrise II --- --- 2,820 11,280 --- ---
Warren W. Heidbreder --- --- 1,800 7,200 --- ---
Nathaniel L. Derby II --- --- 1,200 4,800 --- ---
John C. McErlane --- --- 1,400 5,600 --- ---
</TABLE>
9
<PAGE>
[1] The dollar values are calculated by determining the difference between the
option exercise price and the closing price on the New York Stock Exchange
for the Common Stock on December 31, 1999.
Pension Plan Benefits. The following table sets forth annual normal
retirement age pension benefits under the Bandag Salaried Pension Plan at the
specified remuneration and years-of-service classifications. The table assumes
retirement in 1999. To the extent benefits are not paid under the Salaried
Pension Plan due to limitations under the Internal Revenue Code of 1986, as
amended, they are paid by the Corporation.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Annual Pension Per Years of Service
Highest 5-Year -----------------------------------
Average Annual
Compensation 5-Years 10-Years 15-Years 20-Years 25-Years 30-Years 35-Years
-------------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 2,938 $ 5,875 $ 8,813 $11,400 $13,900 $ 16,400 $ 17,650
$100,000 $ 7,000 $14,000 $21,000 $26,400 $31,400 $ 36,400 $ 38,900
$200,000 $15,125 $30,250 $45,375 $56,400 $66,400 $ 76,400 $ 81,400
$250,000 $19,188 $38,375 $57,563 $71,400 $83,900 $ 96,400 $102,650
$300,000 $20,325 $40,650 $60,975 $75,600 $88,800 $102,000 $108,600
$350,000 $20,325 $40,650 $60,975 $75,600 $88,800 $102,000 $108,600
$400,000 $20,325 $40,650 $60,975 $75,600 $88,800 $102,000 $108,600
$450,000 $20,325 $40,650 $60,975 $75,600 $88,800 $102,000 $108,600
$500,000 $20,325 $40,650 $60,975 $75,600 $88,800 $102,000 $108,600
</TABLE>
Pension amounts are based upon an employee's base salary and credited years
of service. The base salaries for each of the last three fiscal years to the
named executive officers are set forth in the Summary Compensation Table under
"Salary." As of March 13, 2000, Messrs. Carver, Ferrise, Heidbreder, Derby and
McErlane had completed approximately 21, 19, 18, 29 and 15 years of credited
service under the Corporation's pension plan, respectively. Benefits shown in
the table are computed as a straight line single life annuity assuming
retirement at age 65 and are not subject to offset for Social Security Benefits.
In addition, each named executive officer also has a "Bandag Security
Program" benefit under the Bandag Salaried Pension Plan. The annual defined
benefit payable at age 62 for each of the named executive officers is fixed and
is as follows: Martin G. Carver, $700; Sam Ferrise II, $611; Warren W.
Heidbreder, $542; Nathaniel L. Derby II, $1,108; and John C. McErlane, $404.
Executive Officer Agreements
Each of the executive officers named in the Summary Compensation Table,
except Mr. Ferrise, is a party to a Severance Agreement with the Corporation.
The Severance Agreements provide for severance benefits equal to twenty-four
(24) months base salary in the event of the executive's involuntary termination
of employment or voluntary termination for good cause, except for death,
disability or retirement. For purposes of the Severance Agreements, "good cause"
means
10
<PAGE>
(i) a 15% or greater reduction in the executive's base pay, (ii) a materially
adverse change, without the executive's prior written consent, in the nature or
scope of the executive's title or responsibilities, or (iii) the relocation of
the executive's principal place of employment by more than fifty (50) miles. The
Severance Agreements restrict the named executive officers from competing with
the Corporation for twenty-four months following termination of employment and
also contain extensive restrictions on disclosure of the Corporation's
confidential information.
Mr. Ferrise resigned as Chief Operating Officer of the Corporation on
January 20, 2000 and became President of Tire Distribution Systems, Inc.
("TDS"), a wholly-owned subsidiary of the Corporation, on the same date. His
prior Severance Agreement with the Corporation was terminated and Mr. Ferrise
entered into a new Severance Agreement with TDS (the "TDS Severance Agreement").
