SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Amendment No. ___)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BANDAG, INCORPORATED
(Name of Registrant as Specified in its Charter)
BANDAG, INCORPORATED
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-
6(i)(2).
[ ] $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:*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] 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 date of
its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
BANDAG, INCORPORATED
Bandag Headquarters __________
2905 North Highway 61 BANDAG [R]
Muscatine, Iowa 52761-5886
April 1, 1994
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 5, 1994
To The Shareholders:
The Annual Meeting of the Shareholders of Bandag, Incorporated, an
Iowa corporation, will be held at the Holiday Inn, 2915 North Highway 61,
Muscatine, Iowa, on May 5, 1994, commencing at ten o'clock a.m., Central
Daylight Time, for the following purposes:
(1) To elect three directors for terms of three years.
(2) To ratify the selection of Ernst & Young as independent auditors
of the Corporation for the fiscal year ending December 31, 1994.
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed March 21, 1994, as the record date
for the determination of shareholders entitled to notice of and to vote at
the meeting.
You are invited to attend the meeting; however, if you do not expect
to attend in person, you are urged to sign, date and return immediately
the enclosed Proxy, which is solicited by the Board of Directors. You may
revoke your Proxy and vote in person should you attend the meeting.
By Order of the Board of Directors
WARREN W. HEIDBREDER, Secretary
BANDAG, INCORPORATED
Bandag Headquarters __________
2905 North Highway 61 BANDAG [R]
Muscatine, Iowa 52761-5886
April 1, 1994
P R O X Y S T A T E M E N T
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Bandag, Incorporated (the
"Corporation") to be voted at the Annual Meeting of the Shareholders of
the Corporation to be held on Thursday, May 5, 1994, or at any adjournment
thereof, for the purposes set forth in the foregoing Notice of Annual
Meeting. Any shareholder giving a proxy may revoke it at any time prior
to its exercise.
Shareholders of record at the close of business on March 21, 1994,
will be entitled to vote at the meeting or any adjournment thereof. At
the close of business on March 21, 1994, there were 11,216,176 outstanding
$1.00 par value shares of Common Stock and 2,359,345 outstanding $1.00 par
value shares of Class B Common Stock. Each share of Common Stock is
entitled to one vote and each share of Class B Common Stock is entitled to
ten votes at the meeting.
The Corporation's Annual Report for the fiscal year ended December
31, 1993, this Proxy Statement and the enclosed form of proxy are being
mailed to shareholders on or about April 1, 1994.
The following table sets forth information as to the Common, Class A
Common and Class B Common shares of the Corporation beneficially owned by
each director and director-nominee, each of the executive officers named
in the Summary Compensation Table and by all directors and executive
officers as a group as of March 21, 1994:
Percentage
of
Aggregate
Voting
Percentage Power
of Out- of Common
Amount standing Stock
Bene- Stock of and Class B
Directors, Nominees and ficially Respective Common
Executive Officers Owned [1] Class [1] Stock**
Lucille A. Carver [2]
Common Stock 2,330,685 21%
Class A Common Stock 3,745,431 28%
Class B Common Stock 1,414,746 60% 47%
Martin G. Carver [3] [4]
Common Stock 126,109 1%
Class A Common Stock 596,971 4%
Class B Common Stock 502,622 21% 15%
Roy J. Carver, Jr. [2]
Common Stock 15,000 *
Class A Common Stock 394,202 3%
Class B Common Stock 400,702 17% 12%
Thomas E. Dvorchak
Common Stock 9,814 *
Class A Common Stock 8,914 * *
Class B Common Stock -0- -0-
Robert K. Drummond [5]
Common Stock 2,305 *
Class A Common Stock 3,760 *
Class B Common Stock 1,455 * *
James R. Everline
Common Stock 100 *
Class A Common Stock 450 *
Class B Common Stock 350 * *
Stuart C. Green
Common Stock 900 *
Class A Common Stock 100 * *
Class B Common Stock -0- -0-
William D. Herd
Common Stock 5,344 *
Class A Common Stock 4,461 *
Class B Common Stock -0- -0-
Stanley E. G. Hillman
Common Stock 200 *
Class A Common Stock 400 *
Class B Common Stock 200 * *
Edgar D. Jannotta
Common Stock 7,000 *
Class A Common Stock 7,000 *
Class B Common Stock -0- -0- *
Stephen A. Keller
Common Stock 45,000 *
Class A Common Stock 45,000 *
Class B Common Stock -0- -0- *
R. Stephen Newman
Common Stock 2,500 *
Class A Common Stock 2,500 *
Class B Common Stock -0- -0- *
Michel L. Petiot
Common Stock 2,450 *
Class A Common Stock 1,800 *
Class B Common Stock -0- -0- *
All Directors, Nominees
and Executive Officers as a
Group
(19 Persons) [6]
Common Stock 2,541,892 23%
Class A Common Stock 4,804,510 35%
Class B Common Stock 2,320,075 98% 73%
* Shares owned constitute less than 1% of shares outstanding and less
than 1% of votes entitled to be cast.
