SCHEDULE 14A INFORMATION | ||
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||
Filed by the Registrantx | Filed by a Party other than the Registrant___ | |
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__ | 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© or Section 240.14a-12 | |
Butler National Corporation | ||
(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. | |
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__ | 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. | |
BUTLER NATIONAL CORPORATION |
To the Shareholders of Butler National Corporation: |
Notice is hereby given that the 2008 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, February 24, 2009, at 11:00 a.m., for the following purposes: |
1. To elect one (1) director to serve office for the term of three (3) years or until a successor is elected and qualified. |
The Board of Directors has fixed the close of business on January 6, 2009, 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, 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 | 3,101,819(2) | 5.7% |
R. Warren Wagoner | 3,655,074(3) | 6.7% |
(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, 2008. | |||
| 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 | 3,101,819 | (2) | 5.7% |
R. Warren Wagoner | 3,655,074 | (4) | 6.7% |
Angela D. Shinabargar | 131,092 | 0.2% | |
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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, 2008, 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 2008, the Audit Committee consisted of David Hayden and William E. Logan (deceased January 4, 2008). 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, 2008 and all members of the Audit Committe e attended the meeting. The 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 | 56 | Chairman of the Board of Directors | ||
Clark D. Stewart | 68 | President and Chief Executive Officer | ||
Christopher J. Reedy | 42 | Vice President & Secretary | ||
Angela Shinabargar | 44 | Chief Financial Officer | ||
Larry W. Franke | 64 | President of Avcon Industries, Inc., a wholly-owned subsidiary of Butler National Corporation | ||
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COMPENSATION DISCUSSION AND ANALYSIS: Our compensation programs are designed to support our business goals and promote both short-term and long-term growth. This section of the proxy statement explains how our compensation programs are designed and operate in practice with respect to our listed officers. Our listed officers are the CEO, CFO, and three most highly compensated executive officers in a particular year. The "Executive Compensation" section presents compensation earned by the listed officers for fiscal years ending April 30, 2008, 2007 and 2006. The Compensation Committee of the Board of Directors determines the compensation for Butler National's executive officers. Our executive officers have the broadest job responsibilities and policy-making authority in the company. The Committee reviews and determines all components of executive officers' compensation, including making individual compensation decisions and reviewing and revising the executive officer compensation plans, programs, and guidelines as appropriate. The Committee also consults with management regarding non-executive employee compensation programs. Our Compensation Philosophy The core element of our overall compensation philosophy is the alignment of pay and performance. Total compensation varies with individual performance and Butler National's performance in achieving financial and non-financial objectives. Our equity plans are designed to ensure that executive compensation is aligned with the long-term interests of our stockholders. The Committee and our management believe that compensation should help to recruit, retain, and motivate the employees that the company will depend on for current and future success. The Committee and our management also believe that the proportion of "at risk" compensation (variable cash compensation and equity) should rise as an employee's level of responsibility increases. This philosophy is reflected in the following key design priorities that govern compensation decisions:
Each element of compensation reflects one or more of these design priorities. In most cases, our employees, including executive officers, are employed at will, without employment agreements, severance payment arrangements (except as required by local law), or payment arrangements that would be triggered by a "change in control" of Butler National. Retirement plan programs are broad-based; Butler National does not provide special retirement plans or benefits solely for executive officers. Total compensation for the majority of our employees including executive officers, includes two or more of the following components:
The Compensation Committee and management continue to believe that a similar method of compensating all employees with cash, equity and retirement benefits supports a culture of fairness, collaboration, and egalitarianism. | |
