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SCHEDULE 14A - INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT
OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
JLG INDUSTRIES, INC.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement)
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1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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JLG INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MONDAY, NOVEMBER 15, 2001
Dear Fellow Shareholder:
It is my pleasure to invite you to attend the 2001 Annual Meeting of
Shareholders of JLG Industries, Inc. The meeting will be held at the Plaza
Hotel, 1718 Underpass Way, Hagerstown, Maryland 21742, Thursday, November 15,
2001 at 9:00 a.m. for the following purposes:
1. To elect a board of eight directors of the Company to hold office
until the next Annual Meeting of Shareholders or until their
successors shall be elected and qualified.
2. To ratify the selection of independent auditors for the 2002 fiscal
year.
3. To transact such other business as may properly come before the
Annual Meeting
Shareholders of record at the close of business on October 1, 2001 will be
entitled to vote at this meeting or any adjournments thereof.
Your vote is important to us. Please promptly sign, date and mail the
enclosed proxy card in the postage-paid return envelope provided.
By order of the Board of Directors,
/s/ Thomas D. Singer
Thomas D. Singer
Secretary
October 2, 2001
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PROXY STATEMENT
GENERAL
The Notice of Annual Meeting, this Proxy Statement, the enclosed proxy
card, and the Annual Report of JLG Industries, Inc. (the "Company") are
furnished to shareholders of record at the close of business on October 1, 2001
(the "Record Date"). On the Record Date, there were 43,662,505 shares of Capital
Stock issued and outstanding. Each share of Capital Stock entitles the holder to
one vote at the Annual Meeting. There are no other voting securities of the
Company.
The Board of Directors is soliciting proxies to be voted at the 2001 Annual
Meeting of Shareholders of the Company to be held at the Plaza Hotel, 1718
Underpass Way, Hagerstown, Maryland 21742 on November 15, 2001.
A proxy may be revoked by the person giving the proxy at any time before it
is exercised by filing with the Secretary of the Company a written revocation or
a duly executed proxy bearing a later date. During the Annual Meeting, a proxy
may be revoked by filing a written revocation or a duly executed proxy bearing a
later date or by attending the Meeting and voting in person. You may vote your
shares by signing, dating and mailing the proxy card(s) found in the address
pocket of the mailing envelope. If you hold shares in more than one account,
then you will receive more than one card. Please sign, date and mail each card
received to ensure that all of your shares will be represented and voted at the
Annual Meeting.
All expenses in connection with the solicitation of proxies will be borne
by the Company. In addition to soliciting proxies by mail, the officers,
directors, or other employees of the Company, as yet undesignated, and without
compensation other than their regular compensation, may solicit proxies in
person or by other appropriate means if authorized and if deemed advisable.
PROPOSAL 1
ELECTION OF DIRECTORS
The persons named in the following table have been nominated by the Board
of Directors for election as directors at the Annual Meeting to hold office
until the next Annual Meeting of Shareholders or until their successors shall be
elected and qualified. Directors are elected by a majority of the votes cast.
NOMINEES FOR DIRECTORS
<Table>
<Caption>
DIRECTOR BACKGROUND
NAME AGE SINCE INFORMATION
---- --- -------- -----------
Roy V. Armes............. 48 2000 Corporate Vice President, Global Procurement Operations,
Whirlpool Corporation; prior to 1997, President and Managing
Director, Whirlpool Greater China; prior to 1996, Vice
President, Manufacturing & Technology, Whirlpool Asia.
George R. Kempton........ 67 1993 Retired Chairman of the Board and Chief Executive Officer,
Kysor Industrial Corporation.
William M. Lasky......... 54 1999 Chairman of the Board, President and Chief Executive
Officer; prior to 2001, President and Chief Executive
Officer; prior to 2000, President and Chief Operating
Officer; prior to 1999, President, Dana Corporation,
Worldwide Filtration Products Group; prior to 1997, Vice
President and General Manager, Dana Corporation, North
America Filtration Group.
James A. Mezera.......... 71 1984 President, Mezera and Associates, Inc., a management
consulting firm; prior to 1996, Vice President, Komatsu
Dresser Company.
</Table>
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<Table>
<Caption>
DIRECTOR BACKGROUND
NAME AGE SINCE INFORMATION
---- --- -------- -----------
Stephen Rabinowitz....... 58 1994 Retired Chairman of the Board and Chief Executive Officer,
General Cable Corporation.
Raymond C. Stark......... 58 2000 Retired Corporate Vice President, Quality & Six Sigma,
Honeywell International, Inc.; prior to 1999, President &
General Manager, AlliedSignal Aerospace & Electronics Co.;
prior to 1996, Vice President, Materials Management,
Honeywell International, Inc.
Thomas C. Wajnert........ 58 1994 Chairman of the Board, Seismiq, Inc.; Director, R.J.
Reynolds Tobacco Holdings, Inc.; Chairman of the Board, Epix
Holdings, Inc.; prior to 1998, Chairman of the Board, AT&T
Capital Corporation; prior to 1997, Chairman of the Board
and Chief Executive Officer, AT&T Capital Corporation.
Charles O. Wood, III..... 63 1988 President, Wood Holdings, Inc., a private investment firm;
Director, Boston Private Financial Holdings, Inc.
</Table>
Each nominee for director listed above has been employed in the capacity
noted for more than five years, except as indicated. There are no family
relationships among any of the above-named nominees for director.
BOARD OF DIRECTORS
The Company's Board of Directors held five meetings during the 2001 fiscal
year. During that time, each director attended at least 75% of the aggregate of
(i) the number of meetings of the Board of Directors and (ii) the number of
meetings held by all committees of the Board of Directors on which he served.
The Board of Directors has five committees: Audit, Compensation, Directors
and Corporate Governance, Executive and Finance to devote attention to specific
subjects and to assist the Board of Directors in the discharge of its
responsibilities. All committees other than the Executive Committee are composed
of non-employee directors. The functions of the committees are described in the
Company's Principles of Corporate Governance, a copy of which is attached as
Appendix A to this Proxy Statement.
The Audit Committee, currently consisting of Messrs. Kempton, Mezera, Stark
and Wood (Chairman), who are all "independent" as defined in the New York Stock
Exchange listing standards, met three times during the 2001 fiscal year. A copy
of the Audit Committee Charter is attached as Appendix B to this Proxy
Statement.
The Compensation Committee, currently consisting of Messrs. Armes, Kempton,
Rabinowitz (Chairman) and Wajnert, held three meetings during the 2001 fiscal
year.
The Directors and Corporate Governance Committee, currently consisting of
Messrs. Mezera, Rabinowitz, Wajnert (Chairman) and Wood, held two meetings
during the 2001 fiscal year.
The Executive Committee currently consists of Messrs. Lasky, Rabinowitz,
Wajnert, and Wood. The Executive Committee held no meetings during the 2001
fiscal year.
The Finance Committee, currently consisting of Messrs. Armes, Mezera,
Rabinowitz (Chairman), Wajnert and Wood, held three meetings during the 2001
fiscal year.
Directors, who are not employees of the Company, receive compensation for
their services as directors. Each such director currently receives a $25,000
annual retainer and each committee chairman a $5,000 annual retainer for service
as a committee chairman. In addition, each such director receives $1,500 and
$1,000, respectively, for each Board of Directors meeting and each committee
meeting attended. Directors are also reimbursed for out-of-pocket expenses
incurred in connection with their attendance at meetings and for other services
rendered as a director. Directors, who are employees of the Company, do not
receive additional compensation for services as a director.
