SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
BALDOR ELECTRIC COMPANY
________________________________________________
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
__________________________________________________________________
2) Aggregate number of securities to which transaction applies:
__________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and state
how it was determined:
__________________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________________
5) Total fee paid:
___________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
__________________________________________________________________
2) Form, Schedule or Registration Statement No.:
__________________________________________________________________
3) Filing Party:
__________________________________________________________________
4) Date Filed:
__________________________________________________________________
BALDOR ELECTRIC COMPANY
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 6, 1995
To the Shareholders:
The Annual Meeting of Shareholders of Baldor Electric Company, a
Missouri corporation, will be held at the Holiday Inn, 700 Rogers
Avenue, Fort Smith, Arkansas, on Saturday, May 6, 1995, at 10:30 a.m.,
local time, for the following purposes:
1. To elect directors; and
2. To transact such other business as may properly come before the
meeting and all adjournments thereof.
The Board of Directors has fixed the close of business on March 22,
1995, as the record date for the determination of the shareholders
entitled to notice of, and to vote at, the Annual Meeting and all
adjournments thereof.
By order of the Board of Directors
Lloyd G. Davis
Secretary
March 30, 1995
Even if you expect to attend the meeting in person, please mark, date,
and sign the enclosed proxy and return it in the enclosed return
envelope. The return envelope does not require postage if mailed in the
United States. Shareholders who attend the meeting may revoke their
proxies and vote in person if they so desire.
BALDOR ELECTRIC COMPANY
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
The enclosed proxy is solicited on behalf of the Board of Directors of
Baldor Electric Company (the "Company") for use at the Annual Meeting of
its shareholders to be held May 6, 1995, at 10:30 a.m. If the proxy is
executed and returned to the Company, it nevertheless may be revoked at
any time before it is exercised either by written notice to the
Secretary of the Company or by attending the meeting and voting in
person. If no contrary instructions are indicated on the proxy, the
proxy will be voted for the election of the three nominees named herein
as directors. If matters other than those mentioned herein properly
come before the meeting, the proxy will be voted by the persons named
therein in a manner which they consider to be in the best interests of
the Company.
The Company's principal executive offices are located at 5711 R. S.
Boreham, Jr. Street, Fort Smith, Arkansas 72901. This Proxy Statement
and the accompanying form of proxy are first being sent to shareholders
on or about March 31, 1995.
The cost of the solicitation of proxies will be borne by the Company.
In addition to the use of the mails, proxies may be solicited personally
or by telephone or facsimile, by regular employees of the Company,
without additional compensation. Brokerage firms, banks, nominees and
others will be requested to forward proxy material to the beneficial
owners of Common Stock held by them of record. No solicitation is to be
made by specially engaged employees or other paid solicitors.
VOTING
Only the holders of record of the common stock of the company as of the
close of business on March 22, 1995, are entitled to vote, either in
person or by proxy, at the Annual Meeting and all adjournments thereof.
At the close of business on March 10, 1995, 18,349,595 shares of Common
Stock of the Company were issued and outstanding. A majority of the
outstanding shares of Common Stock, present in person or by proxy, will
constitute a quorum for the transaction of business at the Annual
Meeting. Each share of Common Stock is entitled to one vote on all
matters except the election of directors, as to which there shall be
cumulative voting, as described below. The Board knows of no matters
other than the election of directors to be presented for consideration
at the Annual Meeting. If any other matters properly come before the
meeting, the proxies solicited hereby will be voted on such matters in
accordance with the judgment of the persons voting such proxies.
- 1 -
The affirmative vote of the holders of a majority of the shares entitled
to vote which are present in person or represented by proxy at the 1995
Annual Meeting is required to elect directors and act on any other
matters properly brought before the meeting. In the election of
directors, each shareholder is entitled to vote cumulatively. To vote
cumulatively, each shareholder may multiply the number of shares of
Common Stock held by him by the number of directors to be elected and
cast the whole number of votes for one candidate or distribute them
among two or more candidates. There is no condition precedent to the
exercise of these cumulative voting rights. If more persons than the
number of director positions to be filled receive the affirmative vote
of a majority of shares entitled to vote at the meeting, then the number
of persons up to the number of directorships to be filled, who receive
the most votes, or a "plurality", will be elected as directors.
