-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MaB6c410Yksh//m3g7mpjyOGEFoUvNxPQwrCSJfEGSYcv78bkuTUuKS3UyZIWG/1 IqGgVmd9shskVEYBm5RxFA== 0000912057-97-010242.txt : 19970327 0000912057-97-010242.hdr.sgml : 19970327 ACCESSION NUMBER: 0000912057-97-010242 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970508 FILED AS OF DATE: 19970326 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BMC INDUSTRIES INC/MN/ CENTRAL INDEX KEY: 0000215310 STANDARD INDUSTRIAL CLASSIFICATION: COATING, ENGRAVING & ALLIED SERVICES [3470] IRS NUMBER: 410169210 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08467 FILM NUMBER: 97563815 BUSINESS ADDRESS: STREET 1: 2 APPLETREE SQUARE CITY: MINNEAPOLIS STATE: MN ZIP: 55425 BUSINESS PHONE: 6128516000 MAIL ADDRESS: STREET 1: TWO APPLETREE SW SUITE 400 STREET 2: TWO APPLETREE SW SUITE 400 CITY: MINNEAPOLIS STATE: MN ZIP: 55425 FORMER COMPANY: FORMER CONFORMED NAME: BUCKBEE MEARS CO/MN DATE OF NAME CHANGE: 19830517 DEF 14A 1 DEF 14A 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 Section 240.14a-11(c) or Section 240.14a-12 BMC Industries, Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required / / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ BMC INDUSTRIES, INC. TWO APPLETREE SQUARE MINNEAPOLIS, MINNESOTA 55425 ------------------------ NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 8, 1997 ------------------------ TO THE STOCKHOLDERS OF BMC INDUSTRIES, INC.: The Annual Meeting of Stockholders of BMC Industries, Inc. will be held at the Atrium Center, 3105 East 80th Street, Bloomington, Minnesota on Thursday, May 8, 1997 at 10:00 a.m. local time, for the following purposes: 1. To elect two directors for a term of two years; 2. To transact such other business as properly may be brought before the meeting or any adjournments thereof. The close of business of March 10, 1997 has been fixed as the record date for the determination of stockholders who are entitled to notice of and to vote at the meeting or any adjournments thereof. By order of the Board of Directors [LOGO] Michael P. Hawks SECRETARY March 26, 1997 YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. NO ADMISSION TICKET OR OTHER CREDENTIALS WILL BE NECESSARY. IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE BE SURE YOU ARE REPRESENTED AT THE MEETING BY MARKING, SIGNING, DATING, AND MAILING YOUR PROXY IN THE REPLY ENVELOPE PROVIDED. BMC INDUSTRIES, INC. TWO APPLETREE SQUARE MINNEAPOLIS, MINNESOTA 55425 ------------------------ PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS --------------------- INTRODUCTION This proxy statement, which is first being mailed to stockholders on March 26, 1997, is furnished in connection with the solicitation by the Board of Directors of BMC Industries, Inc. (the "Company") of proxies to be voted at the Annual Meeting of Stockholders to be held at the Atrium Center, 3105 East 80th Street, Bloomington, Minnesota on Thursday, May 8, 1997, at 10:00 a.m., local time, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders, and at any adjournments thereof (the "Meeting"). The Company's 1996 Annual Report to Stockholders has been mailed to the stockholders but is not to be considered a part of the proxy soliciting materials. The accompanying proxy is enclosed for your use. You are solicited on behalf of the Board of Directors of the Company (the "Board") to MARK, SIGN, DATE AND RETURN THE PROXY IN THE ACCOMPANYING SELF-ADDRESSED ENVELOPE. The proxy is revocable at any time before it is used at the Meeting. A proxy may be revoked by filing a revoking instrument or a duly executed proxy bearing a later date with the Secretary of the Company or by attending the Meeting and voting in person. The shares represented by proxies received by the Board will be voted at the Meeting. The cost of soliciting proxies will be borne by the Company. Officers, directors and regular employees of the Company may, but without compensation other than their regular compensation, solicit proxies by mail, personal conversation, telephone or otherwise. The Company may reimburse brokerage firms and others for expenses incurred in forwarding solicitation material to the beneficial owners of the Company's common stock ("Common Stock"). VOTING OF SHARES Only holders of Common Stock of record at the close of business on March 10, 1997 (the "Record Date") will be entitled to vote at the Meeting. On March 10, 1997, the Company had 27,424,304 outstanding shares of Common Stock, each such share entitling the holder thereof to one vote on each matter to be voted on at the Meeting. Holders of shares of Common Stock are not entitled to cumulative voting rights. The presence at the Meeting, in person or by proxy, of the holders of a majority of the outstanding shares of Common Stock entitled to vote at the Meeting is required for a quorum for the transaction of business. In general, shares of Common Stock represented by a properly signed and returned proxy card will be counted as shares present and entitled to vote at the Meeting for purposes of determining a quorum, without regard to whether the card reflects votes against director nominees or abstentions (or is left blank) or reflects a "broker non-vote" on a matter (i.e., a card returned by a broker on behalf of its beneficial owner customer that is not voted on a particular matter because voting instructions have not been received and the broker has no discretionary authority to vote). The election of a nominee for director requires the affirmative vote of a majority of the shares of Common Stock present and entitled to vote in person or by proxy on that matter (and at least a majority of the minimum number of votes necessary for a quorum to transact business at the Meeting). Shares represented by a proxy card voted as abstaining on any of the proposals will be treated as shares present and entitled to vote that were not cast in favor of a particular matter, and 1 thus will be counted as votes against that matter. Shares