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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
BRUNSWICK CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
- --------------------------------------------------------------------------------
PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
(BRUNSWICK LOGO)
March 21, 2003
Dear Brunswick Shareholder:
You are cordially invited to attend the 2003 Annual Meeting of Brunswick
Shareholders to be held on Wednesday, April 30, 2003, at 1:30 p.m. EDT at the
Radisson Summit Hill, 401 Summit Hill Drive, Knoxville, Tennessee 37902.
The formal Notice of Annual Meeting and Proxy Statement accompanying this letter
describe the business to be acted on at the meeting.
It is important that your shares be represented at the meeting. Please submit
your vote according to the instructions on the enclosed proxy card as promptly
as possible to ensure your representation at the meeting. Even if you have given
your proxy, you may revoke it at any time prior to the meeting and may still
vote in person if you attend the meeting. An admission ticket will be required
for attendance at the 2003 annual meeting. Procedures for securing an admission
ticket are described in the formal Notice of Annual Meeting accompanying this
letter. If your shares are held of record by a broker, bank, or other nominee
and you wish to vote at the meeting, you will NOT be permitted to vote in person
at the meeting unless you both obtain a proxy issued in your name from the
broker, bank or other nominee and receive an admission ticket by following the
procedures described in the Notice of Annual Meeting.
Shares held in Brunswick's Employee Stock Ownership Plan (BESOP), Retirement
Savings Plan (BRSP) or Rewards Plan MAY NOT be voted in person at the meeting.
Finally, please note that you have several voting options. In addition to
returning the enclosed proxy card, you may also vote either by telephone or via
the Internet at www.proxyvote.com. Please refer to the enclosed proxy card for
further instructions concerning these voting alternatives.
Thank you for your continued support of Brunswick.
Sincerely,
/s/ George W. Buckley
George W. Buckley
Chairman
Brunswick Corporation 1 N. Field Court Lake Forest, IL 60045-4811
Telephone 847.735.4700
[BRUNSWICK LOGO] Notice of Annual Meeting
March 21, 2003
Dear Brunswick Shareholder:
The Annual Meeting of Shareholders of Brunswick Corporation will be held at the
Radisson Summit Hill, 401 Summit Hill Drive, Knoxville, Tennessee 37902, on
Wednesday, April 30, 2003, at 1:30 p.m. EDT for the following purposes:
(1) To elect five (5) directors,
(2) To approve the Brunswick Corporation 2003 Stock Incentive Plan,
(3) To ratify the appointment of Ernst & Young LLP as independent auditors, and
(4) To consider such other business as may properly come before the meeting.
Brunswick shareholders of record at the close of business on March 3, 2003, will
be entitled to notice of and to vote at the meeting and any adjournment thereof.
By order of the Board of Directors,
- -s- Marschall I. Smith
Marschall I. Smith
Secretary
ADMISSION TO THE 2003 ANNUAL MEETING
Please note that a ticket will be required for admission to the 2003 annual
meeting. An admission ticket will be mailed to you if:
- your Brunswick shares are registered in your name and you check the
appropriate box on your proxy card (or, for those voting shares over the
Internet or by telephone, if you click the appropriate box on the electronic
proxy card or follow the telephone instructions when prompted); or
- your Brunswick shares are held in the name of a broker or other nominee, and
you request an admission ticket by writing to: Brunswick Corporation, 1 N.
Field Court, Lake Forest, Illinois 60045-4811, Attn: Shareholder Services, or
by sending a request by facsimile to (847) 735-4671. You must enclose written
evidence of your ownership of Brunswick Common Stock as of March 3, 2003,
such as a brokerage statement or letter from your broker.
ONLY SHAREHOLDERS WHO OWN BRUNSWICK COMMON STOCK AS OF MARCH 3, 2003, OR THEIR
DULY APPOINTED PROXIES, WILL BE ENTITLED TO ATTEND THE 2003 ANNUAL MEETING.
YOUR ADMISSION TICKET WILL SERVE AS VERIFICATION OF YOUR OWNERSHIP.
Brunswick Corporation 1 N. Field Court Lake Forest, IL 60045-4811
Telephone 847.735.4700
[BRUNSWICK LOGO] Proxy Statement
The Board of Directors of Brunswick Corporation ("Brunswick") is soliciting
proxies from Brunswick's shareholders for the annual meeting to be held at the
Radisson Summit Hill, 401 Summit Hill Drive, Knoxville, Tennessee 37902, on
Wednesday, April 30, 2003, at 1:30 p.m. EDT. This proxy statement is first being
mailed to shareholders on or about March 26, 2003.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the annual meeting, shareholders will act upon matters described in the
Notice of Annual Meeting that accompanies this proxy statement, including the
election of directors, the approval of the Brunswick Corporation 2003 Stock
Incentive Plan and the ratification of the Board's recommendation regarding
Brunswick's independent auditors. In addition, members of management will
respond to questions raised by Brunswick shareholders.
WHO IS ENTITLED TO VOTE?
Only holders of the 90,247,722 shares of Brunswick Common Stock issued and
outstanding as of the close of business on March 3, 2003 (the "Record Date"),
will be entitled to vote at the meeting. Each holder as of the Record Date is
entitled to one vote for each share of Brunswick Common Stock he or she holds.
WHO CAN ATTEND THE MEETING?
Please note that a ticket will be required for admission to the 2003 annual
meeting. An admission ticket will be mailed to you if:
- your Brunswick shares are registered in your name and you check the
appropriate box on your proxy card (or, for those shareholders voting
shares over the Internet or by telephone, if you click the appropriate
box on the electronic proxy card or follow the telephone instructions
when prompted); or
- your Brunswick shares are held in the name of a broker or other nominee,
and you request an admission ticket by writing to: Brunswick Corporation,
1 N. Field Court, Lake Forest, Illinois 60045-4811, Attn: Shareholder
Services, or by sending a request by facsimile to (847) 735-4671. You
must enclose written evidence of your ownership of Brunswick Common Stock
as of March 3, 2003, such as a brokerage statement or letter from your
broker.
Only shareholders who own Brunswick Common Stock as of March 3, 2003, or
their duly appointed proxies, will be entitled to attend the 2003 annual
meeting. Your admission ticket will serve as verification of your ownership.
WHAT CONSTITUTES A QUORUM?
A majority of the 90,247,722 shares of Brunswick Common Stock issued and
outstanding on the Record Date must be represented, in person or by proxy, to
provide a quorum at the annual meeting. Shares represented by properly executed
proxy cards either marked "ABSTAIN" or returned without voting instructions are
counted as present for purposes of determining whether the quorum requirement is
satisfied. Also, in those instances where shares are held by brokers who are
prohibited from exercising discretionary authority for beneficial owners who
have not given voting instructions ("broker nonvotes"), those shares will be
counted as present for quorum purposes. Broker nonvotes will not be counted as
votes for or against any proposal.
HOW DO I VOTE?
Shareholders of record can vote in person, by mail or telephone or on the
Internet at www.proxyvote.com. The deadline for voting by telephone or via the
Internet is 11:59 p.m. EDT on April 29, 2003. Your shares will be voted as you
indicate. You may specify whether your shares will be voted for all, some or
none of the nominees for director, whether your shares should be voted for or
against approval of the Brunswick Corporation 2003 Stock Incentive Plan and
whether your shares should be voted for or against the ratification of
Brunswick's independent auditors.
If your shares are held of record by a broker, bank or other nominee and
you wish to vote in person at the meeting, you must first obtain a proxy issued
in your name from the institution that holds your shares. You also must request
an admission ticket by writing to: Brunswick Corporation, 1 N. Field Court, Lake
Forest, Illinois 60045-4811, Attn: Shareholder Services, or by sending a request
by facsimile to (847) 735-4671. Please enclose with your request written
evidence of your ownership of Brunswick Common Stock as of March 3, 2003, such
as a brokerage statement or letter from your broker.
Any proxy given by a shareholder who is also a participant in either the
Brunswick Dividend Reinvestment Plan or the Brunswick Employee Stock Investment
Plan will also govern the voting of all shares held for that shareholder's
account under those plans, unless contrary instructions are received.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you can change your vote at
any time before the proxy is exercised by (i) voting in person by ballot at the
meeting, (ii) returning a later-dated proxy card, (iii) entering a new vote by
telephone or on the Internet or (iv) delivering written notice of revocation to
Brunswick's Secretary.
HOW DO I VOTE MY SHARES IN BRUNSWICK EMPLOYEE STOCK PLANS?
If you are a participant in the Brunswick Employee Stock Ownership Plan,
Retirement Savings Plan or Rewards Plan, you will not be able to vote the shares
that you hold in those plans at the annual meeting. Instead, you are entitled to
instruct the plan trustee for the relevant plan how to cast the votes related to
your plan shares. Participants in any plan may give instructions to the plan
trustee for that plan by mail, by telephone or on the Internet. To vote by mail,
complete, sign and date the enclosed proxy card and return it in the enclosed
prepaid envelope. To vote by telephone or on the Internet, please follow the
instructions on the enclosed proxy card. Brunswick's tabulator, Automatic Data
Processing, must receive your vote by 5:00 p.m. EDT on Friday, April 25, 2003.
The trustee will vote your shares as you indicate. The trustee will vote
allocated shares (except for shares acquired with tax credit contributions) for
which proxies are not received and unallocated shares in the same proportion as
it votes allocated shares for which it receives instructions.
WHO WILL COUNT THE VOTES?
Brunswick's tabulator, Automatic Data Processing, will count the votes.
Lesley Akers and Mary Theis, both of Brunswick's shareholder services
department, will act as inspectors of election.
HOW WILL MY SHARES BE VOTED IF I SIGN, DATE AND RETURN MY PROXY CARD BUT DO NOT
GIVE VOTING INSTRUCTIONS?
If you sign, date and return your proxy card, your shares will be voted as
you direct. If you do not indicate how you want your shares voted, your proxy
will be voted for the election of the five director nominees, for the approval
of the Brunswick Corporation 2003 Stock Incentive Plan and for the ratification
of Ernst & Young LLP as Brunswick's independent auditors for 2003.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
The Board recommends a vote for the election of the five director nominees,
for the approval of the Brunswick Corporation 2003 Stock Incentive Plan and for
the ratification of Ernst & Young LLP as
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Brunswick's independent auditors for the 2003 fiscal year. With respect to any
other matter that is properly brought before the meeting, the proxy holders will
vote the proxies held by them in accordance with their best judgement.
WHAT VOTE IS REQUIRED TO APPROVE EACH MATTER TO BE CONSIDERED AT THE ANNUAL
MEETING?
Election of Directors: Directors will be elected by a plurality of the
votes cast at the annual meeting on the election of directors. Abstentions or
broker nonvotes will not affect the outcome. If any one or more of the five
director nominees is unable to serve, votes will be cast, pursuant to authority
granted by the enclosed proxy, for the person or persons that the Board of
Directors designates as alternates.
Approval of Brunswick Corporation 2003 Stock Incentive Plan: The
affirmative vote of the holders of a majority of the shares represented in
person or by proxy and entitled to vote on the approval of the Brunswick
Corporation 2003 Stock Incentive Plan will be required for approval. Abstentions
are the same as votes against approval. Broker nonvotes will not be considered
represented in person or by proxy or entitled to vote on the matter.
Ratification of Independent Auditors: The affirmative vote of the holders
of a majority of the shares represented in person or by proxy and entitled to
vote on the ratification of Brunswick's independent auditors will be required
for approval. Abstentions are the same as votes against ratification. Broker
nonvotes will not be considered represented in person or by proxy or entitled to
vote on the matter.
WILL MY VOTE BE KEPT CONFIDENTIAL?
Yes. As a matter of policy, shareholder proxies, ballots and tabulations
that identify individual shareholders are kept secret and are available only to
Brunswick's tabulator and inspectors of election, who are required to
acknowledge their obligation to keep your votes confidential.
WHO PAYS TO PREPARE, MAIL AND SOLICIT THE PROXIES?
Brunswick pays all of the costs of preparing, mailing and soliciting
proxies. Brunswick asks brokers, banks, voting trustees and other nominees and
fiduciaries to forward proxy materials to the beneficial owners and to obtain
authority to execute proxies, for which they are reimbursed upon request. In
addition to solicitation by mail, telephone, facsimile, telegraph, Internet or
personal contact by its officers and employees, Brunswick has retained the
services of Georgeson Shareholder Communications Inc. to solicit proxies for a
fee of $9,900 plus expenses.
WHAT IF OTHER MATTERS COME UP DURING THE MEETING?
If any matters other than those referred to in the Notice of Annual Meeting
should properly come before the meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the proxies held by them in
accordance with their best judgement. Management does not know of any business
other than that referred to in the Notice that may be considered at the meeting.
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
Five directors are to be elected at the 2003 annual meeting. The Board of
Directors has nominated George W. Buckley, Michael J. Callahan, Manual A.
Fernandez, Peter B. Hamilton and Roger W. Schipke for election as directors to
serve for terms expiring at the 2006 annual meeting or until their respective
successors shall have been elected and qualified. Mr. Buckley, Mr. Callahan, Mr.
Fernandez, Mr. Hamilton and Mr. Schipke have served as directors since 2000,
1991, 1997, 2000 and 1993, respectively.
The Board is currently comprised of 14 directors. Bettye Martin Musham and
Jay W. Lorsch will retire from the Board at the 2003 annual meeting in
accordance with the Board of Directors' Principles and Practices (described
below), which establishes a retirement age of 70 for directors. These
retirements will reduce the size of the Board of Directors to 12 members.
Brunswick's Restated Certificate of Incorporation provides that the Board
of Directors shall be divided into three classes, each consisting, as nearly as
may be possible, of one-third of the total number of directors. The retirements
of Mr. Lorsch and Ms. Martin Musham will create an imbalance in Brunswick's
Board classes, with classes comprised of five directors, three directors and
four directors for the classes holding office until 2006, 2005 and 2004,
respectively. To rebalance the classes in accordance with Brunswick's
Certificate of Incorporation and assuming that he is re-elected at the 2003
annual meeting, immediately following the 2003 annual meeting Mr. Buckley will
voluntarily be reassigned to the class standing for reelection at the 2005
annual meeting, effectively shortening his three-year term to two years. Mr.
Buckley's reassignment will result in three classes comprised of four directors
each.
It is intended that votes will be cast, pursuant to authority granted by
the enclosed proxy card (including electronic or telephonic voting), for the
election of the nominees named above as Brunswick's directors, except as
otherwise specified. Biographical information follows for each person nominated
and each person whose term of office will continue after the 2003 annual
meeting.
NOMINEES FOR ELECTION FOR TERMS EXPIRING AT THE 2006 ANNUAL MEETING:
[BUCKLEY PHOTO] GEORGE W. BUCKLEY Director since 2000
Chairman of the Board and Chief Executive Officer of
Brunswick since 2000; President and Chief Operating Officer
of Brunswick, May to June 2000; Executive Vice President of
Brunswick, February to May 2000; President -- Mercury Marine
Group, 1997 to 2000; Senior Vice President of Brunswick,
1998 to 2000; Vice President of Brunswick, 1997 to 1998;
director of Ingersoll-Rand Company and Tyco International
Ltd.; age 56
[CALLAHAN PHOTO] MICHAEL J. CALLAHAN Director since 1991
Financial consultant; Executive Vice President and Chief
Financial Officer of FMC Corporation, a producer of
chemicals for industry and agriculture, 1994 to 1999;
Executive Vice President and Chief Financial Officer of
Whirlpool Corporation, a manufacturer of major home
appliances, 1992 to 1994; director of Material Sciences
Corporation; age 64
[FERNANDEZ PHOTO] MANUEL A. FERNANDEZ Director since 1997
Chairman Emeritus of Gartner, Inc., an information
technology company, since 2001; Chairman of Gartner Group,
Inc., 1995 to 2001; Chief Executive Officer of Gartner
Group, Inc., 1995 to 1998; President and Chief Executive
Officer of Gartner Group, Inc., 1991 to 1997; Managing
Director -- SI Ventures, LLC, a venture capital partnership,
since 1998; director of The Black & Decker Corporation;
Trustee of the University of Florida; age 56
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[HAMILTON PHOTO] PETER B. HAMILTON Director since 2000
Vice Chairman of the Board of Brunswick and
President -- Brunswick Bowling & Billiards since 2000;
Executive Vice President and Chief Financial Officer of
Brunswick, 1998 to 2000; Senior Vice President and Chief
Financial Officer of Brunswick, 1995 to 1998; director of
The Talbots, Inc; age 56
[SCHIPKE PHOTO] ROGER W. SCHIPKE Director since 1993
Private investor; Executive in Residence, University of
Louisville, College of Business and Public Administration;
Adjunct Professor, University of Kentucky, Gatton College of
Business and Economics; Chairman of the Board and Chief
Executive Officer of The Sunbeam Corporation from 1994 to
1996; director of Legg-Mason, Inc. and The Rouse Company;
age 66
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES NAMED ABOVE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2005 ANNUAL MEETING:
[BERN PHOTO] DORRIT J. BERN Director since 2000
Chairman of the Board, President and Chief Executive Officer
of Charming Shoppes, Inc., a company operating a chain of
women's specialty apparel stores, since 1997; Vice Chairman
of the Board, President and Chief Executive Officer of
Charming Shoppes, Inc., 1995 to 1997; director of The
Southern Company; member of The Committee of 200, America's
Women Business Leaders; age 52
[HARF PHOTO] PETER HARF Director since 1996
Chairman and Chief Executive Officer of Joh. A. Benckiser,
GmbH, a German financial holdings company, since 1988;
Chairman of the Board of Coty Inc., Benckiser's U.S.-based
international cosmetics business, since 1993; Chief
Executive Officer of Coty Inc. from 1993 to 2001; Deputy
Chairman of the Board of Reckitt Benckiser plc; Vice
Chairman of the Supervisory Board of the non-profit DKMS
German Bone Marrow Donor Database; age 56
[STAYER PHOTO] RALPH STAYER Director since 2002
Chairman of the Board, President and Chief Executive Officer
of Johnsonville Sausage LLC since 1968; Founder of
Leadership Dynamics, a consulting firm; National Trustee of
Boys and Girls Clubs -- Midwest Region; Trustee of Marian
College; Board member of PAVE, an organization dedicated to
improving education opportunities for urban students in
Milwaukee; age 59
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2004 ANNUAL MEETING:
[ARCHIBALD PHOTO] NOLAN D. ARCHIBALD Director since 1995
Chairman of the Board, President and Chief Executive Officer
of The Black & Decker Corporation, a consumer and commercial
products company, since 1986; recipient of the American
Marketing Association's Edison Achievement Award; director
of Lockheed Martin Corporation; age 59
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[BLEUSTEIN PHOTO] JEFFREY L. BLEUSTEIN Director since 1997
Chairman of the Board of Harley-Davidson, Inc., a motorcycle
manufacturer, since 1998; President and Chief Executive
Officer of Harley-Davidson, Inc., since 1997; President and
Chief Operating Officer of the Motorcycle Division of
Harley-Davidson, Inc., 1993 to 1997; member of the
President's Council on the 21st Century Workforce; age 63
[PHILLIPS PHOTO] GRAHAM H. PHILLIPS Director since 2002
Retired; Chairman and Chief Executive Officer of Young &
Rubicam Advertising, 1999 to 2000; Chairman of
Burson-Marsteller, the perception management division of
Young & Rubicam, Inc., from 1997 to 1999; Chairman and Chief
Executive Officer of Ogilvy & Mather Worldwide, from 1989 to
1992; age 64
[RYAN PHOTO] ROBERT L. RYAN Director since 1998
Senior Vice President and Chief Financial Officer of
Medtronic, Inc., a medical technology company, since 1993;
Vice President, Finance, and Chief Financial Officer of
Union Texas Petroleum Corporation, from 1984 to 1993;
director of UnitedHealth Group; Chairman of the Board of
Abbott Northwestern Hospital; age 59
COMMITTEES AND MEETINGS
The Board of Directors met five times during 2002. All directors attended
75 percent or more of the board meetings and meetings of committees of which
they were members during 2002.