** Shares of Class A Common Stock are non-voting.
[1] Beneficial owners exercise both sole voting and sole investment power
unless otherwise stated. The Class B Common Stock is convertible on a
share-for-share basis into Common Stock at the option of the
shareholder. As a result, pursuant to Rule 13d-3(d)(1) of the
Securities Exchange Act of 1934, a shareholder is deemed to have
beneficial ownership of the shares of Common Stock which such
shareholder may acquire upon conversion of the Class B Common Stock.
In order to avoid overstatement, the amount of Common Stock
beneficially owned does not take into account such shares of Common
Stock which may be acquired upon conversion (an amount which is equal
to the number of shares of Class B Common Stock held by a
shareholder). The percentage of outstanding Common Stock is based on
the total number of shares of Common Stock outstanding as of March
21, 1994 (11,216,176 shares), and does not take into account shares
of Common Stock which may be issued upon conversion of the Class B
Common Stock.
[2] Indicates one of seven trustees of the Roy J. Carver Charitable Trust
which owns 15,000 shares of Common Stock, 15,000 shares of Class A
Common Stock and no shares of Class B Common Stock.
[3] Mr. Carver disclaims beneficial ownership of 14,150 shares of Common
Stock, 5,275 shares of Class A Common Stock and 525 shares of Class B
Common Stock held by members of his family.
[4] Includes 100,000 shares of Common Stock and 100,000 shares of Class A
Common Stock which Mr. Carver has the right to acquire upon exercise
of stock options within 60 days after March 21, 1994.
[5] Mr. Drummond disclaims beneficial ownership of 130 shares of Common
Stock, 260 shares of Class A Common Stock and 130 shares of Class B
Common Stock held by members of his family.
[6] In determining the aggregate beneficial ownership of Common Stock,
Class A Common Stock and Class B Common Stock for all directors and
officers as a group, shares which are beneficially owned by more than
one officer or director have been counted only once to avoid
overstatement.
---------------------------------
Principal Shareholders. The following beneficial owners are the only
persons known by the Corporation to beneficially own at least five percent
of the Corporation's voting securities as of March 21, 1994:
COMMON SHARES AND CLASS B COMMON SHARES
Percentage
of
Aggregate
Voting
Percentage Power
of Out- of Common
Amount standing Stock
Bene- Stock of and Class B
ficially Respective Common
Name and Address Owned [2] Class [2] Stock
Lucille A. Carver [1] [2]
c/o Bandag, Incorporated
2905 North Highway 61
Muscatine, Iowa 52761-
5886
Common Stock 2,330,685 21%
Class B Common Stock 1,414,746 60% 47%
Martin G. Carver [2]
c/o Bandag, Incorporated
2905 North Highway 61
Muscatine, Iowa 52761-
5886
Common Stock 126,109 1%
Class B Common Stock 502,622 21% 15%
Roy J. Carver, Jr. [1][2]
c/o Bandag, Incorporated
2905 North Highway 61
Muscatine, Iowa 52761-
5886
Common Stock 15,000 *
Class B Common Stock 400,702 17% 12%
*Shares owned constitute less than 1% of shares outstanding and less than
1% of votes entitled to be cast.
__________________________
[1] Indicates one of seven trustees who exercises shared voting and
investment power over 15,000 shares of Common Stock in the Roy J.
Carver Charitable Trust.
[2] Beneficial owners exercise both sole voting and sole investment power
unless otherwise stated. The Class B Common Stock is convertible on
a share-for-share basis into Common Stock at the option of the
shareholder. As a result, pursuant to Rule 13d-3(d)(1) of the
Securities Exchange Act of 1934, a shareholder is deemed to have
beneficial ownership of the shares of Common Stock which such
shareholder may acquire upon conversion of the Class B Common Stock.
In order to avoid overstatement, the amount of Common Stock
beneficially owned does not take into account such shares of Common
Stock which may be acquired upon conversion (an amount which is equal
to the number of shares of Class B Common Stock held by a
shareholder). The percentage of outstanding Common Stock is based on
the total number of shares of Common Stock outstanding as of March
21, 1994 (11,216,176 shares), and does not take into account shares
of Common Stock which may be issued upon conversion of the Class B
Common Stock.
---------------------------------
Proposal No. 1 ELECTION OF DIRECTORS
The Articles of Incorporation require election of directors to
staggered terms of three years, providing that three of the nine directors
are elected each year. Three nominees this year are to be elected for
three-year terms.
