B.B.WALKER COMPANY THIS PROXY IS SOLICITED ON BEHALF OF THE
P 4l4 East Dixie Drive BOARD OF DIRECTORS
P.O.Drawer ll67
R Asheboro, N.C. 27204
The undersigned hereby appoints Dorothy W.
O Craven and Rebecca S. Rich or either of
them, as Proxies, each with the power to
X appoint a substitute and hereby authorizes
them to represent and to vote as designated
Y below, all of the shares of common stock of
B. B. Walker Company held of record by the
undersigned on February 22, l999, at the
Annual Meeting of Shareholders to be held
at 7:00 p.m. EST on March l5, l999 or any
adjournment thereof.
l. ELECTION OF FOR all nominees listed below WITHHOLD AUTHORITY
DIRECTORS (Except as marked to the to vote for all
contrary) nominees
K.T. Anderson; G.M. Ball; R. L. Donnell, Jr.; J. P.McDermott;
M. C. Miller and E. A. Walker.
INSTRUCTION: To withhold authority to vote for one or more
individual nominees, write the name(s) of such
nominees(s) in the space provided below.
2. WITH DISCRETIONARY AUTHORITY UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.
YOUR PROXY MAY BE RESCINDED AT ANY TIME BEFORE IT IS EXERCISED AND
WILL BE RETURNED TO YOU ON REQUEST. THIS PROXY WILL BE VOTED AS
SPECIFIED AND IF NO SPECIFICATION IS MADE, SHALL BE VOTED IN FAVOR
OF THE AFOREMENTIONED PROPOSALS. PLEASE SIGN AND DATE THIS PROXY AND
RETURN AT ONCE IN THE ENCLOSED BUSINESS REPLY ENVELOPE. MANAGEMENT
RECOMMENDS A VOTE FOR EACH OF THE ABOVE PROPOSITIONS.
DATED
LABEL (SEAL)
Signature
(SEAL)
Signature
IMPORTANT: Please sign this Proxy exactly as your name appears
hereon. If shares are held jointly, both owners must
sign. Others signing in a representative capacity should
give their full titles.
B.B.WALKER COMPANY
414 East Dixie Drive, P.O.Drawer ll67,Asheboro, North Carolina 27204
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH l5, l999
TO THE HOLDERS OF COMMON STOCK OF B.B.WALKER COMPANY
You are cordially invited to attend the Annual Meeting of the Share-
holders of B. B. Walker Company scheduled to be held on Monday,
March l5, l999 at 7:00 p.m. EST in the executive offices of the
Company at 4l4 East Dixie Drive, Asheboro, North Carolina. The
purposes of the meeting are:
(l) To elect 6 Directors of the Company.
(2) To transact such other business as may properly be brought
before the meeting or any adjournment thereof.
Only holders of common stock of record at the close of
business on February 22, l999 will be entitled to vote at
the meeting. The stock transfer books of the Company will
not be closed.
IMPORTANT - YOUR PROXY CARD IS ENCLOSED
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE URGED TO
COMPLETE, SIGN,DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. THIS
WILL INSURE THAT YOUR VOTE IS COUNTED, WHETHER OR NOT YOU ARE ABLE TO
BE PRESENT. YOUR PROXY CARD WILL BE RETURNED TO YOU IF YOU ARE
PRESENT AT THE MEETING AND SO REQUEST. PLEASE USE THE ENCLOSED
POSTAGE PAID RETURN ENVELOPE FOR MAILING YOUR PROXY CARD.
You have been mailed a copy of the Company's Annual Report, including
financial statements for the fiscal year ended October 3l, l998.
By Order of the Board of Directors
DOROTHY W. CRAVEN, Secretary
----------------------------
Date of Mailing:
February 22, l999
B.B.WALKER COMPANY
414 East Dixie Drive - P.O.Drawer ll67 - Asheboro, N. C. 27204
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
March l5, l999 and Adjournments
SOLICITATION OF PROXY
The enclosed Proxy, mailed on February 22, l999, is solicited by the
Board of Directors of B.B. WALKER COMPANY, (the Company), for use at
its Annual Meeting of Shareholders to be held in the executive offices
of the Company at 414 East Dixie Drive, Asheboro, North Carolina, at
7.00 p.m. EST on Monday, March l5, l999 or any adjournments thereof.
The Company will bear the cost of solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of stock. In addition to
the use of the mails, proxies may be solicited by personal interview
or by telephone, telegram and FAX, etc. Proxies and correspondence
should be addressed to Dorothy W. Craven, Corporate Secretary.
REVOCATION OF PROXY
Execution and return of a Proxy given in response to this
solicitation will not affect a Shareholder's right to attend the
meeting and vote in person. Any Shareholder signing and returning a
Proxy in the form enclosed with this statement may revoke it at any
time before it is exercised by giving notice thereof to the Company in
writing or in open meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Board of Directors has fixed the close of business on
February 22, l999 as the record date for Shareholders entitled to
notice of and to vote at the meeting and any adjournment. On February
22, l999, the Company had issued and outstanding l,725,954 shares of
common stock all of which were outstanding and entitled to vote. Each
share of common stock is entitled to one vote. As of January ll, l999
all Directors and Officers of the Company as a group (9 persons) owned
or controlled 763,599 shares or 44.4% of the Company's common stock.
