UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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[_] Preliminary Proxy Statement
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[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to §240.14a-12
JOY GLOBAL 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)(4) and 0-11.
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(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set |
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| [_] | 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. |
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JOY GLOBAL INC.
Notice of 2006
Annual Meeting of
Shareholders and
Proxy Statement
JOY GLOBAL INC.
100 East Wisconsin Avenue, Suite 2780
Milwaukee, WI 53202
NOTICE OF ANNUAL MEETING
The annual meeting of shareholders of Joy Global Inc. will be held in the Tenant Conference Center, 100 East Wisconsin Avenue, Suite 1660, Milwaukee, Wisconsin, on Tuesday, February 23, 2006 at 8:00 a.m. for the following purposes:
| 1. | To elect seven persons to the corporation's Board of Directors; and |
| 2. | To transact such other business as may properly come before the meeting or any adjournment or postponement of the meeting. |
Shareholders of record at the close of business on January 6, 2006 are entitled to receive notice of and to vote at the annual meeting and any adjournment or postponement of the meeting. A list of shareholders entitled to vote will be available at the corporation's headquarters at least 10 days prior to the meeting and may be inspected during business hours by any shareholder for any purpose germane to the meeting.
Whether or not you plan to attend the meeting, we urge you to mark, date and sign the enclosed proxy card and return it promptly so that your shares will be voted at the meeting in accordance with your instructions.
| By order of the Board of Directors, OREN B. AZAR Secretary |
January 23, 2006
PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE.
PROXY STATEMENT
INTRODUCTION
This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Joy Global Inc., a Delaware corporation, for use at the 2006 annual meeting of shareholders to be held in the Tenant Conference Center, 100 East Wisconsin Avenue, Suite 1660, Milwaukee, Wisconsin, on Thursday, February 23, 2006 at 8:00 a.m. and at any adjournment or postponement of the annual meeting. The proxy statement, proxy card and annual report are being mailed to shareholders on or about January 23, 2006.
Proxies
Properly signed and dated proxies received by the corporation’s Secretary prior to or at the annual meeting will be voted as instructed on the proxies or, in the absence of such instruction, FOR the election to the Board of Directors of the persons nominated by the Board and in accordance with the best judgment of the persons named in the proxy on any other matters which may properly come before the meeting.
Any proxy may be revoked by the person executing it for any reason at any time before the polls close by filing with the corporation’s Secretary a written revocation or duly executed form of proxy bearing a later date or by voting in person at the meeting. The Board of Directors has appointed an officer of American Stock Transfer & Trust Company, transfer agent for the corporation’s common stock, $1.00 par value per share (the “Common Stock”), to act as an independent inspector at the annual meeting.
Record Date, Shares Outstanding and Voting
Shareholders of record of Common Stock at the close of business on January 6, 2006 (the “Record Date”) are entitled to vote on all matters presented at the annual meeting. As of the Record Date, 122,676,755 shares of Common Stock were outstanding and entitled to vote at the annual meeting. Each such share is entitled to one vote. All share and per share amounts shown in this proxy statement reflect the corporation’s 3-for-2 stock splits completed on January 21, 2005 and December 12, 2005.
A majority of the shares entitled to vote, represented in person or by proxy, constitutes a quorum. Under the corporation’s bylaws, if a quorum is present, the election of directors is decided by plurality vote.
The independent inspector will count the votes. Abstentions are considered as shares represented and entitled to vote. Broker or nominee “non-votes” on a matter are not considered as shares represented and entitled to vote on that matter, but do count toward the quorum requirement.
If less than a majority of the outstanding shares of Common Stock are represented at the meeting, a majority of the shares represented at the meeting may adjourn the meeting from time to time without further notice.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table lists the beneficial ownership of Common Stock as of January 9, 2006 by any person known to the corporation to own beneficially more than 5% of its Common Stock, each of the executive officers named in the Summary Compensation Table, and the corporation’s executive officers and directors as a group. Beneficial ownership of these shares consists of sole voting power and sole investment power except as noted below.
| Name and Address of Beneficial Owner | Shares Owned (1) | Percent of Class | |
|---|---|---|---|
| FMR Corp. 82 Devonshire Street Boston, Massachusetts 02109 | 17,403,133 | (2) | 14.2% |
| Oaktree Capital Management, LLC 333 South Grand Avenue, 28th Floor Los Angeles, California 90071 | 8,983,459 | (3) | 7.3% |
| John Nils Hanson | 1,086,214 | (4) (5) | less than 1% |
| Michael W. Sutherlin | 125,628 | (4) | less than 1% |
| Donald C. Roof | 235,175 | (4) (5) | less than 1% |
| Mark E. Readinger | 117,409 | (4) (5) | less than 1% |
| James A. Chokey | 65,264 | (4) (5) | less than 1% |
| All executive officers and directors as a group (13 persons) | 1,851,533 | (4) (6) | 1.5% |
Notes:
| (1) | The beneficial ownership information presented in this proxy statement is based on information furnished by the specified persons and is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as required for purposes of this proxy statement. Accordingly, it includes shares of Common Stock that are issuable upon the exercise of stock options exercisable at or within 60 days after January 9, 2006. Such information is not necessarily to be construed as an admission of beneficial ownership for other purposes. |
| (2) | Based on information contained in a Schedule 13G/A filed with the Securities and Exchange Commission on February 14, 2005 by FMR Corp. The Schedule 13G/A states that FMR Corp. has the sole power to vote or direct the voting of 5,786,124 of these shares (as adjusted for the corporation’s stock splits completed on January 21, 2005 and December 12, 2005) and that voting power with respect to the remainder of the shares is held by the Boards of Trustees of the various funds of Fidelity Management & Research Company, a subsidiary of FMR Corp. that holds the shares. |
| (3) | Based on information contained in a Schedule 13G/A filed with the Securities and Exchange Commission on February 11, 2005 by Oaktree Capital Management, LLC (“Oaktree”) in its capacities (i) as the general partner of OCM Opportunities Fund II, L.P., a Delaware limited partnership (the “Partnership”), and (ii) as the investment manager of a third party managed account (the “Oaktree Account”). Based on the Schedule 13G/A, the Partnership is the direct beneficial owner of 8,950,596 shares of Common Stock and the Oaktree Account is the direct beneficial owner of 32,863 shares of Common Stock (in each case, as adjusted for the corporation’s stock splits completed on January 21, 2005 and December 12, 2005). |