The TDS Severance Agreement is substantially similar to the Severance Agreements
with the Corporation described above.
Report of Management Continuity and Compensation Committee on Executive
Compensation
The seven-member Management Continuity and Compensation Committee of the
Board of Directors (the "Compensation Committee") makes all decisions regarding
compensation of the Corporation's executives, except for the awarding of stock
options and restricted stock, which is done by the Stock Option Committee. Set
forth below is a report submitted by the Compensation Committee addressing the
Corporation's compensation policies applicable to the Corporation's executives,
including the executive officers named in the Summary Compensation Table.
In 1998 the Board of Directors established a Special Committee on Executive
Compensation, with membership consisting of Martin G. Carver, Chief Executive
Officer; R. Stephen Newman, non-employee Director; Gary E. Dewel, non-employee
Director; and Warren W. Heidbreder, Chief Financial Officer (the "Executive
Compensation Committee"). The duties of this committee were to investigate
various incentive compensation approaches for key members of management and to
make recommendations and proposals to the Board of Directors. In researching
opportunities for improvement in the Corporation's executive compensation plan,
the Executive Compensation Committee recommended, and the Board of Directors
approved, that for 1999 the Corporation:
o Focus on the Executive Leadership Team (ELT) for executive compensation
plan changes. Members of the Executive Leadership Team are Martin G.
Carver, Chief Executive Officer; Warren W. Heidbreder, Vice President,
Chief Financial Officer; John C. McErlane, Vice President, Marketing &
Sales; and Nathaniel L. Derby II, Vice President, Manufacturing Design. Sam
Ferrise II, was also a member of the ELT until his resignation as Executive
Vice President, Chief Operating Officer on January 20, 2000.
o Develop an executive compensation plan for the ELT, allocating total direct
compensation between three (rather than two) pay components, thereby
increasing the amount of pay at risk for these executives:
- Base salary
- Annual or short-term reward based on achievement of an established
"earnings-per-share" target, paid out in restricted stock in the year
2000 with a 3-year vesting.
- Long-term reward, consisting of annual grants of non-qualified stock
options with a 10-year exercise period and 5-year step vesting (20%
each year).
o Develop an implementation plan to shift from current pay practices to the
target program. o Develop a plan to transition other executives into a similar
compensation plan.
The Executive Compensation Committee and the Compensation Committee agreed
that the plan recommendations outlined above should serve the long-term
interests of shareholders by achieving the following objectives:
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o Increase the alignment of executive compensation and rewards with the
interests of the Corporation's shareholders;
o Provide a closer linkage between executive compensation earned and the
short-term and long-term performance of the Corporation; and
o Provide the opportunity to better position executive compensation with
competitive market levels as the Corporation's performance dictates.
1999 Compensation for the Executive Leadership Team
---------------------------------------------------
Under the executive compensation plan, the total compensation opportunity
for each ELT member is based on a target level of total direct compensation for
each ELT member's position, including the Chief Executive Officer. The total
direct compensation target for each position approximates the 60th percentile of
competitive compensation (cash and stock) from executive compensation surveys,
which encompasses manufacturing companies with revenues at or approximating $1
billion.
The actual level of total compensation an executive will achieve depends
upon a variety of factors, including the responsibilities of the position,
experience of the executive, current level of total compensation relative to the
target level, the financial performance of the corporation, national trends, and
the Corporation's competitive need to retain and recruit the very best and most
capable individuals. In reviewing the Corporation's financial performance, the
Compensation Committee considers the Corporation's revenues, net income and net
income per share in light of the competitive and economic conditions during the
fiscal year. In addition, the Compensation Committee considers the Corporation's
financial performance resulting from investment in marketing programs, research
and development, plant, machinery and equipment, and in personnel and related
programs.
The Corporation's executive compensation plan for the ELT consists of the
following components:
Base Salary
- -----------
Base salaries were established based on the pay-at-risk level appropriate
for each executive's job, including the Chief Executive Officer. For the Chief
Executive Officer and Chief Operating Officer, base salaries averaged 48% of
their total direct compensation opportunity. For the remaining three members of
the ELT, base salaries averaged 66% of their total direct compensation
opportunity.
