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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 / / 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 Rule 14a-11(c) or Rule 14a-12
BLOUNT, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[BLOUNT LOGO]
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Blount, Inc. which will be held at 10:00 AM CDT, on Monday, June 26, 1995 at the
Montgomery Museum of Fine Arts, One Museum Drive, Montgomery, Alabama.
In addition to the matters set forth in the attached Proxy Statement, we
will report on the activities of Blount and give you an opportunity to ask
questions.
Your vote is important and your shares should be represented at the meeting
whether or not you are personally able to attend. You are urged to sign, date
and return the enclosed proxy card(s) promptly.
On behalf of our Board of Directors and employees, thank you for your
continued support of Blount, Inc.
Sincerely,
Winton M. Blount John M. Panettiere
Chairman of the Board President and Chief Executive
Officer
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[BLOUNT LOGO]
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 26, 1995
---------------------
TO THE STOCKHOLDERS OF BLOUNT, INC.:
The Annual Meeting of Stockholders of Blount, Inc. will be held at 10:00
A.M., C.D.T., on Monday, June 26, 1995 in the Wilson Auditorium of the
Montgomery Museum of Fine Arts, One Museum Drive, Montgomery, Alabama 36117, for
the following purposes:
1. To elect a Board of Directors to serve until the next Annual Meeting of
Stockholders or until their successors have been elected and qualified;
2. To consider and act upon a proposal to approve the 1995 Blount Long Term
Executive Stock Option Plan;
3. To consider and act upon a proposal to ratify the appointment of Coopers
& Lybrand as independent auditors for the Corporation for the fiscal
year ending February 29, 1996; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on Friday, April 28,
1995, as the record date for determining the stockholders entitled to notice of
and to vote at the Meeting or any adjournment thereof.
IF YOU OWN SHARES OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK, YOU
MUST RETURN BOTH PROXY FORMS IN ORDER TO VOTE FOR ALL DIRECTORS.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ASSURE
YOUR REPRESENTATION AT THE MEETING, YOU ARE REQUESTED TO COMPLETE, DATE AND SIGN
THE ACCOMPANYING FORM OR FORMS OF PROXY AND RETURN THEM PROMPTLY IN THE ENCLOSED
ENVELOPE.
By Order of the Board of Directors,
D. JOSEPH McINNES
Senior Vice President -- Administration
and Secretary
4520 Executive Park Drive
Montgomery, Alabama 36116-1602
May 10, 1995
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BLOUNT, INC.
4520 EXECUTIVE PARK DRIVE
MONTGOMERY, ALABAMA 36116-1602
(334) 244-4000
------------------------------
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
JUNE 26, 1995
------------------------------
This Proxy Statement is furnished in connection with the solicitation on
behalf of the Board of Directors (the "Board") of Blount, Inc., a Delaware
corporation (the "Corporation"), of your proxy or proxies for use at the Annual
Meeting of Stockholders to be held on June 26, 1995, or at any adjournment
thereof (the "Meeting"). It is anticipated that this Proxy Statement and the
accompanying form or forms of proxy will be mailed to stockholders on or about
May 17, 1995.
Shares represented by each properly signed proxy on the accompanying form
or forms received by the Corporation in time to permit its use at the Meeting or
any adjournment thereof will be voted at the Meeting, but such proxy may be
revoked at any time prior to the actual voting thereof by giving notice in
writing to the Secretary of the Corporation or by voting a subsequently dated
proxy. If a proxy is signed but no specification is made on the proxy, the
shares represented by the proxy will be voted as recommended by the Board. If a
specification is made, the shares will be voted in accordance with the
specification. The presence of a stockholder at the Meeting does not revoke his
or her proxy; however, a stockholder may revoke his or her proxy and vote in
person if he or she so requests.
VOTING SECURITIES
RECORD DATE, CLASSES OF STOCK ENTITLED TO VOTE, AND VOTE REQUIRED
The Board has fixed the close of business on Friday, April 28, 1995, as the
record date for determining stockholders entitled to notice of and to vote at
the Meeting. Holders of shares of Class A Common Stock and Class B Common Stock
are entitled to vote at the Meeting. As of such date, the Corporation had issued
and outstanding 8,630,548 shares of Class A Common Stock and 3,979,624 shares of
Class B Common Stock. There are no cumulative voting or preemptive rights.
The holders of Class A Common Stock will be entitled to elect 25% (rounded
up to the nearest whole number) of the directors and will be entitled to 1/10 of
1 vote per share with respect to other matters. The holders of Class B Common
Stock will be entitled to elect the remaining directors and will be entitled to
1 vote per share with respect to other matters.
Directors are elected by the affirmative vote of a majority of the shares
of the appropriate class of common stock, voting as a single class, cast in the
election. The affirmative vote of a majority of the voting power of the shares
of both classes of common stock, voting together, cast in the election is
required to approve any other proposal presented at the Meeting.
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PRINCIPAL STOCKHOLDERS
The following table sets forth as of April 28, 1995, to the best knowledge
of the Corporation, information as to (a) beneficial ownership of more than 5%
of the Class A Common Stock and Class B Common Stock of the Corporation by
certain persons (other than director nominees); and (b) beneficial ownership of
Class A Common Stock and Class B Common Stock of the Corporation by (i) each
director nominee, (ii) each executive officer named in the Summary Compensation
Table other than director nominees, and (iii) all director nominees and
executive officers of the Corporation as a group. Except as otherwise indicated,
all beneficial ownership stated in the table represents sole voting and
investment power.
PERCENT
SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIALLY OF TOTAL
BENEFICIAL OWNERS TITLE OF CLASS OWNED CLASS VOTES(1)
----------------------------------- --------------------- -------------- ------ ------
(a) Holders of more than 5% of Class A
Common Stock and Class B Common
Stock (other than director nominees
and executive officers named in the
Summary Compensation Table)
-----------------------------------
HBC, Incorporated Class A Common Stock 2,075,048 (2) 24.04% 4.28%
4520 Executive Park Drive Class B Common Stock 2,803,232 (2) 70.44% 57.89%
Montgomery, Alabama 36116
United States Trust Company Class A Common Stock 1,070,812 (3) 12.41% 2.21%
of New York Class B Common Stock None
114 West 47th Street
New York, New York 10036
(b)(i) Nominees -- Class A Common Stock
-----------------------------------
W. Houston Blount Class A Common Stock 2,962 * *
Class B Common Stock 1,332 * *
Herbert J. Dickson Class A Common Stock 3,932 * *
Class B Common Stock None
Alfred M. Gleason Class A Common Stock 600 * *
Class B Common Stock None
Mary D. Nelson Class A Common Stock 2,000 * *
Class B Common Stock None
Nominees -- Class B Common Stock
-----------------------------------
Winton M. Blount Class A Common Stock 2,095,448 (4) 24.28% 4.33%
Class B Common Stock 3,315,578 (4) 83.31% 68.47%
R. Eugene Cartledge Class A Common Stock 1,000 * *
Class B Common Stock None
Richard B. Cheney Class A Common Stock None
Class B Common Stock None
C. Todd Conover Class A Common Stock 1,000 * *
Class B Common Stock None
H. Corbin Day Class A Common Stock 8,304 * *
Class B Common Stock None
Emory M. Folmar Class A Common Stock None
Class B Common Stock None
John M. Panettiere Class A Common Stock 60,441 (5) * *
Class B Common Stock None
Arthur P. Ronan Class A Common Stock None
Class B Common Stock None
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PERCENT
SHARES PERCENT OF
NAME AND ADDRESS OF BENEFICIALLY OF TOTAL
BENEFICIAL OWNERS TITLE OF CLASS OWNED CLASS VOTES(1)
----------------------------------- --------------------- -------------- ------ ------
Joab L. Thomas Class A Common Stock 2,113 * *
Class B Common Stock None
(ii) Executive Officers named in the
Summary Compensation Table
(other than director nominees)
-----------------------------------
Harold E. Layman Class A Common Stock 25,856 (6) * *
Class B Common Stock None
D. Joseph McInnes Class A Common Stock 29,246 (7) * *
Class B Common Stock None
Donald B. Zorn Class A Common Stock 10,089 (8) * *
Class B Common Stock None
(iii) All director nominees and Class A Common Stock 2,331,291 (9) 26.55% 4.50%
executive officers as a group Class B Common Stock 3,316,910 83.35% 68.49%
(21 persons)
- ---------------
* Less than 1.0% of class or total votes.
(1) Percent of total votes on all matters other than the election of directors.
(2) HBC, Incorporated is a corporation of which Winton M. Blount is the
controlling stockholder, owning 52.20% of its voting stock.
(3) United States Trust Company of New York serves as the Master Trustee for the
Corporation's 401(k) Retirement Savings Plan. The shares listed are held
for the benefit of the participants in that plan. Under the terms of the
Plan, as amended, and the Trust, the Trustee is to vote the allocated
shares held by the Plan in accordance with the instructions received from
Plan participants and to dispose of the allocated shares in connection with
tender offers in accordance with directions received from Plan
participants. If no voting instructions or invalid voting instructions are
received with respect to allocated shares, the Trustee is to vote such
shares in the same manner and in the same proportions as the allocated
shares with respect to which the Trustee received valid voting instructions
are voted. Also, with respect to allocated shares, if no directions or
invalid directions are received in connection with tendering shares, the
Trustee is to treat such allocated shares as if Plan participants
instructed the Trustee not to dispose of such shares. With respect to
unallocated shares, the Trustee is to vote such shares, or dispose of such
shares in connection with tender offers, in the same manner and in the same
proportion as the allocated shares with respect to which the Trustee
received valid voting instructions or directions are voted or disposed.
United States Trust Company of New York, as Trustee, expressly denies
beneficial ownership in the shares listed.
(4) - Excludes 363,909 shares of Class A Common Stock (4.22% of class, .75% of
total votes) and 432,880 shares of Class B Common Stock (10.88% of class,
8.94% of total votes) owned beneficially by children, step-children, their
spouses, and grandchildren of Winton M. Blount and Carolyn S. Blount.
Winton M. Blount and his wife, Carolyn S. Blount, do not have or share
voting or dispositive power with respect to, and disclaim any beneficial
ownership in, such shares.
- Includes 906 shares of Class A Common Stock (less than 1.0% of class and
total votes) and 906 shares of Class B Common Stock (less than 1.0% of
class and total votes) owned by Winton M. Blount's wife.
- Includes 1,966 shares of Class A Common Stock (less than 1.0% of class
and total votes) and 1,966 shares of Class B Common Stock (less than 1.0%
of class and total votes) held by Winton M. Blount or Trustee of a trust
for the benefit of his sister. Winton M. Blount disclaims any beneficial
ownership in such shares.
- Includes the 2,075,048 shares of Class A Common Stock (24.04% of class,
4.28% of total votes) and 2,803,232 shares of Class B Common Stock (70.44%
of class, 57.89% of total votes) shown in the table as owned by HBC,
Incorporated. (See Note 2 above.)
(5) Includes 45,547 shares of Class A Common Stock (less than 1.0% of class and
total votes) which are subject to a right to acquire beneficial ownership
within 60 days under the 1992 Blount Incentive Stock Option Plan and the
1994 Blount Executive Stock Option Plan.
(6) Includes 24,667 shares of Class A Common Stock (less than 1.0% of class and
total votes) which are subject to a right to acquire beneficial ownership
within 60 days under the 1992 Blount Incentive Stock Option Plan and the
1994 Blount Executive Stock Option Plan.
(7) Includes 28,667 shares of Class A Common Stock (less than 1.0% of class and
total votes) which are subject to a right to acquire beneficial ownership
within 60 days under the 1992 Blount Incentive Stock Option Plan and the
1994 Blount Executive Stock Option Plan.
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(8) Includes 10,000 shares of Class A Common Stock (less than 1.0% of class and
total votes) which are subject to a right to acquire beneficial ownership
within 60 days under the 1992 Blount Incentive Stock Option Plan.
