BUTLER NATIONAL CORPORATION |
To the Shareholders of Butler National Corporation: |
Notice is hereby given that the 2007 Annual Meeting of Shareholders of Butler National Corporation (the "Company") will be held at the Holiday Inn-Olathe, 101 West 151st Street, Olathe, Kansas, on Tuesday, April 8, 2008, at 11:00 a.m., for the following purposes: |
1. To review the Board of Directors plans for the selection of new directors to replace our deceased directors, Mr. Griffith (Class I) and Mr. Logan (Class II). Normally, the Class I director would be elected at this meeting. |
The Board of Directors has fixed the close of business on February 26, 2008, as the record date for the determination of shareholders entitled to notice of and to vote at the meeting. |
By Order of the Board of Directors, /S/ Christopher J. Reedy |
Olathe, Kansas |
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE IN PERSON IF THEY DESIRE. |
BUTLER NATIONAL CORPORATION | ||
GENERAL | ||
VOTING | ||
SHAREHOLDER PROPOSALS | ||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | ||
| Amount and Nature of Beneficial Ownership (1) |
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Clark D. Stewart | 4,114,319(2) | 7.6% |
R. Warren Wagoner | 4,141,126(3) | 7.6% |
(1) Unless otherwise indicated by footnote, nature of beneficial ownership of securities is direct, and beneficial ownership as shown in the table arises from sole voting power and sole investment power. |
The following table sets forth, with respect to our Common Stock (the only class of voting securities), (i) shares beneficially owned by all directors and named executive officers of Butler National Corporation, and (ii) total shares beneficially owned by directors and officers as a group, as of April 30, 2007. | |||
| Amount and Nature of | See Note | Percent of Class |
Larry W. Franke | 481,277 | (5) | 0.9% |
David B. Hayden | 1,357,225 | 2.5% | |
William E. Logan (deceased 1/4/08) | 823,929 | (3) | 1.5% |
Christopher J. Reedy | 260,747 | 0.5% | |
Clark D. Stewart | 4,114,319 | (2) | 7.6% |
R. Warren Wagoner | 4,141,126 | (4) | 7.6% |
Angela D. Shinabargar | 166,092 | 0.3% | |
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DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT | ||||
DIRECTORS:The names and ages of the directors, their principal occupations for at least the past five years are set forth below, based on information furnished by the directors. | ||||
Name of Nominee and Director and Age | Served Since | Principal Occupation for Last Five Years and Other Directorships | ||
Clark D. Stewart | 1989 | President of our Company from September 1, 1989 to present. | ||
R. Warren Wagoner | 1986 | Chairman of the Board of Directors of our Company since August 30, 1989. | ||
David B. Hayden | 1996 | Co-owner and President of Kings Avionics, Inc. since 1974. | ||
William E. Logan | 1990 | (Deceased January 4, 2008) | ||
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During the fiscal year ended April 30, 2007, the Board of Directors met five times. Each director attended 100% of the meetings of the Board of Directors. All Directors are expected to attend all meetings of the Board of Directors and the Annual Shareholders meeting. Members of the Board who are not otherwise our paid employees (all except Mr. Stewart and Mr. Wagoner) are paid $100 for each meeting attended. The Board of Directors has an Audit Committee, and a Compensation Committee, but no Nominating Committee. The Board of Directors believes that the responsibilities of a Nominating Committee can be handled as a function of the Board of Directors as a whole. During fiscal 2007, the Audit Committee consisted of David Hayden and William E. Logan. Its function is to assist the President in the review of our financial performance and operations. The Audit Committee met five times during the fiscal year ended April 30, 2007 and all members of the Audit Committee attended the meeting. Th e Audit Committee has a written charter that was filed with the Securities and Exchange Commission on December 26, 2001 as Exhibit C to our Form DEF 14A - Definitive Proxy. | ||||