| (4) | Includes the following number of shares the respective executive officer has a right to acquire upon exercise of currently exercisable options: Mr. Hanson, 322,500; Mr. Sutherlin, 18,750; Mr. Roof, 18,750; Mr. Readinger, 15,750; and Mr. Chokey, 10,500. Also includes the following number of shares the respective executive officer has a right to acquire upon settlement of deferred stock units credited to such executive officer in connection with performance shares earned through January 9, 2006: Mr. Hanson, 451,821; Mr. Sutherlin, 83,145; Mr. Roof, 145,296; Mr. Readinger, 64,570; and Mr. Chokey, 35,254. |
| (5) | Includes the following number of shares the respective executive officer beneficially owns with his spouse: Mr. Hanson, 311,893; Mr. Roof, 71,129; Mr. Readinger, 37,089; and Mr. Chokey, 19,510. |
| (6) | Includes 168,750 shares non-employee directors have a right to acquire upon exercise of currently exercisable stock options. Does not include 125,688 restricted stock units held by non-employee directors and does not include 180,467 restricted stock units held by executive officers. See “Election of Directors” for information regarding beneficial ownership of Common Stock by each director. |
ELECTION OF DIRECTORS
The following table shows certain information (including principal occupation, recent business experience and beneficial ownership of the corporation’s Common Stock as of January 9, 2006) for each of the individuals nominated by the Board of Directors for election at the 2006 annual meeting. Beneficial ownership of these shares consists of sole voting and investment power except as noted below. None of these individuals beneficially owns more than 1% of the outstanding Common Stock. All of the nominees are presently directors whose terms expire in 2006 and who are nominated to serve terms ending at the annual meeting in 2007. If for any unforeseen reason any of these nominees should not be available for election, the proxies will be voted for such person or persons as may be nominated by the Board of Directors. Each of the current members of the board of directors was selected by the Creditors Committee in 2001 in connection with the corporation’s emergence from bankruptcy.
| Director Since | Shares Owned (1)(2) | ||
|---|---|---|---|
| Steven L. Gerard | Chairman and Chief Executive Officer of CBIZ, Inc., a leading provider of integrated business services and products headquartered in Cleveland, Ohio, since 2000. From 1997 to 2000, Mr. Gerard was Chairman and Chief Executive Officer of Great Point Capital, an operational and financial restructuring firm. Mr. Gerard is also a director of Lennar Corporation, The Fairchild Corporation and TIMCO Aviation Services, Inc. He is 60. | 2001 | 33,750 (3) |
| John Nils Hanson | Chairman, President and Chief Executive Officer of the corporation since 2000. He has been an officer of the corporation since 1995 and a director since 1996. Mr. Hanson is also a director of Arrow Electronics, Inc. He is 64. | 1996 | 1,086,214 (4) |
| Ken C. Johnsen | Member of the Cox Group, a private investment group. Mr. Johnsen was President and Chief Executive Officer and a director of Geneva Steel Holdings Corp. from 2001 to 2005. Geneva Steel filed a voluntary petition for reorganization under Chapter 11 in 2002. He is also a director of Amerityre Corporation. He is 47. | 2001 | 33,750 (3) |
| James R. Klauser | Senior Vice President of Wisconsin Energy Corporation, a Milwaukee-based holding company with subsidiaries in utility and non-utility businesses. Prior to joining Wisconsin Energy in 1998, he was a senior partner with the law firm of Dewitt Ross and Stevens in Madison, Wisconsin. From 1986 to 1996 Mr. Klauser was Secretary of the Wisconsin Department of Administration. He is 66. | 2001 | - |
| Richard B. Loynd | Chairman of the Executive Committee and former Chairman of the Board and Chief Executive Officer of Furniture Brands International, Inc., the largest home furniture manufacturer in the United States. He is 78. | 2001 | 38,250 (3) |
| P. Eric Siegert | Managing Director of Houlihan Lokey Howard & Zukin, an international investment banking firm. Houlihan Lokey acted as financial advisor to the Harnischfeger Creditors Committee during the corporation's reorganization. As Managing Director assigned to Houlihan Lokey's engagement with the Creditors Committee, Mr. Siegert advised the Committee on financial matters. Mr. Siegert is also a director of Alabama River Group, Inc. He is 40. | 2001 | 33,750 (3) |
| James H. Tate | Executive Vice President, Chief Administrative Officer and Chief Financial Officer of TIMCO Aviation Services, Inc. since 2005. From 2004 to 2005, Mr. Tate was an independent consultant. Mr. Tate was Senior Vice President and Chief Financial Officer of Thermadyne Holdings Corporation from 1995 to 2004. He is 58. | 2001 | 36,000 (3) |
Notes:
| (1) | The beneficial ownership information presented in this proxy statement is based on information furnished by the specified persons and is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as required for purposes of this proxy statement. Accordingly, it includes shares of Common Stock that are issuable upon the exercise of stock options exercisable at or within 60 days after January 9, 2006. Such information is not necessarily to be construed as an admission of beneficial ownership for other purposes. |
| (2) | Does not include restricted stock units. Each non-employee director holds 20,948 restricted stock units and Mr. Hanson holds 79,882 restricted stock units. |
| (3) | Includes 33,750 shares the director has a right to acquire upon the exercise of currently exercisable options. |
| (4) | Includes 322,500 shares Mr. Hanson has a right to acquire upon exercise of currently exercisable stock options and 311,893 shares Mr. Hanson beneficially owns with his spouse. Also includes 451,821 shares Mr. Hanson has a right to acquire upon settlement of deferred stock units credited to him in connection with performance shares earned as of January 9, 2006. |
BOARD OF DIRECTORS; AUDIT COMMITTEE FINANCIAL EXPERT
Meetings
The Board of Directors held eight meetings during fiscal 2005. Each of the directors attended at least 75% of the Board meetings held during the year. The Board of Directors has determined that all directors other than Mr. Hanson are independent under Nasdaq listing standards.
All directors are expected to attend the annual meeting and all directors attended the 2005 annual meeting either in person or by means of conference telephone.
Communications
Shareholder communications intended for the Board of Directors or for particular directors (other than shareholder proposals submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 and communications made in connection with such proposals) may be sent in care of the corporation’s Secretary at Joy Global Inc., 100 East Wisconsin Avenue, Suite 2780, Milwaukee, Wisconsin 53202. The Secretary will forward all such communications to the Board of Directors or to particular directors as directed.