Members of the ELT, including the Chief Executive Officer, did not receive
an increase to their base salary at the beginning of 1999. In addition, because
the Corporation's performance was significantly less than expected in 1999, the
Chief Executive Officer elected to receive a 20% reduction in base pay, and
other ELT members elected to receive a 10% reduction in base pay. These pay
decreases were effective November 15, 1999, and there was no increase to base
salary for 2000.
Future base pay increases will be based on factors similar to establishing
total compensation opportunities for the ELT as discussed above.
Short-term Reward Plan
- ----------------------
Members of the ELT, including the Chief Executive Officer, are eligible for
an annual or short-term reward consisting of restricted stock, based on
achievement of the Corporation's established "earnings-per-share" target.
However, members of the ELT, including the Chief Executive Officer, did not
believe it was appropriate to receive restricted stock under this plan in
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<PAGE>
1999 and elected to terminate their participation in this plan in November 1999
for the following reasons:
o In light of the restructuring actions late in 1999, it would send a
conflicting and negative message to employees if target was met and members
of the ELT received a pay-out under the plan;
o To communicate to shareholders that executive compensation is strongly
linked to the performance of the Corporation;
o If results indicated a pay-out under the plan, electing to opt out for 1999
would help control 1999 expenses; and
o With regard to the plan design, there was an interpretative question of
whether "earnings per share" should be computed before or after the
restructuring charge.
Long-term Reward Plan
- ---------------------
Members of the ELT, including the Chief Executive Officer, received a grant
of non-qualified stock options at the February 8, 1999 meeting of the
Corporation's Board of Directors. This grant is discussed in more detail in the
Report of Stock Option Committee on Executive Compensation.
1999 Compensation for Other Executives
--------------------------------------
Under the 1999 compensation plan for executive officers (except the ELT),
an executive received an annual salary as determined by the Compensation
Committee, restricted stock awards determined by the Stock Option Committee, tax
"gross up" payments related to such awards, and Corporation contributions to the
Corporation's Salaried Profit Sharing, Retirement and Savings Plan as determined
by the Compensation Committee.
Under the current plan, a "midpoint" is established for each executive's
position. This midpoint approximates the 75th percentile of competitive cash
compensation from executive compensation surveys, which encompassed
manufacturing companies with revenues at or approximating $1 billion.
The "midpoints" are used to calculate the annual increase for each
executive by multiplying the "midpoint" (not the current base salary) by a
percentage established by the Compensation Committee. The resulting amount is
then added to the current base salary. Multiplying the "midpoint" for a given
position by the annual percentage increases base salaries which are currently
below the "midpoint" by a greater amount than if the base salaries were
multiplied by the annual percentage. Likewise, base salaries which are currently
in excess of the "midpoint" for a given position will receive a smaller increase
than would be the case if the actual base salaries were multiplied by the annual
percentage.
The actual level of compensation an executive officer achieves depends on
factors similar to those previously discussed under "1999 Compensation for the
Executive Leadership Team" above.
Annual Salary Increases
-----------------------
In determining the annual percentage increase for base salary, the
Compensation Committee considers a variety of factors, including inflation rate,
the Corporation's financial performance, and trends in salaried employee
compensation increases, as disclosed by published salary budget forecasts.
Effective January 1, 1999, the percentage increase was 3.0% for all executives,
except for members of the ELT, who did not receive an increase in 1999.
13
<PAGE>
Because the Corporation's performance was significantly less than expected
in 1999 and because of the Corporation's desire to decrease expenses in 2000,
all executives, including the Chief Executive Officer, elected not to receive a
salary increase for 2000.
Bandag, Incorporated Management
Continuity and Compensation Committee
Robert T. Blanchard Phillip J. Hanrahan
Roy J. Carver, Jr. Edgar D. Jannotta
Martin G. Carver R. Stephen Newman
James R. Everline
Report of Stock Option Committee on Executive Compensation
The Stock Option Committee of the Board of Directors (the "Stock Option
Committee"), which is composed of four non-employee directors, makes all
decisions regarding the granting of stock options and the granting of restricted
stock awards.