Included in the solicitation of proxies is the solicitation of
discretionary authority to transact such other business as may
properly be brought before the meeting or any adjournments. The
presence, in person or by proxy, of the holders of a majority of the
outstanding shares of B. B. Walker Company common stock entitled to
vote, is necessary to constitute a quorum.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows information as to "beneficial
ownership" of the common stock of the Company as of January ll,l999 by
each person, known by the Company, (i) to be the beneficial owner of
more than 5% of the outstanding common stock of the Company; (ii) by
each of the Company's directors and nominees for director owning
common stock in the Company; and (iii) by all directors and executive
officers as a group:
Name of Beneficial Number of shares Percent of
Owner Beneficially Beneficially Owned
owned (l) Shares
Kent T. Anderson (2) l82,927 l0.3%
James P. McDermott (3) 403,889 23.5%
Nellie Jean Richardson (4) l94,260 ll.3%
Edna A. Walker (5) lll,697 6.5%
All Directors and Executive
Officers as a Group, 763,599 44.4 %
including stock options deemed
exercisable (9 persons)
(l) Except as otherwise noted, all persons have sole voting and
investment power with respect to their shares.
(2) Kent T. Anderson individually owns 65,202 shares directly
and holds 43,675 shares jointly with Mrs. Anderson. He is
deemed to own 58,750 shares by virtue of currently exercisable
stock option grants. The above total also includes l5,300 shares
of common stock owned by certain family members, some of which
shares are held in a fiduciary capacity.
(3) James P. McDermott individually owns 25,420 shares directly and
is deemed to own 4,000 shares under unexercised Directors
stock option grants. In addition, as Trustee of the Employee
Stock Ownership Plan of B.B. Walker Company (the ESOP), he is
authorized to vote all 374,469 shares held by the ESOP.
(4) Nellie Jean Richardson, widow of a former executive officer and
former Director of the Company, individually owns ll3,202 shares
directly and is deemed to own beneficially 8l,058 shares held by
members of her family.
(5) Edna A. Walker individually owns 88,846 shares directly and is
deemed to own 4,000 shares under exercisable Directors stock
option grants. In addition Mrs. Walker holds joint ownership with
two members of her family of l,699 shares and is deemed to own
beneficially l7,l52 shares held by members of her family.
l. ELECTION OF DIRECTORS
Six Directors are to be elected at the forthcoming Annual Meeting.
The recommendation of the Nominating Committee of the Board of
Directors was that the existing six member Board be reelected. This
was accepted and the Board at its January l999 meeting directed that
the six persons be presented as its director nominees for
consideration by the shareholders. It is intended that the two
persons named in the accompanying Proxy will vote FOR all six director
nominees named on the following pages unless authority to vote is
directed otherwise. Directors shall be elected by a plurality of the
votes cast at the meeting.
A Director is elected to serve until the next Annual Meeting
of the Shareholders or until a successor shall be elected and shall
qualify. Each nominee for Director has agreed to serve and, so far
as the Board is aware, will serve if elected. If any nominee is
unable to serve, the proxies will be voted by those named therein for
the election of a substitute nominee selected by the Board of
Directors.
Of the six nominees for director, one is presently an
employee and three are retired employees. The Company provides
Directors and Officers Liability Insurance coverages. There are no
family relationships between any of the nominees and the executive
officers of the Company or its subsidiary.
BOARD MEETINGS AND DIRECTORS' ATTENDANCE
The Board of Directors meets on a quarterly basis. The Annual
Meeting of the Board of Directors is held immediately following the
Annual Meeting of the Shareholders. Special meetings of the Board may
be called at any time when necessary as provided in the By-Laws.
There were 5 Board meetings held in l998. All except one Director,
who missed one meeting, attended all six meetings of the Board and of
the Committees on which he or she served.
BOARD COMMITTEES
The Board has 3 committees: an Audit Committee; a Compensation
Committee; and a Nominating Committee.
(l) The Audit Committee, which held l meeting in l998, meets with
the independent public accountants and reviews the scope and results
of the audit by the independent auditing firm. The Committee makes
recommendations to the Board as to the selection of the independent
public accountants and as to services provided. In addition it
reviews the system of internal control and accounting policies. The
Audit Committee is composed entirely of Directors who are not
employees of the Company or of its subsidiary. The five Members of
the Audit Committee are: James P. McDermott, Chairman; George M.
Ball; Robert L. Donnell, Jr.; Michael C. Miller and Edna A.
Walker. The Committee met with the independent public accountants on
January 4, l999 and reviewed the financial statements presented. The
Committee subsequently recommended to the Board of Directors that the
formal audit report be accepted as presented, which recommendation
was accepted.
(2) The Compensation Committee met once during the year when the
fiscal l998 financial results were available for its review. The
Committee is directly responsible for determining the compensation of
the Chairman and Chief Executive Officer of the Company, relating his
compensation to an evaluation of his performance during the fiscal
year. The Committee presents its recommendations to the Board of
Directors for its consideration. The Committee is composed of the 5
outside non-employee directors. The Committee is responsible for the
establishment and oversight of executive compensation, benefit and
retirement plans of the Company. The Compensation Committee is
composed of George M. Ball, Chairman; Robert L. Donnell, Jr.;
James P. McDermott; Michael C. Miller and Edna A. Walker.
The Compensation Committee also reviews the recommendations of
management for the issuance of Stock Option Grants under the l995
Incentive Stock Option Plan of the Company. After review the
Committee makes recommendations to the Board regarding the issuance of
the grants, the price at which the shares of stock are issued, and the
conditions of the grant.
(3) The Nominating Committee, composed of three non-employee directors
who are not officers of the Company or its subsidiary, held l meeting
in l998. The Committee reviews information for the selection of
qualified candidates for director nominee and recommends to the Board
of Directors for its consideration the names of qualified director
nominees who are willing to serve if nominated and elected. This
Committee has no current plans to consider nominees recommended by
security holders. The 3 Members of the Nominating Committee are:
Michael C. Miller, Chairman; Edna A. Walker and George M. Ball.
The Committee also met on January 4, l999 and unanimously recommended
to the Board of Directors the re-election of the existing Board of
Directors.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
THE BOARD RECOMMENDS A VOTE "FOR" ALL OF THE BELOW LISTED NOMINEES FOR
ELECTION AS DIRECTORS.
