SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party Other than the Registrant [X ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section
240.14a-12
Name of Registrant as Specified in Its Charter:
Borg-Warner Security Corporation
Name of Person(s) Filing Proxy Statement:
Borg-Warner Shareholders Committee
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(j)(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.
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applies:
______________________________________________________
2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of transaction
computed
pursuant to Exchange Act Rule 0-11: (1)
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[ ] Check box if any part of the fee is offset as provided by
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PRELIMINARY PROXY STATEMENT
BORG-WARNER SHAREHOLDERS COMMITTEE
25 Louisiana Avenue
Washington, D.C. 20000
Tel: (202) 624-8100
Fax: (202) 624-6833
INDEPENDENT SHAREHOLDER SOLICITATION
Re: Borg-Warner Security Corp.
ANNUAL MEETING: April ____, 1995
Released March 3, 1995
Dear fellow Borg-Warner Security Corp. shareholder:
You may well be disappointed in the performance of Borg-
Warner Security Corp. We are writing to offer what we believe is
a necessary reform in turning around our company: establishing
an independent director as chairman of the board.
Here is the record under the tenure of the
current Chairman and CEO Donald Trauscht:
* The company stock slid from a high of nearly $22 in
January, 1994 to $7, which it reached February 1, 1995.
* The company reported earnings of 3 cents a share for the
fourth quarter of 1994, compared with 48 cents a share in the
same quarter last year. Before accounting for tax accruals, the
company actually lost $10 million in the fourth quarter.
* In January, 1995, Borg-Warner attributed its problems, in
part, to "an unusually high rate of external theft, which caused
unusually high cargo losses and higher insurance premiums,"
explained company spokesman Joe Allen to Reuters in January
1995.<F1> We feel this is a disquieting admission for a security
company.
* After disclosing disappointing earnings in the third
quarter of 1994, the company said that "the escalating rate of
violent armed attacks against armored and automated-teller-
machine personnel is dramatically increasing security costs and
insurance premiums throughout the industry."<F2>.
[CHART STOCK HISTORY FROM IPO TO 1994]
- ----------------------------------
<F1>
Reuters, January 31, 1995.
<F2>
Chicago Tribune, September 16, 1994.
* Similar problems plagued the company in 1993, when an
internal memo pointed out that its $18 million in claims and
insurance premiums associated with theft, negligence, worker's
compensation, vehicle accidents and general liability claims "is
almost double the profit income of the company."<F3>
* Crain's Chicago Business identified the company as
"biggest loser" of the week in stock trading between Jan. 30 and
Feb. 3.<F4>
* Competitor Brinks reported an 18% increase in 4th quarter
earnings, compared with the 4th quarter of 1993. Brinks
reported record operating profit in 1994.<F5>
[THE FOLLOWING INFORMATION WILL APPEAR IN GRAPH FORM:]
CLOSING STOCK PRICE
COMPANY 12/13/93 6/24/94 12/28/94
- ----------------------------------------------------------
ADT 8.87 12 10.5
Borg-Warner 20.5 11.5 9
Pittston 29.25 28.15 27.25
(Brinks)
Pinkerton's 19.5 16.25 18.75
Wackenhut 13 15 13.4
In November, 1994, Standard & Poors along with Duff & Phelps
placed Borg-Warner on "watch" for a possible downgrade of its
long-term debt. In January, 1995, Standard & Poors reiterated
that it held the company on "CreditWatch" with "negative
implications." S&P explained that the "potential for covenant
violations at future periods remains due to continued subpar
financial performance."
- --------------------------------------
<F3>
Security Business, Vol. XXIII, No. 14, July 15, 1993, Part III.
<F4>
Crain's Chicago Business, Feb. 6-12, 1995.
<F5>
Pittson Services Group press release 1/25/95.
* The company's earnings slide put it in possible violation
of loan covenants for its short-term debt, forcing it to
renegotiate with its bankers to win a waiver.
* Major shareholders have abandoned their positions,
including Ariel, the second largest shareholder, which sold its
entire 9% stake of the company.<F6> Delphi Management also sold
its stake, and Woods Island Management reduced its holding
considerably. Merrill Lynch and affiliates, which once owned the
entire company, have also reduced their investment stake.
These are critical times for Borg-Warner. As the cascading
stock price, credit rating alerts and loan renegotiations attest,
our company's own security is on the line. Shareholders deserve
careful, independent scrutiny over the decisions which will
determine the fate of our company.
THE PROPOSAL:
We question whether the board's current structure allows it
to exercise the oversight necessary to steer this company on a
path of earnings growth. The company's governance rules include
measures which we believe frustrate shareholder accountability,
including a classified board, an 80% supermajority voting
requirement to make changes, and restrictions on shareholders
calling a special meeting.
In reforming what appears to be board insulation from
shareholder accountability, we believe the first step is to
establish an independent chairman.
We have alerted company management that we intend to bring
the following resolution to shareholders at the company's annual
meeting:
RESOLVED: That the Chairman of the Board of directors must
be an independent director who does not also hold the position of
Chief Executive Officer.
We do not know whether the company will include this
proposal in its proxy materials, but regardless, we will present
this proposal at the meeting.
We urge you to support this proposal and to send us your
proxy.
- --------------------------
<F6>
Crain's Chicago Business, Feb. 6-12, 1995.