(9) Includes 150,549 shares of Class A Common Stock (1.71% of class and less
than 1.0% of total votes) which are subject to a right to acquire
beneficial ownership within 60 days under the 1992 Blount Incentive Stock
Option Plan and the 1994 Blount Executive Stock Option Plan.
ELECTION OF DIRECTORS
PROPOSAL 1
DIRECTORS
The By-laws of the Corporation, which may be amended by the Board,
presently provide that the number of directors which shall constitute the whole
Board shall be not less than 3 nor more than 14, with the exact number to be
determined from time to time by resolution of the Board. The Board has set the
exact number at 13 effective June 26, 1995, with 4 members to be elected by the
holders of Class A Common Stock and 9 members to be elected by the holders of
Class B Common Stock. Class A Common Stock proxies may not be voted for more
than 4 persons, and the Class B Common Stock proxies may not be voted for more
than 9 persons.
The Board intends to nominate and, unless contrary instructions are
specified, to vote, as appropriate, all proxies received by the Board FOR the
election of the persons named below as directors of the Corporation.
Each director to be elected shall hold office until the next Annual Meeting
of Stockholders of the Corporation or until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Should any nominee
fail to accept election, it is expected that the Board will cast all proxies, as
appropriate, received by it in favor of the election of such other person for
the office of director as the Board may recommend. The Board has no reason to
believe that any of the persons named below will fail to accept election as a
director.
BIOGRAPHICAL INFORMATION
The following biographical information is furnished with respect to each
nominee for election as director at the Meeting:
NOMINEES -- CLASS A COMMON STOCK
- ---------------------- W. HOUSTON BLOUNT, Age 73.
- ---------------------- Director since September 1949(1); Chairman of the Acquisition Committee, member of
- ---------------------- the Executive Committee and the Compensation and Management Development Committee.
- ---------------------- Chairman of the Board Emeritus since May 1992; Chairman of the Board from May 1986
- ------(PHOTO)--------- of Vulcan Materials Company, Birmingham, Alabama (crushed stone and chemicals).
- ---------------------- Mr. Blount is the brother of Winton M. Blount.
- ---------------------- Mr. Blount is also a director of VF Corporation, Reading, Pennsylvania.
- ----------------------
- ----------------------
- ----------------------
- ---------------------- HERBERT J. DICKSON, Age 69.
- ---------------------- Director since July 1966(1); Chairman of the Finance Committee and member of the
- ---------------------- Compensation and Management Development Committee.
- ---------------------- Financial consultant since March 1993; formerly Chairman of the Board and Chief
- ------(PHOTO)--------- Executive Officer of Fortune Financial Services, Inc., Atlanta, Georgia (a finance
- ---------------------- company) throughout the 5 years preceding March 1993.
- ---------------------- Mr. Dickson is also a director of American Business Products, Inc., Atlanta,
- ---------------------- Georgia; and Martin Industries, Inc., Florence, Alabama.
- ----------------------
- ----------------------
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- ---------------------- ALFRED M. GLEASON, Age 65.
- ---------------------- Director since February 1985; Chairman of the Compensation and Management
- ---------------------- Development Committee and member of the Executive Committee.
- ---------------------- Vice Chairman since February 1994, President and Chief Executive Officer from
- -------(PHOTO)-------- January 1989, President from January 1985 of PacifiCorp, Portland, Oregon
- ---------------------- (diversified utility).
- ---------------------- Mr. Gleason is also a director of PacifiCorp, Portland, Oregon; Fred Meyer, Inc.,
- ---------------------- Portland, Oregon; Comdial Corporation, Charlottesville, Virginia; PacifiCorp
- ---------------------- Financial Services, Inc., Portland, Oregon; Tektronix, Inc., Beaverton, Oregon;
- ---------------------- Legacy Health System, Portland, Oregon; trustee of Willamette University, Salem,
Oregon; and Commissioner of the Port of Portland, Portland, Oregon.
- ---------------------- MARY D. NELSON, Age 62.
- ---------------------- Director since June 1986; member of the Audit Committee and the Finance Committee.
- ---------------------- President of Nelson & Co., Cincinnati, Ohio (consulting actuaries) throughout the
- ---------------------- past 5 years.
- -------(PHOTO)-------- Mrs. Nelson is also a director of Cincinnati Bell, Inc., Cincinnati, Ohio and a
- ---------------------- director of Union Central Life Insurance Co., Cincinnati, Ohio.
- ----------------------
- ----------------------
- ----------------------
- ----------------------
NOMINEES -- CLASS B COMMON STOCK
- ---------------------- WINTON M. BLOUNT, Age 74.
- ---------------------- Director since September 1949(1), except from January 1969 through October 1971
- ---------------------- during which period he served as Postmaster General of the United States; Chairman
- ---------------------- of the Executive Committee.
- -------(PHOTO)-------- Chairman of the Board since June 1993; Chairman of the Board and Chief Executive
- ---------------------- Officer of the Corporation throughout the 5 years preceding June 1993 except from
- ---------------------- December 1990 to October 1991 during which period he served as Chairman of the
- ---------------------- Board.
- ---------------------- Mr. Blount is the brother of W. Houston Blount.
- ---------------------- Mr. Blount is also a director of the Alabama Shakespeare Festival, Montgomery,
Alabama; Montgomery Museum of Fine Arts, Montgomery, Alabama; National Actors
Theatre, New York, New York; Chairman of the Advisory Committee of the National
Postal Museum, Washington, DC; Trustee Emeritus of the University of Alabama; Life
Trustee of Rhodes College, Memphis, Tennessee; Trustee of the National Symphony
Orchestra, Washington, DC; and Governor of the Royal Shakespeare Company, London,
England.
- ---------------------- R. EUGENE CARTLEDGE, Age 66.
- ---------------------- Director since September 1994; member of the Audit Committee and the Compensation
- ---------------------- and Management Development Committee.
- ---------------------- Retired since June 1994. Formerly Chairman of the Board and Chief Executive Officer
- -------(PHOTO)-------- of Union Camp Corporation, Wayne, New Jersey 1989 to 1994; prior to December 1989,
- ---------------------- Chairman of the Board, President and Chief Executive Officer of Union Camp
- ---------------------- Corporation.
- ---------------------- Mr. Cartledge is also a director of Union Camp Corporation, Delta Air Lines,
- ---------------------- NationsBank and Sun Company, Inc.
- ----------------------
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- ---------------------- RICHARD B. CHENEY, Age 54.
- ---------------------- Director nominee.
- ---------------------- Senior Fellow, American Enterprise Institute, Washington, D.C., since January 1993;
- ---------------------- United States Secretary of Defense, March 1989 to January 1993; member, United
- -------(PHOTO)-------- States House of Representatives 1979 to 1989.
- ---------------------- Mr. Cheney is also a director of Union Pacific Corporation; IGI Incorporated; Morgan
- ---------------------- Stanley Group, Inc.; US West; and Procter & Gamble Co.
- ----------------------
- ----------------------
- ----------------------
- ---------------------- C. TODD CONOVER, Age 55.
- ---------------------- Director since September 1992; member of the Audit Committee and the Finance
- ---------------------- Committee.
- ---------------------- President and Chief Executive Officer of The Vantage Company, Los Altos, California
- -------(PHOTO)-------- (management services) since July 1992; formerly General Manager of the Finance
- ---------------------- Industry Group of Tandem Computers Incorporated, Cupertino, California from
- ---------------------- January 1994; President and Chief Executive Officer of Central Bancorporation,
- ---------------------- Denver, Colorado (bank holding company) from July 1991; National Director with
- ---------------------- KPMG Peat Marwick, San Francisco, California and New York, New York (bank
- ---------------------- consulting) from September 1988. He served as Comptroller of the Currency of the
United States from December 1981 through May 1985.
Mr. Conover is also a Director of PacifiCorp, Portland, Oregon.
- ---------------------- H. CORBIN DAY, Age 57.
- ---------------------- Director since June 1992; member of the Audit Committee, the Finance Committee, the
- ---------------------- Compensation and Management Development Committee and the Acquisition Committee.
- ---------------------- Limited partner of Goldman, Sachs & Co., New York, New York (investment bankers)
- -------(PHOTO)-------- throughout the past 5 years, and Chairman from May 1988, of Jemison Investment
- ---------------------- Co., Inc., Birmingham, Alabama (investment bankers).
- ---------------------- Mr. Day is also a director of Jemison Investment Co., Inc. and its affiliated
- ---------------------- companies, Birmingham, Alabama; Altec Industries, Inc., Birmingham, Alabama;
- ---------------------- American Heritage Life Insurance Company, Jacksonville, Florida; and trustee of
- ---------------------- the Birmingham Museum of Art, Birmingham, Alabama.
- ---------------------- EMORY M. FOLMAR, Age 64.
- ---------------------- Director nominee.
- ---------------------- Mayor, City of Montgomery, Montgomery, Alabama since 1977; member Montgomery City
- ---------------------- Council 1975 to 1977.
- -------(PHOTO)-------- Mr. Folmar serves on the board of the Montgomery Boys Club and the Alabama
- ---------------------- Shakespeare Festival.
- ----------------------
- ----------------------
- ----------------------
- ----------------------
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- ---------------------- JOHN M. PANETTIERE, Age 57.
- ---------------------- Director since May 1992.
- ---------------------- President and Chief Executive Officer since June 1993, President and Chief Operating
- ---------------------- Officer from May 1992 of the Corporation; formerly Chairman, President and Chief
- -------(PHOTO)-------- Executive Officer from January 1990, President and Chief Executive Officer from
- ---------------------- January 1988, Senior Executive Vice President and Chief Operating Officer from
- ---------------------- August 1986 of Grove Worldwide Company, Shady Grove, Pennsylvania (manufacturer of
- ---------------------- mobile hydraulic cranes and aerial work platforms).
- ---------------------- Mr. Panettiere is a Life Honorary Director and Past Chairman of the Construction
- ---------------------- Industry Manufacturers Association, Milwaukee, Wisconsin. He is also a director of
the Alabama Shakespeare Festival.
- ---------------------- ARTHUR P. RONAN, Age 65.
- ---------------------- Director since June 1993; member of the Audit Committee and the Acquisition
- ---------------------- Committee.
- ---------------------- Retired since February 1992; formerly Corporate Vice President from 1982 and
- -------(PHOTO)-------- President from June 1985 of the Automotive Operations of Rockwell International
- ---------------------- Corporation, Troy, Michigan (manufacturer of automotive components).
- ---------------------- Mr. Ronan was Chairman and President of Western Highway Institute, Bruno, California
- ---------------------- from 1991 to 1993; Vice Chairman of Highway Users Federation, Washington, D.C.
- ---------------------- from 1990 to 1992; Trustee of General Motors Institute, Flint, Michigan from 1984
- ---------------------- to 1992; member of the Board of Advisors of Oakland University, Rochester,
Michigan from 1984 to 1992; and Trustee of Marygrove College, Detroit, Michigan
from 1975 to 1979.