Name, Age & Year Equity Securities of
First Elected Principal Occupation Company,beneficially
a Director For Last Five Years owned on January ll,l999(l)
Common Preferred
Shares(6) Shares
Kent T. Anderson Chairman of the Board l82,927
(56)(l985) (l992), President (l0.3%)
(l984) & Chief -
Chief Executive
Officer (l986)(2)
George M. Ball Chairman, Philpott, 4,000 -
(64)(l993) Ball & Co., Investment (.23%)
Bankers, Charlotte, N. C.(5)
Robert L. Donnell, Jr. Retired. Formerly 6,l46 -
(67) (l968) Executive Vice Presi- (.36%)
dent - Operations
l968-l99l (6)
James P. McDermott Retired. Formerly Vice 403,889 -
(78)(l986) President & General (23.5%)
Counsel l974-l992.
Formerly Corporate
Secretary l984-l993.(3)
Michael C. Miller President & Chief Executive 4,000 -
(47) (l993) Officer, First National (.23%)
Bank & Trust Co.,Asheboro, N.C.(4)
Edna A. Walker President lll,697 35
(74)(l952) B. B. Walker Foundation (6.5%) (4.2%)
(l) The By-Laws and the Corporate Charter do not require Directors
to be Shareholders. The number of shares of common stock
shown includes shares held in the names of spouses, minor
children or certain relatives, as to which beneficial
ownership is disclaimed. The totals shown in the table
include shares subject to currently exercisable options
granted by the Company.
(2) Kent T. Anderson, currently holds exercisable stock option
grants for 58,750 shares. Under the l987 Incentive Stock
Option Plan of the Company, Mr. Anderson holds unexercised
stock option grants for 38,750 shares. He also holds 20,000
shares granted on March 3l, l997 under the l995 Incentive
Stock Option Plan of the Company. Reference is made to
subparagraph (2) on page 2 of this Proxy Statement under
the heading, "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT".
(3) The above set forth total of shares of common stock
beneficially owned by James P. McDermott includes the 374,469
shares of common stock or 2l.7% of the total shares issued
and outstanding, held by him as Trustee of the Employee Stock
Ownership Plan and Trust of B.B. Walker Company for the
benefit of all Plan participants. Under the Plan,
participants exercise no voting control over shares of stock
allocated to their accounts so long as they are participants
in the Plan, unless required by North Carolina law. Shares
cannot be distributed to nor disposed of by participants while
employed. Equitable ownership by participants of shares
allocated to their accounts depends upon their being vested in
their accounts, which vesting is based upon their length of
service. Reference is made to subparagraph (3) on page 2 of
this Proxy Statement under the heading, "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT".
James P. McDermott, subsequent to his retirement in February
l992 as Vice President, General Counsel & Secretary of the
Company,was retained by the Company as a Consultant to render
services in two specialized areas. (l) James P. McDermott
oversees the administration and prepares the annual report
filings with the IRS of the Company's three ERISA qualified
employee benefit plans. Under the Consulting Agreement he
serves as Trustee and or Plan Administrator for the three
qualified Plans. (2) In addition under the Consulting Agree-
memt, he is responsible for the preparation of the Proxy
Statement which Proxy Statement is sent to Shareholders
for the Annual Meeting of the Shareholders. James P.
McDermott was paid $3l,600 during fiscal l998 for services
rendered.
(4) Michael C. Miller, elected to the Board on July 6, l993 has
been President since l99l of First National Bank & Trust
Company, Asheboro, N. C. He was elected Chief Executive
Officer of the Bank in January l994. In January l994 he was
elected President and Chief Executive Officer of FNB Corp.,
the parent company of the Bank. He has been associated with
First National Bank since l985 serving as Executive Vice
President until l99l when he was elected President. He is a
Director of the Bank's parent holding company. Prior to
joining the First National Bank, he was an attorney engaged in
the private practice of law in Asheboro, N.C. Mr. Miller is
a graduate of the University of North Carolina at Chapel Hill,
N.C. He holds a Masters of Business Administration Degree in
Management from Wake Forest University and a Juris Doctor
Degree from the Wake Forest University School of Law.
First National Bank has entered into a Mortgage Loan trans-
action with the Company and holds a first lien on the
Company's facility in Somerset, Pennsylvania. First National
Bank is also a major participant with Mellon Bank,
Philadelphia,Pennsylvania, in a Term Loan to the Company
secured by a lien on the Company's manufacturing facilities in
Asheboro, North Carolina.
(5) George M. Ball, elected to the Board on September 7, l993, has
been Chairman of Philpott, Ball & Co., an investment banking
firm in Charlotte, N.C. since l99l. Prior to the founding of
Philpott, Ball & Co., he was Senior Vice President in charge
of the Mergers & Acquisitions Department at Interstate/Johnson
Lane Securities, a regional securities firm in Charlotte, N.C.
George Ball has been involved on an executive level in
corporate finance and management and with securities firms
since l968. He presently serves on the Board of Directors of
Juno Lighting, Inc., a publicly held lighting equipment
manufacturing company located in Des Plaines, Illinois. Mr.
Ball is a graduate of Yale University following which he
served for a number of years as a pilot in the United States
Marine Corps. George M. Ball, on behalf of his employer
Philpott, Ball & Company, has served the B. B. Walker
Company as a management consultant for a number of years
advising management on various matters of corporate finance
and restructuring. Philpott, Ball & Company was paid $46,882
for its services rendered during fiscal l998.
(6) Robert L. Donnell, Jr., until his disability retirement in
l99l was Executive Vice President-Operations of the Company.
Mr. Donnell was hired on April l,l998 as a consultant to the
Company to advise management in the orderly transfer of
certain non-cement manufacturing operations from the Asheboro,
NC facility to the western boot manufacturing facility in
Somerset, PA. Mr. Donnell was paid $l5,500 in fees for his
services during fiscal l998.
