SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
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(Name of Registrant as Specified In Its Charter)
JLG INDUSTRIES, INC.
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(Name of Registrant as Specified in its Charter)
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JLG INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, NOVEMBER 17, 1999
Dear Fellow Shareholder:
It is my pleasure to invite you to attend the 1999 Annual Meeting of
Shareholders of JLG Industries, Inc. The meeting will be held at the Company's
headquarters in McConnellsburg, Pennsylvania on Wednesday, November 17, 1999 at
4:30 p.m. for the following purposes:
1. To elect a board of seven directors of the Company to hold office until
the next Annual Meeting of Shareholders and until their successors shall
be elected and qualified.
2. To approve the Company's Annual Management Incentive Plan.
3. To approve the Company's Amended and Restated Stock Incentive Plan.
4. To ratify the selection of independent auditors for the 2000 fiscal
year.
5. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors has designated the close of business on October 1,
1999, as the record date for the determination of shareholders entitled to
notice of, and to vote at, this meeting or any adjournments thereof.
We hope that you will be able to attend the meeting in person. Whether or
not you plan to attend, please promptly sign, date and mail the enclosed proxy
card in the postage-paid return envelope provided. It is important that your
shares are represented and voted at the meeting.
On behalf of the Board of Directors, I wish to thank you for your cooperation
and continued support.
[LOGO]
Charles H. Diller, Jr.
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
AND SECRETARY
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation by and
on behalf of the Board of Directors of JLG Industries, Inc. (the "Company") of
proxies to be voted at the 1999 Annual Meeting of Shareholders of the Company to
be held at the Company's headquarters in McConnellsburg, Pennsylvania on
November 17, 1999.
A proxy may be revoked by the person giving the proxy at any time before it
is exercised by filing with the Secretary of the Company a written revocation or
a duly executed proxy bearing a later date. During the Annual Meeting, a proxy
may be revoked by filing a written revocation or a duly executed proxy bearing a
later date or by attending the Meeting and voting in person.
It is important that your shares are voted at the Annual Meeting. Whether or
not you plan to attend in person, we urge you to take a moment now to exercise
your right to vote by signing, dating and mailing the proxy card(s) found in the
address pocket of the mailing envelope. If you hold shares in more than one
account, you will receive more than one card. Please sign, date and mail each
card received to ensure that all of your shares will be represented and voted at
the Annual Meeting.
All expenses in connection with the solicitation of proxies will be borne by
the Company. In addition to soliciting proxies by mail, the officers, directors,
or other employees of the Company, as yet undesignated, and without compensation
other than their regular compensation, may solicit proxies in person or by other
appropriate means if authorized and if deemed advisable. The Company has also
engaged the proxy soliciting firm of D.F. King & Co., Inc. for a fee not to
exceed $5,000 plus out-of-pocket expenses.
As of October 1, 1999, the record date for the Annual Meeting as set by the
Board of Directors, there were 44,268,837 shares of Capital Stock issued and
outstanding. Each share of Capital Stock entitles the holder to one vote at the
Annual Meeting. There are no other voting securities of the Company.
2
PROPOSAL 1
ELECTION OF DIRECTORS
The persons named in the following table have been nominated by the Board of
Directors for election as directors at the Annual Meeting to hold office until
the next Annual Meeting of Shareholders and until their successors shall be
elected and qualified. Directors are elected by a majority of the votes cast.
NOMINEES FOR DIRECTORS
DIRECTOR BACKGROUND
NAME AGE SINCE INFORMATION
- ------------------------------------------------ --- ----------- ------------------------------------------------
L. David Black.................................. 62 1990 Chairman of the Board, President and Chief
Executive Officer; Director, Columbus McKinnon
Corporation.
Charles H. Diller, Jr........................... 54 1984 Executive Vice President and Chief Financial
Officer and Secretary.
George R. Kempton............................... 65 1993 Retired Chairman of the Board and Chief
Executive Officer, Kysor Industrial Corporation;
Director, Simpson Industries Inc.
James A. Mezera................................. 69 1984 President, Mezera and Associates, Inc., a
management consulting firm; prior to 1996, Vice
President, Komatsu Dresser Company.
Stephen Rabinowitz.............................. 56 1994 Chairman of the Board, President and Chief
Executive Officer, General Cable Corporation;
prior to 1994, President, AlliedSignal Braking
Systems, AlliedSignal, Inc.
Thomas C. Wajnert............................... 56 1994 Chairman of the Board, Epix Holdings, Inc, an
employee leasing company; prior to 1998,
Chairman of the Board, AT&T Capital Corporation;
prior to 1997, Chairman of the Board and Chief
Executive Officer, AT&T Capital Corporation;
Director, R. J. Reynolds Tobacco Holdings, Inc.
Charles O. Wood, III............................ 61 1988 President, Wood Holdings, Inc., a private
investment firm; Director, Boston Private
Financial Holdings, Inc.
Each nominee for director listed above has been employed in the capacity
noted for more than five years, except as indicated. There are no family
relationships among any of the above-named nominees for director.
3
BOARD OF DIRECTORS
The Company's Board of Directors held eleven meetings during the 1999 fiscal
year. During that time, each director attended at least seventy-five percent of
the aggregate of (i) the number of meetings of the Board and (ii) the number of
meetings held by all committees of the Board on which he served.
The Board of Directors has established three committees, Audit, Compensation
and Directors and Corporate Governance, to devote attention to specific subjects
and to assist the Board in the discharge of its responsibilities. The functions
of those committees, their current members and the number of meetings held
during the 1999 fiscal year are described below.
The Audit Committee, currently consisting of Messrs. Kempton, Mezera and
Wood (Chairman), who are all outside directors, met two times during the 1999
fiscal year. Its functions include recommending the selection of independent
auditors; conferring with the independent auditors and reviewing the scope and
fees of the annual audit and the results thereof; reviewing the Company's annual
report to shareholders and annual filings with the Securities and Exchange
Commission; reviewing the adequacy of the Company's internal audit function, as
well as the accounting and financial controls and procedures; and approving the
nature and scope of nonaudit services performed by the independent auditors.
The Compensation Committee, currently consisting of Messrs. Kempton,
Rabinowitz (Chairman) and Wajnert, who are all outside directors, principally
evaluates the performance of the Chief Executive Officer; reviews his evaluation
of the other officers' performance; recommends compensation arrangements for all
officers of the Company, including salaries, bonuses and other supplemental
compensation programs; administers the Company's Stock Incentive Plan; and
reviews all other officer-related benefit plans. The Compensation Committee held
three meetings during the 1999 fiscal year.
The Directors and Corporate Governance Committee, currently consisting of
Messrs. Mezera, Rabinowitz, Wajnert (Chairman) and Wood, who are all outside
directors, held six meetings during fiscal 1999. This committee is responsible
for identifying and recommending to the Board appropriate areas of expertise to
be represented on the Board; identifying qualified candidates to fill Board
positions; reviewing and recommending the slate of directors to be submitted for
election by the shareholders at each annual meeting; reviewing any such
shareholder nominations of directors to determine whether they comply with
substantive and procedural requirements; recommending to the Board staffing of
committees and reviewing the scope of each committee's responsibilities;
reviewing shareholder proposals for inclusion in the Company's proxy materials
and determining whether they comply with substantive and procedural
requirements; recommending to the Board appropriate levels of director
compensation and compensation programs; reviewing and advising the Board
regarding management succession plans; and evaluating the performance of current
directors.
Director nominations, other than those by or at the direction of the Board,
may be made pursuant to written notice received by the Secretary of the Company
at the principal executive offices of the Company no later than ninety days
prior to the anniversary date of the previous year's annual meeting. Such notice
must be accompanied by written statements signed by each person so nominated
setting forth all information in respect of such person that would be required
by Rule 14a-3 promulgated by the Securities and Exchange Commission if such
person had been nominated by the Board of Directors and stating that such person
consents to such nomination and consents to serve as director of the Company if
elected.
Directors, who are not employees of the Company, receive compensation for
their services as directors. Each such director currently receives a $25,000
annual retainer and each committee chairman a $5,000 annual retainer for service
as a committee chairman. In addition, each such director receives $1,500 and
$1,000, respectively, for each Board meeting or committee meeting attended.
Directors are also reimbursed for out-of-pocket expenses incurred in connection
with their attendance at meetings and for other services rendered as a director.
Directors, who are employees of the Company, do not receive additional
compensation for services as a director.
4
The JLG Industries, Inc. Directors Stock Option Plan provides for annual
grants to each non-employee director of an option to purchase 6,000 shares of
the Company's Capital Stock provided the Company earned a net profit, before
extraordinary items, for the preceding year.
The Company has a Directors' Deferred Compensation Plan which entitles each
eligible director to defer the receipt of fees payable for services as a
director. Any director, who is not an employee of the Company, is eligible to
participate in the plan. Messrs. Mezera and Wajnert elected to participate in
the plan during fiscal 1999. Payments deferred under the plan are credited with
an investment rate of return based upon investment indices available under the
plan as selected by the participant.
EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION POLICIES
The Company's executive compensation programs are designed to retain or
attract qualified executives to develop and manage implementation of the
Company's business plans and to provide appropriate incentives, based
principally on objective criteria, that link compensation to individual and
Company performance. The Compensation Committee, which is composed entirely of
non-employee directors, reviews executive compensation levels annually and
recommends for Board consideration an annual compensation package for each
executive officer comprised of base salary and target cash bonus pursuant to an
incentive bonus plan. The target cash bonuses are awarded on the basis of
individual performance objectives and the Company's achieving targeted levels of
earnings per share and other performance objectives. The Committee also
determines annually for each executive officer appropriate levels of stock
options or other stock-based awards under the Company's Stock Incentive Plan. In
granting stock options, the Committee considers the cash value of such awards
based on the Black-Scholes valuation method. The Committee believes the
stock-based awards provide incentives for executive management to promote
intermediate-term and long-term shareholder value.
Total compensation available in the combined package for each officer will
generally be set based on the Company's financial condition, performance
objectives correlated to the Company's annual business plan and comparisons to
the preceding year's package. The Committee also evaluates compensation levels
for comparable positions reflected in survey data provided by the Committee's
independent compensation consultant. The consultant seeks to compile survey data
drawn from a broad group of industrial companies of roughly comparable revenue
size, with roughly comparable officer positions and responsibilities. In
considering all of these factors, the Committee seeks to set base salaries
generally equivalent to median levels reflected in the survey data. In setting
performance-based compensation, the Committee seeks to provide Company
executives with the opportunity to earn total compensation generally at or
exceeding the 75th percentile levels reflected in the survey data. As a
secondary comparative measure for Chief Executive Officer compensation, the
Committee examines compensation practices of a selected group of capital
equipment manufacturers. However, the Committee believes that the market for
skilled senior management is not limited to capital equipment manufacturers and
that a broad industry comparison offers a better basis for evaluating
competitive compensation levels than comparison to executive compensation paid
by firms included in either the selected group of capital equipment
manufacturers examined by the Committee or the Peer Industry Group identified in
the Performance Graph included in this Proxy Statement.
COMPENSATION FOR FISCAL YEAR 1999
Compensation paid to the Company's executive officers for fiscal year 1999
consisted of a base salary and a year-end cash bonus. The Committee also awarded
stock options and restricted shares under the Company's Stock Incentive Plan.
With the Company's record performance in fiscal 1999, base salaries were
generally below the median of survey data provided by the Committee's
compensation consultant at the outset of fiscal 1999.
5
Considering the continuing growth in sales, including the effects of the
acquisition of Gradall Industries, Inc, fiscal 2000 salaries have been increased
to a level that the Committee believes restores competitiveness with median
survey data for companies with revenues comparable with that expected by the
Company in fiscal 2000.
At the outset of fiscal 1999 the Committee established under the management
incentive plan a cash bonus matrix based on various levels of fiscal 1999
earnings per share (EPS). The Company's record earnings of $1.40 per share in
fiscal 1999 exceeded the management incentive plan's EPS distinguished level.
This reflected a sixth consecutive year of record earnings. Accordingly, fiscal
1999 cash bonuses recommended by the Committee and approved by the Board
generally resulted in total cash compensation that approached the 75(th)
percentile of compensation survey data. Considering that the Company's
performance exceeded the management incentive plan's distinguished level, the
Committee also granted awards of 27,160 restricted shares allocated among 13
officers. The restricted shares will vest in equal installments over three years
subject to each grantee's continued employment with the Company.
For fiscal 1999, the Committee also awarded stock options that provide
long-term incentives and that offer opportunities for officers to earn total
direct compensation generally approximating the 75(th) percentile levels
reflected in survey data. Stock options were awarded on a basis similar to prior
years.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee recognizes Mr. Black's strategic leadership in completing the
acquisition of Gradall Industries and several important international service
and distributor organizations, growing and strengthening the Company's customer
relationships, deepening the Company's management and employee talent, and
guiding the Company to achieve a sixth consecutive year of record sales and
earnings.
As noted above, fiscal 1999 EPS exceeded the distinguished level under the
management incentive plan. Accordingly, the Committee recommended that the Board
award Mr. Black a $714,846 cash bonus for fiscal 1999, in accordance with the
EPS matrix set forth in the management incentive plan. The Committee also
awarded Mr. Black 5,719 restricted shares that vest in equal installments over
three years. Mr. Black's base salary for fiscal 1999 was $440,016, which barely
exceeded the first quartile of survey data. For fiscal 2000, Mr. Black's salary
has been increased to $500,000 which approaches the median of survey data. With
the bonus, Mr. Black's total cash compensation for fiscal 1999 approached the
75(th) percentile of survey data.
The Committee also awarded Mr. Black options to acquire 100,000 shares of
the Company's Capital Stock, with an exercise price equal to the average of the
high and low trading prices on the grant date. One third of the options become
exercisable over each of the next three years subject to Mr. Black's continued
employment with the Company. With the options, Mr. Black's total direct
compensation opportunity approximated the 75(th) percentile of the survey data
provided by the Committee's compensation consultant. In determining the number
of options, the Committee based its decision on Mr. Black's performance and
survey data.
DISCUSSION OF CORPORATE TAX DEDUCTION FOR COMPENSATION IN EXCESS OF $1 MILLION A
YEAR
Section 162(m) of the Internal Revenue Code of 1986 (the "Code"), precludes
a public corporation from taking a tax deduction in any year for compensation in
excess of $1 million paid to its chief executive officer or any of its four
other highest-paid executive officers. The $1 million annual deduction limit
does not apply, however, to "performance-based compensation" as that term is
defined in Code Section 162(m)(4)(C) and regulations promulgated thereunder.
Compensation deferred by an executive under a qualifying deferred compensation
program also is not subject to the $1 million annual deduction limit if the
compensation is paid after the individual ceases to be an executive officer.