Stock Option Grants
-------------------
The objectives of the Bandag, Incorporated Stock Award Plan, pursuant to
which stock options are granted, are to:
o Create a better link between the interests of the participants and the
Corporation's shareholders;
o Promote teamwork and provide participants with rewards for excellence in
the Corporation's performance;
o Provide flexibility to the Corporation in its ability to compensate,
attract, and retain the services of individuals who make significant
contributions to the Corporation's success; and
o Allow participants to further share in the success of the Corporation.
As part of their participation in the executive compensation plan, the five
members of the ELT, including the Chief Executive Officer (for names see "Report
of Management Continuity and Compensation Committee on Executive Compensation"),
were granted an option to purchase shares of Class A Common Stock at fair market
value as of the award date of February 8, 1999. These options are non-qualified
stock options under the Internal Revenue Code.
Under this grant, stock options for the ELT members, including the Chief
Executive Officer, are exercisable at a rate of 20% per year, beginning February
8, 2000, and have an exercise period of 10 years. The size of the grant was
based on the estimated value of the options, and was made considering the
executive's overall total direct compensation target. The estimated value of the
options was calculated using the Black-Scholes option pricing model.
Each option becomes immediately exercisable, unless the participant's
employment has been previously terminated at the end of the vesting period, or
in the event of the participant's death, disability, retirement at age 60 with
ten or more years of service, or change in corporate control.
14
<PAGE>
Restricted Stock Grants
-----------------------
Grants Made Under the Corporation's Restricted Stock Grant Plan
- ---------------------------------------------------------------
The purpose of the Restricted Stock Grant Plan is to provide long-term
incentive compensation which will attract and retain superior executive
personnel. Under the Plan, the Stock Option Committee awards stock to key
executives each year. The shares are held by a custodian until seven years have
elapsed, when they are then transferred to the executive. If an executive who
has not attained age 60 leaves the Corporation before the end of the seven-year
restriction period, the shares are forfeited, except in the case of death or
disability. An executive who has attained age 60 and who leaves the Corporation
prior to the end of the seven-year retention period does not forfeit the shares.
During 1999, restricted stock was granted based on a percentage of the
"midpoint" established for each executive position (except for members of the
ELT, which includes the Chief Executive Officer). The percentages were
established taking into consideration total compensation, as well as each
executive's level of responsibility.
The number of restricted shares granted was computed by multiplying the
"midpoint" for an executive by the percentage established by the Stock Option
Committee, and then dividing such amount by the per share market value of the
Corporation's Common Stock and Class A Common Stock on the date of grant. In
determining the awards for all executives, the Stock Option Committee considered
the Corporation's performance in the same manner as the Compensation Committee
did in determining other components of executive compensation for 1999 (see
"Report of Management Continuity and Compensation Committee on Executive
Compensation").
The restricted stock awards for the Corporation's executive officers were
calculated in the manner described in the preceding paragraph, except for the
ELT members. Again, because the Corporation's performance was significantly less
than expected in 1999 and because of the Corporation's desire to decrease
expenses in 1999, the restricted stock awards for executives were reduced by 50%
from the number of restricted shares which would have normally been granted.
Restricted Stock Grants Under the Bandag, Incorporated Stock Award Plan
- -----------------------------------------------------------------------
As stated in the "Report of Management Continuity and Compensation
Committee on Executive Compensation", members of the ELT, including the Chief
Executive Officer, elected to not participate in the 1999 short-term reward plan
which provided for awards of restricted stock for achieving a desired
earnings-per-share target. As such, there were no grants of restricted stock
made under the Bandag, Incorporated Stock Award Plan for 1999.
Bandag, Incorporated
Stock Option Committee
Robert T. Blanchard James R. Everline
Gary E. Dewel R. Stephen Newman
Compensation Committee Interlocks and Insider Participation
The Management Continuity and Compensation Committee (the "Compensation
Committee") consists of Messrs. Robert T. Blanchard, Martin G. Carver, Roy J.
Carver, Jr., James R. Everline, Phillip J. Hanrahan, Edgar D. Jannotta and R.
Stephen Newman. The Stock Option Committee consists of Messrs. Robert T.
