-----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, ABlXYfz/hpXouOai0N7BfbLv66N2t18IbVDP+drA+lVJKgXB221JghvV1LybDNFL cmFznnggMl/ouPeICgzfTw== 0000950124-01-001544.txt : 20010326 0000950124-01-001544.hdr.sgml : 20010326 ACCESSION NUMBER: 0000950124-01-001544 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010427 FILED AS OF DATE: 20010323 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BADGER METER INC CENTRAL INDEX KEY: 0000009092 STANDARD INDUSTRIAL CLASSIFICATION: TOTALIZING FLUID METERS & COUNTING DEVICES [3824] IRS NUMBER: 390143280 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-06706 FILM NUMBER: 1577688 BUSINESS ADDRESS: STREET 1: 4545 WEST BROWN DEER ROAD CITY: MILWAUKEE STATE: WI ZIP: 53223 BUSINESS PHONE: 4143715702 MAIL ADDRESS: STREET 1: 4545 W BROWN DEER RD CITY: MILWAUKEE STATE: WI ZIP: 53223 FORMER COMPANY: FORMER CONFORMED NAME: BADGER METER MANUFACTURING CO DATE OF NAME CHANGE: 19710729 DEF 14A 1 c61083def14a.txt DEFINITIVE PROXY STATEMENT 1 SCHEDULE 14A (RULE 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the registrant [X] Filed by a party other than the registrant [ ] Check the appropriate box: [ ] Preliminary proxy statement. [ ] Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)). [X] Definitive proxy statement. [ ] Definitive additional materials. [ ] Soliciting material pursuant to Rule 14a-12 Badger Meter, 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: - -------------------------------------------------------------------------------- 2 [BADGER METER LOGO] BADGER METER, INC. 4545 WEST BROWN DEER ROAD MILWAUKEE, WISCONSIN 53223 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS APRIL 27, 2001 The Annual Meeting of the Shareholders of Badger Meter, Inc. (the "Company") will be held at BADGER METER, INC., 4545 West Brown Deer Road, Milwaukee, Wisconsin, 53223, on Friday, April 27, 2001, at 8:30 a.m. local time, for the following purposes: 1. To elect two directors to three-year terms; 2. To transact such other business as may properly come before the meeting or any adjournments or postponements thereof. Holders of record of Common Stock of the Company at the close of business on February 28, 2001 will be entitled to notice of and to vote at the meeting and any adjournments or postponements thereof. Shareholders will be entitled to one vote per share so held. Please vote the enclosed proxy form, sign and return it in the envelope provided. You retain the right to revoke the proxy at any time before it is actually voted. By Order of the Board of Directors Deirdre C. Elliott, Secretary March 26, 2001 3 BADGER METER, INC. 4545 WEST BROWN DEER ROAD MILWAUKEE, WISCONSIN 53223 PROXY STATEMENT To the Shareholders of BADGER METER, INC. This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Badger Meter, Inc. (the "Company") to be used at the Annual Meeting of Shareholders of the Company (the "Meeting"), which will be held at 8:30 a.m. local time, Friday, April 27, 2001, at BADGER METER, INC., 4545 West Brown Deer Road, Milwaukee, Wisconsin 53223, and at any adjournments or postponements thereof. Shareholders who execute proxies retain the right to revoke them at any time prior to the voting thereof by giving notice to the Company in writing or in open meeting. Unless so revoked, the shares represented by such proxies will be voted at the Meeting and any adjournments or postponements thereof. The record date for shareholders entitled to notice of and to vote at the Meeting is the close of business on February 28, 2001. As of the record date, the Company had 3,209,524 shares of Common Stock (the "Common Stock") outstanding and entitled to one vote per share. This Proxy Statement is being furnished to shareholders of the Company on or about March 26, 2001. NOMINATION AND ELECTION OF DIRECTORS At the Meeting, holders of Common Stock shall be entitled to elect two directors. Directors will be elected by a plurality of votes cast at the Meeting (assuming a quorum is present). Consequently, any shares not voted at the Meeting, whether due to abstentions, broker nonvotes or otherwise, will have no impact on the election of directors. Proxies received representing one vote per share of Common Stock will, unless otherwise directed, be voted in favor of the election of each of the two persons named below to serve as directors for three years or until their respective successors have been duly appointed, or until their prior death, resignation or removal. As of the Meeting, the Board of Directors will consist of eight members divided into three classes, with one class elected each year to serve for a term of three years. Two directors are to be elected at the Meeting for three-year terms expiring in 2004. Donald J. Schuenke, who has reached the mandatory retirement age, and Robert D. Belan will not be renominated to the Board. The Company currently has one vacancy on its Board of Directors and is actively engaged in efforts to identify an appropriate candidate to fill the vacancy. Listed below are the names of the nominees of the Board of Directors for the office of director together with certain additional information concerning each such nominee. The nominees are presently directors of the Company. If either of the nominees should be unable or unwilling to serve, the proxies, pursuant to the authority granted to them by the Board of Directors, shall have discretionary authority to select and vote for substitute nominees. The Board of Directors has no reason to believe that either of the nominees will be unable or unwilling to serve. 1 4 NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS FOR THREE-YEAR TERMS EXPIRING 2004 ANNUAL MEETING
DIRECTOR NAME AGE BUSINESS EXPERIENCE DURING LAST FIVE YEARS SINCE - ---- --- ------------------------------------------ -------- KENNETH P. MANNING..................... 59 Sensient Technologies Corporation (an 1996 international supplier of flavors, colors and inks): Chairman, President and Chief Executive Officer. JOHN J. STOLLENWERK.................... 61 Allen-Edmonds Shoe Corporation (a 1996 manufacturer and marketer of shoes): Owner and President.