Shares represented by proxies which are marked "withhold authority" with
respect to the election of any one or more nominees for election as
directors, and proxies which are marked to deny discretionary authority
on other matters, will be counted for the purpose of determining the
number of shares represented by proxy at the meeting. Such proxies will
thus have the same effect as if the shares represented thereby were
voted against such nominee or nominees, and against such other matters,
respectively. Because so-called "broker non-votes" are inapplicable to
the election of directors, a discussion of the concept is omitted from
this Proxy Statement.
If the proxy is signed and returned without any direction given, shares
will be voted for the election of the Board's slate of nominees and in
their discretion, the persons named in the proxy are authorized to
cumulate and vote the shares of the shareholders giving the proxy for
any nominee except for those nominees with respect to whom authority has
been withheld.
PROPOSAL 1:
ELECTION OF DIRECTORS
The Restated Articles of Incorporation and Bylaws of the Company provide
for a classified Board of Directors, with the Board divided into three
classes whose terms expire at different times. Three members are to be
elected to the Board of Directors in 1995, each to serve for a term of
three years.
The persons named in the enclosed form of proxy intend to vote such
proxy for the election of the three nominees named below as directors of
the Company, unless the shareholder indicates on the form of proxy that
the vote should be withheld or contrary directions are indicated. If the
proxy is signed and returned without any direction given, shares will be
voted for the election of the Board's slate of nominees and in their
discretion, the persons named in the proxy are authorized to cumulate
and vote the shares of the shareholders giving the proxy for any nominee
except those nominees with respect to whom authority has been withheld.
The Board of Directors has no reason to doubt the availability of the
nominees and each has indicated a willingness to serve if elected. If
any nominee shall decline or be unable to serve, it is intended that, in
the discretion of the Board of Directors, either the size of the Board
will be reduced or the proxies will vote for a substitute nominee
designated by the Board of Directors.
- 2 -
Information Regarding the Nominees for Directors
to be Elected in 1995 for Terms Ending in 1998
Fred C. Ballman ... Former Chairman and Chief Executive Officer of the
Company (retired); Age 82; Present term expires 1995; Director of the
Company from 1944 to 1982 and since 1992. (1)
R. S. Boreham, Jr. ... Chairman of the Board of the Company since 1981;
Chief Executive Officer of the Company from 1978 through fiscal year
1992; Director of U.S.A. Truck, Inc.; Age 70; Present term expires 1995;
Director of the Company since 1961. (2)
R. L. Qualls ... Chief Executive Officer of the Company beginning
January 3, 1993 and President of the Company since 1990; Chief Operating
Officer of the Company from February 1991 through fiscal year 1992;
Executive Vice President-Finance and Planning of the Company from May
1986 through April 1990; Age 61; Present term expires 1995; Director of
the Company since 1987. (3)
Information Regarding the Directors Who Are Not Nominees for
Election and Whose Terms Continue Beyond 1995
Jefferson W. Asher, Jr. ... Independent Management Consultant providing
assistance to corporations, attorneys, banking institutions, and other
creditors for more than the past five years; Director of California
Beach Restaurants, Inc.; Age 70; Present term expires 1996; Director of
the Company since 1973. (4)(5)
O. A. Baumann ... The Company's manufacturer's sales representative in
St. Louis, Missouri, from 1947 to 1987 (retired); Age 73; Present term
expires 1997; Director of the Company since 1961. (5)
Robert J. Messey ... Senior Vice President, Chief Financial Officer, and
Director of Sverdrup Corporation, engineering and architectural firm,
since January 1, 1993; Partner of Ernst & Young LLP, international
accounting firm, prior to January 1, 1993; Age 49; Present term expires
1996; Director of the Company since 1993. (6)
Robert L. Proost ... Corporate Vice President and Director of
Administration, A.G. Edwards & Sons, Inc., securities brokerage and
investment banking; Age 57; Present term expires 1997; Director of the
Company since 1988. (6)(7)
- 3 -
George A. Schock ... Assistant Secretary of the Company since 1978; has
served as an officer of the Company since 1944; Age 87; Present term
expires 1997; Director of the Company since 1944. (3)
Willis J. Wheat ... Professor of Management and Marketing, Oklahoma City
University, since 1987; Age 69; Present term expires 1996; Director of
the Company since 1991. (1)(8)
_______________
(1) Member of the Stock Option Committee
(2) Chairman of the Executive Committee
(3) Member of the Executive Committee
(4) Chairman of the Audit Committee
(5) Member of the Nominating Committee
(6) Member of the Audit Committee
(7) Chairman of the Stock Option Committee
(8) Chairman of the Nominating Committee
Information About the Board of Directors
and Committees of the Board
Board of Directors ... During the fiscal year ended December 31, 1994
("fiscal year 1994"), four meetings of the Board of Directors were held.