Compensation
Directors who are not officers or employees of the corporation receive an annual retainer fee, as well as a fee of $1,500 for each Board and Board committee meeting attended. The annual retainer fee, which had remained at $30,000 since the corporation’s emergence from reorganization in 2001, is increasing to $50,000 effective with the 2006 annual meeting. The chairs of the Audit Committee and Human Resources and Nominating Committee receive additional annual retainer fees of $15,000 and $12,500, respectively.
In addition, as of the date of the annual meeting, each non-employee director receives a grant of restricted stock units awarded under the 2003 Stock Incentive Plan. The number of restricted stock units granted annually to each non-employee director is equal to $75,000 divided by the then current market price of the corporation’s Common Stock. Prior to the 2006 annual meeting, this amount had been $60,000. Restricted stock units become non-forfeitable one year after their grant and are paid out one year after the director’s duties on the Board terminate. Directors who are officers or employees of the corporation earn no additional remuneration for their services as directors.
Committees
The Board’s committees consist of the Audit Committee, the Human Resources and Nominating Committee, and the Executive Committee.
Audit Committee and Audit Committee Financial Expert
The Audit Committee is a separately designated committee of the Board, established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. Current members of the Audit Committee are James H. Tate (Chair), James R. Klauser and P. Eric Siegert. The Board of Directors has determined that Mr. Tate is an audit committee financial expert, and is independent, within the meaning of the Securities and Exchange Commission rules. The Board of Directors has also determined that all members of the Audit Committee are independent under Rule 4200(a)(15) of Nasdaq’s listing standards. The charter for the Committee is available on the corporation’s website, www.joyglobal.com.
The Audit Committee has the sole authority to appoint and replace the independent auditor and is directly responsible for the compensation and oversight of the independent auditor. The primary function of the Audit Committee is to oversee: (1) the integrity of the financial statements of the corporation; (2) the independent auditor’s qualification and independence; (3) the performance of the corporation’s internal audit function and the independent auditors; and (4) the compliance by the corporation with legal and regulatory requirements. The Audit Committee met six times during fiscal 2005.
Human Resources and Nominating Committee
Current members of the Human Resources and Nominating Committee are Richard B. Loynd (Chair), Steven L. Gerard and Ken C. Johnsen. The Board of Directors has determined that all members of the Human Resources and Nominating Committee are independent under Rule 4200(a)(15) of Nasdaq’s listing standards. The charter for the Committee is available on the corporation’s website, www.joyglobal.com.
The primary functions of the Human Resources and Nominating Committee are to: (1) periodically review and approve the compensation programs for the corporation’s key executives, including salary rates, incentive compensation plans, fringe benefits, non-cash perquisites and all other forms of compensation; (2) administer the corporation’s stock option and stock-based compensation plans; (3) periodically review the executive staffing of the corporation and make recommendations to the Board as appropriate; (4) assess the performance of the Board and the performance of individual directors; (5) review and approve director compensation programs; and (6) review and present to the Board for its consideration recommendations for nominations to fill expiring terms, vacancies or additions to the Board. The Human Resources and Nominating Committee met four times during fiscal 2005.
The Human Resources and Nominating Committee will consider director candidates recommended by the corporation’s shareholders. Recommendations should be directed to the Committee in care of the corporation’s Secretary. Under the corporation’s bylaws, shareholder nominations of directors must be received by the corporation at its principal executive offices, 100 East Wisconsin Avenue, Suite 2780, Milwaukee, Wisconsin 53202, directed to the attention of the Secretary, not less than 90 days before the 2007 meeting and any such nominations must contain the information specified in the corporation’s bylaws.
In fiscal 2004 the Human Resources and Nominating Committee and the Board of Directors adopted a list of qualifications that a director of the corporation should have. These characteristics include: (1) the education, breadth of experience, and current insights necessary to comprehend the strategic plans and goals of the corporation and provide oversight of management’s accomplishment of those plans and goals; (2) a history of conducting his or her professional and personal affairs with the utmost integrity and observing the highest standards of values, character and ethics; and (3) a willingness to invest the time necessary to prepare for Board and committee meetings, to attend Board and committee meetings, to be present at annual shareholder meetings, and to be available for consultation with other directors and executive management. The Committee also believes that it is necessary for all non-employee directors to be able to satisfy the criteria for independence established by the Securities and Exchange Commission and Nasdaq listing standards.
The Human Resources and Nominating Committee and the Board of Directors have also developed procedures for identifying and evaluating persons recommended to be nominated for election as directors, including nominees recommended by shareholders. Under these procedures, the Committee will, among other things: (1) review the qualifications and performance of incumbent directors to determine whether the Committee recommends that they be nominated for a further term; (2) investigate and review the backgrounds and qualifications of candidates recommended by shareholders, management or other directors to determine their eligibility to be nominated to become directors under the corporation’s list of qualifications for directors and Corporate Governance Principles; (3) consider the appropriateness of adding additional directors to the Board; and (4) interview candidates for nomination.
Executive Committee
Current members of the Executive Committee are Richard B. Loynd (Chair), John Nils Hanson, James R. Klauser and P. Eric Siegert. The primary functions of the Executive Committee are to consider proposals to (1) modify the corporation’s capital structure, (2) acquire or divest businesses, (3) make significant investments, or (4) enter into strategic alliances. In addition, the Executive Committee may act upon a matter when it determines that prompt action is in the best interest of the corporation and it is not possible or necessary to call a meeting of the full Board. The Executive Committee did not meet during fiscal 2005.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows compensation awarded to, earned by, or paid to the corporation’s Chief Executive Officer and each of the four most highly compensated executive officers, other than the Chief Executive Officer, for services rendered to the corporation and its subsidiaries during fiscal 2005, 2004 and 2003.