Listed below are the names of the directors who are not up for election this year together with certain additional information on each director. MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE TERMS EXPIRING 2002 ANNUAL MEETING JAMES L. FORBES........................ 68 Badger Meter, Inc.: Chairman, President and 1981 Chief Executive Officer. Formerly, Badger Meter, Inc.: Chairman and Chief Executive Officer. CHARLES F. JAMES, JR. ................. 69 Milwaukee School of Engineering: Retired 1986 Vice President of Academics. Formerly, University of Wisconsin -- Milwaukee: Dean of the College of Engineering and Applied Science. JAMES O. WRIGHT, JR. .................. 55 The Wright Tax Service: Owner. 1978
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE TERMS EXPIRING 2003 ANNUAL MEETING ULICE PAYNE, JR. ...................... 45 Foley & Lardner (a law firm): Partner. 2000 Formerly, Reinhart, Boerner, VanDeuren, Norris & Rieselbach (a law firm): Partner. ANDREW J. POLICANO..................... 51 University of Wisconsin: Dean of the School 1997 of Business. STEVEN J. SMITH........................ 51 Journal Communications, Inc. (a diversified 2000 communications company): Chairman and CEO Formerly, Journal Communications, Inc.: President.
Certain directors of the Company also serve as directors of other companies, some of which are publicly held. Mr. Forbes is a director of Sensient Technologies Corporation, Journal Communications, Inc. and United Wisconsin Services, Inc. Mr. Manning is a director of Sensient Technologies Corporation. Mr. Payne is a director of Midwest Express Holdings, Inc. and State Financial Services Corporation. Mr. Policano is a director of National Guardian Life Insurance Company and Physicians Insurance Corporation of Wisconsin, Inc. Mr. Smith is a director of Journal Communications, Inc. Mr. Stollenwerk is a director of Allen-Edmonds Shoe Corporation, The Northwestern Mutual Life Insurance Company, U.S. Bancorp and Koss Corporation. COMMITTEES, MEETINGS AND ATTENDANCE The Board of Directors of the Company had six standing committees during 2000: Audit, Compliance, Employee Benefit Plans, Finance, Management Review and Technology. The Audit Committee, which met twice in 2000, consists of Messrs. Payne (Chairman), Manning and Smith. The Audit Committee recommends to the Board of Directors independent auditors for selection by the 2 5 Company, discusses with the independent auditors and internal auditors the scope and results of audits, and approves and reviews any non-audit services performed by the Company's independent auditing firm. The Management Review Committee, consisting of Messrs. Schuenke (Chairman), Payne, Policano and Stollenwerk, met twice in 2000 and in January 2001. The Management Review Committee reviews and establishes all forms of compensation for the officers of the Company and administers the Company's compensation plans including the various stock option plans. The Committee also reviews the various management development and succession programs. The Committee selects nominees for the Company's Board of Directors. The Committee considers nominees for directors recommended by the shareholders but has no established procedure that must be followed. The Company's Restated By-Laws also provide for shareholder nominations of candidates for election as directors. These provisions require such nominations to be made pursuant to timely notice (as specified in the Restated By-Laws) in writing to the Secretary of the Company. The Compliance Committee, which met twice in 2000, consists of Messrs. James (Chairman), Smith and Wright, Jr. The Compliance Committee monitors the Company's compliance with the Company's policies governing activities which include but are not limited to the Company's code of conduct, environment, safety, diversity, product regulation and quality processes. The Employee Benefit Plans Committee, which met twice in 2000, consists of Messrs. Policano (Chairman), Schuenke, Smith and Wright, Jr. The Employee Benefit Plans Committee oversees the administration of the Company's pension plans, savings plans, employee savings and stock ownership plan and other retirement plans. The Technology Committee, which met twice in 2000, consists of Messrs. Manning (Chairman), James and Stollenwerk. This committee assesses the development and maintenance of the technologies used by the Company in all aspects of the Company's operations. The Finance Committee, which met once in 2000, consists of Messrs. Stollenwerk (Chairman), Manning and Policano. This committee continually reviews the Company's various financing activities and recommends changes in the corporate debt structure. The Board of Directors held five meetings in 2000. All directors attended at least 75% of the meetings of the Board of Directors and committees on which they served during the period that they served. DIRECTOR COMPENSATION James L. Forbes and Robert D. Belan, employees of the Company, received no compensation as directors. All other directors are compensated as follows: Directors were compensated at a rate of $1,500 for each Board of Directors meeting attended and were reimbursed for out-of-pocket travel, lodging and meal expenses. Directors were compensated at the rate of $1,000 for each committee meeting they attended. In addition, directors were paid a retainer of $750 per month and committee chairmen received an annual fee of $2,000. Starting in 2000, directors may elect to defer their compensation, in whole or in part, in a stock or cash subaccount of the Badger Meter Deferred Compensation Plan for Directors. If a director elects to defer compensation in a stock subaccount, the earnings on the deferred fees are based on the annual return on Company stock. No actual shares are issued. Effective January 1, 1996, the non-employee directors of the Company participate in the same long-term incentive plan as certain members of the Company's management group. Under the terms of the plan, the directors earn cash bonuses based on the same earnings growth objectives as other participants. Effective January 1, 2000, the maximum amount that a director can earn under the long-term incentive plan is $16,300 to $22,100 per year, depending on date of award. Under the Company's 1999 Stock Option Plan, upon election to the Board of Directors, non-employee directors receive a grant of options to purchase 6,000 shares of Common Stock, and another grant of options to purchase up to 2,000 shares of Common Stock. 3 6 STOCK OWNERSHIP OF MANAGEMENT AND OTHERS The following table sets forth, as of February 28, 2001, the number of shares of the Company's Common Stock beneficially owned and the number of options outstanding by (i) each director of the Company, (ii) each of the executive officers named in the Summary Compensation Table set forth below, (iii) all directors and officers of the Company as a group, and (iv) each person known to the Company to be the beneficial owner of more than 5% of the Company's Common Stock (as reported to the Securities and Exchange Commission). Beneficial ownership of shares is reported in the following table and footnotes in accordance with the beneficial ownership rules promulgated by the Securities and Exchange Commission. Such rules define "beneficial owner" of a security to include any person who has or shares voting power or investment power with respect to such security. Compliance with these rules results in overlapping beneficial ownership of shares. Therefore, certain shares set forth in the table below are reported as being beneficially owned by more than one person. In the aggregate, 667,510 shares of Common Stock representing approximately 20.8% of the votes represented by the outstanding shares of Common Stock are beneficially held by directors and officers of the Company as a group. AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OF BADGER METER, INC. COMMON STOCK