- ---------------------- JOAB L. THOMAS, Age 62.
- ---------------------- Director since June 1981; member of the Finance Committee and the Audit Committee.
- ---------------------- President, Pennsylvania State University, University Park, Pennsylvania since
- ---------------------- September 1990; formerly Professor from September 1988 and President from July
- -------(PHOTO)-------- 1981 of the University of Alabama, Tuscaloosa, Alabama.
- ---------------------- Dr. Thomas is also a director of Lukens, Inc., Coatesville, Pennsylvania; and Mellon
- ---------------------- Bank, Pittsburgh, Pennsylvania.
- ----------------------
- ----------------------
- ----------------------
- ---------------
(1) Includes the period for which the person served as a director of Blount
Brothers Corporation. The Corporation was organized in February 1971, and
on March 1, 1971, the stockholders of Blount Brothers Corporation exchanged
their stock in Blount Brothers Corporation for stock in the Corporation.
Blount Brothers Corporation was merged into the Corporation on February 29,
1988.
THE BOARD AND ITS COMMITTEES
The property, affairs and business of the Corporation are managed under the
direction of the Board. The Board has standing Executive, Audit, Finance,
Acquisition and Compensation and Management Development Committees whose
principal functions are described below. The Corporation does not have a
Nominating Committee. During the fiscal year ended February 28, 1995 ("Fiscal
1995"), the Board held 5 regular meetings, 1 telephone conference, and took
action 3 times by written consent in lieu of a meeting. Average attendance by
directors at Board and Committee meetings was 99%. All directors attended 93% or
more of the meetings of the Board and the Committees on which they serve.
Executive Committee -- The Executive Committee consists of 4 members, 2 of
whom are non-employee directors. The Chairman of the Board of the Corporation is
Chairman of the Committee. The Committee may exercise all of the authority and
powers of the Board, to the extent permitted by law, during the intervals
between Board meetings. The Committee took action 1 time by written consent in
lieu of a meeting during Fiscal 1995. The present members of the Committee are
Winton M. Blount, W. Houston Blount, Alfred M. Gleason and John M. Panettiere.
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Audit Committee -- The Audit Committee consists of 7 members, all of whom
are non-employee directors. The functions of the Committee include (i)
recommending annually to the Board the appointment of the Corporation's
independent auditors, (ii) reviewing the professional services, proposed fees
and independence of such auditors, (iii) reviewing the annual audit plans of
such auditors and the internal audit staff, (iv) monitoring the activities of
the independent auditors and internal audit staff, and (v) reporting on such
activities to the Board. The Committee held 2 regular meetings during Fiscal
1995. The present members of the Committee are R. Eugene Cartledge, C. Todd
Conover, H. Corbin Day, James W. Hargrove, Mary D. Nelson, Arthur P. Ronan and
Joab L. Thomas.
Finance Committee -- The Finance Committee consists of 6 members, all of
whom are non-employee directors. The functions of the Committee include (i)
approving the Corporation's funding policy for its retirement plans, (ii)
approving actuarial assumptions for the retirement plans, (iii) approving the
selection and termination of investment managers, trustees, independent auditors
and actuaries for the retirement plans, (iv) approving the investment policy
asset allocation guidelines, objectives, constraints, and restrictions, as
appropriate, issued to investment managers and trustees, (v) approving operating
procedures and safeguards as required to prohibit transactions not authorized
under the Employee Retirement Income Security Act, (vi) approving the
consolidation, merger, or transfer of retirement plan assets or liabilities to
or from one plan to another, (vii) approving reports with regard to retirement
plans prepared by the trustees, the independent auditors, investment managers or
consultants, and the actuaries, and (viii) reporting on such activities to the
Board. The Committee held 2 regular meetings during Fiscal 1995. The present
members of the Committee are C. Todd Conover, H. Corbin Day, Herbert J. Dickson,
James W. Hargrove, Mary D. Nelson and Joab L. Thomas.
Compensation and Management Development Committee -- The Compensation and
Management Development Committee consists of 5 members, all of whom are
non-employee directors. The functions of the Committee include (i) approving
compensation philosophy and guidelines for the Corporation's executive and
managerial employees, (ii) establishing a total compensation range for the
Chairman of the Board and the President and Chief Executive Officer ("CEO") and
appraising the performance of said officers on a timely basis, (iii) approving
salaries and changes in salaries of officers of the Corporation and presidents
of its divisions and subsidiaries or other executives as the Committee may deem
appropriate, (iv) approving the participants, annual financial or other targets,
and amounts to be paid under the Corporation's Target Incentive Plans, (v)
reviewing and recommending to the Board any new executive incentive or stock
option plans or additions to or revisions of such existing plans and approving
any awards or options granted under such plan(s), (vi) reviewing from time to
time the Corporation's management resources and executive personnel planning,
development and selection processes, and (vii) reporting on such activities to
the Board. The Committee held 2 regular meetings and had 2 telephone conference
meetings and took action 2 times by written consent in lieu of a meeting during
Fiscal 1995. The present members of the Committee are W. Houston Blount, R.
Eugene Cartledge, H. Corbin Day, Herbert J. Dickson and Alfred M. Gleason.
Acquisition Committee -- The Acquisition Committee consists of 3 members,
all of whom are non-employee directors. The functions of the Committee are to
review and approve any acquisition proposed by management and report on such
activities to the Board. The Committee held 3 telephone conference meetings in
Fiscal 1995. The present members of the Committee are W. Houston Blount, H.
Corbin Day, and Arthur P. Ronan.
COMPENSATION OF DIRECTORS
Non-employee directors received a retainer fee of $4,750 per quarter plus a
fee of $1,000 for each Board Meeting attended in person or by telephone
conference, and an additional $1,000 for each Board Committee Meeting attended
in person or by telephone conference. No fee for execution of consent actions is
paid. Persons serving as Chairmen of Committees of the Board, who were not
employees of the Corporation, received an additional retainer fee of $750 per
quarter for their services. The directors were reimbursed for travel and other
expenses and were provided travel insurance when traveling on Corporation
business, liability insurance coverage and participation in a charitable
contributions matching gift program. Participation in the Corporation's group
medical and dental plans was available to the non-employee directors on the same
basis as offered to all employees of the Corporation. In addition, each
non-employee director was provided $50,000 of life insurance under the
Corporation's group life insurance plan. Directors who are employees of the
Corporation do not receive any additional compensation for their services as
directors.
In January 1983, the Board approved a Directors' Fee Deferral Plan under
which directors may defer receipt of directors' fees until their retirement or
other termination of status as a director. Deferred amounts bear interest,
adjusted quarterly, based on the prime rate set by a New York bank. Such
accumulated fees, together with the income accrued thereon, are payable in cash
to the director or his or her estate in accordance with the option selected by
the director at the time he or she elected to participate in this plan. The
Director's Fee Deferral Plan is unfunded and amounts due the participants
covered thereby are general obligations of the Corporation. One director has
chosen to defer his director's fees.
In May 1991, the Board approved and in April 1994 amended the Advisory
Directors' Recognition Plan. Each member of the Board who has served as a
director for at least 5 consecutive years and who has not been an employee
vested in any employee
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benefits sponsored by the Corporation during his or her service on the Board and
(a) who is serving at the attainment of age 72, or (b) who becomes permanently
and totally disabled at any time prior to age 72, shall become an advisory
director. No advisory director and no other director, except the co-founders of
the Corporation, shall be eligible to stand for re-election to the Board who,
after July 1, 1991, is or reaches age 72. Under this plan, a director who is or
becomes eligible for advisory director status after July 1, 1991, shall, at the
end of his or her current term, be paid a quarterly benefit for life equal to
the quarterly cash retainer, exclusive of committee chairman fees, then being
paid to the director. An advisory director who attains that status due to
disability shall be paid a quarterly disability benefit equal to the quarterly
cash retainer then being paid to directors for the shorter of (a) such advisory
director's life, or (b) the number of the advisory director's full years of
service as a director. A director who has been an employee vested in employee
benefits sponsored by the Corporation is eligible to become an advisory
director, but shall not be entitled to the retainer paid to advisory directors.
When their views on a matter are sought, advisory directors are expected to
consult with management or directors of the Corporation. The status of advisory
director may be terminated upon request by the advisory director or by the Board
if it determines that an advisory director becomes a director, officer, employee
or consultant of or to another company that competes with the Corporation or any
of its divisions or subsidiaries. The Advisory Directors' Recognition Plan does
not apply to Winton M. Blount, a co-founder of the Corporation and it does not
apply to W. Houston Blount, a co-founder of the Corporation until he ceases to
be a member of the Board of Directors regardless of his age at the time of such
cessation. The Advisory Directors' Recognition Plan is unfunded and amounts due
the participants covered thereby are general obligations of the Corporation.
There is presently 1 participant under this plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following members of the Board served as members of the Compensation
and Management Development Committee during the last completed fiscal year or
for the portion of the year stated:
W. Houston Blount, Chairman of the Board Emeritus of Vulcan Materials
Company.
R. Eugene Cartledge, formerly Chairman and Chief Executive Officer of
Union Camp Corporation, began service on September 9, 1994.
H. Corbin Day, Limited Partner of Goldman, Sachs & Co., and Chairman
of Jemison Investments Co., Inc.
Herbert J. Dickson, Financial Consultant and formerly Chairman of the
Board of Fortune Financial Services.
Alfred M. Gleason, Vice Chairman of the Board of PacifiCorp.
There were no relationships with respect to Compensation Committee
interlocks and insider participation in compensation decisions during the last
completed fiscal year.
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
OVERALL OBJECTIVES OF THE EXECUTIVE COMPENSATION PROGRAM
The Corporation's executive compensation program is designed to help the
Corporation attract, motivate and retain the executive resources that the
Corporation needs in order to maximize its return to shareholders.
Toward that end, the Corporation's executive compensation program attempts
to provide:
- levels of compensation that are competitive with those provided in the
various markets in which the Corporation competes for its executive
resources;
- incentive compensation that varies in a manner consistent with the
financial performance of the Corporation; and
- incentive compensation that effectively rewards corporate and individual
performance.
In designing and administering its executive compensation program, the
Corporation attempts to maintain an appropriate balance among these various
objectives, each of which is discussed in greater detail below.
PROVIDING COMPETITIVE LEVELS OF COMPENSATION
The Corporation attempts to provide its executives with a total
compensation package that, at expected levels of performance, is competitive
with total compensation provided to executives who hold comparable positions or
have similar qualifications in other organizations of similar size and scope
with which the Corporation competes.
The Corporation projects an executive's competitive level of compensation
based on information drawn from a variety of sources, including proxy
statements, special surveys, and outside compensation consultants. This
information is used in creating
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the basic structure of the Corporation's program. The market data used in
establishing the Corporation's executive compensation levels reflect a blending
of general industry and manufacturing industry companies comparable to the
Corporation's size, including many of the industry peer companies covered by the
total shareholder return graph. However, the Committee has not defined the
Corporation's compensation comparative group to be identical to the companies
included in the graph for a variety of reasons, including the need to adjust for
differences in company size and scope.
It should be noted that the value of an executive's compensation package
will vary significantly based on performance. So while the expected value of an
executive's compensation package may be competitive, its actual value can exceed
or fall below competitive levels depending on performance.
ENSURING THAT INCENTIVE COMPENSATION VARIES WITH FINANCIAL PERFORMANCE
The Corporation's incentive plans are designed to ensure that the incentive
compensation varies in a manner consistent with the financial performance of the
Corporation and its various business units. The specific corporate performance
factors for Fiscal 1995 are discussed in other sections of this report.