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The JLG Industries, Inc. Directors Stock Option Plan provides for annual
grants to each non-employee director of an option to purchase 6,000 shares of
the Company's Capital Stock provided the Company earned a net profit, before
extraordinary items, for the preceding year.
The Company has a Directors' Deferred Compensation Plan which entitles each
eligible director to defer the receipt of fees payable for services as a
director. Any director, who is not an employee of the Company, is eligible to
participate in the plan. Mr. Mezera elected to participate in the plan during
fiscal 2001. Payments deferred under the plan are credited with an investment
rate of return based upon investment indices available under the plan as
selected by the participant.
Director nominations, other than those by or at the direction of the Board
of Directors, may be made pursuant to written notice received by the Secretary
of the Company at 1 JLG Drive, McConnellsburg, PA 17233 no later than ninety
days prior to the anniversary date of the previous year's annual meeting. Such
notice must be accompanied by written statements signed by each person so
nominated setting forth all information in respect of such person that would be
required by Rule 14a-3 promulgated by the Securities and Exchange Commission if
such person had been nominated by the Board of Directors and stating that such
person consents to such nomination and consents to serve as director of the
Company if elected.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities Exchange Act of 1934 require that the Company
disclose late filings of reports of stock ownership, or changes in ownership, by
its directors, officers, and 10% stockholders. Based on its review of the copies
of forms it received, or written representations from reporting persons that
they were not required to file a Form 5, the Company believes that, during
fiscal 2001, all reports required under Section 16(a) of the Securities Exchange
Act for its directors, officers, and 10% stockholders were filed on a timely
basis, except that Mr. Wood filed a late report of disposition of securities.
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VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table shows the number of shares of the Company's Capital
Stock beneficially owned on September 1, 2001 by each director-nominee, each
named executive officer, and all current directors and executive officers as a
group. All ownership information is based upon filings made by such persons with
the Securities and Exchange Commission ("Commission") or upon information
provided to the Company.
<Table>
<Caption>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
---------------------------------------------
NAME OF PERSON CURRENTLY ACQUIRABLE PERCENT OF
OR GROUP (1) OWNED (2) WITHIN 60 DAYS CLASS (3)
------------ --------- -------------- ----------
William M. Lasky................................... 115,063 122,333 --
Charles O. Wood, III............................... 45,000(4) 90,000 --
James H. Woodward, Jr.............................. 42,200 -- --
George R. Kempton.................................. 42,000 54,000 --
Thomas D. Singer................................... 39,078 31,108 --
James A. Mezera.................................... 37,000 42,000 --
Craig E. Paylor.................................... 35,077 32,205 --
Peter L. Bonafede, Jr.............................. 25,127 20,699 --
Stephen Rabinowitz................................. 17,000 71,064 --
Thomas C. Wajnert.................................. 11,600 42,000 --
Barry L. Phillips.................................. 5,000 35,665 --
Raymond C. Stark................................... 1,000 1,167 --
Roy V. Armes....................................... 350 1,167 --
All directors and executive officers as a group (13
persons)......................................... 415,495 543,408 2.2%
</Table>
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(1) The address of each of the named persons is in care of JLG Industries, Inc.,
1 JLG Drive, McConnellsburg, PA 17233.
(2) Each person listed has advised the Company that, except as otherwise
indicated, such person has sole voting and sole investment power with
respect to the shares indicated, except for certain shares as follows where
each person has voting but not investment power: Mr. Lasky, 92,300; Mr.
Woodward, 42,200; Mr. Singer, 38,849; Mr. Paylor, 35,324; Mr. Bonafede,
18,440; Mr. Phillips, 5,000; and all directors and executive officers as a
group, 232,113.
(3) Percentages are not shown where less than 1.0%.
(4) Includes 10,000 shares owned by a family trust.
The following table sets forth the name and address of each shareholder
known to the Company to be beneficial owner of more than five percent of the
outstanding shares of the Company's Capital Stock.
<Table>
<Caption>
AMOUNT AND NATURE
OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP CLASS
---------------- -------------------- ----------
Westport Asset Management................................... 2,628,000(1) 6.3%
253 Riverside Avenue
Westport, Connecticut 06880
Ingalls & Snyder LLC........................................ 2,376,998(1) 5.6%
61 Broadway
31st Floor
New York, New York 10006
</Table>
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(1) As of August 17, 2001, based on information supplied to the Company by
Westport Asset Management and Ingalls & Snyder LLC.
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EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION POLICIES
The Company's executive compensation programs are designed to retain or
attract qualified executives to develop and manage implementation of the
Company's business plans and to provide appropriate incentives, based
principally on objective criteria, that link compensation to individual and
Company performance. The Compensation Committee, which is composed entirely of
non-employee directors, reviews executive compensation levels annually and
recommends for Board consideration an annual compensation package for each
executive officer comprised of base salary and target cash bonus pursuant to the
Company's Management Incentive Plan. The target cash bonuses are awarded on the
basis of individual performance objectives and the Company's achieving targeted
levels of earnings per share and other performance objectives. The Committee
also determines annually for each executive officer appropriate levels of stock
options or other stock-based awards under the Company's Stock Incentive Plan and
confers discretion upon the Chief Executive Officer to award additional stock
based awards to officers and key employees out of a limited pool of shares fixed
annually by the Committee. In granting stock options, the Committee considers
the expected value of such awards based on the Black-Scholes valuation method.
The Committee believes the stock-based awards provide incentives for executive
management to promote intermediate-term and long-term shareholder value.
Total compensation available in the combined package for each executive
officer will generally be set based on the Company's financial condition,
performance objectives correlated to the Company's annual business plan and
comparisons to the preceding year's package. The Committee also evaluates
compensation levels for comparable positions reflected in survey data provided
by the Committee's independent compensation consultant. The consultant seeks to
compile survey data drawn from a broad group of industrial companies of roughly
comparable revenue size, with roughly comparable officer positions and
responsibilities. In considering all of these factors, the Committee seeks to
set base salaries generally equivalent to median levels reflected in the survey
data. In setting performance-based compensation, the Committee seeks to provide
Company executives with the opportunity to earn total compensation generally at
or exceeding the 75th percentile levels reflected in the survey data. As a
secondary comparative measure for Chief Executive Officer compensation, the
Committee examines compensation practices of a selected group of capital
equipment manufacturers. However, the Committee believes that the market for
skilled senior management is not limited to capital equipment manufacturers and
that a broad industry comparison offers a better basis for evaluating
competitive compensation levels than comparison to executive compensation paid
by firms included in either the selected group of capital equipment
manufacturers examined by the Committee or the Peer Industry Group identified in
the Performance Graph included in this Proxy Statement.
COMPENSATION FOR FISCAL YEAR 2001
Compensation available for the Company's executive officers for fiscal year
2001 consisted of a base salary and opportunity to earn a year-end cash bonus.
The Committee also awarded stock options and restricted shares under the
Company's Stock Incentive Plan. The Chief Executive Officer also awarded bonus
shares and restricted shares in the exercise of his discretionary authority
conferred by the Committee.
With salary increases at the outset of fiscal 2001, base salary
competitiveness improved compared to prior years, but a majority of officer
positions remained below the median of survey data provided by the Committee's
compensation consultant.
For fiscal 2001 the Committee established under the Management Incentive
Plan a cash bonus matrix based on various levels of projected fiscal 2001
earnings per share (EPS). The Company's earnings of $1.04 per share in fiscal
2001 did not reach the Management Incentive Plan's EPS threshold level and,
accordingly, the Company paid no bonuses under the Management Incentive Plan.