| Annual Compensation | Long-Term Compensation | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Awards | Payouts | |||||||||||||||||||||||||
| Name and Principal Position | Year | Salary | Bonus | Other Annual Compen- sation | Restricted Stock Awards | Shares Underlying Options | LTIP Payouts | All Other Compen- sation | ||||||||||||||||||
| (1) | (2) | (3) | (4) | (5) | ||||||||||||||||||||||
John Nils Hanson | 2005 | $ | 782,400 | $ | 1,351,840 | $ | 81,766 | $ | 429,908 | 163,125 | $ | 4,070,250 | $ | 70,650 | ||||||||||||
| Chairman, President | 2004 | $ | 777,400 | $ | 1,196,100 | $ | 82,286 | $ | 455,838 | 180,000 | $ | 4,703,568 | $ | 70,750 | ||||||||||||
| and Chief Executive | 2003 | $ | 747,400 | $ | 681,087 | $ | 72,659 | -- | 270,000 | -- | $ | 82,296 | ||||||||||||||
| Officer | ||||||||||||||||||||||||||
Michael W. Sutherlin | 2005 | $ | 412,404 | $ | 501,164 | -- | $ | 132,881 | 50,625 | $ | 3,052,688 | $ | -- | |||||||||||||
| Executive Vice | 2004 | $ | 398,154 | $ | 490,000 | -- | $ | 142,283 | 56,250 | -- | $ | -- | ||||||||||||||
| President; President | 2003 | $ | 307,500 | $ | 273,405 | $ | 30,957 | -- | 270,000 | -- | $ | 74,806 | ||||||||||||||
| and Chief Operating | ||||||||||||||||||||||||||
| Officer of Joy Mining | ||||||||||||||||||||||||||
| Machinery | ||||||||||||||||||||||||||
Donald C. Roof | 2005 | $ | 407,917 | $ | 492,125 | $ | 17,431 | $ | 132,881 | 50,625 | $ | 1,678,993 | $ | 3,150 | ||||||||||||
| Executive Vice | 2004 | $ | 395,250 | $ | 480,000 | $ | 13,161 | $ | 142,283 | 56,250 | $ | 2,351,784 | $ | 3,250 | ||||||||||||
| President, Chief | 2003 | $ | 384,000 | $ | 308,869 | $ | 12,526 | -- | 112,500 | -- | $ | 131,709 | ||||||||||||||
| Financial Officer and | ||||||||||||||||||||||||||
| Treasurer | ||||||||||||||||||||||||||
Mark E. Readinger | 2005 | $ | 353,333 | $ | 428,000 | $ | 20,770 | $ | 113,339 | 43,875 | $ | 2,543,906 | $ | 3,150 | ||||||||||||
| Executive Vice | 2004 | $ | 355,000 | $ | 420,000 | $ | 19,917 | $ | 119,678 | 47,250 | -- | $ | 5,738 | |||||||||||||
| President; President | 2003 | $ | 316,250 | $ | 249,063 | $ | 72,691 | -- | 225,000 | -- | $ | 66,128 | ||||||||||||||
| and Chief Operating | ||||||||||||||||||||||||||
| Officer of P&H Mining | ||||||||||||||||||||||||||
| Equipment | ||||||||||||||||||||||||||
James A. Chokey | 2005 | $ | 306,867 | $ | 366,180 | $ | 22,319 | $ | 85,982 | 31,500 | $ | 1,017,563 | $ | 3,150 | ||||||||||||
| Executive Vice | 2004 | $ | 311,200 | $ | 365,000 | $ | 22,077 | $ | 79,785 | 31,500 | $ | 1,175,892 | $ | 3,250 | ||||||||||||
| President (6) | 2003 | $ | 301,200 | $ | 223,248 | $ | 21,375 | -- | 67,500 | -- | $ | 9,401 | ||||||||||||||
Notes:
| (1) | The amounts reported in this category represent amounts reimbursed during the fiscal year for the payment of taxes. |
| (2) | Represents the dollar value, calculated based on the closing price on the date of award, of restricted stock units awarded to the named executive officers during the fiscal year. Each restricted stock unit entitles the holder to receive one share of Common Stock at the end of the applicable restricted period. The restricted period for one-third of the restricted stock units granted in fiscal 2004 will end on each of the third, fourth and fifth anniversaries of January 21, 2004. The restricted period for one-third of the restricted stock units granted in fiscal 2005 will end on each of the third, fourth and fifth anniversaries of November 15, 2004. At the end of fiscal 2005, the named executive officers held restricted stock units as follows (as adjusted to reflect the corporation’s stock split completed on December 12, 2005): Mr. Hanson, 64,362 restricted stock units valued at $1,940,514; Mr. Sutherlin, 20,013 restricted stock units valued at $603,392; Mr. Roof, 20,013 restricted stock units valued at $603,392; Mr. Readinger, 16,922 restricted stock units valued at $510,198; and Mr. Chokey, 11,892 restricted stock units valued at $358,544. These restricted stock units are eligible to receive dividends (in the form of additional restricted stock units). |
| (3) | All amounts shown have been adjusted to the extent necessary to reflect the corporation’s stock splits completed on January 21, 2005 and December 12, 2005. |
| (4) | Represents the dollar value, calculated based on the closing trading price of the Common Stock on the last trading day of the applicable fiscal year, of performance shares earned for the multi-year award cycle completed at the end of such fiscal year. The distribution of certain of such shares was deferred and credited to the relevant executive officer in the form of deferred stock units in order to preserve the deductibility of the associated executive compensation expense under Section 162(m) of the Internal Revenue Code. All other performance shares earned for such cycle were settled by the distribution of shares of Common Stock, on a one-for-one basis (after withholding for required taxes). |
| (5) | Includes the following amounts for fiscal 2005: for Mr. Hanson, $67,500 for supplemental life insurance and $3,150 of company matching 401(k) contributions; and for each of Mr. Roof, Mr. Readinger and Mr. Chokey, $3,150 of company matching 401(k) contributions. |
| (6) | Mr. Chokey was also the corporation’s General Counsel until November 15, 2005. |
Human Resources and Nominating Committee Report on Executive Compensation
The Human Resources and Nominating Committee has presented the following report on executive compensation for inclusion in this proxy statement.
Compensation Philosophy
The members of the Human Resources and Nominating Committee believe that the corporation’s senior executive officers, including the Chief Executive Officer, should be compensated on a basis competitive with other manufacturing companies of comparable size. This philosophy is based on the need to attract and retain experienced and talented executive officers. The objective is to provide a total compensation program that establishes base salaries in a competitive range, bonus opportunities that reward above-average performance with above-average pay, and stock-based incentive programs designed to achieve long-term corporate financial goals and build executive stock ownership. The Committee has established long-term ownership objectives for the Chief Executive Officer and the other executive officers equal to five times annual salary in the case of the Chief Executive Officer and two and one half times annual salary for the other executive officers. These objectives serve to align management and shareholder interests. At the end of fiscal 2005, all executive officers other than Mr. Fons (who became an executive officer in the fourth quarter of fiscal 2005) exceeded the minimum ownership requirements.