Blanchard, Gary E. Dewel, James R. Everline and R. Stephen
15
<PAGE>
Newman. Mr. Martin G. Carver is Chairman of the Board, Chief Executive Officer
and President of the Corporation. Mr. Roy J. Carver, Jr. owns Carver Aero, Inc.,
which sold $130,757 of aviation fuel and charter services to the Corporation in
1999 (see "Transactions with Management/Principal Shareholders" herein). Mr.
Hanrahan is a partner of the law firm of Foley & Lardner, Milwaukee, Wisconsin,
which has served as legal counsel to the Corporation for several years. Mr.
Jannotta is Senior Director of William Blair & Company, L.L.C., which provided
investment banking services to the Corporation in 1999.
Remuneration of Directors. Directors who are also full-time employees of
the Corporation do not receive remuneration for acting as directors.
Non-employee directors are compensated in accordance with the following
schedule:
Annual Fees - Chairman of Committee - $37,500. Other Directors - $35,500.
Board Meeting Attendance - $1,250 per meeting.
Committee Meeting Attendance - Chairman - $1,500 per meeting.
Other Directors - $1,250 per meeting.
Transactions with Management/Principal Shareholders. Roy J. Carver, Jr.,
son of Lucille A. Carver and brother of Martin G. Carver, owns 100% of Carver
Aero, Inc., which operates fixed base operations at airports in Muscatine, Iowa;
Davenport, Iowa, and Clinton, Iowa. During 1999, it sold $130,757 of aviation
fuel and charter services to the Corporation at competitive prices based on
volume purchased and services utilized.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
<PAGE>
SHAREHOLDER RETURN PERFORMANCE INFORMATION
Set forth on the following page is a line graph comparing the yearly
percentage change during the last five years in the cumulative total shareholder
return (assuming reinvestment of dividends) on the Corporation's Common Stock
and Class A Common Stock with the cumulative total return of the Standard &
Poor's 500 Stock Index and the Dow Jones & Co., Inc. Automobile Parts &
Equipment-All Index.
Bandag, Incorporated
Stock Performance Chart
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Among Bandag, Incorporated, S&P 500 Stock Index
and the Dow Jones & Co., Inc. Automobile Parts & Equipment -All Index
[GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
December 31
- --------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------
Bandag, Incorporated $100 $ 95 $ 84 $ 93 $ 71 $ 45
- --------------------------------------------------------------------------------
S&P 500 Stock Index $100 $138 $169 $226 $290 $351
- --------------------------------------------------------------------------------
Automobile Parts &
Equipment-All Index $100 $125 $140 $180 $169 $126
- --------------------------------------------------------------------------------
Assumes $100 Invested on December 31, 1994 in
Bandag, Incorporated Common Stock and Class A
Common Stock, the S&P 500 Stock Index and the
Dow Jones & Co., Inc. Automobile Parts &
Equipment-All Index
- -------------------------------------------------
17
<PAGE>
Proposal No. 2 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, based upon the recommendation of the Audit
Committee, which consists of Robert T. Blanchard, Gary E. Dewel, James R.
Everline and R. Stephen Newman, non-employee directors of the Corporation, has
appointed Ernst & Young LLP as the Corporation's independent auditors for the
fiscal year ending December 31, 2000.
Ernst & Young LLP served as the Corporation's independent auditors for the
fiscal year ended December 31, 1999. Representatives of Ernst & Young LLP will
be present at the Annual Meeting and will be available to respond to any
questions raised at the meeting and make any comments they deem appropriate.
Although this appointment is not required by law to be submitted to a vote
by shareholders, the Board believes it appropriate, as a matter of policy, to
request that the shareholders ratify the appointment of Ernst & Young LLP as
independent auditors for 2000. If the shareholders should not ratify, the Board
will reconsider the appointment.
Assuming a quorum is present, ratification of the appointment requires that
more votes of shares of Common and Class B Common Stock be voted in favor of
such ratification than are voted against such ratification. Any shares not voted
at the Annual Meeting with respect to such ratification (whether as a result of
abstentions, broker non-votes or otherwise) will have no impact on the vote.