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R. Warren Wagoner | 55 | Chairman of the Board of Directors | ||
Clark D. Stewart | 67 | President and Chief Executive Officer | ||
Christopher J. Reedy | 41 | Vice President & Secretary | ||
Angela Shinabargar | 43 | Chief Financial Officer | ||
Kathy L. Gorrell | 47 | Treasurer and Chief Information Officer | ||
Larry W. Franke | 63 | President of Avcon Industries, Inc., a wholly-owned subsidiary of Butler National Corporation | ||
Curtis Beadle | 43 | President of Butler National Services, Inc., a wholly-owned subsidiary of Butler National Corporation | ||
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EXECUTIVE COMPENSATION
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PAY COMPONENT | BRIEF DESCRIPTION |
Base Salary | Described in detail in separate paragraph above titled Base Salary. |
Annual and Semiannual Incentive Cash Payments | Paid as discretionary cash bonuses to individual employees for outstanding performance of a task. |
Equity Grants | Regulatory provisions since 2003 are too complex to allow us to safely award equity grants. |
Employee Stock Purchase Plan | Any employee may purchase the Company stock at the fair market value at the date of purchase without broker or issue fees. The stock is restricted and not considered a stock reward. We have the 1981 Employee Stock Purchase plan. No shares have been purchased under this plan since 1988. |
Retirement Benefits | We pay the required federal and state retirement contributions, the required unemployment contributions and match the employee's contribution to their account in the Butler National Corporation 401(k) plan. |
Health and Welfare Benefits | We pay a share of the health, dental, vision and life insurance costs for the employee. |
SUMMARY: COMPENSATION OF EXECUTIVE OFFICERS | |||||||||
Name | YR | Salary |
| Stock Awards | Option Awards and Stock Appreciation Rights | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings($) | All Other | Total ($)(2) |
Clark D. Stewart, | 07 | 345,479 | --- | --- | --- | --- | --- | 47,035 | 392,514 |
R. Warren Wagoner | 07 | 161,010 113,628 | --- | --- | --- | --- | --- | 18,232 | 179,242 |
Christopher J. Reedy | 07 | 168,141 | --- | --- | --- | --- | --- | 25,444 | 193,585 |
Larry W. Franke | 07 | 203,258 | --- | --- | --- | --- | --- | 19,663 | 222,921 |
Angela D. Shinabargar | 07 | 112,334 | --- | --- | --- | --- | --- | 7,651 | 119,985 |
Name | Year | Airplane and Automobile Usage | Health Benefits | Memberships | Matching Contributions to 401(k) (3) | |||
Clark D. Stewart | 2007 | 7,200 | 4,910 | 14,925 | 20,000 | |||
R. Warren Wagoner | 2007 | --- | 5,908 | --- | 12,324 | |||
Christopher J. Reedy | 2007 | --- | 3,299 | 7,145 | 15,000 | |||
Larry W. Franke | 2007 | --- | 4,910 | --- | 14,753 | |||
Angela D. Shinabargar | 2007 | --- | 3,299 | --- | 4,352 |
(1) All Other Compensation includes the amounts in the tables above. |
OPTION GRANTS, EXERCISES AND HOLDINGS | ||||
No options were granted to any named executive officer in the last fiscal year. | ||||
The following table provides information with respect to the named executive officers concerning options exercised and unexercised options held as of the end of the Company's last fiscal year: | ||||
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR | ||||
| Value of Unexercised | |||
| Number of Shares Acquired | Value | Exercisable/ | Exercisable/ |
Clark D. Stewart, |
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R. Warren Wagoner, |
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Christopher J. Reedy, |
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Angela D. Shinabargar, |
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Larry W. Franke, |
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Each non-officer director is entitled to a director's fee of $100 for meetings of the Board of Directors which he attends. Officer-directors are not entitled to receive fees for attendance at meetings. No fees were paid in fiscal 2007 or fiscal 2006. | ||||