NUMBER OF SHARES AND PERCENT OF TOTAL SOLE SHARED COMMON STOCK OPTIONS BENEFICIAL BENEFICIAL BENEFICIALLY NAME OUTSTANDING OWNERSHIP(1) OWNERSHIP(1) OWNED(4) ---- ----------- ------------ ------------ ---------------- JAMES L. FORBES....................... 18,680 92,595(2)(3) 140,762(2) 233,337 7.3% CHARLES F. JAMES, JR.................. 8,000 2,000 600 10,600 0.3% KENNETH P. MANNING.................... 6,500 3,707 10,207 0.3% ULICE PAYNE, JR....................... 8,000 8,000 0.2% ANDREW J. POLICANO.................... 8,500 1,500 10,000 0.3% DONALD J. SCHUENKE.................... 8,000 5,000 13,000(5) 0.4% STEVEN J. SMITH....................... 8,000 250 8,250 0.3% JOHN J. STOLLENWERK................... 8,000 5,416 2,488 15,904(5) 0.5% JAMES O. WRIGHT, JR................... 8,000 8,150 201,000(6)(9) 217,150 6.8% ROBERT D. BELAN....................... 29,972 31,406(2)(3) 48,406 1.5% RONALD H. DIX......................... 13,096 17,428(2)(3) 163,816(2) 178,844 5.6% RICHARD A. MEEUSEN.................... 17,308 15,637(2)(3) 140,762(2) 152,843 4.8% KENNETH E. SMITH...................... 8,600 3,058(2)(3) 3,058 n/a
4 7
NUMBER OF SHARES AND PERCENT OF TOTAL SOLE SHARED COMMON STOCK OPTIONS BENEFICIAL BENEFICIAL BENEFICIALLY NAME OUTSTANDING OWNERSHIP(1) OWNERSHIP(1) OWNED(4) ---- ----------- ------------ ------------ ---------------- All Directors and Officers as a Group (18 persons, including those named above).............................. 201,072 261,058(2)(3) 367,904 667,510(5) (2)(6)(9) 20.8% Dimensional Fund Advisors Inc. 1299 Ocean Avenue 11th Floor Santa Monica, CA 90401.............. 213,000(7) 213,000 6.6% Heartland Advisors, Inc. 789 N. Water St Milwaukee, WI 53202................. 361,400(8) 361,400 11.3% JOW Corp. 4545 W. Brown Deer Rd Milwaukee, WI 53223................. 200,000(9) 200,000 6.2% M&I Trust Company 1000 N. Water St Milwaukee, WI 53202................. 21,818 457,913(3)(10) 479,731 14.9%
- --------------- (1) Unless otherwise indicated, the beneficial owner has sole investment and voting power or shared voting and investment power over the reported shares. (2) The Badger Meter Officers' Voting Trust ("Officers' Trust"), of which Ronald H. Dix, James L. Forbes and Richard A. Meeusen are trustees, holds 140,762 shares of Common Stock. The address of the trustees is 4545 West Brown Deer Road, Milwaukee, WI 53223. The trustees of the Officers' Trust have the right to vote all shares of Common Stock held therein. The Officers' Trust will exist for 30 years from December 18, 1992 to December 18, 2022, and thereafter for additional 30-year renewal periods unless earlier terminated by a vote of beneficiaries holding 75% or more of the votes in the Officers' Trust or by applicable law. The Officers' Trust has a $2,500,000 bank credit line used to assist officers in financing the purchase of Company stock. Loans to the Officers' Trust are guaranteed by the Company and the stock purchased by the officers using this credit facility is pledged to the Company to secure the loans. Each depositor to the Trust must have sufficient shares deposited to adequately collateralize the individual officer's loan balance. The Officers' Trust holds shares with a value more than sufficient to cover the full credit line. All officers, including the named executive officers, have purchased Common Stock using this credit facility. Messrs. Dix, Forbes and Meeusen all share voting power in all of the shares deposited in the Officers' Trust. Beneficiaries of the Officers' Trust have sole investment power over only those shares individually deposited in the Officers' Trust. Mr. Dix has sole investment power over 9,000 shares of Common Stock. Mr. Forbes has sole investment power over 2,020 shares of Common Stock. Mr. Meeusen has sole investment power over 14,256 shares of Common Stock. Messrs. Belan and Smith have sole investment power (but no voting power) over 28,654 and 3,000 shares of Common Stock, respectively. (3) In conjunction with the Badger Meter, Inc. Employee Savings and Stock Ownership Plan, Common Stock included in the preceding table has been allocated to the following directors and/or officers as follows: James L. Forbes, 5,503 shares; Robert D. Belan, 1,534 shares; Ronald H. Dix, 2,928 shares; Richard A. Meeusen, 429 shares; Kenneth E. Smith, 58 shares; and all officers as a group (including 5 8 those named), 16,947 shares. A person who has been allocated shares pursuant to this plan has shared voting power but no investment power with respect to these shares. (4) Includes the following shares subject to stock options which are currently exercisable or exercisable within 60 days of February 28, 2001: Mr. Forbes -- 2,000 shares; Mr. Belan -- 17,000 shares; Mr. Dix -- 6,600 shares; Mr. Meeusen -- 10,700 shares; Mr. Smith -- 0 shares; and all directors and executive officers as a group -- 126,450 shares. (5) Does not include deferred director fee holdings of phantom stock units by non-employee directors as follows: Mr. Schuenke, 320.19 units and Mr. Stollenwerk, 524.62 units. The value of the phantom stock units is based upon and fluctuates with the market value of the Common Stock. (6) The number of shares shown includes shares that are reported as beneficially owned solely because such person is co-trustee of the Christina Wright Schiro 1973 Trust, 1,000 shares. (7) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other investment vehicles, including commingled group trusts. (These investment companies and investment vehicles are the "Portfolios"). In its role as investment advisor and investment manager, Dimensional possesses both voting and investment power over the securities of the issuer described in this schedule that are owned by the Funds. All securities reported in this schedule are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. (8) These shares may be deemed beneficially owned within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934 by (1) Heartland Advisors, Inc. by virtue of its investment discretion and in some cases voting power over client securities, which may be revoked; and (2) William J. Nasgovitz, as a result of his position with and stock ownership of Heartland which could be deemed to confer upon him voting and/or investment power over the shares Heartland beneficially owns. Of these 361,400 shares, 200,000 shares also may be deemed beneficially owned within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934 by Mr. Nasgovitz as a result of his position as an officer and director of Heartland Group, Inc. which could be deemed to confer upon him voting power over the shares Heartland Group beneficially owns. (9) JOW Corp. is a personal holding company. James O. Wright, Jr. is a shareholder of JOW Corp. James O. Wright, father of James O. Wright, Jr. and retired director and retired officer of Badger Meter, Inc., is the president of JOW Corp. (10) The number of shares shown includes shares held in one or more employee benefit plans, where the Marshall & Ilsley Trust Company, as custodian, may be viewed as having voting or dispositive authority in certain situations pursuant to Department of Labor regulations or interpretations of federal case law. Pursuant to SEC Rule 13d-4, inclusion of such shares in this statement shall not be construed as an admission that the reporting person or its subsidiaries are, for purposes of Sections 13(d) or 13(g) of the Act, the beneficial owners of such securities. 6 9 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth certain information regarding compensation paid during each of the Company's last three fiscal years to the Company's Chairman, President and Chief Executive Officer and each of the Company's four other most highly compensated executive officers, based on salary and bonus earned during fiscal 2000.