represented by a proxy card that includes broker non-votes on a matter will be treated as shares not entitled to vote on that matter, and thus will not be counted in determining whether that matter has been approved. PROPOSAL 1 ELECTION OF DIRECTORS NOMINATION The Company's Second Restated Articles of Incorporation (the "Articles") provide that the Board shall consist of not less than three nor more than 17 members, as determined from time to time by the Board of Directors, divided into two classes of as nearly equal size as possible. The term of each class of directors is two years, and the term of one class expires each year in rotation. The Board currently consists of six (6) directors, with the terms of three present members of the Board expiring as of the Meeting. The terms of the remaining three members of the Board will not expire this year, but rather will expire as indicated below. Dr. Swalin is retiring from the Board. The Company wishes to extend to Dr. Swalin its sincere gratitude for his many years of service. As a result of Dr. Swalin's retirement, the Board has determined that there will be five (5) directors of the Company for the ensuing year. The Board has nominated John W. Castro and Joe E. Davis to serve as directors of the Company for terms of two years, expiring at the 1999 Annual Meeting of Stockholders, or until their successors are elected and qualified. The Board recommends a vote FOR the election of Messrs. Castro and Davis. In the absence of other instructions, the proxies will be voted FOR the election of the nominees. If the Board should learn prior to the Meeting that any of the nominees will be unable to serve by reason of death, incapacity or other unexpected occurrence, the proxies that otherwise would have been voted for that nominee will be voted for such substitute nominee as may be selected by the Board. Alternatively, the proxies, at the Board's discretion, may be voted for such fewer number of nominees as results from such death, incapacity or other unexpected occurrence. The Board has no reason to believe that any of the nominees will be unable to serve. INFORMATION ABOUT DIRECTORS AND NOMINEES The following table gives certain information concerning the Company's directors, including this year's nominees.
NAMES OF DIRECTORS DIRECTOR AND NOMINEES PRINCIPAL OCCUPATION AGE SINCE - -------------------------- ---------------------------------------------------------------------- --- ----------- NOMINEES FOR A TWO-YEAR TERM EXPIRING IN 1999: John W. Castro President and Chief Executive Officer of Merrill Corporation 48 1994 (diversified document services) Joe E. Davis Former President and Chief Executive Officer of National Health 62 1982 Enterprises, Inc.; former Chairman of the Board, Linear Corporation DIRECTORS NOT STANDING FOR ELECTION AT THE MEETING WHOSE TERMS EXPIRE IN 1998: Lyle D. Altman Former Chairman of the Board of Network Systems Corporation (data 66 1983 communications equipment) Paul B. Burke Chairman of the Board, President and Chief Executive Officer of BMC 41 1991 Industries, Inc. Harry A. Hammerly Former Executive Vice President and Director of 3M Corporation 63 1995
2 Except as indicated below, there has been no change in the principal occupations or employment during the past five years for the directors or nominees for election as directors. On March 7, 1995, Mr. Altman resigned as Chairman of the Board of Network Systems Corporation ("NSC") in connection with Storage Technology Corporation's acquisition of NSC. From September 1, 1993 to March 7, 1995, Mr. Altman served as interim Chief Executive Officer of NSC. Mr. Altman previously served as President and Chief Executive Officer of NSC until October 1991, and as its Chief Executive Officer until April, 1992. Mr. Burke has been President of the Company since May 1991, and he has served as its President and Chief Executive Officer since July 1991. Mr. Burke has also served as Chairman of the Board since May 1995. Mr. Burke joined the Company as Associate General Counsel in June 1983 and became Vice President, Secretary and General Counsel in August 1985. In November 1987, he was appointed Vice President, Ft. Lauderdale Operations of the Company's Vision-Ease Lens division and in May 1989 he was appointed President of Vision-Ease Lens. Mr. Hammerly retired from 3M Corporation in July 1995. He served in various positions with 3M Company from June 1955 to July 1995, most recently as Executive Vice President, International Operations. The following Board members also serve as directors of the designated public companies: Mr. Burke, Apogee Enterprises, Inc. and Donaldson Company, Inc.; Mr. Castro, Merrill Corporation; Mr. Davis, American Variable Insurance Series; and Mr. Hammerly, Apogee Enterprises, Inc., Brown and Sharp Manufacturing Company, Cincinnati Milacron, Inc. and The Geon Company. INFORMATION ABOUT THE BOARD AND ITS COMMITTEES COMMITTEES. The business and affairs of the Company are managed by the Board, which met four (4) times in 1996. The Board maintains several standing committees, including Audit, Compensation, Finance and Nominating Committees. The Audit Committee oversees the Company's Internal Audit Department and the provision of outside audit services. It met two (2) times in 1996. The Compensation Committee reviews and approves compensation for all elected executive officers; reviews, approves and modifies all general compensation matters; and, sets the terms of, and grants awards under, the Company's 1994 Stock Incentive Plan and any other incentive plans. The Compensation Committee met two (2) times during 1996. The Finance Committee approves the Company's dividends payable to stockholders and reviews the Company's long-range financing plan. The Finance Committee met four (4) times during 1996. The Nominating Committee is authorized to identify, evaluate and nominate persons for election to the Board and to make recommendations to the Board with respect to such persons. The