All operating segments were profitable and performed well above budgeted
expectations for Fiscal 1995.
REWARDING INDIVIDUAL PERFORMANCE
The Corporation believes that effectively rewarding individual performance
will ultimately serve to enhance the financial performance of the Corporation
and its various business units. While the Corporation's incentive plans provide
compensation that varies with financial performance, they also provide for
individual awards that are based on quantitative assessments of business unit
and individual performance.
DESCRIPTION OF THE EXECUTIVE COMPENSATION PROGRAM
This section describes each of the principal elements of the Corporation's
executive compensation program.
BASE SALARY PROGRAM
The objective of the Corporation's base salary program for senior executive
management positions is to provide base salaries that are approximately between
the 65th and 80th percentile of the competitive market norms for companies in
the Corporation's business lines and similar in size to the Corporation. The
Committee believes it is crucial to provide competitive salaries in order to
attract and retain managers who are highly talented. The specific competitive
markets considered depend on the nature and level of the positions in question
and the markets from which qualified individuals are recruited.
Base salary levels are also dependent on the performance of each individual
employee. Thus, employees with higher levels of sustained performance will be
paid correspondingly higher salaries.
Annual salary reviews are based on three factors: general levels of market
salary increases, individual performance, and the Corporation's overall
financial results. All base salary increases are based on a philosophy of
pay-for-performance and perceptions of an individual's long-term value to the
Corporation.
THE MANAGEMENT INCENTIVE PLAN
The objectives of the Annual Target Incentive Plan are to motivate and
reward the accomplishment of annual corporate objectives; reinforce a strong
performance orientation with differentiation and variability in individual
awards based on contributions to business results; and provide a fully
competitive compensation package which will attract, reward and retain
individuals of the highest quality. As a pay-for-performance plan, cash bonus
awards are paid upon the achievement of specific business segment and individual
performance objectives established for the fiscal year.
Targeted bonus award levels are determined for eligible positions each year
using data obtained from independent consultants and surveys. The target bonus
levels reflect competitive market norms for companies similar in size to the
Corporation and the Corporation's philosophy of providing competitive total
annual compensation opportunities.
A bonus program is established each fiscal year based on the Corporation's
budgeted performance against measures approved by the Committee. In Fiscal 1995,
the key performance measures considered were pre-tax income and return on
capital employed for operating units, net income for the Corporate staff and for
all plan participants other than the Chairman of the Board and the President and
Chief Executive Officer, individual key base objectives were established and
measured. The weighting of target objectives among each of the Corporation's
operating units range from a 50% weighting factor for pre-tax income, a 20%
weighting for return on capital employed and a 30% weighting for attainment of
individual performance objectives.
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For the corporate staff and senior corporate officers, 60% of bonus
attainment is based on the Corporation's net income target and 40% of the bonus
is determined by attainment of individual key base objectives. The bonus
attainment for the Chairman of the Board and for the President and Chief
Executive Officer is based 100% on the Corporation's net income target.
Target bonuses for Incentive Plan participants range from 5% to 65% of the
participants' base pay. Participants can earn from 80% (minimum threshold) to
200% (maximum bonus) of the target bonus. The actual bonus is determined by the
extent to which performance objectives have been accomplished. All units were
profitable in Fiscal 1995 and performed well above budgeted targets for returns
on capital employed, pre-tax income and net income. As a result, an annual
incentive funding pool was created for Fiscal 1995 performance and awards were
made to certain key executives named in the compensation table exceeding target
bonus objectives.
LONG-TERM INCENTIVES
The Corporation's approach to long-term incentives for employees is focused
on the Corporation's stock option plans. The Corporation uses stock options to
align the interests of employees and shareholders by providing value to the
employee when the stock price increases. Options are granted at 100% of the
market value of the stock on the date of grant.
All options granted have terms of 10 years and are generally exercisable
within 5 years of the date of the grant. The exercise price is payable in cash.
No option holder has any rights as a shareholder for any shares subject to an
option until the exercise price has been paid and the shares have been issued to
the employee.
The Corporation's stock option grant levels are established by considering
competitive market data on grant levels and the level of shares reserved for
such plans. Individual option grants are based on the responsibility level of
each participant in the Corporation, attainment of individual performance
measured against key base objectives, and the amounts of previous grants.
The Executive Compensation Program is reviewed annually by the Compensation
and Management Development Committee to provide an appropriate mix of base
salary, annual bonus, and long-term awards within the philosophy of providing
competitive total direct compensation opportunities.
The Chairman of the Board, as the majority shareholder of the Corporation,
does not participate in the Stock Option Plan. Stock options granted to the
named executives in Fiscal 1995 are shown in the Option Grant Table.
FISCAL 1995 CHAIRMAN OF THE BOARD AND THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
PAY
As described above, the Corporation determines its pay for all executives,
including the Chairman of the Board and the President and Chief Executive
Officer, considering both a pay-for-performance philosophy and market rates of
compensation for the job. Specific actions taken by the Committee regarding the
Chairman of the Board and the President and Chief Executive Officer's
compensation are summarized below:
Base Salary -- The Chairman of the Board, Mr. Winton Blount, received a
merit increase of 7% in March 1994 based on competitive data and
performance. The President and Chief Executive Officer, Mr. John
Panettiere, received a 10% merit increase in March 1994 based on
competitive data and performance.
Annual Bonus -- The Corporation's Fiscal 1995 performance significantly
exceeded the targeted net income objective established in the Executive
Management Incentive Plan which covers the Chairman of the Board and the
President and Chief Executive Officer. The Plan was approved by the
shareholders in June of 1994.
The bonus for Fiscal 1995 generated by the Executive Management Incentive
Plan formula for Mr. Winton Blount, Chairman of the Board, and for Mr. John
Panettiere, President and Chief Executive Officer, was based on the
Corporation's attainment of the net income objective established in March 1994.
The Corporation's performance significantly exceeded that objective thus bonuses
equal to 200% of the 65% target for Mr. Winton Blount and 200% of the 65% target
for Mr. John Panettiere were earned for Fiscal 1995. In addition to the bonus
earned under the Executive Management Incentive Plan, the Committee approved a
discretionary bonus of $16,000 payable to the Chairman, Mr. Winton M. Blount,
and a discretionary bonus of $85,000 payable to the President and Chief
Executive Officer, Mr. John M. Panettiere.
Alfred M. Gleason, Chairman
W. Houston Blount
R. Eugene Cartledge
H. Corbin Day
Herbert J. Dickson
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EXECUTIVE OFFICERS
The executive officers of the Corporation, in addition to those who are
also Director nominees, as of May 1, 1995 are:
YEAR FIRST
ELECTED TO FAMILY
NAME OFFICE SUCH OFFICE AGE RELATIONSHIP
- -------------------- --------------------------------------------------- ----------- --- ------------
K. O. Dixon President of Dixon Industries, Inc. 1973 56 None
Thomas J. Fruechtel President of the Sporting Equipment Division of the 1993 44 None
Corporation
Richard H. Irving, Senior Vice President and General Counsel of the 1995 51 None
III Corporation
Bernell Jiles President of Gear Products, Inc. 1984 61 None
Harold E. Layman Senior Vice President and Chief Financial Officer 1993 48 None
of the Corporation
D. Joseph McInnes Senior Vice President -- Administration and 1991 52 None
Secretary of the Corporation and President of The 1994 and
Blount Foundation, Inc. 1982
James S. Osterman President of the Oregon Cutting Systems Division of 1987 57 None
the Corporation
Donald B. Zorn President of the Forestry and Industrial Equipment 1994 58 None
Division of the Corporation
Each of these executive officers serves at the pleasure of the Board. There
were no arrangements or understandings with any other person pursuant to which
any officer was elected. The executive officers of the Corporation may also be
directors or officers of divisions or subsidiaries of the Corporation.
K. O. Dixon was elected President of Dixon Industries, Inc. (manufacturer
of riding lawn mowers) in 1973. Dixon Industries, Inc. was acquired by the
Corporation in March 1990.
Thomas J. Fruechtel was appointed President of the Sporting Equipment
Division of the Corporation in March 1993. Prior to that date, Mr. Fruechtel
served as Executive Vice President from October 1992 and Director of Marketing
from August 1987 of the Sporting Equipment Division.
Richard H. Irving, III was elected Senior Vice President and General
Counsel on April 10, 1995. Prior to that date, he served since 1988 as Vice
President, General Counsel and Secretary of Duchossois Industries, Inc., a
diversified privately held company headquartered in Emhurst, Illinois. Mr.
Irving also served as Associate General Counsel of Union Camp Corporation from
1979 to 1986, and Assistant General Counsel of Rockwell International from 1974
to 1979.
Bernell Jiles was elected President of Gear Products, Inc. (designer and
manufacturer of rotation bearings and mechanical power transmission components)
in January 1984. Gear Products, Inc. was acquired by the Corporation in March
1991.
Harold E. Layman was elected Senior Vice President and Chief Financial
Officer of the Corporation in January 1993. Prior to that date, he served as
Senior Vice President Finance and Administration and was a member of the
Executive Committee of VME Group, N.V., The Netherlands from September 1988
(manufacturer of automotive components and industrial equipment).
D. Joseph McInnes was elected Senior Vice President -- Administration and
Secretary of the Corporation in May 1994. Prior to that date, he served as
Senior Vice President -- Administration of the Corporation from October 1991,
and Vice President -- Human Resources of the Corporation from March 1983. In
addition, he was elected President of The Blount Foundation, Inc. (a charitable
foundation funded by the Corporation) in April 1982.
James S. Osterman was appointed President of the Oregon Cutting Systems
Division of the Corporation in January 1987.
Donald B. Zorn was appointed President of the Forestry and Industrial
Equipment Division of the Corporation in January 1994. Prior to that date, he
served as President and Chief Operating Officer of Grove Cranes, a division of
Grove Worldwide Company, Shady Grove, Pennsylvania (manufacturer of mobile
hydraulic cranes and aerial work platforms) from March 1988.
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EXECUTIVE COMPENSATION
The following table summarizes, for the fiscal years ended the last day of
February 1993, 1994 and 1995, all plan and non-plan compensation awarded to,
earned by, or paid to (i) the CEO and (ii) the four most highly compensated
executive officers other than the CEO of the Corporation (the "Named Executive
Officers") at the end of Fiscal 1995 in all capacities in which they served:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ---------- -----------
--------------------------------------------- SECURITIES LONG-TERM
NAME AND OTHER UNDERLYING INCENTIVE ALL
PRINCIPAL SALARY BONUS ANNUAL OPTIONS PLAN OTHER
POSITION YEAR ($) ($) COMPENSATION ($) (#) PAYOUTS ($) COMPENSATION ($)
- ------------------------------------ ---- ------- ------- ---------------- ---------- ----------- ----------------
Winton M. Blount 1995 680,000 900,000(1) 70,789(3) 0 0 41,769(5)
Chairman of the Board 1994 635,000 619,125 30,569 0 0 33,261
1993 590,000 355,000 13,538 0 0 25,701
John M. Panettiere 1995 550,000 800,000(2) 24,915(3) 25,000 0 53,888(6)
President and CEO 1994 461,379 450,000 26,807 100,000 0 193,774
1993 332,051 225,000 34,273 100,000 0 0
Donald B. Zorn 1995 250,000 225,000 90,425(4) 7,500 0 18,550(7)
President -- Forestry and 1994 41,666 10,000 0 30,000 0 0
Industrial Equipment Division 1993 0 0 0 0 0 0
Harold E. Layman 1995 237,600 215,000 12,227(3) 7,500 0 23,356(8)
Senior Vice President and Chief 1994 220,000 148,500 6,319 50,000 0 31,673
Financial Officer 1993 36,667 16,506 0 20,000 0 0
D. Joseph McInnes 1995 236,000 215,000 11,338(3) 7,500 118,527 13,366(9)
Senior Vice President -- 1994 219,450 148,129 5,785 50,000 0 13,799
Administration and 1993 201,027 100,000 2,266 0 0 713
Corporate Secretary
- ---------------
(1) Consists of $884,000 bonus earned under the Executive Management Target
Incentive Plan and a $16,000 discretionary bonus.