The Board of Directors has adopted written Principles and Practices (the
"Principles"), a copy of which is attached to this proxy statement as Appendix
I, to assist it in the performance of its duties and the exercise of its
responsibilities. The Principles reflect the views of the Board with respect to
corporate governance issues generally. The Board believes that good corporate
governance is a source of competitive advantage for Brunswick. Good governance
allows the skills, experience and judgment of the Board to support Brunswick's
executive management team, enabling management to improve Brunswick's
performance and maximize shareholder value.
The Principles are divided into four broad sections: (a) Board Roles and
Responsibilities, (b) Board Selection and Composition, (c) Board Operations and
(d) Other Matters.
- Board Roles and Responsibilities. This section addresses topics
including the objectives and responsibilities of the Board as well as the
expectations of individual directors and the Board's expectations of
management.
- Board Selection and Composition. This section addresses topics relating
to the composition of the Board including, among others, the size of the
Board, Board leadership, independent directors, the nomination and
selection of directors, service on other boards, director retirement and
director orientation and continuing education.
- Board Operations. This section addresses a variety of Board-related
operational matters including, among others, Board and committee
meetings, executive sessions, committee composition, Board communication
with executive management, Board and Chief Executive Officer evaluation,
corporate strategy and management development and succession planning.
- Other Matters. This section addresses the compensation of directors,
director share ownership, management service on other boards and
corporate communications.
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The Principles are guidelines rather than rigid rules that govern the
Board's activities and are subject to modification from time to time by the
Board.
The Board of Directors has Audit, Finance, Human Resource and Compensation
and Corporate Governance Committees. The Board of Directors no longer has an
Executive Committee. Prior to May 2002, the functions of the Audit Committee and
the Finance Committee were performed by a single Audit and Finance Committee.
Each of these committees is composed solely of independent directors. From time
to time, the Board of Directors meets without members of management present. At
these meetings, Mr. Fernandez serves as the presiding director.
AUDIT COMMITTEE
Members of the Audit Committee are Mr. Callahan (Chairman), Ms. Bern and
Mr. Ryan. When the Board fills the vacancies on the Corporate Governance
Committee and the Human Resource and Compensation Committee caused by the
retirements of Mr. Lorsch and Ms. Martin Musham, Ms. Bern will be reassigned
from the Audit Committee to the Human Resource and Compensation Committee, and
Mr. Stayer will be appointed to the Audit Committee. The Board of Directors has
determined that all members of the Audit Committee are independent, in
accordance with the New York Stock Exchange audit committee requirements. The
Audit Committee assists the Board in fulfilling its responsibility to
Brunswick's shareholders and the investment community with respect to overseeing
Brunswick's accounting, auditing and reporting practices, its internal controls
and the integrity of its financial information. The Audit Committee maintains
free and open communication with the Board, the independent auditors, the
internal auditors and management. The Audit Committee may, at its sole
discretion and at Brunswick's expense, obtain advice and assistance from outside
legal, financial, accounting or other experts. The Audit Committee's specific
responsibilities include, but are not limited to:
- Appointing (subject to shareholder ratification), terminating,
compensating and overseeing Brunswick's independent auditors, which
report directly to the Audit Committee;
- Approving in advance all audit and non-audit engagements of Brunswick's
independent auditors;
- Reviewing and evaluating the qualifications, performance and independence
of Brunswick's independent auditors and periodically presenting its
conclusions to the Board;
- Reviewing the performance of Brunswick's internal audit function;
- Reviewing the adequacy and effectiveness of Brunswick's internal
controls, any special audit steps adopted in light of any material
control deficiencies and the performance and qualifications of the
internal audit staff;
- Reviewing and discussing significant findings on specific audits
completed by the internal audit function and management's responses to
those findings, including any follow-up action undertaken as a result of
those findings;
- Reviewing accounting principles and financial statement presentations,
including significant changes in Brunswick's selection or application of
accounting policies;
- Reviewing and discussing Brunswick's reporting and disclosure policies;
- Reviewing and discussing with both management and Brunswick's independent
auditors prior to public disclosure Brunswick's annual audited and
quarterly financial statements, Brunswick's Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and annual and quarterly reports to
shareholders;
- Reviewing and discussing with Brunswick's independent auditors any audit
problems or difficulties and other issues and recommendations identified
by the independent auditors together with management's responses;
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- Reviewing and discussing earnings announcements, financial information
and earnings guidance provided to shareholders, analysts and rating
agencies;
- Reviewing with Brunswick's independent auditors any restrictions on the
scope of the independent auditors' activities or access to requested
information, and any significant disagreements with management;
- Recommending to the Board hiring practices for employees or former
employees of the independent auditors consistent with Section 206 of the
Sarbanes-Oxley Act of 2002;
- Conducting or authorizing investigations into any matters within the
Audit Committee's scope of responsibility;
- Reporting to the Board on its activities following each meeting of the
Audit Committee; and
- Monitoring and considering implementation of best-demonstrated audit and
control practices.
The Audit Committee met nine times during 2002. The Committee operates
pursuant to a written charter, a copy of which is attached to this proxy
statement as Exhibit A to Appendix I.
FINANCE COMMITTEE
Members of the Finance Committee are Mr. Schipke (Chairman), Mr. Archibald
and Mr. Harf. The Finance Committee may, at its sole discretion and at
Brunswick's expense, obtain advice and assistance from independent legal,
financial, accounting and other advisors. The responsibilities of the Finance
Committee include, but are not limited to:
- Reviewing Brunswick's financial structure, including any special purpose
entities, any other off-balance sheet or off-shore transactions that have
or could have an impact on the financial structure of Brunswick, or any
non-ordinary course of business financial transactions;
- Reviewing Brunswick's financial policies and procedures, capital
expenditures and capital expenditure budgets, and proposals for corporate
financing (including the issuance, sale and repurchase of Brunswick's
securities);
- Reviewing proposals for short-term and long-term borrowings;
- Making recommendations to the Board concerning the declaration and
distribution of dividends;
- Coordinating the Board's review of proposals for (and monitoring the
performance of): (a) material investments and divestitures (including
mergers, acquisitions, new business ventures, joint ventures, leasing
transactions, real estate transactions and other capital expenditures);
and (b) other significant transactions that are not in the ordinary
course of Brunswick's business;
- Reviewing and evaluating Brunswick's tax strategy, insurance coverage and
related matters;
- Reviewing and discussing policies regarding risk and risk management,
significant risks and exposures; and
- Coordinating the Board's annual review of Brunswick's delegation of
authority policy and overseeing compliance with that policy.
The Finance Committee met six times during 2002. The Committee operates
pursuant to a written charter, a copy of which is attached to this proxy
statement as Exhibit C to Appendix I.
HUMAN RESOURCE AND COMPENSATION COMMITTEE
Members of the Human Resource and Compensation Committee are Mr. Fernandez
(Chairman), Mr. Phillips and Mr. Lorsch. As mentioned above, Mr. Lorsch will be
retiring from the Board of Directors at the 2003 annual meeting. In accordance
with Brunswick's By-laws, the Board plans to fill the vacancy on the Human
Resource and Compensation Committee created by Mr. Lorsch's retirement by
appointing
8
Ms. Bern at that time. The Human Resource and Compensation Committee may, at its
sole discretion and at Brunswick's expense, obtain advice and assistance from
independent legal, financial, accounting and other advisors. The
responsibilities of the Human Resource and Compensation Committee include, but
are not limited to:
- Together with the Corporate Governance Committee, conducting the annual
review of the Chief Executive Officer's performance;
- Determining the equity-based compensation of the Chief Executive Officer
and making recommendations to the Board regarding non-equity based
compensation of the Chief Executive Officer;
- Determining compensation paid to Brunswick's senior executives;
- Developing and overseeing policies for the administration of compensation
and benefit plans;
- Reviewing and coordinating Board review of Brunswick's compensation and
benefit plans for alignment with corporate objectives;
- Reviewing and commenting on management development for key management
positions and coordinating, together with the Chief Executive Officer,
the Board's annual review of the Chief Executive Officer succession plan;
- Approving benefit programs that specifically benefit senior management;
and
- Monitoring and considering developments and best practices in human
resource and compensation practices.
The Human Resource and Compensation Committee met six times during 2002.
The Committee operates pursuant to a written charter, a copy of which is
attached to this proxy statement as Exhibit D to Appendix I.
CORPORATE GOVERNANCE COMMITTEE
Members of the Corporate Governance Committee are Mr. Bleustein (Chairman),
Mr. Stayer and Ms. Martin Musham. As mentioned above, Ms. Martin Musham will be
retiring from the Board of Directors at the 2003 annual meeting. In accordance
with Brunswick's By-laws, the Board will fill the vacancy on the Corporate
Governance Committee created by Ms. Martin Musham's retirement by appointing Mr.
Phillips at that time. The Corporate Governance Committee may, at its sole
discretion and at Brunswick's expense, obtain advice and assistance from outside
legal, financial, accounting and other advisors, including search firms or
consultants retained for the purpose of identifying director candidates. The
responsibilities of the Corporate Governance Committee include, but are not
limited to:
- Reviewing policies and programs designed to ensure Brunswick's compliance
with the highest ethical standards and with all applicable legal and
regulatory requirements and regularly reporting on that compliance to the
Board;
- Periodically receiving reports on Brunswick's ethics and compliance
program;
- Together with the Human Resource and Compensation Committee, conducting
the annual review of the Chief Executive Officer's performance;
- Reviewing and making recommendations to the Board with respect to
director compensation;
- Recommending to the Board criteria for new directors and establishing
guidelines to ensure appropriate diversity of perspective, background and
experience;
- Together with the Chairman of the Board, identifying, screening,
interviewing and recommending to the Board potential director nominees;
- Overseeing the orientation of new directors and continuing education of
directors;
9
- Coordinating the review of each incumbent director's performance at the
time of his or her renomination;
- Coordinating the annual review of Brunswick's Principles and Practices;
- Together with the Chairman of the Board, recommending to the Board the
size, membership and chairs of the Board's committees; and
- Monitoring changes in, and approving all major changes to, Brunswick's
organizational structure.
The Corporate Governance Committee met seven times during 2002. The
Committee operates pursuant to a written charter, a copy of which is attached to
this proxy statement as Exhibit B to Appendix I.
DIRECTOR NOMINATIONS
The By-laws provide that nominations for the election of directors may be
made by the Board of Directors or a committee appointed by the Board of
Directors. The Corporate Governance Committee has been appointed by the Board to
make the nominations and will consider qualified director candidates who are
suggested by shareholders in written submissions to Brunswick's Secretary. In
addition, the By-laws provide the following procedures for shareholder
nominations:
- If a shareholder intends to nominate one or more director candidates to
stand for election at an annual meeting of shareholders, the shareholder
must deliver written notice of the nomination to Brunswick's Secretary
not less than 90 days or more than 120 days prior to the anniversary date
of the immediately preceding annual meeting of shareholders;
- If a shareholder intends to nominate one or more director candidates to
stand for election at a special meeting of shareholders, the shareholder
must deliver written notice of the nomination to Brunswick's Secretary
not later than the close of business on the tenth day following the date
on which notice of the meeting is first given to shareholders.
A notice of nomination submitted by a shareholder must set forth the
following information concerning the nominating shareholder and the
shareholder's nominee(s):
- Their names and addresses;
- A representation that the shareholder is entitled to vote at the meeting
and intends to appear in person or by proxy at the meeting to nominate
the person or persons specified in the notice;
- A description of all arrangements or understandings between the
shareholder and each nominee and any other information as would be
required to be included in a proxy statement soliciting proxies for the
election of the nominee(s) of the shareholder; and
- The consent of each nominee to serve as a director of Brunswick if so
elected.
The chairman of the meeting may refuse to acknowledge any nomination not
made in compliance with the foregoing procedure.
DIRECTOR COMPENSATION
During 2002, the Corporate Governance Committee conducted a review of
director compensation practices as reported in several published surveys and
reported by a group of 34 peer companies that Brunswick uses for compensation
benchmarking purposes. Based on this review and corporate governance issues
raised during 2002, several changes were made to Brunswick's compensation
programs for directors who are not employees.
Annual Fee and Deferred Stock Awards: Directors who are not employees are
entitled to an annual fee of $100,000. The director who is the chair of the
Audit Committee is entitled to an additional fee of $15,000, and the other
directors who are members of the Audit Committee are entitled to an additional
10
fee of $7,500 due to the increased time commitment required of those directors.
The directors who chair the Finance, Human Resource and Compensation and
Corporate Governance Committees are entitled to an additional annual fee of
$7,500. One-half of each director's annual fee is paid in Brunswick Common
Stock, which may be deferred until after retirement from the Board. Each
director may elect to have the remaining one-half paid as follows:
- In cash;
- In Brunswick Common Stock distributed currently; or
- In deferred stock awards with a 20 percent premium.
For directors who elect to receive one-half of their annual fee in deferred
stock awards, the number of shares of stock is determined by multiplying the
cash amount by 1.2, then dividing that amount by the closing price of Brunswick
Common Stock on the date of award. During 2002, non-employee directors could
elect to receive one-half of their retainer in stock options, and the number of
options was determined by multiplying the cash amount by four, then dividing
that amount by the closing price of Brunswick Common Stock on the date of grant.
Stock Options: Immediately following Brunswick's 2002 annual meeting of
shareholders, each non-employee director received options to purchase 3,000
shares of Brunswick Common Stock. Non-employee directors first elected in 2002
also received options to purchase 3,000 shares of Brunswick Common Stock.
Beginning in 2003, stock options will no longer be granted to non-employee
members of the Board of Directors.
The exercise price of all options is the closing price of Brunswick Common
Stock on the date of grant. Options received by directors in lieu of taking
their retainers in cash were immediately vested and are exercisable six months
following the date of grant. One-half of the shares awarded in all other non-
employee director option grants vest and become exercisable on each of the first
and second anniversaries of the date of grant. All non-employee director options
become exercisable immediately upon a change in control of Brunswick, death,
disability or retirement upon reaching the mandatory retirement age for
directors, and may be exercised at any time after becoming exercisable until the
tenth anniversary of the date of grant.
Stock Ownership Guidelines: In February 2003, the Board of Directors
adopted stock ownership guidelines for non-employee directors. By April 30,
2006, each current non-employee director must own at least 10,000 shares of
Brunswick Common Stock, and by April 30, 2008, each current non-employee
director must own at least 20,000 shares of Brunswick Common Stock. A new
non-employee director will be expected to meet these levels of stock ownership
within three and five years, respectively, of the date on which he or she
commences service as a director. For purposes of satisfying the guidelines,
deferred stock awards are included.
Brunswick Product Program: Directors are encouraged to use Brunswick
products to enhance their understanding and appreciation of the business.
Directors may receive Brunswick products with an aggregate value of up to
$10,000 annually. The value of the products is included in the directors'
taxable income, and Brunswick reimburses directors for applicable tax liability
associated with the receipt of products. In addition, directors may lease boats
from Brunswick at no charge except for the payment of applicable taxes, and all
or a portion of a director's $10,000 product allowance may be applied to defray
those taxes. Directors also may purchase Brunswick products at Brunswick's
wholesale prices.
11
SHAREHOLDERS
Each director and nominee for director, each executive officer listed in
the summary compensation table, and all directors and executive officers as a
group, owned the number of shares of Brunswick Common Stock set forth in the
following table, with sole voting and investment power except as otherwise
indicated:
NUMBER OF SHARES PERCENT
NAME OF INDIVIDUAL BENEFICIALLY OWNED AS OF
OR PERSONS IN GROUP OF FEBRUARY 28, 2003 CLASS
- ------------------- -------------------------- -------
Nolan D. Archibald..................................... 33,870(1) *
Dorrit J. Bern......................................... 15,971(1) *
Jeffrey L. Bleustein................................... 35,653(1) *
George W. Buckley...................................... 599,849(2) *
Michael J. Callahan.................................... 44,074(1) *
Manuel A. Fernandez.................................... 33,674(1) *
Peter B. Hamilton...................................... 395,213(2) *
Peter Harf............................................. 64,564(1) *
Jay W. Lorsch.......................................... 34,575(1) *
Bettye Martin Musham................................... 27,785(1) *
Graham Phillips........................................ 5,010(1) *
Robert L. Ryan......................................... 24,287(1) *
Roger W. Schipke....................................... 27,989(1) *
Ralph Stayer........................................... 14,056(1) *
Dustan E. McCoy........................................ 106,459(2) *
Patrick C. Mackey...................................... 76,583(2) *
Cynthia Trudell........................................ 29,621(2) *
Victoria J. Reich...................................... 125,031(2) *
All directors and executive officers as a group........ 2,170,761(1)(2) 2.41%
- ---------------
* Less than 1 percent
(1) Includes the following shares of Brunswick Common Stock issuable to
non-employee directors, receipt of which has been deferred: Messrs.
Archibald 2,869 shares, Bleustein 17,153 shares, Callahan 5,933 shares,
Fernandez 20,174 shares, Harf 19,353 shares, Lorsch 6,742 shares, Phillips
3,510 shares, Ryan 9,382 shares, Schipke 6,389 shares and Stayer 4,276
shares, Ms. Bern 11,471 shares, Ms. Martin Musham 2,210 shares, and all
non-employee directors as a group 109,464 shares. Also includes the
following shares of Brunswick Common Stock issuable pursuant to stock
options exercisable currently or within 60 days: 21,600 shares for each of
Messrs. Callahan and Lorsch and Ms. Martin Musham; 13,500 shares for each of
Messrs. Bleustein and Fernandez; 16,000 shares for Mr. Archibald; 20,211
shares for Mr. Harf; 1,500 shares for Mr. Phillips; 14,905 shares for Mr.
Ryan; 21,400 shares for Mr. Schipke; 3,180 shares for Mr. Stayer; and 4,500
shares for Ms. Bern.
Excludes the following shares of Brunswick Common Stock issuable to
non-employee directors, receipt of which has been deferred: Mr. Archibald
11,479 shares; Mr. Callahan 23,731 shares; Mr. Lorsch 26,968, Mr. Schipke
25,556 shares; and Ms. Martin Musham 8,840 shares. These non-employee
directors will be entitled to receive these deferred shares in predetermined
installments which will commence at varying times following their
termination of service as a member of the Board of Directors, in accordance
with each non-employee director's individual election.
(2) Includes the following shares of Brunswick Common Stock issuable pursuant to
stock options exercisable currently or within 60 days: Messrs. Buckley
531,250 shares, Hamilton 307,500 shares, Mackey 65,000 shares and McCoy
87,500 shares, Ms. Reich 109,500 shares, Ms. Trudell
12
20,000 shares, and all directors and executive officers as a group 1,659,696
shares. Includes the following shares of Brunswick Common Stock held by the
Brunswick Employee Stock Ownership Plan trustee and the Brunswick Savings
Plan trustee as of December 31, 2002: Messrs. Buckley 424 shares, Hamilton
703 shares, McCoy 63 shares and Mackey 729 shares, Ms. Reich 484 shares and
Ms. Trudell 335 shares, and all executive officers as a group 12,446 shares.