Nominating Committee will consider nominees recommended by stockholders if submitted in writing to the Committee Chair. The Company's Restated Bylaws also permit any stockholder entitled to vote for the election of directors to make nominations directly, without first recommending the nominee to the Nominating Committee. Under the Restated Bylaws, any such nomination made by a stockholder must be made by written notice to the Company's Secretary not less than 120 days prior to the Annual Meeting of Stockholders or special meeting called for the election of directors (as the case may be). The motion must include each nominee's name, age, business address and residence address, principal occupation, and beneficial share ownership, together with the class of directors to which the nominee is being nominated and such other information as would be required in a proxy solicitation concerning the nominee under the Securities and Exchange Commission's proxy rules. The Nominating Committee met two (2) times in 1996. The Audit, Compensation, Finance and Nominating Committees are presently comprised of the following incumbent directors of the Company:
AUDIT COMPENSATION FINANCE NOMINATING COMMITTEE COMMITTEE COMMITTEE COMMITTEE - --------------------------- --------------------------- ------------------------ -------------------------- Lyle D. Altman (Chair) John W. Castro (Chair) Joe E. Davis (Chair) Dr. Richard A. Swalin Joe E. Davis Dr. Richard A. Swalin Lyle D. Altman (Chair) Harry A. Hammerly John W. Castro Harry A. Hammerly
3 DIRECTORS' FEES. As an employee of the Company, Mr. Burke is not paid a director's fee. Non-employee directors are paid an annual retainer of $15,000, $1,000 per Board meeting attended and $1,000 ($1,200 in the case of the committee Chair) per committee meeting attended. DIRECTORS' DEFERRED COMPENSATION PLAN. On December 7, 1984, the Board of Directors adopted the Directors' Deferred Compensation Plan (the "Deferred Plan"), which is administered by the Secretary of the Company in conjunction with the Human Resources Department. Each non-employee member of the Board of Directors may elect to participate and defer his or her receipt of the fees described above. The amount of each participating director's compensation deferred under the Deferred Plan is credited to a separate bookkeeping account in the director's name. Prior to January 1, 1997, participants could elect to have compensation credited to the "BMC Stock Performance" account ("Stock Account") or the "Interest Income" account ("Interest Account"). Effective January 1, 1997, the Board amended the Deferred Plan to replace the Stock Account with new phantom investment options ("Investment Account"). Compensation credited to the Investment Account is converted into share equivalents of up to three (3) mutual funds ("Phantom Investments") chosen from a variety of equity and bond fund options. The value of Phantom Investments credited to the Investment Account, and, consequently the value of a participating director's account, increases or decreases depending on the market performance of the underlying mutual funds chosen as Phantom Investments. Compensation credited to the Interest Account earns interest computed on the beginning balance each quarter at an annual rate equal to the effective cost of borrowing under the Company's revolving credit agreements in effect during the quarter. Amounts credited to participating directors' accounts are payable in cash in a lump sum or in two to ten annual installments, at the option of the participant, upon termination from the Board of Directors. During the past three years, $38,440 was deferred under the Deferred Plan by all current directors who are not executive officers, as a group (5 persons). NON-EMPLOYEE DIRECTOR STOCK OPTIONS. On December 10, 1993, the Board adopted the 1994 Stock Incentive Plan (the "1994 Plan") which subsequently was approved by the Company's stockholders at the 1994 Annual Meeting of Stockholders. The 1994 Plan provides for automatic non-qualified option grants to the Company's non-employee directors. Effective as of January 1, 1997, the Board amended the 1994 Plan to provide for an automatic, one-time grant to directors filling new directorships or vacancies of non-qualified options to purchase 10,000 shares of Common Stock, at an exercise price equal to the fair market value of the Common Stock on the date of their election or appointment. Prior to January 1, 1997, directors received non-qualified options to purchase 20,000 shares of Common Stock on the date of their election or appointment. The 1994 Plan further provides that on the date of each subsequent Annual Meeting of Stockholders, each non-employee director will automatically be granted additional options to purchase 4,000 shares of Common Stock at the fair market value of the Common Stock on the date of grant. Each option becomes excercisable in full three years after the date of grant and terminates five years after its date of grant. If a non-employee director ceases to serve as a director for any reason, all options held by such director will continue to become exercisable and expire in accordance with their original terms. In 1996, all of the incumbent directors attended 75% or more of the aggregate meetings of the Board and all such committees on which they served. 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Set forth in the following table is information, as of March 10, 1997 (unless otherwise indicated), pertaining to persons who, to the best of the Company's knowledge, owned beneficially more than five percent (5%) of the outstanding Common Stock of the Company. Also set forth below is information with respect to shares of the Common Stock beneficially held by the Company's directors and the Company's executive officers named in the "Summary Compensation Table", which appears below under the heading "Executive Compensation", and for all directors and executive officers as a group.