LONG-TERM ANNUAL COMPENSATION COMPENSATION AWARDS ---------------------------------- --------------------------- EARNINGS UNDER OTHER ANNUAL LONG-TERM SECURITIES ALL OTHER NAME AND PRINCIPAL FISCAL BONUS COMPENSATION INCENTIVE PLAN UNDERLYING COMPENSATION POSITION YEAR SALARY($) ($)(3) ($)(3) ($)(2) OPTIONS(#) ($)(1) ------------------ ------ --------- ------ ------------ -------------- ---------- ------------ James L. Forbes........ 2000 422,571 0 0 0 0 2,625 Chairman, President and 1999 394,578 200,000 0 36,253 10,000 2,500 Chief Executive Officer 1998 374,810 185,000 0 39,853 0 2,500 Robert D. Belan........ 2000 291,394 0 0 0 0 2,625 Executive Vice 1999 256,557 130,000 0 24,348 6,000 2,500 President -- Operations 1998 218,014 90,000 0 20,348 5,500 2,500 Richard A. Meeusen..... 2000 180,524 0 0 0 0 2,625 Executive Vice 1999 168,498 66,000 0 15,904 3,500 2,500 President -- 1998 158,016 54,250 0 15,904 0 2,500 Administration Ronald H. Dix.......... 2000 178,774 0 0 0 0 2,625 Vice President -- 1999 169,665 58,100 0 15,437 3,500 2,500 Human Resources 1998 161,162 55,300 0 15,437 0 2,500 Kenneth E. Smith....... 2000 166,378 25,000 30,000 0 8,600 1,433 Vice President -- 1999 0 0 0 0 0 0 Industrial Products 1998 0 0 0 0 0 0 and International
- --------------- (1) Company contribution to Badger Meter, Inc. Employee Savings and Stock Ownership Plan (ESSOP). (2) Each of the executive officers named in the table has been designated as a participant under the Company's Long-Term Incentive Plan ("LTIP"). The LTIP provides annual cash bonuses to the named officers and other members of the management group with respect to a four or five year performance period. The awards are based upon annual attainment of earnings objectives for each year, as established by the Board of Directors. The current plan is in effect through 2004. There were no payments for 2000. Maximum annual payments for 2001 through 2004 are approximately $65,883, $36,966, $28,917, $28,067 and $38,576 for Messrs. Forbes, Belan, Meeusen, Dix and Smith, respectively. (3) Mr. Smith was paid a guaranteed bonus and a recruitment incentive during 2000, as reported in the Management Review Committee Report on Executive Compensation. Certain benefits (including social club dues, automobile and legal and accounting services) were provided through the Company to the executive officers named in the table above. The aggregate amount of such benefits for each of the executive officers named in the table did not exceed 10% of such officer's cash compensation for any of the years shown. 7 10 OPTION GRANTS IN 2000 The following table sets forth certain information concerning options to purchase Common Stock granted in 2000 to the individuals named in the Summary Compensation Table. INDIVIDUAL GRANTS
NUMBER OF SECURITIES % OF TOTAL CURRENT UNDERLYING OPTIONS EXERCISE OR PRESENT OPTIONS GRANTED TO BASE VALUE AT TYPE OF GRANTED EMPLOYEES PRICE EXPIRATION DATE NAME OPTION (#)(1) IN FISCAL YEAR ($/SH) DATE OF GRANT($) ---- ------- ---------- -------------- ----------- ---------- ----------- Kenneth E. Smith...... Non-Qual 5,000 26.0 31.75 5/12/10 50,600 Kenneth E. Smith...... ISO 3,600 18.8 31.75 5/12/10 36,432
- --------------- (1) Options identified as "non-qual" are non-qualified stock options for purposes of the Internal Revenue Code of 1986, as amended. "ISO" options are incentive stock options and are qualified options for purposes of the Internal Revenue Code of 1986, as amended. The option base price is the fair market value of the stock at the time of the grant. All the options will be fully vested within five years after date of grant. Termination of employment for any reason other than death, disability or retirement will result in the cancellation of the unexercisable options. The option term is ten years. The current present value at date of grant was computed under the Black-Scholes option pricing model using the following assumptions: risk-free interest rate of 6.8%; dividend yield of 3%; expected market price volatility factor of 30%; and a weighted average expected life of 6.6 years. AGGREGATED OPTION EXERCISES IN 2000 AND YEAR-END OPTION VALUES The following table sets forth certain information concerning the exercise in 2000 of options to purchase Common Stock by the five individuals named in the Summary Compensation Table and the unexercised options to purchase Common Stock held by such individuals at December 31, 2000.