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL | ||||
On January 27, 2004 the Company extended the Employment Agreement with Clark D. Stewart as President and Chief Executive Officer of the Company with the terms as currently provided including annual increases of 5% through December 31, 2013. In the event Mr. Stewart is terminated from employment with the Company other than "for cause," Mr. Stewart shall receive as severance pay an amount equal to the unpaid salary for the remainder of the term of the Employment Agreement. Mr. Stewart is also granted an automobile allowance of $600 per month which is reported by us as Salary Expense and to Mr. Stewart as Wages. Under the terms of the Employment Agreement with Mr. Stewart, the Company is obligated to pay company related expenses and salary. Included in accrued liabilities are $245,538 and $238,437 as of April 30, 2007, and 2006 respectively for amounts owed to our CEO for accrued compensation. |
AUDIT COMMITTEE REPORT |
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS |
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION |
STOCK PERFORMANCE GRAPH | |
ASSUMES $100 INVESTED ON MAY 1, 2002 | |
The peer group consists of companies with similar market capitalization. The Custom Selected Stock List is made up of the following small cap securities selected by Hemscott, Inc. as peer companies: Activeworlds Corp., Atlas South Sea Pearl, Clinical Data Inc., Forward Industries, Inc.s, Hirsch Internat CP CL A, Interpharm Holdings, Provena Foods, Inc. (through 2006). | |
AUDIT FEES | ||||
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Audit feesa | $92,939 | $62,838 | ||
(a) Includes fees billed for professional services rendered in connection with the audit of the annual financial statements and for the review of the quarterly financial statements. | ||||
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All Other Fees |
ELECTION OF DIRECTOR |
The number of directors constituting our Board of Directors has been fixed at five (5). The Board is comprised of the following three classes of directors that serve staggered three year terms. Class I consists of one director that would be due for election at this Annual Meeting. Class II consists of two directors to be elected at the 2008 Annual Meeting. Class III consists of two directors to be elected at the 2009 Annual Meeting. THE BOARD OF DIRECTORS IS NOT REQUESTING A VOTE ON ITEM 1. |
INDEPENDENT PUBLIC ACCOUNTANTS |
We have engaged Weaver & Martin, LLC to audit our financial statements for the years ended April 30, 2005, 2006, and 2007. Weaver & Martin, LLC was able to express an opinion on the financial statements for the years ended April 30, 2005, 2006 and 2007. Representatives of Weaver & Martin, LLC are expected to be present at the Annual Meeting of Shareholders, and they will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions. |
PROPOSAL TO AMEND THE COMPANY'S ARTICLE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT AT A RATIO BETWEEN
The ratio of the Reverse Stock Split will be determined by the Board of Directors, in its sole discretion. However, the ratio will not exceed a ratio of one-for-thirty (1:30) or be less than a ratio of one-for-two (1:2). In determining the Reverse Stock Split ratio, the Board of Directors will consider numerous factors including the historical and projected performance of the Common Stock, prevailing market conditions and general economic trends, and will place emphasis on the expected closing price of the Common Stock in the period following the effectiveness of the Reverse Stock Split. The Board of Directors will also consider the impact of the Reverse Stock Split ratio on investor interest. The purpose of selecting a range is to give the Board of Directors the flexibility to meet business needs as they arise, to take advantage of favorable opportunities and to respond to a changing corporate environment. Based on the number of shares of Common Stock issued and outstanding as of the Record Date , after completion of the Reverse Stock Split, we will have approximately between 26.9 million and 2.7 million shares of issued and outstanding Common Stock, depending on the ratio of the Reverse Stock Split determined by the Board of Directors. The following table sets forth the approximate number of issued and outstanding shares of Common Stock, and net profit per share for the year ended April 30, 2007, assuming each possible Reverse Stock Split outcome: |