(2) Consists of $715,000 bonus earned under the Executive Management Target
Incentive Plan and a $85,000 discretionary bonus.
(3) Tax gross-up on club dues, personal use of the Corporation's property and
premiums on life insurance policies.
(4) Personal use of the Corporation's property, premiums on life insurance
policy and relocation expenses.
(5) Amount is comprised of $12,307 matching contribution to employee's 401(k)
account and excess 401(k) account and $29,462 attributable to the personal
portion of the premiums on life insurance policies under the Executive
Benefit Life Insurance and Supplemental Retirement Plan.
(6) Amount is comprised of $21,463 matching contribution to employee's 401(k)
and excess 401(k) account and $32,425 premiums on a life insurance policy
under the Executive Life Insurance Plan.
(7) Amount is comprised of $18,550 in premiums on a life insurance policy under
the Executive Life Insurance Plan.
(8) Amount is comprised of $10,016 matching contribution to the employee's
401(k) and excess 401(k) accounts and $13,340 in premiums on a life
insurance policy under the Executive Life Insurance Plan.
(9) Amount is comprised of $12,407 matching contribution to employee's 401(k)
and excess 401(k) accounts and $959 attributable to the personal portion of
the premiums on the life insurance policies under the Executive Benefit
Life Insurance and Supplemental Retirement Plan.
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OPTION GRANTS
The following table summarizes pertinent information concerning individual
grants of stock options, including the potential realizable dollar value of
grants of options made during Fiscal 1995 to each Named Executive Officer,
assuming that the market value of the underlying security appreciates in value,
from the date of grant to the end of the option term, at the rates indicated in
the following table:
OPTION GRANTS IN FISCAL YEAR 1995
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
------------------------------------------------------- ASSUMED ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO EXERCISE EXPIRATION FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE DATE -----------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) (MMDDYY) 5% ($) 10% ($)
--------------------------- ----------- ------------ --------- -------- ------- ---------
Winton M. Blount 0 0 0 -- 0 0
John M. Panettiere 25,000 16.79% 46.0625 02-13-05 724,000 1,835,000
Donald B. Zorn 7,500 5.04% 46.0625 02-13-05 217,000 551,000
Harold E. Layman 7,500 5.04% 46.0625 02-13-05 217,000 551,000
D. Joseph McInnes 7,500 5.04% 46.0625 02-13-05 217,000 551,000
- ---------------
(1) The amounts under these columns are the result of calculations at 5% and 10%
rates which were established by rules adopted by the Securities and
Exchange Commission and therefore are not intended to forecast possible
future appreciation, if any, in the price of the Corporation's Class A
Common Stock.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table summarizes pertinent information concerning the
exercise of stock options during Fiscal 1995 by each of the Named Executive
Officers and the fiscal year-end value of unexercised options:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT FISCAL YEAR END IN-THE-MONEY OPTIONS
ACQUIRED ON (#) AT FISCAL YEAR END ($)
EXERCISE VALUE ----------------------------- -----------------------------
NAME (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------- ----------- ------------ ----------- ------------- ----------- -------------
Winton M. Blount 0 0 0 0 0 0
John M. Panettiere 12,213 343,000 33,334 167,240 600,000 4,106,000
Donald B. Zorn 0 0 10,000 27,500 184,000 372,000
Harold E. Layman 0 0 24,667 52,833 565,000 1,000,000
D. Joseph McInnes 0 0 28,667 48,833 767,000 914,000
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PENSION PLANS
Assuming continuance of the Blount Retirement Plan in its present form,
estimated annual benefits payable to eligible employees (including executive
officers) in specific classifications following retirement at age 65 (normal
retirement age), after continuous years of credited service, are shown below:
PENSION PLAN TABLE
ESTIMATED ANNUAL BENEFITS FOR
FIVE-YEAR AVERAGE SPECIFIED YEARS OF CREDITED SERVICE(1), (2)
EARNINGS AT --------------------------------------------------------------------------------------
RETIREMENT(3) 10 15 20 25 30 35 40 OR MORE
- ------------------------------------------------------------------------------------------------------------
$ 100,000 $ 20,000 $ 30,000 $ 40,000 $ 50,000 $ 52,500 $ 55,000 $ 57,500
150,000 30,000 45,000 60,000 75,000 78,750 82,500 86,250
200,000 40,000 60,000 80,000 100,000 105,000 110,000 115,000
250,000 50,000 75,000 100,000 125,000 131,250 137,500 143,750
300,000 60,000 90,000 120,000 150,000 157,500 165,000 172,500
350,000 70,000 105,000 140,000 175,000 183,750 192,500 201,250
400,000 80,000 120,000 160,000 200,000 210,000 220,000 230,000
450,000 90,000 135,000 180,000 225,000 236,250 247,500 258,750
500,000 100,000 150,000 200,000 250,000 262,500 275,000 287,500
550,000 110,000 165,000 220,000 275,000 288,750 302,500 316,250
600,000 120,000 180,000 240,000 300,000 315,000 330,000 345,000
650,000 130,000 195,000 260,000 325,000 341,250 357,500 373,750
700,000 140,000 210,000 280,000 350,000 367,500 385,000 402,500
- ---------------
(1) The amounts set out above are based on the benefits under a straight life
annuity to a participant retiring at age 65 on March 1, 1995. The amounts
shown are to be reduced for offsetting amounts to be paid as social
security benefits and benefits payable under Master Annuity Contracts
(purchased upon termination of prior Retirement Plans).
(2) Under Section 415(b) of the Internal Revenue Code, as amended, the maximum
benefit payable under the Master Annuity Contracts (purchased upon
termination of prior Retirement Plans) and the Blount Retirement Plan to an
employee retiring at age 65 in 1995 is $120,800 ($118,800 for 1994), an
amount which may change each year in accordance with a determination made
by the Commissioner of the Internal Revenue Service. In addition, Section
401(a)(17) of the Internal Revenue Code, as amended, limits the amount of
an employee's compensation which may be taken into account under the Blount
Retirement Plan to $150,000 for 1995, an amount which also may change each
year in accordance with a similar determination. These limitations have
been disregarded for the purposes of this table since the amount of the
benefit payable in excess of the limitation is covered by the Blount, Inc.
and Subsidiaries Supplemental Retirement Benefit Plan (the "Excess Benefit
Plan").
(3) Earnings covered by the Blount Retirement Plan are based on the
participant's base salary or wages.
The years of benefit service used to determine benefits under the Blount
Retirement Plan and the Master Annuity Contracts (purchased upon termination of
prior Retirement Plans) as of February 28, 1995, for the persons named in the
Summary Compensation Table are: Mr. Blount -- 49 years; Mr. Panettiere -- 3
years; Mr. Layman -- 2 years; Mr. McInnes -- 21 years; and Mr. Zorn -- 1 year.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS
EXECUTIVE BENEFIT LIFE INSURANCE AND SUPPLEMENTAL RETIREMENT PLAN
On September 22, 1980, the Board adopted, effective August 1, 1980, an
Executive Benefit Life Insurance and Supplemental Retirement Plan (the "Keyman
Insurance Plan") for key executive officers of the Corporation and its divisions
and subsidiaries. Eligibility is determined by the Compensation and Management
Development Committee of the Board. Each participating executive officer has the
opportunity to obtain life insurance that will pay to the named beneficiary in
the event of the executive officer's death while employed by the Corporation or
one of its divisions or subsidiaries as a full-time permanent employee, an
amount equal to 2 1/2 times the executive officer's annual compensation (base
salary as of August 1 of each year plus the amount of the most recent bonus paid
under the Corporation's Annual Target Incentive Plan) at the time of the
executive officer's death (the "Death Benefit"). The excess of the face amount
of the policy over the Death Benefit is paid to the Corporation. The Corporation
has ownership rights in the policy, except that the executive officer has the
right to change the beneficiary designation for the amount of the Death Benefit.
All dividends declared on the policy shall be applied at the option of the
Corporation to purchase
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additional paid-up insurance on the life of the executive officer or to reduce
the premiums on the policy. The Corporation pays all premiums due on the
policies.
If the executive officer retires directly from permanent full-time
employment with the Corporation or one of its divisions or subsidiaries, under
certain circumstances and subject to the election by the executive officer, the
Corporation, after withdrawing the cash value, will assign its rights in the
policy to the executive officer. In lieu of the Corporation's assignment of its
rights in the policy, the executive officer may elect to receive an optional
supplemental retirement benefit payable by the Corporation instead of
all or a portion of any interest the executive officer or his beneficiary or
beneficiaries may otherwise be entitled to under the policy, and the Death
Benefit will terminate. If the executive officer retires prior to age 65, he or
she may elect a supplemental retirement benefit commencing upon such retirement
date, but the benefit will be reduced based on a formula.
Should the executive officer upon retirement at age 65 elect to receive a
supplemental retirement benefit under the Keyman Insurance Plan and based on the
amount of life insurance in force at the end of Fiscal 1995, the persons named
in the Summary Compensation Table would receive the following annual payments
from the Corporation for 15 years in addition to the benefits payable under the
Master Annuity Contract, the Excess Benefit Plan and any Supplemental Executive
Retirement Plan: Mr. Blount -- $280,000; and Mr. McInnes -- $107,556. Messrs.
Panettiere, Layman and Zorn do not participate in the Keyman Insurance Plan.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
The Corporation maintains a Supplemental Executive Retirement Plan for John
M. Panettiere. If Mr. Panettiere completes at least five years of service, the
Supplemental Executive Retirement Plan will provide him with a benefit upon his
normal retirement date or earlier termination of employment equal to a benefit
calculated under the benefit formula of the Blount Retirement Plan, but based on
a schedule of years of service granted to him under the Supplemental Executive
Retirement Plan rather than his actual service, reduced by any retirement
benefits payable under the Blount Retirement Plan, the Supplemental Retirement
Benefit Plan, and any retirement income actually paid to Mr. Panettiere under
any pension plan maintained by a former employer. This Plan is administered by
the Board or, at its discretion, the Compensation and Management Development
Committee of the Board. This Plan may be amended from time to time in any
respect with the consent of the other party, but it cannot be terminated without
the consent of the Board or its designated committee and Mr. Panettiere. At the
discretion of the Board and after timely notice to Mr. Panettiere, rights to
receive any benefits under this Plan may be forfeited, suspended, reduced or
terminated by the Board if it determines in good faith that good cause as
defined in this Plan has been shown. The projected annual benefit payable to Mr.
Panettiere under this Plan, in addition to the benefits payable under the Blount
Retirement Plan, the Excess Benefit Plan and the retirement income payable under
any pension plan maintained by a former employer of Mr. Panettiere, is $247,979.