SHARES OF COMMON STOCK BENEFICIALLY OWNED(1) ----------------------------- PERCENT NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT OF CLASS - ---------------------------------------------------- --------------- ------------ Neuberger & Berman L.P. 1,615,580(2) 5.9% 605 Third Avenue New York, NY 10158-3698 Lyle D. Altman 36,000(3) * Paul B. Burke 755,037(4) 2.7 John W. Castro 8,000 * Joe E. Davis 144,000(3) * John L. Gburek 50,759(5) * Harry A. Hammerly 1,000 * Michael P. Hawks 120,550(6) * Terry R. Nygaard 54,241(7) * Richard A. Swalin 10,000(8) * Jeffrey L. Wright 3,800(9) * All Directors and Executive Officers as a group (10 1,183,387(10) 4.2 persons)
- ------------------------ * = less than 1%. (1) Unless otherwise noted, all of the shares shown are held by individuals or entities possessing sole voting and investment power with respect to such shares. Unless otherwise noted, share amounts and percentages are as of March 10, 1997. Shares not outstanding but deemed beneficially owned by an individual or by members of the group (as the case may be) by virtue of a right to acquire them within 60 days upon the exercise of options are treated as outstanding for purposes of determining the percent beneficially owned by the individual or the group. (2) As set forth in a Schedule 13G filed with the Securities and Exchange Commission on February 13, 1997, Neuberger & Berman, LLC ("Neuberger"), a registered investment adviser, is deemed to have beneficial ownership as of December 31, 1996 of 1,615,580 shares. As reported in the Schedule 13G, Neuberger possesses sole voting power with respect to 864,500 of such shares, shared voting power with respect to 350,200 of such shares and shared dispositive power with respect to all 1,615,580 shares. (3) Includes 8,000 shares that the director has the right to acquire within 60 days upon the exercise of options. (4) Includes 604,600 shares that Mr. Burke has the right to acquire within 60 days upon the exercise of options; 400 shares held indirectly as custodian for Mr. Burke's minor son; and 10,854 shares allocable to Mr. Burke as of December 31, 1996 in connection with his participation in the Company's 401(k) savings plan. 5 (5) Includes 10,000 shares that Mr. Gburek has the right to acquire within 60 days upon the exercise of options and 759 shares allocable to Mr. Gburek as of December 31, 1996 in connection with his participation in the Company's 401(k) savings plan. (6) Includes 12,500 shares that Mr. Hawks has the right to acquire within 60 days upon the exercise of options; 1,050 shares held indirectly by Mr. Hawks' minor children; and 13,170 shares allocable to Mr. Hawks as of December 31, 1996 in connection with his participation in the Company's 401(k) savings plan. (7) Includes 5,000 shares that Mr. Nygaard has the right to acquire within 60 days upon the exercise of options and 12,241 shares allocable to Mr. Nygaard as of December 31, 1996 in connection with his participation in the Company's 401(k) savings plan. (8) Includes 4,000 shares that Dr. Swalin has the right to acquire within 60 days upon the exercise of options. (9) Includes 3,000 shares that Mr. Wright has the right to acquire within 60 days upon the exercise of options (10) Includes 1,450 shares held indirectly by two officers' minor children. Includes 655,100 shares not outstanding but deemed beneficially owned by members of the group by virtue of a right to acquire them within 60 days upon the exercise of options. Includes 37,024 shares allocable as of December 31, 1996 to executive officers (5 persons) in connection with their participation in the Company's 401(k) savings plan. EXECUTIVE COMPENSATION COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION THE COMMITTEE. The Compensation Committee of the Company's Board of Directors (the "Committee") is comprised entirely of non-employee directors and administers the Company's executive compensation program. See "Information About the Board and its Committees" for a more complete description of the functions of the Compensation Committee. COMPENSATION PHILOSOPHY. The Company's executive compensation policy is intended to support the achievement of the Company's desired economic performance by: - Providing compensation that will attract and retain superior talent and reward performance; and - Aligning executive officers' interests with the Company's success by linking both annual incentive compensation and long-term incentive compensation with the Company's success in achieving performance goals. The executive compensation policy adopted by the Company, as approved by the Committee, provides for an overall level of potential compensation that is at a median level of competitiveness with manufacturing companies of comparable size. The Committee, in reviewing compensation matters, consult with the Company's Director of Compensation and Benefits and, as appropriate, independent compensation consultants. The Committee makes use of a variety of independently available compensation surveys, each of which provide compensation data for well over 100 companies, including many of the companies in the S&P 500-Registered Trademark- and S&P Manufacturing (Diversified Industries)-Registered Trademark- indices used in the Company's performance graph. The compensation surveys used by the Committee report compensation data for like-sized manufacturing companies and provide statistical analyses that predict median compensation rates at profit and revenue levels comparable to the Company. Actual individual compensation levels for officers of the Company may be greater or less than median competitive levels, based upon annual and long-term Company performance as well as individual performance. The Compensation Committee, at its discretion, sets executive compensation at levels which it judges are justified by external, internal or other circumstances. 