2007: EARNINGS $605,545 | 2006: EARNINGS $365,545 | 2005: EARNINGS $2,445,633 | ||||||
After Reverse | Common Stock Outstanding | 2007 Earnings Per Share Basic | Common Stock Outstanding | 2006 Earnings Per Share Basic | Common Stock Outstanding | 2005 Earnings | ||
Current | 53,812,469 | $0.01 | 53,051,837 | $0.01 | 52,576,044 | $0.06 | ||
1 for 2 | 26,906,235 | $0.02 | 26,525,919 | $0.01 | 26,288,022 | $0.09 | ||
1 for 3 | 17,937,490 | $0.03 | 17,683,946 | $0.02 | 17,525,348 | $0.14 | ||
1 for 4 | 13,453,118 | $0.05 | 13,262,959 | $0.03 | 13,144,011 | $0.19 | ||
1 for 5 | 10,762,494 | $0.06 | 10,610,367 | $0.03 | 10,515,209 | $0.23 | ||
1 for 6 | 8,968,745 | $0.07 | 8,841,973 | $0.04 | 8,762,674 | $0.28 | ||
1 for 7 | 7,687,496 | $0.08 | 7,578,834 | $0.05 | 7,510,863 | $0.33 | ||
1 for 8 | 6,726,559 | $0.09 | 6,631,480 | $0.06 | 6,572,006 | $0.37 | ||
1 for 9 | 5,979,164 | $0.10 | 5,894,649 | $0.06 | 5,841,783 | $0.42 | ||
1 for 10 | 5,381,247 | $0.11 | 5,305,184 | $0.07 | 5,257,604 | $0.47 | ||
1 for 11 | 4,892,043 | $0.12 | 4,822,894 | $0.08 | 4,779,640 | $0.51 | ||
1 for 12 | 4,484,373 | $0.14 | 4,420,986 | $0.08 | 4,381,337 | $0.56 | ||
1 for 13 | 4,139,421 | $0.15 | 4,080,911 | $0.09 | 4,044,311 | $0.60 | ||
1 for 14 | 3,843,748 | $0.16 | 3,789,417 | $0.10 | 3,755,432 | $0.65 | ||
1 for 15 | 3,587,498 | $0.17 | 3,536,789 | $0.10 | 3,505,070 | $0.70 | ||
1 for 16 | 3,363,280 | $0.18 | 3,315,740 | $0.11 | 3,286,003 | $0.74 | ||
1 for 17 | 3,165,440 | $0.19 | 3,120,696 | $0.12 | 3,092,708 | $0.79 | ||
1 for 18 | 2,989,582 | $0.20 | 2,947,324 | $0.12 | 2,920,891 | $0.84 | ||
1 for 19 | 2,832,236 | $0.21 | 2,792,202 | $0.13 | 2,767,160 | $0.88 | ||
1 for 20 | 2,690,624 | $0.23 | 2,652,592 | $0.14 | 2,628,802 | $0.93 | ||
1 for 21 | 2,562,499 | $0.24 | 2,526,278 | $0.14 | 2,503,621 | $0.98 | ||
1 for 22 | 2,446,021 | $0.25 | 2,411,447 | $0.15 | 2,389,820 | $1.02 | ||
1 for 23 | 2,339,673 | $0.26 | 2,306,602 | $0.16 | 2,285,915 | $1.07 | ||
1 for 24 | 2,242,186 | $0.27 | 2,210,493 | $0.17 | 2,190,669 | $1.12 | ||
1 for 25 | 2,152,499 | $0.28 | 2,122,073 | $0.27 | 2,103,042 | $1.16 | ||
1 for 26 | 2,069,710 | $0.29 | 2,040,455 | $0.18 | 2,022,156 | $1.21 | ||
1 for 27 | 1,993,054 | $0.30 | 1,964,883 | $0.19 | 1,947,261 | $1.26 | ||
1 for 28 | 1,921,874 | $0.32 | 1,894,708 | $0.19 | 1,877,716 | $1.30 | ||
1 for 29 | 1,855,602 | $0.33 | 1,829,374 | $0.20 | 1,812,967 | $1.35 | ||
1 for 30 | 1,793,749 | $0.34 | 1,768,395 | $0.21 | 1,752,535 | $1.40 |
We do not anticipate a decrease in the number of holders of record of our Common Stock in the event the Board of Directors determines to implement the Reverse Stock Split, including in the event the ratio of the Reverse Stock Split determined by the Board of Directors is one-for-thirty (1:30). As soon as practicable after the Effective Date, transmittal forms will be mailed to each holder of record of certificates for shares of Common Stock to be used in forwarding such certificates for surrender and exchange for certificates representing the number of shares of Common Stock such stockholder is entitled to receive as a consequence of the Reverse Stock Split. The transmittal forms will be accompanied by instructions specifying other details of the exchange. Upon receipt of such transmittal form, each stockholder should surrender the certificates representing shares of Common Stock prior to the Reverse Stock Split, in accordance with the applicable instructions. Each holder who surrenders certificates will receive new certificates representing the number of shares of Common Stock that