6
The Committee believes that Company and executive performance are the most
determinative factors with respect to all components of executive compensation
other than base salaries. Both prior cash bonuses under the management incentive
plan and prior grants of restricted shares were determined by the Committee
based on performance criteria. However, none of these compensation components
has in the past met the technical performance-based criteria required by Code
Section 162(m) for exclusion from the deduction limit. The Committee believes
that, if approved by shareholders, future bonuses payable under the new Annual
Management Incentive Plan described in Proposal 2 of the Proxy Statement will
meet the technical performance-based criteria required by Code Section 162(m)
for exclusion from the deduction limit. Similarly, if Proposal 3 is approved by
shareholders, compensation expenses in respect of stock options granted under
the Company's Stock Incentive Plan will continue to be excluded from the
deduction limit.
For fiscal 1999 one Company executive, Mr. Black, received cash compensation
exceeding $1 million, but as a result of Mr. Black's election to defer a portion
of his income under the Company's Executive Deferred Compensation Plan, less
than $70,000 of the compensation paid by the Company to Mr. Black for fiscal
1999 exceeded the Section 162(m) deduction limit. The Committee does not
anticipate that following approval of the new Annual Management Incentive Plan,
salaries and other non performance-based cash compensation paid to any of the
five highest-paid executive officers in any year in the near future will
approach $1 million. However, there is the possibility that vesting of
restricted shares that do not meet the requirements of Section 162(m), depending
on the vesting date, could cause the threshold to be exceeded for fiscal years
subsequent to fiscal 1999. Accordingly, the Committee will continue to monitor
this matter and, if warranted and consistent with compensation objectives, will
consider additional modifications to the Company's executive compensation
programs to maximize the Company's compensation related tax deductions.
This report is submitted by the Compensation Committee of the Board of
Directors.
Stephen Rabinowitz
Thomas C. Wajnert
George R. Kempton
7
The following tables and narrative identify the Company's executive officers
and set forth compensation information for the Company's Chief Executive Officer
and its four most highly compensated executive officers (the "Named Executive
Officers") as of the end of the 1999 fiscal year.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
-----------------------
ANNUAL COMPENSATION OTHER RESTRICTED ALL
NAME, AGE AND --------------------------------- ANNUAL STOCK OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) AWARDS(3) OPTIONS COMPENSATION(4)
- ---------------------------------- --------- ---------- ---------- ---------------- ------------ --------- ----------------
L. David Black, 62................ 1999 $ 440,016 $ 714,846 $ 100,620 100,000 $ 100,059
Chairman of the Board, President 1998 350,016 389,146 1,658,160 55,500 53,336
and Chief Executive Officer 1997 350,016 52,416 282,865 62,400 76,335
Charles H. Diller, Jr., 54........ 1999 230,016 345,024 48,559 34,000 67,579
Executive Vice President and Chief 1998 196,008 205,850 599,306 21,200 36,205
Financial Officer 1997 196,008 26,092 24,700 51,699
Raymond F. Treml, 59.............. 1999 180,000 249,318 355,320 10,200 57,743
Senior Vice President-- Operations 1998 150,000 180,000 8,400 25,452
1997 150,000 17,471 38,481
Rao Bollimpalli, 61............... 1999 150,000 153,600 21,623 12,200 49,831
Senior Vice President-- 1998 138,000 140,000 355,320 9,400 25,966
Engineering 1997 138,000 16,073 7,800 33,850
Peter L. Bonafede, Jr. 49(5)...... 1999 76,286 82,545 11,612 20,400 2,582
Senior Vice President--
Manufacturing
- ------------------------
(1) Reflects bonuses earned during the fiscal year, but paid during the
following fiscal year.
(2) Excludes the value of perquisites and other personal benefits. The
incremental cost to the Company of providing such perquisites and other
personal benefits did not exceed the lesser of $50,000 or 10% of annual
salary and bonus for any of the named executive officers.
(3) The 1999 shares were awarded August 31, 1999 and vesting is in three equal
installments beginning one year following the date of grant. The 1998
restricted shares were awarded September 3, 1997 and may vest at any time
between two and five years following the date of grant if the Company
achieves a certain share price target, or at the end of five years if the
Named Executive Officer is then an employee of the Company. Dividends are
payable to the Named Executive Officers on the restricted shares. Total
restricted shares held and the aggregate market value at July 31, 1999 for
the Named Executive Officers were as follows: Mr. Black, 145,098 shares
valued at $2,892,891; Mr. Diller, 53,318 shares valued at $1,063,028; Mr.
Treml, 30,000 shares valued at $633,175; and Mr. Bollimpalli, 31,585 shares
valued at $629,726.
(4) Includes payments pursuant to the Company's Supplemental Medical Care
Reimbursement Plan for its Named Executive Officers to reimburse medical
expenses incurred by them or their dependents and not paid by other employee
benefit plans (Mr. Black $3,078; Mr. Diller $4,017; Mr. Treml $3,810; Mr.
Bollimpalli $1,878; and Mr. Bonafede $283); payments pursuant to the
Company's Annual Physical Examination Plan (Mr. Black $2,051; Mr. Diller
$2,037; Mr. Treml $3,192; and Mr. Bollimpalli $4,655); contributions to the
Company's discretionary, defined contribution retirement plan (Mr. Black
$16,421; Mr. Diller $20,849; Mr. Treml $20,877; Mr. Bollimpalli $21,195; and
Mr. Bonafede $2,299); and contributions pursuant to the Company's Executive
Deferred Compensation Plan (Mr. Black $78,509; Mr. Diller $40,676; Mr. Treml
$29,864; and Mr. Bollimpalli $22,103).
(5) Mr. Bonafede commenced employment with the Company on February 22, 1999.
8
STOCK OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
----------------------------------------- VALUE AT ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK
OPTIONS PRICE APPRECIATION
GRANTED TO FOR OPTION TERM(3)
OPTIONS/ EMPLOYEES EXERCISE OR -------------------------------------------
SAR'S IN FISCAL BASE PRICE EXPIRATION
NAME GRANTED(1) YEAR PER SHARE DATE(2) 5% 10%
- ----------------------------------- ----------- --------------- ----------- --------------- ------------ ------------
L. David Black..................... 100,000 21% $ 21.09 July 21, 2009 $ 1,138,609 $ 3,062,274
Charles H. Diller, Jr.............. 34,000 7 21.09 July 21, 2009 387,127 1,041,173
Rao Bollimpalli.................... 12,200 3 21.09 July 21, 2009 138,910 373,597
Peter L. Bonafede, Jr.............. 20,400 4 21.09 July 21, 2009 232,276 624,704
- ------------------------
(1) Consists solely of options to purchase shares of Capital Stock.
(2) Options become exercisable in equal amounts over a three year period
beginning July 22, 2000. To the extent not already exercisable, the options
generally become exercisable upon a change in control. A change in control
means either (i) any person or group becomes the beneficial owner of 25% or
more of the voting power of the Company's Capital Stock; or (ii) the
election within a twelve-month period of three or more directors whose
election is not approved by the majority of the Board of Directors; or (iii)
the incumbent directors cease to be a majority of the Board of Directors.
(3) The potential realizable value illustrates value that might be realized upon
exercise of the options immediately prior to the expiration of their term,
assuming the specified compounded rates of appreciation in the market price
of the Capital Stock over the terms of the options. The potential realizable
value to all shareholders using the specified 5% and 10% rates of
appreciation and the outstanding shares at July 31, 1999 would be
$504,125,931 and $1,355,840,507, respectively. The Company's use of these
hypothetical appreciation rates specified by the Securities and Exchange
Commission should not be construed as an endorsement of the accuracy of this
method of valuing options. The value realized by the holders of the options
will depend upon the actual performance of the Capital Stock over the term
of the options.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUES
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FISCAL YEAR END(1) AT FISCAL YEAR END(2)
SHARES ACQUIRED VALUE -------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- --------------- ------------- ----------- ------------- ------------ -------------
L. David Black.............. 522,514 178,600 $ 7,944,461 $ 420,014
Charles H. Diller, Jr....... 181,404 64,601 2,698,569 165,108
Raymond F. Treml............ 20,000 349,240 46,805 12,400 596,867 60,629
Rao Bollimpalli............. 56,200 23,667 828,107 56,192
- ------------------------
(1) The Company does not have any outstanding stock appreciation rights.
(2) Value is calculated based on the difference between the option exercise
price and the closing market price of the Company's Capital Stock on July
31, 1999, multiplied by the number of shares underlying the option. The
calculation omits options where the closing market price exceeds the
exercise price.
9
COMPENSATION PURSUANT TO PLANS
The Company maintains a non-qualified defined benefit plan that provides for
payments, following retirement or in other specified circumstances, equal to the
average of the officer's base salary plus cash bonus for the two calendar years
in which the sum is the highest, multiplied by 65% for Mr. Black, 60% for Mr.
Diller and 55% for Messrs. Treml, Bollimpalli and Bonafede offset, however, by
the actuarial equivalent of benefits provided to the officer in conjunction with
the Company's contribution to other employer sponsored retirement plans, the
actuarial equivalent of retirement benefits provided by previous employers of
the officer; and 50% of the officer's social security benefit. The retirement
benefit is payable in the form of a ten year certain life annuity, with options
for a joint and survivor annuity and an actuarial equivalent lump sum payout.
The officer may elect to receive a reduced retirement benefit in the case of
early retirement. The plan provides for 25% vesting per year after two years of
service, with full vesting after five years of service. Based on their annual
compensation through the end of the Company's 1999 fiscal year, with the
benefits identified in the plan and assuming normal retirement age has been
attained, the named executive officers would be entitled to projected annual
payments under the plan as follows: Mr. Black, $301,000; Mr. Diller, $64,000;
Mr. Treml, $96,000; and Mr. Bollimpalli $75,000. The Company also provides a
separate retiree medical plan for the officers, together with their spouse and
eligible dependents.
The Company has an Executive Deferred Compensation Plan which allows
officers to defer all or a portion of their base salary and/or cash bonus.
Provided that the officer elects to defer some portion of his base salary and/or
cash bonus, the Company will contribute to the officer's account an amount equal
to the amount that would have been contributed by the Company to the account in
the Company's Savings Plan in the form of matching and profit sharing
contributions, but for the various limitations in the Code. Payments deferred
and contributions received under the plan are credited with an investment rate
of return based upon investment indices available under the plan as selected by
the participant.
The Company also maintains an executive severance plan which will provide a
severance benefit of three times the aggregate of base salary and cash bonus for
Mr. Black and two times the aggregate of base salary and cash bonus for Messrs.
Diller, Treml and Bollimpalli, with base salary and cash bonus being the amounts
paid the officer for the final twelve calendar months of employment. The
severance benefit is payable in the form of a lump sum upon involuntary
termination of employment by the Company, unless the termination is for one of
the specified reasons which includes disloyalty or conviction of a felony. The
severance benefit is also payable in certain other circumstances in connection
with a change of control and will be adjusted to gross-up for any excise tax
applicable to compensation in excess of limits presented in Section 280G of the
Code. No severance benefit is payable if the officer is entitled to a retirement
benefit under the supplemental executive retirement plan, except in connection
with a change of control. The severance benefit includes continuation of Company
provided life and medical insurance in the event of a change in control.
10
PERFORMANCE GRAPH
The following graph compares the cumulative return on the Company's Capital
Stock over the past five years with the cumulative total return on shares of
companies comprising Standard & Poor's 500 Stock and Diversified Machinery Group
indices. Cumulative total return is measured assuming an initial investment of
$100 on July 31, 1994 and the reinvestment of all dividends paid.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
YEAR END JULY 31, 1994 1995 1996 1997 1998 1999
JLG Industries, Inc. $100 $205 $630 $377 $530 $682
S&P 500 $100 $126 $147 $224 $267 $321
S&P Diversified Machinery Group Index $100 $126 $128 $209 $173 $202
11
VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth, as of September 1, 1999, the beneficial
ownership of the Company's Capital Stock by (i) each director or nominee for
director of the Company, (ii) each executive officer of the Company named in the
Summary Compensation Table set forth under the caption "Executive Compensation",
and (iii) all directors and executive officers of the Company as a group. All
ownership information is based upon filings made by such persons with the
Securities and Exchange Commission ("Commission") or upon information provided
to the Company.
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP
-------------------------------------
ACQUIRABLE
NAME OF PERSON CURRENTLY WITHIN 60 PERCENT OF
OR GROUP(1) OWNED(2) DAYS CLASS(3)
- -------------------------------------------------- --------- ---------- ----------
L. David Black.................................... 279,456(4) 543,314 1.8%
Charles H. Diller, Jr............................. 224,207 189,637
Charles O. Wood, III.............................. 199,900(5) 78,000
Raymond F. Treml.................................. 143,562 59,205
Rao G. Bollimpalli................................ 62,571 58,800
George R. Kempton................................. 42,000 30,000
James A. Mezera................................... 35,500 30,000
Stephen Rabinowitz................................ 12,000 59,064
Thomas C. Wajnert................................. 6,000 30,000
Peter L. Bonafede, Jr............................. 1,160
All directors and executive officers as a group 1,030,750 1,105,462 4.7%
(13 persons)....................................
- ------------------------
(1) The address of each of the named persons is in care of JLG Industries, Inc.,
1 JLG Drive, McConnellsburg, PA 17233.
(2) Each person listed has advised the Company that, except as otherwise
indicated, such person has sole voting and sole investment power with
respect to the shares indicated, except for certain shares as follows where
each person has voting but not investment power: Mr. Black, 156,959; Mr.
Diller, 75,036; Mr. Treml, 29,070; Mr. Bollimpalli, 46,809; Mr. Bonafede,
660 and all directors and executive officers as a group, 308,533.
(3) Percentages are not shown where less than 1.0%.
(4) Includes 3,600 shares owned by spouse.
(5) Includes 41,900 shares owned by a family trust.
The following table sets forth the name and address of each shareholder
known to the Company to be beneficial owner of more than five percent of the
outstanding shares of the Company's Capital Stock.
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP(1) CLASS
- ------------------------------------------------------------------------------ ---------------------- -------------
Lazard Freres & Co. LLC....................................................... 2,755,160 6.2%
30 Rockefeller Plaza
New York, New York 10020
T. Rowe Price................................................................. 2,741,500 6.2%
100 East Pratt Street
Baltimore, MD 21202
- ------------------------
(1) As of September 21, 1999, based on information supplied to the Company by
Lazard Freres & Co. LLC and T. Rowe Price.
12
PROPOSAL 2
APPROVAL OF ANNUAL MANAGEMENT INCENTIVE PLAN
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), annual compensation in excess of $1 million paid to the Company's chief
executive officer and the four other highest paid executive officers
(collectively, the "Covered Executives") is not deductible by the Company for
federal income tax purposes. However, "performance-based compensation" is exempt
from the $1 million deduction limit. For compensation to qualify as
"performance-based compensation" under Code Section 162(m) certain conditions
must be met, including shareholder approval of the material terms of the
arrangement under which the compensation is paid.