This resulted in total cash compensation below the 50th percentile of
compensation survey data for most officers.
For fiscal 2001, the Committee also awarded a blend of stock options and
restricted shares that provide intermediate and long-term incentives and that
offer opportunities for officers to earn total direct compensation generally
between the 65th and 75th percentile levels reflected in survey data. The
aggregate quantitative
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value of the stock based awards was determined on a basis similar to prior
years, with 60% of the quantitative value allocated to stock options and 40%
allocated to restricted shares.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee believes that during his first year as CEO Mr. Lasky
demonstrated sound leadership strengthening the Company through a challenging
economic environment.
Upon promotion to chief executive in September 2000, the Committee
recommended and the Board approved an increase in Mr. Lasky's annual salary from
$400,000 to $450,000, which was between the 25th and 50th percentile level
reflected in survey data. As noted above, fiscal 2001 EPS fell short of the
threshold level under the Management Incentive Plan resulting in no bonus being
awarded to Mr. Lasky. Accordingly, Mr. Lasky's total cash compensation for
fiscal 2001, comprised of just his salary, fell below the 25th percentile of
survey data.
In considering intermediate and long-term incentives, for fiscal 2001, the
Committee awarded Mr. Lasky 69,300 restricted shares and options to acquire
155,300 shares of Common Stock. The restricted shares vest at the end of five
years subject to Mr. Lasky's continued employment with the Company, with certain
performance-based vesting opportunities prior to the end of the fifth year. The
options have an exercise price equal to the average of the high and low trading
prices on the grant date and vest ratably over each of the next three years
subject to Mr. Lasky's continued employment.
DISCUSSION OF CORPORATE TAX DEDUCTION FOR COMPENSATION IN EXCESS OF $1 MILLION A
YEAR
Section 162(m) of the Internal Revenue Code of 1986 (the "Code"), precludes
a public corporation from taking a tax deduction in any year for compensation in
excess of $1 million paid to its chief executive officer or any of its four
other highest-paid executive officers. The $1 million annual deduction limit
does not apply, however, to "performance-based compensation" as that term is
defined in Code Section 162(m)(4)(C) and regulations promulgated thereunder.
Compensation deferred by an executive under a qualifying deferred compensation
program also is not subject to the $1 million annual deduction limit if the
compensation is paid after the individual ceases to be an executive officer.
Compensation in respect of stock options granted under the Stock Incentive
Plan qualifies as "performance-based compensation." As a result, in fiscal 2001
no executive received non-performance-based compensation exceeding $1 million
and the Committee does not expect any executive to receive any such excess
compensation in fiscal 2002.
This report is submitted by the Compensation Committee of the Board of
Directors.
Stephen Rabinowitz (Chairman)
Roy V. Armes
George R. Kempton
Thomas C. Wajnert
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The following tables and narrative identify the Company's executive
officers and set forth compensation information for the Company's Chief
Executive Officer and its four most highly compensated executive officers (the
"Named Executive Officers") as of the end of the 2001 fiscal year.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------- -----------------------
OTHER RESTRICTED
NAME, AGE AND ANNUAL STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS(3) OPTIONS COMPENSATION(4)
------------------ ---- ------ -------- --------------- ------------ -------- ---------------
William M. Lasky, 54 (5) 2001 $445,272 -- -- $746,361 155,300 $ 68,804
Chairman of the Board, 2000 250,000 $381,169 -- 468,648 303,800 12,370
President and Chief Executive
Officer
James H. Woodward, Jr., 48 (6) 2001 275,880 115,000 -- 292,944 104,500 899
Senior Vice President and
Chief Financial Officer
Barry L. Phillips, 60 (7) 2001 285,928 -- -- -- 69,300 --
President and Chief 2000 285,848 123,465 -- 50,940 50,000 3,752
Executive Officer, 1999 41,468 -- -- -- -- 97
Gradall Industries, Inc.
Thomas D. Singer, 49 (8) 2001 205,008 -- -- 143,241 29,800 36,694
Senior Vice President,
General Counsel and Secretary
Peter L. Bonafede, Jr., 51 (9) 2001 200,016 -- -- 140,010 29,100 34,567
Senior Vice President
Manufacturing
Craig E. Paylor, 45 (10) 2001 200,016 -- -- 140,010 29,100 77,886
Senior Vice President, 2000 190,008 135,894 -- 65,876 21,300 26,949
Sales and Market Development
L. David Black, 64 (11) 2001 267,504 187,253 -- -- -- 113,437
Retired Chairman of the 2000 500,016 374,985 -- -- 168,800 150,785
Board 1999 440,016 714,846 -- 100,620 100,000 100,059
</Table>
---------------
(1) Reflects bonuses earned during the fiscal year, but paid during the
following fiscal year.
(2) Excludes the value of perquisites and other personal benefits. The
incremental cost to the Company of providing such perquisites and other
personal benefits did not exceed the lesser of either $50,000 or 10% of
annual salary and bonus for any of the Named Executive Officers.
(3) The 2001 shares were granted on August 14, 2000 and July 24, 2001. The
former shares vest in three equal installments beginning one year following
the date of grant. The latter shares vest in five years with the exceptions
that i) if the share price of the Company's Capital Stock averages $16 per
share for twenty consecutive trading days, then 50% of the grant vests and
ii) if the share price of the Company's Capital Stock averages $20 per
share for twenty consecutive trading days, then the remaining 50% of the
grant vests. Dividends are payable to the Named Executive Officers on the
restricted shares. Total restricted shares held and the aggregate market
value at July 31, 2001 for the Named Executive Officers were as follows:
Mr. Lasky, 92,300 shares valued at $1,042,990; Mr. Woodward, 42,200 shares
valued at $476,860; Mr. Phillips, 5,000 shares valued at $56,500; Mr.
Singer, 24,781 shares valued at $280,025; Mr. Bonafede, 18,440 shares
valued at $208,372; and Mr. Paylor, 23,098 shares valued at $261,007.
(4) Includes payments pursuant to the Company's Supplemental Medical Care
Reimbursement Plan for its Named Executive Officers to reimburse medical
expenses incurred by them or their dependents and not paid by other
employee benefit plans (Mr. Lasky $1,500; Mr. Woodward $899; Mr. Singer
$3,153; Mr. Bonafede $1,073; Mr. Paylor $2,718; and Mr. Black $1,633);
payments pursuant to the Company's
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Annual Physical Examination Plan (Mr. Black $2,182); contributions to the
Company's discretionary, defined contribution retirement plan (Mr. Lasky
$13,190; Mr. Singer $20,178; Mr. Bonafede $17,560; Mr. Paylor $21,053; and
Mr. Black $17,839); and contributions pursuant to the Company's Executive
Deferred Compensation Plan (Mr. Lasky $54,114; Mr. Singer $16,363; Mr.
Bonafede $15,933; Mr. Paylor $54,114; and Mr. Black $91,782).
(5) Mr. Lasky commenced employment with the Company on December 1, 1999.
(6) Mr. Woodward commenced employment with the Company on August 7, 2000.
(7) Mr. Phillips commenced employment with the Company on June 16, 1999.
(8) Mr. Singer became an executive officer in November 2000.
(9) Mr. Bonafede commenced employment with the Company on February 22, 1999.
(10) Mr. Paylor became an executive officer in August 1999.