DIRECTOR AND OFFICER SECURITIES REPORTS
Federal securities laws require the Company's directors and executive
officers to file with the Securities and Exchange Commission,
Washington, D. C. initial reports of ownership and reports of
changes in ownership of B.B. Walker Company common stock. The
Company is required to identify any officer, director or owner of more
than l0% of the Company's common stock who failed to timely file with
the Securities and Exchange Commission a required report relating to
beneficial ownership of common stock under Section l6(a) of the
Securities Exchange Act of l934. To the Company's knowledge and based
on Company records and other information, all parties subject to these
reporting requirements with respect to B.B. Walker Company's common
stock, filed the required reports on a timely basis during fiscal
l998.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
The following table sets forth information concerning the annual
compensation for services in all capacities to the Corporation for the
fiscal years ended in October l998, November l997 and l996, of
those persons who were, at October 3l, l998 (i) the chief executive
officer and (ii) the other four most highly compensated executive
officers of the Corporation, ("The Named Officers") who were paid
compensation of $l00,000 or more per year:
Summary Compensation Table
Annual Compensation
(a) (b) (c) (d) (e) (g)
(i)
Long Term
Other Compensation
Name and Annual Awards All Other
Principal Compen- Options/ Compensation
Position Year Salary (1) Bonus sation SAR(#) (l) (2) (3) (4)
Kent. T.Anderson l998 $223,958 $ -0- $ - -0- $5,787
Chief Executive l997 $l98,489 $ -0- $ - (5) 20,000 $5,63l
Officer l996 $2l5,000 $ -0- $ - $2,493
-0-
"NO EXECUTIVE OFFICER OTHER THAN THE CHIEF EXECUTIVE
OFFICER EARNED $l00,000.00 OR MORE IN BASE SALARY AND
INCENTIVE COMPENSATION DURING FISCAL l998."
(1) Salary data shown for the Named Officer is prior to any deduction
or offset for participation in the Company's Thrift Plan, a
Section 40l(k) Plan. Since January l, l989, the Company has
sponsored for the benefit of all employees, including the Named
Officer Kent T. Anderson, the Retirement Savings Plan of B.B.
Walker Company, (the Section 40l(k) Plan). Participants may
contribute through payroll deduction each month on a pre-tax
basis. The Board of Directors authorized a matching contribu-
tion to the Plan for fiscal l998 of ten (l0%) percent of actual
payroll deductions made during the year by active participants in
the Plan who were employed as of December 3l, l998. The Named
Officer received a matching contribution of $9ll to his Section
40l(k) Plan account for fiscal l998. Such amount is included in
column (i) All Other Compensation above. In addition, the Named
Officer is provided with a leased vehicle for use on Company
business. The vehicle is used from time to time for his personal
use. The value of such personal usage is determined and is
included on his W-2 form as taxable income to him. Such amount
is not included in the above table.
(2) The Named Officer is a participant in the Employee Stock
Ownership Plan of B.B. Walker Company (the ESOP).
This Plan, which has been in effect since l96l, is a defined
contribution Plan under the Employee Retirement Income
Security Act of l974, (ERISA), and has accumulated for the
exclusive benefit of employee participants just under 2l.7% of
the issued and outstanding common stock of the Company. The
employees do not contribute to the ESOP and participation is
mandatory. The contribution is allocated to individual
participant accounts by a formula under which all participants
receive the same percentage of their fiscal year compensation
contributed to their accounts. The "Named Officer" was allocated
$2,224 from the $65,000 contribution for fiscal l998 as
authorized by the Board of Directors which amount is included in
column (i) All Other Compensation above.
(3) The Named Officer has borrowed funds from the Company under the
l989 Plan for the lending of Company funds to officers, directors
and key employees for the purchase of B.B. Walker Company stock.
Full data on the Named Officer's participation in the Company's
Loan Program to Officers and Directors for the purchase of the
B.B. Walker Company common stock, is set forth in sub-paragraph
(2) under the "CERTAIN TRANSACTIONS" section hereinafter. During
Fiscal l998, the Named Officer is deemed to have benefited in the
amount of $l,668 in having a contract rate provided under the
Plan that was 2% below the prime rate in effect at two regional
banks. Such amount is included in the above table under column
(i) All Other Compensation.
(4) The Company provides a special life insurance program of various
amounts for Officers, Directors, truck drivers, salesmen and
other key employees of the Company and its subsidiary, with the
Company and the employees sharing the premium cost. A total of
55 employees are insured of which 6 are Officers and Directors of
the Company and its subsidiary and 49 are truck drivers,
salesmen, supervisors and other key employees. In fiscal l998
the Company and its subsidiary's share of the premium cost
amounted to $20,454. The Company share during fiscal l998 of the
total cost of the special life insurance coverage for all 6
executive officers and directors as a group was $6,286 or 30.7%
of the total Company cost. The portion of such cost applying to
the director nominees amounted to $2,637 or l2.9% of the total
Company cost. The cost for the Named Officer for l998 was $984
which amount is included in column (i) All Other Compensation
above.
(5) See Option/SAR Grants Section below.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No SAR's were granted by the Board of Directors to any key employee during the
fiscal l998 year. Only one stock option for 5,000 shares was granted to a key
employee in fiscal l998. No stock options were exercised by key employees.
The Company maintains the "l995 Incentive Stock Option Plan for Key Employees
and Non-Employee Directors" which Plan was approved by the Shareholders at
the Annual Meeting on March 20, l995. Under Part II of the Plan - the
Automatic Option Grant Program, applying only to non-employee Directors,
automatic grants for l,000 shares each were made to all five non-employee
Directors following the close of the Annual Shareholders Meeting on March l6,
l998. No options granted to Non-Employee Directors were exercised in fiscal
l998.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
The following table shows stock options exercised by Named
Officers during fiscal l998, including the aggregate value of
gains on the date of exercise. In addition, this table includes
the number of shares covered by both exercisable and non-
exercisable stock options as of October 3l,l998. Also reported
are the values for "in-the-money" options which represent the
positive spread between the exercise price of any such existing
stock options and the year-end price of Common Stock.