Executive Committee ... Between meetings of the Board, the Executive
Committee is empowered to act in lieu of the Board of Directors except
on those matters for which the Board of Directors has specifically
reserved authority to itself. The Executive Committee held four
meetings during fiscal year 1994.
- 4 -
Audit Committee ... The Audit Committee performs the following
functions: assists in the selection of independent auditors, directs
and supervises investigations into matters relating to audit functions,
reviews with independent auditors the plans and results of the audit
engagement, reviews the degree of independence of the auditors,
considers the range of audit and non-audit fees, and reviews the
adequacy of the Company's system of internal accounting controls. The
Audit Committee held three meetings during fiscal year 1994.
Stock Option Committee ... The Stock Option Committee administers four
of the Company's five existing stock option plans. Awards can be made
from three plans and the committee has the exclusive authority to
determine the persons eligible to participate and to determine the
amount and the terms and conditions of the awards made to each
participant. The Stock Option Committee held four meetings during
fiscal year 1994.
Nominating Committee ... The Nominating Committee is responsible for
proposing a slate of directors for election by the shareholders at each
annual meeting and proposing candidates to fill any vacancies on the
Board. Pursuant to the Bylaws, any shareholder of the Company eligible
to vote in an election of directors may nominate a person or persons for
election to the Board of Directors by written notice mailed to the
Company not less than 45 nor more than 90 days prior to the regularly
scheduled date set forth in the Bylaws for the annual meeting of
shareholders. The notification to the Company shall state the name and
residence address of the nominating shareholder and, to the extent known
to the nominating shareholder: the name and address of the proposed
nominee, the total number of shares to be voted for the proposed
nominee, and the number of shares held by the nominating shareholder.
The committee will consider candidates for Board membership proposed by
shareholders who have complied with the aforementioned procedures. The
Nominating Committee held one meeting during fiscal year 1994.
Director Compensation ... During fiscal year 1994, each member of the
Board of Directors who was not a Company employee received $3,000 per
quarter for services as a director. Each director who is a member of
the Audit Committee received an additional $2,500 per quarter as
chairman or $1,600 per quarter as a member. Each director who is a
member of the Stock Option Committee received an additional $550 per
quarter during fiscal year 1994. The Company also maintains the 1989
Stock Option Plan for Non-Employee Directors (the "1989 Plan"). Under
the terms of the 1989 Plan, all non-employee directors received an
annual option grant on January 31, 1994, to purchase shares of Common
Stock of the Company, consisting of an option to purchase 1,620 shares
having an exercise price of $26.50 (the fair market value per share on
that date) and an additional option to purchase 1,080 shares having an
exercise price of $13.25 (50% of the fair market value per share on that
date). Annual option grants become exercisable in five equal
installments beginning on the grant's first anniversary. All options
expire ten years after the grant date. The 1989 Plan is administered by
a committee of non-participating directors.
- 5 -
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 10, 1995,
regarding all persons known to the Company to be the beneficial owners
of more than five percent of the Company's Common Stock. The table also
includes security ownership for each director of the Company, the
Company's Chief Executive Officer, each of the Company's five other most
highly compensated executive officers for fiscal year 1994, and all
executive officers and directors as a group.
Number of Percent of
Name Shares Class (1)
----------------------------- -------------- -----------
George A. Schock 1,649,941 (2) 9.0%
#1 McKnight Place - Apt. #218
St. Louis, Missouri 63124
Fred C. Ballman 1,499,453 (3) 8.2%
P. O. Box 6638
Fort Smith, Arkansas 72906
R. S. Boreham, Jr. 1,216,847 (4) 6.6%
P. O. Box 2400
Fort Smith, Arkansas 72902
The Company's Profit Sharing
and Savings Plan 1,417,895 (5) 7.7%
P. O. Box 2400
Fort Smith, Arkansas 72902
Putnam Investments, Inc. 1,178,677 (6) 6.4%
One Post Office Square
Boston, Massachusetts 02109
O. A. Baumann 309,246 (7) 1.7%
R. L. Qualls 191,596 (8) 1.0%
James R. Kimzey 99,055 (9) *
John A. McFarland 85,490 (10) *
Lloyd G. Davis 84,505 (11) *
Robert L. Null, Jr. 52,700 (12) *
Jefferson W. Asher, Jr. 27,180 (13) *
Robert L. Proost 22,320 (14) *
Willis J. Wheat 11,340 (15) *
Robert J. Messey 6,335 (16) *
All executive officers and
directors as a group
(17 persons) 5,495,798 (17) 28.8%
- 6 -
_______________
* Less than 1%.