(11) Mr. Black served as Chief Executive Officer during a portion of fiscal
2001.
STOCK OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<Table>
<Caption>
INDIVIDUAL GRANTS
--------------------------------------- POTENTIAL REALIZABLE VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES OF STOCK PRICE
OPTIONS APPRECIATION FOR OPTION TERM(3)
OPTIONS/ GRANTED TO EXERCISE OR -----------------------------------------
SAR'S EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(1) FISCAL YEAR PER SHARE DATE(2) 5% 10%
---- ---------- ------------ ----------- --------------- ---------- ----------
William M. Lasky........... 155,300 12% $10.91 July 24, 2011 $1,164,208 $2,857,410
James H. Woodward, Jr...... 61,000 5 10.91 July 24, 2011 457,287 1,122,357
James H. Woodward, Jr...... 43,500 3 9.97 August 14, 2010 326,098 800,369
Barry L. Phillips.......... 69,300 5 10.91 July 24, 2011 519,508 1,275,071
Thomas D. Singer........... 29,800 2 10.91 July 24, 2011 223,396 548,299
Peter L. Bonafede, Jr...... 29,100 2 10.91 July 24, 2011 218,148 535,419
Craig E. Paylor............ 29,100 2 10.91 July 24, 2011 218,148 535,419
</Table>
---------------
(1) Consists solely of options to purchase shares of Capital Stock.
(2) Options become exercisable in equal amounts over a three year period
beginning August 14, 2001 and July 24, 2002. To the extent not already
exercisable, the options generally become exercisable upon a change in
control. A change in control means either (i) any person or group becomes
the beneficial owner of 25% or more of the voting power of the Company's
Capital Stock; or (ii) the election within a twelve-month period of three or
more directors whose election is not approved by the majority of the Board
of Directors; or (iii) the incumbent directors cease to be a majority of the
Board of Directors.
(3) The potential realizable value illustrates value that might be realized upon
exercise of the options immediately prior to the expiration of their term,
assuming the specified compounded rates of appreciation in the market price
of the Capital Stock over the terms of the options. The potential realizable
value to all shareholders using the specified 5% and 10% rates of
appreciation and the outstanding shares at July 31, 2001 would be
$315,932,820 and $775,419,504, respectively. The Company's use of these
hypothetical appreciation rates specified by the Securities and Exchange
Commission should not be construed as an endorsement of the accuracy of this
method of valuing options. The value realized by the holders of the options
will depend upon the actual performance of the Capital Stock over the term
of the options.
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AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
<Table>
<Caption>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR END(1) AT FISCAL YEAR END(2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------------- ----------- ------------- ----------- -------------
William M. Lasky........... -- -- 101,750 1357,350 $1,266,558 $4,207,588
James H. Woodward, Jr...... -- -- -- 104,500 -- 1,099,205
Barry L. Phillips.......... -- -- 35,665 117,135 579,015 1,418,563
Thomas D. Singer........... -- -- 24,441 40,634 376,832 465,600
Peter L. Bonafede, Jr...... -- -- 20,699 53,801 322,534 636,411
Craig E. Paylor............ -- -- 32,205 47,300 501,821 551,367
L. David Black............. -- -- 839,914 -- 7,473,100 --
</Table>
---------------
(1) The Company does not have any outstanding stock appreciation rights.
(2) Value is calculated based on the difference between the option exercise
price and the closing market price of the Company's Capital Stock on July
31, 2001, multiplied by the number of shares underlying the option. The
calculation omits options where the exercise price exceeds the closing
market price.
COMPENSATION PURSUANT TO PLANS
The Company maintains separate benefit plans for employees of the Company
and Gradall Industries, Inc. The following describe the Company's plans and
related benefits.
The Company maintains a non-qualified defined benefit plan that provides
for payments, following retirement or in other specified circumstances, equal to
the average of the officer's base salary plus cash bonus for the two calendar
years in which the sum is the highest, multiplied by 65% for Mr. Lasky, 60% for
Mr. Woodward and 55% for Messrs. Singer, Bonafede and Paylor; offset, however,
by the actuarial equivalent of benefits provided to the officer in conjunction
with the Company's contribution to other employer sponsored retirement plans,
the actuarial equivalent of retirement benefits provided by previous employers
of the officer; and 50% of the officer's social security benefit. The retirement
benefit is payable in the form of a ten year certain life annuity, with options
for a joint and survivor annuity and an actuarial equivalent lump sum payout.
The officer may elect to receive a reduced retirement benefit in the case of
early retirement. The plan provides for 25% vesting per year after two years of
service, with full vesting after five years of service. Based on their annual
compensation through the end of the Company's 2001 fiscal year, with the
benefits identified in the plan and assuming normal retirement age has been
attained or retirement dates are announced, the named executive officers would
be entitled to projected annual payments under the plan as follows: Mr. Lasky,
$377,860; Mr. Woodward, $344,454; Mr. Singer, $58,504; Mr. Bonafede, $194,325;
and Mr. Paylor, $19,134. The Company also provides a separate retiree medical
plan for the officers, together with their spouse and eligible dependents.
The Company has an executive deferred compensation plan that allows
officers to defer all or a portion of their base salary and/or cash bonus.
Provided that the officer elects to defer some portion of his base salary and/or
cash bonus, the Company will contribute to the officer's account an amount equal
to the amount that would have been contributed by the Company to the account in
the Company's Employees' Retirement Savings Plan in the form of matching and
profit sharing contributions, but for the various limitations in the Code.
Payments deferred and contributions received under the plan are credited with an
investment rate of return based upon investment indices available under the plan
as selected by the participant.
The Company also maintains an executive severance plan which will provide a
severance benefit of two times the aggregate of base salary and cash bonus for
Mr. Lasky and one times the aggregate of base salary and cash bonus for Messrs.
Woodward, Singer, and Paylor, with base salary and cash bonus being the amounts
paid the officer for the final twelve calendar months of employment. The
agreement with Mr. Woodward expires in August 2002. The severance benefit is
payable in the form of a lump sum upon involuntary
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termination of employment by the Company, unless the termination is for one of
the specified reasons which includes disloyalty or conviction of a felony. The
severance benefit is also payable in certain other circumstances in connection
with a change of control and will be adjusted to gross-up for any excise tax
applicable to compensation in excess of limits presented in Section 280G of the
Code. No severance benefit is payable if the officer is entitled to a retirement
benefit under the supplemental executive retirement plan, except in connection
with a change of control. The severance benefit includes continuation of Company
provided life and medical insurance in the event of a change in control.
Mr. Phillips is employed by a wholly owned subsidiary of the Company,
Gradall Industries, Inc., and the following plans and associated benefits apply
to him.
Under The Gradall Company Employees' Retirement Plan (the "Retirement
Plan"), benefits are payable to all eligible employees of Gradall, other than
employees who participate in a separate retirement plan for bargaining unit
employees. The Retirement Plan provides a benefit, based upon years of service
with Gradall since October 1983, and upon final average base compensation for
the five highest consecutive calendar years of the ten years preceding
retirement. The benefits under the Retirement Plan are not subject to any
deduction for Social Security or other amounts. Under terms of the Retirement
Plan, Mr. Phillips is entitled to receive annual payments of $59,760 at age 65.
Gradall has also adopted a non-qualified supplemental retirement plan for
certain officers and key employees (the "Restoration Plan"). The Restoration
Plan provides an additional benefit to participants retiring before age 65, and
is intended to minimize the effect of revised actuarial reduction factors
utilized in calculating normal benefits under certain provisions of the Code and
the Employee Retirement Income Security Act of 1974.