It has long been the Company's practice to pay cash bonuses to selected
officers and other key employees under a Management Incentive Plan. Until fiscal
1999 this practice had not resulted in any Covered Executive receiving
compensation in excess of the $1 million threshold. Accordingly, the Company has
not in the past submitted its Management Incentive Plan for shareholder
approval. However, with fiscal 1999 compensation of Mr. Black for the first time
exceeding the deductibility limits and with the Company's continued growth, the
Board of Directors believes it is appropriate to take the necessary steps to
avoid unnecessary tax disadvantage to the Company in the event that the Board
determines in the future that one or more executives should receive cash
compensation exceeding $1 million during any year.
Therefore, on September 1, 1999, the Board of Directors adopted a written
Annual Management Incentive Plan (the "MIP"), subject to shareholder approval.
Under the MIP, executive officers and other key employees are eligible to
receive annual bonuses, payable in cash based on the level of attainment of
Company and individual performance goals over one-year performance periods. The
Company intends that payments to Covered Executives under the MIP will qualify
as performance-based compensation so that the tax deductibility of the payments
will not be limited by Code Section 162(m).
SUMMARY OF THE MATERIAL PROVISIONS OF THE MIP
Below is a summary of the significant terms of the MIP which has been
approved by the Board of Directors and is being submitted for shareholder
approval. The summary does not purport to be complete and is qualified in its
entirety by reference to the full text of the MIP, a copy of which is included
as Exhibit A to this Proxy Statement.
PURPOSE....................... To facilitate the achievement of the short-term financial
and operating goals of the Company by providing incentives
for selected employees.
ADMINISTRATION OF THE MIP..... A committee of directors (the "Committee") designated by the
Company's Board of Directors and comprised solely of
"outside directors" within the meaning of Code Section
162(m) will administer the MIP. Generally it is expected
that the Committee will be the Compensation Committee of the
Board of Directors. The Committee's responsibilities
pursuant to the MIP will include (i) selecting the
participants; (ii) determining the date awards are to be
made; (iii) determining whether performance goals and other
payment criteria have been satisfied; (iv) determining when
awards should be paid; and (v) determining whether the
amount of awards should be reduced. The Committee also will
have the powers necessary to administer the MIP, including
the power to make rules and regulations, the power to
interpret the MIP, and the power to delegate certain of its
powers and responsibilities.
13
ELIGIBLE PERSONS.............. Executive officers and other key employees of the Company or
any of its affiliates.
AWARDS........................ An award is an amount payable in cash to a participant if
one or more performance objectives are met during the fiscal
year, and if any other specified terms or conditions are
satisfied. The Committee determines the amount of each
award, the specific performance objectives that must be met
for the award to be payable, and any other terms and
conditions for the award.
MAXIMUM AWARD................. $3,500,000 per year to any employee.
REDUCTION AND INCREASE OF
AWARDS...................... The Committee may reduce the amount payable to any
participant and increase the amount payable to any
participant who is not a Covered Executive. In the case of
any Covered Executive, the Committee may not increase the
amount an individual is eligible to receive as calculated on
the basis of the level of performance under the
pre-established performance objectives.
ESTABLISHMENT OF PERFORMANCE
OBJECTIVES.................. The Committee will establish performance objectives for
awards to "Covered Executives" from the list set out below.
Except in the case of mid-year hires, the Committee must
designate performance objectives for awards to Covered
Executives in writing during the first 90 days of the fiscal
year, while the attainment of each designated objective is
still uncertain. Performance objectives for other
participants may consist of any measure selected by the
Committee in its discretion at any time.
TYPES OF PERFORMANCE
OBJECTIVES.................. Performance objectives established by the Committee may be
based on one or more of the following criteria: net sales;
pre-tax income before allocation of corporate overhead
and/or bonus; comparison of performance to budget; earnings
per share; net income; subsidiary, division, group or
corporate financial goals; return on stockholder's equity;
return on assets; attainment of strategic and operational
initiatives; appreciation in or maintenance of the price of
the common stock or any other publicly traded securities of
the Company; market share; gross profits; net profits;
earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; economic
value added models; comparisons with various stock market
indices; and reductions in costs.
TERMINATION OF EMPLOYMENT..... A participant forfeits his award if he terminates his
employment during the fiscal year for reasons other than
death, disability or retirement. If a participant terminates
employment during a fiscal year because of death,
disability, or normal or early retirement, the Committee
shall decide the amount which will be paid under the award,
and when such payment will be made.
AMENDMENT OR TERMINATION OF
THE MIP..................... The Committee may amend, modify or terminate the MIP in any
manner at any time without the consent of any participant.
14
TERM.......................... The MIP will remain in effect through July 31, 2004.
SHAREHOLDER REAPPROVAL OF THE
MIP......................... Since the MIP permits the Committee to change the targets
under the performance goals from year to year, pursuant to
regulations promulgated under Code Section 162(m), the
material terms of the performance objectives must be
reapproved by the shareholders five years after initial
shareholder approval to maintain the exemption from
deductibility limits.
The following table sets forth awards granted under the Company's prior
Management Incentive Plan for fiscal 1999, to each of the persons and groups of
persons listed in the table:
NAME AND POSITION AMOUNT
- ----------------------------------------------------------------------------------------------------- ----------
L. David Black, Chairman of the Board, President and Chief Executive Officer......................... $ 714,846
Charles H. Diller, Jr., Executive Vice President and
Chief Financial Officer............................................................................ 345,024
Raymond F. Treml, Senior Vice President--Operations.................................................. 249,318
Rao G. Bollimpalli, Senior Vice President--Engineering............................................... 153,600
Peter L. Bonafede, Jr., Senior Vice President--Manufacturing......................................... 82,545
All executive officers............................................................................... 1,978,583
All directors who are not executive officers......................................................... 0
All employees including officers who are not executive officers...................................... 4,434,443
APPROVAL OF THE MIP
The affirmative vote of a majority of the votes cast in person or by proxy
by shareholders represented and entitled to vote at the meeting is required for
approval of the MIP. The MIP will be terminated and no compensation will be paid
under the plan if it is not approved by the shareholders. In that event,
however, payments made to certain of the Company's executive officers may not be
deductible for federal income tax purposes under Section 162(m) of the Code.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS BELIEVES THAT THE MIP IS IN THE BEST INTERESTS OF THE
COMPANY AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR THE ADOPTION OF THE JLG INDUSTRIES, INC. ANNUAL MANAGEMENT INCENTIVE
PLAN.
15
PROPOSAL 3
APPROVAL OF AMENDED AND RESTATED STOCK INCENTIVE PLAN
In 1991, the Board of Directors adopted, and the shareholders approved, the
JLG Industries, Inc. Stock Incentive Plan (the "Incentive Plan"). Subsequent
amendments to the Incentive Plan were approved by the shareholders in 1994.
Since 1994 the Board of Directors has adopted several amendments to the
Incentive Plan that did not require shareholder approval. Upon approval of the
1994 amendments, the Incentive Plan authorized the Compensation Committee of the
Board of Directors (the "Committee") to issue up to 6,028,596 shares of Common
Stock (as adjusted for stock splits since the approval date) pursuant to stock
options or restricted share awards granted under the Incentive Plan. To date
246,782 of the eligible 6,028,596 shares have been issued and are outstanding,
1,252,056 remain issuable pursuant to outstanding stock options, 321,460 have
been issued as restricted shares that remain unvested, and 4,028,298 remain
available for issuance. The Incentive Plan is scheduled terminate on May 23,
2001.
At the Annual Meeting, the Board of Directors is submitting an Amended and
Restated Stock Incentive Plan (the "1999 Plan") to the shareholders for
approval. The 1999 Plan amends the current Incentive Plan to: (1) increase from
100,000 to 300,000 the maximum number of shares that any participant may be
awarded during any year, (2) conform the available performance criteria for
vesting of Performance Based Restricted Shares to the criteria set forth in the
proposed Annual Management Incentive Plan, and (3) extend the termination date
of the plan to December 31, 2004. The Board of Directors believes that these
amendments will support the Company's ability to continue to provide key
employees with the opportunity to participate in the long-term growth of the
Company and to maintain the Company's ability to attract and retain highly
qualified and motivated employees through the future grant of stock options and
restricted share awards. Because future awards under the 1999 Plan are at the
discretion of the Committee, the amount and terms of any future award to a
specific participant is not determinable.
Because 4,208,298 shares remain available for issuance under the Incentive
Plan, the Company is not proposing to increase the number of available shares in
the 1999 Plan. As a matter of administrative convenience, certain references to
numbers of shares in Section 3 of the Incentive Plan are being restated in the
1999 Plan to reflect the effect of stock splits that have occurred since the
Incentive Plan was last approved by shareholders in 1994.
The Company intends that compensation associated with awards under the 1999
Plan will qualify as performance based compensation so that the tax
deductibility of the compensation will not be limited under Section 162(m) of
the Code.
SUMMARY OF 1999 PLAN
Below is a summary of significant terms of the 1999 Plan which has been
approved by the Board of Directors and is being submitted for shareholder
approval. The summary does not purport to be complete and is qualified in its
entirety by reference to (i) the text of the 1999 Plan and (ii) the terms of the
option agreements, reflecting certain terms of the options, entered into between
each grantee and the Company.
PURPOSE........................... To enable the key personnel of the Company and its
subsidiaries to acquire or increase a proprietary
interest in the Company. The Incentive Plan is intended
to enable the Company to attract and retain outstanding
personnel and to promote a closer identity of interests
between the Company's management and its shareholders.
TOTAL NUMBER OF SHARES COVERED.... 4,208,298 shares of Common Stock (reflects shares that
remain available under the Incentive Plan as approved by
shareholders in 1994). In addition, up to 1,573,516
shares in respect of
16
unexercised Options and unvested Restricted Shares
outstanding as of September 1, 1999 may be restored for
issuance under the 1999 Plan to the extent that any such
Options lapse or are terminated prior to exercise or
such Restricted Shares are forfeited.
LIMITS ON AWARDS.................. No participant may receive awards in any fiscal year
covering in excess of 300,000 shares of Common Stock.
ADMINISTRATION OF THE
INCENTIVE PLAN.................. The Compensation Committee (the "Committee") administers
the Incentive Plan, determining which key employees are
eligible to participate, the number and types of awards
to be granted and the terms and conditions of such
awards. In addition, each fiscal year, the chief
executive officer is authorized to grant an amount of
awards fixed by the Committee. All questions of
interpretation and administration of the 1999 Plan are
made by the Committee.
ELIGIBLE PERSONS.................. Key employees (including officers and directors) of the
Company and its subsidiaries.
TYPES OF GRANTS................... The Committee may authorize grants of the following
awards: (i) INCENTIVE STOCK OPTIONS--stock options that
are qualified as "incentive stock options" under Section
422 (b) of the Code; (ii) NON-QUALIFIED STOCK
OPTIONS--stock options that are not qualified as
"incentive stock options" under Section 422(b) of the
Code; (iii) RESTRICTED SHARES--shares of the Company's
Common Stock that are subject to various types of
restrictions on the receipt thereof; and (iv) LIMITED
STOCK APPRECIATION RIGHTS ("LSARs").
INCENTIVE STOCK OPTIONS........... OPTION TERM. Established by the Committee, but may not
exceed 10 years, or 5 years in the case the grantee, at
the time the option is granted, owns more than 10% of
the combined voting power of all classes of stock of the
Company or its subsidiaries.
EXERCISE PRICE. Fair market value of a share of Common
Stock on the date the option is granted, except in the
case the grantee, at the time the option is granted,
owns more than 10% of the combined voting power of all
classes of stock of the Company or its subsidiaries, in
which event the exercise price shall be not less than
110% of the fair market value of a share of Common
Stock.
NON-QUALIFIED
STOCK OPTIONS................... OPTION TERM. Established by the Committee, but may not
exceed 10 years.
EXERCISE PRICE. Determined by the Committee at the time
of the grant, but may not be less than the par value of
a share of Common Stock.
RESTRICTED SHARES. The Committee may determine whether
shares purchased pursuant to the exercise of a
Non-qualified Stock Option will be Restricted Shares.
17
LSARS............................. GRANT. The Committee may authorize the grant of LSARs in
connection with all or part of any option.
TERM. LSARs may be exercised only to the extent the
related option is exercisable and only within the 60 day
period beginning on the date on which the Company
obtains knowledge that a Change in Control (as defined
in the 1999 Plan) has occurred.
EXERCISE. Upon exercise of a LSAR, the holder is paid
cash in an amount which equals the difference of the
option price of the related option and the fair market
value of a share of Common Stock (or, in the case of
LSARs granted in connection with a Non-qualified Stock
Option, the highest price paid by a person effecting a
Change in Control).
RESTRICTED SHARES................. VESTING. Determined by the Committee.
RIGHTS. Holder of Restricted Shares has beneficial
ownership of Restricted Shares, including the right to
receive dividends and the right to vote.
TRANSFER. Restricted Shares may not be sold, assigned,
transferred, pledged hypothecated or otherwise disposed
of, and must be returned to the Company upon termination
of participant's employment with the Company (unless
termination is due to disability or death of employee).
CHANGE IN CONTROL. All restrictions shall lapse upon the
Company receiving knowledge of a Change in Control.
PERFORMANCE TARGETS. Restrictions imposed on performance
based Restricted Shares shall be removed based solely on
the attainment of objective performance targets
established by the Committee based on one or more of the
following criteria: (i) increase in net sales; (ii)
pretax income before allocation of corporate overhead
and/or bonus; (iii) budget; (iv) earnings per share; (v)
net income; (vi) attainment of division, group or
corporate financial goals; (vii) return on stockholders'
equity; (viii) return on assets; (ix) attainment of
strategic and operational initiatives; (x) appreciation
in or maintenance of the price of the common stock or
any other publicly-traded securities of the Company;
(xi) increase in market share; (xii) gross profits;
(xiii) earnings before interest and taxes; (xiv)
earnings before interest, taxes, depreciation and
amortization; (xv) economic value-added models; (xvi)
comparisons with various stock market indices; or (xvii)
reductions in costs. Using one or more of these business
criteria, the Committee, at the time that an award is
made, establishes specific performance targets for the
vesting of each qualified performance-based restricted
share award.
LIMITATIONS ON EXERCISE........... Options and rights granted may not be exercised for a
minimum of six months after their grant. The Committee
may also establish quotas limiting the amount of options
exercisable in full at any time during their term.