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 burdensome 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 | Employees electing to participate in the various insurance plans offered by the Company receive a payment for a share of the health, dental, vision and life insurance costs for the employee. |
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, | 08 | 361,250 | --- | --- | --- | --- | --- | 37,236 | 588,486 | ||||||||||||||||
R. Warren Wagoner | 08 | 219,961 127,391 | --- | --- | --- | --- | --- | 22,420 | 242,381 | ||||||||||||||||
Christopher J. Reedy | 08 | 175,245 | --- | --- | --- | --- | --- | 21,353 | 196,598 | ||||||||||||||||
Larry W. Franke | 08 | 212,424 | --- | --- | --- | --- | --- | 17,536 | 229,960 | ||||||||||||||||
Angela D. Shinabargar | 08 | 121,382 | --- | --- | --- | --- | --- | 13,880 | 135,263 | ||||||||||||||||
Name | Year | Airplane and Automobile Usage | Health Benefits | Memberships | Matching Contributions to 401(k) (3) | ||||||||||||||||||||
Clark D. Stewart | 2008 | 7,200 | 5,093 | 9,175 | 15,769 | ||||||||||||||||||||
R. Warren Wagoner | 2008 | --- | 6,920 | --- | 15,500 | ||||||||||||||||||||
Christopher J. Reedy | 2008 | --- | 3,397 | 7,161 | 10,795 | ||||||||||||||||||||
Larry W. Franke | 2008 | --- | 5,086 | --- | 12,450 | ||||||||||||||||||||
Angela D. Shinabargar | 2008 | --- | 3,412 | --- | 10,468 | ||||||||||||||||||||
(1) All Other Compensation includes the amounts in the tables above. (3) Includes catch-up contribution made by the employee and matched by the Company. |
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 2008 or fiscal 2007. | ||||
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL | ||||
On January 27, 2004 the Company extended the Employment Agreement with Mr. Stewart, as the 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 $73,758 and $245,538 as of April 30, 2008, and 2007 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 The CEO provided the entire board of directors with an assessment of his own performance with respect to the performance measures listed above, which the board considered in its assessment of his performance for fiscal year 2007. The CEO reviewed the performance of the other executive officers (except the Chairman) with the Committee and made recommendations regarding the components of their compensation. Before making its compensation decisions, the Committee discussed levels of compensation for the Chairman, the CEO and the other executive officers with the full board of directors in an executive session. Determination of CEO Compensation In fiscal year 2007, Butler National Corporation reached projected levels of revenue, profit from operations, operating margin and operating cash flow. With regard to progress toward strategic goals, BNC improved its products and technology positions and strengthened its relationships with customers. Taking into account the company's performance, both absolute and relative to competition, and the executive officers' contributions to that performance, the Committee set its targeted compensation levels so as to be commensurate with that relative performance. The Committee made the following determinations for fiscal year 2008 with respect to each component of compensation for the CEO and his existing contract and the other executive officers: Base Salary -In keeping with its strategy, the Committee's base salary decisions for fiscal year 2008 were generally intended to provide salaries somewhat lower than the median level of salaries for similarly situated executives of the comparator companies. Performance Bonus -In general, the Committee granted no annual performance awards Long-Term Compensation -The Committee granted no equity compensation. Compensation of the Chairman Because Mr. Wagoner was among the Company's five most highly compensated executive officers, SEC rules require disclosure of his compensation. In making the determinations, the Committee considered his role as Chairman, his contribution to the Company's performance and strategic direction, and the compensation of employee-chairmen of comparator companies. |
STOCK PERFORMANCE GRAPH | |
ASSUMES DIVIDEND REINVESTED | |
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). | |
PRINCIPAL ACCOUNTANT FEES AND SERVICES | ||||
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Audit feesa | $93,185 | $92,939 | ||
(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 to be elected at the 2010 Annual Meeting. Class II consists of two directors, of which one is to be elected at this Annual Meeting. Class III consists of two directors to be elected at the 2009 Annual Meeting. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" MR. HAYDEN FOR ELECTION AS DIRECTOR OF BUTLER NATIONAL CORPORATION. |
INDEPENDENT PUBLIC ACCOUNTANTS |
We have engaged Weaver & Martin, LLC to audit our financial statements for the years ended April 30, 2006, 2007, and 2008. Weaver & Martin, LLC was able to express an opinion on the financial statements for the years ended April 30, 2006, 2007 and 2008. 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. |
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. |