Components of Executive Compensation
The corporation’s executive compensation program for fiscal 2005 consisted of base salary, annual bonuses and awards of stock options, performance shares and restricted stock units.
Annual Cash Compensation
Salary. Base salaries for fiscal 2005 for Mr. Hanson and the other executive officers named in the Summary Compensation Table were established by the Human Resources and Nominating Committee early in the fiscal year using the compensation philosophy described above.
Bonus. The corporation has an annual bonus compensation plan that applies to senior executive officers and that was approved by shareholders at the 2002 annual meeting. The annual bonus compensation plan applies to Mr. Hanson and the other named executive officers who may be “covered employees” as defined in Section 162(m) of the Internal Revenue Code. The Committee has discretion under the annual bonus compensation plan to reduce or eliminate awards.
The bonus plan for fiscal 2005 for all other employees of the corporation was based on return on average working capital (ROAWC). Performance goals for fiscal 2005 were exceeded and the corporation’s employees earned above target bonuses in fiscal 2005.
Bonus targets for fiscal 2005 under the annual bonus compensation plan for senior executive officers were also met. The Committee exercised its discretion under the annual bonus compensation plan for senior executive officers and reduced bonus payments to Mr. Hanson and the other named executive officers for fiscal 2005 to the amounts those individuals would have earned had they participated in the ROAWC bonus plan for all other employees.
Long-term Incentive Compensation
Stock Options. The Committee believes that stock options are an important component of a sound compensation program for executive officers. Stock options were granted to 133 employees, including executive officers, in fiscal 2005. The Committee determined the number of stock options to grant to each executive officer after consultation with compensation advisors and based upon our philosophy of using stock-based incentive programs to build executive stock ownership and align management and shareholder interests.
Performance Shares. The Committee grants performance shares under the terms of the 2003 Stock Incentive Plan in order to provide executive officers and other senior management with long-term incentives to improve the quality of earnings. An initial grant of performance shares was made in fiscal 2001 and additional grants were made during fiscal 2003, fiscal 2004 and fiscal 2005. The performance measure for those grants was positive net cash flow. Performance shares were granted to 20 executive officers and other senior managers in fiscal 2005. For fiscal 2006, the performance measure for executive officers is average return on equity over the three-year award cycle ending in fiscal 2008. The Committee believes that the performance share award program serves as a powerful retention tool and motivates senior management to generate long-term returns for the corporation’s shareholders.
Restricted Stock Units. The Committee granted restricted stock units to officers and employees in fiscal 2004 and fiscal 2005. The Committee believes that restricted stock unit grants play an important role in retaining the corporation’s senior management. Restricted stock units were granted to 13 executive officers and other senior managers in fiscal 2005. These restricted stock units vest in thirds on the third, fourth and fifth anniversaries of the grant date.
CEO Compensation For Fiscal 2005
Mr. Hanson’s compensation for fiscal 2005 included base salary of $782,400 and a bonus of $1,351,840. In addition, during fiscal 2005 Mr. Hanson was granted 163,125 stock options, 24,750 performance shares and 24,750 restricted stock units.
The Committee considered a wide range of factors in determining Mr. Hanson’s salary, targeted bonus and long-term incentive grants for fiscal 2005, including his individual performance, comparative compensation data for manufacturing companies of comparable size, and various measures of the corporation’s performance, including ROAWC, cash flow, operating margins, incremental profitability and market position. Mr. Hanson’s effective compensation for fiscal 2005 was also directly affected by the corporation’s performance due to the design of the corporation’s bonus and performance share programs.
In November 2005 the Committee formally evaluated Mr. Hanson’s performance against goals established for Mr. Hanson by the Committee at the beginning of the year. The Committee also established performance goals for Mr. Hanson for fiscal 2006.
Tax Considerations
The Committee intends to take the necessary steps to satisfy the conditions of Section 162(m) of the Internal Revenue Code in order to preserve the deductibility of executive compensation to the fullest extent possible consistent with the Committee’s other compensation objectives and overall compensation philosophy.
Respectfully,
Richard B. Loynd (Chair)
Steven L. Gerard
Ken C. Johnsen
Performance Graph
The following graph shows the cumulative total shareholder return on $100 invested in the corporation’s Common Stock from August 1, 2001, the first trading day following the issuance of the corporation’s new Common Stock after its emergence from bankruptcy, until October 29, 2005, the last day of fiscal 2005, as compared to the returns over the same period, in each case assuming reinvestment of cash dividends, of the Standard & Poor’s 500 Stock Index and the Dow Jones U.S. Commercial Vehicles & Trucks Index (ticker symbol DJUSHR), an industry subsector index that includes the corporation. The Dow Jones U.S. Commercial Vehicles & Trucks Index was known as the Dow Jones U.S. Total Market Heavy Machinery Index until December 20, 2004.
Option Grants
The following table shows information about stock option grants during the last fiscal year to the five executive officers named in the Summary Compensation Table. All amounts shown have been adjusted to reflect the corporation’s stock splits completed on January 21, 2005 and December 12, 2005.