18
EXERCISE OF OPTIONS............... Options may be exercised by delivering or mailing to the
Committee a notice, in the form and manner prescribed by
the Committee, specifying the number of shares with
respect to which the option is being exercised and
payment in full of the exercise price. The exercise
price is payable (i) by money order, cashier's check or
certified check or other cash equivalent approved by the
Committee; (ii) unless limited or prohibited by the
Committee, by the tender of, or attestation to the
ownership of, shares of Common Stock held for at least
six months having a fair market value equal to the
exercise price; (iii) by a combination of (i) and (ii);
or (iv) unless expressly prohibited by the Committee and
except to the extent that the option is an option to
purchase Restricted Shares, by irrevocable instructions
to the Company to deliver the shares issuable upon
exercise of the option promptly to a broker and delivery
of an irrevocable instruction letter to the broker to
sell a sufficient number of the shares of Common Stock
issuable upon exercise to pay the exercise price to the
Company.
TRANSFERABILITY................... Options and rights are not transferable except by will
or by the laws of intestate succession. Subject to
Committee approval, Non-qualified Stock Options and
LSARs granted in connection with Non-qualified Stock
Options may be transferable to members of the immediate
family of a grantee or trust for the benefit of such
immediate family members or to partnerships or
corporations whose partners or shareholders consist
solely of such immediate family members.
EXERCISE OF OPTIONS FOLLOWING
DISABILITY, RETIREMENT, DEATH,
CHANGE IN CONTROL OR OTHER
TERMINATION OF EMPLOYMENT....... Options are exercisable following the termination of
employment of the grantee only in the following
circumstances: (i) DISABILITY. If the grantee's
employment by the Company and its subsidiaries ceases
due to the grantee's disability (as defined by the 1999
Plan), after six months of continuous employment since
the date of the grant, the grantee may exercise an
option (to the extent that it is exercisable on the date
of cessation of employment) for a period of two years
after the grantee's employment terminates. (ii)
RETIREMENT. If the grantee's employment by the Company
and its subsidiaries ceases due to the grantee's
retirement, after six months of continuous employment
since the date of the grant, the Grantee may exercise an
option (to the extent that it is exercisable on the date
of cessation of employment) for a period of five years
after the grantee's employment terminates. (iii) DEATH.
If the grantee dies while an employee of the Company or
any of its subsidiaries, an option may be exercised by
the beneficiary of the grantee (to the extent that it is
exercisable on the date of the grantee's death) for a
period of twelve months following the death of the
Grantee. (iv) CHANGE IN CONTROL. If the grantee's
employment by the Company and its subsidiaries ceases
within three months
19
after the date that the Company obtains actual knowledge
that a Change in Control has occurred (other than due to
disability, retirement or death), an option may be
exercised for a period of three months after the
grantee's employment terminates. (v) OTHER TERMINATIONS.
If the employment of a grantee by the Company and its
subsidiaries terminates for any reason other than
disability, retirement or death, or following a Change
in Control, an option may be exercised (to the extent
that it is exercisable on the date of termination of
employment) for a period, if any, determined by the
Committee and specified in the option agreement,
provided that such period may not be longer than three
months.
WITHHOLDING TAXES................. Upon the exercise of any option, the Company may require
the grantee to remit to the Company, or may deduct from
the payment made to any grantee, such amounts sufficient
to satisfy any Federal, State or local withholding tax
requirements.
RIGHTS OF STOCKHOLDERS............ Options do not confer upon the holder any rights of a
stockholder with respect to the shares of Common Stock
issuable upon the exercise of an option until the option
has been duly exercised and shares of Common Stock
issued.
TERMINATION, SUSPENSION OR
MODIFICATION.................... The Board may at any time terminate, suspend or modify
the 1999 Plan, except that the Board shall not, without
approval by the affirmative votes of the holders of a
majority of the securities of the Company, change (other
than through adjustment for changes in capitalization as
described above) (i) the aggregate number of shares of
Common Stock for which awards may be granted under the
1999 Plan; (ii) the class of persons eligible for awards
under the 1999 Plan; (iii) the minimum exercise price;
or (iv) the maximum duration of the Incentive Plan.
CHANGE IN CONTROL................. Immediately following the date that the Company obtains
actual knowledge that a Change in Control has occurred,
all outstanding options will be exercisable in full once
they have been held for six months from the date of
grant, notwithstanding any quota or other limitation on
their exercise and the restrictions imposed on
Restricted Shares that have been issued will lapse.
EFFECT OF MERGER OR OTHER
REORGANIZATION.................. If the Company is the surviving corporation in a merger
or other reorganization, any option shall extend to
stock and securities of the Company after the merger or
other reorganization to the same extent that a person
who held, immediately before the merger or
reorganization, the number of shares of Common Stock
issuable upon exercise of the option would be entitled
to have or obtain stock or securities of the Company
under the terms of the merger or reorganization
20
The following table sets forth awards granted under the Incentive Plan for
fiscal 1999, to each of the persons and groups of persons listed in the table:
NAME AND POSITION SHARES
- ------------------------------------------------------------------------------------------------------- ---------
L. David Black, Chairman of the Board, President and Chief Executive Officer........................... 100,000
Charles H. Diller, Jr., Executive Vice President and Chief Financial Officer........................... 34,000
Raymond F. Treml, Senior Vice President--Operations.................................................... 0
Rao G. Bollimpalli, Senior Vice President--Engineering................................................. 12,200
Peter L. Bonafede, Jr., Senior Vice president--Manufacturing........................................... 20,400
All executive officers................................................................................. 212,100
All directors who are not executive officers........................................................... 0
All employees including officers who are not executive officers........................................ 288,510
APPROVAL OF THE 1999 PLAN
The affirmative vote of a majority of the votes cast in person or by proxy
by shareholders represented and entitled to vote at the meeting is required for
approval of the 1999 Plan. If the 1999 Plan is not approved; the Incentive Plan
will remain in effect. However, compensation realized by certain executive
officers in respect of awards granted under the Incentive Plan may not be
deductible for federal income tax purposes under Section 162(m) of the Code.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS BELIEVES THAT THE 1999 PLAN IS IN THE BEST INTERESTS
OF THE COMPANY AND ITS SHAREHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE APPROVAL OF THE JLG INDUSTRIES, INC. AMENDED AND
RESTATED STOCK INCENTIVE PLAN.
PROPOSAL 4
SELECTION OF INDEPENDENT AUDITORS
The accounting firm of Ernst & Young LLP served as the Company's independent
auditors throughout fiscal year 1999 and the Board of Directors, on the
recommendation of the Audit Committee, has selected the firm as the Company's
independent auditors for fiscal 2000. The Board of Directors recommends
ratification of the selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year 2000. Representatives of the firm of Ernst & Young
LLP are expected to be present at the Annual Meeting, with the opportunity to
make a statement if they desire to do so, and to respond to appropriate
questions. If the selection is not ratified, the Board of Directors will
reconsider its action.
VOTING INSTRUCTIONS
The matters set forth in the Notice of Annual Meeting will be voted upon in
the order in which they are listed in the Notice. The proxy form accompanying
this Proxy Statement provides boxes by means of which shareholders executing the
proxy forms may vote for or withhold a vote on the election of all or any of
Board of Director's nominees for election as directors. Each of the nominees has
consented to serve as a director and the Board of Directors has no reason to
believe that any of the nominees will not be available to serve if elected.
Should any of the nominees cease to be available for election before the Annual
Meeting, the proxy will, unless authority to vote has been withheld by the
person giving the proxy, be voted for a substitute nominee designated by the
Board of Directors. A majority of the shares entitled to vote
21
and either present in person or represented by proxy will constitute a quorum
for the transaction of business at the Annual Meeting. Directors are elected by
a plurality and the seven nominees who receive the most votes will be elected.
Each other matter submitted for shareholder approval shall be approved upon the
affirmative vote of a majority of the votes cast by shareholders entitled to
vote and either present in person or represented by proxy at the Annual Meeting.
Abstentions and broker non-votes on any matter submitted to the shareholders for
approval will be counted in determining whether a quorum has been reached, but
will be excluded entirely from the vote and will not effect the vote. Broker
non-votes as to any matter are shares held by nominees which are present and
voted at the meeting on matters as to which the nominee has discretionary
authority but which are not voted on the matter in question because the nominee
does not have discretionary voting authority as to such matter.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2000 Annual Meeting
must be received in writing by the Company before June 16, 2000 in order to be
considered for inclusion in the Company's proxy materials relating to that
meeting.
OTHER BUSINESS
The Board of Directors of the Company knows of no other matter that is to be
presented for action at the Annual Meeting other than those listed as items 1
through 4 in the Notice of Annual Meeting. As to any other business that may
properly come before the meeting, proxies will be voted in accordance with the
best judgment of the persons voting such proxies.
By order of the Board of Directors,
/s/ CHARLES H. DILLER, JR.
- ---------------------------------
Charles H. Diller, Jr.
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER AND SECRETARY
October 3, 1999
22
APPENDIX A
JLG INDUSTRIES, INC.
ANNUAL MANAGEMENT INCENTIVE PLAN
SECTION 1. PURPOSE
The purpose of the JLG Industries, Inc. Annual Management Incentive Plan
(the "Plan") is to provide annual incentive awards in order to motivate certain
executive officers and key employees of JLG Industries, Inc., a Pennsylvania
corporation, and its Subsidiaries to put forth maximum efforts toward the
growth, profitability and success of the Company and its Subsidiaries and to
encourage such individuals to remain in the employ of the Company or a
Subsidiary.
SECTION 2. DEFINITIONS
In this Plan document, unless the context clearly indicates otherwise, words
in the masculine gender shall be deemed to include a reference to the female
gender, any term used in the singular also shall refer to the plural, and the
following terms, when capitalized, shall have the meaning set forth in this
Section 2:
(a) "Award" means a potential cash benefit payable or cash benefit paid to a
person in accordance with the terms and conditions of the Plan.
(b) "Beneficiary" means the person or persons designated in writing by the
Grantee as his beneficiary in respect of an Award; or, in the absence of an
effective designation or if the designated person or persons predecease the
Grantee, the Grantee's Beneficiary shall be the person or persons who acquire by
bequest or inheritance the Grantee's rights in respect of an Award. In order to
be effective, a Grantee's designation of a Beneficiary must be on file with the
Company before the Grantee's death. Any such designation may be revoked and a
new designation substituted therefor at any time before the Grantee's death.
(c) "Board of Directors" or "Board" means the Board of Directors of the
Company.
(d) "Change in Control" means the first to occur of the following events:
(1) an acquisition (other than directly from the Company) of securities
of the Company by any person, immediately after which such person,
together with all securities law affiliates and associates of such
person, becomes the beneficial owner of securities of the Company
representing 25 percent or more of the voting power; provided that, in
determining whether a Change in Control has occurred, the acquisition of
securities of the Company in a non-control acquisition will not
constitute an acquisition that would cause a Change in Control; or
(2) three or more directors, whose election or nomination for election is
not approved by a majority of the members of the incumbent Board then
serving as members of the Board of Directors, are elected within any
single 12-month period to serve on the Board of Directors; provided that
an individual whose election or nomination for election is approved as a
result of either an actual or threatened election contest or proxy
contest, including by reason of any agreement intended to avoid or settle
any election contest or proxy contest, will be deemed not to have been
approved by a majority of the incumbent Board for purposes of this
definition; or
(3) members of the incumbent Board cease for any reason to constitute at
least a majority of the Board of Directors; or
(4) approval by shareholders of the Company of:
(i) a merger, consolidation, or reorganization involving the Company,
unless
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(A) the shareholders of the Company, immediately before the
merger, consolidation, or reorganization, own, directly or
indirectly immediately following such merger, consolidation, or
reorganization, at least 75 percent of the combined voting power
of the outstanding voting securities of the corporation resulting
from such merger, consolidation or reorganization in
substantially the same proportion as their ownership of the
voting securities immediately before such merger, consolidation,
or reorganization;
(B) individuals who were members of the incumbent Board
immediately prior to the execution of the agreement providing for
such merger, consolidation, or reorganization constitute at least
a majority of the board of directors of the surviving
corporation; and
(C) no person (other than (I) the Company or any Subsidiary
thereof, (II) any employee benefit plan (or any trust forming a
part thereof) maintained by the Company, any Subsidiary thereof,
or the surviving corporation, or (III) any person who,
immediately prior to such merger, consolidation, or
reorganization, had beneficial ownership of securities
representing 25 percent or more of the voting power) has
beneficial ownership of securities representing 25 percent or
more of the combined voting power of the surviving corporation's
then outstanding voting securities;
(ii) a complete liquidation or dissolution of the Company; or
(iii) an agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any person (other
than a transfer to a Subsidiary).
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Committee" means a committee appointed by the Board for the purpose of
administering the Plan. The Committee shall consist of two or more members of
the Compensation Committee of the Board, each of whom shall qualify, at the time
of appointment and thereafter, as an "outside director" within the meaning of
Section 162(m) of the Code (or a successor provision of similar import), as in
effect from time to time.
(g) "Company" means JLG Industries, Inc.
(h) "Covered Executive" means an individual who is determined by the
Committee to be reasonably likely to be a "covered employee" under Section
162(m) of the Code as of the end of the Company's taxable year for which an
Award to the individual will be deductible and whose Award would exceed the
deductibility limits under Section 162(m) if such Award is not Performance-Based
Compensation.
(i) "Disability" or "Disabled" means having a total and permanent disability
as defined in Section 22(e)(3) of the Code.
(j) "Grantee" means an executive officer or key employee of the Company or a
Subsidiary to whom an Award has been granted under the Plan.
(k) "Performance Objective" means the goal or goals identified by the
Committee that will result in an Award if the target for the Performance Year is
satisfied.
(l) "Performance Year" means the fiscal year beginning August 1 and ending
July 31.
(m) "Performance-Based Compensation" means compensation that is intended to
qualify as "performance-based compensation" under Section 162(m) of the Code and
the regulations thereunder.
(n) "Plan" means the JLG Industries, Inc. Annual Management Incentive Plan,
as set forth herein and as amended from time to time.
(o) "Retirement" means retirement pursuant to the JLG Industries, Inc.
Employees' Retirement Savings Plan, as amended from time to time.
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(p) "Subsidiary" means a corporation, association, partnership, limited
liability company, joint venture, business trust, organization, or business of
which the Company directly or indirectly through one or more intermediaries owns
at least 50% of the outstanding capital stock (or other shares of beneficial
interest) entitled to vote generally in the election of directors or other
managers of the entity.
SECTION 3. ADMINISTRATION
(a) The Plan shall be administered by the Committee. The Committee shall
have all the powers vested in it by the terms of the Plan, such powers to
include authority (within the limitations described herein) to select the
persons to be granted Awards under the Plan, to determine the time when Awards
will be granted, to determine whether performance objectives and other
conditions for earning Awards have been met, to determine whether Awards will be
paid at the end of the Performance Year or deferred to a later date, and to
determine whether an Award or payment of an Award should be reduced or
eliminated. The Committee is authorized, subject to the remaining provisions of
the Plan, to establish such rules and regulations as it deems necessary for the
proper administration of the Plan and to make such determinations and
interpretations and to take such action in connection with the Plan and any
Awards granted hereunder as it deems necessary or advisable. All determinations
and interpretations made by the Committee shall be binding and conclusive on all
persons participating in the Plan and their legal representatives.