In May 1999, Gradall entered into an amended and restated employment
agreement with Mr. Phillips that provides for the continuation of his employment
as President and Chief Executive Officer at an annual salary of $260,000. Mr.
Phillips' salary may be increased from time to time at the discretion of the
Company's Compensation Committee. The term of the agreement is for a period of
three years expiring in May 2002. If Gradall dismisses Mr. Phillips or he
resigns, Gradall is required to continue to make all payments due thereunder and
Mr. Phillips is entitled to all benefits offered by Gradall to any of its
executive officers. In the event that Gradall experiences a change of control
(as defined in the employment agreement) the term of the employment agreement is
extended for a period of three years from the date on which such change of
control occurs (the "Continuation Term"). If Gradall terminates the agreement
prior to the occurrence of a change of control, for any reason other than "for
cause," death or disability, Gradall is required to continue to make all
payments due thereunder. If amounts to be received by Mr. Phillips in connection
with a termination of his employment following a change of control will be
subject to the excise tax provided by Section 4999 of the Internal Revenue Code
(the "Excise Tax"), (i) the payments will be reduced to the maximum amount of
payments which could be made without imposition of the Excise Tax (the "Safe
Harbor Amount"), if within 115% of the Safe Harbor Amount or (ii) if the
payments equal or exceed 115% of the Safe Harbor Amount, Gradall is required to
pay Mr. Phillips an additional amount to offset any Excise Tax on the Total
Payments (the "Gross-Up Payment") and any federal, state and local income and
employment taxes and the Excise Tax upon the Gross-Up Payment.
Gradall maintains a Supplemental Executive Retirement Plan (the "SERP") for
the benefit of certain key employees of Gradall, including Mr. Phillips.
Pursuant to the terms of the SERP, participants may elect to defer all or any
portion of their compensation and contribute such deferral to the SERP. All
participant deferrals are immediately and fully vested. Gradall may make
contributions to the SERP at the discretion of the Board of Directors. Gradall's
contributions are 50% vested after the participant reaches age 55 and are fully
vested once the participant reaches age 60. In addition, Company contributions
fully vest upon the death or disability of the participant or in the event of a
change of control of Gradall. If a participant's employment is terminated "for
cause," all Company contributions allocated to such participant's account are
forfeited. All amounts contributed to the SERP, whether as a result of Company
contributions or participant deferrals have been used to purchase whole life
insurance policies on the life of the participant. As of July 31, 2001, life
insurance policies purchased under the SERP included policies on the life of Mr.
Phillips in the aggregate face amount of $174,133. Upon the death of the
insured, the entire proceeds of the policy will be paid to insured's
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designated beneficiary. The insured is entitled to receive the policy upon the
termination of his employment as a result of disability or retirement after age
60.
Effective July 1989, Gradall entered into a Deferred Compensation Agreement
with Mr. Phillips. Pursuant to this agreement, upon the termination of Mr.
Phillips' employment with Gradall at any time after age 65, Gradall will pay to
Mr. Phillips or his designated beneficiary in the event of his death, the sum of
$78,687 per year for fifteen years. Upon the death of Mr. Phillips while
employed by Gradall, Mr. Phillips' designated beneficiary is entitled to receive
the death benefit payable under a life insurance policy in the face amount of
$125,000. Upon termination of employment as a result of disability, Mr. Phillips
has the option of receiving the net cash surrender value of this policy or an
assignment of the policy. Gradall pays all premiums due under this policy.
Gradall has entered into a Split-Dollar Life Insurance Agreement with Mr.
Phillips with respect to an insurance policy on the life of Mr. Phillips with a
death benefit of $500,000. Pursuant to the terms of the agreement, Mr. Phillips
pays the portion of the premium attributable to the PS-58 cost of the policy,
funded by an off-setting bonus from the Company, and the Company pays the
balance of the premium. Upon the death of Mr. Phillips or the cancellation of
the policy, the Company is entitled to receive the premiums it has paid under
the policy and a portion of the cash value of the policy. The balance of the
policy proceeds will be paid to Mr. Phillips or his designated beneficiary.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Management established guidelines that require individuals in key
management positions in the Company to own significant amounts of Capital Stock.
The guidelines are designed to encourage growth in shareholder value by
increasing the alignment between executives' risks and rewards and the Company's
total shareholder return. To assist employees in purchasing Capital Stock to
comply with guidelines, interest-bearing loans are available from the Company at
the Applicable Federal Rates as published monthly by the Internal Revenue
Service. Each loan is with full recourse to the borrower. Any bonus payable to
the maker of the loan shall be applied to the then current balance due. The
amounts of remaining payments, if any, shall be recalculated based on the
remaining principal balance.
Three of the Company's executive officers obtained loans to finance the
purchase of Company Stock to comply with the guidelines. The largest amounts
outstanding under these loans during Fiscal 2001 were: Mr. Lasky, $85,520; Mr.
Bonafede $50,940; and Mr. Paylor, $76,746. These loans were paid in full in
September 2000.
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PERFORMANCE GRAPH
The following graph compares the cumulative return on the Company's Capital
Stock over the past five years with the cumulative total return on shares of
companies comprising Standard & Poor's 500 Stock and Diversified Machinery Group
indices. Cumulative total return is measured assuming an initial investment of
$100 on July 31, 1996 and the reinvestment of all dividends paid.
<Table>
<Caption>
S&P DIVERSIFIED MACHINERY
GROUP S&P 500 JLG
------------------------- ------- ---
1996 100.00 100.00 100.00
1997 162.43 152.14 59.86
1998 134.31 181.48 83.99
1999 157.34 218.14 108.18
2000 125.02 237.72 55.46
2001 150.92 203.66 61.71
</Table>
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PROPOSAL 2
SELECTION OF INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP served as the Company's
independent auditors throughout fiscal year 2001 and the Board of Directors, on
the recommendation of the Audit Committee, has selected the firm as the
Company's independent auditors for fiscal 2002. The Board of Directors
recommends ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for the fiscal year 2002. Representatives of the firm of
Ernst & Young LLP are expected to be present at the Annual Meeting, with the
opportunity to make a statement if they desire to do so, and to respond to
appropriate questions. If the selection is not ratified, the Board of Directors
will reconsider its action.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended July 31, 2001, with management
and Ernst & Young LLP, the Company's independent auditors. Management is
responsible for the Company's internal controls and the financial reporting
process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and for issuing a report
thereon. The Audit Committee has discussed with Ernst & Young LLP the matters
required to be discussed by Statement on Auditing Standards No. 61 relating to
the conduct of the audit. The Audit Committee has received written disclosures
and the letter from Ernst & Young LLP regarding its independence as required by
Independence Standards Board Standard No. 1 and discussed with Ernst & Young LLP
their independence, including considering the compatibility of non-audit
services provided by Ernst & Young LLP with their independence. Based on the
Audit Committee's review and discussions with management and Ernst & Young LLP,
the Audit Committee recommended to the Board that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 2001 for filing with the Securities and Exchange
Commission.
Charles O. Wood, III (Chairman)
George R. Kempton
James A. Mezera
Raymond C. Stark
DISCLOSURE OF AUDIT AND OTHER FEES
AUDIT FEES
The aggregate fees billed by Ernst & Young LLP for professional services
rendered for the audit of the Company's annual financial statements for the
fiscal year ended July 31, 2001 and the reviews of the financial statements
included in the Company's quarterly reports on Form 10-Q for that fiscal year
were $249,983.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees billed by Ernst & Young LLP for professional services
relating to financial information systems design and implementation rendered
during the fiscal year ended July 31, 2001.