The Corporation maintains a Supplemental Executive Retirement Plan for
Donald B. Zorn. If Mr. Zorn completes at least five years of service, the
Supplemental Executive Retirement Plan will provide him with a benefit upon his
normal retirement date or earlier termination of employment equal to a benefit
calculated under the benefit formula of the Blount Retirement Plan, but based on
a schedule of years of service granted to him under the Supplemental Executive
Retirement Plan rather than his actual service, reduced by any retirement
benefits payable under the Blount Retirement Plan, the Supplemental Retirement
Benefit Plan, and any retirement income actually paid to Mr. Zorn under any
pension plan maintained by a former employer. This Plan is administered by the
Board or, at its discretion, the Compensation and Management Development
Committee of the Board. This Plan may be amended from time to time in any
respect with the consent of the other party, but it cannot be terminated without
the consent of the Board or its designated committee and Mr. Zorn. At the
discretion of the Board and after timely notice to Mr. Zorn, rights to receive
any benefits under this Plan may be forfeited, suspended, reduced or terminated
by the Board if it determines in good faith that good cause as defined in this
Plan has been shown. Due to Mr. Zorn's service of less than one year at the date
of Blount's latest Actuarial Valuation, no projected benefit under this Plan was
determined.
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Corporation has entered into Employment Agreements (the "Agreements")
with all of the executive officers named in the Summary Compensation Table
except for Winton M. Blount. The terms of the Agreements provide that each
executive will be paid a base salary no less than the 1995 base salary shown in
the Table, be eligible to participate in the Corporation's Incentive Plans with
target bonuses ranging from 45% to 65% of base salary, participate in the
Corporation's stock option programs and all other benefit plans, arrangements
and perquisites generally available to executive officers. Three executives are
covered by the Corporation's Executive Life Insurance Program and two are
covered under the Corporation's Keyman Life Insurance and Supplemental
Retirement Plan. The Agreements with Messrs. Panettiere and Zorn provide for
certain supplemental retirement benefits, less any benefits from the Blount
Retirement Plan, the Blount and Subsidiaries Supplemental Retirement Plan and
any pension plan of a former employer.
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The duration of each Agreement is automatically extended one day for each
day employed until such time as the executive attains his 65th birthday. Each
Agreement has a clause which prohibits the executive, for up to three years
following the termination of employment, from competing directly or indirectly
with the Corporation or disclosing proprietary or confidential information.
The Agreements contain a Change-In-Control provision under which the
executive is paid a multiple (of 24 to 36 months, depending on the executive) of
his then current base salary and an average of bonus payments recently received.
Full funding of certain benefits and immediate vesting in unvested stock options
also occur upon a Change-In-Control, as defined in the Agreements.
The Agreements also contain provisions for severance payments and benefits
(for 24 to 36 months, depending on the executive) if the Corporation terminates
the executive for reasons other than death, disability or cause (as defined in
the Agreements).
In the event of death, disability or termination for cause (as defined in
the Agreements) or in the event the employer terminates his employment (except
for Change-In-Control), the Corporation's obligations under the Employment
Agreements cease and no special benefits will be paid.
A Rabbi Trust has been established by the Corporation for the purpose of
funding certain non-qualified benefits and Change-In-Control liabilities
identified in this section.
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PERFORMANCE GRAPH
Rules adopted by the Securities and Exchange Commission require that the
Corporation include in the proxy statement a line-graph presentation comparing
cumulative, five-year shareholder returns on an indexed basis with the
cumulative return of a broad equity market index that includes companies whose
equity securities are traded on the same exchange and either a published
industry index or an index of peer companies selected by the Corporation. Since
the Corporation is not included in the Standard and Poor's 500 Stock Index and
its equity securities are traded on the American Stock Exchange ("ASE"), the
American Stock Exchange Market Value Index was selected as the broad equity
market index. The Corporation chose a group of 10 manufacturing companies that
have operations in those industries in which the Corporation competes as its
peer group for purposes of this performance comparison. A list of these
companies ("Peer Group") follows the graph below.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
BLOUNT, INC., AMERICAN STOCK EXCHANGE MARKET VALUE INDEX,
AND A PEER GROUP
MEASUREMENT PERIOD BLOUNT, INC., ASE MKT. VAL.
(FISCAL YEAR COVERED) CLASS A INDEX PEER GROUP
1990 100.00 100.00 100.00
1991 125.40 85.85 101.83
1992 75.84 84.66 114.38
1993 141.93 91.72 109.09
1994 311.36 154.94 127.08
1995 491.38 147.41 116.57
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(1) The companies in the Peer Group are as follows: Actava Group, Inc.,
Caterpillar, Inc., Clark Equipment Co., Deere & Co., Kaydon Corp.,
Kennametal Inc., Navistar International Corp., Regal-Beloit Corp., Terex
Corp., and the Toro Co.
(2) The comparison of total return on investment (change in year-end stock price
plus reinvested dividends) for each of the periods assumes that $100 was
invested on February 28, 1990 in each of Blount, Inc., the ASE Market Value
Index, and the Peer Group, with investment weighted on the basis of market
capitalization.
INDEBTEDNESS OF MANAGEMENT
In connection with the employment of Donald B. Zorn as President of the
Forestry and Industrial Equipment Division of the Corporation in January 1994,
the Corporation made an interest-free loan to him in March 1994 for the purchase
of a home in Lakeville, Minnesota pending sale of his home in another city. The
largest aggregate amount of such indebtedness outstanding at any time in Fiscal
1995 was $73,000. The loan was paid in September 1994.
FILING DISCLOSURE
Section 16(a) of the Securities Exchange Act of 1934 and the rules
thereunder require the Corporation's directors, executive officers and persons
who beneficially own more than 10% of any class of equity securities of the
Corporation to file reports of
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ownership and changes in ownership with the Securities and Exchange Commission
and the American Stock Exchange and to furnish the Corporation with copies.
Based on the review of copies of such forms received by it, or written
representations from certain reporting persons, the Corporation believes that,
during the last fiscal year all filing requirements were complied with which
were applicable to its directors, officers and greater than 10% beneficial
owners.
CERTAIN TRANSACTIONS AND OTHER MATTERS
During Fiscal 1995, the Corporation made cash contributions of $491,000 to
The Blount Foundation, Inc., a charitable foundation. D. Joseph McInnes is
President and a director; Katherine Blount Miles is Vice President, Treasurer
and a director; and Winton M. Blount is a director of The Blount Foundation,
Inc.
APPROVAL OF THE 1995 BLOUNT LONG TERM EXECUTIVE STOCK OPTION PLAN
PROPOSAL 2
The Board adopted, subject to approval by the stockholders of the
Corporation, a new stock option plan entitled the 1995 Blount Long Term
Executive Stock Option Plan (the "1995 LTESO Plan"), the full text of which is
set forth in Exhibit A hereto. The 1995 LTESO Plan became effective upon its
approval by the Board on April 10, 1995, subject to the approval by the
stockholders.
The 1995 LTESO Plan contemplates the grant of the right to purchase shares
of Class A Common Stock of the Corporation under Stock Option Agreements
("Options"). Subject to the usual antidilution provisions of stock splits, stock
dividends, etc., the number of shares of Class A Common Stock which may be
issued under the 1995 LTESO Plan may not exceed 700,000 shares. The 1995 LTESO
Plan will be administered by the Compensation and Management Development
Committee of the Board (the "Committee"), no member of which is eligible to
participate in the 1995 LTESO Plan. Those employees eligible to participate are
any officer or other key management employee (approximately 50 persons) of the
Corporation and its divisions and subsidiaries. The Committee will have sole
discretion to determine from among eligible employees those to whom and the time
or times at which or the criteria under which Options may be granted, the number
of shares of Class A Common Stock to be subject to each Option and the period
for the exercise of such Options.
The per share exercise price of the Class A Common Stock subject to each
Option may not be less than the fair market value of such stock on the date the
Option is granted. The market value of the Class A Common Stock was $43.75 on
April 10, 1995. Options must be granted within 10 years from the effective date
of the 1995 LTESO Plan, and the period for the exercise of each Option cannot
exceed 10 years from the date of grant.
No Option may be exercised unless and until the optionee has remained in
the employ of the Corporation or its divisions and subsidiaries for 1 year from
the date of grant, except in the case of death, as described below. No Option
will be transferable by an optionee other than by will or the laws of descent
and distribution. During the lifetime of an optionee, the Option will be
exercisable only by the optionee.
In the event an optionee's employment is terminated with or without cause,
or by the act of the optionee including death, before his or her Option has been
in effect for 1 year, the optionee's right to exercise such Incentive Option
shall terminate and all rights thereunder shall cease. In the event an
optionee's employment is terminated with or without cause, or by the act of the
optionee including death, after his or her Option has been in effect for 1 year,
the optionee will have 3 months, except in the case of death as described below,
after such termination within which to exercise such Option to the extent it was
exercisable at the date of such termination.
In the event of the death of an optionee, the executor or administrator of
the estate of the optionee or the person or persons to whom the Option shall
have been validly transferred by the executor or the administrator pursuant to a
will or the laws of descent and distribution shall have the right for 1 year
following the date of death to exercise the optionee's Option to the extent it
was exercisable at the date of death, but not to exceed the original expiration
date of the Option.
FEDERAL INCOME TAX CONSEQUENCES
Options which may be granted under the 1995 LTESO Plan are not intended to
qualify as "incentive stock options" within the meaning of Section 422A of the
U.S. Internal Revenue Code, as amended.
Under current federal tax law, there are no tax consequences to either the
Corporation or the optionee upon grant of the Option. Upon exercise of the
Option, the excess of the fair market value of the Class A Common Stock acquired
over the option price is taxable to the optionee as compensation income and
deductible by the Corporation. The tax basis for the stock acquired by
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the optionee is the option price plus such taxable excess. When an optionee
disposes of shares acquired upon exercise of the option, any amount received in
excess of the tax basis of the shares will be treated as capital gain and will
either be long-term or short-term, depending on the holding period of the
shares. The holding period commences on the date of exercise of the option. If
the amount received on sale is less than the tax basis of the shares, the loss
will be treated as long-term or short-term capital loss, depending upon the
holding period of the shares.
MANAGEMENT RECOMMENDATION
By affording key management employees of the Corporation and its divisions
and subsidiaries an opportunity to acquire or increase their equity interest in
the Corporation and by thus encouraging such employees to become owners of the
Corporation's Class A Common Stock, the Corporation seeks to motivate, retain
and attract those highly competent individuals upon whose judgment, initiative,
leadership and continued efforts the success of the Corporation in large measure
depends. For this reason, the management of the Corporation recommends to the
stockholders of the Corporation that they vote FOR approval of the 1995 LTESO
Plan.
VOTE REQUIRED
The affirmative vote of the majority of the stock having voting power
present in person or represented by proxy at the Annual Meeting of Stockholders
is required for approval of the 1995 LTESO Plan. Proxies solicited hereby will
be voted FOR the proposal unless a vote against the proposal or abstention is
specifically indicated.
RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
PROPOSAL 3
Upon recommendation of the Audit Committee, the Board has appointed the
firm of Coopers & Lybrand as its independent auditors for the fiscal year ending
February 29, 1996. Although stockholder ratification is not required, the Board
has determined that it would be desirable to request an expression from the
stockholders as to whether or not they concur in the foregoing appointment.