Also includes the following shares of Brunswick Common Stock held for the
benefit of family and family partnerships: Mr. Hamilton 43,250 shares, Ms.
Reich 40 shares, and all executive officers as a group 43,450 shares.
Excludes the following shares of Brunswick Common Stock issuable to
officers, receipt of which has been deferred: Messrs. Buckley 93,086 shares,
Mackey 20,794 shares and McCoy 13,162 shares, Ms. Reich 19,240 shares and
Ms. Trudell 29,546 shares, and all executive officers as a group 269,210
shares. These officers will be entitled to receive these deferred shares in
predetermined installments which will commence at varying times following
the officers' termination of employment with Brunswick, in accordance with
each officer's individual election.
Those shareholders known to Brunswick that beneficially own more than 5
percent of Brunswick's outstanding Brunswick Common Stock are:
SHARES BENEFICIALLY
OWNED AS OF
NAME AND ADDRESS OF DECEMBER 31, PERCENT
BENEFICIAL OWNER 2002 OF CLASS
- ------------------- ------------------- --------
T. Rowe Price Associates, Inc. ............................. 5,703,174(1) 6.3%
100 East Pratt Street
Baltimore, Maryland 21202
Vanguard Fiduciary Trust Company............................ 4,528,930(2) 5.024%
500 Admiral Nelson Boulevard
Malvern, Pennsylvania 19355
- ---------------
(1) These securities are owned by various individual and institutional investors
which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment adviser with power to direct investments and/or sole power to
vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(2) This information is based upon a Schedule 13G filed by Vanguard Fiduciary
Trust Company, in its capacity as trustee for certain employee benefit
plans, with the Securities and Exchange Commission on February 10, 2003.
REPORT OF THE HUMAN RESOURCE AND COMPENSATION COMMITTEE
TO THE SHAREHOLDERS OF BRUNSWICK CORPORATION:
The Human Resource and Compensation Committee of the Board of Directors is
comprised entirely of independent, non-employee directors. The Committee
operates pursuant to a written charter, a copy of which is attached to this
proxy statement as Exhibit D to Appendix I, and is responsible for overseeing
all compensation plans in which the Chairman and Chief Executive Officer and
other senior executives, including group and division presidents and senior
corporate executives ("Senior Executives") participate.
EXECUTIVE COMPENSATION PROGRAMS
Executive compensation programs are designed to:
- Attract, retain and motivate the senior executive talent required to
ensure Brunswick's continued success;
13
- Support creation of shareholder value by linking compensation to
corporate results; and
- Ensure that pay is consistent with performance.
Thirty-four peer companies were used in 2002 to assess the competitiveness
of Brunswick's executive compensation. The peer companies consist primarily of
manufacturers with revenues that are comparable with Brunswick's. Compensation
for Brunswick's Senior Executives is generally slightly above the fiftieth
percentile among the peer companies.
Base Salaries: Base salaries and salary increases reflect an executive's
responsibilities and performance, as demonstrated over time, and will be managed
around median peer salary levels. Salaries are reviewed to ensure they are
externally competitive and internally equitable. Generally, executive salaries
are reviewed every 12 to 24 months.
Brunswick Performance Plan (BPP): BPP rewards achievement of annual
Brunswick Value Added (BVA) goals. BVA is defined as after-tax profits after a
deduction for the cost of total capital. Individual awards reflect both team
performance as measured by BVA and individual contribution to success. For
Senior Executives, BPP opportunities generally range from 50 percent to 100
percent of salary.
For corporate participants, BVA is based on overall corporate performance.
For division participants, BVA is based on division performance. BVA performance
for 2002 was above plan and supported the awarding of bonuses.
Strategic Incentive Plan (SIP): SIP rewards achievement of mid-term
financial goals and performance against leading indicators of success.
Individual awards reflect both team performance and individual contribution to
success. SIP awards are based on BVA performance and performance against
identified strategic factors. With respect to the BVA component, SIP has
overlapping two-year cycles with a new cycle beginning each year. With respect
to the strategic-factor components, SIP has two-year "end-to-end" performance
periods. For Senior Executives, SIP opportunities generally range from 50
percent to 100 percent of salary.
The 2001-2002 BVA criteria were reset so that one-half of the 2001-2002
BVA-based award could be earned if 2002 performance warranted. BVA performance
for 2002 supported funding of SIP awards.
The portion of SIP based on strategic factors -- customer satisfaction,
employee satisfaction, innovation and market share -- also supported funding of
SIP awards. Because only 2002 BVA performance supported funding of SIP awards,
they are reported as annual bonuses in the summary compensation table below.
Stock Options: Brunswick uses stock options, with exercise prices set at
the closing price of Brunswick Common Stock on the date of grant, to reward
long-term success as measured by Brunswick Common Stock price appreciation.
Options generally have a ten-year term with options granted in 2002 vesting 25
percent on each of the first, second, third and fourth anniversaries of the date
of grant. Options vest earlier if there is a change in control of Brunswick,
upon death or disability of the optionee, or if the optionee's age and years of
service equal 65 or more on termination of employment.
In 2001 the Committee granted Senior Executives both their scheduled 2001
stock option awards and an accelerated grant of their scheduled 2002 stock
option awards. In recognition of this acceleration, the Committee did not grant
stock options to Senior Executives other than the Chief Executive Officer in
2002.
Restricted Stock: To reward progress made in implementing strategic plans
and to encourage retention of key individuals, one-time restricted stock grants
were made to select individuals. Grants vest one-third on each of November 21st
of 2002, 2003 and 2004. Restricted stock vests earlier if there is a change in
control of Brunswick, upon death or disability of the grantee, or if the sum of
the grantee's age and years of service equals 65 or more on the date of
termination of the grantee's employment.
14
Stock Ownership Guidelines: The Brunswick stock ownership guidelines are
as follows:
- The Chief Executive Officer is expected to own at least 175,000 shares of
Brunswick Common Stock;
- Division Presidents and the Chief Financial Officer are expected to own
at least 45,000 shares of Brunswick Common Stock.
- Other Senior Executives are expected to own from at least 10,000 to
17,500 shares of Brunswick Common Stock.
Ownership requirements are expected to be met within five years from the
later of guideline adoption, attainment of Senior Executive status or promotion
to a position with a higher ownership requirement.
Elective Deferral Program: During 2002, Senior Executives were permitted
to defer salary, BPP or SIP awards. Senior Executives electing to defer SIP
awards into deferred stock unit awards were entitled to a 20 percent premium.
For Senior Executives making this election, the number of stock units deferred
was determined by multiplying the cash amount by 1.2, then dividing that amount
by the closing price of Brunswick Common Stock on the date of award. If the
original deferral is withdrawn before the third anniversary of the deferral, the
20 percent premium will be forfeited. As of January 1, 2003, elective salary
deferral is no longer permitted.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
George W. Buckley's annual salary was increased from $800,000 to $1,000,000
as of July 1, 2002. Mr. Buckley's new salary is slightly above the median salary
for chief executive officers in Brunswick's 34-company peer group described
above. Mr. Buckley's salary was last increased in June 2000.
Mr. Buckley participates in the Brunswick Performance Plan (BPP), the
BVA-based annual incentive plan described above. Mr. Buckley's target incentive
opportunity is 150 percent of base salary. For 2002, Brunswick's BVA performance
supported funding at 150 percent of target. Mr. Buckley received a BPP award of
$2,016,300.
Mr. Buckley participates in the Strategic Incentive Plan (SIP), the
mid-term incentive plan described above. Funding for SIP awards is based on BVA
performance and achievement of strategic objectives. Mr. Buckley's target
incentive opportunity is 100 percent of base salary. Brunswick's 2002 BVA
performance supported funding of a SIP award for Mr. Buckley. In recognition of
Brunswick's accomplishment of strategic goals, the Committee recommended and the
Board approved a SIP award of $804,700 for Mr. Buckley.
In recognition of his success in developing and implementing a new
strategic plan for Brunswick, Mr. Buckley was granted 100,000 stock options in
May 2002. Stock options were granted with an exercise price equal to the closing
price of Brunswick Common Stock on the date of grant and a ten-year option term,
with 25 percent of the stock option shares vesting on the first, second, third,
and fourth anniversaries of the date of grant.
Mr. Buckley was granted 50,000 restricted shares in February 2002.
One-third of this grant vested on November 21, 2002, one-third will vest on
November 21, 2003 and the remaining one-third will vest on November 21, 2004.
15
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
The Omnibus Budget Reconciliation Act of 1993 places a $1 million tax
deduction limit on compensation paid to any executive employed by Brunswick on
December 31st of each year and required to be named in the summary compensation
table, with certain exceptions. Senior Executives will generally defer receipt
of compensation that is in excess of $1.5 million and is not otherwise
deductible by Brunswick, under the terms of an automatic deferral plan
established for this purpose. Accordingly, Brunswick may not be entitled to
deduct up to $500,000 for each named executive under these rules.
Submitted by Members of the Human Resource and Compensation Committee of
the Board of Directors.
M.A. Fernandez, Chairman
J.W. Lorsch
G. H. Phillips
16
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG BRUNSWICK, S&P 500 INDEX AND PEER GROUP
[PERFORMANCE GRAPH]
- --------------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002
- --------------------------------------------------------------------------------
Brunswick 100.00 83.13 76.33 57.85 78.58 73.44
S&P 500 Index 100.00 126.67 151.40 136.06 118.31 90.67
Peer Group 100.00 86.81 90.81 85.33 122.40 140.99
The basis of comparison is a $100 investment at December 31, 1997, in each
of (i) Brunswick, (ii) the S&P 500 Index, and (iii) a peer group of five
recreation manufacturing companies (Cybex International, Inc., Polaris
Industries, Inc., K2, Inc., Fortune Brands, Inc., and Callaway Golf Company),
weighted by the beginning of the year market value of each company. All
dividends are reinvested.
17
SUMMARY COMPENSATION TABLE
In accordance with regulations under the Securities Exchange Act of 1934,
the following table sets forth the compensation for each of the last three years
of the Chief Executive Officer and each of Brunswick's five other most highly
compensated executive officers.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS PAYOUTS
--------------------------------------- ----------------------- ----------
OTHER RESTRICTED SECURITIES LONG-TERM
ANNUAL STOCK UNDERLYING INCENTIVE ALL OTHER
NAME/POSITION YEAR SALARY BONUS(4) COMPENSATION(5) AWARD(6) OPTIONS PAYOUTS(7) COMPENSATION(8)
- ------------- ---- -------- ---------- --------------- ---------- ---------- ---------- ---------------
George W. Buckley(1)...... 2002 $896,154 $2,821,000 $251,749 $1,225,500 100,000 $ 0 $ 70,795
Chairman and 2001 $790,786 $ 500,000 $239,565 $ 0 725,000 $ 0 $ 64,125
Chief Executive Officer 2000 $660,625 $1,410,000 $306,120 $ 0 300,000 $550,000 $ 41,032
Peter B. Hamilton......... 2002 $520,000 $1,236,300 $ 37,070 $ 367,650 0 $ 0 $ 68,494
Vice Chairman and 2001 $514,000 $ 102,800 $ 61,821 $ 0 90,000 $ 0 $ 73,448
President -- Brunswick 2000 $502,116 $ 766,950 $ 43,013 $ 285,938 45,000 $342,733 $ 81,941
Bowling and Billiards
Dustan E. McCoy........... 2002 $462,019 $ 900,000 $179,213 $ 367,650 0 $ 0 $100,574
Vice President and 2001 $427,308 $ 85,462 $ 7,811 $ 0 90,000 $ 0 $ 60,214
President -- Brunswick 2000 $343,694 $ 413,800 $ 2,123 $ 0 45,000 $170,000 $ 63,331
Boat Group
Patrick C. Mackey(2)...... 2002 $449,615 $1,058,400 $100,902 $ 329,298 0 $ 0 $ 85,041
Vice President and 2001 $433,231 $ 173,292 $163,954 $ 0 90,000 $ 0 $ 59,921
President -- Mercury 2000 $103,939 $ 136,400 0 $ 0 45,000 $ 0 $ 0
Marine Group
Cynthia Trudell(3)........ 2002 $430,000 $1,010,500 $ 76,701 $ 305,520 0 $ 0 $102,689
Vice President and 2001 $302,077 $ 120,840 $179,315 $ 0 80,000 $ 0 $657,245
President -- Sea Ray
Division
Victoria J. Reich......... 2002 $367,211 $ 880,600 $ 0 $ 300,190 0 $ 0 $ 22,096
Senior Vice President 2001 $355,846 $ 101,169 $ 1,506 $ 0 90,000 $ 0 $ 18,956
and Chief Financial 2000 $307,097 $ 442,785 $ 0 $ 0 45,000 $136,307 $ 13,151
Officer
- ---------------
(1) On being named President and Chief Operating Officer of Brunswick in May
2000, Mr. Buckley's salary was increased from $470,000 to $650,000. Mr.
Buckley's salary was increased to $800,000 in June 2000 when he was named
Chairman and Chief Executive Officer and to $1,000,000 in July 2002.
(2) Mr. Mackey joined Brunswick as Vice President and President -- Mercury
Marine Group in October 2000. Mr. Mackey was inadvertently underpaid by
$39,968 in 2000, bringing his salary for that year to $103,939 from the
previously disclosed amount of $63,971, and by $65,201 in 2001, bringing his
salary for that year to $433,231 from the previously disclosed amount of
$368,030. To rectify these underpayments, Mr. Mackey was paid a lump sum of
$105,169 in 2002.
(3) Ms. Trudell joined Brunswick as Vice President and President -- Sea Ray
Division in April 2001.
18
(4) Annual bonuses for 2002 consist of amounts awarded under the 2001-2002
Brunswick Strategic Incentive Plan (SIP) and the 2002 Brunswick Performance
Plan (BPP). SIP is typically based on performance over two years with
overlapping performance periods. As summarized in the Report of the Human
Resource and Compensation Committee, the 2001-2002 performance criteria were
reset so that one-half of the award could be earned if 2002 performance
warranted. Annual bonuses earned from the 2002 BPP and 2001-2002 SIP are as
follows:
BPP SIP
---------- --------
G. Buckley.................................................. $2,016,300 $804,700
P. Hamilton................................................. $ 767,500 $468,800
D. McCoy.................................................... $ 543,300 $356,700
P. Mackey................................................... $ 674,400 $384,000
C. Trudell.................................................. $ 645,000 $365,500
V. Reich.................................................... $ 550,800 $329,800
(5) Other Annual Compensation for the named executives includes the following:
(i) for 2002: relocation expenses of $86,976 for Mr. McCoy; reimbursement
for payment of taxes for Mr. Buckley of $69,292, for Mr. McCoy of $55,614,
for Mr. Mackey of $45,860 and for Ms. Trudell of $15,435; payment of
above-market interest on deferred compensation of $20,886 for Mr. Buckley
and $37,070 for Mr. Hamilton; tax planning for Mr. Mackey of $16,575; boat
usage for Mr. Mackey of $29,184; and aircraft usage for Ms. Trudell of
$35,088; (ii) for 2001: relocation expenses of $70,644 for Mr. Buckley and
$44,660 for Mr. Mackey; reimbursement for payment of taxes for Mr. Mackey of
$77,928; and payment of above-market interest on deferred compensation of
$60,740 for Mr. Hamilton; and (iii) for 2000: relocation expenses of $95,076
for Mr. Buckley; reimbursement for payment of taxes of $107,137 for Mr.
Buckley; and payments of above-market interest on deferred compensation for
Mr. Hamilton of $43,013.
(6) The amount shown in this column is the value of restricted shares as of the
date of grant.
- On February 5, 2002, Messrs. Buckley, Hamilton, McCoy and Mackey, Ms.
Trudell and Ms. Reich were awarded 50,000, 15,000, 15,000, 12,000, 10,000
and 12,000 restricted shares respectfully. As of December 31, 2002, the
value of these shares was $993,000, $297,900, $297,900, $238,320,
$198,600 and $238,320 respectfully.
- Mr. Mackey, Ms. Trudell and Ms. Reich each deferred a portion of their
2001 SIP and were awarded 20 percent deferred stock unit premiums of
1,435.266, 2,465.116 and 247.660 respectfully. As of December 31, 2002,
the value of these deferred stock units was $28,504.38, $48,957.20 and
$4,918.53 respectfully.
- On May 4, 2000, Mr. Hamilton was awarded 15,000 restricted shares. As of
December 31, 2002, the value of these shares was $297,900.
(7) Due to restated performance goals for the 2001-2002 SIP, which typically is
treated as long-term incentive compensation, 2001 and 2002 SIP awards are
reported in the annual bonus column.
(8) All Other Compensation for 2002 for named executives is comprised of the
following:
- Brunswick contributions to the Brunswick Retirement Savings Plan and the
Brunswick Restoration Plan for Messrs. Buckley $16,131 and Hamilton
$3,300 and Ms. Reich $6,610;
- Brunswick contributions to the Brunswick Employee Stock Ownership Plan of
$457 for each of Messrs. Buckley, Hamilton, McCoy and Mackey, Ms. Trudell
and Ms. Reich;
- Brunswick contributions to the Brunswick Rewards Plan and the Brunswick
Restoration Plan for Messrs. McCoy $71,594 and Mackey $36,670 and Ms.
Trudell $70,485; and
19
- The value of split dollar life insurance premiums paid by Brunswick on
behalf of named executives. This value represents the cost of term life
insurance provided during the year as well as the present value of the
potential cash surrender value attributable to the year's premium
payment. The present value is determined by assuming an interest free
loan to the named executive until Brunswick is reimbursed for its portion
of the premiums. These amounts are: Messrs. Buckley $54,207, Hamilton
$64,737, McCoy $28,524 and Mackey $47,914, Ms. Trudell $31,747 and Ms.
Reich $15,029. Brunswick paid all split dollar life insurance premiums
prior to July 30, 2002.
OPTION GRANTS IN 2002
INDIVIDUAL GRANTS(1)
------------------------------------------------ POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED ANNUAL
SECURITIES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION FOR OPTION TERM(4)
OPTIONS EMPLOYEES EXERCISE EXPIRATION -------------------------------------
EXECUTIVE GRANTED IN 2002 PRICE DATE 0% 5% 10%
- --------- ---------- ---------- -------- ---------- --- -------------- --------------
George W. Buckley............... 100,000 10.42% $28.6700 05/01/12 0 $ 1,803,041 $ 4,569,260
Peter B. Hamilton............... 0 0% 0
Dustan E. McCoy................. 0 0% 0
Patrick C. Mackey............... 0 0% 0
Cynthia Trudell................. 0 0% 0
Victoria J. Reich............... 0 0% 0
All Employee Optionees.......... 959,385 100% $24.9700(2) various 0 $ 15,065,701 $ 38,179,445
All Shareholders(3)............. N/A N/A N/A N/A 0 $1,415,519,834 $3,588,387,860
Employee Optionees' Gain as % of
All Shareholders' Gains(4).... N/A N/A N/A N/A 0 1.06% 1.06%
- ---------------
(1) Non-qualified stock options awarded during 2002 have an exercise price equal
to the closing price of Brunswick Common Stock on the date of grant and a
ten-year option term, with 25 percent of the stock option shares vesting on
the first, second, third and fourth anniversaries of the date of grant.