(a) (b) (c) (d)
(e)
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired on Value FY-End(#)(2) FY-End($)(3)
Name Exercise(#)(l) Realized($)(3) Exercisable Unexercisable Exercisable Unexercisable
Kent T. Anderson -0- -0- 58,750 -0- ($63,750)* $ -0-
* Fair Market Value at Fiscal Year End l0/3l/98 was $l.00 per share
based on the Bid Price of $.75 per share and the Ask Price of
$l.25 per share as published in the Over the Counter Section of
the financial pages of local and regional newspapers.
(l) Upon exercise of an option grant, the optionee must pay the
exercise price in cash.
(2) Options shown in column (d) were made under the l987 & l995 Incentive
Stock Option Plans. All grants provide that only one-half of the number
of shares granted may be exercised at time of grant and the other half
after l2 months. Shares purchased at exercise of grant may not be sold
without penalty for a period of two years. Under the ISO Plans any
profit or gain realized is not taxable to the grantee at time of
exercise of the grant, but is taxable to the grantee at time of sale
of the stock.
(3) Represents the difference between the fair market value of the
common stock underlying option and the exercise price at exercise
or fiscal year end respectively.
EMPLOYMENT CONTRACT AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
Kent T. Anderson, as President and Chief Executive Officer, and the
Company entered into an Employment Agreement on October 2, l989, five
years after the Chief Executive Officer was employed. The initial
term was for three years starting November l, l989 with an automatic
annual extension provision providing for the Agreement to be for no
less than three years at all times. The Agreement provided for the
Chief Executive Officer's employment at a minimum base salary of
$l25,000 per year and for an annual increase on January l of each year
thereafter, of at least five (5%) percent of his current base salary.
The Agreement provides that the Board of Directors may, in its
discretion, grant merit increases to the Chief Executive Officer from
time to time. The Chief Executive Officer's salary for fiscal year
l998 was $223,958. Effective January l, l999, under the provisions of
the Chief Executive Officers Employment Agreement with the Board of
Directors, the annual increase of 5% raised his base salary to
$235,l56 per year.
This Agreement with the Chief Executive Officer may not be terminated
by the Company for any reason whatsoever without penalty, other than
for cause. It may be terminated with three years prior written notice
of termination. However, the Board may exercise its statutory
authority to remove the Chief Executive Officer from his present
elected office and function at any time. This would require immediate
payment of the three year compensation amount provided for in the
Agreement. By Amendment No. l dated July 6, l990, the Employment
Agreement was modified to comply with certain tax provisions of the
Internal Revenue Code. The Chief Executive Officer may, at his
option, elect to reduce the total amount due him under the Agreement
so that no portion of the amounts received by him will be subject to
the excise tax imposed by the Internal Revenue Code on some severance
payments.
The Chief Executive Officer may terminate his employment under
the Agreement in the event: (i) The Company merges or consolidates
with another person or group or undertakes any other reorganization
where the Company is not the Surviving Entity; or (ii) the Company
sells or transfers substantially all of its business or assets to
another person; or (iii) 50% or more of the capital stock of the
Company presently outstanding is acquired by a person or group at any
time after the date of this Agreement. In the event of such
termination, the Chief Executive Officer is entitled to receive
immediately the full amount of his current base salary for three
years. Subject to the above mentioned Amendment, unless the Chief
Executive Officer elects to reduce the total amount to be paid to him,
the three years pay following the end of fiscal l998 would be
$705,468. Such payment,if made, is to be made in full in cash and
without limitation. The Board of Directors, with the exception of
Kent T. Anderson who was not present, was unanimous in authorizing
the execution of this Employment Agreement.
COMPENSATION OF OUTSIDE DIRECTORS
Five of the six Directors are non-employees of the Company.
The Company provides Directors and Officers Liability Insurance coverage.
Non-employee outside Directors receive a meeting fee of $l,200 for each
Board or Board Committee Meeting, unless the Board and Committee meetings are
held on the same day. Directors who are full time employees of the
Company or of its subsidiary, namely Kent T. Anderson, do not receive any
additional compensation by reason of membership on or attendance at
meetings of the Board of Directors or Board Committees. Four quarterly Board
Meetings are scheduled each fiscal year in addition to the Annual
Meeting of the Board of Directors held immediately following the Annual
Meeting of the Shareholders.
All five Non-Employee Directors benefit from Part II of the "l995
Incentive Stock Option Plan for Key Employees (Part I) and (Part II)
Non-Employee Directors". Part II is a Non-Qualified Plan. This Plan
was approved by the Shareholders at the Annual Meeting on March 20,
l995. Under Part II, Non-Employee Directors who are elected at the
Shareholders Meeting receive an automatic grant of l,000 shares each
of B. B. Walker Company common stock under the Plan, with the Board of
Directors establishing the option price. Presently each Non-Employee
Director holds unexercised options under Part II of the l995 Plan of
4,000 shares. No such stock options have been exercised to date.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation & Stock Option Committee of the Board of Directors,
("the Committee"), is composed of the five outside non-employee
directors and is responsible for the establishment and oversight of
the Company's policies for executive compensation as well as benefit
and retirement plans of the Company. The Committee is responsible for
the initiation and operation of the Company's incentive stock option
plans. The Committee recommends to the Board, on an annual basis,the
compensation of the Chief Executive Officer relating his compensation
to performance. The Board,(other than the Chief Executive Officer),
must approve all compensation actions affecting the Chief Executive
Officer. The Company does not utilize outside compensation
consultants, but does have available to it independent compensation
data of other companies. The Committee has prepared the following
report for inclusion in this Proxy Statement.