(1) Percentage is calculated with number of shares as the numerator
which includes shares issuable upon exercise of options. The
denominator consists of shares issued and outstanding plus shares
issuable upon exercise of options, if any, awarded to the named
individual or group.
(2) Shared voting and shared investment power over 1,621,152 shares;
includes exercisable options to purchase 28,789 shares.
(3) Shared voting and shared investment power over 1,496,213 shares;
includes exercisable options to purchase 3,240 shares.
(4) Shared voting and shared investment power over 425,022 shares;
sole voting and sole investment power over 572,130 shares; sole
voting and shared investment power over 111,435 shares in the
Company's Profit Sharing and Savings Plan; includes exercisable
options to purchase 108,260 shares.
(5) Sole voting power over 2,040 shares; shared investment power over
1,415,855 shares.
(6) Pursuant to Schedule 13G, dated February 7, 1995, filed with the
Securities and Exchange Commission; shared voting power over 354,835
shares and shared investment power over 1,178,677 shares.
(7) Shared voting and shared investment power over 290,346 shares;includes
exercisable options to purchase 18,900 shares.
(8) Shared voting and shared investment power over 68,828 shares sole voting
and shared investment power over 666 shares in the Company's Profit
Sharing and Savings Plan; includes exercisable options to purchase
122,102 shares.
(9) Shared voting and shared investment power over 9,928 shares; sole voting
and shared investment power over 3,117 shares in the Company's Profit
Sharing and Savings Plan; includes exercisable options to purchase
86,010 shares.
(10) Sole voting and sole investment power over 13,858 shares; shared voting
and shared investment power over 1,100 shares; sole voting and shared
investment power over 8,932 shares in the Company's Profit Sharing and
Savings Plan; includes exercisable options to purchase 62,710 shares.
(11) Sole voting and sole investment power over 22,988 shares; sole voting and
shared investment power over 7,377 shares in the Company's Profit Sharing
and Savings Plan; includes exercisable options to purchase 54,140 shares.
(12) Shared voting and shared investment power over 7,270 shares; sole voting
and shared investment power over 2,279 shares in the Company's Profit
Sharing and Savings Plan; includes exercisable options to purchase
43,151 shares.
(13) Sole voting and sole investment power over 8,280 shares; includes
exercisable options to purchase 18,900 shares.
(14) Sole voting and sole investment power over 15,300 shares; includes
exercisable options to purchase 7,020 shares.
(15) Shared voting and shared investment power over 1,620 shares; includes
exercisable options to purchase 9,720 shares.
(16) Sole voting and sole investment power over 1,200 shares; shared
voting and shared investment power over 275 shares; includes
exercisable options to purchase 4,860 shares.
(17) Includes 151,138 shares in the Company's Profit Sharing and Savings Plan;
includes exercisable options to purchase 750,760 shares.
- 7 -
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid during each of the Company's last three fiscal
years to the Company's Chief Executive Officer and each of the
Company's five other most highly compensated executive officers.