Proxies will be voted for the election of each of the nominees listed
below, unless the shareholder giving the proxy votes against, or abstains
from voting for, any nominee. If, as a result of unforeseen
circumstances, any such nominee shall be unable to serve as director,
proxies will be voted for the election of such person or persons as the
Board may select. Information about the nominees is set forth below:
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
STANLEY E. G. HILLMAN, age 82, retired. During 1989 he was Acting
Chairman, President and Chief Executive Officer of Consolidated Rail
Corporation. Mr. Hillman was Vice Chairman of IC Industries until his
retirement in 1978. He was later appointed the Trustee of the Milwaukee
Road, in which capacity he served until June 1979. Mr. Hillman is a
member of the Audit Committee, Executive Committee, Management Continuity
and Compensation Committee and the Stock Option Committee. Mr. Hillman
has been a Director since 1977.
STEPHEN A. KELLER, age 76, retired. He was President of Kodicor,
Inc., a manufacturer of tanks, pottery and plumbing products, with
headquarters in Minneapolis, Minnesota, until his retirement in January
1978. Mr. Keller was Chairman of the Board of Directors of J-TEC
Associates, Inc. until his retirement on December 31, 1984. Mr. Keller is
a member of the Audit Committee, Management Continuity and Compensation
Committee, Stock Option Committee and the Strategic Planning Committee.
Mr. Keller was a Director during the period 1966 to 1973 and has been a
Director since 1978.
R. STEPHEN NEWMAN, age 50, since August 1990 has been President of
Bacon's Information, Inc., a media information services company. From
1982 to 1990, he was President of MGI Corporation, a computer services
company. Mr. Newman is a member of the Audit Committee, Management
Continuity and Compensation Committee, Strategic Planning Committee and
the Stock Option Committee. Mr. Newman has been a Director since 1983.
DIRECTORS CONTINUING IN OFFICE
ROY J. CARVER, JR., age 50, is Chairman of the Board of Directors of
Carver Pump Company, Muscatine, Iowa. During 1988, Mr. Carver acquired a
chain of hardware stores and is President of the Muscatine, Iowa based
company, Carver Hardware. Mr. Carver is President of Carver Aero, Inc.,
which operates fixed base operations at airports in Muscatine, Iowa;
Davenport, Iowa and Clinton, Iowa; President of Carver Hotel Enterprises,
Inc., a Muscatine, Iowa based hotel and restaurant operation; and
President of Harrington Signal, Inc., an electronic signal panel
manufacturing company located in Moline, Illinois. Mr. Carver holds
directorships in Iowa First Bancshares Corp. and Met-Coil Systems
Corporations. He is a member of the Contributions Committee, Management
Continuity and Compensation Committee, Nominating Committee, Stock Option
Committee and the Strategic Planning Committee. Mr. Carver has been a
Director since 1982 and his term expires in 1995.
ROBERT K. DRUMMOND, age 55, has been for more than five years a
partner in the Milwaukee law firm of Foley & Lardner. In 1993, the
Corporation paid fees for legal services to Foley & Lardner, and the
Corporation anticipates that similar services may be provided by Foley &
Lardner in the current fiscal year. Mr. Drummond's fees as a Director are
paid to Foley & Lardner, which credits the sums to the Corporation's legal
services account. Mr. Drummond is a member of the Management Continuity
and Compensation Committee, Stock Option Committee and Strategic Planning
Committee. Mr. Drummond has been a Director since 1982 and his term
expires in 1995.
JAMES R. EVERLINE, age 52, is President of Everline & Co., a mergers
and acquisitions/management consulting company. Previously, Mr. Everline
was President, Investment Banking Division of Henry & Company (1990-
December 1991). Henry & Company is engaged in the venture capital and
investment banking business. Prior to Mr. Everline's employment by Henry
& Company, he was a Partner of Founders Court Investors Inc. (1988-1989)
and served as Vice President, Capital Markets Group, Bank of America
(1981-1988). He is a member of the Audit Committee, Executive Committee,
Management Continuity and Compensation Committee, Nominating Committee,
Stock Option Committee and the Strategic Planning Committee. Mr. Everline
has been a Director since 1982 and his term expires in 1995.
LUCILLE A. CARVER,, age 76, has for more than five years served as
Treasurer of the Corporation. She is a member of the Contributions
Committee and the Nominating Committee. Mrs. Carver has been a Director
since 1957 and her term expires in 1996.
MARTIN G. CARVER, age 45, was elected Chairman of the Board effective
June 23, 1981, Chief Executive Officer effective May 18, 1982, and
President effective May 25, 1983. Mr. Carver was also Vice Chairman of
the Board from January 5, 1981 to June 23, 1981. He is a member of the
Executive Committee, Management Continuity and Compensation Committee,
Nominating Committee and the Strategic Planning Committee. Mr. Carver has
been a Director since 1978 and his term expires in 1996.