(b) The Committee may not delegate to any individual the authority to make
determinations concerning that individual's own Awards, or the Awards of any
Covered Executive. Except as provided in the preceding sentence, the Committee
may delegate to one or more of its members, or to one or more executive officers
of the Company, including the Chief Executive Officer, authority (i) to select
key employees to receive Awards under the Plan, and (ii) to make all other
determinations in respect of such Awards. In addition, the Committee may
delegate to such persons such administrative duties as it deems advisable.
References herein to the Committee shall include any delegate described under
this paragraph, except where the context or the regulations under Code Section
162(m) otherwise require.
(c) The Committee, or any person to whom it has delegated duties as
described herein, may employ one or more persons to render advice with respect
to any responsibility the Committee or such person may have under the Plan
(including such legal or other counsel, consultants, and agents as it may deem
desirable for the administration of the Plan) and may rely upon any opinion or
computation received from any such counsel, consultant, or agent. Expenses
incurred in the engagement of such counsel, consultant, or agent shall be paid
by the Company.
SECTION 4. ELIGIBILITY
The Committee may grant Awards under the Plan to such executive officers and
key employees of the Company as it shall select for participation pursuant to
Section 3 above.
SECTION 5. AWARDS; LIMITATIONS ON AWARDS
(a) Each Award granted under the Plan shall represent an amount payable in
cash by the Company to the Grantee upon achievement of one or more or a
combination of Performance Objectives in a Performance Year, subject to all
other terms and conditions of the Plan and to such other terms and conditions as
may be specified by the Committee. The grant of Awards under the Plan to Covered
Executives shall be evidenced by Award letters in a form approved by the
Committee from time to time which shall contain the terms and conditions, as
determined by the Committee, of a Grantee's Award; provided, however, that in
the event of any conflict between the provisions of the Plan and any Award
letters, the provisions of the Plan shall prevail. An Award shall be determined
by multiplying the Grantee's target percentage of base salary with respect to a
Performance Year by applicable factors and percentages
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based on the achievement of Performance Objectives, subject to the discretion of
the Committee provided in Section 6 hereof.
(b) The maximum amount of an Award granted to any one Grantee in respect of
a Performance Year shall not exceed $3.5 million. This maximum amount limitation
shall be measured at the time of settlement of an Award under Section 7.
(c) Annual Performance Objectives shall be based on the performance of the
Company, one or more of its Subsidiaries or affiliates, one or more of its units
or divisions and/or the individual for the Performance Year. The Committee shall
use one or more of the following business criteria to establish Performance
Objectives for Grantees who are Covered Executives: increase in net sales;
pretax income before allocation of corporate overhead and bonus; budget;
earnings per share; net income; attainment of division, group or corporate
financial goals; return on stockholders' equity; return on assets; attainment of
strategic and operational initiatives; appreciation in or maintenance of the
price of the common stock or any other publicly-traded securities of the
Company; increase in market share; gross profits; earnings before interest and
taxes; earnings before interest, taxes, depreciation and amortization; economic
value-added models; comparisons with various stock market indices; or reductions
in costs. The Performance Objective for any Covered Executive shall be
sufficiently specific that a third party having knowledge of the relevant facts
could determine whether the objective is met; and the outcome under the
Performance Objective shall be substantially uncertain when the Committee
establishes the objective. In the case of a Grantee who is not a Covered
Executive, the Committee may establish Performance Objectives using the criteria
listed above in this Section 5(c), or the Committee may use any other measure of
performance that it shall approve in its discretion.
SECTION 6. GRANT OF AWARDS
(a) The Committee shall grant Awards to any Grantees who are Covered
Executives not later than 90 days after the commencement of the Performance
Year. If a Covered Executive is initially employed by the Company or a
Subsidiary after the beginning of a Performance Year, the Committee may grant an
Award to that Covered Executive with respect to a period of service following
the Covered Executive's date of hire, provided that no more than 25% of the
relevant service period has elapsed when the Committee grants the Award and the
Performance Objective otherwise satisfies the requirements applicable to Covered
Executives. The Committee shall select Grantees other than Covered Executives
for participation in the Plan and shall grant Awards to such Grantees at such
times as the Committee may determine. In granting an Award, the Committee shall
establish the terms of the Award, including the Performance Objective and the
maximum amount that will be paid (subject to the limit in Section 5) if the
Performance Objective is achieved. The Committee may establish different payment
levels under an Award based on different levels of achievement under the
Performance Objective.
(b) After the end of each Performance Year, the Committee shall determine
the amount payable to each Grantee in settlement of the Grantee's Award for the
Performance Year. The Committee, in its discretion, may reduce the maximum
payment established when the Award was granted, or may determine to make no
payment under the Award. The Committee, in its discretion, may increase the
amount payable under the Award (but not to an amount greater than the limit in
Section 5) to a Grantee who is not a Covered Executive. The Committee shall
certify in writing, in a manner conforming to applicable regulations under
Section 162(m) of the Code, prior to the settlement of each Award granted to a
Covered Executive, that the Performance Objectives and other material terms of
the Award upon which settlement of the Award was conditioned have been
satisfied.
(c) The Committee may adjust or modify Awards or terms of Awards (1) in
recognition of unusual or nonrecurring events affecting the Company or any
business unit, or the financial statements or results thereof, or in response to
changes in applicable laws (including tax, disclosure, and other laws),
regulations, accounting principles, or other circumstances deemed relevant by
the Committee, (2) with respect to
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any Grantee whose position or duties with the Company change during a
Performance Year, or (3) with respect to any person who first becomes a Grantee
after the first day of the Performance Year; provided, however, that no
adjustment to an Award granted to a Covered Executive shall be authorized or
made if, and to the extent that, such authorization or the making of such
adjustment would contravene the requirements applicable to Performance-Based
Compensation.
SECTION 7. SETTLEMENT OF AWARDS
(a) Except as provided in this Section 7, each Grantee shall receive payment
of a cash lump sum in settlement of his or her Award, in the amount determined
in accordance with Section 6, as promptly as practicable following the time such
determination in respect thereof has been reached by the Committee. No Award to
a Covered Executive shall be settled until the shareholders of the Company have
approved the Plan in a manner that satisfies the requirements of Section 162(m)
of the Code.
(b) Each Grantee shall have the right to defer his or her receipt of part or
all of any payment due in settlement of an Award under and in accordance with
the terms and conditions of any deferred compensation plan or arrangement of the
Company unless otherwise specified by the Committee.
SECTION 8. TERMINATION OF EMPLOYMENT
Except as otherwise provided in any written agreement between the Company
and a Grantee, if a Grantee ceases to be employed by the Company prior to the
end of a Performance Year for any reason other than death, Disability, or
Retirement, any Award for such Performance Year shall be forfeited. If such
cessation of employment results from such Grantee's death, Disability, or
Retirement, the Committee shall determine, in its sole discretion and in such
manner as it may deem reasonable, subject to Section 9, the extent to which the
Performance Objectives for the Performance Year or portion thereof completed at
the date of cessation of employment have been achieved, and the amount payable
in settlement of the Award based on such determinations. The Committee may base
such determination on the performance achieved for the full year, in which case
its determination may be deferred until following the Performance Year. Such
determinations shall be set forth in a written certification, as specified in
Section 6. Such Grantee or his or her Beneficiary shall be entitled to receive
settlement of such Award at the earliest time such payment may be made without
causing the payment to fail to be deductible by the Company under Section 162(m)
of the Code.
SECTION 9. STATUS OF AWARDS UNDER SECTION 162(m)
It is the intent of the Company that Awards granted to Covered Executives
shall constitute Performance-Based Compensation, if at the time of settlement
the Grantee remains a Covered Executive. Accordingly, the Plan shall be
interpreted in a manner consistent with Section 162(m) of the Code and the
regulations thereunder. If any provision of the Plan relating to a Covered
Executive or any Award letter evidencing an Award to a Covered Executive does
not comply with, or is inconsistent with, the provisions of Section 162(m)(4)(C)
of the Code or the regulations thereunder (including Treasury Regulation Section
1.162-27(e)) for Performance-Based Compensation, such provision shall be
construed or deemed amended to the extent necessary to conform to such
requirements.
SECTION 10. TRANSFERABILITY
Awards and any other benefit payable under, or interest in, this Plan are
not transferable by a Grantee except upon a Grantee's death by will or the laws
of descent and distribution, and shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or
charge, and any such attempted action shall be void.
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SECTION 11. WITHHOLDING
All payments relating to an Award, whether at settlement or resulting from
any further deferral or issuance of an Award under another plan of the Company
in settlement of the Award, shall be net of any amounts required to be withheld
pursuant to applicable federal, state and local tax withholding requirements.
SECTION 12. TENURE
A Grantee's right, if any, to continue to serve the Company as a Covered
Executive, officer, employee, or otherwise, shall not be enlarged or otherwise
affected by his or her designation as a Grantee or any other event under the
Plan.
SECTION 13. NO RIGHTS TO PARTICIPATION OR SETTLEMENT
Nothing in the Plan shall be deemed to give any eligible employee any right
to participate in the Plan except upon determination of the Committee. Until the
Committee has determined to settle an Award under Section 7, a Grantee's
selection to participate, the grant of an Award, and other events under the Plan
shall not be construed as a commitment that any Award will be settled under the
Plan. The foregoing notwithstanding, the Committee may authorize legal
commitments with respect to Awards under the terms of an employment agreement or
other agreement with a Grantee, to the extent of the Committee's authority under
the Plan, including commitments that limit the Committee's future discretion
under the Plan, but in all cases subject to Section 9.
SECTION 14. UNFUNDED PLAN
Grantees shall have no right, title, or interest whatsoever in or to any
specific assets of the Company, or to any investments that the Company may make
to aid in meeting its obligations under the Plan. Nothing contained in the Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the Company and
any Grantee, beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Company. All payments to be made hereunder shall be paid
from the general funds of the Company. The Company shall not be required to
establish any special or separate fund, or to segregate any assets, to assure
payment of such amounts. The Plan is not intended to be subject to the Employee
Retirement Income Security Act of 1974, as amended.
SECTION 15. OTHER COMPENSATORY PLANS AND ARRANGEMENTS
Nothing in the Plan shall preclude any Grantee from participation in any
other compensation or benefit plan of the Company or its Subsidiaries. The
adoption of the Plan and the grant of Awards hereunder shall not preclude the
Company or any Subsidiary from paying any other compensation apart from the
Plan, including compensation for services or in respect of performance in a
Performance Year for which an Award has been made. If an Award to a Covered
Executive may not be settled under the terms of the Plan, however (for example,
because the Covered Executive has not achieved the Performance Objective or
because shareholders have not approved the Plan), neither the Company nor a
Subsidiary may pay any part of the Award to the Covered Executive outside the
Plan.
SECTION 16. DURATION, AMENDMENT AND TERMINATION OF PLAN
No Award may be granted in respect of any Performance Year commencing after
July 31, 2004. The Board may amend the Plan from time to time (either
retroactively or prospectively), and may suspend or terminate the Plan at any
time, provided that any such action shall be subject to shareholder approval if
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and to the extent required to ensure that compensation under the Plan will
qualify as Performance-Based Compensation, or as otherwise may be required under
applicable law.
SECTION 17. GOVERNING LAW
The Plan, Awards granted hereunder, and actions taken in connection herewith
shall be governed and construed in accordance with the laws of the Commonwealth
of Pennsylvania (regardless of the law that might otherwise govern under
applicable Pennsylvania principles of conflict of laws).
SECTION 18. EFFECTIVE DATE
The Plan shall be effective as of August 1, 1999; provided, however, that
the Plan shall be subject to approval of the shareholders of the Company at an
annual meeting or any special meeting of stockholders of the Company before
settlement of Awards for the 2000 Performance Year so that compensation will
qualify as Performance-Based Compensation. In addition, the Board may determine
to submit the Plan to shareholders for reapproval at such time, if any, required
in order that compensation under the Plan shall qualify as Performance-Based
Compensation.
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APPENDIX B
JLG INDUSTRIES, INC.
STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED ON SEPTEMBER 1, 1999)
1. PURPOSE
The JLG Industries, Inc. Stock Incentive Plan (the "Plan"), as amended and
restated as of September 1, 1999, is designed to enable key personnel of JLG
Industries, Inc. (the "Company") and its Subsidiaries to acquire or increase a
proprietary interest in the Company, and thus to share in the future success of
the Company's business. Accordingly, the Plan is intended as a further means not
only of attracting and retaining outstanding personnel, but also of promoting a
closer identity of interests between management and shareholders. Since the
personnel eligible to receive Awards under the Plan will be those who are in
positions to make important and direct contributions to the success of the
Company, the directors believe that the grant of Awards under the Plan will be
in the Company's interest.
2. DEFINITIONS
In this Plan document, unless the context clearly indicates otherwise, words
in the masculine gender shall be deemed to refer to females as well as males,
any term used in the singular also shall refer to the plural, and the following
capitalized terms shall have the following meanings set forth in this Section 2:
(a) "Award" means an Option, Restricted Shares or a Right. Unless the
context clearly indicates otherwise, the term "Awards" shall include
Options, Restricted Shares and Rights.
(b) "Beneficiary" means the person or persons designated in writing by the
Grantee as his beneficiary in respect of an Award; or, in the absence of an
effective designation or if the designated person or persons predecease the
Grantee, the Grantee's Beneficiary shall be the person or persons who
acquire by bequest or inheritance the Grantee's rights in respect of an
Award. In order to be effective, a Grantee's designation of a Beneficiary
must be on file with the Company before the Grantee's death. Any such
designation may be revoked and a new designation substituted therefor at any
time before the Grantee's death.
(c) "Board of Directors" or "Board" means the Board of Directors of the
Company.