Option Grants in Last Fiscal Year (1)
| Individual Grants | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Number of Securities Underlying Options Granted | Percent of Total Options Granted to Employees in Fiscal Year | Exercise Price per Share | Expiration Date (2) | Grant Date Present Value (3) | ||||||
| John Nils Hanson | 163,125 | 14.61% | $17.39 | November 15, 2014 | $1,050,525 | ||||||
Michael W. Sutherlin | 50,625 | 4.53% | $17.39 | November 15, 2014 | $326,025 | ||||||
Donald C. Roof | 50,625 | 4.53% | $17.39 | November 15, 2014 | $326,025 | ||||||
Mark E. Readinger | 43,875 | 3.93% | $17.39 | November 15, 2014 | $282,555 | ||||||
James A. Chokey | 31,500 | 2.82% | $17.39 | November 15, 2014 | $202,860 | ||||||
Notes:
| (1) | No stock appreciation rights (SARs) were granted in the last fiscal year. |
| (2) | One-third of the options become exercisable on each of the first, second and third anniversaries of November 15, 2004. |
| (3) | Grant date present values were determined using the Black-Scholes option pricing model. The actual value, if any, an executive may realize will depend on the excess of the stock price over the exercise price on the date the option is exercised. There is no assurance the value realized by an executive will be at or near the value estimated by the Black-Scholes model. The estimated values are based on assumed volatility of 46.6%, risk-free rate of return of 3.53%, dividend yield of 1.17% and four year expected life. No adjustments have been made for non-transferability or risk of forfeiture. |
Option Exercises and Fiscal Year-End Values
The following table shows information with respect to options exercised in fiscal 2005 and options held at the end of such year by the five executive officers named in the Summary Compensation Table. The corporation has not granted stock appreciation rights (SARs) to any of its executive officers. The value of unexercised in-the-money options is determined by multiplying the number of unexercised options for each in-the-money grant by the difference between the option exercise price for that grant and the fiscal year-end closing price of $30.15 per share (as adjusted to reflect the corporation’s 3-for-2 stock split completed December 12, 2005) and then aggregating these amounts for all in-the-money grants for each executive officer.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values(1)
| Number of Securities Underlying Unexercised Options at Fiscal Year End | Value of Unexercised In-the-Money Options at Fiscal Year End | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Shares Acquired on Exercise | Value Realized | Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||
| John Nils Hanson | 448,125 | $8,450,150 | 298,125 | 373,125 | $6,715,838 | $6,584,475 | |||||||
Michael W. Sutherlin | 108,750 | $1,819,589 | -- | 178,125 | -- | $3,573,150 | |||||||
Donald C. Roof | 37,500 | $ 492,000 | 18,750 | 125,623 | $ 344,438 | $2,292,549 | |||||||
Mark E. Readinger | 90,750 | $1,624,187 | -- | 150,373 | -- | $3,037,449 | |||||||
James A. Chokey | 33,000 | $ 428,690 | -- | 75,000 | -- | $1,362,360 | |||||||
Notes:
(1) All amounts shown have been adjusted to reflect the corporation’s 3-for-2 stock split completed on December 12, 2005.
Long-Term Incentive Compensation
Performance share awards under the corporation’s 2003 Stock Incentive Plan provide long-term incentive compensation opportunities to the corporation’s executives. In fiscal 2005 the corporation granted performance shares to executives named in the Summary Compensation Table and to other executives of the corporation.
Executives awarded performance shares in fiscal 2005 earn shares of Common Stock if, at the end of the three-year award cycle, cumulative net cash flow exceeds a specified threshold amount. Each performance share represents the right to earn one share of Common Stock if the specified performance target is achieved. The number of shares of Common Stock earned at the end of the award cycle can range from 0% to 150% of the number of performance shares awarded. Performance shares earned will be settled in shares of Common Stock, cash or a combination of the two, at the discretion of the Human Resources and Nominating Committee.
The following table provides information regarding performance share awards to the named executive officers during fiscal 2005 under the Stock Incentive Plan.
Long-Term Incentive Plans – Awards In Last Fiscal Year (1)
| Estimated Future Payouts Under Non-Stock Price-Based Plans (Number of Shares) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Name | Number of Shares, Units or Other Rights | Performance or Other Period Until Maturation or Payout | Threshold | Target | Maximum | ||||||
| John Nils Hanson | 24,750 | 10/31/04 - 11/03/07 | 12,375 | 24,750 | 37,125 | ||||||
Michael W. Sutherlin | 7,650 | 10/31/04 - 11/03/07 | 3,825 | 7,650 | 11,475 | ||||||
Donald C. Roof | 7,650 | 10/31/04 - 11/03/07 | 3,825 | 7,650 | 11,475 | ||||||
Mark E. Readinger | 6,525 | 10/31/04 - 11/03/07 | 3,263 | 6,525 | 9,788 | ||||||
James A. Chokey | 4,950 | 10/31/04 - 11/03/07 | 2,475 | 4,950 | 7,425 | ||||||
Notes:
| (1) | All amounts shown have been adjusted to reflect the corporation's stock splits completed on January 21, 2005 and December 12, 2005. |
Equity Compensation Plan Information
The following table summarizes information about the corporation's equity compensation plans as of the end of fiscal 2005. All outstanding awards relate to Common Stock. All amounts shown below have been adjusted for the corporation's 3-for-2 stock split completed December 12, 2005.
| Plan category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights | (b) Weighted-average exercise price of outstanding options, warrants and rights | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||
|---|---|---|---|---|---|---|---|
| Equity compensation plans | 3,672,879 | $ 10.75 | 5,980,717 (2) | ||||
| approved by security holders (1) | |||||||
Equity compensation plans | -- | -- | -- | ||||
| not approved by security | |||||||
| holders | |||||||
Total | 3,672,879 | $ 10.75 | 5,980,717 | ||||
Notes:
| (1) | The corporation’s 2001 Stock Incentive Plan was deemed approved by shareholders in connection with the approval of the corporation’s plan of reorganization. The corporation’s 2003 Stock Incentive Plan was approved by shareholders at the 2003 annual meeting. The maximum number of shares of Common Stock that may be delivered under the 2003 Stock Incentive Plan is determined on the basis of a formula equal to the sum of the following (adjusted to the extent necessary to reflect the corporation’s stock splits): (a) 5,625,000; (b) the number of shares of Common Stock that, as of the time the 2003 Stock Incentive Plan became effective on February 25, 2003 (the “Effective Time”), were not subject to outstanding awards and remained available for issuance under the 2001 Stock Incentive Plan; (c) the number of shares of Common Stock that are repurchased by the corporation with stock option exercise proceeds after the Effective Time; (d) the number of shares of Common Stock underlying any stock incentive award that is exercised or settled for cash, forfeited, or terminates, expires or lapses without being exercised after the Effective Time; (e) the number of shares of Common Stock delivered to the corporation by an optionee in satisfaction of the exercise price of any stock option after the Effective Time; and (f) the number of shares of Common Stock not delivered to a participant because such shares are used to satisfy an applicable tax withholding obligation after the Effective Time. |
| (2) | Includes 318,205 shares of Common Stock, which is the maximum number of shares that may be issued under performance share awards granted in fiscal 2004 and fiscal 2005; 921,624 shares of Common Stock deliverable under performance share awards granted in fiscal 2001 and fiscal 2003 (including shares deliverable upon settlement of deferred stock units resulting from the deferral of performance share payouts); and 312,993 shares of Common Stock that may be issued under outstanding restricted stock unit awards. |
Pension Plan Table
The following table lists the estimated annual benefits payable upon retirement at normal retirement age for the years of service indicated under the corporation’s defined benefit pension plan for U.S. employees (and excess benefit arrangements described below) at the indicated remuneration levels.