EDGAR D. JANNOTTA, age 62, has been for more than five years the
Managing Partner of William Blair & Company. He holds directorships in
AAR Corp., Molex Incorporated, Oil-Dri Corporation of America, and Safety-
Kleen Corp. William Blair & Company provided investment banking services
to the Corporation in 1993 and the Corporation anticipates that services
may be provided to the Corporation in the current fiscal year. He is a
member of the Audit Committee, Management Continuity and Compensation
Committee, Nominating Committee and the Stock Option Committee. Mr.
Jannotta has been a Director since 1973 and his term expires in 1996.
Directors are elected by a majority of the votes cast (assuming a
quorum is present). Consequently, any shares not voted at the Annual
Meeting, whether due to abstentions, broker non-votes or otherwise, will
have no impact on the election of directors.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met four times in 1993.
The Audit Committee met three times in 1993; its functions are to
review major accounting decisions with management and the independent
auditors, to confer with such auditors with respect to the scope and
results of the annual audit, to review the annual audit and evaluate the
auditors' performance, to recommend to the Board of Directors annually the
selection of outside auditors for the ensuing year, to recommend the scope
and format of financial information to be submitted to the Board of
Directors, to review the scope of financial information included in the
Annual Report to Shareholders, to review the program of the internal audit
department for the year, to review the financial data included in all
required governmental reports, and to review the audits of all pension,
profit sharing and other trust funds held for the benefit of employees of
the Corporation. The Committee also reviews various insurance coverages of
the Corporation and the Corporation's compliance with the Foreign Corrupt
Practices Act.
The Management Continuity and Compensation Committee met four times
in 1993; its functions are to review, evaluate and determine executive
level compensation and to recommend to the Board of Directors the election
of corporate officers.
The Nominating Committee met twice in 1993; its duties relate to the
evaluation and recommendation to the Board of Directors of prospective
candidates for election as directors of the Corporation. The Nominating
Committee will consider recommended nominations for the position of
director which are submitted in writing by the shareholders and addressed
to the Committee in care of the Corporation at Muscatine, Iowa.
The Stock Option Committee met twice in 1993; its function is to
select key executives and to award options and restricted stock grants to
those key executives whose judgment, initiative and efforts contribute
materially to the successful performance of the Corporation.
REMUNERATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary Compensation Information
The following table sets forth certain information concerning compensation
paid for the last three fiscal years to the Corporation's Chief Executive
Officer and each of its four other most highly compensated executive
officers whose total cash compensation exceeded $100,000 in fiscal 1993.
The persons named in the table are sometimes referred to herein as the
"named executive officers."
Summary Compensation Table
Other Long Term
Annual Compensation All Other
Com- Restricted Com-
Name and Principal pensation Stock pensation
Position Year Salary Bonus [1] Award(s)[2] [3]
Martin G. Carver 1993 $299,036 $0 $82,770 $107,115 $19,318
Chairman of the Board, 1992 259,888 0 73,687 117,248 18,309
Chief Executive Officer 1991 250,000 0 50,545 79,713 20,424
and President
Thomas E. Dvorchak 1993 $292,942 $0 $19,706 $22,200 $19,318
Senior V.P. and Chief 1992 265,043 0 16,872 24,300 18,309
Financial Officer 1991 209,926 20,235 15,621 22,775 20,135
Stuart C. Green 1993 $283,690 $0 $18,120 $22,200 $21,101
Senior V.P., 1992 267,069 0 18,268 24,300 26,804
Manufacturing 1991 73,365 15,543 8,824 11,388 15,529
William D. Herd 1993 $338,078 $0 $19,822 $24,420 $19,318
Senior V.P., 1992 315,397 0 17,776 26,730 18,309
Sales and Marketing 1991 210,993 44,901 28,702 45,550 19,842
Michel L. Petiot [4] 1993 $272,977 $0 $94,423 $ 0 $124,688
Senior V.P. and General 1992 261,824 0 260,119 21,263 132,999
Manager of Eastern 1991 170,000 46,869 76,580 34,163 133,170
Hemisphere Retreading
Division
<FN>
[1] Amounts shown represent the tax reimbursement or "gross up" with
respect to restricted stock awards and certain other fringe benefits
and, in Mr. Petiot's case, includes tax "gross up" in connection with
foreign service assignment.
[2] At December 31, 1993, the number of shares held and the aggregate
market value of restricted stock held by the named executive officers
are as follows: Martin G. Carver - 10,560 Shs. Common Stock, Value
$584,760 and 6,700 Shs. Class A Common Stock, Value $346,725; William
D. Herd, 3,930 Shs. Common Stock, Value $217,624 and 3,050 Shs. Class
A Common Stock, Value $157,838; Thomas E. Dvorchak, 2,650 Shs. Common
Stock, Value $146,744 and 1,850 Shs. Class A Common Stock, Value
$95,738; Stuart C. Green, 900 Shs. Common Stock, Value $49,838 and
100 Shs. Class A Common Stock, Value $5,175; Michel L. Petiot, 2,150
Shs. Common Stock, Value $119,056 and 1,800 Shs. Class A Common
Stock, Value $93,150. Dividends are paid on the shares of restricted
stock prior to vesting.