(d) "Change in Control" means the first to occur of the following events:
(1) an acquisition (other than directly from the Company) of securities
of the Company by any person, immediately after which such person,
together with all securities law affiliates and associates of such
person, becomes the beneficial owner of securities of the Company
representing 25 percent or more of the voting power; provided that, in
determining whether a Change in Control has occurred, the acquisition of
securities of the Company in a non-control acquisition will not
constitute an acquisition that would cause a Change in Control; or
(2) three or more directors, whose election or nomination for election is
not approved by a majority of the members of the incumbent Board then
serving as members of the Board of Directors, are elected within any
single 12-month period to serve on the Board of Directors; provided that
an individual whose election or nomination for election is approved as a
result of either an actual or threatened election contest or proxy
contest, including by reason of any agreement intended to avoid or settle
any election contest or proxy contest, will be deemed not to have been
approved by a majority of the incumbent Board for purposes of this
definition; or
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(3) members of the incumbent Board cease for any reason to constitute at
least a majority of the Board of Directors; or
(4) approval by shareholders of the Company of: (i) a merger,
consolidation, or reorganization involving the Company, unless
(A) the shareholders of the Company, immediately before the merger,
consolidation, or reorganization, own, directly or indirectly
immediately following such merger, consolidation, or reorganization,
at least 75 percent of the combined voting power of the outstanding
voting securities of the corporation resulting from such merger,
consolidation, or reorganization in substantially the same proportion
as their ownership of the voting securities immediately before such
merger, consolidation, or reorganization;
(B) individuals who were members of the incumbent Board immediately
prior to the execution of the agreement providing for such merger,
consolidation, or reorganization constitute at least a majority of
the board of directors of the surviving corporation; and
(C) no person (other than (I) the Company or any Subsidiary thereof,
(II) any employee benefit plan (or any trust forming a part thereof)
maintained by the Company, any Subsidiary thereof, or the surviving
corporation, or(III) any person who, immediately prior to such
merger, consolidation, or reorganization, had beneficial ownership of
securities representing 25 percent or more of the voting power) has
beneficial ownership of securities representing 25 percent or more of
the combined voting power of the Surviving Corporation's then
outstanding voting securities;
(i) a complete liquidation or dissolution of the Company; or
(iii) an agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any person
(other than a transfer to a Subsidiary).
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Committee" means a committee consisting of such number of members of
the Compensation Committee of the Board of Directors with such
qualifications as are required to satisfy the requirements of (i) Rule 16b-3
under the Securities Exchange Act of 1934, as in effect from time to time
(or any successor rule of similar import) and (ii) Section 162(m) of the
Code, and the regulations thereunder, as in effect from time to time (or any
successor provision of similar import), to the extent that Awards made under
the Incentive Plan are intended to qualify as performance-based compensation
thereunder.
(g) "Company" means JLG Industries, Inc.
(h) "Disability" or "Disabled" means having a total and permanent disability
as defined in Section 22(e)(3) of the Code.
(i) "Fair Market Value" means, when used in connection with the Shares on a
certain date, the fair market value of a Share as determined by the
Committee, and shall be deemed equal to the mean of the high and low prices
at which Shares are traded on such date (or on the next preceding day for
which such information is ascertainable at the time of the Committee's
determination) as reported for such date by The Wall Street Journal (or if
Shares are not traded on such date, on the next preceding day on which
Shares are traded) (or if Shares are traded on such date but no edition of
The Wall Street Journal reporting such prices for such date is published,
the fair market value shall be deemed equal to the mean of the high and low
prices at which Shares are traded on such date as reported through the
National Association of Securities Dealers Automated Quotations System in
any other newspaper).
(j) "Grantee" means a person to whom an Award has been granted under the
Plan.
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(k) "Incentive Stock Option" means an Option that complies with the terms
and conditions set forth in Section 422(b) of the Code and is designated by
the Committee as an Incentive Stock Option.
(l) "Limited Stock Appreciation Right" or "Right" means a right that
provides for payment in accordance with Section 10 hereof.
(m) "Non-qualified Stock Option" means an Option granted under the Plan
other than an Incentive Stock Option.
(n) "Option" means any option to purchase a Share or Shares pursuant to the
provisions of the Plan. Unless the context clearly indicates otherwise, the
term "Option" shall include both Incentive Stock Options and Non-qualified
Stock Options.
(o) "Option Agreement" means the written agreement to be entered into by the
Company and the Grantee, as provided in Section 7 hereof.
(p) "Parent" means any parent corporation of the Company within the meaning
of Section 424(e) of the Code (or a successor provision of similar import).
(q) "Performance-Based Restricted Shares" means Restricted Shares that are
intended to qualify as performance-based compensation under Section 162(m)
of the Code, and the regulations thereunder.
(r) "Plan" means the JLG Industries, Inc. Stock Incentive Plan, as amended
and restated on September 1, 1999, as set forth herein and as amended from
time to time (except where the context makes clear that the reference is to
the Plan as in effect prior to May 23, 1991, which was called the JLG
Industries, Inc. 1983 Stock Option Plan (as amended and restated)).
(s) "Quota" means the portion of the total number of Shares subject to an
Option that the Grantee of the Option may purchase during each of the
several periods of the Term of the Option (if the Option is subject to
Quotas), as provided in Section 12(a) hereof.
(t) "Restricted Shares" means Shares granted pursuant to Section 11 hereof
or purchased under a Non-qualified Stock Option pursuant to Section 9(d)
hereof and subject to such restrictions and other terms and conditions as
the Committee shall determine in accordance with the Plan.
(u) "Retirement" means retirement pursuant to the JLG Industries, Inc.
Employees' Retirement Savings Plan, as amended from time to time.
(v) "Shares" means shares of the Company's $.20 par value common stock.
(w) "Subsidiary" means a subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code (or a successor provision of similar
import.)
(x) "Term" means the period during which a particular Option or Right may be
exercised.
3. EFFECTIVE DATE AND DURATION OF THE AMENDED AND RESTATED PLAN
(a) Upon approval by the Company's shareholders, this amendment and
restatement of the Plan shall be effective as of September 1, 1999, and
shall continue in effect until December 31, 2004. This amendment and
restatement of the Plan as of September 1, 1999 shall not affect the terms
of any Option or Award that was outstanding on August 31, 1999; all such
Options and Awards shall continue to be governed by the terms of the Plan in
effect on August 31, 1999.
(b) Awards may be granted at any time prior to the earlier of the expiration
of the ten-year term of the Plan, as described in subsection (a) above, or
the termination of the Plan pursuant to Section 19 hereof. For the purpose
of commencing the ten-year period specified in Section 422(b)(2) of the Code
during which Incentive Stock Options may be granted, this amendment and
restatement of the Plan as of August 31, 1999 shall constitute the adoption
of a new plan. An Award outstanding at the time the
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Plan is terminated (either by expiration of the ten-year term of the Plan or
by termination of the Plan pursuant to Section 19 hereof) shall not cease to
be or cease to become exercisable pursuant to its terms solely because of
the termination of the Plan.
4. NUMBER AND SOURCE OF SHARES SUBJECT TO THE PLAN
(a) Subject to the provision of subsection (d) below, the Company may grant
Awards (including Replacement Options granted under Section 13(b) hereof)
under the Plan, as amended and restated as of May 23, 1991, and as further
amended as of November 21, 1994, and as of September 1, 1999 with respect to
not more than (i) the remaining number of Shares with respect to which
additional Options were authorized to be granted under the Plan immediately
prior to its amendment and restatement as of May 23, 1991 (namely 28,596
Shares) plus (ii) 6,000,000 additional Shares (subject, however, to increase
as provided in subsection (c) below and to adjustment as provided in Section
17 hereof) which shall be provided from Shares in the treasury or by the
issuance of Shares authorized but unissued.
(b) If an Option granted on or after September 1, 1999 is surrendered before
exercise, or lapses or is terminated without being exercised, in whole or in
part, for any reason other than the exercise of a Right, the Shares subject
to the Option shall be restored to the aggregate maximum number of Shares
(specified in subsection (a) above) with respect to which Awards may be
granted under the Plan, but only to the extent that the Option or any
related Right has not been exercised. Similarly, if any Restricted Share is
forfeited and returned to the Company, such forfeited Share shall be
restored to such aggregate maximum number of Shares with respect to which
Awards may be granted under the Plan.
(c) If, on or after September 1, 1999, any of the 1,573,516 missing Options
or Restricted Shares granted before September 1, 1999 under the Plan as in
effect before September 1, 1999 which remain unexercised or unvested on
September 1, 1999 is surrendered before exercise, lapses or is terminated
without being exercised, or is forfeited, in whole or in part, for any
reason, the Company may grant Awards under the Plan with respect to the
Shares subject to such Options or such forfeited Restricted Shares in
addition to the aggregate maximum number of Shares specified in subsection
(a) above.
(d) The Company may grant Incentive Stock Options under the Plan only with
respect to not more than 6,000,000 of the Shares specified in subsection (a)
above.
(e) The maximum number of Shares that can be the subject of Awards to any
individual in any fiscal year of the Company is 300,000 Shares. For purposes
of this subsection (e), (i) if an Award is canceled, the canceled Award
shall be counted against the maximum number of Shares for which Awards may
be granted to the individual, and (ii) if, after grant, the exercise price
of an Option or Right is reduced (other than pursuant to the adjustment
provisions of Section 17 hereof), the transaction shall be treated as the
cancellation of the Option or Right and the grant of a new Option or Right,
and both the Option or Right that is deemed to be canceled and the Option or
Right that is deemed to be granted shall reduce the maximum number of Shares
for which Options and Rights may be granted to the individual.
5. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee.
(b) The Committee may adopt, amend and rescind rules and regulations
relating to the Plan as it may deem proper, shall make all other
determinations necessary or advisable for the administration of the Plan,
and may provide for conditions and assurances deemed necessary or advisable
to protect the interests of the Company, to the extent not contrary to the
express provisions of the Plan; provided,
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however, that the Committee may take action only upon the agreement of a
majority of its members then in office. Notwithstanding the provisions of
the preceding sentence, no action or determination by the Committee may
adversely affect any right acquired by any Grantee or Beneficiary under the
terms of any Award granted before the date such action or determination is
taken or made, unless the affected Grantee or Beneficiary shall expressly
consent; but it shall be conclusively presumed that any adjustment pursuant
to Section 17 does not adversely affect any such right. Any action that the
Committee may take through a written instrument signed by all of its members
then in office shall be as effective as though taken at a meeting duly
called and held.
(c) The powers of the Committee shall include plenary authority to interpret
the Plan, and, subject to the provisions hereof, the Committee may determine
(i) the persons to whom Awards shall be granted; (ii) the number of Shares
subject to each Award; (iii) the Term of each Award; (iv) the frequency of
Awards and the date on which each Award shall be granted; (v) the type of
each Award; (vi) the Quotas (if any), exercise periods, and other terms and
conditions applicable to each Option and Right, and the provisions of each
Option Agreement; (vii) any performance criteria pursuant to which Awards
may be granted; and (viii) the restrictions and other terms and conditions
of each grant of Restricted Shares and the provisions of any instruments
evidencing such grants. The Committee also may accelerate at any time the
exercisability of outstanding Options, provided that no Option shall be
exercisable prior to the expiration of the mandatory six-month holding
period specified in Section 12(a) hereof.
(d) The determinations, interpretations, and other actions made or taken by
the Committee pursuant to the provisions of the Plan shall be final,
binding, and conclusive for all purposes and upon all persons.
(e) Subject to the limits established by the Committee pursuant to this
Section 5(e), the Company's Chief Executive Officer is authorized to grant
Awards to key employees (excluding those employees required to file
ownership reports with the Securities and Exchange Commission under Section
16(a) of the Securities and Exchange Act of 1934) having such terms,
consistent with the terms of the Plan, as the Chief Executive Officer shall
determine. No later than 90 days after the commencement of each fiscal year
of the Company, the Committee may establish (i) a maximum aggregate amount
of Awards which the Chief Executive Officer may grant during such fiscal
year and (ii) the maximum amount of Awards which the Chief Executive Officer
may grant to any one Grantee during such fiscal year. Upon granting any
Awards pursuant to the Plan, the Chief Executive Officer, promptly, but in
any event not later than the next Committee meeting, shall inform the
Committee of the terms and number of Awards granted to any Grantee. The
types of Awards that the Chief Executive Officer may grant shall be limited
to Restricted Shares and Non-qualified Stock Options. The exercise price of
any Options granted by the Chief Executive Officer pursuant to the Plan
shall not be less than the Fair Market Value of the Shares on the date the
Option is granted.
6. EMPLOYEES ELIGIBLE TO RECEIVE OPTIONS
(a) Awards may be granted under the Plan to key employees of the Company or
any Subsidiary (including employees who are directors and/or officers). All
determinations by the Committee as to the identity of the persons to whom
Awards shall be granted hereunder shall be conclusive.
(b) Directors who are not regular salaried employees of the Company or a
Subsidiary shall not be eligible to receive Awards.
(c) An individual Grantee may receive more than one Award.
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7. OPTION AGREEMENT
(a) No Option or Right shall be exercised by a Grantee unless he shall have
executed and delivered an Option Agreement evidencing the grant of such
Option or Right. The Agreement shall set forth the number of Shares subject
to the Option or Right and the terms, conditions and restrictions applicable
thereto.
(b) Appropriate officers of the Company are hereby authorized to execute and
deliver Option Agreements in the name of the Company as directed from time
to time by the Committee.
8. INCENTIVE STOCK OPTIONS
(a) The Committee may authorize the grant of Incentive Stock Options to
officers and key employees, subject to the terms and conditions set forth in
the Plan. The Option Agreement relating to an Incentive Stock Option shall
state that the Option evidenced by the Option Agreement is intended to be an
"incentive stock option" within the meaning of Section 422(b) of the Code.
(b) The Term of each Incentive Stock Option shall end (unless the Option
shall have terminated earlier under another provision of the Plan) on a date
fixed by the Committee and set forth in the applicable Option Agreement. In
no event shall the Term of an Incentive Stock Option extend beyond ten years
from the date of grant. In the case of any Grantee who, on the date the
Option is granted, owns (within the meaning of Section 424(d) of the Code)
more than ten percent of the total combined voting power of all classes of
stock of the Company, a Parent, or a Subsidiary, the Term of the Option
shall not extend beyond five years from the date of grant.
(c) To the extent that the aggregate Fair Market Value of the stock with
respect to which Incentive Stock Options (determined without regard to this
paragraph (c)) are exercisable by any Grantee for the first time during any
calendar year (under all stock option plans of the Company, its Parent and
its Subsidiaries) exceeds $100,000, such Options shall not be Incentive
Stock Options. For the purpose of this paragraph (c), the Fair Market Value
of stock shall be determined as of the time the Option with respect to such
stock is granted. This paragraph (c) shall be applied by taking Options into
account in the order in which they were granted.
(d) The Option price to be paid by the Grantee to the Company for each Share
purchased upon the exercise of an Incentive Stock Option shall be equal to
the Fair Market Value of a Share on the date the Option is granted, except
that with respect to any Incentive Stock Option granted to a Grantee who, on
the date the Option is granted, owns (within the meaning of Section 424(d)
of the Code) more than ten percent of the total combined voting power of all
classes of stock of the Company, a Parent, or a Subsidiary, the Option price
for each Share purchased shall not be less than 110 percent of the Fair
Market Value of a Share on the date the Option is granted. In no event may
an Incentive Stock Option be granted if the Option price per Share is less
than the par value of a Share.
(e) Any Grantee who disposes of Shares purchased upon the exercise of an
Incentive Stock Option either (i) within two years after the date on which
the Option was granted, or (ii) within one year after the transfer of such
Shares to the Grantee, shall promptly notify the Company of the date of such
disposition and of the amount realized upon such disposition.