| Years of Service | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Remuneration | 10 | 15 | 20 | 25 | 30 | 35 | |||||||
| $ 400,000 | $ 60,000 | $ 90,000 | $120,000 | $150,000 | $180,000 | $ 210,000 | |||||||
600,000 | 90,000 | 135,000 | 180,000 | 225,000 | 270,000 | 315,000 | |||||||
800,000 | 120,000 | 180,000 | 240,000 | 300,000 | 360,000 | 420,000 | |||||||
1,000,000 | 150,000 | 225,000 | 300,000 | 375,000 | 450,000 | 525,000 | |||||||
1,200,000 | 180,000 | 270,000 | 360,000 | 450,000 | 540,000 | 630,000 | |||||||
1,400,000 | 210,000 | 315,000 | 420,000 | 525,000 | 630,000 | 735,000 | |||||||
1,600,000 | 240,000 | 360,000 | 480,000 | 600,000 | 720,000 | 840,000 | |||||||
1,800,000 | 270,000 | 405,000 | 540,000 | 675,000 | 810,000 | 945,000 | |||||||
2,000,000 | 300,000 | 450,000 | 600,000 | 750,000 | 900,000 | 1,050,000 | |||||||
2,200,000 | 330,000 | 495,000 | 660,000 | 825,000 | 990,000 | 1,155,000 | |||||||
Benefits are based both upon credited years of service with the corporation or its subsidiaries and the average salary and incentive compensation over the highest 60 consecutive calendar month period during the last 120 consecutive calendar months of service. The estimated benefits in the table do not reflect offsets under the plan of 1.25% per year of service (up to a maximum of 50%) of the estimated Social Security benefit. Remuneration covered by the plan includes the salary and bonus amounts reported in the Summary Compensation Table.
The years of service credited for each of the executive officers named in the Summary Compensation Table are: John Nils Hanson, 29 years; Michael W. Sutherlin, 3 years; Donald C. Roof, 5 years; Mark E. Readinger, 12 years; and James A. Chokey, 24 years. Under an arrangement approved by the Human Resources and Nominating Committee in 1999, Mr. Hanson is credited with three years of service for pension plan purposes for each year he is employed by the corporation after June 1999.
Estimated benefits under the retirement plan are subject to the provisions of the Internal Revenue Code that limit the annual benefits that may be paid from a tax qualified retirement plan. Amounts reflected in the table above in excess of such limitations will be paid from the general funds of the corporation under the terms of the corporation’s Supplemental Retirement Plan.
Non-union employees, including executive officers, hired on or after May 1, 2005 will not be considered eligible employees under the corporation’s defined benefit pension plan. Instead, these employees will participate in the Joy Global Retirement Savings Plan and the corporation will contribute a fixed amount to each such employee’s plan account equal to a percentage of eligible earnings based on years of service. Employee accounts become fully vested after five years of service.
Employment Contracts and Termination of Employment and Change-in-Control Arrangements
The corporation entered into change-in-control employment agreements dated as of May 20, 2003 with each of the executive officers named in the Summary Compensation Table and certain other employees. The agreements replaced change-in-control agreements that were put in place prior to the corporation’s reorganization.
The current agreements provide that, in the event of a “Change of Control” (as defined in the agreements), any outstanding and unvested stock options will be cashed out at a then current market price. The agreements provide further that in the event the executive’s employment is terminated during the three-year period following a Change of Control, either by the executive for “Good Reason” or by the corporation without “Cause” (as such terms are defined in the agreements), the corporation will provide the executive with outplacement services and will provide medical, insurance and other welfare benefits to the executive for two years (three years in the case of the CEO), pay the executive accrued benefits including a pro rata bonus, and pay the executive a lump sum equal to two times (three times in the case of the CEO) the sum of the executive’s base salary and annual bonus.
The approximate dollar amounts that would have been payable to the named executive officers under the provisions of these agreements if a Change of Control had occurred and the respective executive’s employment was terminated as of the date of this proxy statement, either by the individual for “Good Reason” or by the corporation without “Cause,” are: Mr. Hanson, $12.0 million; Mr. Sutherlin, $3.7 million; Mr. Roof, $3.6 million; Mr. Readinger, $3.1 million; and Mr. Chokey, $2.4 million. In the event that any such payment would cause a named executive officer to incur an excise tax obligation, the corporation would not be obligated to make a tax gross-up payment to such executive officer, but payments to such executive officer may be reduced to minimize the excise tax incurred.
In the event of a “Change in Control” of the corporation as defined in the 2003 Stock Incentive Plan, the terms of the Performance Awards granted to each named executive officer provide for a lump sum cash payment equal to the greater of the value of the performance shares earned as of the date of the Change in Control or the value of the pro rata target number of performance shares through the date of the Change in Control. The approximate dollar amounts that would have been payable to the named executive officers under the provisions of the Performance Awards had a Change in Control occurred as of the date of this proxy statement are: Mr. Hanson, $4.5 million; Mr. Sutherlin, $1.4 million; Mr. Roof, $1.4 million; Mr. Readinger, $1.2 million; and Mr. Chokey, $0.8 million.
Under the terms of the corporation’s restricted stock unit awards, in the event of a “Change of Control,” all restricted stock units granted by the corporation, whether or not vested, would be settled by payment of an amount in cash equal to the then current market price of a share of Common Stock. The approximate dollar amounts that would have been payable to the named executive officers under the provisions of the restricted stock unit awards had a Change of Control occurred as of the date of this proxy statement are: Mr. Hanson, $3.7 million; Mr. Sutherlin, $1.2 million; Mr. Roof, $1.2 million; Mr. Readinger, $1.0 million; and Mr. Chokey, $0.6 million.
Certain Business Relationships
Pursuant to the corporation’s bylaws, officers and directors of the corporation are indemnified by the corporation in the event claims are made against them arising out of their service as an officer or director. Other than these indemnification arrangements, there were no other relationships or related transactions during fiscal 2005 involving any director or executive officer (or any members of their immediate families) to which the corporation or any of its subsidiaries was a party which are required to be disclosed under the rules governing the preparation of proxy statements.