COMPENSATION PHILOSOPHY
From the Company's inception its corporate philosophy concerning
employee compensation as established by the Board of Directors has
been for the Board to delegate to the Chief Executive Officer, subject
to review by the Board, the responsibility for establishing rates of
pay and bonus allocations for all employees, with the exception of his
own compensation (salary and bonus). The Chief Executive Officer, in
his determinations, follows the philosophy of compensation as
determined by the Committee and approved by the Board, as well as the
requirements set forth in the l995 Incentive Stock Option Plan and
the l992 Incentive Compensation (Bonus) Plan.
The Company's executive compensation policies have two primary goals:
(l) to attract and retain the highest quality executive officers and
(2) to reward those officers for superior corporate performance
measured by the Company's financial results and strategic
achievements.
The Compensation Committee, in the interests of employee morale and
motivation, plans to continue supporting and recommending to the Board
of Directors and to the Chief Executive Officer, improvements in and
to, simple and plain incentive compensation plans for management
personnel in the areas of:
(1) Merit salary increases based on the individual's level of
responsibility and on above average individual work
performance and goal achievement.
(2) The l995 Incentive Stock Option Plan for key management
employees and executive officers, which is based on merit,
above average performance and goal achievement. This ISO Plan
is intended to motivate a key management employee, who holds a
stock option grant, to work for long term Company growth and
profitability. Such will benefit key employee shareholders, as
well as benefit all other shareholders.
(3) The 1992 Incentive Compensation (Bonus) Plan was established
to provide a fair and equitable formula for the sharing of
Company profits with those management employees who help
make profits possible. If there is a loss or if profits
are minimal no bonus awards will be made. When the Company is
adequately profitable, graduated awards are made based on the
individual's level of responsibility and his/her performance
thereunder. The more responsible a key management employee's
function is, the greater the reward when pre-established goals
are met or exceeded.
Cash awards under the two-part Bonus Plan are based on the
Company meeting or exceeding during the fiscal year specified
income levels for each part. This two part Plan is designed
to share the Company profit on a merit and performance basis,
first with all management personnel and second with key
executive management. Payments under both parts being geared
to individuals achieving budgets and/or meeting specific
performance goals. In certain instances sharing is among
several individuals where group effort is to be rewarded.
CHIEF EXECUTIVE OFFICER COMPENSATION PROGRAM
The Chief Executive Officer's compensation program is comprised of
base salary, annual performance compensation and long-term
incentive compensation in the form of stock options. In addition the
Committee believes that basic management compensation should be
adequate, but not excessive and should be coupled with incentive
compensation awards based on the individual's performance and his/her
contribution to the overall Company effort and results.
The Chief Executive Officer is a Certified Public Accountant who had
worked for a number of years in the management services division of a
world renowned public accounting firm. He is a hands on executive and
knowledgeable about all aspects of footwear manufacturing, marketing
and distribution activities, including compensation and affordable
employee benefits in those areas. The Chief Executive Officer has a
broad general knowledge of compensation levels in other footwear
manufacturing concerns and in communities wherein such are located.
The Committee believes the Chief Executive Officer is best qualified
to judge the merits of employee compensation requests and
recommendations for compensation levels for individual management
employees. Due to the size of the Company, the Chief Executive
Officer, who is also the Chief Operating Officer, is familiar with and
works with all such management personnel on a day to day basis.
Delegation of authority on a report back basis is widely used by him.
The Company, with its flexible internal communications relationship
in management and its open door policy for questions, suggestions and
complaints, etc., is not staffed as and does not operate as a
bureaucracy. Salary increases and bonus allocation amounts are based
on merit and are generally made by the Chief Executive Officer in
conjunction with input from the Department Heads and other senior
supervisors and are subject to review by the Compensation Committee.
The Compensation Committee reviews the base salary and the annual
incentive compensation of the Chief Executive Officer following the
close of each fiscal year. This review is made in light of his
handling of his responsibilities, his performance during the year and
the financial results for the fiscal year.
Base Salary
The Chief Executive Officer's base salary through fiscal l998 was
$223,958. The Compensation Committee, based on fiscal l998
operations, decided not to grant any merit increase to the CEO's base
salary for fiscal l999. However, his base salary was increased as of
January l, l999 under the automatic annual salary increase provision
in the CEO's employment contract. The Committee felt that, in light
of business conditions, this was an adequate amount of increase for
the CEO for fiscal l999.
The Chief Executive Officer's 3 year continuing Employment Contract
provides for an automatic increase of 5% of base salary on January
l following the close of each fiscal year. The base salary by
contract thus provides a floor from which merit increases based
on performance may be made. The Compensation Committee independently
determines merit increases in the base salary for the Chief Executive
Officer by evaluating the Company's performance against its pre-set
goals; examining the Company's performance within the industry and
evaluating the overall performance of the Chief Executive Officer in
operating the Company during the fiscal year.
The Company was only marginally profitable in fiscal l998 having a net
income of $75,000 compared with a marginal profit of $24,000 in
fiscal l997. The Committee believes the footwear market and other
factors faced by the Company in fiscal l998 were extremely difficult.
Continuing major factors were: the continuing decline in shipments
due to over- production by other suppliers which has caused
overstocked inventory conditions of dealers and retailers thereby
affecting the Company's profit margins; severe price competition from
work shoe imports in the marketplace and marketing restructuring
activities. The Committee believes the Chief Executive Officer
handled his responsibilities well during fiscal l998 resulting in a
breakeven status for the year. The Chief Executive Officer has in
place substantial changes to improve the financial results for l999.