Summary Compensation Table
Long Term Compensation
Annual Compensation Awards Payouts
------------------------------ --------------------- -------
Other Restricted Securities All
Annual Stock Underlying LTIP Other
Name and Principal Position Year Salary Bonus Compensation Awards Options Payouts Compensation(F1)
--------------------------- ---- ------ ------- ------------ ------ --------- ------- -------------
($) ($) ($) ($) (#) ($) ($)
R. L. Qualls 1994 240,000 262,570 0 0 25,000 0 59,570
President and Chief 1993 200,000 219,856 0 0 27,000 0 64,604
Executive Officer 1992 170,000 148,918 0 0 27,000 0 39,859
R. S. Boreham, Jr. 1994 200,000 235,777 0 0 10,000 0 96,768
Chairman of the 1993 200,000 219,856 0 0 21,000 0 170,382
Board of Directors 1992 217,000 210,633 0 0 0 0 80,208
Lloyd G. Davis 1994 100,000 58,944 0 0 12,000 0 19,007
Chief Financial Officer, 1993 100,000 32,978 0 0 15,000 0 16,979
Vice President- 1992 94,863 16,532 0 0 14,400 0 6,953
Finance, Secretary, and
Treasurer
James R. Kimzey 1994 100,000 42,869 0 0 2,000 0 19,711
Vice President - 1993 100,000 29,681 0 0 6,000 0 16,291
Research and Engineering 1992 98,000 23,380 0 0 14,400 0 14,893
John A. McFarland 1994 100,000 58,944 0 0 5,000 0 16,723
Vice President - Sales 1993 90,000 29,681 0 0 15,000 0 12,341
1992 82,000 18,100 0 0 14,400 0 9,951
Robert L. Null, Jr. 1994 100,000 42,869 0 0 2,000 0 18,536
Vice President - 1993 100,000 29,681 0 0 5,400 0 15,116
Manufacturing 1992 100,000 21,274 0 0 0 0 13,708
<FN>
----------------
(F1) The amounts disclosed in this column include contributions by the
Company to the Baldor Electric Company Employees' Profit Sharing and
Savings Plan, a defined contribution plan, which is two plans in one: a
Profit Sharing Plan and a Savings Plan. The Company makes all
contributions to the Profit Sharing Plan which are equal to 12% of pre-
tax earnings for participating companies. The contributions are
allocated among eligible employees in proportion to their total
compensation. The Company makes matching contributions to the Savings
Plan at a rate equal to 25% of the first 4% of the participating
employee's compensation earned and contributed. The Company also
maintains a split-dollar life insurance plan for all executive officers.
The Company makes the premium payments on the split-dollar life
insurance policies which vary according to age and insurance coverage
for each officer. Each officer reimburses the Company for a portion of
the premium that represents the full value attributable to term life
coverage. The amounts included as compensation for each named officer
represents the full dollar value of the premium paid by the Company
during the covered fiscal year less the reimbursement received from each
individual. The fiscal year 1994 amounts in this column represent
Company contributions consisting of the following:
Contributions Contributions Split-Dollar
to the to the Life Insurance
Name Profit Sharing Plan Savings Plan Premiums
------------------ ------------------- ------------- --------------
($) ($) ($)
R. L. Qualls 12,331 1,400 45,839
R. S. Boreham, Jr. 12,331 1,500 82,937
Lloyd G. Davis 11,980 1,000 6,027
James R. Kimzey 11,402 1,000 7,309
John A. McFarland 11,970 1,000 3,753
Robert L. Null, Jr. 11,402 1,000 6,134
- 8 -
Option Grants in Last Fiscal Year
Individual Grants
-----------------------------------------------------------
Number of % of Total Market
Securities Options Price
Underlying Granted on Grant Date
Options in Exercise Grant Expiration Present
Name Granted Fiscal Year Price Date Date Value (F1)
------------------ ----------- ----------- -------- ------- ---------- ----------
(#) ($/sh) ($/sh) ($)
R. L. Qualls 25,000 (2) 11.5% 25.3750 25.375 02/06/2004 263,250
R. S. Boreham, Jr. 10,000 (2) 4.6% 25.3750 25.375 02/06/2004 105,314
Lloyd G. Davis 7,000 (2) 3.2% 25.3750 25.375 02/06/2004 73,720
5,000 (3) 2.3% 12.6875 25.375 02/06/2004 83,623
James R. Kimzey 2,000 (2) 0.9% 25.3750 25.375 02/06/2004 21,063
John A. McFarland 5,000 (2) 2.3% 25.3750 25.375 02/06/2004 52,657
Robert L. Null, Jr. 2,000 (2) 0.9% 25.3750 25.375 02/06/2004 21,063
<FN>
----------------
(F1) The Company used the Black-Scholes option pricing model to determine
grant date present value. Calculations are based on a ten-year option
term and assumptions are: interest rate of 7.85%; annual dividend yield
of 1.8%; and volatility of 1.0%. As indicated, the present values are
based on assumptions and the amounts reflected in this table may not be
achieved.
(F2) Incentive options to purchase shares of Common Stock of the Company were
granted at the market value of the Common Stock on the date of grant and
are 100% exercisable six months and one day following the grant date.
(F3) Non-qualified options to purchase shares of restricted Common Stock of
the Company were granted at 50% of the market value of the Common Stock
on the date of grant with full vesting occurring on the fifth
anniversary date. Vesting may be accelerated by early exercise or when
certain events relating to change of the Company's ownership occurs.