6 ELEMENTS OF EXECUTIVE OFFICER COMPENSATION POLICY. The Company's executive officer compensation policy is comprised of base salary, annual cash bonus incentives and long-term incentives in the form of stock options and/or restricted stock awards. BASE SALARY. Base salary levels for the Company's executive officers, including the Chief Executive Officer, are generally set at or below median levels of competitiveness compared to manufacturing companies of similar size and profitability. In determining individual salaries, in addition to the comparison with similar companies, the Committee also takes into consideration individual experience and performance, as well as competitive and comparable data related to the executive officer's specific areas of expertise. As a matter of philosophy, the Company does not emphasize base salaries in an executive's total compensation package. ANNUAL CASH BONUS INCENTIVES. Under the Company's management incentive bonus plan (the "Bonus Plan"), executive officers and key employees of the Company, designated by the Chief Executive Officer, may receive cash bonus awards after the close of the fiscal year if the Company achieves financial performance goals set by the Board for that year. Target bonus rates of a percentage of base salary are established for each executive officer; depending upon the individual's level of responsibility and the median level of incentive compensation opportunity offered by like-sized manufacturing companies as reported in salary surveys. In 1996, the Company achieved performance beyond established financial performance goals. Accordingly, executive officers were eligible to receive the maximum bonus under the Bonus Plan for 1996. LONG-TERM INCENTIVES. On December 10, 1993, the Company's Board of Directors approved the 1994 Plan which subsequently was approved by the Company's stockholders at the 1994 Annual Meeting of Stockholders. The 1994 Plan provides for grants to eligible employees of the Company of stock options, restricted stock awards, performance units, stock bonuses and stock appreciation rights. The Committee has the discretion to select participants, the type of award and the terms and conditions for each award, to the extent not otherwise fixed by the terms of the 1994 Plan. Awards under the 1994 Plan are intended to align management and stockholder long-term interests by creating a direct link between executive compensation and stockholder return, and to enable executives to develop and maintain an equity position in the Company. The Committee does not rely on any single formula in determining the size of grants or selecting recipients, but considers relevant median level competitive data, the potential and performance of the recipient, grants made in prior years and options which remain outstanding. CHIEF EXECUTIVE OFFICER COMPENSATION. Base salary, incentive compensation awards, and other compensation paid to Mr. Burke, as well as stock option awards made to Mr. Burke during his tenure as an executive officer, are consistent with the design of the overall program described above, and are shown in the tables below. The potential value of Mr. Burke's compensation package is designed to "pay for results" by placing a high degree of pay at risk and by providing significant emphasis on stockholder value through the granting of stock options. Annual incentive compensation is targeted at 57.25% of his base salary with a maximum of 75%. Benefits and perquisites are not emphasized and are set at or below median levels of competitiveness. Mr. Burke's base salary and his stock option awards are determined after a review of competitive compensation compiled by independent consultants and after taking into account the Company's performance under his leadership. The Company's performance is measured against financial goals for earnings, earnings per share and cash flow. Other measurements used to evaluate Mr. Burke are stock price performance and soundness of strategic operating plans. Mr. Burke's 1996 base salary was $350,000. Because the Company significantly exceeded its financial goals for 1996 as defined by the Company's Bonus Plan, Mr. Burke received a bonus equal to 75% of his 1996 base salary. Members of the Compensation Committee: John W. Castro, Chairman Dr. Richard A. Swalin 7 COMPARATIVE STOCK PERFORMANCE The graph below compares the cumulative total stockholder return on the Company's Common Stock for the last five fiscal years to the total cumulative return on the S&P500-Registered Trademark- Index and the S&P-Registered Trademark-Manufacturing (Diversified Industries) Index over the same period, assuming a $100 investment in Common Stock and each such index on December 31, 1991 and reinvestment of all dividends (if any). CUMULATIVE TOTAL RETURN BASED ON INVESTMENT OF $100 BEGINNING DECEMBER 31, 1991 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
S&P BMC Industries, Manufacturing Inc. (Diversified) S&P 500 12/31/91 $100.00 $100.00 $100.00 12/31/92 144.26 108.39 107.61 12/31/93 277.05 131.58 118.41 12/30/94 410.95 136.11 119.97 12/29/95 1,226.66 191.66 165.00 12/31/96 1,665.14 255.58 202.85
8 SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION The following table describes the cash and non-cash compensation for each of the last three fiscal years of the Company's Chief Executive Officer and its four other executive officers whose annual salary and bonus for 1996 exceeded $100,000. SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION ------------- AWARDS ANNUAL COMPENSATION(1) ------------- ------------------------------------------ SECURITIES OTHER ANNUAL UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) OPTIONS(4) COMPENSATION(5) - --------------------------------- --------- ----------- ----------- ---------------- ------------- ---------------- Paul B. Burke 1996 $ 350,000 $ 262,500 $ 131,629 0 $ 80,916 Chairman of the Board, President 1995 250,000 187,500 73,357 0 67,012 and CEO 1994 250,000 187,500 78,055 0 67,046 Michael P. Hawks 1996 120,000 54,000 36,149 0 23,666 Vice President of Finance and 1995 109,538 45,369 26,043 40,000 25,194 Administration, Chief Financial 1994 100,000 37,438 24,000 0 22,399 Officer and Secretary(6) John L. Gburek, 1996 115,000 60,383 34,961 0 22,945 Vice President of Corporate 1995 114,789 60,143 5,768 0 27,333 Development(7) 1994 -- -- -- -- -- Terry R. Nygaard, 1996 93,000 34,875 26,438 0 17,202 Vice President of Taxes(8) 1995 93,000 34,875 20,796 0 20,607 1994 91,269 34,226 22,073 0 19,845 Jeffrey L. Wright 1996 90,503 33,939 12,849 15,000 0 Corporate Controller(9) 1995 -- -- -- -- -- 1994 -- -- -- -- --
- ------------------------ (1) Annual compensation (including compensation deferred at the election of the named executive officer pursuant to qualified benefit plans) is included in the appropriate category in the year earned. (2) Bonuses are included in the year earned. Under the Company's management incentive bonus plan, bonuses earned during any given fiscal year are paid to participants in March of the following year. (3) Includes the value of all perquisites and personal benefits provided by the Company to the named individuals, including the use of leased automobiles, reimbursement of club membership dues, tax preparation services, physical examinations, supplemental health insurance and an interest rate supplement related to the exercise of stock options or the acquisition of shares in the open market. For the purposes of this table, the above mentioned perquisites and benefits were valued at their incremental cost to the Company, not on the taxable benefit derived by the named individuals. In addition, the Company permits executive officers to exercise stock options and pay any related income taxes due through interest-free loans from the Company. See "Certain Transactions" below. The value of such interest-free loans was determined by calculating the interest imputed on such loans for the applicable year at the applicable federal rate provided by the Code. Specific perquisites or personal benefits exceeding 25% of the total reported for each of the named individuals were as follows: (a) Mr. Burke: Leased auto, $45,036, $15,681 and $31,581 for fiscal 1996, 1995 and 1994, respectively; imputed interest on interest free loans, $75,825, $44,143 and $32,805 for fiscal 1996, 1995 and 1994, respectively. 