Options vest earlier if there is a change in control of Brunswick, upon
death or disability of the optionee or if the sum of the optionee's age and
years of service equals 65 or more on the date of termination of employment
of the optionee. When exercising options, an optionee may deliver previously
acquired shares of Brunswick Common Stock or may request that shares be
withheld to satisfy required withholding taxes. Stock options are
transferable only to immediate family members, estate planning vehicles or
as otherwise approved by the Human Resource and Compensation Committee.
(2) Weighted average exercise price of all employee option shares awarded during
2002.
(3) The potential realizable values for all shareholders were calculated using
the weighted average exercise price of all employee option shares awarded
during 2002 ($24.97) and the total outstanding shares of Brunswick Common
Stock on December 31, 2002 (90,160,499). At 5 percent and 10 percent annual
appreciation, the value of the Brunswick Common Stock would be approximately
$40.67 per share and $64.77 per share, respectively, at the end of the
ten-year period.
(4) No gain to the optionees is possible without an increase in stock price,
which will benefit all shareholders commensurately. A zero percent stock
price appreciation will result in zero dollars for the optionee.
20
OPTION EXERCISES AND YEAR-END VALUE TABLE(1)
NUMBER OF SECURITIES VALUE OF UNEXERCISED,
UNDERLYING THE UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 12/31/02 HELD AT 12/31/02(2)
--------------------------- ---------------------------
EXECUTIVE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------- ----------- ------------- ----------- -------------
George W. Buckley......................... 456,250 793,750 $119,625.00 $119,625.00
Peter B. Hamilton......................... 285,000 90,000 $ 81,562.50 $ 22,162.50
Dustan E. McCoy........................... 65,000 90,000 $ 22,162.50 $ 22,162.50
Patrick C. Mackey......................... 42,500 87,500 $ 35,950.00 $ 35,950.00
Cynthia Trudell........................... 20,000 60,000 $ 7,400.00 $ 22,200.00
Victoria J. Reich......................... 87,000 90,000 $ 22,162.50 $ 22,162.50
- ---------------
(1) No options were exercised by any named executive in 2002.
(2) Represents the difference between the option exercise price and the fair
market value of Brunswick Common Stock on December 31, 2002.
LONG-TERM INCENTIVE PLAN -- AWARDS DURING 2002
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF SHARES, PERFORMANCE OR OTHER NON-STOCK PRICE-BASED PLANS
UNITS OR OTHER PERIOD UNTIL ------------------------------
EXECUTIVE RIGHTS(1) MATURATION OR PAYOUT THRESHOLD TARGET
- --------- ----------------- -------------------- ----------- ------------
George W. Buckley............... $1,000,000 2002-2003 $250,000 $1,000,000
Peter B. Hamilton............... $ 520,000 2002-2003 $130,000 $ 520,000
Dustan E. McCoy................. $ 475,000 2002-2003 $118,750 $ 475,000
Patrick C. Mackey............... $ 465,000 2002-2003 $116,250 $ 465,000
Cynthia Trudell................. $ 440,000 2002-2003 $110,000 $ 440,000
Victoria J. Reich............... $ 375,000 2002-2003 $ 93,750 $ 375,000
- ---------------
(1) These dollar-denominated incentive opportunities were granted in 2002 under
the Brunswick Strategic Incentive Plan (SIP), to be paid out based on
performance during the two-year period commencing on January 1, 2002. SIP
awards are based on BVA performance and performance against identified
strategic factors. With respect to the BVA component, SIP has overlapping
two-year cycles with a new cycle beginning each year. With respect to the
strategic-factor components, SIP has two-year "end-to-end" performance
periods.
PENSION PLANS
The following table shows the maximum retirement income which may be
payable as a straight-life annuity pursuant to Brunswick's salaried pension
plans at age 65 under various assumed conditions prior to reduction for Social
Security benefits.
RETIREMENT INCOME FOR
AVERAGE OF THE THREE HIGHEST YEARS OF PARTICIPATING SERVICE
CONSECUTIVE YEARS' EARNINGS -----------------------------------------
AS A PARTICIPANT 15 20 25 30
- ---------------------------- ------- ------- --------- ---------
$ 500,000................................ 150,000 200,000 250,000 300,000
750,000................................ 225,000 300,000 375,000 450,000
1,000,000................................ 300,000 400,000 500,000 600,000
1,250,000................................ 375,000 500,000 625,000 750,000
1,500,000................................ 450,000 600,000 750,000 900,000
2,000,000................................ 600,000 800,000 1,000,000 1,200,000
21
The salaried pension plans are non-contributory plans providing for
benefits following retirement under a formula based upon years of participation
in the plans up to 30 years, the average of the three highest consecutive years'
earnings (salaries, annual bonuses and commissions, but excluding payouts under
the Strategic Incentive Plan), and age. The 2002 earnings used to calculate Mr.
Buckley's benefits under the salaried pension plans are $896,154, which include
his 2002 salary and the bonus paid in 2002 for 2001 performance.
The years of service of the officers named in the summary compensation
table are: Mr. Buckley 10 years, Mr. Hamilton 19 years, and Ms. Reich 6 years.
Mr. McCoy and Mr. Mackey do not participate in any salaried pension plan. Mr.
Buckley's 10 years of service include 5 additional years of service that were
credited to him upon his completion of 3 years of employment with Brunswick. In
addition, if Mr. Buckley remains employed by Brunswick until age 60, his pension
benefit will be further enhanced to provide 40 percent of his final average
earnings at age 60, and will be further increased by three percent for each year
of employment thereafter to a maximum of 55 percent of his final average
earnings at age 65. Under an agreement with Brunswick, Mr. Hamilton's 19 years
include 12.5 years of service with a previous employer, reduced by the pension
he receives from that employer.
If there is a change in control of Brunswick on or before March 1, 2004,
and if there is a termination, merger or transfer of assets of the salaried
pension plans during the five years following the change in control of
Brunswick, benefits would be increased so that there would be no excess net
assets. Also, in the event of the involuntary termination of employment (other
than for cause) of a participant in the salaried pension plans during the five
years following a change in control of Brunswick, the participant's pension
would not be reduced as a result of early retirement. For purposes of pension
treatment, a change in control of Brunswick has the same as the definition as
that described in Mr. Buckley's change in control agreement, which is described
in the section Employment Agreements and Other Transactions below.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2002, regarding
Brunswick Common Stock that may be issued under equity compensation plans
currently maintained by Brunswick. The table does not include information
regarding the proposed Brunswick Corporation 2003 Stock Incentive Plan, for
which Brunswick is seeking shareholder approval at the 2003 annual meeting of
shareholders, and the terms of which are summarized below.
(C)
NUMBER OF SECURITIES
REMAINING AVAILABLE
(A) (B) FOR FUTURE ISSUANCE
NUMBER OF SECURITIES WEIGHTED-AVERAGE UNDER EQUITY
TO BE ISSUED UPON EXERCISE PRICE OF COMPENSATION PLANS
THE EXERCISE OF OUTSTANDING (EXCLUDING SECURITIES
OUTSTANDING OPTIONS OPTIONS REFLECTED IN
PLAN CATEGORY AND RIGHTS AND RIGHTS COLUMN (A))
- ------------- -------------------- ----------------- ---------------------
Equity compensation plans approved
by security holders(1)............. 9,258,572(2) $22.44(3) 815,760(4)
Equity compensation plans not
approved by security holders(5).... 215,796(6) $25.23 (7)
TOTAL.............................. 9,474,368 815,760
- ---------------
(1) The following plans have been approved by Brunswick shareholders: the
Brunswick Corporation 1991 Stock Plan (the "1991 Plan"), the Brunswick
Corporation 1994 Stock Option Plan for Non-Employee Directors (the "1994
Plan") and the Brunswick Corporation 1995 Stock Plan for Non-Employee
Directors (the "1995 Plan").
(2) Includes 9,049,987 shares of Brunswick Common Stock subject to outstanding
options and 205,585 shares of Brunswick Common Stock subject to deferred
obligations to issue shares of Brunswick Common Stock.
22
(3) The weighted average exercise price was calculated solely with respect to
outstanding options. Deferred obligations to issue shares of Brunswick
Common Stock have been disregarded for purposes of calculating the weighted
average exercise price because no exercise price is associated with those
obligations.
(4) As of December 31, 2002, 547,642 shares of Brunswick Common Stock remain
available for future awards under the 1991 Plan. Upon the effectiveness of
the Brunswick Corporation 2003 Stock Incentive Plan, the 1991 Plan will be
terminated. As of December 31, 2002, 125,200 shares of Brunswick Common
Stock remain available for future awards of options under the 1994 Plan and
142,918 shares of Brunswick Common Stock remain available for future awards
of Brunswick Common Stock under the 1995 Plan.
(5) The Brunswick Corporation 1997 Stock Plan for Non-Employee Directors has not
been approved by shareholders. The material terms of this plan are described
below.
(6) Consists solely of outstanding options.
(7) The 1997 Plan does not contain a limit on the number of shares of Brunswick
Common Stock that are available for awards. Brunswick does not intend to
grant awards under the 1997 Plan upon the effectiveness of the Brunswick
Corporation 2003 Stock Incentive Plan.
BRUNSWICK CORPORATION 1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
The Brunswick Corporation 1997 Stock Plan for Non-Employee Directors (the
"1997 Plan") has not been approved by Brunswick shareholders. Participation in
the 1997 Plan, which provides for the issuance of Brunswick Common Stock and
options to purchase Brunswick Common Stock, is limited to non-employee directors
of Brunswick.
Stock Awards: Non-employee directors of Brunswick may receive awards of
Brunswick Common Stock under the 1997 Plan as authorized by the Board. If an
award is denominated in dollars, the number of shares subject to the award is
determined by dividing the applicable amount by the fair market value of
Brunswick Common Stock on the date the award is made. Receipt of Brunswick
Common Stock awarded under the 1997 Plan may be deferred until retirement from
the Board as authorized by the Board and will be paid in one lump sum after
retirement unless the director elects to have the shares of Brunswick Common
Stock paid after retirement in up to fifteen annual installments.
Options: Non-employee directors of Brunswick may receive options to
purchase Brunswick Common Stock under the 1997 Plan as authorized by the Board.
The exercise price of options granted under the 1997 Plan may not be less than
the fair market value of Brunswick Common Stock on the date of grant. Payment of
the exercise price may be made in cash, other shares of Brunswick Common Stock
or by a combination thereof, with the right to have shares withheld or to
deliver previously acquired shares to satisfy tax withholding obligations on
exercise of the option. Other terms applicable to options granted under the 1997
Plan are determined by the Board at the time the option is granted.
EMPLOYMENT AGREEMENTS AND OTHER TRANSACTIONS
Under an agreement with Brunswick dated November 1, 2000, Mr. Buckley would
be entitled to certain severance benefits in the event his employment is
terminated other than for cause or disability. The agreement defines termination
to include resignation by Mr. Buckley in connection with certain events,
including a change in control of Brunswick or other substantial changes in the
terms and conditions of Mr. Buckley's employment.
If a termination covered by the agreement does not involve a change in
control, Mr. Buckley would be entitled to a severance payment equal to two times
his base salary and target annual bonus for the year in which termination
occurs. If the termination does involve a change in control, Mr. Buckley would
be entitled to a severance payment equal to three times the sum of (i) his
annual salary, (ii) the larger of his targeted annual bonus for the year of
termination or the year in which the change in control occurs, and (iii) his
most recent full-cycle target percentage under the Strategic Incentive Plan
(SIP), plus any
23
applicable premium determined as if the award were paid in stock. Mr. Buckley
would also be entitled to receive: any annual bonus earned for the preceding
year that had not yet been paid at the time of termination; a pro rata annual
bonus for the year in which termination occurs unless the termination occurs in
the first quarter of the year; and other benefits and perquisites for up to two
years (three years in the event of a change in control). If termination occurs
following a change in control, Mr. Buckley would also be entitled to a lump sum
payment of accrued pension and supplemental pension benefits, calculated as if
he had worked for an additional three years beyond the date of the change in
control; accrued profit-sharing benefits; accrued deferred compensation
contributions; and would fully vest in all outstanding stock options and
restricted stock awards.
The definition of a change in control includes: (i) the acquisition of 25
percent or more of the outstanding voting stock of Brunswick by any person other
than an employee benefit plan of Brunswick; (ii) a tender offer for stock of
Brunswick which has not been negotiated and approved by Brunswick's Board of
Directors once (a) the offeror owns or has accepted for payment 25 percent or
more of the outstanding voting stock of Brunswick, or (b) three business days
before the offer is to terminate, unless the offer is withdrawn first, if the
offeror could own 50 percent or more of the outstanding voting stock of
Brunswick as a result of the offer; (iii) the failure of the incumbent Board of
Directors to constitute a majority of Brunswick's Board of Directors, excluding
new directors who are approved by a vote of at least 75 percent of the members
of the incumbent Board of Directors and did not join the Board following a
contested election of directors; (iv) a merger of Brunswick with another
corporation, other than a merger in which Brunswick's shareholders receive at
least 75 percent of the voting stock outstanding after the merger or a merger
effected to implement a recapitalization of Brunswick in which no person
acquires more than 25 percent of Brunswick's voting stock; or (v) a complete
liquidation or dissolution of Brunswick or sale of substantially all of
Brunswick's assets.
The terms of the agreement require Mr. Buckley to assent to certain
confidentiality, non-competition and non-solicitation provisions, and to execute
a general release.
In connection with his being named President and Chief Operating Officer in
May 2000, Mr. Buckley was required to relocate from Fond du Lac, Wisconsin, to
the Lake Forest, Illinois, area. In connection with Mr. Buckley's purchase of a
new home in the Lake Forest, Illinois, area, Brunswick loaned Mr. Buckley
$800,000 during 2000, to be repaid in five annual installments commencing August
1, 2001. This loan is secured by a mortgage on Mr. Buckley's home and will be
interest-free except in the event of default. Mr. Buckley has timely made all
required payments to date under the loan, and is otherwise in full compliance
with the terms of the loan. On January 1, 2002, $640,000 was outstanding on the
loan, and $480,000 is outstanding on the loan as of the date of this proxy
statement.
Brunswick's other Senior Executives are entitled to severance and change in
control benefits substantially similar to those outlined above for Mr. Buckley,
except that the severance payment triggered by a termination that does not
follow a change in control is equal to 1.5 times base salary plus a target
annual bonus as determined at the discretion of the Chief Executive Officer for
the year in which termination occurs.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING REQUIREMENTS
According to written certifications provided to Brunswick, all directors
and executive officers of Brunswick timely filed all required reports in
accordance with Section 16(a) during 2002 except as described below.
Prior to 2002, all Brunswick stock transactions in executives' retirement
savings plans had been reportable on an annual basis. Following SEC rule changes
enacted during 2002, certain transactions in executives' retirement plans became
reportable within two business days of the transaction. Brunswick's executives
rely on Brunswick to prepare and file SEC reports on their behalf pursuant to
powers of attorney granted by the executives. Brunswick's reporting system did
not account for the accelerated filing requirement in a timely manner. As a
result, the following executives reported certain contributions made
24
into their retirement savings plans and denominated in Brunswick Common Stock
units following the year-end rather than within the accelerated filing period:
Kathryn Chieger, 85 stock units credited to her retirement savings in a single
transaction; Kevin Grodzki, 97 stock units credited to his retirement savings in
four separate transactions; Patrick Mackey, 252 stock units credited to his
retirement savings in six separate transactions; and Cynthia Trudell, 125 stock
units credited to her retirement savings in four separate transactions. Each of
these transactions should have been reported on a separate Form 4 within two
business days of the transaction.
REPORT OF THE AUDIT COMMITTEE
TO THE SHAREHOLDERS OF BRUNSWICK CORPORATION:
The following is the report of the Audit Committee with respect to
Brunswick's audited financial statements for the fiscal year ended December 31,
2002.
AUDIT COMMITTEE CHARTER
The Audit Committee operates pursuant to a written charter, a copy of which
is attached to this proxy statement as Exhibit A to Appendix I.
INDEPENDENCE OF AUDIT COMMITTEE MEMBERS
The Board of Directors has determined that all members of the Audit
Committee are independent, in accordance with the New York Stock Exchange audit
committee requirements.
REVIEW WITH MANAGEMENT
The Audit Committee has reviewed and discussed Brunswick's audited
financial statements with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT ACCOUNTANTS
The Audit Committee has discussed with Ernst & Young LLP, Brunswick's
independent auditors for the fiscal year ended December 31, 2002, the matters
required to be discussed by SAS 61 (Codification of Statements on Auditing
Standards).
The Audit Committee has also received the written disclosures and the
letter from Ernst & Young LLP required by Independence Standards Board Standard
No. 1 (which relates to the accountant's independence from Brunswick and its
related entities) and has discussed with Ernst & Young LLP its independence from
Brunswick. The Audit Committee has also reviewed the non-audit services provided
by Ernst & Young LLP, as described below, and considered whether the provision
of those services was compatible with maintaining Ernst & Young LLP's
independence.
CONCLUSION
Based on the review and discussions referred to above, the Audit Committee
recommended to Brunswick's Board that the audited financial statements be
included in Brunswick's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002.
Submitted by Members of the Audit Committee of the Board of Directors
M. J. Callahan (Chairman)
D. J. Bern
R. L. Ryan
25
PROPOSAL NO. 2: APPROVAL OF BRUNSWICK CORPORATION
2003 STOCK INCENTIVE PLAN
On February 4, 2003, the Board of Directors adopted the Brunswick
Corporation 2003 Stock Incentive Plan (the "Plan") and recommended the Plan be
submitted to shareholders for approval at the 2003 annual meeting of
shareholders. If approved by shareholders, the Plan will become effective as of
the date of the approval. The following summary is qualified in its entirety by
reference to the complete text of the Plan, which is attached as Appendix II to
this proxy statement.
Purpose: The Plan is intended to provide incentives and rewards (i) to
support the execution of Brunswick's business and human resource strategies,
(ii) to provide for the compensation of non-employee directors, and (iii) to
more closely align the interests of participants with those of Brunswick's
shareholders.
Participants: All employees of Brunswick and its subsidiaries and
non-employee directors of Brunswick are eligible to participate in the Plan.
Authorization: Subject to adjustment as described below, the Plan provides
that 4,000,000 shares of Brunswick Common Stock plus the number of shares of
Brunswick Common Stock available for future grants of awards under the Brunswick
Corporation 1991 Stock Plan (the "1991 Plan") will be available for award
grants, of which no more than 25 percent may be subject to awards other than
stock options. As of March 6, 2003, 544,623 shares are available under the 1991
Plan. Shares represented by awards under this Plan, the 1991 Plan and
Brunswick's 1997 Stock Plan for Non-Employee Directors (the "1997 Plan") (i)
which are cancelled, forfeited, surrendered, terminated, paid in cash or expire
unexercised or (ii) which are not issued or delivered by reason of the delivery
or withholding of shares of Brunswick Common Stock to pay all or a portion of
the exercise price of an award, if any, or to satisfy all or a portion of the
tax withholding obligations related to an award, are also available for awards
granted under the Plan. The shares of Brunswick Common Stock subject to awards
under the Plan may be either authorized but unissued shares or treasury shares.