Annual Incentive Compensation
Since fiscal l998 generated a marginal net income for the year,
no provision was made for the payment of any bonuses under the l992
Incentive Compensation (Bonus) Plan.
Stock Option Grants
Only one stock option of 5,000 shares at $l.00 per share was granted
to a key employee during fiscal l998.
DIRECTORS AND MEMBERS OF THE
COMPENSATION & STOCK OPTION COMMITTEE
George M. Ball, Chairman
R.L. Donnell, Jr.
James P. McDermott
Michael C. Miller
Edna A. Walker
COMPENSATION AWARDS TO KEY EMPLOYEES BY THE CHIEF EXECUTIVE OFFICER
The Board of Directors has delegated to the Chief Executive Officer,
(the"CEO"), the establishing of rates of pay and bonus allocations for
all key employees and officers, with the exception of benefits for
himself. This is on the basis of his experience in the footwear
industry and a belief that his regular contacts with employees would
result in his establishing compensation levels that would be more
accurate and fair. The exercise of this authority by the CEO is
subject to review by the Compensation Committee and by the Board of
Directors.
Due to the relatively small size of the Company and since the CEO is
also the Chief Operating Officer, he is in contact with sales,
manufacturing and administrative management personnel on a regular
basis. His contacts are basically observing and checking without
interfering with the natural line of authority in the various levels
of supervision. Accordingly, the various managers and key employees
are personally known to him and such exposure forms the basis for his
evaluation of key employee and officer performance. Evaluation is
also obtained from time to time by attendance at various sales,
manufacturing and administrative meetings both as an observer and as a
participant.
It is his practice when it is time for the annual compensation review
for key employees and officers to confer with individual higher level
managers regarding each key employee's goals, performance, attitude,
effort, relations with and motivation of those supervised, as well as
relations with fellow supervisors and higher level supervisors. The
acceptance of responsibility and performance toward and achievement of
goals set thereunder are given considerable weight in decisions made
by the CEO.
At times the CEO will prepare a list of key employees and officers
recommending the granting of stock options under the l995 Stock Option
Plan for Key Employees and Officers. The CEO follows the set of
general guidelines in determining his recommendations of stock option
grants. He generally takes into account the duties and
responsibilities of the individual, his/her individual performance,
years of service to the Company, the number of outstanding options and
the size of prior option awards. In general, more emphasis is placed
on employee performance and the achievement of goals. Such list is
submitted by him to the Compensation Committee for its consideration
and recommendation to the Board of Directors. Similar factors used by
the CEO in base pay and incentive compensation considerations go into
preparing the proposed list of stock option grants.
It is the CEO's belief that the linking of key management and officer
compensation to performance and achievement of goals on an all around
basis is the best way to serve the Company and the Shareholders. The
Compensation Committee is in agreement with the CEO's philosophy of
compensation awards.
CERTAIN TRANSACTIONS
(l) MAE, Inc. ("MAE" hereinafter), of Asheboro, North Carolina, is an
advertising agency and public relations firm owned by Maggie Anderson
and her husband Kent T. Anderson, Chairman and Chief Executive
Officer of B. B. Walker Company, ("Walker" hereinafter). During
fiscal l998, Maggie Anderson, as the only active principal and owner,
rendered technical and creative services to Walker in the areas of
design, layout, color separation, photography and other services,
including the placement of Walker advertisements and ad copy in trade
publications, footwear consumer magazines and other related media
means. Other services rendered include assistance in producing
printed material; coordinating public relations events and press
conferences for the Company; the Co-operative Advertising Program,
the development and handling of direct mailings to customers and
prospects; footwear market promotions and Internet activities
including the development of WEB pages on the Internet for the
various footwear brands sold by Walker.
In August l997, the Company created an in-house advertising agency to
provide more focus to its advertising programs. Maggie Anderson was
retained as a consultant to manage the operations of the in-house
advertising agency and to provide consultation and direction
regarding Walker's advertising programs. Maggie Anderson still manages
MAE, Inc. which continues to provide services to its clients,
including Walker, although on a reduced scale. Maggie Anderson as the
non-employee manager of the in-house agency works with and is super-
vised by French P. Humphries, Executive Vice President of Marketing.
During fiscal l998, Walker paid MAE, Inc. total of $l00,388 for
services rendered and for use of their facility and equipment. This
relationship was disclosed to and approved by the Board of Directors
at its inception in l989. The Chief Executive Officer updated the
Board again in March l998. The Board believes the services rendered
to Walker by MAE and paid for are competitive as to price and are
equal to or superior in quality to others available in this area.
(2) Key employees and Directors, including the Named Officer, Kent T.
Anderson, have borrowed Company funds for the purchase of B. B.
Walker Company stock through the exercise of stock options. Such
loans were made under the "l989 Plan For The Lending of Company Funds
To Officers and Directors For The Purchase of B. B. Walker Company
Stock", (the Loan Program). The lending of B. B. Walker Company
funds to officers, directors and other key employees in management, as
authorized under North Carolina law, was instituted initially by
shareholder approval granted in l966. In l989 the loan program was
updated and was approved by the Shareholders at the Annual Meeting
held on March l3, l989. The Loan Program is in accord with a long
standing Company policy of encouraging officers and directors and
other key employees in management to become shareholders.
All loans are made in the sole and absolute discretion of the Board of
Directors. All borrowings are made solely to enable the employee to
purchase B. B. Walker Company stock from various sources, including
the exercise of all or part of any outstanding stock option grant.
Loans are made for a period of up to l0 years and are repayable
through payroll deduction. Interest is charged at 2% below the lower
of the prime rate charged by the First National Bank and Trust
Company, Asheboro, N. C. or by the NationsBank of Charlotte, N. C.
as determined by the Board of Directors. Each loan is made under a
negotiable promissory note and is secured or collateralized by the
pledge of all shares purchased with the loan proceeds. All three
loans presently outstanding, as of l0/3l/98 totaling $77,056, are at
4% per annum, which rate is charged monthly on the outstanding unpaid
balance. No executive officer owes $60,000 or more to the Company
under the Loan Program. All loans in the aggregate cannot and have
not exceeded $350,000 at any time.