AUDIT COMMITTEE REPORT
The Audit Committee has presented the following report for inclusion in this proxy statement.
The Audit Committee met with management and the independent auditor six times during fiscal 2005.
Management represented to the Committee that the corporation’s financial statements were prepared in accordance with generally accepted accounting principles. The Committee has reviewed and discussed the financial statements with management and the independent auditor. The Committee discussed with the independent auditor matters required to be discussed by Statement on Auditing Standards No. 61 (Communications with Audit Committees).
The corporation’s independent auditor provided to the Committee the written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and the Committee discussed with the independent auditor that firm’s independence.
Based upon the Committee’s discussions with management and the independent auditor and the Committee’s review of the representations of management and the report of the independent auditor to the Committee, the Committee recommended that the Board of Directors include the audited financial statements in the corporation’s Annual Report on Form 10-K for the fiscal year ended October 29, 2005 filed with the Securities and Exchange Commission.
Respectfully,
James H. Tate (Chair)
James R. Klauser
P. Eric Siegert
AUDITORS, AUDIT FEES AND AUDITOR INDEPENDENCE
Ernst & Young LLP served as the corporation’s independent auditor for fiscal 2005. A representative of Ernst & Young is expected to be present at the 2006 annual meeting and will be given the opportunity to make a statement and answer questions that may be asked by shareholders. The Audit Committee expects to make its selection of independent auditor for fiscal 2006 during the first half of the year.
Audit Fees
Ernst & Young LLP billed the corporation an aggregate of $2,682,631 in fees for professional services rendered for the audit of the corporation’s annual financial statements for fiscal 2005, the audit of management’s assessment of the corporation’s internal control over financial reporting, and the reviews of the financial statements included in the corporation’s quarterly reports on Form 10-Q for fiscal 2005. These fees are for services that are normally provided by Ernst & Young in connection with statutory and regulatory filings or engagements including the annual consolidated audit, foreign statutory audits, consents and accounting consultation for matters that were addressed during the audit work. Fees billed in this category for fiscal 2004 aggregated $1,311,604.
Audit-Related Fees
Ernst & Young LLP billed the corporation an aggregate of $84,162 in fees for audit-related services in fiscal 2005. These fees are for assurance and related services provided by Ernst & Young that are reasonably related to the performance of the audit including internal control consultation, employee benefit plan audits, accounting consultations not specifically linked to audit work and fees for access to electronic accounting research. Fees billed in this category for fiscal 2004 aggregated $33,236.
Tax Fees
Ernst & Young LLP billed the corporation an aggregate of $310,579 in tax fees in fiscal 2005. These fees are for tax consultation and tax planning provided by Ernst & Young that are related to various federal, state and international issues and entity restructuring. Fees billed in this category for fiscal 2004 aggregated $362,183.
All Other Fees
Ernst & Young LLP did not bill the corporation for fees in the “All Other Fees” category in either fiscal 2005 or fiscal 2004.
Audit Committee Pre-approval Policies and Procedures
The Audit Committee has established a policy to pre-approve the audit and non-audit services performed by the independent auditor in order to assure that the provision of such services does not impair the auditor’s independence. Based on information presented to the Audit Committee by Ernst & Young and the corporation’s management, the Audit Committee has pre-approved defined audit, audit-related, tax and other services for fiscal 2006 up to specified cost levels. Any proposed services exceeding pre-approved cost levels require specific pre-approval by the Audit Committee. The policy requires the independent auditor to provide detailed back-up documentation regarding the specific services to be provided. The policy also prohibits the independent auditor from providing services that are prohibited under the Sarbanes-Oxley Act of 2002.
Although Rule 2-01(c)(7)(i)(C) of Regulation S-X permits the Audit Committee to waive its pre-approval requirement under certain circumstances, the Audit Committee did not rely on that rule in approving any of the fees reported under the headings Audit-Related Fees, Tax Fees and All Other Fees.
OTHER INFORMATION
Additional Matters
The Board of Directors is not aware of any other matters that will be presented for action at the 2006 annual meeting. Should any additional matters properly come before the meeting, the persons named in the enclosed proxy will vote on those matters in accordance with their best judgment.
Submission of Shareholder Proposals
Shareholder proposals for the 2007 annual meeting must be received no later than September 29, 2006 at the corporation’s principal executive offices, 100 East Wisconsin Avenue, Suite 2780, Milwaukee, Wisconsin, 53202, directed to the attention of the Secretary, in order to be considered for inclusion in next year’s annual meeting proxy materials under Securities and Exchange Commission rules. Under the corporation’s bylaws, written notice of shareholder proposals for the 2007 annual meeting which are not intended to be considered for inclusion in next year’s annual meeting proxy materials (shareholder proposals submitted outside the processes of Rule 14a-8 under the Securities Exchange Act of 1934) must be received by the corporation at such offices, directed to the attention of the Secretary, not less than 75 nor more than 105 days before the first anniversary of this year’s meeting and must contain the information specified in the corporation’s bylaws.
Cost of Proxy Solicitation
The corporation will pay the cost of preparing, printing and mailing proxy materials as well as the cost of soliciting proxies on behalf of the Board. In addition to using mail services, officers and other employees of the corporation, without additional remuneration, may solicit proxies in person and by telephone, e-mail or facsimile transmission. The corporation may retain a professional proxy solicitation firm, and pay such firm its customary fee, to solicit proxies from direct holders and from banks, brokers and other nominees having shares registered in their names that are beneficially owned by others.
Annual Report on Form 10-K
A copy (without exhibits) of the corporation’s Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended October 29, 2005 is being provided with this proxy statement. The corporation will provide an additional copy of such Annual Report to any shareholder, without charge, upon written request of such shareholder. Such requests should be addressed to the attention of “Shareholder Relations” at Joy Global Inc., 100 East Wisconsin Avenue, Suite 2780, Milwaukee, Wisconsin 53202.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to the corporation during the last fiscal year and Forms 5 and amendments thereto furnished to the corporation with respect to the last fiscal year or written representations that no reports were required, the corporation is not aware that any director, officer or beneficial owner of more than 10% of the corporation’s Common Stock failed to report on a timely basis transactions required to be reported during the last fiscal year by Section 16(a) of the Securities Exchange Act of 1934.
By order of the Board of Directors
OREN B. AZAR
Secretary
January 23, 2006