NUMBER OF SECURITIES VALUE OF UNEXERCISED SHARES VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT ACQUIRED ON REALIZED OPTIONS AT FY-END(#) FY-END($) NAME EXERCISE(#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE ---- ----------- -------- ------------------------- ------------------------- James L. Forbes................ 2,170 40,416 2,000 / 16,680 0 / 4,340 Robert D. Belan................ 3,018 62,509 17,000 / 12,972 179,213 / 2,436 Richard A. Meeusen............. 952 17,731 10,700 / 6,608 71,469 / 1,848 Ronald H. Dix.................. 1,424 27,772 6,600 / 6,496 106,250 / 1,904 Kenneth E. Smith............... 0 0 0 / 8,600 0 / 0
PENSION PLAN TABLE The Company maintained a defined benefit pension plan (the "Pension Plan") covering all domestic salaried employees including the above-named executive officers. Effective January 1, 1997, the Pension Plan was modified to become a "cash balance" plan. Under this approach, a participant has an account balance which is credited each year with dollar amounts equal to 5% of compensation, plus 2% of compensation in excess of the Social Security wage base. Interest is credited to the account balance each year at a rate of interest based upon 30-year U.S. Treasury securities. A starting balance was established for each participant based upon December 31, 1996 accrued benefits under the prior Pension Plan formula. Additional annual dollar amounts are credited to the accounts of participants with Pension Plan participation prior to January 1, 1997 based on their service on January 1, 1997. These additional annual credits are 3% for those with less than 11 years; 4% for those with 11 to 20 years; and 5% for those with 21 or more years. The additional credits will apply for years after 1996 for each year of continued employment but limited to the lesser of 15 years or the number of the participant's years of credited service as of December 31, 8 11 1996. At retirement, a participant may elect a cash payment of the account balance or a life annuity of equivalent value. Mr. Meeusen and Mr. Smith are eligible for benefits under the cash balance plan but are not eligible for benefits under the prior plan's final average pay formula. The estimated total annual benefits payable to these executives under the cash balance plan at age 65 are $83,854 for Mr. Meeusen and $27,057 for Mr. Smith. These projected benefits were determined assuming no future increases in pay and interest credited to the cash balance account at a rate of 7%. The remaining executive officers, because of their ages and service, are expected to obtain retirement benefits according to the prior plan's final average pay formula, which has been retained under the modified Pension Plan as a minimum benefit for employees who had attained age 50 and completed 10 or more years of service as of December 31, 1996. Under the prior formula, the monthly pension at normal retirement (age 65) for all executive officers is equal to the sum of nine-tenths percent (0.9%) of the participant's average monthly compensation (based on the highest 60 months of the last 120 months compensation) multiplied by the participant's years of service, not to exceed 30; and six-tenths percent (0.6%) of the participant's average monthly compensation in excess of Covered Compensation, multiplied by the participant's years of service, not to exceed 30. IRS regulations limit the amount of compensation to be considered in benefit calculations to $170,000 in 2000, and varying amounts for prior years. Participants whose compensation is in excess of the IRS limits also participate in a non-qualified unfunded supplemental retirement plan. Benefits from this plan are calculated to provide the participant the same pension benefits as if there was no compensation limit. Based on the assumption that retirement occurs at age 65, the following table shows the approximate annual retirement benefit payable from the funded and/or unfunded plans to salaried employees retiring in 2000, based on the benefit formula described above.
YEARS OF SERVICE AVERAGE ANNUAL --------------------------------------------------------------- COMPENSATION 10 15 20 25 30 35 -------------- -------- -------- -------- -------- -------- -------- $150,000...................... $ 20,394 $ 30,591 $ 40,788 $ 50,985 $ 61,182 $ 61,182 $175,000...................... $ 24,144 $ 36,216 $ 48,288 $ 60,360 $ 72,432 $ 72,432 $200,000...................... $ 27,894 $ 41,841 $ 55,788 $ 69,735 $ 83,682 $ 83,682 $250,000...................... $ 35,394 $ 53,091 $ 70,788 $ 88,485 $106,182 $106,182 $300,000...................... $ 42,894 $ 64,341 $ 85,788 $107,235 $128,682 $128,682 $350,000...................... $ 50,394 $ 75,591 $100,788 $125,985 $151,182 $151,182 $400,000...................... $ 57,894 $ 86,841 $115,788 $144,735 $173,682 $173,682 $450,000...................... $ 65,394 $ 98,091 $130,788 $163,485 $196,182 $196,182 $500,000...................... $ 72,894 $109,341 $145,788 $182,235 $218,682 $218,682 $550,000...................... $ 80,394 $120,591 $160,788 $200,985 $241,182 $241,182 $600,000...................... $ 87,894 $131,841 $175,788 $219,735 $263,682 $263,682 $650,000...................... $ 95,394 $143,091 $190,788 $238,485 $286,182 $286,182 $700,000...................... $102,894 $154,341 $205,788 $257,235 $308,682 $308,682 $750,000...................... $110,394 $165,591 $220,788 $275,985 $331,182 $331,182
Compensation covered by the Defined Benefit Plan is a participant's salary and bonus, as shown in the Summary Compensation Table, whether or not such compensation has been deferred at the participant's election. The above table does not reflect limitations imposed by the Internal Revenue Code of 1986 (the "Code"), as amended on pensions paid under federal income tax qualified plans. However, an executive officer covered by the Company's unfunded program will receive the full pension to which he would be entitled in the absence of such limitations. The years of credited service under the Pension Plan for each individual named in the Summary Compensation Table are as follows: Mr. Forbes (22), Mr. Belan (17) and Mr. Dix (20). The current 9 12 remuneration for these individuals for purposes of the Pension Plan is set forth in the Summary Compensation Table. In 1990, Messrs. Forbes and Dix agreed to the cancellation of substantially all of their post-retirement group term life insurance in exchange for an unfunded supplemental retirement plan. This plan provides for the payment of 20% of the participant's final monthly salary for 120 months after retirement. Assuming no increase in salary before retirement, they would be paid additional annual pensions of $84,000 and $34,600, respectively. Mr. Belan is entitled to benefits under a non-qualified supplemental retirement plan for five years of service which he was granted at the time of his employment. The 15 years of credited service under the Pension Plan consists of five years under the non-qualified supplemental retirement plan and ten years under the qualified plan. Benefits are calculated to provide Mr. Belan with the same pension benefits as if all of his credited service was under the qualified plan. BOARD MANAGEMENT REVIEW COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Company's executive compensation program is administered by the Management Review Committee of the Board of Directors. The Committee is composed of four non-employee directors. Following