Coopers & Lybrand has served as auditors of the consolidated financial
statements of the Corporation and its divisions and subsidiaries from year to
year since 1972. The Corporation has been advised by Coopers & Lybrand that they
do not have any direct financial interest or any material indirect financial
interest in the Corporation or any of its divisions or subsidiaries, and that
during the above time, Coopers & Lybrand has not had any connection with the
Corporation or its divisions or subsidiaries in the capacity of promoter,
underwriter, voting trustee, director, officer or employee.
Representatives of Coopers & Lybrand and of the Audit Committee of the
Board will be present at the Meeting and will have the opportunity to make a
statement if they desire to do so. Those representatives will also be available
to respond to appropriate questions.
The Audit Committee of the Board approved all non-audit services rendered
by Coopers & Lybrand during Fiscal 1995 and concluded that such services did not
affect the independence of the auditors. The audit services provided by Coopers
& Lybrand included the audit of the consolidated financial statements of the
Corporation for Fiscal 1995, audit of certain subsidiary financial statements
for Fiscal 1995, review of various filings with the Securities and Exchange
Commission, and performance of such other appropriate auditing services as were
required by management or the Board. The non-audit services include, among other
things, tax services and special services regarding accounting issues.
Coopers & Lybrand has advised that all professional services were provided
at customary rates and terms.
The Board recommends a vote FOR ratification of the appointment of Coopers
& Lybrand as independent auditors for the Corporation for the fiscal year ending
February 29, 1996. If the stockholders should not ratify the appointment of
Coopers & Lybrand, the Board will reconsider the appointment.
STOCKHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING
Stockholders may present proposals which may be proper subjects for
inclusion in the Proxy Statement and for consideration at the Annual Meeting of
Stockholders. In order to be considered, proposals must be submitted on a timely
basis. Proposals for the 1996 Annual Meeting of Stockholders must be received by
the Corporation no later than February 1, 1996. Any such proposals, as well as
any questions related thereto, should be directed to the Secretary of the
Corporation.
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GENERAL INFORMATION
The Board does not presently know of any other business to be presented at
the Meeting. However, if any other matters properly come before the Meeting, the
persons whose names appear on the enclosed form or forms of proxy will vote
thereon in accordance with their best judgment.
The expenses of soliciting proxies will be paid by the Corporation. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or facsimile, by directors, officers and regular employees of the
Corporation and its divisions and subsidiaries, who, except for normal overtime
pay in certain instances, will not receive additional compensation therefor.
Arrangements will also be made with brokerage firms and other custodians,
nominees and fiduciaries for the forwarding of proxy soliciting materials to
beneficial owners of the Corporation's Class A Common Stock and Class B Common
Stock, and the Corporation will reimburse such brokerage firms, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
By Order of the Board of Directors,
D. Joseph McInnes
Senior Vice President -- Administration
and Secretary
Montgomery, Alabama
May 10, 1995
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EXHIBIT A
BLOUNT, INC.
1995 BLOUNT LONG TERM EXECUTIVE STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
SEC. 1.1 DEFINITIONS
As used herein, the following terms shall have the meanings hereinafter set
forth unless the context clearly indicates to the contrary:
(a) "Company" shall mean Blount, Inc., a Delaware corporation.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Covered Employee" shall mean any individual who, as of the last
day of the Company's taxable year, is either the Chief Executive Officer of
the Company or is acting in such capacity, or is among the four highest
compensated officers of the Company other than the Chief Executive Officer.
(e) "Committee" shall mean the Compensation and Management Development
Committee of the Board consisting of two (2) or more persons.
(f) "Stock," with respect to each share to which that term refers,
shall mean one (1) share of Class A Common Stock of the Company, par value
$1.00 per share.
(g) "Fair Market Value" shall mean the average of the highest price
and the lowest price per share at which the Stock is sold in the regular
way on the American Stock Exchange on the day an Option is granted
hereunder or, in the absence of any reported sales on such day, the first
preceding day on which there were such sales.
(h) "Fundamental Change" shall mean any of the following events:
(i) the sale by the Company of substantially all of its assets to a
single purchaser or a group of associated or affiliated purchasers;
(ii) the sale, exchange, or other disposition, in one transaction
to an entity or entities not affiliated with the Company, of more than
fifty percent (50%) of the outstanding common stock of the Company other
than a sale, exchange, or disposition of the common stock of the Company
resulting from a public or private offering of common stock or other
security convertible into common stock of the Company which offering is
sponsored or initiated by the Company and approved by the Board;
(iii) the merger or consolidation of the Company in a transaction
in which the stockholders of the Company receive less than fifty percent
(50%) of the outstanding voting stock of the new or continuing entity;
or
(iv) a change in control of the Board as constituted on the date
this is adopted by the Board.
(i) "Option" shall mean an option to purchase Stock granted pursuant
to the provisions of Article VI hereof.
(j) "Optionee" shall mean an employee to whom an Option has been
granted hereunder.
(k) "Plan" shall mean the 1995 Blount Long Term Executive Stock Option
Plan, the terms of which are set forth herein.
(l) "Stock Option Agreement" shall mean the agreement between the
Company and the Optionee under which the Optionee may purchase Stock
hereunder.
(m) "Subsidiary" shall mean any corporation, the majority of the
outstanding capital stock of which is owned, directly or indirectly, by the
Company.
ARTICLE II
THE PLAN
SEC. 2.1 NAME
This plan shall be known as the "1995 Blount Long Term Executive Stock
Option Plan".
SEC. 2.2 PURPOSE
The purpose of the Plan is to advance the interests of the Company and its
stockholders by affording to key management employees of the Company and its
subsidiaries an opportunity to acquire or increase their proprietary interest in
the Company and
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to allow such employees to benefit directly from improved performance of the
Company by the grant to such employees of Options under the terms set forth
herein. By thus encouraging such employees to become owners of the Company's
stock and allowing them to benefit directly from improved performance of the
Company, the Company seeks to motivate, retain and attract those highly
competent individuals upon whose judgment, initiative, leadership and continued
efforts the success of the Company in large measure depends. The Options granted
under this Plan are not intended to qualify as incentive stock options under
Section 422A of the Code.
SEC. 2.3 EFFECTIVE DATE
The Plan shall be deemed adopted and shall become effective upon its
approval by the Board subject to its subsequent approval within 12 months of
adoption by the Board by the stockholders of the Company at an annual or special
meeting of the stockholders of the Company. No option granted hereunder may
become exercisable unless and until such approval is obtained. Any subsequent
amendments to the Plan requiring the consent of the stockholders of the Company
shall become effective upon approval of such amendments by the Board and by the
affirmative vote of the majority of the outstanding shares of Stock of the
Company at any annual or special meeting of the stockholders of the Company and,
if necessary, upon the filing of appropriate certificates of amendment to the
Certificate of Incorporation of the Company with the appropriate authorities in
the State of Delaware.
ARTICLE III
PARTICIPANTS
SEC. 3.1 ELIGIBILITY
Any officer or other key management employee of the Company or its
subsidiaries shall be eligible to participate in the Plan; provided, however,
that no member of the Committee shall be eligible to receive equity securities
or options of the Company under the Plan or equity securities or options of the
Company under any other plan of the Company while serving on the Committee or
for a period of one year prior to serving on the Committee, except to the extent
permitted and still retain qualification of the Plan for exemption from the
provisions of Section 16(b) of the Securities Exchange Act of 1934 under Rule
16(b)(3) under the Securities Exchange Act of 1934. The Committee may grant
Options to any eligible employee in accordance with such determinations as the
Committee from time to time in its sole discretion shall make.
ARTICLE IV
ADMINISTRATION
SEC. 4.1 DUTIES AND POWERS OF COMMITTEE
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have sole discretion and authority
to determine from among eligible employees those to whom and the time or times
at which Options may be granted, the number of shares of Stock to be subject to
each Option, and the period for the exercise of such Option which need not be
the same for each grant hereunder. Subject to the express provisions of the
Plan, the Committee shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement, and to make all other
determinations necessary or advisable in the administration of the Plan.
SEC. 4.2 MAJORITY RULE
A majority of the members of the Committee shall constitute a quorum, and
any action taken by a majority present at a meeting at which a quorum is present
or any action taken without a meeting evidenced by a writing executed by a
majority of the whole Committee shall constitute the action of the Committee.
SEC. 4.3 COMPANY ASSISTANCE
The Company shall supply full and timely information to the Committee on
all matters relating to eligible employees, their employment, death, or other
termination of employment, and such other pertinent facts as the Committee may
require. The Company shall furnish the Committee with such clerical and other
assistance as is necessary in the performance of its duties.
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ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
SEC. 5.1 LIMITATIONS
Subject to adjustment pursuant to the provisions of Section 5.3 hereof, the
number of shares of Stock which may be issued and sold hereunder shall not
exceed 700,000 shares of Stock. Such shares may be either authorized and
unissued shares or shares issued and thereafter acquired by the Company. The
maximum number of shares with respect to which Options may be granted to any
individual who has been a Covered Employee at any time during the term of the
Plan is 700,000 in any calendar year.
SEC. 5.2 OPTIONS GRANTED UNDER PLAN
Shares of Stock with respect to which an Option granted hereunder shall
have been exercised shall not again be available for grant hereunder. If Options
granted hereunder shall expire, terminate or be canceled for any reason without
being wholly exercised, new Options may be granted hereunder covering the number
of shares to which such Option expiration, termination or cancellation relates.
SEC. 5.3 ANTIDILUTION AND FUNDAMENTAL CHANGE
In the event that the outstanding shares of Stock hereafter are changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of merger, consolidation,
other reorganization, recapitalization, reclassification, combination of shares,
stock split-up or stock dividend:
(a) the aggregate number and kind of shares subject to Options which
may be granted hereunder shall be adjusted appropriately;
(b) rights under outstanding Options granted hereunder, both as to the
number of subject shares and the Option price, shall be adjusted
appropriately;
(c) where dissolution or liquidation of the Company is involved, each
outstanding Option granted hereunder shall terminate, but the Optionee
shall have the right, subject to the other provisions of the Plan, for
thirty (30) days prior to such dissolution or liquidation, to exercise his
Option in full, without regard to any installment exercise provisions, to
the extent that it shall not have been exercised;
The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined solely by the Committee, and any such adjustment
shall provide for the elimination of fractional share interests.
In the event of a Fundamental Change, every Option outstanding shall
terminate, provided that for a period of thirty (30) days prior to the effective
date of such Fundamental Change and subject to the other provisions of the Plan,
except for Section 6.4(a) which shall not apply, Optionee shall have the right
to exercise his Option in full, without regard to any installment exercise
provisions, to the extent that it shall not have been exercised.
ARTICLE VI
OPTIONS
SEC. 6.1 OPTION GRANT AND AGREEMENT
Each Option granted hereunder shall be evidenced by minutes of a meeting or
the written consent of the Committee and by a Stock Option Agreement dated as of
the date of grant and executed by the Company and the Optionee, which Agreement
shall set forth such terms and conditions as may be determined by the Committee
consistent with the Plan. Such Agreement shall bind the Optionee to provide
written notice to the Company in the event that the Optionee shall make an
election under Section 83(b) of the Code with respect to any Stock purchased
through exercise of an Option under this Plan; such written notice shall be
presented to the Company no later than ten (10) days following the filing of
such election.
SEC. 6.2 OPTION PRICE
The per share price of the Stock subject to each Option shall be determined
by the Committee, but said per share price shall not be less than the Fair
Market Value of the Stock on the date the Option is granted.