The restricted shares purchased on exercise of such options may be voted
but cannot be sold or transferred until they are vested. The options
are 100% exercisable six months and one day following the grant date.
- 9 -
Aggregated Option Exercises in Last Fiscal Year
and FY-End Option Values
Number of
Securities Underlying Value of
Shares Unexercised Unexercised
Acquired on Value Options In-the-Money Options
Name Exercise Realized (F1) at FY-End (#) at FY-End ($) (F2)
----------------- ----------- ------------- ---------------------------- -----------------------------
(#) ($) (Exercisable) (Unexercisable) (Exercisable) (Unexercisable)
R. L. Qualls 11,455 133,040 130,215 0 1,980,594 0
R. S. Boreham, Jr. 17,900 328,489 108,260 0 1,834,633 0
Lloyd G. Davis 3,100 59,027 45,140 9,000 607,649 108,000
James R. Kimzey 2,000 34,866 86,010 0 1,573,626 0
John A. McFarland 2,800 51,490 62,710 0 907,530 0
Robert L. Null, Jr. 1,100 17,732 43,150 0 751,885 0
<FN>
----------------
(F1) Represents the difference between the option exercise price and the market
price of the Common Stock on the date of exercise multiplied by the number of
shares acquired upon exercise.
(F2) Represents the difference between the $27.00 closing price of the Common
Stock as reported by the New York Stock Exchange on December 30, 1994, the
last trading day of fiscal year 1994, and the exercise price of the options
multiplied by the number of shares of Common stock underlying the option. The
numbers shown reflect the value of options accumulated over a seven-year period.
Change-of-Control Arrangements
Pursuant to agreements under the 1987 Incentive Stock Plan and the 1994
Incentive Stock Plan, outstanding restricted Common Stock of the Company
acquired by an early exercise of a non-qualified stock option will fully vest
and be free of restrictions without the requirement of any further act by the
Company or shareholder in the event of a "Change-of-Control" of the Company as
defined in those agreements.
Compensation Committee Interlocks and Insider Participation
Although the Company has no standing compensation committee of the Board of
Directors, the Executive Committee performs functions similar to those
customarily performed by such committees. Except for grants under the various
incentive stock plans, the Board of Directors, as a whole, approves the salary
and bonus remuneration arrangements for directors and executive officers. The
members of the Executive Committee are the following executive officers:
R. S. Boreham, Jr., R. L. Qualls, and George A. Schock. The Stock Option
Committee administers four of the five incentive stock plans. The members
of the Stock Option Committee are the following non-employee directors: Fred
C. Ballman, Robert L. Proost, and Willis J. Wheat.
- 10 -
Report of the Executive and Stock Option Committees
The Company applies a consistent philosophy to compensation for all employees,
including senior management. This philosophy is based on the premise that the
achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives. The Company strives to achieve
those objectives through teamwork that is focused on meeting the expectations
of customers and shareholders.
The Company's Officer's Compensation Plan (the "Plan") is objective, formula
driven, and has been consistently applied since 1973. The Plan is designed to
ensure that an appropriate relationship exists between executive pay and the
creation of shareholder value. The primary goals of the Plan are to ensure
that total compensation is fair internally, is competitive externally, and
offers performance motivation. For purposes of this section, total
compensation is defined as salary plus bonus. The Plan combines annual base
compensation with a bonus based upon the Company's performance. The Company
believes that the goals of the Plan are met by providing competitive
compensation which will motivate and retain key employees.
Total compensation for all executive officers is established within the range
of salaries and bonuses for persons holding similar positions at other
comparably-sized manufacturing companies utilizing independent salary survey
data. The survey data is a composite of all manufacturing companies that are
comparably-sized based upon sales volume. The independent survey does not
provide a detailed list of all participating companies and the companies
included may or may not include those in the performance graph. The total
compensation for all executive officers is expected to be slightly below the
median for similar positions compared to the independent survey data. This is
accomplished by establishing the annual base portion of compensation at the low
end of the survey with the potential incentive portion being slightly above the
median. This results in a greater emphasis being placed upon the Company's
performance.
The total compensation individual officers may earn is subjective based upon
the individual's position, experience, and ability to impact the Company's
performance. In establishing each officer's annual base and potential bonus
portion of compensation, additional consideration includes the individual's
past performance, initiative and achievement, and future potential, as well as
the Company's performance.