the Committee's review and approval, all matters related to their activities are reported to the full Board of Directors for approval. The charter of the Management Review Committee includes the following powers and duties: 1. To recommend candidates to be nominated by the Board of Directors for election as directors of the Company at the next succeeding Annual Meeting of Shareholders; 2. To recommend candidates to fill any unexpired term of the Board which may occur, and to consider nominees recommended by shareholders; 3. To evaluate director performance; 4. To review and consider management's program for the development and succession of management, including identifying and developing those individuals who have the character, intelligence, motivation, education, stamina, and can successfully perform management duties; 5. To recommend candidates to be nominated by the Board of Directors for election as Corporate officers and to make recommendations to the Board of Directors on the ratification of the approved officers; 6. To evaluate the performance of the Corporate officers; 7. To review and approve all forms of compensation and fringe benefits for all Corporate officers, except assistant officers; 8. To review recommendations and to grant stock options in accordance with their respective plans; 9. To review and approve annually the Corporate Incentive Plans and incentives to be paid; 10. To review and recommend to the Board fees and compensation, including incentive compensation, of non-employee directors for service on the Board or its committees or to the Company in any capacity; and 11. To submit to the Corporate Secretary minutes of each meeting held by the Committee. The compensation policies which are used as a general guideline for the Committee as it carries out its powers and duties are: 1. The design of executive pay programs should attract and retain qualified executive officers, motivate and reward performance; 2. Achievement of annual incentive compensation levels requires attainment of performance goals as approved by the Management Review Committee; 10 13 3. Long-term incentive programs must focus on the enhancement of shareholder value through the use of stock options and long-term cash incentives; and 4. The Committee uses its judgment to achieve a fair and competitive compensation structure, utilizing both short-term and long-term plans, with fixed and variable components. In making its decisions, the Management Review Committee reviews: 1. Competitive compensation data for organizations of similar size and similar business activity, considering both base salary and bonus data separately, on a combined basis and total cash and non-cash compensation; 2. Financial performance for the Company as a whole and various product lines, relative to the prior year, the budget and other meaningful financial data; and 3. Personal performance, including objectives approved by the Management Review Committee and on a discretionary basis, where appropriate. The compensation program for the executive officers of the Company involves base salaries, short-term annual cash incentive bonuses and a long-term program using stock options and cash incentives. Base Salaries. Salary rate ranges are established for each officer position. The rate ranges are reviewed annually by the Management Review Committee, using data supplied by an independent consulting firm, on organizations of similar size and similar business activity. Membership in the performance peer group set forth on page 14 is limited to publicly-held companies. The compensation survey incorporates privately-held as well as publicly-held companies of similar size, and has a broader definition of similar business activity, thereby providing the best basis for evaluating compensation relative to the companies that compete with the Company for executives. The data includes salaries, total cash compensation and total compensation. This process has been consistently used by the Management Review Committee for the past 11 years. The Company's policy is to pay executives at market, so the midpoint of the rate range reflects compensation for similar positions in organizations of similar size and similar business. Each of the individual officers' compensation falls within the appropriate rate range. In establishing the compensation of each officer, including the Chairman, President and Chief Executive Officer, the Management Review Committee is given a five-year history, including base salary, short-term incentive awards, and long-term compensation programs. The Committee is also furnished with a schedule showing the Common Stock ownership of each officer, including options. The base compensation for each employee is established by first determining the employee's position within the applicable rate range and then considering various performance factors. For those employees who are managers of a product line or a combination of product lines, the financial performance of that particular unit, relative to the prior year, the budget and the current economic condition of the market being served are considered. Other non-financial objectives examined include any change in market share, new product development, customer service and the quality attainment of various products. Because the philosophy of the Company is one of long-term goals and objectives, greater weight is given to the long-term factors and lesser weight to the annual financial performance for base compensation considerations. Base salary increases approved for 2001 by the Management Review Committee ranged from zero to 14.3 percent, with the Chairman, President and Chief Executive Officer's compensation remaining unchanged, after evaluation of the factors set forth above relative to each individual's circumstances and performance. Short-Term Incentive Plan. Under the short-term incentive plan, the maximum bonus payable is 60 percent of base salary for the Chairman, President and Chief Executive Officer and 35-60 percent for the other officers. A single factor is used for the short-term incentive plan -- financial. The financial factor is based on the attainment of a certain pretax earnings for the Company, approved at the beginning of each year by the Management Review Committee. For 2000, no bonuses were paid to the executive officers with the exception of a $25,000 guaranteed bonus to Kenneth E. Smith. 