The maximum number of shares of Brunswick Common Stock with respect to
which stock options may be granted during any calendar year to any person is
1,000,000, subject to adjustment as described below.
Administration: Except as otherwise determined by the Board or as
described below, the Plan will be administered by the Human Resource and
Compensation Committee (the "Compensation Committee"). The Compensation
Committee will also have authority to establish rules and regulations for
administering the Plan and to decide questions of interpretation or application
of any provision of the Plan. The Compensation Committee will have the authority
to select employees who will receive awards under the Plan and determine all the
terms and conditions of those awards; provided, however, that the Corporate
Governance Committee (the "Governance Committee") will have the authority to
select non-employee directors who will receive awards under the Plan and will
determine all the terms and conditions of each award granted to a non-employee
director. Except as otherwise determined by the Board, the Governance Committee
will exercise all the authority of the Compensation Committee under the Plan as
the same relates to awards granted to non-employee directors.
Each of the Compensation Committee and the Governance Committee may
designate other persons to carry out its responsibilities with conditions and
limitations as it may set; provided, however, that neither may delegate its
power and authority with regard to the selection for participation in the Plan
of persons who are executive officers or non-employee directors of Brunswick or
decisions concerning the timing, pricing or amount of an award to that person.
Prior to a Change of Control (as defined in the Plan), the Compensation
Committee may cancel any award for reasonable cause and may provide for the
conditions and circumstances under which awards will be forfeited.
Awards: In addition to incentive compensation, awards may also be made in
tandem with or in lieu of current or deferred compensation. In addition to
Brunswick Common Stock, the following types of
26
awards and other Brunswick Common Stock-based awards may be granted under the
Plan on a stand-alone, combination or tandem basis:
Stock Options. A right to buy a specified number of shares of Brunswick
Common Stock at a fixed exercise price during a specified time; provided the
exercise price may not be less than the fair market value of a share of
Brunswick Common Stock on the date of grant. Stock options granted under the
Plan are not intended to qualify as incentive stock options under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
Restricted and Performance Shares. A transfer of Brunswick Common Stock,
subject to restrictions on transfer or other incidents of ownership, or subject
to specified performance standards for specified periods of time.
Restricted and Performance Share Units. A fixed or variable share or
dollar denominated unit subject to conditions of vesting, performance and time
of payment, which unit may be paid in Brunswick Common Stock, cash or a
combination of both.
Other Brunswick Common Stock-based Awards. Other Brunswick Common
Stock-based awards which are related to or serve a similar function as those
awards described above.
Adjustments: In the event there is a change in the capital structure of
Brunswick as a result of any stock dividend or split, recapitalization,
reorganization, merger, consolidation, spin-off or other similar corporate
change, the Compensation Committee will make an adjustment in the number of
shares of Brunswick Common Stock available for issuance under the Plan, the
maximum number of shares that may be granted to any person during a calendar
year, the number of shares covered by any outstanding award and the price per
share thereof.
Amendments and Terminations: The Board or the Compensation Committee may
at any time amend, suspend or discontinue the Plan and, prior to a Change of
Control, alter or amend any awards granted thereunder to the extent permitted by
law. Any amendment, suspension, discontinuation or alternation may be taken
without the approval of the shareholders of Brunswick to the extent that the
approval is not required by applicable law or regulation. There is no set
termination date for the Plan.
Federal Income Tax Considerations: The following discussion briefly
summarizes the federal income tax consequences generally arising with respect to
awards under the Plan. This summary is not intended to be exhaustive, does not
constitute tax advice and, among other things, does not describe state, local or
foreign tax consequences. A Participant should consult his or her own tax
advisor with respect to the specific federal, state, local and other tax
consequences of participation in the Plan.
Stock Option. No income is recognized by a recipient of an option upon the
grant of the option. Upon exercise of the option, compensation taxable as
ordinary income (and subject to income tax withholding) will be realized by the
recipient in an amount equal to the excess of the fair market value of the
shares on the date of the exercise over the exercise price, and Brunswick will
be entitled to a corresponding deduction. A subsequent sale of those shares will
result in capital gain or loss measured by the difference between (i) the
exercise price, increased by any compensation recognized by the recipient upon
exercise of the option and (ii) the amount realized on the subsequent sale.
Capital gain or loss will be long-term or short-term depending on how long the
shares were held from the date the option was exercised. Brunswick will not be
entitled to any deduction with respect to the amount recognized by the recipient
as capital gain.
Restricted and Performance Shares. A recipient of restricted or
performance shares that are subject to restrictions or performance standards
that constitute a substantial risk of forfeiture generally will be subject to
tax at ordinary income rates at the time the restrictions on the restricted
shares lapse, or the performance standards on the performance shares are
satisfied, as applicable, in an amount equal to the excess of the fair market
value of the shares at that time over the amount, if any, paid for the shares.
However, the recipient may make an election to be taxed at the time the
restricted or performance shares are granted (an "83(b) election"). If an 83(b)
election is made, the recipient will recognize taxable
27
income on the date of grant equal to the excess of the fair market value of the
shares at that time over the amount, if any, paid for the shares as if there
were no restrictions or performance standards. The amount of ordinary income
recognized by a recipient of restricted or performance shares generally is
deductible by Brunswick as a compensation expense, except to the extent the
deduction limits of Section 162(m) of the Code apply. If the shares subject to
an 83(b) election are subsequently forfeited, the recipient will not be entitled
to any deduction, refund or loss for tax purposes for the ordinary income
recognized by the recipient with respect to the forfeited shares. If the terms
of an award agreement provide that a recipient of restricted or performance
shares will have the right to receive dividends, the amount of any cash
dividends paid on restricted or performance shares for which an 83(b) election
has not been made and before the restrictions lapse or the performance standards
are satisfied, as applicable, will be treated as compensation taxable as
ordinary income, rather than dividend income, and Brunswick will be entitled to
a corresponding deduction.
A subsequent sale of shares previously subject to restrictions or
performance standards that constitute a substantial risk of forfeiture will
result in capital gain or loss measured by the difference between (i) the sum of
the amount, if any, paid for the shares plus the amount of any compensation
recognized by the recipient upon expiration or satisfaction of the restrictions
or performance standards, or if an 83(b) election was made, at the time of grant
and (ii) the amount realized on the subsequent sale. Capital gain or loss will
be long-term or short-term depending on how long the shares were held. The
holding period to determine whether the recipient has long-term or short-term
capital gain or loss begins when the restriction period expires or the
performance standards are satisfied, or if an 83(b) election was made, on the
date of the grant. Brunswick will not be entitled to any deduction with respect
to the amount recognized by the recipient as capital gain.
Restricted and Performance Units. A recipient of restricted or performance
units generally will be subject to tax at ordinary income rates at the time the
units are settled in an amount equal to the excess of the sum of the cash and
the fair market value of the shares distributed at that time over the amount, if
any, paid for the shares. This amount is generally deductible by Brunswick as a
compensation expense, except to the extent the deduction limits of Section
162(m) of the Code apply. A subsequent sale of shares received upon settlement
of any restricted or performance units will result in capital gain or loss
measured by the difference between (i) the sum of the amount, if any, paid for
the shares plus the amount of any compensation recognized by the recipient upon
settlement of the units and (ii) the amount realized on the subsequent sale.
Capital gain or loss will be long-term or short-term depending on how long the
shares were held from the date the units were settled. Brunswick will not be
entitled to any deduction with respect to the amount recognized by the recipient
as capital gain.
Stock. A recipient receiving unrestricted shares of Brunswick Common Stock
will recognize compensation taxable as ordinary income (and subject to income
tax withholding) at the time the Brunswick Common Stock is awarded in an amount
equal to the excess of the then fair market value of the Brunswick Common Stock
over the amount, if any, paid for the Brunswick Common Stock. This amount is
generally deductible by Brunswick as a compensation expense, except to the
extent the deduction limits of Section 162(m) of the Code apply.
Other Brunswick Common Stock-based Awards. The federal income tax
consequences of other Brunswick Common Stock-based awards will depend on how the
awards are structured.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
28
PROPOSAL NO. 3: APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee has appointed Ernst & Young LLP (Ernst & Young),
independent public accountants, as auditors for Brunswick and its subsidiaries
for fiscal year 2003. The Board of Directors recommends that the appointment of
Ernst & Young as accountants for Brunswick and its subsidiaries be ratified. If
shareholders do not ratify the appointment, the Board of Directors and the Audit
Committee will reconsider their selection. Ernst & Young served as independent
auditors for Brunswick and its subsidiaries for fiscal year 2002.
Representatives of Ernst & Young will be present at the annual meeting of
shareholders and afforded an opportunity to make a statement, if they desire to
do so, and to respond to questions from shareholders.
On March 13, 2002, Brunswick terminated its engagement of Arthur Andersen
as independent auditors. The decision to terminate the engagement of Arthur
Andersen was recommended by Brunswick's Audit and Finance Committee and approved
by the Board of Directors.
Arthur Andersen's report on the financial statements of Brunswick for each
of the years ended December 31, 2000, and December 31, 2001, did not contain an
adverse opinion or a disclaimer of opinion and was not qualified or modified as
to uncertainty, audit scope or accounting principles.
During the years ended December 31, 2000, and December 31, 2001, and the
interim period between December 31, 2001, and March 13, 2002, there were no
disagreements between Brunswick and Arthur Andersen on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Arthur
Andersen, would have caused it to make reference to the subject matter of the
disagreements in connection with its report. During the years ended December 31,
2000, and December 31, 2001, there were no reportable events (as defined in Item
304(a)(1)(v) of Regulation S-K promulgated by the Securities and Exchange
Commission).
During the years ended December 31, 2000, and December 31, 2001, and the
interim period between December 31, 2001, and March 13, 2002, Brunswick did not
consult with Ernst & Young regarding (i) the application of accounting
principles to a specified transaction, either completed or proposed, (ii) the
type of audit opinion that might be rendered on Brunswick's financial statements
or (iii) any matter that was either the subject of a disagreement (as described
above) or a reportable event.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
FEES INCURRED FOR SERVICES OF ERNST & YOUNG
For 2002, Brunswick incurred the following fees for services rendered by
Ernst & Young, Brunswick's accountant during the fiscal year ended December 31,
2002:
Audit Fees: Brunswick incurred $1,266,700 in fees for audit services
rendered by Ernst & Young in connection with the audit of Brunswick's annual
financial statements, reviews of Brunswick's quarterly reports on Form 10-Q and
statutory audits required internationally.
Financial Information Systems Design and Implementation Fees: Brunswick
incurred no fees for financial information systems design and implementation
services rendered by Ernst & Young during 2002.
All Other Fees: Brunswick incurred $195,300 in fees for all services
rendered by Ernst & Young during 2002 other than audit and financial information
systems design and implementation services.
29
SHAREHOLDER PROPOSALS
In order to be considered for inclusion in Brunswick's proxy materials for
its 2004 annual meeting, a shareholder proposal must be received at Brunswick's
principal executive offices at 1 N. Field Court, Lake Forest, Illinois
60045-4811 by November 27, 2003. In addition, Brunswick's By-laws establish an
advance notice procedure for shareholder proposals to be brought before an
annual meeting of shareholders, including proposed nominations of persons for
election to the Board. A shareholder proposal or nomination intended to be
brought before the 2004 annual meeting must be delivered to the Secretary no
earlier than January 1, 2004, and no later than January 31, 2004. All proposals
and nominations should be directed to Corporate Secretary, Brunswick
Corporation, 1 N. Field Court, Lake Forest, Illinois 60045-4811.
In order to assure the presence of the necessary quorum and to vote on the
matters to come before the annual meeting, please indicate your choices on the
enclosed proxy, and date, sign and return it promptly in the envelope provided.
Alternatively, you may vote your proxy by telephone or via the Internet by
following the instructions included with your proxy card.
By order of the Board of Directors,
/s/ MARSCHALL I. SMITH
Marschall I. Smith
Secretary
Lake Forest, Illinois
March 21, 2003
30
APPENDIX I
BRUNSWICK CORPORATION
PRINCIPLES AND PRACTICES OF THE BOARD OF DIRECTORS
AS APPROVED BY THE BOARD OF DIRECTORS
DECEMBER 5, 2002
TABLE OF CONTENTS
OVERVIEW.................................................... I-1
BOARD ROLES AND RESPONSIBILITIES............................ I-1
Board Objective........................................... I-1
Board Responsibilities.................................... I-1
Expectations of Individual Directors...................... I-1
Board's Expectations Of Management........................ I-2
BOARD SELECTION AND COMPOSITION............................. I-2
Definition of an Independent Director..................... I-2
Number of Directors....................................... I-3
Number of Independent Directors........................... I-3
Nomination and Selection of Directors..................... I-3
Board Leadership.......................................... I-4
Director Retirement....................................... I-4
Change of Position........................................ I-4
Service on Other Boards................................... I-4
Service on Boards of Competing or Interlocking
Enterprises............................................ I-4
Director Orientation and Continuing Education Program..... I-5
BOARD OPERATIONS............................................ I-5
Number of Regular Meetings................................ I-5
Annual Agenda............................................. I-5
Extended Meeting.......................................... I-6
Other Regular Meetings.................................... I-6
Special Meetings.......................................... I-6
Executive Sessions........................................ I-6
Meeting Materials......................................... I-6
Board Contact with Management............................. I-6
Board Evaluation.......................................... I-6
CEO Evaluation............................................ I-7
Strategy.................................................. I-7
Management Development and Succession Planning............ I-7
Board Committees.......................................... I-7
Committee Composition; Rotation of Membership............. I-7
Management Liaison Officers............................... I-8
Annual Committee Agenda................................... I-8
Committee Meeting Materials............................... I-8
Management Attendance at Committee Meetings............... I-9
Committee Reports to the Board............................ I-9
Ad Hoc Committees......................................... I-9
OTHER MATTERS............................................... I-9
Directors' Compensation................................... I-9
Directors' Share Ownership................................ I-9
Management Service on Other Boards........................ I-9
Communications............................................ I-10
OVERVIEW
These Principles and Practices (the "Principles") have been adopted by the
Board of Directors (the "Board") of Brunswick Corporation (the "Corporation") to
assist it in the performance of its duties and the exercise of its
responsibilities. The Principles reflect the Board's current thinking with
respect to corporate governance issues.
The Board believes that good corporate governance is a source of
competitive advantage for the Corporation. Management drives superior
performance, but good corporate governance brings the skills, experience and
judgment of the Board to bear on the Corporation's executive management team
("Management"), enabling Management to improve the Corporation's performance and
maximize stockholder value.
The Principles are guidelines. The Principles are neither intended to be,
nor are they, rigid rules that govern the Board's activities. The Principles do
not, and are not intended to, modify or constitute an interpretation of the
Delaware General Corporation Law, the Corporation's Certificate of Incorporation
or By-Laws, or any Federal, state or local law or regulation. The Principles are
subject to modification from time to time by the Board.
BOARD ROLES AND RESPONSIBILITIES
BOARD OBJECTIVE
The Board's objective is to oversee and direct Management in building
long-term value for the stockholders of the Corporation ("the Stockholders").
The Board recognizes that in order to achieve this goal it must be sensitive to
the interests of the Corporation's employees, customers, suppliers, creditors
and the communities in which the Corporation operates.
BOARD RESPONSIBILITIES
The Board is elected by and accountable to the Stockholders and is
responsible for the strategic direction and control of the Corporation. In
carrying out its responsibilities, the Board will exercise sound, informed, and
independent business judgment. The Board recognizes that to do so requires
individual preparation by each Director and group deliberation by the Board. The
Board's responsibilities include both decision-making and oversight. Among other
things, the Board's decision-making responsibilities include: (a) review and
approval of the Corporation's mission, strategies, objectives and policies, as
developed by Management; (b) the selection and evaluation of the Corporation's
Chief Executive Officer ("CEO"); (c) the determination of the terms of the CEO's
employment, including his or her compensation package; and (d) the approval of
material investments or divestitures, strategic transactions, and any other
significant transactions that are not in the ordinary course of the
Corporation's business or affect the long-term capital structure of the
Corporation. Among other things, the Board's oversight responsibilities include
monitoring: (i) the Corporation's compliance with legal requirements and ethical
standards; (ii) the performance of the Corporation (in relation to its mission,
strategies, financial and non-financial objectives, and competitors); (iii) the
Corporation's success in developing leaders and ensuring a strong management
team with sound succession plans; (iv) the performance and effectiveness of the
CEO and Management; and (v) the integrity of the Corporation's financial
statements, reporting processes and internal controls. In addition, as
appropriate, the Board should offer the CEO and Management constructive advice
and counsel. All major decisions should be considered by the Board as a whole.
The Board, at its sole discretion and at the Corporation's expense, may obtain
advice and assistance from independent legal, financial, accounting and other
advisors.
EXPECTATIONS OF INDIVIDUAL DIRECTORS
Among other things, the Board expects each Director to: (a) understand the
Corporation's businesses and the marketplaces in which they operate; (b)
regularly attend meetings of the Board and of the
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Committee(s) on which he or she serves; (c) review and understand the materials
provided in advance of meetings and any other materials provided to the Board
from time to time; (d) monitor and keep abreast of general economic, business
and management news and trends, as well as developments in the Corporation's
competitive environment and the Corporation's performance with respect to that
environment; (e) actively, objectively and constructively participate in
meetings and the strategic decision-making processes; (f) share his or her
perspective, background, experience, knowledge and insights as they relate to
the matters before the Board and its Committees; and (g) be reasonably available
when requested to advise the CEO and Management on specific issues not requiring
the attention of the full Board but where an individual Director's insights
might be helpful to the CEO or Management.
BOARD'S EXPECTATIONS OF MANAGEMENT
Among other things, the Board expects Management to: (a) provide strong,
informed and ethical leadership; (b) develop strategies that build businesses
with strong, sustainable marketplace positions, build Stockholder value over the
long term, and provide timely and appropriate reporting of those strategies and
business operations to the Board; (c) develop appropriate strategic, operating
and financial plans; (d) maintain effective control of operations and report
regularly on its programs to ensure compliance with the highest ethical
standards, as well as with legal, regulatory and other requirements; (e) measure
and report performance against peer enterprises; (f) provide sound succession
planning and management development; (g) maintain a sound organizational
structure; (h) inform the Board regularly of the status of key initiatives and
changes in the Corporation's performance or the environment in which it
operates; (i) timely address and resolve issues discussed at Board and Board
Committee meetings; and (j) acting through the CEO, inform the Board of material
developments on a timely basis, including periodic notification in between
regularly scheduled Board meetings.
BOARD SELECTION AND COMPOSITION
DEFINITION OF INDEPENDENT DIRECTOR
(a) An Independent Director is a director whom the Board has determined is
free from any relationship with the Corporation (either directly or as a
partner, stockholder or officer of an organization that has a relationship with
the Corporation) that would interfere with his or her exercise of independent
business judgment (an "Independent Director"). A Director is not independent if
he or she: (a) is, or within the prior five years has been, an employee or
executive officer of the Corporation or any of its affiliates; (b) has a
business relationship with the Corporation or is a partner, controlling
stockholder or executive officer of any organization that has a business
relationship with the Corporation, unless, in either case, the Board determines
that the relationship is not such that it will interfere with the Director's
exercise of independent business judgment; (c) is, or within the prior five
years has been, an employee of any other business organization where any of the
Corporation's executive officers serves on that business organization's
compensation, nominating or directors' affairs committee; (d) is, or within the
prior five years has been, affiliated with or employed by any accounting firm
engaged by the Corporation or any affiliate of the Corporation as its
independent auditor within the prior five years; or (e) is an immediate family
member of an individual who is, or within the prior five years has been, an
employee of the Corporation or any of its affiliates, an employee of any other
business organization where any of the Corporation's executive officers serve on
that business organization's compensation, nominating or directors' affairs
committee, or affiliated with or employed by any accounting firm engaged by the
Corporation or any affiliate of the Corporation as its independent auditor
within the prior five years.