The potential bonus pool is based upon the sales and earnings performance of
the Company and the relative weights are 75% sales and 25% earnings.
Compensation attributable to the sales component increases or decreases in
relation to sales. Compensation attributable to the earnings component
increases if earnings exceed a percentage of shareholders' equity as determined
by the Board of Directors (currently 10%) and decreases if earnings are less
than such amount. Each individual officer's participation in the potential
bonus pool is determined as described above and is assigned such that if the
Company achieves its sales and earnings objectives, the salary and bonus
combined will be competitive with the industry and will remain consistent with
the Company's philosophy and Plan. The Company exceeded planned sales and
earnings which resulted in actual bonuses equaling 23% to 52% of total
compensation for named executive officers.
- 11 -
The factors considered in determining the compensation package for the
President and Chief Executive Officer for fiscal year 1994 were the same as
those described above for executive officers. The total compensation for the
President and the Chief Executive Officer is expected to be slightly below the
median of comparably-sized manufacturing companies. This median is obtained
from independent salary survey data which is utilized in the same manner for
the CEO as well as all other executive officers. The CEO's total compensation
is competitive and reflective of the Company's performance with 52% of the
CEO's compensation at risk in the form of a performance bonus. In 1994, 51% of
the increase in the CEO's total compensation over 1993 total compensation was
the result of improved sales and earnings.
The Company also maintains stock option plans to provide additional incentives
to executive officers and other employees to work to maximize shareholder
value. The Stock Option Committee has granted incentive options to purchase
shares of Common Stock of the Company (at the fair market value of the Common
Stock on the date of grant) and non-qualified options to purchase shares of
restricted stock (at 50% of the fair market value of the Common Stock on the
date of grant) to executive officers and other employees. Grants were made in
fiscal year 1994 to named executives and other employees to continue to
encourage long-term growth and profitability. The number of options granted to
each executive officer is subjective based upon individual performance, future
potential, and abilities to impact the Company's performance.
The President and Chief Executive Officer received an incentive stock option to
purchase 25,000 shares of Common Stock, which represented 11.5% of total shares
granted. The number of options granted was subjective based upon the CEO's
ability to impact the Company's performance as well as individual performance,
and future potential.
The Company, the Executive Committee, and the Stock Option Committee, as
appropriate, continually review the executive compensation policies in regards
to Section 162(m) of the Internal Revenue Code of 1986 as Amended pertaining to
the Company's $1,000,000 deductibility limitation for applicable compensation
paid to named executive officers. In 1994, the deductibility of the Company's
executive compensation was not affected by the limitation under Section 162(m).
EXECUTIVE COMMITTEE STOCK OPTION COMMITTEE
R. S. Boreham, Jr., Chairman Robert L. Proost, Chairman
R. L. Qualls Fred C. Ballman
George A. Schock Willis J. Wheat
- 12 -
Performance Graph
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
Baldor $100.00 $ 80.17 $114.84 $167.07 $221.00 $254.44
S & P 500 100.00 96.90 126.42 136.05 149.76 151.74
S & P Elec Eqp Grp 100.00 91.96 121.91 133.5 161.07 162.95
Assumes $100.00 invested on December 31,1989 in Baldor Electric Company,
S & P 500 Index, and S & P Electrical Equipment Composite Index.
- 13 -
COMPLIANCE WITH SECTION 16 FILINGS
Gene J. Hagedorn, Vice President - Materials, filed one Form 4, with respect to
one transaction, late during the year ended December 31, 1994.
INDEPENDENT AUDITORS
The Company is presently utilizing the services of Ernst & Young LLP, which has
been the Company's independent auditors since 1972. The Audit Committee and
the Board of Directors will consider the reappointment of Ernst & Young LLP as
the Company's independent auditors for the fiscal year ending December 30,
1995, at the Company's next regular Board of Directors meeting in May. The
Company has no reason to believe that Ernst & Young LLP will not be
reappointed. Representatives of Ernst & Young LLP will be present at the
Annual Meeting with an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any shareholder proposals intended to be presented at the 1996 Annual Meeting
must be received by the Company at its principal executive offices no later
than December 2, 1995, in order to be considered for inclusion in the proxy
materials.
OTHER MATTERS
The Board of Directors knows of no other matters to be presented for
consideration at the meeting by the Board of Directors or by shareholders who
have requested inclusion of proposals in the Proxy Statement. If any other
matter shall properly come before the meeting, the persons named in the
accompanying form of proxy intend to vote on such matters in accordance with
their judgment.