(3) Michael C. Miller, a Director of the Company since l993,is
President and Chief Executive Officer of First National Bank and Trust
Company, Asheboro, N. C. ("the Bank"). Until l995 the Bank held a
First Deed of Trust on the Company's main manufacturing facility in
Asheboro. For many years the Company has operated a western boot
manufacturing facility in Somerset, Pa. In l994 the Company purchased
a larger manufacturing facility in Somerset, Pa. borrowing funds from
three sources, one of which was the Bank. The Bank holds a 25%
interest in this mortgage loan package, all of which is secured by a
first lien on the Somerset, Pa. manufacturing facility.
In l995 the Company entered into a major refinancing agreement with
Mellon Bank of Philadelphia, Pa. As part of its refinancing, the
Company received a separate term loan from Mellon of $3 Million.
Proceeds from this loan were used to pay off the First Deed of Trust
held by First National Bank on the Company's Asheboro manufacturing
facility and Mellon thus secured a First Deed of Trust in its favor on
the Company's main manufacturing facility as security for the $3
Million term loan. First National Bank dealing directly with Mellon
is a secured participant with Mellon in the term loan to the Walker
Company. There is no direct relationship in this transaction between
First National Bank and the Walker Company.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is an officer or an employee
of the Company. As reported elsewhere under Nominees for Election to
the Board of Directors on page 4, James P. McDermott, until February
l992 a former executive officer of the Company and a Director Nominee,
renders services to the Company as a Consultant for which he is
compensated. Similarly, George M. Ball, a Director Nominee, renders
services to the Company as Chairman of Philpott, Ball & Company, for
which his Company is compensated. Also Michael C. Miller, a Director
Nominee, is President of First National Bank and Trust Company. The
Bank as reported elsewhere herein, under Certain Transactions, is a
participant with other lenders and holds a security interest in the
two parcels of real estate owned by the Company in Asheboro, NC and
Somerset, PA.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the annual percentage change
in the Company's common stock with the percentage change in the NASDAQ
Composite Index and an index of peer companies selected by the
Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(B.B.Walker Company, NASDAQ Composite Index, Peer Group)
NASDAQ
Measurement Period B.B.Walker Composite Peer
(Fiscal Year) Company Index Group
- ------------------ ---------- --------- -----
Measurement Point -
October 30, 1993 $ 275 $ 129 $ 185
October 29, 1994 $ 163 $ 128 $ 139
October 28, 1995 $ 38 $ 172 $ 120
November 2, 1996 $ 41 $ 202 $ 153
November 1, 1997 $ 41 $ 263 $ 203
October 31, 1998 $ 25 $ 293 $ 161
This graph depicts the total cumulative appreciation of a $l00
investment made on October 30, l993 through October 30, l998,
in B. B. Walker Company, the NASDAQ Composite Index and the
Peer Group.
The Peer Group is comprised of the following public companies:
Brown Group, Genesco, Justin Industries, McRae Industries,
Rocky Shoes & Boots, Timberland, Wellco Enterprises, Weyco
Group and Wolverine World Wide. These companies operate in
the same or similar markets and produce the same or similar
products. The Peer Group appreciation is the average total
appreciation of the companies within the group.
2. APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company at its January 4, l999 meeting,
on the recommendation of the Audit Committee, again selected the firm
of PricewaterhouseCoopers, LLP, Greensboro,North Carolina, to continue
as independent public accountants of B.B. Walker Company and its
subsidiary for the fiscal year ending October 30, l999, to audit the
books and accounts of the Company for the l999 fiscal year and until
their successors are selected. PricewaterhouseCoopers, LLP has acted
in such capacity since April l973.
The Board of Directors and the Audit Committee are satisfied as to the
professional competence and standing of PricewaterhouseCoopers, LLP.
The Audit Committee meets with representatives of
PricewaterhouseCoopers, LLP to review the audit scope and estimated
fees for the coming year and to review the results of the audit of
the prior fiscal year.
PricewaterhouseCoopers, LLP plans to have one or more representatives
present at the Annual Meeting who will have the opportunity to make a
statement if desired and to respond to appropriate questions which any
Shareholders may have. Management knows of no direct or indirect
material financial interests or relationships that any members of such
firm have with B. B. Walker Company.
3. SHAREHOLDER PROPOSALS
Proposals from Shareholders for inclusion in the Proxy Statement of
B. B. Walker Company relating to the Year 2000 Annual Meeting of the
Shareholders, must be directed to the Secretary of the Company at the
principal office of B. B. Walker Company for consideration no later
than October 22, l999. All such proposals must meet the requirements
set forth in the rules and regulations of the Securities and Exchange
Commission, in order to be eligible for inclusion in the Company's
year 2000 Proxy Statement.
4. OTHER MATTERS
The management of the Company knows of no other matters which
may come before this meeting. However, if any matters other than
those referred to above should come before the meeting, it is the
intention of the persons named in the enclosed Proxy to vote such
proxy in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS, THIS 22ND DAY OF FEBRUARY,
l999.
DOROTHY W. CRAVEN
----------------------------
Dorothy W. Craven, Secretary
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE AND SIGN THE
ENCLOSED PROXY CARD. RETURN THE CARD PROMPTLY IN THE
ACCOMPANYING POSTPAID PRE-ADDRESSED ENVELOPE. THANK YOU.
B.B.WALKER COMPANY
Proxy Statement for
Annual Meeting of
Shareholders
Annual Meeting of Shareholders
March l5, l999
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B. B. Walker Company
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