he or she holds as a result of the Reverse Stock Split. STOCKHOLDERS SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM. After the Effective Date, each certificate representing shares of Common Stock outstanding prior to the Effective Date (an "Old Certificate") will, until surrendered and exchanged as described above, be deemed, for all corporate purposes, to evidence ownership of the whole number of shares of Common Stock, into which the shares of Common Stock evidenced by such certificate have been converted by the Reverse Stock Split, except that the holder of such unexchanged certificates will not be entitled to receive any dividends or other distributions payable by the Company after the Effective Date, until the Old Certificates have been surrendered. Such dividends and distributions, if any, will be accumulated, and at the time of surrender of the Old Certificates, all such unpaid dividends or distributions will be paid without interest. |
OTHER MATTERS |
Management knows of no other matters that will be presented at the meeting. If any other matter arises at the meeting, it is intended that the shares represented by the proxies in the accompanying form will be voted in accordance with the judgment of the persons named in the proxy. |
EXHIBIT A BUTLER NATIONAL CORPORATION, a corporation (the "Corporation") organized and existing under and by virtue of the Kansas General Corporation Code, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of BUTLER NATIONAL CORPORATION duly adopted resolutions setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: "RESOLVED, that the Certificate of Incorporation of this Corporation be and is hereby amended by deleting Article FOURTH thereof in its entirety and by substituting in lieu thereof the following: FOURTH: Section 1. The authorized capital of this Corporation shall be $3,500,000 consisting of 100,000,000 shares of common stock, $.01 par value (the "Common Stock") and 500,000 shares of preferred stock, the par value of $5.00 per share (the "Preferred Stock"). The relative voting rights, preferences and other privileges of such capital stock shall be as follows: (a) Common Stock. Each share of Common Stock shall entitle the holder thereof to one (1) vote; all such shares of Common Stock shall be equal in all respects and shall confer equal rights upon the holders thereof. (b) Preferred Stock. Each share of Preferred Stock shall entitle the holder thereof to such rights, voting power, preferences and restrictions as may be fixed by the board of directors by resolution thereof. Effectively immediately upon the filing of the Certificate of Amendment which contains this provision with the Secretary of State of the State of Kansas, the outstanding shares of Common Stock shall be and hereby are combined and reclassified as follows: each share of Common Stock shall be reclassified as and converted into one-half to one-thirtieth (the exact conversion ratio to be determined by the Board of Directors in the manner as described in the Proxy Statement) of one share of Common Stock, $.01 par value per share, without any action by the holder. Certificates representing shares combined and reclassified as provided in this Certificate of Amendment are thereby canceled, and, upon presentation of the canceled certificates to the Corporation, the holders thereof shall be entitled to receive new certificates representing the shares resulting from such combination and reclassification." Section 2. A shareholder shall have no pre-emptive rights to subscribe for or purchase any shares of capital stock or other securities of whatsoever kind of nature which may be issued by this Corporation; voting for directors shall not be cumulative." SECOND: That said amendment was duly adopted in accordance with the provisions of the Kansas General Corporation Code. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment of Certificate of Incorporation on the _____ day of ______, 20__. BUTLER NATIONAL CORPORATION By: /S/ Christopher J. Reedy Name: Christopher J. Reedy Title: Secretary |