[3] Of the amounts shown in this column for 1993 for each of the named
executive officers, $18,867 is the Corporation's contribution to its
Salaried Profit Sharing, Retirement and Savings Plan for each of such
individuals and $451 is the Corporation's contribution to its Bandag
Security Program, a combination defined benefit and defined
contribution plan. The remainder of the amount shown for Mr. Green in
1993 is $1,783, representing imputed interest on an interest-free
loan from the Corporation in connection with his relocation to
Muscatine. The remainder of the amount shown for Mr. Petiot in 1993
is $105,370 representing allowances for foreign service assignment.
[4] Under a three-year employment agreement with the Corporation,
effective January 1, 1994, Mr. Petiot, formerly Senior Vice President
and General Manager of Eastern Hemisphere Retreading Division,
assumed the position of Senior Vice President-Development at an
annual salary of $90,000. During the employment period and for a
period of two years thereafter, Mr. Petiot agreed not to directly
compete with the Corporation by engaging in executive employment
directly related to the manufacture of retreading truck tires
utilizing pre-cured tread rubber.
Stock Options
The following table sets forth information regarding the fiscal year-
end value of unexercised options held by the named executive officers. No
options were granted or exercised in 1993.
Aggregate Option Exercises in Last
Fiscal Year and Fiscal Year-End Option Values
Value of
Number of Unexercised
Unexercised In-the-Money
Options Options
at Fiscal Year-End at Fiscal Year-End[2]
Shares
Acquired Value
Name on Exercise Realized Exercisable Exercisable
Martin G. Carver -0- -0- 200,000[1] $6,087,500
<FN>
[1] Comprised of 100,000 shares of Common Stock and 100,000 shares of
Class A Common Stock. The options were granted in 1987 at an
exercise price equal to the closing price of the Corporation's Common
Stock on the New York Stock Exchange on the date of grant.
[2] The dollar values are calculated by determining the difference
between the fair market value of the underlying Common Stock and
Class A Common Stock, respectively, at fiscal year-end and the
exercise price of the options.
Pension Plan Benefits. The following table sets forth estimated
annual pension benefits under the Bandag Salaried Pension Plan payable at
normal retirement age to persons in specified remuneration and years-of-
service classifications:
PENSION PLAN TABLE
Annual Pension Per Years of Service
Highest 5-Year
Average
Annual Compensation 5-Years 10-Years 15-Years 20 Years 25 Years 30 Years 35 Years
$ 50,000 $ 3,350 $ 6,700 $10,050 $12,720 $14,970 $16,220 $17,470
$100,000 $ 7,413 $14,825 $22,237 $27,720 $32,220 $34,720 $37,220
$200,000 $15,537 $31,075 $46,613 $57,720 $66,720 $71,720 $76,720
$250,000 $19,099 $38,199 $57,298 $70,872 $81,845 $87,941 $94,037
$300,000 $19,099 $38,199 $57,298 $70,872 $81,845 $87,941 $94,037
$350,000 $19,099 $38,199 $57,298 $70,872 $81,845 $87,941 $94,037
$400,000 $19,099 $38,199 $57,298 $70,872 $81,845 $87,941 $94,037
Pension amounts are based upon an employee's base salary (exclusive
of bonus) and credited years of service. For the individuals named in the
foregoing remuneration table, the base salary and credited service as of
March 21, 1994, were as follows: Martin G. Carver, $311,977 and 15 years;
Thomas E. Dvorchak, $299,381 and 23 years; Stuart C. Green, $295,490 and 2
years; William D. Herd, $351,078 and 16 years; and Michel L. Petiot,
$90,000 and 5 years. Benefits shown in the table are computed as a
straight line single life annuity assuming retirement at age 65 and are
not subject to offset for Social Security benefits.
The named executive officers also participate in the Bandag Security
Program which is a combined defined benefit and defined contribution plan
(see footnote [3] on page 8). The annual defined benefit payable at age
62 for each of the named executive officers is fixed and is as follows:
Martin G. Carver, $700; William D. Herd, $792; Thomas E. Dvorchak, $1,160;
Stuart C. Green, $74 and Michel L. Petiot, $230.
Report of Management Continuity and Compensation Committee on Executive
Compensation
The eight member Management Continuity and Compensation Committee of
the Board of Directors (the "Compensation Committee") makes all decisions
regarding compensation of the Corporation's executive officers, except for
the awarding of stock options and restricted stock, which are made by the
Stock Option Committee. Set forth below is a report submitted by the
Compensation Committee addressing the Corporation's compensation policies
for 1993 applicable to the Corporation's executive officers, including the
executive officers named in the Summary Compensation Table.