11 14 Long-Term Incentive Plans/Stock Option Plans. A long-term compensation program, which includes the Company's 1993 Stock Option Plan, the 1995 Stock Option Plan, the 1997 Stock Option Plan and the 1999 Stock Option Plan, presents an opportunity for the officers to gain or increase their equity interests in the Company. All of the stock options are granted at the market price on the date of grant and are based on a factor of compensation. The Company has a long-term incentive plan whereby members of the management group could earn bonuses based upon increases in pretax earnings over the prior year. A cash bonus is payable annually for four or five years, if the annual increase in pretax earnings meets the objectives established by the Board of Directors. The Committee believes that the long-term incentive plan, based on increases in pretax earnings, ties management compensation to the shareholders' interest and is reasonable compared to other publicly held companies of similar size. The Company has continued the long-term incentive plan for the years beginning January 1, 2000 through December 31, 2004, on the same terms as the prior four years except that during the years 2000-2004, the maximum annual bonus paid to the participant could range from 12 to 24 percent of the participant's February 1, 2000 base salary. Section 162(m) Limitations. It is anticipated all 2000 compensation to executives will be fully deductible under Section 162(m) of the Code and therefore the Management Review Committee determined that a policy with respect to qualifying compensation paid to certain executive officers for deductibility is not necessary. The foregoing report has been approved by all members of the Committee. The Management Review Committee Donald J. Schuenke, Chairman Ulice Payne, Jr. Andrew J. Policano John J. Stollenwerk BOARD AUDIT COMMITTEE REPORT The Audit Committee oversees the Company's financial reporting process on behalf of the Board of Directors. The Audit Committee is composed of three directors, each of whom is independent as defined in the American Stock Exchange listing standards. The duties of the Audit Committee are set forth in the Committee's charter, which is attached as Exhibit "A" to this proxy statement. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Committee reviewed and discussed the audited financial statements for the year ended December 31, 2000 with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company's accounting principles and such other matters as are required to be discussed with the Committee under generally accepted auditing standards. The Committee has received the written disclosures required by Independence Standards Board Standard No. 1 from the independent auditors. In addition, the Committee has discussed with the independent auditors the auditors' independence from management and the Company including the matters in the written disclosures required by the Independence Standards Board and has considered the compatibility of non-audit services with the auditors' independence. The Committee discussed with the Company's internal and independent auditors the overall scope and plans for their respective audits. The Committee meets with the independent auditors, with and without management present, to discuss their results of their examinations, their evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting. The Committee held two meetings 12 15 during 2000. The Committee has discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61. Based on the reviews and discussions referred to above, the Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2000 for filing with the Securities and Exchange Commission. The Committee and the Board have also recommended the selection of the Company's independent auditors. The foregoing report has been approved by all members of the Committee. The Audit Committee Ulice Payne, Jr., Chairman Kenneth P. Manning Steven J. Smith MANAGEMENT REVIEW COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Management Review Committee during 2000 consisted of Messrs. Schuenke, Payne, Policano and Stollenwerk. There were no Compensation Committee interlocks. 13 16 PERFORMANCE GRAPH The following graph compares on a cumulative basis the yearly percentage change since January 1, 1996 in (a) the total shareholder return on the Common Stock with (b) the total return on the American Stock Exchange Corporate Index and (c) the total return of a peer group made up of 11 companies in similar industries and with similar market capitalization as selected by an independent consulting firm. The graph assumes $100.00 invested on January 1, 1996. It further assumes the reinvestment of dividends. The returns of each component company in the peer group have also been weighted based on such company's relative market capitalization. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN OF COMPANY, PEER GROUP AND BROAD MARKET [LINE GRAPH]
1995 1996 1997 1998 1999 2000 ------ ------ ------ ------ ------ ------ Badger Meter.............................. 100.00 148.05 321.21 285.72 246.85 194.26 Peer Group................................ 100.00 132.24 138.00 113.27 157.27 396.84 Broad Market.............................. 100.00 105.52 126.97 125.25 156.15 154.23
- --------------- * Peer Group consists of Axcess, Inc., Badger Meter, Inc., Bio/Rad Labs, Candela Laser Corp., Frequency Electronics, Innovex, Inc., Integral Vision, Inc., K-Tron International, Inc., Keithley Instruments, Inc., Newport Corp., and Research Frontiers, Inc. CEM Corp., Moore Products Company and TSI, Inc. have been omitted from this year's Peer Group because they were acquired by other companies during 2000. CERTAIN TRANSACTIONS The Company utilizes Foley & Lardner to perform various legal services. Ulice Payne, Jr. is a partner of Foley & Lardner. No services were performed or directed by Mr. Payne. INDEPENDENT AUDITORS Ernst & Young LLP, the Company's independent auditors for many years, has been selected to audit the Company and its subsidiaries for 2000. Representatives of Ernst & Young LLP will be present at the Annual Meeting to respond to appropriate questions and to make a statement if they desire to do so. 14 17 PRINCIPAL ACCOUNTING FIRM FEES Fees for the last annual audit were $129,000. All other fees were $46,000, which included $17,000 of audit related services and $29,000 of nonaudit services. Audit related services generally include fees for pension and statutory audits and accounting consultations. Ernst & Young did not render any services related to financial information systems design and implementation for the fiscal year ended December 31, 2000. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors to file reports concerning the ownership of Company equity securities with the Securities and Exchange Commission and 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, the Company believes that, during the year ended December 31, 2000, except for a Form 5 filing required for phantom stock units accrued during 2000 by Mr. Schuenke, all reports required by Section 16(a) to be filed by the Company on behalf of the Company's insiders were filed on a timely basis. OTHER MATTERS THE COMPANY WILL FILE AN ANNUAL REPORT ON FORM 10-K WITH THE SECURITIES AND EXCHANGE COMMISSION FOR ITS FISCAL YEAR ENDED DECEMBER 31, 2000. THE COMPANY WILL PROVIDE A COPY OF THIS FORM 10-K REPORT WITHOUT CHARGE TO EACH PERSON WHO IS A RECORD OR BENEFICIAL HOLDER OF SHARES OF COMMON STOCK ON THE RECORD DATE FOR THE MEETING AND WHO SUBMITS A WRITTEN REQUEST FOR IT. REQUESTS FOR COPIES OF THE FORM 10-K SHOULD BE ADDRESSED TO SECRETARY, BADGER METER, INC., 4545 WEST BROWN DEER ROAD, P.O. BOX 245036, MILWAUKEE, WISCONSIN 53224-9536 The cost of solicitation of proxies will be borne by the Company. Brokers, nominees and custodians who hold stock in their names and who solicit proxies from the beneficial owners will be reimbursed by the Company for out-of-pocket and reasonable clerical expenses. The Board of Directors does not intend to present at the Meeting any matters other than those set forth herein and does not presently know of any other matters that may be presented to the Meeting by others. However, if any other matters should properly come before the Meeting, it is the intention of the persons named in the enclosed proxy to vote said proxy on any such matters in accordance with their best judgment. A shareholder wishing to include a proposal in the proxy statement for the 