(b) The following commercial or charitable relationships will not be
considered to be material relationships that would impair a Director's
independence:
(i) if a Director is also a director or executive officer of another
corporation that does business with the Corporation and the annual sales
to, or purchases from, the Corporation are less than
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three percent of the annual revenues of the corporation he or she serves as
a director or executive officer, and less than three percent of the annual
revenues of the Corporation;
(ii) if a Director is also a director or executive officer of another
corporation which is indebted to the Corporation, or to which the
Corporation is indebted, and the total amount of either corporation's
indebtedness to the other is less than three percent of the total
consolidated assets of the corporation he or she serves as a director or
executive officer and less than three percent of the total consolidated
assets of the Corporation; and
(iii) if a Director serves as an officer, director or trustee of a
charitable organization, and the Corporation's discretionary charitable
contributions to the organization are less than three percent of that
organization's total annual charitable receipts.
The Board will annually review all commercial and charitable relationships
of directors. Whether the Company's directors meet these categorical
independence tests will be reviewed and will be made public annually prior to
their standing for re-election to the Board.
(c) For relationships not covered by the guidelines in paragraph (b) above,
the determination of whether the relationship is material or not, and,
therefore, whether the Director would be an Independent Director or not, shall
be made by the Directors who satisfy the independence guidelines set forth in
paragraphs (a) and (b) above. For example, if a Director is an executive officer
of a corporation that purchases products and services from the Corporation that
are more than three percent of that corporation's annual revenues, the
Independent Directors could determine, after considering all of the relevant
circumstances, whether such a relationship was material or immaterial, and
whether the Director would therefore be considered an Independent Director. The
Corporation would explain in the next proxy statement the basis for any Board
determination that a relationship was immaterial despite the fact that it did
not meet the categorical standards of immateriality set forth in paragraph (b)
above."
NUMBER OF DIRECTORS
The Board should have a sufficient number of Directors to reflect a
substantial diversity of perspectives, backgrounds and experiences, but not so
many Directors that the size of the Board hinders effective discussion or
diminishes individual accountability. Given the current size and complexity of
the Corporation's businesses, the Board believes that its normal size would be
in the range from 9 to 12 Independent Directors. A larger number of Directors
may be appropriate on an interim basis or temporarily to provide continuity when
retirements are pending. From time to time, the Board will evaluate its size in
light of changes in the size and complexity of the Corporation's businesses and
may change the specific number of Directors constituting the Board by
resolution.
NUMBER OF INDEPENDENT DIRECTORS
Independent Directors will constitute a substantial majority of the Board.
No more than two members of Management may serve on the Board at the same time.
NOMINATION AND SELECTION OF DIRECTORS
The Board as a whole will be responsible for nominating individuals for
election to the Board by the Stockholders and for filling vacancies on the Board
that may occur between annual meetings of the Stockholders. The Corporate
Governance Committee, in consultation with the Chairman of the Board, will be
responsible for identifying, screening, personally interviewing and recommending
candidates to the entire Board. Nominees for Director will be selected on the
basis of their integrity, experience, achievements, judgment, intelligence,
personal character, ability to make independent analytical inquiries,
willingness to devote adequate time to Board duties, and likelihood that he or
she will be willing and able to serve on the Board for a sustained period. In
connection with the selection of nominees for Director, due consideration will
be given to the Board's overall balance of diversity of perspectives,
backgrounds and experiences. It is the Board's policy that any potential nominee
will have been interviewed by a majority of
I-3
the members of the Corporate Governance Committee. The Corporate Governance
Committee will consider any suggestions offered by other Directors or any
Stockholder with respect to potential Directors. Stockholders may also nominate
individuals for election to the Board in accordance with the Corporation's
By-Laws.
BOARD LEADERSHIP
The Corporation will have a Chairman of the Board and a Chief Executive
Officer, who are currently the same person. The Board may, however, separate
these two positions when it deems it to be in the best interests of the
Corporation and the Stockholders to do so. If the Chairman and the CEO are the
same person, the Independent Directors will select an Independent Director to
act as the Board's leader when it meets in executive session or when the Board
Chairman is unable to lead the Board's deliberations (the "Presiding Director").
The Presiding Director will also serve as a liaison between the Board and the
CEO.
DIRECTOR RETIREMENT
Directors normally will not stand for re-election if they have reached age
70 prior to the mailing to Stockholders of that year's Proxy Statement. If a
Director reaches age 70 during his or her term of service, he or she will resign
from the Board effective as of the Annual Meeting of Stockholders immediately
following his or her 70th birthday. Any member of Management (including the CEO)
who is a Director will retire from the Board at the same time he or she retires
from active management with the Corporation, and will resign from the Board at
the same time he or she ceases employment with the Corporation for any reason.
CHANGE OF POSITION
Any non-employee Director who retires or changes the position held when the
Director became a member of the Board will submit his or her resignation to the
Board. The Corporate Governance Committee will consider whether or not such
resignation should be accepted and make a recommendation to the Board. The Board
will determine whether or not such Director will continue as a member of the
Board.
SERVICE ON OTHER BOARDS
The Board believes that individuals should limit the number of boards of
directors or similar governing bodies of publicly-traded, for-profit
corporations ("Public Boards") on which they serve in order to give proper
attention to their responsibilities to each board. Directors will seek and
obtain approval of the Corporate Governance Committee for memberships on Public
Boards and shall inform the Chair of the Committee before agreeing to be
considered for nomination to any Public Board. The Committee shall review the
requirements of such board membership with the Director. As a general policy,
the Board believes that Directors should limit their service to not more than
three Public Boards in addition to the board of the company by which they are
employed, but exceptions to this policy may be made in appropriate cases. Where
a Director seeks to serve on more than three Public Boards, in addition to his
or her employer's board, the Corporate Governance Committee will consider the
request and submit its recommendation to the Board for consideration and
decision. All memberships on other Public Boards by the CEO will be considered
and decided by the full Board based upon the Corporate Governance Committee's
recommendation. As a general rule, the Board's policy is that the CEO should not
serve on more than two Public Boards in addition to the Board of the
Corporation.
SERVICE ON BOARDS OF COMPETING OR INTERLOCKING ENTERPRISES
A Director will not serve as a director, officer or employee of or
consultant to any enterprise that is competitive with the businesses of the
Corporation. Federal law regulates so-called "interlocking" directorates; and
other restrictions are imposed where two or more Directors of the Corporation
serve together on another board or similar body. Directors should seek legal
guidance concerning such
I-4
memberships, and inform the Corporate Governance Committee before agreeing to be
considered for nomination to such a body.
DIRECTOR ORIENTATION AND CONTINUING EDUCATION PROGRAM
The Board and Management will provide an orientation program for new
Directors that includes management meetings, facility visits, and materials such
as the Corporation's organizational and governance documents, recent Board and
Committee minutes, recent Securities and Exchange Commission filings, strategic
and operating plans, financial information, corporate structure and
organizational charts, and information about the Corporation's businesses,
products, services and the industries in which the Corporation operates. The
Board and Management will also provide continuing education opportunities to all
Directors and, on an ongoing basis, provide information concerning the best
practices in corporate and board governance to all Directors. The Management
Liaison Officer, as defined below, for the Corporate Governance Committee will
be responsible for coordinating new and continuing education of Directors.
BOARD OPERATIONS
NUMBER OF REGULAR MEETINGS
The Board normally will hold five regular meetings each year.
ANNUAL AGENDA
The Chairman will prepare and propose an Annual Master Board Meeting
Schedule and Agenda (the "Annual Agenda") for consideration by the Board at its
first meeting following the Annual Meeting of Stockholders. The Annual Agenda
will set aside sufficient time at the regular Board meetings for consideration
of, and action with respect to, each of the matters set forth opposite such
month below:
MEETING SUBJECT
- ------- -------
April/May............. Annual Organizational Meeting of the Board; Performance and
composition of each of the standing committees of the Board;
Assessment and amendment if needed of these Principles;
Performance and Compensation of the CEO; Operating Report of
one Division or Corporate Initiative
July.................. Management development and succession planning; Review of
the Corporation's benefit plans; Operating Report of one
Division or Corporate Initiative; Activities, policies,
practices of Finance Committee; Review of the Corporation's
Compliance Program and Code of Ethical Conduct
October............... Corporation's overall, long-term strategy and long-term
strategic and financial plans; Performance, structure,
composition and compensation of the Board; Operating Report
of the Corporate Staff; Activities, policies, practices of
Audit Committee; Consideration of annual dividends
December.............. Corporation's short-term operating plans and capital and
operating budgets for the following calendar year; Combined
strategic and operating plans of the Corporation's major
divisions; Review of the Corporation's Delegation of
Authority Policy; Operating Report of one Division or
Corporate Initiative; Activities, policies, practices of
Human Resource and Compensation Committee; Review of
Director Orientation and Education Program; Review Committee
Charters
February.............. Performance of the Corporation's major operating divisions;
Performance of the Board of Directors; Performance of
individual Directors prior to the time of his or her
renomination; Operating Report of one Division or Corporate
Initiative; Activities, policies, practices of Corporate
Governance Committee; Review of Information Technology
Program
I-5
EXTENDED MEETING
One of the Board's meetings each year, normally the October meeting, will
be scheduled over an extended period to permit detailed review of the
Corporation's strategic plan.
OTHER REGULAR MEETINGS
Most regular meetings of the Board will be held at the Corporation's
headquarters. From time to time, the Board will meet at a major manufacturing or
operating facility of the Corporation. This meeting will include a tour of the
facility and meetings with local management.
SPECIAL MEETINGS
Special meetings of the Board will be held from time to time when called in
accordance with the By-Laws.
EXECUTIVE SESSIONS
At each Board meeting, the Board will have an executive session of the
Independent Directors. Such sessions are a normal part of the Board's
deliberations and activities. These meetings will be chaired either by the
Chairman (if he or she is an Independent Director) or by the Presiding Director
(if the Chairman is not an Independent Director).
MEETING MATERIALS
An agenda for each Board meeting will be sent to each Director in advance
of the meeting together with: (a) written materials pertaining to the matters to
be presented for Board decision at such meeting; (b) summary financial
information needed to understand the performance of the Corporation; (c) minutes
of the most recent Board meeting and of any Committee meetings held since the
distribution of materials for the most recent Board meeting; and (d) other
written materials that are available in advance of the meeting. Written
materials should be designed to provide a foundation for the Board's discussion
of key issues and allow the Board to make the most efficient use of its meeting
time. Directors may request additional information or changes in the scope,
amount or format of the information provided, and the CEO will make every effort
to provide such additional information or make such changes.
BOARD CONTACT WITH MANAGEMENT
The Corporation's Chief Executive Officer, Chief Financial Officer, General
Counsel and Corporate Secretary will attend all meetings of the Board other than
executive sessions. The Board encourages the CEO to bring other members of
Management and other employees into Board meetings to: (a) make presentations to
the Board regarding matters that involve the individual; (b) provide additional
insight and perspective concerning matters under discussion by the Board; (c)
expose the Board to individuals with high potential for significant leadership
roles in the Corporation; or (d) otherwise assist the Board in its work.
Additionally, Directors may from time to time meet individually with members of
Management. The CEO should be informed of such meetings in advance and,
following such meetings, informed of the results of and matters discussed during
such meetings. Directors should use their access to Management with care so as
not to undermine normal lines of management authority or take too much of
Management's time.
BOARD EVALUATION
The Board will annually review the functioning and performance of the Board
and its committees (including assessing the size, composition and structure of
the Board and its committees; the agenda and calendar of the Board and its
committees; the information Directors receive; and the Board's other processes
and procedures). Such review will be coordinated by the Corporate Governance
Committee.
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CEO EVALUATION
Each year the Board will develop criteria that will be used to evaluate the
CEO's performance. These criteria will include, among other things, the
Corporation's performance against its strategic and operating plans, as well as
achievements in management development and succession planning. The appropriate
Management Liaison Officer(s), as defined below, will survey leading
corporations and provide information regarding CEO evaluation processes. The
Corporate Governance Committee, in conjunction with the Human Resource and
Compensation Committee, will conduct the CEO's evaluation. The Corporate
Governance Committee will solicit input from each of the Independent Directors
regarding the CEO's performance, and share the results of the evaluation with
the Board's Independent Directors. After discussion and approval by the
Independent Directors, the Presiding Director (if the Chairman is the CEO) or
the Chairman (if he or she is not the CEO) and the Chairs of the Human Resource
and Compensation Committee and the Corporate Governance Committee will meet with
the CEO to discuss the evaluation.
STRATEGY
It is Management's responsibility to formulate, propose and implement
strategy and the Board's role to approve strategic direction and to monitor
strategic results. The Board and Management will each be better able to carry
out their respective responsibilities regarding matters of strategy if there is
an ongoing dialogue between the Board and the CEO and other members of
Management. Board approval will be required for changes in long-range strategy
(including resource allocation) and changes in long-term capital structure as
well as any significant transactions that are not in the ordinary course of the
Corporation's business.
MANAGEMENT DEVELOPMENT AND SUCCESSION PLANNING
On an annual basis, the CEO will present a report on management development
for key Management positions together with a proposed CEO Succession Plan to the
Human Resource and Compensation Committee. The Committee will review the report
and provide comments to the CEO who will then present the report on management
development and the CEO Succession Plan to the Board for its consideration. In
evaluating candidates to succeed the CEO the Board will, among other things,
consider such candidates' integrity, experience, achievements, judgment,
intelligence, personal character and potential for providing strong leadership
to the Corporation in both the short and long term. If the CEO dies or otherwise
becomes unable to carry out his or her responsibilities, the Human Resource and
Compensation Committee will appoint an interim CEO pending selection of a new
CEO by the Board.
BOARD COMMITTEES
The Board currently has four standing Committees -- the Audit Committee,
the Human Resource and Compensation Committee, the Corporate Governance
Committee and the Finance Committee. The Board may, from time to time, expand or
reduce the number of standing committees, change committee responsibilities or
form ad hoc committees. The responsibilities of each standing committee will be
determined by the Board from time to time. Those responsibilities will be set
forth in a written committee charter adopted by the Board. Current copies of
each of the charters are attached to these Principles. In general, the
Committees should function to identify and focus on issues for discussion by the
full Board. Each Committee Chair shall report regularly to the Board on
Committee meetings and other Committee activities.
COMMITTEE COMPOSITION; ROTATION OF MEMBERSHIP
The size, membership, and chairs of each Committee will be determined by
the Board. Each of the Committees will be chaired by an Independent Director and
consist of at least three members, all of whom will be Independent Directors.
The membership and Chairs of the standing Committees will be rotated from time
to time to allow Directors to serve on various committees over time and to
promote
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continuity of membership and leadership on each Committee. The Chairman and CEO
may participate in any Committee meeting except when such participation would
present a conflict of interest or, in the case of a Chairman who is also the
CEO, the meeting is an executive session of the Committee.
MANAGEMENT LIAISON OFFICERS
The Board does not have a professional staff, but relies on Management to
perform staff functions. Each Committee and the Board itself will be assigned a
liaison officer from Management ("Management Liaison Officer") whose
responsibilities shall include (a) maintaining regular contact with the Chair
and members as appropriate; (b) conducting analysis, research and investigation,
and preparing reports as requested by the Committee; (c) coordinating ongoing
review of Committee responsibilities and providing advice to the Committee Chair
on optimal methods of fulfilling those responsibilities; (d) assisting with the
preparation of the Committee meeting agenda in coordination with the Committee
Chair; (e) keeping accurate records of the Committee's activities; (f) executing
Committee directives, subject to and in coordination with the CEO's overall
responsibility to manage the Corporation; (g) maintaining contact with the
Management Liaison Officers of the other Committees and with the CEO to ensure
coordination of activities and directives; (h) monitoring and reporting
developments in areas of interest to the Committee to ensure that the
Corporation is following the best demonstrated practices in corporate management
and governance and considering advanced practices; and (i) as requested by the
Chair and on an ongoing basis as necessary or appropriate, providing advice to
his or her assigned Committee and to its Chair.
It is the expectation of the Board that each Management Liaison Officer
will devote approximately 20 percent of his or her time to liaison duties.
Management Liaison Officers will be designated by the CEO and will report to the
CEO or other Executive Officer of the Corporation and will not have a reporting
relationship to the Board or any Committee. Each Management Liaison Officer will
keep the CEO fully informed of his or her activities as a Management Liaison
Officer. Generally, the following Executive Officers of the Corporation will
have the Management Liaison Officer responsibility shown:
ORGANIZATION LIAISON OFFICER
- ------------ ---------------
Board of Directors.................................... Secretary and General
Counsel
Audit Committee....................................... Controller
Human Resource and Compensation Committee............. Chief Human Resource Officer
Finance Committee..................................... Chief Financial Officer
Corporate Governance Committee........................ Secretary and General
Counsel
ANNUAL COMMITTEE AGENDA
In connection with the preparation of the Board's Annual Agenda, the Chair
of each Committee, in consultation with the CEO and the Presiding Director (or
Chairman, if the CEO is not the Chairman), will prepare a master agenda and
schedule for the Committee for the year. Copies of each Committee's master
agenda and schedule will be distributed to all Directors.
COMMITTEE MEETING MATERIALS
The Chair of each Committee will oversee the preparation of an agenda for
each meeting. The agenda, together with: (a) written materials pertaining to the
matters to be presented for consideration at such meeting; and (b) the minutes
of the most recent meeting of the Committee, will be provided to each Committee
member in advance.
It is expected that the Management Liaison Officer for each Committee will
be responsible for preparation and dissemination of these materials under the
supervision of the Chair.
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MANAGEMENT ATTENDANCE AT COMMITTEE MEETINGS
The Chair of each Committee, in consultation with the CEO, will determine
which members of Management in addition to the Management Liaison Officer will
attend each Committee meeting. The CEO will be permitted to attend any Committee
meeting except those designated as executive sessions.
COMMITTEE REPORTS TO THE BOARD
At least once per year, the Chair of each Committee will make a
presentation to the Board regarding the activities and policies and practices of
his or her Committee. The purpose of such presentation is to inform Directors of
the activities, policies and practices of Committees on which they do not serve.
AD HOC COMMITTEES
In addition to the standing Committees, ad hoc committees may be formed
from time to time by the Board. The size, membership, and chair of each ad hoc
committee will be determined by the Board. Generally, the Chairs and most
members of such committees will be Independent Directors. Members of Management
may be appointed by the Board as ex officio members of such ad hoc committees.
OTHER MATTERS
DIRECTORS' COMPENSATION
Directors' compensation will be determined by the Board. Members of
Management who are also Directors will not receive additional compensation for
their service as Directors. The Board believes that it is important to align the
interests of Directors with those of the Stockholders. Accordingly, the Board
believes that a significant portion of Directors' compensation should be paid in
stock, stock options or other forms of compensation that correlate with the
market value of the Corporation. Management will report annually to the
Corporate Governance Committee on the amount and composition of the compensation
of the Corporation's Directors in relation to the compensation of Directors of
comparable enterprises. Changes in Directors' compensation will be recommended
to the Board by the Corporate Governance Committee.