Proposal No. 3 - OTHER MATTERS
The management of the Corporation knows of no matters to be presented at
the meeting other than those set forth in the Notice of Annual Meeting. However,
if any other matters properly come before the meeting, it is intended that the
persons named in the enclosed proxy will vote on such matters in accordance with
their best judgments.
2001 SHAREHOLDERS' PROPOSALS
The date by which proposals of shareholders intended to be presented at the
2001 Annual Meeting of the Corporation must be received by the Corporation for
inclusion in its Proxy Statement and form of proxy relating to that meeting is
December 7, 2000. The Corporation may exercise discretionary voting authority
under proxies solicited by it for the 2001 Annual Meeting of the Corporation if
it receives notice of a proposed non-Rule 14a-8 shareholder action after
February 20, 2001.
MISCELLANEOUS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and more than 10% shareholders ("Insiders") to
file with the Securities and Exchange Commission reports on prescribed forms of
their beneficial ownership of the Company's stock and furnish copies of such
reports to the Company. Based solely on a review of the copies of such forms
furnished to the Company, or written representations that no Form 5 was required
to be filed, the Company believes that during the year ended December 31, 1999,
all reports required by Section 16(a) to be filed by the Company's Insiders were
filed on a timely basis, except that the Company inadvertently filed late a Form
5 or amended Form 5 on behalf of each of Messrs. Carver, Ferrise, Derby,
Heidbreder and McErlane in each case to report the acquisition of a stock option
which was entitled to be reported on a deferred basis on Form 5. The Form 5s,
which were
18
<PAGE>
required to be filed by February 14, 2000, were amended and/or filed by the
Company on March 20, 2000. The grant of these stock options was fully disclosed
in the Company's Proxy Statement for its 1999 Annual Meeting.
Expenses
The expense of preparing, printing and mailing this Proxy Statement and the
proxies solicited hereby will be borne by the Corporation.
Some of the officers and regular employees of the Corporation may, without
extra remuneration, solicit proxies personally or by telephone, telex or
telefax. The Corporation will request brokerage houses, nominees, custodians and
fiduciaries to forward proxy materials to the beneficial owners of shares held
of record and will reimburse such persons for their expenses.
By Order of the Board of Directors
WARREN W. HEIDBREDER, Secretary
19
<PAGE>
<TABLE>
<CAPTION>
Proxy
BANDAG, INCORPORATED
Muscatine, Iowa
PROXY FOR ANNUAL MEETING - MAY 2, 2000
<S> <C>
Lucille A. Carver and Martin G. Carver, or either of them each with power of substitution, are authorized to vote all
shares of Common Stock (COM) and Class B Common Stock (CLB) which the undersigned is entitled to vote at the Annual Meeting
of Shareholders of Bandag, Incorporated to be held May 2, 2000 and at any adjournment thereof.
This proxy is solicited on behalf of the Company's Board of Directors. Every properly signed proxy will be voted as
directed. The Board of Directors recommends a vote FOR the nominees in Item (1) and FOR Item (2). Unless otherwise directed,
proxies will be voted in accordance with the foregoing sentence and in the discretion of the Board of Directors in connection
with Item (3).
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any
boxes if you wish to vote in accordance with the Board of Directors' recommendations. The proxy holders cannot vote your
shares unless you sign and return this card.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
|X| Please mark
votes as in
this example.
The signer revokes all proxies heretofore given by the signer to vote at said meeting or any adjournment thereof.
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of Directors. FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. Action re selection of Ernst &
(01) Robert T. Blanchard |_| |_| |_| Young LLP as independent |_| |_| |_|
auditors for the fiscal year ending
December 31, 2000.
FOR AGAINST ABSTAIN
(02) Gary E. Dewel |_| |_| |_| 3. In their discretion upon such other matters as may properly come
before the meeting.
(03) R. Stephen Newman FOR AGAINST ABSTAIN
|_| |_| |_|
MARK HERE FOR |_| MARK HERE |_|
COMMENTS/ADDRESS IF YOU PLAN
CHANGE AND NOTE TO ATTEND
AT LEFT THE MEETING
Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title
as such.
Signature ________________________ Date:__________________ Signature: ________________________ Date: __________________
</TABLE>