9 (b) Mr. Hawks: Leased auto, $19,876, $12,166 and $12,544 for fiscal 1996, 1995 and 1994, respectively; imputed interest on interest free loans, $12,093 and $8,362 for fiscal 1996 and 1995, respectively. (c) Mr. Gburek: Leased auto, $10,203 and $3,965 for fiscal 1996 and 1995, respectively; imputed interest on interest free loans, $16,033 and $4,518 for fiscal 1996 and 1995, respectively. (d) Mr. Nygaard: Leased auto, $13,781, $11,638 and $12,089 for fiscal 1996, 1995 and 1994, respectively; imputed interest on interest free loans, $8,248 for fiscal 1996. (e) Mr. Wright: Leased auto, $12,800 for fiscal 1996. (4) The number of shares have been adjusted, where appropriate, to reflect a two-for-one stock split in 1995. (5) Includes contributions made and to be made by the Company to the Company's qualified 401(k) savings plan, qualified profit sharing plan and nonqualified benefit equalization plan on behalf of the named individuals for services performed in fiscal 1996, as follows: (a) Mr. Burke: Savings plan, $2,250; profit sharing plan, $18,750; benefit equalization plan, $59,916. (b) Mr. Hawks: Savings plan, $5,686; profit sharing plan, $15,314; benefit equalization plan, $2,666. (c) Mr. Gburek: Savings plan, $6,473; profit sharing plan; $14,527; benefit equalization plan, $1,945. (d) Mr. Nygaard: Savings plan, $6,138; profit sharing plan, $11,064. (6) Mr. Hawks became Vice President of Finance and Administration, Chief Financial Officer and Secretary on August 7, 1995. Prior to that date, he served as Treasurer and Secretary. (7) Mr. Gburek became Vice President of Corporate Development on August 2, 1995. Prior to that date, he served as General Manager of Buckbee-Mears St. Paul. (8) Mr. Nygaard served as Corporate Controller from May 6, 1993 until January 29, 1996 when he became Vice President of Taxes. Mr. Nygaard resigned from his position as Vice President of Taxes on March 20, 1997. (9) Mr. Wright became Corporate Controller on January 29, 1996. OPTION GRANTS AND EXERCISES The following tables summarize options granted to and exercised by the executive officers named in the "Summary Compensation Table" above during 1996 and the potential realizable value of the options held by those individuals at December 31, 1996. OPTION GRANTS IN 1996
INDIVIDUAL GRANTS ------------------------------------------------- NUMBER OF % OF TOTAL GRANT DATE SECURITIES OPTIONS VALUE(1) UNDERLYING GRANTED TO EXERCISE OR ------------- OPTIONS EMPLOYEES BASE PRICE EXPIRATION GRANT DATE NAME GRANTED IN 1996(2) ($/SH)(3) DATE PRESENT VALUE - --------------------- ----------- ----------- ----------- ---------- ------------- Paul B. Burke 0 0 -- -- -- Michael P. Hawks 0 0 -- -- -- John L. Gburek 0 0 -- -- -- Terry R. Nygaard 0 0 -- -- -- Jeffrey L. Wright 15,000(4) 16.5% $ 21.437 1/29/06 $ 138,300
- ------------------------ (1) The present value determination was made using the Black-Scholes option pricing model. The assumptions used in the model are dependent on the date of option grant. The assumptions used 10 included expected stock price volatility of .387, risk-free rate of return of 6.21%, weighted average expected life of five years, dividend yield of .19% and contractual time to exercise of ten years for Mr. Wright. Actual gains (if any) on stock option exercises are dependent upon the Company's future performance and the performance of its Common Stock, overall market conditions, and the executive's continued employment with the Company through the vesting dates of the option grant. (2) All option grants were under the Company's 1994 Plan. (3) Fair market value of the Company's Common Stock on the date of grant. (4) Option was granted on January 29, 1996 and became exercisable in five equal annual installments commencing on January 29, 1997. AGGREGATED OPTION EXERCISES IN 1996 AND OPTION VALUES AT DECEMBER 31, 1996
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED SHARES OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS ACQUIRED ON VALUE 1996 AT DECEMBER 31, 1996 NAME EXERCISE(1) REALIZED(2) EXERCISABLE/UNEXERCISABLE(3) EXERCISABLE/UNEXERCISABLE(4) - --------------------- ----------- ------------- --------------------------- --------------------------- Paul B. Burke 140,000 $ 3,323,280 604,600/240,000 $17,405,988/$6,393,749 Michael P. Hawks 10,000 198,313 28,000/52,000 804,375/1,082,187 John L. Gburek 36,000 698,875 0/84,000 0/2,118,782 Terry R. Nygaard 9,000 188,843 4,000/17,000 106,562/461,406 Jeffrey L. Wright 0 0 0/15,000 0/150,945
- ------------------------ (1) Under the 1994 Plan, the exercise price of options may be paid in cash or, at the Compensation Committee's discretion, in shares of Common Stock valued at fair market value on the date of exercise, or pursuant to a cashless exercise procedure under which the executive provides irrevocable instructions to a brokerage firm to sell the purchased shares and to remit to the Company, out of the sale proceeds, an amount equal to the exercise price plus all applicable withholding taxes. The exercise price may also be paid with an interest free loan from the Company pursuant to the BMC Stock Option Exercise Loan Program (the "BMC Loan Program"). See "Certain Transactions" for a more detailed description of the BMC Loan Program. (2) Market value of underlying securities on date of exercise, minus the exercise price. (3) The number of shares have been adjusted, where appropriate, to reflect two-for-one stock splits in each of 1994 and 1995. (4) Based on the closing price of the Common Stock on the New York Stock Exchange--Composite Transactions at December 31, 1996 ($31.50) minus the exercise price. OFFICER AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS Each of Messrs. Burke, Hawks, Gburek, Nygaard and Wright have entered into change of control agreements (the "Agreements") with the Company in the form described immediately below. Under the Agreements, termination of an individual executive officer's employment with the Company in connection with any change of control triggers severance benefits. A "change of control" includes the sale, lease or other transfer of substantially all of the assets of the Company; a stockholder approved dissolution or liquidation; a change of control reportable to the Securities and Exchange Commission on Form 8-K; acquisition by any person of 50% or more of the Company's voting stock; or, a change in composition of the