DIRECTORS' SHARE OWNERSHIP
Within 3 years of (a) April 30, 2003, or (b) the date on which a Director
first became a Director, whichever is later, and thereafter for so long as each
Director is a Director of the Corporation, each Director shall own common stock
and deferred stock units of the Corporation totaling 10,000 shares; and, within
5 years of the dates set forth in (a) and (b) above, each Director shall own
common stock and deferred stock units of the Corporation totaling 20,000 shares.
MANAGEMENT SERVICE ON OTHER BOARDS
The Board believes that, in general, Management should devote its full
business time and attention to the operation and management of the Corporation.
The Board recognizes that members of Management, particularly the CEO, and the
Corporation will benefit from service on other Public Boards. It is the Board's
policy to encourage such membership in appropriate cases. If any member of
Management who is not a member of the board desires to join a Public Board, he
or she should advise the CEO of his or her desire to do so, prior to agreeing to
be considered for nomination, and the CEO will consider whether or not such
person and the Corporation will benefit from that person's service on such
Public Board and if such membership will interfere with or detract from such
person's responsibilities to the Corporation. The CEO will determine whether or
not to permit such person to serve on the other Public Board and will report
such other board memberships to the Board on an annual basis. The CEO and the
Board shall consider the potential liability of the Corporation resulting from
service by Management members on other
I-9
Public Boards, and will consider the financial stability and directors'
liability insurance program of such corporations in connection with his or her
consideration.
COMMUNICATIONS
Management speaks for the Corporation. Inquiries from Stockholders, other
investors, analysts, the press, customers, suppliers, or others should be
referred to the CEO or other appropriate members of Management. Individual
Directors may, from time to time, meet with various constituencies of the
Corporation, at the request of or with the concurrence of Management. Obviously,
Directors are free to meet with or address the public or special groups
concerning board practices generally, and other matters of interest to the
Directors not directly related to activities of the Corporation, and such
contacts will not require Management concurrence.
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EXHIBIT A
BOARD OF DIRECTORS OF BRUNSWICK CORPORATION
CHARTER OF THE AUDIT COMMITTEE
(AS AMENDED THROUGH MARCH 1, 2003)
PURPOSE
The Audit Committee (the "Committee") shall provide assistance to the board
of directors (the "Board") in fulfilling the Board's responsibility to oversee:
(a) the Corporation's accounting, auditing and reporting practices; (b) the
qualifications, independence and performance of the independent auditors; (c)
the Corporation's system of internal controls, including the performance of the
internal audit function; (d) the Corporation's disclosure policies and
practices; (e) the quality and integrity of the Corporation's financial
statements; and (f) compliance by the Corporation with legal and regulatory
requirements. The Committee shall also prepare the report that the rules of the
Securities Exchange Act of 1934 require to be included in the Corporation's
annual proxy statement. Unless otherwise defined in this Charter, capitalized
terms will have the meanings given to such terms in the Corporation's Principles
and Practices of the Board of Directors (the "Principles and Practices").
In carrying out its duties, the Committee shall maintain free and open
communication with the Board, the independent auditors, the internal auditors
and members of Management.
The Committee's role is one of oversight and it recognizes that the
Corporation's Management is responsible for preparing the Corporation's
financial statements and that the independent auditors are responsible for
auditing those financial statements. Consequently, in carrying out its oversight
responsibilities, the Committee is not providing any expert or special assurance
as to the Corporation's financial statements or any professional certification
as to the work of the independent auditors.
MEMBERSHIP
- The Committee shall be comprised of at least three members of the Board,
one of whom shall be appointed as the chairman of the Committee (the
"Chair").
- The Board will appoint the Chair and members of the Committee following
nomination by the Corporate Governance Committee.
- The Chair and members of the Committee will be rotated from time to time.
- All members of the Committee will be Independent Directors as defined by
the New York Stock Exchange listing standards, and no member of the
Committee can be an "affiliated person" as defined under applicable
Securities and Exchange Commission rules and regulations.
- Each Committee member must be financially literate, or must become
financially literate within a reasonable period of time after his or her
appointment to the Committee.
- The Chair of the Committee shall have accounting or related financial
management experience.
- The Corporation will disclose whether or not it has an Audit Committee
Financial Expert as defined by the SEC rules. The name of the individual
will also be disclosed. If the Committee does not have an Audit Committee
Financial Expert, the disclosure will include the reasons why.
- Directors' fees are the only compensation that Committee members may
receive from the Corporation.
MEETINGS
- Periodically, the Committee will meet separately with each of the
independent auditors, the internal audit function staff and members of
Management. Such private meetings will occur at least
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quarterly, or as requested by the Committee, the independent auditors or
the internal audit staff. The Committee may ask members of Management or
others to attend meetings and provide pertinent information as necessary.
AUTHORITY AND RESPONSIBILITIES
Among other items, the Committee shall:
OVERSIGHT OF INDEPENDENT AUDITORS
- Have the sole authority, at the Corporation's expense, to: (a) appoint,
(b) terminate, (c) compensate and (d) oversee the Corporation's
independent auditors, which shall report directly to the Committee. The
appointment of the Corporation's independent auditors shall be subject to
stockholder ratification.
- Have the sole authority to approve, and shall approve in advance, all
audit and non-audit engagements of the independent auditors. The
Committee may delegate one or more of its members to grant approvals of
audit and non-audit services, each of which approvals shall be reported
to the full Committee at its next meeting.
- Review and evaluate the qualifications, performance and independence of
the independent auditors, including its lead audit partner, and
periodically present its conclusions to the Board.
- At least annually, obtain and review a report by the independent auditors
describing: (a) the internal quality-control procedures used by the
independent auditors; (b) any material issues raised by the most recent
internal quality-control review or peer review of the independent
auditors, or by any inquiry or investigation by governmental or
professional authorities, within the preceding five years, with respect
to one or more independent audits carried out by the independent
auditors, and any steps taken to deal with such issues; and (c) all
relationships between the independent auditors and the Corporation.
- Consider whether or not there should be a regular rotation of the
independent auditors, and monitor the periodic rotation of the
independent auditors' lead partner and the audit partner responsible for
reviewing the audit.
OVERSIGHT OF INTERNAL AUDIT FUNCTION
- Review the performance of the Corporation's internal audit function
(which shall report jointly to the Chair of the Committee and to
Management).
- Review the adequacy and effectiveness of the Corporation's internal
controls, any special audit steps adopted in light of any material
control deficiencies, and the performance and qualifications of the
internal audit function staff.
- Review and discuss significant findings on specific audits completed by
the internal audit function and Management's responses to such findings,
including any follow-up action undertaken as a result of such findings.
- Discuss any changes in the planned scope of the internal audit, and the
coordination of the internal and external audit functions.
- Discuss with Management and the independent auditors the internal audit
function responsibilities, budget and staffing.
FINANCIAL AND DISCLOSURE MATTERS
- Review accounting principles and financial statement presentations,
including significant changes in the Corporation's selection or
application of accounting principles.
A-2
- Review and discuss the Corporation's reporting and disclosure policies.
- Review and discuss with both Management and the independent auditors
prior to public disclosure the Corporation's (a) annual audited and
quarterly financial statements, (b) 10-K and 10-Q reports, including the
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and (c) annual and quarterly reports to stockholders.
- Review the scope of the annual audit conducted by the independent
auditors, and the independent auditors' opinion rendered with respect to
the annual financial statements.
- Review and discuss with the independent auditors any audit problems or
difficulties and other issues and recommendations identified by the
independent auditors together with Management's responses.
- Review with the independent auditors any restrictions on the scope of the
independent auditors' activities or access to requested information, and
any significant disagreements with Management.
- Review with the independent auditors: (a) any accounting adjustments
noted or proposed by the auditors that were passed (as immaterial or
otherwise); (b) any communications between the independent auditors and
the auditors' national office with respect to issues presented by the
engagement; and (c) any management or internal control letter issued, or
proposed to be issued, by the independent auditors to the Corporation.
- Review and discuss earnings announcements, financial information and
earnings guidance provided to stockholders, analysts and rating agencies.
- Review legal, regulatory, environmental and other matters including any
off-balance sheet or off-shore transactions that have or could have an
impact on the financial structure or financial results of the
Corporation, or any non-ordinary course of business financial
transactions.
- Review and discuss policies regarding risk assessment and risk
management, and significant risks and exposures confronted by the
Corporation.
- Review analyses and reports prepared by Management and/or the independent
auditors concerning critical accounting policies and practices, and
significant financial reporting issues and judgments or estimates made in
connection with the preparation of the financial statements, including
analyses of the effects of alternative generally accepted accounting
principles methods on the financial statements.
- Review the effect of regulatory and accounting initiatives on the
financial statements of the Corporation.
COMMITTEE GOVERNANCE/OTHER
- Annually review the Committee's charter and performance and, if necessary
and appropriate, recommend changes to the Corporate Governance Committee
of the Board.
- Recommend to the Board hiring practices for employees or former employees
of the independent auditors consistent with Section 206 of the
Sarbanes-Oxley Act of 2002.
- Conduct or authorize investigations into any matters within the
Committee's scope of responsibility.
- At its sole discretion and the Corporation's expense, obtain advice and
assistance from outside legal, financial, accounting or other experts.
- Report to the Board on the Committee's activities following each meeting
of the Committee.
- Prepare the audit committee report required to be included in the
Corporation's annual proxy statement stating whether the Committee has
reviewed and discussed the audited financial statements with management;
has received and considered independence disclosures from the independent
auditors; and has recommended to the Board that the Corporation's audited
financial statements should be included in the Corporation's Annual
Report on Form 10-K.
A-3
- Review any reports on internal controls in the Corporation's annual
report to stockholders.
- Establish procedures for the receipt, retention and treatment of
complaints received by the Corporation regarding accounting, internal
accounting controls or auditing matters, including appropriate procedures
for the confidential, anonymous submission by employees of concerns
regarding questionable accounting or auditing matters.
- Monitor and consider implementation of best-demonstrated audit and
control practices.
- Meet jointly on at least an annual basis with the Finance Committee to
review and discuss matters relevant to both committees.
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EXHIBIT B
BOARD OF DIRECTORS OF BRUNSWICK CORPORATION
CHARTER OF THE CORPORATE GOVERNANCE COMMITTEE
(AS AMENDED THROUGH DECEMBER 5, 2002)
PURPOSE
The Corporate Governance Committee (the "Committee") is appointed by the
board of directors (the "Board") of Brunswick Corporation (the "Corporation"),
among other things, to: (a) identify individuals qualified to become Board
members; (b) recommend to the Board director nominees for each annual meeting of
the stockholders; (c) monitor developments in corporate governance practices and
recommend modifications and improvements to the Principles and Practices of the
Board of Directors (the "Principles and Practices"); and (d) oversee the
Corporation's compliance with legal and regulatory requirements. Unless
otherwise defined in this Charter, capitalized terms will have the meanings
given to such terms in the Principles and Practices.
MEMBERSHIP
- The Committee shall be comprised of at least three members of the Board,
one of whom shall be appointed as the chairman of the Committee (the
"Chair") and all of whom shall be Independent Directors as defined by the
New York Stock Exchange listing standards.
- The Board will appoint the Chair and members of the Committee, following
nomination by the Corporate Governance Committee.
- The Chair and members of the Committee will be rotated from time to time.
INDEPENDENT ADVICE; ENGAGEMENT OF CONSULTANTS
- The Committee, at its sole discretion and the Corporation's expense, may
obtain advice and assistance from outside, independent legal, financial,
accounting and other advisors.
- The Committee shall have sole authority, at the Corporation's expense, to
engage and terminate search firms or consultants retained for the purpose
of identifying director candidates.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
Among other things, the Committee will:
- Review policies and programs designed to ensure the Corporation's
compliance with the highest ethical standards and with all applicable
legal and regulatory requirements (including those relating to equal
employment opportunities, employee health and safety, product safety,
environmental matters, conflicts of interest and other business practices
that reflect upon the Corporation's role as a responsible corporate
citizen) and regularly report on such compliance to the Board, which is
the body responsible for overseeing the Corporation's ethical and legal
compliance.
- Periodically receive reports on the Corporation's ethics and compliance
program.
- Coordinate the Board's annual review of the functioning and performance
of the Board and the Committees (including assessing the size,
composition and structure of the Board and its Committees; the agenda and
calendar of the Board and its committees; the information Directors
receive; and the Board's other processes and procedures).
- In conjunction with the Human Resource and Compensation Committee,
conduct the annual review of the CEO's performance.
- Review and make recommendations to the Board with respect to Director
compensation.
B-1
- Recommend to the Board criteria for new Directors and establish
guidelines to ensure appropriate diversity of perspective, background and
experience.
- In consultation with the Chairman, identify, screen, interview and
recommend to the Board potential Director nominees.
- Oversee the orientation of new Directors and continuing education of
Directors.
- Coordinate the review of the performance of each incumbent Director at
the time of his or her renomination.
- Coordinate the annual review of the Principles and Practices.
- In consultation with the Chairman, recommend to the Board the size,
membership and chairs of the Board's Committees.
- Monitor changes in the Corporation's organizational structure and approve
all major changes to the organizational structure.
- Annually review the Committee's Charter, operations and performance and,
if necessary or appropriate, recommend changes to the Charter or
operations to the Board.
- Monitor and consider developments and best practices in corporate
governance practices.
B-2
EXHIBIT C
BOARD OF DIRECTORS OF BRUNSWICK CORPORATION
CHARTER OF THE FINANCE COMMITTEE
(AS AMENDED THROUGH DECEMBER 5, 2002)
PURPOSE
The Finance Committee (the "Committee") of the board of directors (the
"Board") of Brunswick Corporation (the "Corporation") is appointed by the Board,
among other things, to assist the Board with its oversight of the Corporation's
financial performance, capital structure, financing, investment, tax, insurance,
divestiture, merger and acquisition activities. Unless otherwise defined in this
Charter, capitalized terms will have the meanings given to such terms in the
Corporation's Principles and Practices of the Board of Directors (the
"Principles and Practices").
MEMBERSHIP
- The Committee shall be comprised of at least three members of the Board,
one of whom shall be appointed as the chairman of the Committee (the
"Chair") and all of whom shall be Independent Directors as defined by the
New York Stock Exchange listing standards.
- The Board will appoint the Chair and members of the Committee, following
nomination by the Corporate Governance Committee.
- The Chair and members of the Committee will be rotated from time to time.
INDEPENDENT ADVICE
- The Committee, at its sole discretion and the Corporation's expense, may
obtain advice and assistance from independent legal, financial,
accounting and other advisors.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
Among other things, the Committee will:
- Review the Corporation's financial structure, including any special
purpose entities, any other off-balance sheet or off-shore transactions
that have or could have an impact on the financial structure of the
Corporation, or any non-ordinary course of business financial
transactions.
- Review the Corporation's financial policies and procedures, capital
expenditures and capital expenditure budgets, and proposals for corporate
financing (including the issuance, sale and repurchase of the
Corporation's securities).
- Review proposals for short-term and long-term borrowings.
- Make recommendations to the Board concerning the declaration and
distribution of dividends.
- Review and evaluate any risks associated with the Corporation's use of or
investment in financial products, including risk management related to
foreign currencies, commodity prices and interest rates.
- Coordinate the Board's review of proposals for (and monitor the
performance of): (a) material investments and divestitures (including
mergers, acquisitions, new business ventures, joint ventures, leasing
transactions, real estate transactions and other capital expenditures);
and (b) other significant transactions that are not in the ordinary
course of the Corporation's business.
- Review and evaluate the Corporation's tax strategy, insurance coverage,
and related matters.
- Review and approve Director and Officer liability insurance.
C-1
- Review and discuss policies regarding risk and risk management,
significant risks and exposures.
- Coordinate the Board's annual review of the Delegation of Authority
Policy and oversee compliance with the policy.
- Coordinate, together with the Human Resource and Compensation Committee,
the annual review of the funding, performance and other matters related
to the Corporation's pension plans.
- Annually review the Committee's Charter and operations and, if necessary
and appropriate, recommend changes to the Charter or operations to the
Corporate Governance Committee.
- Monitor and consider developments and best practices in financing and
financial structuring practices.
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EXHIBIT D
BOARD OF DIRECTORS OF BRUNSWICK CORPORATION
CHARTER OF THE HUMAN RESOURCE AND
COMPENSATION COMMITTEE
(AS AMENDED THROUGH DECEMBER 5, 2002)
PURPOSE
The Human Resource and Compensation Committee (the "Committee") is
appointed by the board of directors (the "Board") of Brunswick Corporation (the
"Corporation"), among other things, to: (a) discharge the Board's
responsibilities relating to (i) compensation of the Corporation's executives,
(ii) management development and (iii) executive benefits; and (b) produce an
annual report on executive compensation for inclusion in the Corporation's proxy
statement in accordance with the applicable Securities and Exchange Commission
("SEC") rules and regulations. Unless otherwise defined in this Charter,
capitalized terms will have the meanings given to such terms in the
Corporation's Principles and Practices of the Board of Directors (the
"Principles and Practices").
MEMBERSHIP
- The Committee shall be comprised of at least three members of the Board,
one of whom shall be appointed as the chairman of the Committee (the
"Chair") and all of whom shall be Independent Directors as defined by the
New York Stock Exchange listing standards.
- The Board will appoint the Chair and members of the Committee, following
nomination by the Corporate Governance Committee.
- The Chair and members of the Committee will be rotated from time to time.
INDEPENDENT ADVICE; ENGAGEMENT OF CONSULTANTS
- The Committee, at its sole discretion and the Corporation's expense, may
obtain advice and assistance from independent legal, financial,
accounting or other advisors, including but not limited to advisors
retained to review the compensation of any Director, the Chief Executive
Officer ("CEO") or any other member of Senior Management ("Senior
Management").
- No compensation consultant will be engaged to assist in the evaluation of
compensation for any member of Senior Management without the prior
approval of the Committee, except that management may, in its discretion,
engage compensation, benefit and other consultants to provide advice with
respect to and assist with the development of broad-based compensation
and benefit programs in which members of Senior Management participate on
the same or similar basis as other employees of the Corporation.
COMMITTEE AUTHORITY AND RESPONSIBILITIES
Among other things, the Committee will:
- In conjunction with the Corporate Governance Committee, conduct the
annual review of the CEO's performance.
- Review and comment on management development for key management positions
and coordinate, together with the CEO, the Board's annual review of the
CEO Succession Plan.
- In the case of the CEO's death or inability to carry out his or her
responsibilities, appoint an interim CEO pending selection of a new CEO
by the Board.
D-1
- Approve the equity-based compensation (including stock options,
restricted shares, performance shares, etc.) of the CEO, and make
recommendations to the Board with respect to salary, bonus and all other
non-equity-based compensation of the CEO, taking into account, among
other things, (a) the CEO's performance, (b) the Corporation's
achievement of its corporate objectives, (c) compensation practices at
peer companies and the market in general, (d) the Corporation's
performance and relative stockholder return, and (e) awards given to the
CEO in prior years.