SEC. 6.3 OPTION PERIOD
Each Option granted hereunder must be granted within ten years from the
effective date of the Plan. The period for the exercise of each Option shall be
determined by the Committee, but in no instance shall such period exceed ten
years from the date of grant of the Option.
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SEC. 6.4 OPTION EXERCISE
(a) No Option granted hereunder shall be exercisable unless and until the
Optionee shall have been or remained in the employ of the Company or its
subsidiaries for one year from and after the date such Option was granted,
except as otherwise provided in Section 6.6 hereof.
(b) Options may be exercised with respect to whole shares only, for such
shares of Stock and within the period permitted by the exercise thereof as
determined by the Committee, and shall be exercised by written notice of intent
to exercise the Option with respect to a specified number of shares delivered to
the Company at its principal office in the State of Alabama, and payment in full
in cash to the Company at said office of the amount of the Option price for the
number of shares of Stock with respect to which the Option is then being
exercised. If and to the extent that the Company is required to withhold on
account of any present or future tax imposed by any taxing authority with
respect to such exercise, the notice of exercise shall be accompanied by a check
to the order of the Company in payment of the amount of such withholding, as
determined by the Company in its sole discretion.
(c) No Option granted hereunder shall be exercisable unless at all times
during the period beginning on the date of the granting of such Option and
ending on the day which is three months before the date of exercise (or ending
on the day which is twelve months before the date of exercise in case of the
death of the Optionee) the Optionee was an employee of either the Company or a
parent or Subsidiary of the Company, or a corporation (or parent or subsidiary
of such corporation) issuing or assuming such Option.
SEC. 6.5 NONTRANSFERABILITY OF OPTION
No Option shall be transferred by an Optionee otherwise than by will or the
laws of descent and distribution. During the lifetime of an Optionee the Option
shall be exercisable only by the Optionee.
SEC. 6.6 EFFECT OF DEATH OR OTHER TERMINATION OF EMPLOYMENT
(a) If, prior to a date one year from the date an Option shall have been
granted, the Optionee's employment with the Company or its subsidiaries shall be
terminated by the Company or Subsidiary with or without cause, or by the act of
the Optionee including death, the Optionee's right to exercise such Option shall
terminate and all rights thereunder shall cease.
(b) If on or subsequent to a date one year from the date an Option shall
have been granted, the Optionee's employment with the Company or its
subsidiaries shall be terminated by the Company or subsidiaries with or without
cause, or by the act of the Optionee including death, the Optionee's right to
exercise such Option shall extend only to the number of shares under the Option
which such Optionee has on such date a fully vested right to exercise the Option
with respect thereto. The Option with respect to all remaining shares shall
terminate, and except as set forth in this Plan all rights under the Option
shall cease.
(c) In the event of the death of an Optionee, the executor or administrator
of the estate of the Optionee or the person or persons to whom an Option granted
hereunder shall have been validly transferred by the executor or the
administrator pursuant to will or the laws of descent and distribution shall
have the right to exercise the Optionee's Option for one year following the date
of death (but not to exceed the original expiration date of the Option).
(d) No transfer of an Option by the Optionee by will or by the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and an
authenticated copy of the will and/or such other evidence as the Committee may
deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions of such Option.
SEC. 6.7 RIGHTS AS STOCKHOLDER
An Optionee or a transferee of an Option shall have no rights as a
stockholder with respect to any shares subject to such Option prior to the
purchase of such shares by exercise of such Option as provided herein.
ARTICLE VII
STOCK CERTIFICATES
SEC. 7.1 STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, prior to fulfillment of all of the following conditions:
(a) the admission of such shares to listing on all stock exchanges on
which the Stock is then listed;
(b) the completion of any registration or other qualification of such
shares under any federal or state law or under the rulings or regulations
of the U.S. Securities and Exchange Commission or any other governmental
regulatory body, which the Committee shall in its sole discretion deem
necessary or advisable;
(c) the obtaining of any approval or other clearance from any federal
or state governmental agency which the Committee shall in its sole
discretion determine to be necessary or advisable; and
A-4
29
(d) the lapse of such reasonable period of time following the exercise
of the Option as the Committee from time to time may establish for reasons
of administrative convenience.
ARTICLE VIII
TERMINATION, AMENDMENT AND MODIFICATION OF THE PLAN
SEC. 8.1 TERMINATION, AMENDMENT AND MODIFICATION OF THE PLAN
The Board may at any time terminate, and may at any time and from time to
time and in any respect amend or modify, the Plan; provided, however, that no
such action of the Board without approval of the stockholders of the Company
may:
(a) increase the total number of shares of Stock subject to the Plan
except as contemplated in Section 5.3 hereof;
(b) change the manner of determining the Option price;
(c) withdraw the administration of the Plan from the Committee; or
(d) permit any person while a member of the Committee to be eligible
to receive an Option under the Plan; and
provided further, that no termination, amendment or modification of the Plan
shall in any manner affect any Stock Option Agreement theretofore granted
pursuant to the Plan without the consent of the Optionee or transferee of the
Option and provided further that any amendment which if not approved by
Stockholders of the Company would adversely affect the qualification of the Plan
for exemption from the provisions of Section 16(b) of Securities Exchange Act of
1934 under Rule 16(b)(3) under the Securities Exchange Action of 1934 will
require approval of the Stockholders of the Company.
ARTICLE IX
MISCELLANEOUS
SEC. 9.1 EMPLOYMENT
Nothing in the Plan or in any Option granted hereunder or in any Stock
Option Agreement relating thereto shall confer upon any employee the right to
continue in the employ of the Company or any Subsidiary.
SEC. 9.2 OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option or
incentive or other compensation plans in effect for the Company or any
Subsidiary, nor shall the Plan preclude the Company from establishing any other
forms of incentive or other compensation for employees of the Company or any
Subsidiary.
SEC. 9.3 PLAN BINDING ON SUCCESSORS
The Plan shall be binding upon the successors and assigns of the Company.
SEC. 9.4 SINGULAR, PLURAL; GENDER
Whenever used herein, nouns in the singular shall include the plural, and
the masculine pronoun shall include the feminine gender.
SEC. 9.5 HEADINGS, ETC., NO PART OF PLAN
Headings of Articles and Sections hereof are inserted for convenience and
reference; they constitute no part of the Plan.
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30
EXHIBIT B
(White cards) (Front Side of Proxy Card)
BLOUNT, INC.
4520 EXECUTIVE PARK DRIVE
MONTGOMERY, ALABAMA 36116-1602 BLOUNT (LOGO)
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JUNE 26, 1995 CLASS A COMMON STOCK
The undersigned, revoking previous proxies, if any, relating to these
shares, hereby acknowledges receipt of the Notice and Proxy Statement dated May
10, 1995 in connection with the Annual Meeting of Stockholders to be held at
10:00 A.M., C.D.T., on Monday, June 26, 1995, in the Wilson Auditorium of the
Montgomery Museum of Fine Arts, One Museum Drive, Montgomery, Alabama 36117,
and hereby appoints ELIZABETH B. PENDERGAST, D. JOSEPH McINNES and ROBERT K.
WHITING, or either one of them acting in the absence of the other, the proxies
of the undersigned, with power of substitution to each, to represent and vote,
as designated below, all shares of Class A Common Stock of Blount, Inc.
registered in the name provided herein as of April 28, 1995 which the
undersigned is entitled to vote at the 1995 Annual Meeting of Stockholders, and
at any adjournment thereof, with all the powers the undersigned would have if
personally present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NUMBERED 1, 2,
AND 3.
1. ELECTION OF DIRECTORS. [ ] FOR nominees listed below [ ] WITHHOLD AUTHORITY
(Except as marked to the contrary below) to vote for all nominees
listed below
Nominees: W. Houston Blount, Herbert J. Dickson, Alfred M. Gleason and Mary D. Nelson
Instruction: To withhold authority to vote for any individual, write that nominee's name here: ___________________________
2. APPROVE THE 1995 BLOUNT LONG [ ] FOR [ ] AGAINST [ ] ABSTAIN
TERM EXECUTIVE STOCK OPTION PLAN.
3. RATIFY THE APPOINTMENT OF [ ] FOR [ ] AGAINST [ ] ABSTAIN
COOPERS & LYBRAND as the
independent auditors for the
Corporation for the fiscal year
ending February 29, 1996.
4. In their discretion on such other [ ] FOR [ ] AGAINST [ ] ABSTAIN
business as may properly come
before the meeting.
This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED "FOR" PROPOSALS NUMBERED 1, 2, AND 3.
_________________________________ _________________________________ Dated:_____________________________1995
Signature of Stockholder Signature of Stockholder
Please mark, sign exactly as your name is printed hereon and return in the
enclosed envelope. If the stock is held jointly, each joint owner must sign.
When signing as Attorney, Executor, Administrator, Trustee, Guardian or in any
other representative capacity, please give full title.
31
EXHIBIT C
(Blue cards) (Front Side of Proxy Card)
BLOUNT, INC.
4520 EXECUTIVE PARK DRIVE
MONTGOMERY, ALABAMA 36116-1602 BLOUNT (LOGO)
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JUNE 26, 1995 CLASS B COMMON STOCK
The undersigned, revoking previous proxies, if any, relating to these
shares, hereby acknowledges receipt of the Notice and Proxy Statement dated May
10, 1995 in connection with the Annual Meeting of Stockholders to be held at
10:00 A.M., C.D.T., on Monday, June 26, 1995, in the Wilson Auditorium of the
Montgomery Museum of Fine Arts, One Museum Drive, Montgomery, Alabama 36117,
and hereby appoints ELIZABETH B. PENDERGAST, D. JOSEPH McINNES and ROBERT K.
WHITING, or either one of them acting in the absence of the other, the proxies
of the undersigned, with power of substitution to each, to represent and vote,
as designated below, all shares of Class B Common Stock of Blount, Inc.
registered in the name provided herein as of April 28, 1995 which the
undersigned is entitled to vote at the 1995 Annual Meeting of Stockholders, and
at any adjournment thereof, with all the powers the undersigned would have if
personally present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS NUMBERED 1, 2,
AND 3.
1. ELECTION OF DIRECTORS. [ ] FOR nominees listed below [ ] WITHHOLD AUTHORITY
(Except as marked to the contrary below) to vote for all nominees
listed below
Nominees: Winton M. Blount, R. Eugene Cartledge, Richard B. Cheney, C. Todd Conover, H. Corbin Day,
Emory M. Folmar, John M. Panettiere, Arthur P. Ronan and Joab L. Thomas.
Instruction: To withhold authority to vote for any individual, write that nominee's name here: ___________________________
2. APPROVE THE 1995 BLOUNT LONG [ ] FOR [ ] AGAINST [ ] ABSTAIN
TERM EXECUTIVE STOCK OPTION PLAN.
3. RATIFY THE APPOINTMENT OF [ ] FOR [ ] AGAINST [ ] ABSTAIN
COOPERS & LYBRAND as the
independent auditors for the
Corporation for the fiscal year
ending February 29, 1996.
4. In their discretion on such other [ ] FOR [ ] AGAINST [ ] ABSTAIN
business as may properly come
before the meeting.
This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED "FOR" PROPOSALS NUMBERED 1, 2, AND 3.
_________________________________ _________________________________ Dated:_____________________________1995
Signature of Stockholder Signature of Stockholder
Please mark, sign exactly as your name is printed hereon and return in the
enclosed envelope. If the stock is held jointly, each joint owner must sign.
When signing as Attorney, Executor, Administrator, Trustee, Guardian or in any
other representative capacity, please give full title.