Consistent with the Corporation's commitment to adopt a world-class
approach to improving total quality, in 1992 the Corporation adopted a new
approach to the compensation of executive officers and other salaried
employees. As the Corporation learned more about total quality systems,
their fairness to people and their necessity in achieving a corporation's
long-term objectives, it became apparent that the then existing
compensation system was not designed with these objectives in mind. In
that spirit, a Midpoint Compensation System (the "System") was approved
by the Compensation Committee in 1992.
This System eliminated arbitrary incentives which the Compensation
Committee believes are a major barrier to continuous improvement. As a
result of the adoption of the System, bonuses, country club memberships,
automobile allowances, split dollar life insurance and tax preparation
fees, which were perquisites of top executives and some other managers,
were eliminated. A portion of the dollar value of these perquisites was
rolled into the executives' base salaries. Salary survey information was
used to ensure that the salaries were fair and competitive with those of
other companies similar in size to the Corporation. Under the System,
bonuses and most traditional executive perquisites are no longer paid.
Rather, under the System, an executive officer, including the Chief
Executive Officer, receives an annual salary fixed by the Compensation
Committee, restricted stock awards determined by the Stock Option
Committee, tax "gross up" payments related to such awards and Corporation
contributions to the Corporation's Salaried Profit Sharing, Retirement and
Savings Plan and the Bandag Security Program as determined by the
Compensation Committee.
Under the System, a salary "midpoint" for each executive officer,
including the Chief Executive Officer, is established through the use of
executive compensation salary surveys, financial performance of the
Corporation, national trends in compensation and the Corporation's
competitive need to retain and to recruit the very best and most capable
people. Such salary surveys encompass general manufacturing companies
with revenues from $500 million to $1 billion. In reviewing the
Corporation's financial performance, the Compensation Committee considered
the Corporation's revenues, net income and net income per share in light
of the competitive and economic conditions encourntered by the Corporation
during the fiscal year, as well as the effect on the Corporation's
financial performance resulting from the Corporation's investment in
marketing programs, research and development, plant, machinery and
equipment and in personnel and related programs.
The salary "midpoints" represent the salary level in the 75th
percentile of the salary range for each executive officer position, based
on executive compensation salary surveys, as adjusted by the Compensation
Committee based on an evaluation of the importance of the particular
executive position to the Corporation. The salary "midpoints" are
adjusted by the Compensation Committee each year based on a review of the
factors outlined in the immediately preceding paragraph. These salary
"midpoints" are used to calculate the annual increase for each executive
officer, except the Chief Executive Officer, by multiplying the salary
"midpoint" (not the existing annual salary) by a percentage established by
the Compensation Committee. Multiplying the salary "midpoint" for a given
position by the annual percentage determined by the Compensation Committee
increases base salaries which are currently below the salary "midpoint" by
a greater amount than if base salaries were multiplied by the annual
percentage, while base salaries which are currently in excess of the
salary "midpoint" for a given position will receive a smaller increase
than would be the case if the base salaries were multiplied by such
percentage. For 1994, the percentage increase was fixed at 4.0% for all
salaried Corporation employees, including all executive officers, except
the Chief Executive Officer. Such increase in base salary takes effect on
January 1, 1994 and does not affect 1993 compensation. In fixing the
percentage increase for 1994 base salary, the Compensation Committee
considered a variety of factors, including the inflation rate, the
Corporation's financial performance and trends in salaried employee
compensation increases, as disclosed by published salary forecasts.
Mr. Martin G. Carver, Chief Executive Officer, declined to receive a
salary increase for 1994 based on a percentage of the salary "midpoint"
for his position. Instead, he requested that his salary increase for 1994
be increased by a percentage of his 1993 base salary, which is
substantially lower than his salary "midpoint." The salary increase for
Mr. Carver for 1994 was equal to 4.11% of his 1993 base salary (not his
salary "midpoint").
Although the Compensation Committee considers the Corporation's
financial performance in determining the total compensation for executive
officers, including the Chief Executive Officer, there is no specific
formula or target performance against which executive compensation is to
be compared or judged. Rather, the Corporation's performance is part of
the total mix of information which the Compensation Committee considers in
making its decisions on executive compensation.
Bandag, Incorporated Management
Continuity and Compensation Committee
Roy J. Carver, Jr. Stanley E. G. Hillman
Martin G. Carver Edgar D. Jannotta
Robert K. Drummond Stephen A. Keller
James R. Everline R. Stephen Newman
Report of Stock Option Committee on Executive Compensation
The Stock Option Committee of the Board of Directors (the "Stock
Option Committee"), which is composed of seven non-employee directors,
makes all decisions regarding the granting of stock options and the grant
of restricted stock awards. No grants of stock options were made in 1993.