ALL OTHER FEES
The aggregate fees billed by Ernst & Young LLP for professional services
rendered during the fiscal year ended July 31, 2001 other than as stated above
under the captions Audit Fees and Financial Information Systems Design and
Implementation Fees were $1,195,576, which consisted of $910,162 and $285,414
for tax and other services, respectively.
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VOTING INSTRUCTIONS
The matters set forth in the Notice of Annual Meeting will be voted upon in
the order in which they are listed in the Notice. The proxy form accompanying
this Proxy Statement provides boxes by means of which shareholders executing the
proxy forms may vote for or withhold a vote on the election of all or any of
Board of Director's nominees for election as directors. Each of the nominees has
consented to serve as a director and the Board of Directors has no reason to
believe that any of the nominees will not be available to serve if elected.
Should any of the nominees cease to be available for election before the Annual
Meeting, the proxy will, unless authority to vote has been withheld by the
person giving the proxy, be voted for a substitute nominee designated by the
Board of Directors. A majority of the shares entitled to vote and either present
in person or represented by proxy will constitute a quorum for the transaction
of business at the Annual Meeting. Directors are elected by a plurality and the
eight nominees who receive the most votes will be elected. Each other matter
submitted for shareholder approval shall be approved upon the affirmative vote
of a majority of the votes cast by shareholders entitled to vote and either
present in person or represented by proxy at the Annual Meeting. Abstentions and
broker non-votes on any matter submitted to the shareholders for approval will
be counted in determining whether a quorum has been reached, but will be
excluded entirely from the vote and will not effect the vote. Broker non-votes
as to any matter are shares held by nominees which are present and voted at the
meeting on matters as to which the nominee has discretionary authority but which
are not voted on the matter in question because the nominee does not have
discretionary voting authority as to such matter.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2002 Annual Meeting
must have been received in writing by the Company before June 12, 2002 in order
to be considered for inclusion in the Company's proxy materials relating to that
meeting. For any proposal that is not submitted for inclusion in next year's
Proxy Statement, but is instead sought to be presented directly at the 2002
Annual Meeting, SEC rules will permit management to vote proxies in its
discretion if the Company: (1) receives notice of the proposal before the close
of business on August 26, 2002, and advises share owners in the 2002 Proxy
Statement about the nature of the matter and how management intends to vote on
such matter; or (2) does not receive notice of the proposal prior to the close
of business on August 26, 2002. Shareholder proposals or notices of intention to
present proposals at the 2002 Annual Meeting should be addressed to Secretary,
JLG Industries, Inc. 1 JLG Drive, McConnellsburg, Pennsylvania 17233.
OTHER BUSINESS
The Board of Directors of the Company knows of no other matter that is to
be presented for action at the Annual Meeting other than those listed as items 1
through 2 in the Notice of Annual Meeting. As to any other business that may
properly come before the meeting, proxies will be voted in accordance with the
best judgment of the persons voting such proxies.
By order of the Board of Directors,
/s/ THOMAS D. SINGER
Thomas D. Singer
Secretary
October 2, 2001
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APPENDIX A
PRINCIPLES OF CORPORATE GOVERNANCE
The Board of Directors is responsible for ensuring that JLG is managed in a
manner that serves the best interests of the Company. In so doing the Board may
consider the effects of any Board action upon any or all affected groups
including, shareholders, employees, suppliers, customers and creditors of the
Company; however the Board is accountable only to the Company's shareholders.
Accordingly, the Board believes that the Company's primary purpose is to build
long-term shareholder value.
Cognizant of the role that effective corporate governance plays in
promoting shareholder value, the Board has adopted the following principles of
corporate governance as a public statement of certain guidelines that the Board
follows in carrying out its responsibilities. This set of principles does not
reflect any significant change in policy or practice of the Board. Rather it
generally memorializes JLG Board practices that have evolved into place over the
past decade. By adopting these principles, the Board does not expect this
evolution to cease. Like all other aspects of the Company's business, the Board
is committed to a process of continuous improvement that will require periodic
reexamination and possibly modification of these principles.
I. BOARD MEMBERSHIP
1. Annual Election. Every director shall be subject to annual election.
Annual director nominations shall be reviewed by the Directors and Corporate
Governance Committee, and upon its recommendation, by the Board of Directors.
2. Qualifications for Director Candidates. In addition to the procedural
qualifications for director candidates set forth in the Company's bylaws,
director candidates generally should be selected for their abilities and
experience in leadership and general business management. It is desirable for
the Board to be comprised of directors with a diversity of skills and
backgrounds as well as particular expertise in various disciplines including
accounting or finance, marketing, manufacturing, engineering, and international
markets. In selecting director candidates, the Board will seek to balance
continuity in the Company's operations with the need to ensure the Board is open
to new ideas and able to critically re-examine the status quo.
3. Independent directors. A substantial majority of the Board shall be
comprised of independent directors. While the Board will take appropriate steps
to comply with director independence requirements of the New York Stock Exchange
and other regulatory requirements, for this purpose the Board defines
"independent director" as a director who is not a current or former Company
employee and who is free from any relationship with the Company that would
interfere with the director's exercise of independent judgment regarding Company
affairs.
4. Interest in JLG. Directors are required to own at least 1,000 JLG
shares, provided that directors nominated for election by the Board may fulfill
this requirement within 18 months of their initial nomination. In addition to
this requirement, directors are encouraged to own a greater number of shares
under separate ownership guidelines (See Principle V.3. below).
5. Ineligibility. Retired or former executive officers of the Company,
particularly retired CEOs, generally shall not be eligible to serve as
directors.
6. Interlocking directorships not permitted. Interlocking directorships
will not be allowed, except in the case of a joint venture.
7. Service on Other Boards. The Board believes that director service on
other business corporation boards lends valuable experiences and perspective to
the Company. The capacity of any single director to satisfy multiple commitments
including service to the Company varies among directors and cannot be measured
by arbitrary limits on other board service. However, each Board member is
expected to ensure that all current and planned future commitments, including
service on business corporation boards, non-profit boards or service
organizations, do not materially interfere with his or her service as a director
of the Company.
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8. Director Resignation for Change in Circumstances. Directors are required
to inform the Chairman of the Board of retirement or any material change in
present job responsibilities and offer resignation from Board service. The
Directors and Corporate Governance Committee shall consider such circumstances
and determine the appropriateness of continued service by such directors.
9. Mandatory Retirement Age; Term Limits. The Board believes that director
age or term limits are arbitrary and not necessarily indicative of the ability
of a person to provide valuable service as a director. Age or duration of
service may be a factor in a decision to decline director nomination to the
extent that either impairs a director's ability to provide vigorous service or
independent judgment.
II. BOARD COMMITTEES AND OPERATIONS
1. Board positions. Following consideration and recommendation by the
Directors and Corporate Governance Committee, the Board will select the Chairman
of the Board and members of each Board Committee. Generally Committee members
will select from among their ranks a Committee Chairman. The Board favors
periodic rotations of committee members and chairmen to ensure that committees
are infused with fresh perspectives.
2. Committee Membership. The Audit, Compensation, Finance and Directors and
Corporate Governance Committees will consist entirely of independent directors,
but the Chairman of the Board shall serve as an ex officio member of all
committees.