9. NON-QUALIFIED STOCK OPTIONS
(a) The Committee may authorize the grant of Non-qualified Stock Options
subject to the terms and conditions set forth in the Plan. Unless an Option
is designated by the Committee as an Incentive Stock Option, it is intended
that the Option will not be an "incentive stock option" within the meaning
of Section 422(b) of the Code and, instead, will be a Non-qualified Stock
Option. The Option
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Agreement relating to a Non-qualified Stock Option shall state that the
Option evidenced by the Option Agreement will not be treated as an Incentive
Stock Option.
(b) The Term of each Non-qualified Stock Option shall end (unless the Option
shall have terminated earlier under another provision of the Plan) on a date
fixed by the Committee and set forth in the applicable Option Agreement. In
no event shall the Term of a Non-qualified Stock Option extend beyond ten
years from the date of grant of the Option.
(c) In no event may a Non-qualified Stock Option be granted if the Option
price per Share is less than the par value of a Share.
(d) At the time of the grant of a Non-qualified Stock Option, the Committee
shall specify whether the Shares purchased under the Option shall or shall
not be Restricted Shares (or whether they shall be a specified combination
of Shares that are, and Shares that are not, Restricted Shares). Restricted
Shares purchased under an Option shall be subject to the terms, conditions
and restrictions set out in subsections (b) through (e) of Section 11, and
such additional terms, conditions and restrictions as the Committee may
determine. Subject to the provisions of subsections (b) through (e) of
Section 11, the Committee, at the time of grant, shall determine (and the
Option Agreement shall specify) the terms and conditions of any Restricted
Shares that may be purchased under the Non-qualified Stock Option, including
the duration of the restrictions that shall be imposed on the Restricted
Shares, and the dates on which, or circumstances in which, the restrictions
shall expire, lapse or be removed or the Restricted Shares shall be
forfeited. Shares purchased under an Option after the Company obtains actual
knowledge that a Change in Control has occurred shall not be subject to any
restrictions.
10. LIMITED STOCK APPRECIATION RIGHTS
(a) The Committee may authorize the grant of Limited Stock Appreciation
Rights in connection with all or part of any Option.
(b) A Right may be exercised only at such times, by such persons, and to
such extent, as the related Option is exercisable. Furthermore, a Right may
be exercised only within the 60-day period beginning on the date on which
the Company obtains actual knowledge that a Change in Control has occurred.
As soon as the Company obtains actual knowledge that a Change in Control has
occurred, the Company shall promptly notify each Grantee in writing of the
Change in Control, whether or not the Grantee holds a Right.
(c) The Shares that are subject to a Right shall not be used more than once
to calculate the amount to be received pursuant to the exercise of the
Right. The right of a Grantee to exercise an Option shall be canceled if and
to the extent that the Shares subject to the Option are used to calculate
the amount to be received upon the exercise of the related Right, and the
right of a Grantee to exercise a Right shall be canceled if and to the
extent that the Shares with respect to which the Right may be exercised are
purchased upon the exercise of the related Option.
(d) A Right may be granted coincident with or after the grant of any related
Option, provided that the Committee shall consult with counsel before
granting a Right after the grant of a related Incentive Stock Option.
(e) The amount to be paid to the Grantee upon exercise of a Right that is
related to a Non-qualified Stock Option shall be paid in cash, and shall be
equal to the number of Shares with respect to which the Right is exercised
multiplied by the excess of
(1) the higher of (i) the highest Fair Market Value of a Share during the
period commencing on the ninetieth (90th) day preceding the exercise of
the Right and ending on the date of exercise; or (ii) if an event
described in paragraph (i) of the definition of "Change in Control",
above, has occurred, the highest price per Share (A) paid for any Share
in any transaction occurring during
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the period described in clause (i) by any person or group (as defined in
the definition of "Change in Control", above) whose acquisition of Shares
caused the Change in Control to occur, or (B) paid for any Share as shown
on Schedule 13D (or an amendment thereto) filed pursuant to Section 13(d)
of the Securities Exchange Act of 1934 by any such person or group, over
(2) the Option price of the related Non-qualified Stock Option.
(f) The amount to be paid to the Grantee upon exercise of a Right that is
related to an Incentive Stock Option shall be paid in cash, and shall be
equal to the number of Shares with respect to which the Right is exercised
multiplied by the excess of (i) the Fair Market Value (as of the exercise
date of the Right) of a Share over (ii) the Option price of the related
Incentive Stock Option.
11. RESTRICTED SHARES
(a) The Committee may authorize the grant of Restricted Shares subject to
the terms and conditions set forth in the Plan. The following terms,
conditions and restrictions and such additional terms, conditions and
restrictions as may be determined by the Committee shall apply to Restricted
Shares. Subject to the provisions of this Section 11 (including, in the case
of Performance-Based Restricted Shares, paragraph (f)), the Committee shall
determine at the time of grant the size and the terms and conditions of each
grant of Restricted Shares, including the duration of the restrictions that
shall be imposed on the Restricted Shares, the dates on which, or
circumstances in which, the restrictions shall expire, lapse or be removed
or the Restricted Shares shall be forfeited, and the price to be paid to the
Company by the Grantee (and the terms of payment thereof) for the Restricted
Shares. In no event, however, shall the price of a Restricted Share be less
than the par value of a Share on the date of grant. The Committee may cause
to be issued an instrument evidencing the grant of the Restricted Shares to
the Grantee, which instrument may set forth the restrictions and other terms
and conditions of the grant.
(b) A Grantee who has acquired Restricted Shares (pursuant to either a grant
of Restricted Shares or the exercise of an Option to purchase Restricted
Shares) shall have beneficial ownership of the Restricted Shares, including
the right to receive dividends on (subject, in the case of Performance-Based
Restricted Shares, to the provisions of paragraph (f)) and the right to
vote, the Restricted Shares. A certificate or certificates representing the
number of Restricted Shares acquired shall be registered in the name of the
Grantee. The Committee, in its sole discretion, shall determine when the
certificate or certificates shall be delivered to the Grantee (or, in the
event of the Grantee's death, to his Beneficiary), may provide for the
holding of such certificate or certificates in custody by a bank or other
institution or by the Company itself pending their delivery to the Grantee
or Beneficiary, and may provide for any appropriate legend to be borne by
the certificate or certificates referring to the terms, conditions and
restrictions applicable to the Shares. Any attempt to dispose of the Shares
in contravention of such terms, conditions and restrictions shall be
ineffective.
(c) While subject to the restrictions imposed by the Committee in accordance
with this Section 11, Restricted Shares
(1) shall not be sold, assigned, conveyed, transferred, pledged,
hypothecated, or otherwise disposed of, and
(2) shall be returned to the Company forthwith, and all the rights of the
Grantee to such Shares shall immediately terminate, if the Grantee's
continuous employment with the Company or any Subsidiary shall terminate
for any reason, except as provided in Section 11(d). The return of the
Shares shall be accomplished, if necessary, by the Grantee's delivering
or causing to be delivered to the Company the certificate(s) for the
Shares, accompanied by such endorsement(s) and/or instrument(s) of
transfer as may be required by the Company. Upon the return of Shares in
accordance with this paragraph (2), the Company shall pay to the Grantee
an amount in cash
B-8
equal to the lesser of the aggregate price paid for the Shares returned
or the current fair market value of the Shares returned.
(d) Subject to the following provisions of this Section 11(d), the
restrictions imposed on Restricted Shares shall lapse on such date or dates
as the Committee shall determine when the Restricted Shares (or any Option
to purchase them) are granted. In addition, if a Grantee who has been in the
continuous employment of the Company or a Subsidiary since the date on which
he acquired the Restricted Shares becomes Disabled or dies while in such
employment, then the restrictions imposed on the Restricted Shares shall
lapse; provided that, if such Restricted Shares are intended to qualify as
Performance-Based Restricted Shares, they shall cease to qualify as
performance-based compensation for purposes of Section 162(m) of the Code if
the restrictions lapse on the account of the Disability or death of the
Grantee. Further, all restrictions imposed on Restricted Shares shall lapse
immediately following the date on which the Company obtains actual knowledge
that a Change in Control has occurred; provided that, if such Restricted
Shares are intended to qualify as Performance-Based Restricted Shares, they
shall cease to qualify as performance-based compensation for purposes of
Section 162(m) of the Code if the restrictions lapse on account of a Change
in Control.
(e) If, after Restricted Shares are transferred to a Grantee (pursuant to
either a grant of Restricted Shares or the exercise of an Option to purchase
Restricted Shares), the Grantee properly elects, pursuant to section 83(b)
of the Code, to include in gross income for Federal income tax purposes the
amount determined under section 83(b) of the Code, the Grantee shall furnish
to the Company a copy of his completed and signed election form, and shall
pay (or make arrangements satisfactory to the Company to pay) to the Company
any Federal, state or local taxes required to be withheld with respect to
the Shares. If the Grantee fails to make such payments, the Company and its
Subsidiaries shall, to the extent permitted by law, have the right to deduct
from any payment of any kind otherwise due to the Grantee any Federal, state
or local taxes of any kind required by law to be withheld with respect to
the Shares.
(f) The Committee may authorize the grant of Performance-Based Restricted
Shares subject to the following terms and conditions, in addition to all
other applicable terms and conditions set forth in the Plan:
(1) The restrictions imposed on Performance-Based Restricted Shares shall
expire, lapse or be removed based solely on the account of the attainment
of performance targets established by the Committee using one or more of
the following criteria as the applicable performance objectives: (i)
increase in net sales; (ii) pretax income before allocation of corporate
overhead and/or bonus; (iii) budget; (iv) earnings per share; (v) net
income; (vi) attainment of division, group or corporate financial goals;
(vii) return on stockholders' equity; (viii) return on assets; (ix)
attainment of strategic and operational initiatives; (x) appreciation in
or maintenance of the price of the common stock or any other
publicly-traded securities of the Company; (xi) increase in market share;
(xii) gross profits; (xiii) earnings before interest and taxes; (xiv)
earnings before interest, taxes, depreciation and amortization; (xv)
economic value-added models; (xvi) comparisons with various stock market
indices; or (xvii) reductions in costs. The performance objective shall
be sufficiently specific that a third party having knowledge of the
relevant facts could determine whether the objective is met. The
establishment of the actual performance targets and, if an award is based
on more than one of the foregoing financial criteria, the weighing of
such financial criteria, shall be at the sole discretion of the
Committee; provided, however, that in all cases the performance targets
must be established by the Committee in writing no later than 90 days
after the commencement of the fiscal year to which the performance
target(s) relates and when achievement of the performance target(s) is
substantially uncertain. Once established by the Committee, the
performance target(s) may not be changed to increase the amount of
compensation that otherwise would be due upon the attainment of the
performance target(s).
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(2) Dividends shall be payable on Performance-Based Restricted Shares
only to the extent of the Shares received based upon the attainment of
the pre-established performance target(s).
(3) Prior to the release of restrictions on any Performance-Based
Restricted Shares, the Committee shall certify in writing (which may be
set forth in the minutes of the Committee) that the pre-established
performance target(s) have been satisfied.
12. TERMS AND QUOTAS OF OPTION
(a) Each Option and Right granted under the Plan shall be exercisable only
during a Term commencing at least six months after the date on which the
Option or Right was granted. The Committee shall have authority to grant
both Options exercisable in full at any time during their Term and Options
exercisable in Quotas. In exercising an Option that is subject to Quotas,
the Grantee may purchase less than the full Quota available under the Option
during any period. Quotas or portions thereof not purchased in earlier
periods shall accumulate and shall be available for purchase in later
periods within the Term of the Option.
(b) Upon the expiration of the mandatory six-month holding period specified
in subsection (a) above, any Option shall be exercisable in full,
notwithstanding the applicability of any Quota or other limitation on the
exercise of such Option, immediately following the date on which the Company
obtains actual knowledge that a Change in Control has occurred.
13. EXERCISE OF OPTION OR RIGHT
(a) Options or Rights shall be exercised by delivering or mailing to the
Committee:
(1) a notice, in the form and in the manner prescribed by the Committee,
specifying the number of Shares to be purchased, or the number of Shares
with respect to which a Right shall be exercised, and
(2) if an Option is exercised, payment in full of the Option price for
the Shares so purchased
(i) by money order, cashier's check, certified check; or other cash
equivalent approved by the Committee
(ii) by the tender of Shares to the Company, or by the attestation to
the ownership of the Shares that otherwise would be tendered to the
Company in exchange for the Company's reducing the number of Shares
that it issues to the Grantee by the number of Shares necessary for
payment in full of the Option price for the Shares so purchased;
(iii) by money order, cashier's check, or certified check and the
tender of Shares to the Company, or by money order, cashier's check,
or certified check and the attestation to the ownership of the Shares
that otherwise would be tendered to the Company in exchange for the
Company's reducing the number of Shares that it issues to the Grantee
by the number of Shares necessary for payment in full of the Option
price for the Shares so purchased; or
(iv) unless the Committee expressly notifies the Grantee otherwise
(at the time of grant in the case of an Incentive Stock Option or at
any time prior to full exercise in the case of a Non-qualified Stock
Option), and except to the extent that the Option is an Option to
purchase Restricted Shares, by the Grantee's (a) irrevocable
instructions to the Company to deliver the Shares issuable upon
exercise of the Option promptly to the broker for the Grantee's
account and (b) irrevocable instruction letter to the broker to sell
Shares sufficient to pay the exercise price and upon such sale to
deliver the exercise price to the Company, provided that at the time
of such exercise, such exercise would not subject the Grantee to
liability under section 16(b) of the Securities Exchange Act of 1934,
or would be exempt
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pursuant to Rule 16b-3 promulgated under such Act or any other
exemption from such liability. The Company shall deliver an
acknowledgment to the broker upon receipt of instructions to deliver
the Shares. The Company shall deliver the Shares to the broker upon
the settlement date. The broker shall deliver to the Company cash
sale proceeds sufficient to cover the exercise price upon receipt of
the Shares from the Company. Shares tendered or attested to in
exchange for Shares issued under the Plan must be held by the Grantee
for at least six months prior to their tender or their attestation to
the Company, and may not be Restricted Shares at the time they are
tendered or attested to. The Committee shall determine acceptable
methods for tendering or attesting to Shares to exercise an Option
under the Plan, and may impose such limitations and prohibitions on
the use of Shares to exercise Options as it deems appropriate. For
purposes of determining the amount of the Option price satisfied by
tendering or attesting to Shares, such Shares shall be valued at
their Fair Market Value on the date of tender or attestation, as
applicable. Except as provided in this paragraph, the date of
exercise shall be deemed to be the date that the notice of exercise
and payment of the Option price are received by the Committee. For
exercise pursuant to Section 13(a)(2)(iv) of the Plan, the date of
exercise shall be deemed to be the date that the notice of exercise
is received by the Committee.