2002 Annual Meeting of Shareholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended ("Rule 14a-8"), must forward the proposal to the Company by November 22, 2001. In addition, a shareholder who otherwise intends to present business at the 2001 Annual Meeting (including nominating persons for election as directors) must comply with the requirements set forth in the Company's Restated By-Laws. Among other things, to bring business before an annual meeting, a shareholder must give written notice thereof, complying with the Restated By-Laws, to the Secretary of the Company not less than 60 days and not more than 90 days prior to the second Saturday in the month of April (subject to certain exceptions if the annual meeting is advanced or delayed a certain number of days). Accordingly, if the Company does not receive notice of a shareholder proposal submitted otherwise than pursuant to Rule 14a-8 prior to February 12, 2002, then the notice will be considered untimely and the Company will not be required to present such proposal at the 2002 Annual Meeting. If the Board of Directors chooses to present such proposal at the 2002 Annual Meeting, then the persons named in proxies solicited by the Board of Directors for the 2002 Annual Meeting may exercise discretionary voting power with respect to such proposal. Deirdre C. Elliott Secretary March 26, 2001 15 18 EXHIBIT A BADGER METER, INC. AUDIT COMMITTEE CHARTER ORGANIZATION This charter governs the operations of the Badger Meter, Inc. Audit Committee (the "Committee"). The Committee shall review and reassess the charter at least annually and obtain the approval of the Board of Directors. The Committee is appointed by the Board of Directors and comprises at least three directors, each of whom is independent in accordance with the requirements of the American Stock Exchange listing standards. All Committee members shall be able to read and understand fundamental financial statements and at least one member shall have accounting or related financial management expertise. STATEMENT OF POLICY The Committee shall provide assistance to the Board of Directors in fulfilling their oversight responsibility with regards to the Company's financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, and the annual independent audit of the Company's financial statements. In so doing, it is the responsibility of the Committee to maintain free and open communication between the Committee, independent auditors, the internal auditors and management of the Company. In discharging its oversight role, the Committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and the power to retain outside counsel, or other experts for this purpose. RESPONSIBILITIES AND PROCESSES The primary responsibility of the Committee is to oversee the Company's financial reporting process on behalf of the board and report the results of their activities to the board. Management is responsible for preparing the Company's financial statements, and the independent auditors are responsible for auditing those financial statements. The following shall be the principal recurring processes of the Committee in carrying out its oversight responsibilities. The processes are set forth as a guide with the understanding that the Committee may supplement them as appropriate. - The Committee shall have a clear understanding with management and the independent auditors that the independent auditors are ultimately accountable to the board and the Committee, as representatives of the Company's shareholders. The Committee and the board shall have the ultimate authority and responsibility to select, evaluate and, where appropriate, replace the independent auditors. - The Committee shall ensure receipt from the independent auditors of periodic statements delineating all relationships between the independent auditors and the Company, consistent with Independence Standards Board Standard No. 1. The Committee shall discuss with the auditors their independence from management and the Company and the matters included in the written disclosures required by the Independence Standards Board and take, or recommend that the board take, appropriate action to oversee the independence of the independent auditors. Annually, the Committee shall review and recommend to the board the selection of the Company's independent auditors. - The Committee shall discuss with the internal auditors and the independent auditors the overall scope and plans for their respective audits. The Committee shall also discuss with management, the internal auditors, and the independent auditors the adequacy and effectiveness of the accounting and financial controls. Further, the Committee shall meet separately with the independent auditors, with and without management present, to discuss the results of their examinations. A-1 19 - The chair of the Committee shall discuss the results of the quarterly review and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards prior to the filing of the quarterly Form 10-Q. - The Committee shall review with management and the independent auditors the financial statements to be included in the Company's Annual Report on Form 10-K, including their judgment about the quality, not just acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements. Also, the Committee shall discuss the results of the annual audit and any other matters required to be communicated to the Committee by the independent auditors under generally accepted auditing standards. A-2 20 PROXY 2001 ANNUAL MEETING OF SHAREHOLDERS BADGER METER, INC. The undersigned does hereby constitute and appoint James L. Forbes and Deirdre C. Elliott, or either of them, as proxies for the undersigned at the Annual Meeting of Shareholders of Badger Meter, Inc. to be held on FRIDAY, April 27, 2001, at Badger Meter, Inc., 4545 West Brown Deer Road, Milwaukee, Wisconsin, at 8:30 a.m. local time, and any adjournments or postponements thereof, to vote thereat the shares of stock held by the undersigned as fully and with the same effect as the undersigned might or could do if personally present at said Meeting or any adjournments or postponements thereof hereby revoking any other Proxy heretofore executed by the undersigned for such Meeting. The undersigned acknowledges receipt of the Notice of Annual Meeting of Shareholders and the Proxy Statement. This proxy when properly executed will be voted in the manner directed herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED. THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. COMPLETE AND SIGN BELOW. DETACH AND RETURN USING THE ENVELOPE PROVIDED BADGER METER, INC. 2001 ANNUAL MEETING 1. ELECTION OF DIRECTORS: THREE-YEAR TERM: 1 - KENNETH P. MANNING 2 - JOHN J. STOLLENWERK (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR A NOMINEE WRITE THE NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.) 2. To transact such other business as may properly come before the meeting, or any adjournments or postponements thereof, ---------------------------------------- Date ---------------- ---------------------------------------- Please sign exactly as your name appears on your stock certificate as shown directly to the left. Joint owners should each sign personally. A corporation should sign in full corporate name by duly authorized officers. When signing as attorney, executor, administrator, trustee or guardian, give full title as such. -----END PRIVACY-ENHANCED MESSAGE-----