Company's Board of Directors, such that current directors cease to constitute a majority (but only if the nominations of the newly elected members were not approved by the current directors). With the exception of payments to Mr. Gburek, severance benefits payable under the Agreements consist of three years' base salary, payable in the form of a lump sum payment of one year's base salary and a payout of the remainder over 24 months. Mr. Gburek's severance benefit payable under his Agreement consists of a lump sum payment equal to one year's base salary. The monthly payments under all of the Agreements are reduced to the extent of 11 any base salary received as a result of subsequent employment, but the terminated executive officer has no duty to seek subsequent employment. In the event the standard severance benefits constitute an excess parachute payment under the rules of the Internal Revenue Service, severance benefits will be reduced to an amount equal to the severance payment amount less the amount required to avoid any excise tax. Under the Agreements, each executive officer remains employed by the Company for a six-month period following any change of control. During that period, he or she may resign for "good reason" and receive contractual severance benefits. "Good reason" includes adverse changes in compensation and/or duties, forced relocation to a new locale, or the Company's failure to continue to provide benefit plans equivalent to those offered by the Company prior to the change of control. At the end of the six-month period, the executive has a 30-day period in which to decide whether to remain employed by the successor; during that period, the executive may elect to terminate employment, with or without good reason, and receive contractual severance benefits. Any termination by the successor during the above periods without good cause, or by the Company prior to a change in control at the insistence of an acquiror, also triggers severance benefits. "Good cause" includes (i) willful and continued failure to perform duties or (ii) conviction of a felony or gross misdemeanor materially injurious to the Company. Death or attainment of age 65 prior to the end of the period during which monthly payments are made ends all further obligations of the Company. To the extent not already exercisable, options also become immediately exercisable under the 1994 Plan in the event of any "change in control." For purposes of the 1994 Plan, a "change in control" of the Company means the following (a) the sale or other transfer of substantially all of the assets of the Company; (b) the liquidation or dissolution of the Company; (c) a merger or consolidation involving the Company if (i) less than 50% of the voting stock of the surviving company is held by persons who were stockholders of the Company immediately before the merger or consolidation, or (ii) less than 80% of the voting stock of the surviving company is held by persons who were stockholders of the Company immediately prior to the merger or consolidation without the prior approval of the continuity directors of the Company (directors as of December 10, 1993 and additional directors nominated or elected by a majority of the "continuity directors"); (d) ownership by any person or group of 50% or more of the Company's voting stock, or 20% or more of the Company's voting stock without the prior approval of the continuity directors; (e) the continuity directors ceasing to constitute a majority of the Board; or (f) any change of control that is required to be reported on Form 8-K. Under the Company's 1984 Omnibus Stock Program, which terminated pursuant to its terms on January 10, 1994, if any person makes a successful tender or exchange offer for the Common Stock of the Company that the Board opposes or does not affirmatively recommend, then (i) all incentive stock options, and non-qualified options with respect to which no stock appreciation rights have been granted, will become immediately exercisable, (ii) all non-qualified options with respect to which stock appreciation rights have been granted and which have been outstanding for at least six months, will become immediately exercisable, provided that exercise may only take place during certain periods following the public release of certain financial reports by the Company, and (iii) all restrictions on any outstanding restricted stock awards will immediately lapse. To the extent not already vested, all benefits under the Company's Profit Sharing Plan 1994 Revision (the "Profit Sharing Plan") and Savings Plan 1994 Revision (the "Savings Plan") become fully vested in the event of any "change in control." For purposes of the Profit Sharing Plan and Savings Plan, a change in control of the Company means the following: (a) the sale or other transfer of substantially all of the assets of the Company; (b) the liquidation or dissolution of the Company; (c) a person becomes the beneficial owner of 50 percent or more of the voting power of the outstanding securities of the Company; (d) individuals who constitute "incumbent directors" (directors as of January 1, 1994 and additional directors nominated or elected by a majority of the "incumbent directors") cease to constitute at least a majority of the Board; or (e) any change in control that is required to be reported under Section 13 or 15(d) of the Securities Exchange Act of 1934. 12 CERTAIN TRANSACTIONS Effective April 22, 1993 (and as amended on December 14, 1994), the Company adopted the BMC Loan Program pursuant to which employees can borrow money from the Company, generally on an interest-free basis, to exercise the Company's stock options and to pay any related income taxes due. The shares obtained upon exercise of the underlying stock options are held by the Company as collateral for the loan. The purpose of the BMC Loan Program is to facilitate the exercise of stock options, to encourage share ownership by employees, to minimize tax consequences to key employees, and to minimize the need to sell shares in the open market to pay income taxes due upon the exercise of options. Approval of the loans are subject to the sole and absolute discretion of the Committee. The total amount that any employee may borrow under the program is determined by the Committee but may not exceed the following: (i) for the first loan request, 100% of the exercise price of the option, plus 100% of the state and federal income taxes actually paid within 15 months of such exercise on any income recognized by reason of such exercise and (ii) for any subsequent loan, the lesser of (a) 100% of the exercise price of the option, plus 100% of the state and federal income taxes actually paid within 15 months of such exercise on any income recognized by reason of such exercise or (b) the amount that, when added to the principal amount of all outstanding loans under