MANAGEMENT COMPENSATION -
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The Committee incorporates herein by reference the
discussion of these subjects in the Company's 1994 proxy
statement and the forthcoming 1995 proxy statement.
PROPOSALS FOR 1996 MEETING
Stockholders who wish to have proposals considered for
inclusion in the Company's proxy statement next year should
deliver their proposals in writing to the Company at 200 South
Michigan Avenue, Chicago, Ill. 60604, by a date to be identified
in the Company's upcoming proxy statement.
IMPORTANT INFORMATION RE: ELECTION OF DIRECTORS AND
VOTING RIGHTS
At the 1995 annual stockholders meeting, shareholders will
be asked to vote in the election for board of directors and may
be asked to vote on other matters (currently unknown to the
Committee). Because the Company's nominees have not yet been
announced, SEC rules do not allow us to solicit your votes for
the directors' election. Once those nominees have been
announced, we will revise our proxy materials to include the
nominees and any other matters to be voted upon. We will make
these revised materials available to shareholders so they may
direct our votes on these other matters. IF YOU VOTE THE
ENCLOSED CARD BUT DO NOT SUBSEQUENTLY VOTE ANOTHER CARD, YOU WILL
HAVE WAIVED YOUR RIGHT TO VOTE IN THE DIRECTORS ELECTION. The
Committee does not know of any contest for the board of directors
and does not intend to engage in one. Giving the Committee a
proxy will not give the Committee any discretionary voting
authority.
If you so indicate on the proxy card, we will keep your card
confidential from the Company until the deadline for submission,
absent court order. If you sign and return the enclosed card but
do not instruct us how to vote, the card will be voted for the
shareholder proposal, and not voted on any other matter.
We incorporate by reference the additional information
about voting requirements and outstanding shares contained in the
Company's proxy statements.
REVOCATION RIGHTS
A proxy card is revocable at any time prior to being voted
by (1) executing a new proxy card; or (2) attending and voting at
the meeting; or (3) delivering written notice of revocation to
the Company or to the authorized agents of the employee benefit
plan through which your stock is held. Only your latest-dated
proxy card will be counted.
SOLICITATION OF PROXIES
We expect to solicit proxies by mail, telephone, telecopier
and personal interviews. We will ask trustees, brokers,
custodians and other nominees to forward solicitation materials
to the beneficial owners of common stock, and reimburse them for
their reasonable out-of-pocket expenses. Proxies will be
solicited by Committee members and by members and employees of
the International Brotherhood of Teamsters (IBT) who do not
receive any additional compensation for such solicitations. No
other specially engaged employees have been employed to solicit
shareholders.
The Committee is sponsored by the IBT, which owns 100 shares
of Borg-Warner's common stock. Other shareholders are invited to
join the Committee. The cost of solicitation is being borne by
IBT. While the exact cost of the solicitation is not at this
time known, it is estimated at $1,000. Unlike management, the
Committee will not seek reimbursement for the cost of its
solicitations from the Company. The person designated on the
Committee's proxy card is William Patterson, a member of the
Council of Institutional Investors and the IBT's Director of
Corporate Affairs.
About 4,000 employees of the Pony Express Courier Corp., a wholly
owned subsidiary of Borg-Warner Security Corp., are represented
by IBT. Pony Express has never entered into a collective
bargaining agreement, and in the past 12 months, Pony Express
employees have gone on strike at several locations.
* * *
SIGN, DATE AND RETURN THE ENCLOSED BLUE CARD TO:
Borg-Warner Shareholders Committee
c/o IBT
25 Louisiana Avenue
Washington, D.C. 20001
Fax (202) 624-6833
Telephone: 202-624-8100
PROXY
SOLICITED ON BEHALF OF BORG-WARNER
SHAREHOLDERS COMMITTEE
FOR 1995 ANNUAL MEETING OF BORG-WARNER SECURITY CORP.
The undersigned, hereby revoking any previous proxy, appoints
William Patterson the proxy of the undersigned, with full power
of substitution, to vote the undersigned's stock in Borg-Warner
Security Corporation at the April, 1995 Annual Meeting of
Shareholders or at any adjournments or postponements thereof, as
follows:
Proposal to require that Chairperson of the Board of
Directors be an independent director, not the Chief
Executive Officer.
____ For ____ Against ____ Abstain
This proxy will be voted in the manner directed above. If no
direction is made, this proxy will be voted FOR the Proposal.
This proxy will not be voted upon any other matter. Execution of
this proxy and no later proxy waives the undersigned's right to
vote in the election of directors and on any other matters which
may come before the meeting.
SIGNATURE_________________________________ DATE:____________
SIGNATURE IF JOINTLY HELD ________________ DATE:____________
If the securities are jointly owned, each should sign. Please
sign exactly as name appears on the company's records. When
signing as an attorney, executor, administrator, trustee or
guardian, please give full title as such.
The following information is voluntary and is not required in
order for the named proxy to cast the shareholders vote:
______________________________________________________
NAME(S) IN WHICH STOCK IS HELD (please print)
______________________________________________________
ADDRESS
______________________________________________________
______________________________________________________
ACCOUNT # TELEPHONE #
______________________________________________________
SOCIAL SECURITY #
[ ] Check here if you wish this card kept confidential from the
company prior to the deadline for submitting proxy cards.