March 30, 1995
- 14 -
(PROXY CARD -- FRONT)
BALDOR ELECTRIC COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
For Annual Meeting of Shareholders on May 6, 1995
The undersigned hereby appoints R. S. Boreham, Jr., R. L. Qualls, and
George A. Schock, and each of them, with power of substitution, as proxies
of the undersigned, to attend the Annual Meeting of Shareholders of Baldor
Electric Company, to be held at the Holiday Inn, 700 Rogers Avenue, Fort
Smith, Arkansas, on Saturday, May 6, 1995, at 10:30 a.m. local time, and
all adjournments thereof, and there to vote, as indicated below, the
shares of Common Stock of Baldor Electric Company which the undersigned is
entitled to vote with all the powers the undersigned would possess if
present at the meeting.
(1) Election of Directors FOR all nominees listed below (except
as marked to the contrary below) [ ]
WITHHOLD AUTHORITY to vote
for all nominees listed below [ ]
Fred C. Ballman, R. S. Boreham, Jr., R. L. Qualls
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
______________________________________________________________________________
(2) In their discretion, the proxies are authorized to cumulate and vote
the shares of the undersigned for any nominee other than nominees with
respect to whom authority to vote has been withheld, and to vote upon such
other business as may properly come before the meeting and all
adjournments thereof. This proxy, when properly executed, will be voted
in the manner directed herein by the undersigned shareholder.
If no direction is made, this proxy will be voted FOR the election of
directors.
Please date and sign on the reverse side and mail promptly in the
enclosed envelope.
(PROXY CARD -- BACK)
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby revokes all proxies heretofore given by the
undersigned for said meeting. This proxy may be revoked prior to its
exercise.
Dated: ____________________________________, 1995
__________________________________________________
Signature
__________________________________________________
Signature
Note: Please sign exactly as your name or names
appear hereon. When signing as Attorney, Executor,
Trustee, Guardian, or Officer of a Corporation,
please give title as such. For joint accounts,
all named holders should sign.
PLEASE MARK, SIGN, DATE, AND PROMPTLY RETURN THIS PROXY CARD IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
(DIRECTION CARD -- FRONT)
BALDOR ELECTRIC COMPANY
The undersigned, a participant in the Baldor Electric Company Profit
Sharing and Savings Plan (the "Plan") hereby directs Wachovia Bank of
North Carolina, N.A., as trustee (the "Trustee") of the Plan Trust (the
"Trust"), at the Annual Meeting of Shareholders of Baldor Electric
Company, to be held at the Holiday Inn, 700 Rogers Avenue, Fort Smith,
Arkansas, on Saturday, May 6, 1995, at 10:30 a.m. local time, and all
adjournments thereof, to vote, as indicated below, the shares of Common
Stock of Baldor Electric Company which the undersigned is entitled to vote
with all the powers the undersigned would possess if present at the
meeting.
(1) Election of Directors FOR all nominees listed below (except
as marked to the contrary below) [ ]
WITHHOLD AUTHORITY to vote
for all nominees listed below [ ]
Fred C. Ballman, R. S. Boreham, Jr., R. L. Qualls
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
______________________________________________________________________________
(2) As Trustee, you are authorized to cumulate and vote the shares of the
undersigned for any nominee other than nominees with respect to whom
authority to vote has been withheld, and to vote upon such other business
as may properly come before the meeting and all adjournments thereof.
This direction card, when properly executed, will be voted in the manner
directed herein by the undersigned participant.
If no direction is made by a participant, voting will be controlled
by the terms of the Plan and the Trust.
Please date and sign on the reverse side and mail promptly in the
enclosed envelope.
(DIRECTION CARD -- BACK)
The undersigned hereby revokes all prior directions (the "Direction")
given by the undersigned to the Trustee with respect to the subject matter
hereof for said meeting. This Direction may be revoked prior to its
exercise.
Dated: ____________________________________, 1995
__________________________________________________
Signature
__________________________________________________
Signature
Note: Please sign exactly as your name or names
appear hereon. When signing as Attorney, Executor,
Trustee, Guardian, or Officer of a Corporation,
please give title as such. For joint accounts,
all named holders should sign.
PLEASE MARK, SIGN, DATE, AND PROMPTLY RETURN THIS CARD IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.