the BMC Loan Program, will not exceed 60% of the market value of all of the Company's stock pledged as collateral by the employee immediately following the loan or (c) eight times the employee's then current base salary. Notwithstanding the foregoing criteria, no loan may be made which would cause the aggregate amount of principal and accrued interest outstanding under all loans to an employee to exceed 100% of the market value of all of the Company's stock pledged as collateral by that employee under the BMC Loan Program. The loans made to employees under the BMC Loan Program are made on an interest-free basis with respect to all amounts advanced to pay the option exercise price. The loans are also interest-free with respect to the amounts advanced to pay income taxes, but only to the extent that the aggregate principal amount attributable to tax payments is not greater than two times the employee's base annual compensation plus target bonus (the "Interest Free Loan Amount"). The applicable interest rate for the amounts in excess of the Interest Free Loan Amount is the rate applicable under any short-term borrowings by the Company or, if the Company has no such borrowings, the interest rate payable to the Company under its short-term money market investments. Upon termination of the employee's employment, the loan must be repaid within 45 days or such longer period as the Committee may determine. Upon the death or long term disability of the employee, the Committee may extend the term of the repayment of the loan up to six months. Notwithstanding the above, the Committee may demand repayment of the notes at any time. Each individual borrowing arrangement is evidenced by a written demand promissory note executed by the employee at the time of borrowing. The note provides that thirty percent (30%) of the employee's bonus compensation received under the Bonus Plan (net of applicable estimated taxes and other withholdings) will be applied to repay the principal under the note. In addition, a portion of the proceeds from any sale of the Company's stock pledged under the BMC Loan Program must be applied to the repayment of amounts outstanding under the BMC Loan Program. All dividends received by an employee for BMC stock pledged for a loan, net of applicable estimated taxes and other withholdings on such dividends, are also applied to the loan. The amount outstanding under the BMC Loan Program for Messrs. Burke, Hawks, Gburek and Nygaard as of March 10, 1997 was $1,332,495, $451,659, $106,984 and $245,425, respectively. The largest loan amount outstanding for Messrs. Burke, Hawks, Gburek and Nygaard during 1996 was $1,580,610, $262,106, $625,236 and $187,433, respectively. 13 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors and executive officers, and persons who beneficially own more than 10% of the Company's Common Stock, to file with the Securities and Exchange Commission (the "SEC") initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Directors, executive officers and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) reports they file. To the Company's knowledge, based solely on review of the copies of such reports furnished to the Company with respect to the period ended December 31, 1996, all Section 16(a) filing requirements applicable to its directors, executive officers and greater than 10% stockholders were complied with. INDEPENDENT AUDITORS During 1996, in addition to auditing the Company's financial statements, Ernst & Young, LLP performed services in connection with preparation of the Company's tax returns and related tax planning, audits of employee benefit plans of the Company and its operating units and provision of general accounting advice. Ernst & Young, LLP, or its predecessor, has been the Company's independent auditors since 1980 and has been selected by the Board to continue as such for the current fiscal year. The Company has requested and expects a representative of Ernst & Young, LLP to be present at the Meeting, to make a statement if he or she so desires and to respond to appropriate questions. 1998 STOCKHOLDER PROPOSALS Stockholder proposals intended to be presented in the proxy materials relating to the 1998 Annual Meeting of Stockholders must be received by the Company on or before November 21, 1997. OTHER BUSINESS The Company knows of no business which will be presented for consideration at the Meeting other than that described in this proxy statement. As to other business, if any, that may properly come before the Meeting, it is intended that proxies solicited by the Board will be voted in accordance with the judgment of the person or persons voting the proxies. THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-K (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 TO EACH PERSON WHO IS A STOCKHOLDER OF THE COMPANY AS OF MARCH 10, 1997, UPON RECEIPT FROM ANY SUCH PERSON OF A WRITTEN REQUEST FOR SUCH AN ANNUAL REPORT. SUCH REQUESTS SHOULD BE SENT TO: INVESTOR RELATIONS DEPARTMENT, BMC INDUSTRIES, INC., TWO APPLETREE SQUARE, MINNEAPOLIS, MN 55425. Dated: March 26, 1997 BMC Industries, Inc. Two Appletree Square Minneapolis, Minnesota 55425 14 PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned hereby appoint(s) Michael P. Hawks, and Jeffrey L. Wright, and each of them, as Proxies, each with the power to appoint his substitute, and hereby authorizes each of them to represent and to vote, as designated below, all the shares of common stock of BMC Industries, [LOGO] Inc. held of record by the undersigned on March 10, 1997, at the Annual Meeting of Stockholders Two Appletree Square to be held on May 8, 1997, or any adjournment Minneapolis, Minnesota 55425 thereof. - ---------------------------- 1. ELECTION OF DIRECTORS FOR all nominees listed AGAINST all nominees below / / listed below / / (except as marked to the contrary below) (INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE(S), STRIKE A LINE THROUGH HIS NAME ON THE LIST) John W. Castro Joe E. Davis 2. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. The Board of Directors Recommends a Vote FOR Proposal 1 Above. (PLEASE SIGN ON REVERSE SIDE.) THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES NAMED IN PROPOSAL 1 ABOVE. Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. - -------------------------------------------------------------------------------- Dated: ______________, 1997. ____________________________ Print name(s) of stockholder(s) ____________________________ Signature ____________________________ Signature if held jointly PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 12-MOS DEC-31-1996 JAN-01-1996 DEC-31-1996 2,468 76 27,309 2,330 50,451 91,700 220,489 96,644 232,969 50,346 0 0 0 56,551 87,557 232,969 279,827 280,487 213,007 228,040 (236) 0 540 52,403 17,302 35,101 0 0 0 35,101 1.24 1.24
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