3. Audit Committee. The Audit Committee functions include recommending the
selection of independent auditors; conferring with the independent auditors and
reviewing the scope and fees of the annual audit and the results thereof;
reviewing the Company's annual report to shareholders and periodic filings with
the Securities and Exchange Commission; reviewing the adequacy of the Company's
internal audit function, as well as the accounting and financial controls and
procedures; and approving the nature and scope of non-audit services performed
by the independent auditors.
4. Directors and Corporate Governance Committee. The Directors and
Corporate Governance Committee is responsible for identifying and recommending
to the Board appropriate areas of expertise to be represented on the Board;
identifying qualified candidates to fill Board positions; reviewing and
recommending the slate of directors to be submitted for election by the
shareholders at each annual meeting; reviewing any shareholder nominations of
directors to determine whether they comply with substantive and procedural
requirements; recommending to the Board staffing of committees and reviewing the
scope of each committee's responsibilities; reviewing shareholder proposals for
inclusion in the Company's proxy materials and determining whether they comply
with substantive and procedural requirements; recommending to the Board
appropriate levels of director compensation and compensation programs; reviewing
and advising the Board regarding management succession plans; and evaluating the
performance of the Board and current directors.
5. Compensation Committee. The Compensation Committee principally evaluates
the performance of the Chief Executive Officer; reviews his evaluation of the
other officers' performance; recommends compensation arrangements for all
officers of the Company, including salaries, bonuses and other supplemental
compensation programs; administers the Company's Stock Incentive Plan; and
reviews all other officer-related benefit plans and management development
programs.
6. Finance Committee. The Finance Committee is principally responsible for
overseeing the Company's capital, finance and investment policies, objectives
and transactions. Within this oversight role, the Committee exercises the full
powers and authority of the Board except for certain categories of transactions
with respect to which the Committee's role is limited to reviewing and making
recommendations to the Board.
7. Executive Committee. The Executive Committee is comprised of the
Chairmen of each of the Audit, Compensation, Finance and Directors and Corporate
Governance Committees and the Company's Chairman of the Board and President and
Chief Executive Officer. The Executive Committee may exercise all of the powers
of the Board of Directors except as prohibited by applicable law. The Executive
Committee's purpose is to permit Board action in unusual circumstances such as
during the unavailability of a quorum. The Executive Committee has not met or
taken any action since 1993.
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8. Committee Reporting. All committees report their deliberations,
recommendations and actions to the full Board during the Board meeting next
following the applicable committee action.
9. Lead Director. The Board has not appointed a single "lead director." The
Board believes its members collaborate well and welcomes the initiative of any
director on any issue that a director perceives to require Board attention. More
generally the Board looks to the Chairmen of each of the Audit, Compensation,
Finance and Directors and Corporate Governance Committees to lead Board
consideration of any specific matters within the jurisdiction of the applicable
committee.
10. Executive Session. During each Board meeting, independent directors
have an opportunity to meet in executive session without the presence of Company
officers, including inside directors.
III. BOARD PERFORMANCE
1. Performance Criteria. The Board will develop performance criteria, not
only for itself acting as a collective body, but also expectations for its
individual directors. These criteria will include prompt attendance, thorough
preparedness, participation, and candor.
2. Attendance. Directors are strongly encouraged to attend all Board and
Committee meetings in person and disclose their reasons for all absences or
conference call substitutions. The Company will disclose director attendance
figures for Board and Committee meetings to shareholders.
3. Preparedness. Directors will receive appropriate materials relating to
the items to be acted upon at Board and Committee meetings sufficiently in
advance of the meetings to allow adequate time for preparation.
4. Board and Director Performance Evaluations. The Directors and Corporate
Governance Committee will conduct bi-annual evaluations of the Board's and
individual directors' effectiveness, and report the results to the Board of
Directors.
5. Compensation of Directors. Directors are compensated only in cash or
stock, with the majority of a director's compensation being in the form of stock
based compensation. The compensation philosophy is to provide cash compensation
that is within the median range of peer companies with total direct
compensation, including stock, within the upper quartile of peer companies.
Changes in Board compensation, if any, will be considered by both the
Compensation Committee and the Directors and Corporate Governance Committee, and
will not be adopted without full discussion and concurrence by the whole Board.
IV. BUSINESS OPERATIONS
1. Business Planning. The Board will annually review and evaluate a
long-term strategic plan and a one-year operating plan that integrates with
strategic plan milestones.
2. CEO Evaluation. The Board or the Compensation Committee will evaluate
the performance of the CEO at least annually in meetings of independent
directors that are not attended by the CEO.
3. Management Development. The CEO will report annually to the Compensation
Committee on the Company's general management development programs.
4. CEO Succession. The Directors and Corporate Governance Committee will
examine and report to the Board periodically as needed on matters pertaining to
CEO succession. In addition the CEO will report to the Directors and Corporate
Governance Committee annually or more often as needed his recommendations for an
immediate successor in the event of the sudden death or incapacity of the CEO.
5. Access to Management. Directors have access to Company officers and
other management employees. Certain key officers regularly report to the Board
during Board meetings and the Board encourages the CEO to schedule Board
presentations by a variety of officers both to provide the Board with additional
insights on matters and to provide officers with exposure to the Board. The
Board also encourages the CEO to schedule informal, social interactions between
directors and officers.
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6. Consideration of Business Combinations. The Board believes that
shareholder interests are best served by the Board, in the exercise of its
independent judgement and consistent with its fiduciary duties, undertaking
supervisory oversight and ultimate responsibility for responding to and/or
negotiating any business combination proposal. Accordingly, the Board will
implement permissible measures that strengthen the Board's ability to carry out
this responsibility.
V. EXECUTIVE COMPENSATION
1. Compensation Philosophy. The Company's executive compensation programs
are reviewed and established annually by the Compensation Committee, with the
advice of independent compensation consultants, and with the approval of the
Board. The programs are designed to retain or attract qualified executives to
develop and manage implementation of the Company's business plans and to provide
appropriate incentives, based principally on objective criteria, that link
compensation to individual and Company performance. A substantial portion of
executive compensation is provided in the form of stock-based awards that
provide incentives for executive management to promote intermediate-term and
long-term shareholder value.
2. Compensation Committee Report. The Compensation Committee will detail
its compensation decisions and recommendations in its annual report on executive
compensation published in the Company's proxy materials.
3. Stock ownership. The Board encourages Company officers and directors to
hold substantial positions in JLG stock at levels that comply with market-based
guidelines for share ownership provided by the Company's independent
compensation consultant. Restricted stock and phantom stock units count toward
compliance with these guidelines, stock options, including vested stock options,
do not count.
VI. SHAREHOLDERS
1. Shareholder meetings. Appropriate notice of shareholder meetings,
including notice concerning any changes in meeting date, time, place, or
shareholder action contemplated, will be given to shareholders in a timely
manner to ensure that shareholders have a reasonable opportunity to exercise
their franchise.
2. Shareholder voting. The Company does not have dual-class voting. All
shareholders have equal voting rights. At annual meetings, shareholders will
vote on unrelated issues individually. Proxies will be kept confidential from
the Company, except at the express request of shareholders.
3. Director Availability. The Board believes that Management speaks for the
Company. Individual directors may, from time to time, meet or otherwise
communicate with various Company constituencies at the request or with the
knowledge of Management. All directors are encouraged to make every effort to
attend annual shareholders' meetings and be available, when requested by the
chair, to answer shareholder questions.