The purpose of the Corporation's Restricted Stock Grant Plan is to provide
long-term incentive compensation which will attract and retain superior
executive personnel. Under the Plan, the Stock Option Committee awards
stock to key executives each year. The shares are held by a custodian
until seven years have elapsed, when they are then transferred to the
executive. Dividends are paid to the recipient of the restricted stock
while the shares are held by the custodian. If an executive who has not
attained age 60 leaves the Corporation before the end of the seven year
restriction period, the shares are forfeited, except in the case of death
or disability. An executive who has attained age 60 and who leaves the
Corporation prior to the end of the seven-year retention period does not
forfeit the shares.
During 1993 awards of restricted stock were made utilizing the
Corporation's System. Restricted stock awards were granted based on a
percentage of the salary "midpoint" established for each executive
position. The percentages were established taking into consideration
total compensation, as well as each executive's level of responsibility.
The Chief Executive Officer's percentage of "midpoint" is greater than the
other executive officers. In fixing a greater percentage of the Chief
Executive Officer's "midpoint," the Stock Option Committee took into
account that the Chief Executive Officer's base salary is substantially
below the salary "midpoint" for his position and that his increase in base
salary for 1994 is substantially less than he would have received had his
increase been based on his salary "midpoint." The number of restricted
shares granted was computed by multiplying the salary "midpoint" for an
executive officer, including the Chief Executive Officer, by the
percentage fixed by the Stock Option Committee and then dividing such
amount by the per share market value of the Corporation's Common Stock on
the date of grant. In fixing the awards for all executives, including the
Chief Executive Officer, the Stock Option Committee considered the
Corporation's performance in the same manner as the Compensation Committee
did in fixing other components of executive compensation. See "Report of
Management Continuity and Compensation Committee on Executive
Compensation." The total amount of previous awards made to individuals
was not a factor in fixing the 1993 awards.
Bandag, Incorporated
Stock Option Committee
Roy J. Carver, Jr. Edgar D. Jannotta
Robert K. Drummond Stephen A. Keller
James R. Everline R. Stephen Newman
Stanley E. G. Hillman
Compensation Committee Interlocks and Insider Participation
The Management Continuity and Compensation Committee (the
"Compensation Committee") consists of Messrs. Roy J. Carver, Jr., Martin
G. Carver, Robert K. Drummond, James R. Everline, Stanley E. G. Hillman,
Edgar D. Jannotta, Stephen A. Keller and R. Stephen Newman. The Stock
Option Committee consists of Messrs. Roy J. Carver, Jr., Robert K.
Drummond, James R. Everline, Stanley E. G. Hillman, Edgar D. Jannotta,
Stephen A. Keller and R. Stephen Newman. Mr. Martin G. Carver is Chairman
of the Board, Chief Executive Officer and President of the Corporation.
Mr. Roy J. Carver owns Carver Aero, Inc., which sold $111,691.88 of
aviation fuel to the Corporation in 1993 (see "Transactions with
Management/Principal Shareholders" herein). Mr. Drummond is a partner of
the law firm of Foley & Lardner, Milwaukee, Wisconsin, which has served as
legal counsel to the Corporation for several years. Mr. Jannotta is
Managing Partner of William Blair & Company, which provided investment
banking services to the Corporation in 1993. Mr. Keller formerly served
as President of the Corporation from April 1966 through June 1973.
Remuneration of Directors. Directors who are also full-time employees
of the Corporation do not receive remuneration for acting as directors.
Non-employee directors are compensated in accordance with the following
schedule:
Annual Fees - Chairman of Committee - $32,500. Other Directors -
$31,000.
Board Meeting Attendance - $1,250 per meeting.
Committee Meeting Attendance - Chairman - $1,500 per meeting.
Other Directors - $1,250 per meeting.
Transactions with Management/Principal Shareholders. Roy J. Carver,
Jr., son of Lucille A. Carver and brother of Martin G. Carver, owns 100%
of Carver Aero, Inc., which operates fixed base operations at airports in
Muscatine, Iowa; Davenport, Iowa, and Clinton, Iowa. During 1993, it sold
$111,691.88 of aviation fuel to Bandag, Incorporated at competitive prices
based on volume purchased.
During 1992, Stuart C. Green, Senior Vice President, Manufacturing,
was extended an interest-free loan from the Corporation in connection with
his relocation to Muscatine. The largest amount of such indebtedness in
1993 was $78,000. The outstanding balance at February 28, 1994 was
$39,000.