(b) At the time it grants a Non-qualified Stock Option, the Committee may
provide in the Option Agreement that if the Grantee exercises the
Non-qualified Stock Option (the "Exercised Option") by tendering Shares to
the Company to pay the Option price in accordance with subsection (a) above,
he shall be granted, as of the date of exercise, a Non-qualified Stock
Option (the "Replacement Option") to purchase a number of Shares not
exceeding the number of Shares he tendered to pay the Option price in
exercising the Exercised Option; provided, however, that no Replacement
Option shall be granted to the extent that it, would cause the limitations
set forth in Sections 4(a) and 4(e) hereof to be exceeded. The terms of the
Replacement Option shall be identical to the terms of the Exercised Option,
except that (i) the Option price per Share shall be equal to the Fair Market
Value of a Share on the date on which the Replacement Option is granted, but
in no event shall the Option price per Share be less than the par value of a
Share on that date; (ii) the Term shall commence at least six months after
the date the Replacement Option is granted, and (iii) the Committee may
establish new Quotas (or no Quotas at all) with respect to the Replacement
Option.
(c) Subject to subsection (d) below, upon receipt of the notice of exercise
and, if an Option is exercised, upon payment of the Option price, the
Company shall promptly deliver to the Grantee (or Beneficiary) a certificate
or certificates for the Shares purchased, without charge to him for issue or
transfer tax, and if a Right is exercised, shall promptly distribute cash to
be paid upon the exercise of the Right.
(d) The exercise of each Option and Right and the grant or distribution of
Restricted Shares under the Plan shall be subject to the condition that if
at any time the Company shall determine (in accordance with the provisions
of the following sentence) that it is necessary as a condition of, or in
connection with, such exercise (or the delivery or purchase of Shares
thereunder), grant or distribution (i) to satisfy withholding tax or other
withholding liabilities, (ii) to effect the listing, registration, or
qualification on any securities exchange or under any state or Federal law
of any Shares otherwise deliverable in connection with such exercise, grant
or distribution, or (iii) to obtain the consent or approval of any
regulatory body, then in any such event such exercise, grant or distribution
shall not be effective unless such withholding, listing, registration,
qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Company in its reasonable and good
faith judgment. Any such determination (described in the preceding sentence)
by the Company must be reasonable, must be made in good faith, and must be
made without any intent to postpone or limit such exercise, grant or
distribution beyond the minimum extent necessary and without any intent
otherwise to deny or frustrate any Grantee's rights in respect of any Award.
In seeking to effect or
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obtain any such withholding, listing, registration, qualification, consent
or approval, the Company shall act with all reasonable diligence. Any such
postponement or limitation affecting the right to exercise an Option or
Right or the grant or distribution of Restricted Shares shall not extend the
time within which the Option or Right may be exercised or the Restricted
Shares may be granted or distributed, unless the Company and the Grantee
choose to amend the terms of the Award to provide for such an extension; and
neither the Company nor its directors or officers shall have any obligation
or liability to the Grantee or to a Beneficiary with respect to any Shares
with respect to which the Award shall lapse, or with respect to which the
grant or distribution shall not be effected, because of a postponement or
limitation that conforms to the provisions of this subsection (d).
(e) Except as provided in Section 13(f) below, Options and Rights granted
under the Plan shall be nontransferable other than by will or by the laws of
descent and distribution in accordance with Section 14(a) hereof, and an
Option or Right may be exercised during the lifetime of the Grantee only by
him.
(f) Subject to the approval of the Committee in its sole discretion,
Non-qualified Stock Options, Limited Stock Appreciation Rights that are
granted in connection with Non-qualified Stock Options, and Restricted Stock
may be transferable to members of the immediate family of the Grantee and to
one or more trusts for the benefit of such family members, partnerships in
which such family members are the only partners, or corporations in which
such family members are the only stockholders. "Members of the immediate
family" means the Grantee's spouse, children, stepchildren, grandchildren,
parents, grandparents, siblings (including half brothers and sisters), and
individuals who are family members by adoption.
(g) Upon the purchase of Shares under an Option, the stock certificate or
certificates may, at the request of the purchaser, be issued in his name and
the name of another person as joint tenants with right of survivorship.
14. EXERCISE OF OPTION OR RIGHT AFTER DEATH, DISABILITY, RETIREMENT, OTHER
TERMINATION OF EMPLOYMENT, OR CHANGE IN CONTROL
(a) Death
If a Grantee's employment with the Company and its Subsidiaries shall cease
due to the Grantee's death, or if the Grantee shall die within three months
after cessation of employment while an Option is exercisable pursuant to
subsection (d) or (e) below, any Option held by the Grantee on the date of
his death may be exercised only within twelve months after the Grantee's
death, and only by the Grantee's Beneficiary, to the extent that the Option
could have been exercised immediately before the Grantee's death.
(b) Disability
If a Grantee's employment with the Company and its Subsidiaries shall cease
due to his Disability, after at least six months of continuous employment
with the Company and/or a Subsidiary immediately following the date on which
an Option was granted, the Grantee may exercise the Option, to the extent
that the Option could be exercised at the cessation of employment, at any
time within two years after the Grantee shall so cease to be an employee.
(c) Retirement
If a Grantee's employment with the Company and its Subsidiaries ceases due
to his Retirement, after at least six months of continuous employment with
the Company and/or a Subsidiary immediately following the date on which an
Option was granted, the Grantee may exercise the Option, to the extent the
Option could be exercised at the cessation of employment, at any time within
five years after the Grantee's Retirement.
B-12
(d) Termination of Employment for Any Other Reason
The Option Agreement shall specify the period, if any, during which an
Option may be exercised subsequent to the termination of a Grantee's
employment with the Company and its Subsidiaries at any time other than
within three months after the date on which the Company obtains actual
knowledge that a Change in Control has occurred and for any reason other
than those specified in subsections (a) through (c) above; provided,
however, that the Option Agreement shall not permit the exercise of any
Option later than three months after such termination; and provided further
that the Option may not be exercised to an extent greater than the extent to
which it could be exercised at the cessation of employment.
(e) Termination of Employment After a Change in Control
If, within three months after the Company obtains actual knowledge that a
Change in Control has occurred, a Grantee's employment with the Company and
its Subsidiaries ceases for any reason other than those specified in
subsections (a) through (c) above, the Grantee may exercise the Option at
any time within three months after such cessation of employment.
(f) Notwithstanding any other provision of this Section 14, in no event
shall an Option be exercisable after the expiration date specified in the
Option Agreement.
15. TAX WITHHOLDING
(a) The Company shall have the right to collect an amount sufficient to
satisfy any Federal, State and/or local withholding tax requirements that
might apply with respect to any Award to a Grantee (including, without
limitation, the exercise of an Option or Right, the disposition of Shares,
or the grant or distribution of Restricted Shares) in the manner specified
in subsection (b) or (c) below. Alternatively, a Grantee may elect to
satisfy any such withholding tax requirements in the manner specified in
subsection (d) or (e) below to the extent permitted therein.
(b) The Company shall have the right to require Grantees to remit to the
Company an amount sufficient to satisfy any such withholding tax
requirements.
(c) The Company and its Subsidiaries also shall, to the extent permitted by
law, have the right to deduct from any payment of any kind (whether or not
related to the Plan) otherwise due to a Grantee any such taxes required to
be withheld.
(d) If the Committee in its sole discretion approves, a Grantee may
irrevocably elect to have any withholding tax obligation satisfied by (i)
having the Company withhold Shares otherwise deliverable to the Grantee, or
(ii) delivering Shares (other than Restricted Shares) to the Company,
provided that the Shares withheld or delivered have a Fair Market Value (on
the date that the amount of tax to be withheld is determined) equal to the
amount required to be withheld.
(e) A Grantee may elect to have any withholding tax obligation satisfied in
the manner described in Section 13(a)(2)(iv) hereof, to the extent permitted
therein.
16. SHAREHOLDER RIGHTS
No person shall have any rights of a shareholder by virtue of an Option or
Right except with respect to Shares actually issued to him, and the issuance of
Shares shall confer no retroactive right to dividends.
17. ADJUSTMENT FOR CHANGES IN CAPITALIZATION
(a) Subject to the provisions of Section 18 hereof, in the event that there
is any change in the Shares through merger, consolidation, reorganization,
recapitalization or otherwise; or if there shall be any
B-13
dividend on the Shares, payable in Shares; or if there shall be a stock
split or a combination of Shares, the aggregate number of shares available
for Awards, the number of Shares subject to outstanding Awards, and the
Option price per Share of each out standing Option may be proportionately
adjusted by the Board of Directors as it deems equitable in its absolute
discretion to prevent dilution or enlargement of the rights of the Grantees;
provided that any fractional Shares resulting from such adjustments shall be
eliminated.
(b) Subject to the provisions of Section 18 hereof, any Shares to which a
Grantee shall become entitled as a result of a stock dividend on Restricted
Shares, or as a result of a stock split, combination of Shares, merger,
consolidation, reorganization, recapitalization or other event affecting
Restricted Shares, shall have the same status, be subject to the same
restrictions, and bear the same legend (if any) as the Shares with respect
to which they were issued, except as may be otherwise provided by the Board
of Directors.
(c) The Board's determination with respect to any such adjustments shall be
conclusive.
18. EFFECTS OF MERGER OR OTHER REORGANIZATION
If the Company shall be the surviving corporation in a merger or other
reorganization, Awards shall extend to stock and securities of the Company after
the merger or other reorganization to the same extent that a person who held,
immediately before the merger or reorganization, the number of Shares
corresponding to the number of Shares covered by the Award would be entitled to
have or obtain stock and securities of the Company under the terms of the merger
or reorganization.
19. TERMINATION, SUSPENSION, OR MODIFICATION OF PLAN
The Board of Directors may at any time terminate, suspend, or modify the
Plan, except that the Board shall not, without approval by the affirmative votes
of the holders of a majority of the securities of the Company present, or
represented, and entitled to vote, at a meeting duly held in accordance with
applicable law, change (other than through adjustment for changes in
capitalization as provided in Section 17 hereof) (a) the aggregate number of
Shares for which Awards may be granted; (b) the class of persons eligible for
Awards; (c) the minimum Option price, applicable to Options or Rights, that is
provided for under the terms of the Plan; or (d) the maximum duration of the
Plan. No termination, suspension or modification of the Plan shall adversely
affect any right acquired by any Grantee, or by any Beneficiary, under the terms
of any Award granted before the date of such termination, suspension or
modification, unless such Grantee or Beneficiary shall expressly consent; but it
shall be conclusively presumed that any adjustment pursuant to Section 17 hereof
does not adversely affect any such right.
20. APPLICATION OF PROCEEDS
The proceeds received by the Company from the sale of Shares (including
Restricted Shares) under the Plan shall be used for general corporate purposes.
21. GENERAL PROVISIONS
The grant of an Award in any year shall not give the Grantee any right to
similar grants in future years or any right to be retained in the employ of the
Company or its Subsidiaries.
22. GOVERNING LAW
The Plan shall be construed and its provisions enforced and administered in
accordance with the laws of the Commonwealth of Pennsylvania except to the
extent that such laws may be superseded by any Federal law.
B-14
JLG INDUSTRIES, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
VOTING INSTRUCTION CARD FOR 1999 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned participant in the JLG Industries, Inc. Employees' Retirement
Savings Plan hereby instructs the Fulton County National Bank and Trust
Company, as trustee of the Plan, to vote all shares of JLG Industries, Inc.
Capital Stock allocated to the account of the undersigned under the Plan, at
the Annual Meeting of Shareholders of JLG Industries, Inc. to be held on
Wednesday, November 17, 1999 at 4:30 p.m., and at all adjournments of such
meeting, and in its discretion upon any other matter as may properly come
before the meeting.
THE TRUSTEE WILL VOTE ALLOCATED SHARES IN THE MANNER DIRECTED BY THE VOTING
INSTRUCTIONS CONTAINED HEREIN. IN THE ABSENCE OF DIRECTION, THE TRUSTEE WILL
VOTE SUCH SHARES FOR ALL PROPOSALS.
The Board of Directors unanimously recommends a vote FOR its nominees and
proposals 2, 3, 4 and 5.
Proposal 1. Election of Directors.
[ ] FOR all nominees listed (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for nominees listed
Nominees: L.D. Black; C.H. Diller, Jr.; G.R. Kempton; J.A.
Mezera; S. Rabinowitz; T.C. Wajnert; and C.O. Wood, III.
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.
- ------------------------------------------------------------------------------
Proposal 2. Approve the JLG Industries, Inc. Annual Management Incentive
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. Approve the JLG Industries, Inc. Amended and Restated Stock
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 4. Ratify the appointment of Ernst & Young LLP as independent
auditors for the ensuing year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, upon any other business that may properly come
before the meeting or any adjournment thereof.
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, all should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If as a corporation, please
sign in corporate name by president or other authorized officer. If as a
partnership, please sign in partnership name by authorized person.
Dated: ________________, 1999
-------------------------------
-------------------------------
Signature(s)
PLEASE VOTE, DATE, SIGN AND RETURN THE
VOTING INSTRUCTIONS CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
JLG INDUSTRIES, INC.
1 JLG DRIVE
MCCONNELLSBURG, PA 17233-9533
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, and does hereby appoint L. David Black and
Charles H. Diller, Jr., and each of them, or such person or persons as they or
any of them may substitute and appoint as proxy or proxies of the undersigned,
to represent the undersigned and to vote all shares of JLG Industries, Inc.,
Capital Stock which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders of JLG Industries, Inc. to be held
on Wednesday, November 17, 1999 at 4:30 p.m., and at all adjournments of such
meeting.
THE PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, PROXIES WILL
BE VOTED FOR PROPOSALS 1 THROUGH 4.
The Board of Directors unanimously recommends a vote FOR its nominees and
proposals 2, 3, 4 and 5.
Proposal 1. Election of Directors.
[ ] FOR all nominees listed (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for nominees listed
Nominees: L.D. Black; C.H. Diller, Jr.; G.R. Kempton;
J.A. Mezera;
S. Rabinowitz; T.C. Wajnert; and C.O. Wood, III.
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.
- ------------------------------------------------------------------------------
Proposal 2. Approve the JLG Industries, Inc. Annual Management Incentive
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 3. Approve the JLG Industries, Inc. Amended and Restated Stock
Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Proposal 4. Ratify the appointment of Ernst & Young LLP as independent
auditors for the ensuing year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, upon any other business that may properly
come before the meeting or any adjournment thereof.
Please sign exactly as your name appears hereon. When shares are held by joint
tenants, all should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If as a corporation, please
sign in corporate name by president or other authorized officer. If as a
partnership, please sign in partnership name by authorized person.
Dated: ________________, 1999
-------------------------------
-------------------------------
Signature(s)
PLEASE VOTE, DATE, SIGN AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.