4. Corporate Governance Standards. Annually, or as needed, the Board will
review, revise as necessary, and approve Principles of Corporate Governance to
be published each year to shareholders in the proxy statement.
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APPENDIX B
AUDIT COMMITTEE CHARTER
I. AUTHORITY AND RESPONSIBILITIES
It will be the responsibility of the Audit Committee (the "Committee") of
the Board of Directors (the "Board" of JLG Industries, Inc. (the "Company") to
implement and support the oversight function of the Board by reviewing on a
periodic basis the Company's processes for producing financial data, its
internal controls, and the independence and terms of engagement of the Company's
independent auditors.
A. Authority. Subject to the limitations set forth below, the Committee
shall have authority to take, or direct the Company to take, any action
determined by the Committee to be necessary or appropriate to perform the
responsibilities of the Committee set forth in this Charter. All actions by the
Committee within the scope of this authority shall be subject to the discretion
of the Board to determine whether to review, rescind or modify such actions.
Typically, the Board will determine whether to review any Committee
action at the first Board meeting during which the subject action is
reported to the Board.
B. Responsibilities. In addition to the general responsibility stated
above, the specific responsibilities of the Committee shall be as follows:
1. Confirm that the independent auditors of the Company are
ultimately accountable to the Board of Directors and the Committee by
selecting, evaluating and, where appropriate, replacing (or recommending
that the Board replace) the independent auditors.
2. Meet with the independent auditors and financial management of
the Company to review the scope and plan of the proposed audit for the
current year, including the independent auditor's compensation and terms of
engagement. At the conclusion of each audit the Committee shall review the
results of the audit, including any comments or recommendations of the
independent auditors and management's response to such comments or
recommendations.
3. Review and approve any significant professional service of a
non-audit nature to be provided by the independent auditors and otherwise
ensure that the independent auditors submit on a periodic basis to the
Committee a formal written statement delineating all relationships between
the auditors and the Company. In addition, the Committee shall actively
engage in a dialogue with the independent auditors with respect to any
disclosed relationships or services that may impact the objectivity and
independence of the independent auditors and, as necessary, recommend that
the Board of Directors take appropriate action in response to the
independent auditors' report to satisfy itself of the auditors'
independence.
4. Review with the independent auditors and with the Company's
financial and accounting personnel the adequacy and effectiveness of the
internal auditing and accounting and financial controls of the Company, and
elicit any recommendations that they may have for the improvement of such
internal control procedures or particular areas where new or more detailed
controls or procedures are desirable. Particular emphasis should be given
to the adequacy of such internal controls to expose any payments,
transactions or procedures which might be deemed illegal or otherwise
improper.
5. Monitor compliance with prescribed Company policies and
procedures designed to disclose conflicts of interest, illegal payments and
record-keeping, fraudulent financial practices, and unethical corporate
behavior.
6. Review the internal audit function of the Company including the
proposed programs for the coming year and the coordination of such programs
with the independent auditors, with particular attention to maintaining an
appropriate effective balance between independent and internal auditing
resources.
7. Review the Company's annual and quarterly reports to shareholders
and regulatory agencies prior to their release. The Committee may delegate
responsibility to the Committee Chairman for review
22
of quarterly reports. This review should be coordinated with the
independent auditor's quarterly reviews and annual audits of the Company's
financial statements and issuance of their applicable reports and opinions.
The Committee should determine that the independent auditors are satisfied
with the report's disclosure and content.
8. Provide the opportunity at all Committee meetings for the
independent auditors to meet with the members of the Committee without
members of management present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of the Company's
financial accounting and auditing personnel, and the cooperation with the
independent auditors during the course of their audit.
9. Meet privately with the Company's senior internal auditor at all
Committee meetings to discuss any specific questions concerning internal or
operational controls, or any other matters which the Committee might wish
to address.
10. Review the appointment and replacement of the Company's senior
internal auditor.
11. Consider major changes and other major questions of choice
respecting the appropriate auditing and accounting principles and practices
to be used in the preparation of the Company's financial statements when
presented by the independent auditors, Company management or otherwise.
12. Remain generally informed regarding current and proposed changes
in SEC financial reporting requirements, generally accepted accounting
principles and generally accepted auditing standards.
13. Prepare the annual report of the Committee required by SEC rules
and undertake all matters necessary for the preparation of such report.
14. Conduct such other duties as may be lawfully delegated to the
Committee from time to time by the Board.
15. Investigate and take appropriate action with respect to any matter
brought to its attention, within the scope of the Committee's duties, and
retain outside experts for this purpose if appropriate in its judgment.
II. MEMBERSHIP
The Committee shall consist of at least three outside Directors of the
Company, who are designated by the Board during the Board of Directors'
reorganization meeting held in November of each year. No inside directors shall
be Committee members, however, the Company's Chairman of the Board shall be an
ex-officio member. Each member of the Committee shall be "financially literate"
and at least one member shall have "financial management expertise" as defined
by the rules of the New York Stock Exchange. Each year during the first
Committee meeting following the reorganizational meeting of the Board, the
Committee shall select from its members a Chairman.
III. MEETINGS AND MINUTES.
It is anticipated that the Committee will meet at least three times each
year. Special meetings of the Committee may be requested by the CEO or called by
the Chairman of the Board, or any of the Committee members. In addition to the
members of the Committee, certain officers and/or other directors may from time
to time be invited to attend and participate in the meetings.
If all members of the Committee shall consent in writing to any action to
be taken by the Committee, such action shall be as valid action as though it had
been approved at a meeting of the Committee.
Minutes of each Committee meeting and records of all other Committee
actions shall be prepared at the direction of the Chairman of the Committee.
The Committee shall report promptly to the Board all Committee decisions
and actions.
B-2
23
IV. AMENDMENTS
The Committee's authority and responsibilities and/or this charter may be
amended in whole or in part from time to time by resolution adopted by the
Board. The Committee shall review this charter annually and recommend any
appropriate changes to the Board.
B-3
24
JLG INDUSTRIES, INC.
1 JLG DRIVE
MCCONNELLSBURG, PA 17233-9533
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, and does hereby appoint William H. Lasky,
James H. Woodward, Jr. and Thomas D. Singer, and each of them, or such person or
persons as they or any of them may substitute and appoint as proxy or proxies of
the undersigned, to represent the undersigned and to vote all shares of JLG
Industries, Inc., Capital Stock which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Shareholders of JLG Industries,
Inc. to be held on Thursday, November 15, 2001 at 9:00 a.m., and at all
adjournments of such meeting.
THE PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, PROXIES WILL
BE VOTED FOR PROPOSALS 1 THROUGH 3.
The Board of Directors unanimously recommends a vote FOR its nominees and
Proposal 2.
Proposal 1. Election of Directors.
[ ] FOR all nominees listed (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for nominees listed
Nominees: R.V. Armes; G.R. Kempton; W.M. Lasky; J.A. Mezera;
S. Rabinowitz; R.C. Stark; T.C. Wajnert; and C.O. Wood, III.
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.
_______________________________________________________________________________
25
Proposal 2. Ratify the appointment of Ernst & Young LLP as independent auditors
for the ensuing year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. In their discretion, upon any other business that may properly come
before the meeting or any adjournment thereof.
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, all should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If as a corporation, please
sign in corporate name by president or other authorized officer. If as a
partnership, please sign in partnership name by authorized person.
Dated: ___________________ ,2001
________________________________
________________________________
Signature(s)
PLEASE VOTE, DATE, SIGN AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.