SHAREHOLDER RETURN PERFORMANCE INFORMATION
Set forth below is a line graph comparing the yearly percentage
change during the last five years in the cumulative total shareholder
return (assuming reinvestment of dividends) on the Corporation's Common
Stock with the cumulative total return of the Standard & Poor's 500 Stock
(Index) and the Dow Jones & Co., Inc. Automobile Parts & Equipment-All
(Index). Performance information set forth below for the Corporation's
Common Stock includes the Corporation's Class A Common Stock issued as a
stock dividend on June 10, 1992.
Bandag, Incorporated
Stock Performance Chart
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Among Bandag, Incorporated, S&P 500 (Index)
and Automobile Parts & Equipment - All (Index)
[Stock Performance Chart Appears Here]
December 31
1988 1989 1990 1991 1992 1993
Bandag, Incorporated $100 $131 $132 $191 $184 $174
S&P 500 Stock (Index) $100 $132 $128 $166 $179 $197
Automobile Parts & $100 $ 96 $ 76 $114 $147 $182
Equipment - All (Index)
Assume $100 Invested on December 31, 1988 in
Bandag, Incorporated Common Stock, the S&P 500
Stock (Index) and the Automobile Parts &
Equipment - All (Index)
Proposal No. 2 RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, based upon the recommendation of the Audit
Committee, which consists of James R. Everline, Stanley E. G. Hillman,
Edgar D. Jannotta, Stephen A. Keller, and R. Stephen Newman, directors of
the Corporation, has appointed Ernst & Young as the Corporation's
independent auditors for the year ending December 31, 1994.
Ernst & Young served as the Corporation's independent auditors for
the year ended December 31, 1993. Representatives of Ernst & Young will be
present at the Annual Meeting and will be available to respond to any
questions raised at the meeting and make any comments they deem
appropriate.
Although this appointment is not required by law to be submitted to a
vote by shareholders, the Board believes it appropriate, as a matter of
policy, to request that the shareholders ratify the appointment of Ernst &
Young as independent auditors for 1994. If the shareholders should not
ratify, the Board will reconsider the appointment.
Proposal No. 3 OTHER MATTERS
The management of the Corporation knows of no matters to be presented
at the meeting other than those set forth in the Notice of Annual Meeting.
However, if any other matters properly come before the meeting, it is
intended that the persons named in the enclosed Proxy will vote on such
matters in accordance with their best judgments.
1995 SHAREHOLDERS' PROPOSALS
The date by which proposals of shareholders intended to be presented
at the 1995 Annual Meeting of the Corporation must be received by the
Corporation for inclusion in its proxy statement and form of proxy
relating to that meeting is December 2, 1994.
MISCELLANEOUS
The expense of preparing, printing and mailing this proxy statement
and the proxies solicited hereby will be borne by the Corporation.
Some of the officers and regular employees of the Corporation may,
without extra remuneration, solicit proxies personally or by telephone,
telex or telefax. The Corporation will request brokerage houses, nominees,
custodians and fiduciaries to forward proxy materials to the beneficial
owners of shares held of record and will reimburse such persons for their
expenses.
By Order of the Board of Directors
WARREN W. HEIDBREDER, Secretary
BANDAG, INCORPORATED
Muscatine, Iowa
PROXY FOR ANNUAL MEETING - MAY 5, 1994
Lucille A. Carver and Martin G. Carver, or either of them each
with power of substitution, are authorized to vote all shares of Common
Stock (COM) and Class B Common Stock (CLB) which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of Bandag,
Incorporated to be held May 5, 1994 and at any adjournment thereof.
This proxy is solicited on behalf of the Company's Board of
Directors. Every properly signed proxy will be voted as directed. The
Board of Directors recommends a vote FOR the nominees in Item (1) and FOR
Item (2). Unless otherwise directed, proxies will be voted in accordance
with the foregoing sentence and in the discretion of the Board of
Directors in connection with Item (3).
You are encouraged to specify your choices by marking the
appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if
you wish to vote in accordance with the Board of Directors'
recommendations. The proxy holders cannot vote your shares unless you
sign and return this card.
SEE REVERSE
SIDE
CONTINUED, AND TO BE SIGNED ON REVERSE SIDE
Please mark
[X] votes as in
this example.
The signer hereby revokes all proxies heretofore given by the signer to
vote at said meeting or any adjournment thereof.
1. Election of Directors
FOR AGAINST ABSTAIN
Stanley E. G. Hillman [ ] [ ] [ ]
Stephen A. Keller [ ] [ ] [ ]
R. Stephen Newman [ ] [ ] [ ]
2. The selection of Ernst [ ] [ ] [ ]
& Young as independent
auditors for the fiscal
year ending December 31,
1994
3. In their discretion upon
such other matters as may
properly come before the
meeting.
MARK HERE MARK HERE
FOR COMMENTS/ IF YOU PLAN
CHANGE OF [ ] TO ATTEND [ ]
ADDRESS AND THE MEETING
NOTE AT LEFT
Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature: ____________________ Date: ___________
Signature: ____________________ Date: ___________