- Approve the compensation (including salary, bonus, equity-based and other
incentive compensation) to be paid to other members of Senior Management,
and authorize Senior Management to approve awards to employees who are
not members of Senior Management up to specific share allocations.
- Approve benefit programs that specifically benefit Senior Management.
- Develop and oversee policies for the administration of compensation and
benefit plans.
- Coordinate, together with the Finance Committee, the annual review of the
funding, performance and other matters related to the Corporation's
pension plans.
- Review and coordinate Board review of the Corporation's compensation and
benefit plans for alignment with corporate objectives.
- Specifically approve the terms and conditions of any stock option and
other equity-based awards for the CEO and other members of Senior
Management, develop recommendations for Board approval regarding awards
to the CEO, approve awards for other members of Senior Management and
authorize Senior Management to approve awards to employees who are not
members of Senior Management up to specific share allocations.
- Annually prepare the Board Compensation Committee report that is required
to be included in the Corporation's proxy statement.
- Annually review the Committee's charter, operations and performance and,
if necessary and appropriate, recommend changes to the Corporate
Governance Committee of the Board.
- Monitor and consider developments and best practices in human resource
and compensation practices
D-2
APPENDIX II
BRUNSWICK CORPORATION
2003 STOCK INCENTIVE PLAN
1. PURPOSE
The purpose of the Brunswick Corporation 2003 Stock Incentive Plan is to
provide incentives and rewards to (i) support the execution of the Corporation's
business and human resource strategies; (ii) provide for the compensation of
Non-Employee Directors and (iii) more closely align the interests of
Participants with those of the Corporation's stockholders.
2. DEFINITIONS
(a) "Award" includes, without limitation, shares of Stock, stock options,
restricted and performance shares, restricted and performance units, dividend or
equivalent rights, or other awards that are valued in whole or in part by
reference to, or are otherwise based on, Stock.
(b) "Award Summary" means a written summary setting forth the terms and
conditions of each Award made under this Plan.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(e) "Compensation Committee" means the Human Resource and Compensation
Committee of the Board or such other committee as the Board may designate from
time to time to administer this Plan.
(f) "Corporation" means Brunswick Corporation, a Delaware corporation.
(g) "Employee" means an employee of the Corporation or a Subsidiary.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(i) "Fair Market Value" means the closing price on the New York Stock
Exchange Composite Transactions Tape on the relevant valuation date or on the
next preceding date on which a closing price was quoted.
(j) "Governance Committee" means the Corporate Governance Committee of the
Board or such other committee as the Board may designate from time to time.
(k) "Non-Employee Director" means any member of the Board who is not an
Employee.
(l) "Participant" means a person who has been granted an Award under this
Plan.
(m) "Plan" means this Brunswick Corporation 2003 Stock Incentive Plan.
(n) "Stock" means the common stock, $0.75 par value, of the Corporation.
(o) "Subsidiary" means any corporation or other entity in which the
Corporation has a proprietary interest of more than 50% by reason of stock
ownership or otherwise.
3. ELIGIBILITY
Employees selected by the Compensation Committee and Non-Employee Directors
selected by the Governance Committee are eligible to receive Awards.
4. PLAN ADMINISTRATION
(a) Except as otherwise determined by the Board or specifically set forth
herein, this Plan shall be administered by the Compensation Committee. The
Compensation Committee shall determine the terms
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of Awards granted to Employees. The Compensation Committee shall, subject to the
terms of this Plan, establish rules and regulations it deems necessary or
desirable for Plan administration.
(b) Notwithstanding anything contained in this Plan to the contrary and
except as otherwise determined by the Board, the Governance Committee shall
determine the terms of Awards granted to Non-Employee Directors, and shall
exercise all the authority of the Compensation Committee under this Plan as the
same relates to such Awards.
(c) To the extent permitted by applicable law, each of the Compensation
Committee and the Governance Committee may designate others to carry out its
responsibilities; provided, however, that neither may delegate its power and
authority to others with regard to the selection for participation in this Plan
of a person subject to Section 16 of the Exchange Act or decisions concerning
the timing, pricing or amount of an Award to such person.
(d) The Compensation Committee shall have the authority at any time prior
to a Change of Control (as defined in Section 12) to cancel Awards for
reasonable cause and to provide for the conditions and circumstances under which
Awards shall be forfeited.
(e) The Compensation Committee shall have authority to interpret and
construe the provisions of this Plan and the Award Summaries, and the
application thereof, and make determinations which shall be final, binding and
conclusive on all persons.
(f) The members of the Board, the Compensation Committee, the Governance
Committee and any person to whom the Compensation Committee or Governance
Committee delegates any of its power and authority (i) shall not be liable for
any action, omission, determination, interpretation or construction made in
connection with this Plan in good faith, and (ii) shall be entitled to
indemnification and reimbursement to the full extent permitted by applicable
law, except as otherwise may be provided in the Corporation's Certificate of
Incorporation and/or By-Laws, as each may be amended from time to time, and
under any directors' and officers' liability insurance that may be in effect
from time to time.
5. STOCK SUBJECT TO PROVISIONS OF THIS PLAN
The stock subject to the provisions of this Plan shall be:
(a) 4,000,000 shares of Stock, which may be either authorized but
unissued Stock or Stock held as treasury stock;
(b) Shares of Stock available, as of the effective date of this Plan,
for future grants of awards under the Brunswick Corporation 1991 Stock Plan
(the "1991 Plan"), which shares upon the effectiveness of this Plan shall
no longer be available under the 1991 Plan; and
(c) Shares of Stock represented by Awards under this Plan, awards
under the 1991 Plan or awards under the Corporation's 1997 Stock Plan for
Non-Employee Directors (the "1997 Plan") (i) which are cancelled,
forfeited, surrendered, terminated, paid in cash or expire unexercised or
(ii) which are not issued or delivered by reason of the delivery or
withholding of shares of Stock to pay all or a portion of the exercise
price, if any, or to satisfy all or a portion of applicable tax withholding
obligations.
The total number of shares of Stock with respect to which Awards other than
stock options may be granted under this Plan shall not exceed twenty-five
percent (25%) of the number of shares of Stock identified in Sections 5(a) and
5(b). The maximum number of shares of Stock with respect to which stock options
may be granted during any calendar year to any person shall be 1,000,000.
II-2
6. AWARDS UNDER THIS PLAN
In addition to shares of Stock, the following types of Awards and other
stock-based Awards may be granted under this Plan on a stand alone, combination
or tandem basis:
(a) Stock Option. A right to buy a specified number of shares of
Stock at a fixed exercise price during a specified time; provided that the
exercise price of any option shall not be less than 100% of the Fair Market
Value of the Stock on the date of grant of the option. The exercise price
of any option granted under this Plan may not be reduced or otherwise
adjusted other than as provided in Section 10.
(b) Restricted And Performance Shares. A transfer of Stock to a
Participant, subject to such restrictions on transfer or other incidents of
ownership, or subject to specified performance standards for specified
periods of time.
(c) Restricted And Performance Share Unit. A fixed or variable share
or dollar denominated unit subject to conditions of vesting, performance
and time of payment, which unit may be paid in Stock, cash or a combination
of both.
(d) Other Stock-Based Awards. Other Stock-based Awards which are
related to or serve a similar function to those Awards set forth in this
Section 6.
In addition to granting Awards for purposes of incentive compensation,
Awards may also be made in tandem with or in lieu of current or deferred
compensation.
No Stock shall be issued pursuant to any Award unless consideration at
least equal to the par value of the Stock has been received by the Corporation
in the form of cash, services rendered or property.
7. AWARD SUMMARIES
Each Award under this Plan shall be evidenced by an Award Summary. Delivery
of an Award Summary to each Participant shall constitute an agreement, subject
to Section 4(e) and Section 9 of this Plan, between the Corporation and the
Participant as to the terms and conditions of the Award.
8. OTHER TERMS AND CONDITIONS
(a) Assignability. No Award shall be assignable or transferable except by
will, by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code or in accordance with guidelines
established by the Compensation Committee.
(b) Rights As A Stockholder. A Participant shall have no rights as a
stockholder with respect to shares of Stock covered by an Award until the date
the Participant or his nominee, guardian or legal representative is the holder
of record. No adjustment will be made for dividends or other rights for which
the record date is prior to such date.
(c) Withholding. Except as otherwise provided by the Compensation
Committee, (i) the deduction of withholding and any other taxes required by law
will be made from all amounts paid in cash and (ii) in the case of payments of
Awards in shares of Stock, the Participant shall be required to pay in cash the
amount of any taxes required to be withheld prior to receipt of such Stock, or
alternatively, a number of shares of Stock the Fair Market Value of which equals
the amount required to be withheld may be deducted from the payment; provided,
however, that the number of shares of Stock so deducted may not have an
aggregate Fair Market Value in excess of the amount determined by applying the
minimum statutory withholding rate.
9. AMENDMENTS
The Board or the Compensation Committee may alter, amend, suspend or
discontinue this Plan at any time or at any time prior to a Change of Control
(as defined in Section 12) alter or amend any or all Award Summaries granted
under this Plan to the extent permitted by law. Any such action may be taken
II-3
without the approval of the Corporation's stockholders, but only to the extent
that such stockholder approval is not required by applicable law or regulation,
including, without limitation, applicable stock exchange rules.
10. RECAPITALIZATION
In the event of any increase or decrease in the number of issued shares of
Stock resulting from a subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend or other increase or decrease in
shares, effected without receipt of consideration by the Corporation, or other
change in corporate or capital structure, the number and class of securities
available under this Plan, the maximum number of securities available for Awards
other than stock options, the number and class of securities subject to each
outstanding stock option and the purchase price per security, the maximum number
of securities with respect to which stock options may be granted during any
calendar year to any person, the number and class of securities subject to each
outstanding Award, and the terms of each outstanding Award shall be
appropriately adjusted by the Compensation Committee, such adjustments to be
made in the case of outstanding options without an increase in the aggregate
purchase price; provided, however, that any fractional shares resulting from any
such adjustment shall be eliminated. The decision of the Compensation Committee
regarding any such adjustment shall be final, binding and conclusive.
11. NO RIGHT TO PARTICIPATION OR EMPLOYMENT
No person shall have any claim or right to be granted an Award, and the
grant of an Award shall not be construed as giving a Participant the right to be
retained in the employ or service of the Corporation or a Subsidiary. Further,
the Corporation and each Subsidiary expressly reserve the right at any time to
dismiss a Participant free from any liability or claim under this Plan, except
as provided herein or in any Award Summary issued hereunder.
12. CHANGE IN CONTROL
The term "Change in Control" of the Corporation means a change in the
beneficial ownership of the Corporation's voting stock or a change in the
composition of the Board which occurs as follows:
(i) any Person other than a trustee or other fiduciary of securities
held under an employee benefit plan of the Corporation or any of its
subsidiaries, is or becomes a beneficial owner, directly or indirectly, of
stock of the Corporation representing 25% or more of the total voting power
of the Corporation's then outstanding stock and securities, excluding any
Person who becomes such a Beneficial Owner in connection with a transaction
described in Clause (A) of paragraph (iv), below;
(ii) a tender offer (for which a filing has been made with the
Securities and Exchange Commission ("SEC") which purports to comply with
the requirements of Section 14(d) of the Exchange Act and the corresponding
SEC rules) is made for the stock of the Corporation, which has not been
negotiated and approved by the Board, then the first to occur of:
(A) any time during the offer when the Person making the offer owns
or has accepted for payment stock of the Corporation with 25% or more of
the total voting power of the Corporation's stock, or
(B) three business days before the offer is to terminate unless the
offer is withdrawn first if the Person making the offer could own, by
the terms of the offer plus any shares owned by this Person, stock with
50% or more of the total voting power of the Corporation's stock when
the offer terminates;
(iii) individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board"), cease for any reason to constitute a majority
thereof; provided, however, that any individual becoming a director whose
election, or nomination for election by the Corporation's stockholders, was
approved by a vote of at least 75% of the directors then comprising the
Incumbent Board shall be considered as though such individual was a member
of the Incumbent Board, but excluding, for this purpose, any
II-4
such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board;
(iv) there is consummated a merger or consolidation of the Corporation
(or any direct or indirect subsidiary of the Corporation) with any other
corporation, other than (A) a merger or consolidation which would result in
the voting securities of the Corporation outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 75% of the combined voting power of
the stock and securities of the Corporation or such surviving entity or any
parent thereof outstanding immediately after such merger or consolidation,
or (B) a merger or consolidation effected to implement a recapitalization
of the Corporation (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of stock and
securities of the Corporation representing more than 25% of the combined
voting power of the Corporation's then outstanding stock and securities; or
(v) the stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated an
agreement for the sale or disposition by the Corporation of all or
substantially all of the Corporation's assets other than a sale or
disposition by the Corporation of all or substantially all of the assets to
an entity at least 75% of the combined voting power of the stock and
securities which is owned by Persons in substantially the same proportions
as their ownership of the Corporation's voting stock immediately prior to
such sale.
As used in this Section 12, "Person" shall mean any person (as defined in
Section 3(a)(9) of the Exchange Act, as such term is modified in Section
13(d) and 14(d) of the Exchange Act) other than (1) any employee plan
established by the Corporation, (2) the Corporation or any of its
affiliates (as defined in Rule 12b-2 promulgated under the Exchange Act),
(3) an underwriter temporarily holding securities pursuant to an offering
of such securities, or (4) a corporation owned, directly or indirectly, by
stockholders of the Corporation in substantially the same proportions as
their ownership of the Corporation. "Beneficial Owner" shall mean
beneficial owner as defined in Rule 13d-3 under the Exchange Act.
13. GOVERNING LAW
To the extent that federal laws do not otherwise control, this Plan shall
be construed in accordance with and governed by the law of the State of
Illinois.
14. SUPPLEMENTAL PLANS
The Board shall have the authority to adopt plans, supplemental to this
Plan, covering Participants residing outside the United States.
15. SAVINGS CLAUSE
This Plan is intended to comply in all aspects with applicable law and
regulation. In case any one or more of the provisions of this Plan shall be held
invalid, illegal or unenforceable in any respect under applicable law and
regulation, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and the invalid,
illegal or unenforceable provision shall be deemed null and void; however, to
the extent permissible by law, any provision which could be deemed null and void
shall first be construed, interpreted or revised retroactively to permit this
Plan to be construed in compliance with all applicable laws so as to foster the
intent of this Plan.
16. EFFECTIVE DATE AND TERM
This Plan shall be submitted to the stockholders of the Corporation for
approval and, if approved by the affirmative vote of a majority of the shares of
Stock present in person or represented by proxy at the 2003 annual meeting of
stockholders, shall become effective as of the date of such approval. This Plan
shall remain in effect until terminated by the Board.
II-5
[BRUNSWICK LOGO]
TWO ADDITIONAL WAYS TO VOTE
VOTE BY INTERNET VOTE BY TELEPHONE
IT'S FAST, CONVENIENT, AND YOUR VOTE IS
IMMEDIATELY CONFIRMED AND REGISTERED. IT'S FAST, CONVENIENT, AND YOUR VOTE IS
YOU MAY ALSO GIVE YOUR CONSENT TO HAVE ALL IMMEDIATELY CONFIRMED AND REGISTERED.
FUTURE PROXY STATEMENTS AND ANNUAL REPORTS
DELIVERED TO YOU ELECTRONICALLY.
CALL TOLL-FREE ON A TOUCH-TONE PHONE IN THE
GO TO WEB SITE U.S. OR CANADA
WWW.PROXYVOTE.COM 1-800-690-6903
Follow these four easy steps: Follow these four easy steps:
- - Read the accompanying Proxy Statement and - Read the accompanying Proxy Statement and
Proxy Card. Proxy Card.
- - Go to Web site WWW.PROXYVOTE.COM. - Call the toll-free phone number above.
- - Enter your unique 12-digit Control Number - Enter your unique 12-digit Control Number
located on your Proxy Card. located on your Proxy Card.
- - Follow the simple instructions. - Follow the simple instructions.
VOTE 24 HOURS A DAY
DO NOT RETURN PROXY CARD IF YOU ARE VOTING BY INTERNET OR TELEPHONE
Registered
- --------------------------------------------------------------------------------
Proxy
Solicited on behalf of the Board of Directors of
BRUNSWICK CORPORATION
The undersigned hereby appoints V.J. Reich, M.I. Smith and L.C. Chatfield II,
and each of them, as proxies with power of substitution, and hereby authorizes
them to represent and to vote, in accordance with the instructions on the
reverse side, all shares of Common Stock of Brunswick Corporation that the
undersigned may be entitled to vote at the Annual Meeting of Shareholders to be
held on April 30, 2003, or any adjournment thereof.
This proxy also provides voting instructions for shares held by Vanguard
Fiduciary Trust Company the trustee for the Brunswick Employee Stock Ownership
Plan, the Brunswick Retirement Savings Plan and the Brunswick Rewards Plan, and
directs such trustee to vote, as indicated on the reverse side of this card, any
shares allocated to your account in these plans. The Trustee will vote your
shares as you direct. The Trustee will vote allocated shares of the Company's
stock (except shares acquired with tax credit contributions) for which proxies
are not received and unallocated shares in direct proportion to voting by
allocated shares for which proxies are received.
THIS PROXY/VOTING INSTRUCTION CARD IS SOLICITED PURSUANT TO A SEPARATE NOTICE
OF ANNUAL MEETING AND PROXY STATEMENT, RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED.
THIS CARD SHOULD BE VOTED, BY MAIL, INTERNET OR TELEPHONE, IN TIME TO REACH THE
COMPANY'S PROXY TABULATOR, AUTOMATIC DATA PROCESSING, BY 11:59 P.M. EASTERN
DAYLIGHT TIME ON TUESDAY, APRIL 29, 2003, FOR ALL REGISTERED SHARES TO BE VOTED
AND BY 5:00 P.M. EASTERN DAYLIGHT TIME ON FRIDAY, APRIL 25, 2003, FOR THE
TRUSTEE TO VOTE THE PLAN SHARES. INDIVIDUAL PROXY VOTING AND VOTING INSTRUCTIONS
WILL BE KEPT CONFIDENTIAL BY AUTOMATIC DATA PROCESSING AND WILL NOT BE PROVIDED
TO THE COMPANY.
ADDRESS CHANGES/COMMENTS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[BRUNSWICK LOGO] VOTE BY INTERNET - WWW.PROXYVOTE.COM
BRUNSWICK CORPORATION Use the Internet to transmit your voting
1 N. FIELD CT. instructions and for electronic delivery
LAKE FOREST, IL 60045-4811 USA of information up until 11:59 p.m.
Eastern Daylight Time on Tuesday, April
29, 2003. Have your proxy card in hand
when you access the Web site. You will
be prompted to enter your 12-digit
Control Number, located below,to obtain
your records and to create an electronic
voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit
your voting instructions up until 11:59
p.m. Eastern Daylight Time on Tuesday,
April 29, 2003. Have your proxy card in
hand when you call. You will be prompted
to enter your 12-digit Control Number,
located below, and then follow the
simple instructions provided by the Vote
Voice.
VOTE BY MAIL -
Mark, sign, and date your proxy card and
return it in the postage-paid envelope
we have provided or return it to
Brunswick Corporation., c/o ADP, 51
Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: BRNSWK KEEP THIS PORTION FOR YOUR RECORDS
- -----------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
BRUNSWICK CORPORATION
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR PROPOSALS 1, 2 AND 3.
1. Election of Directors-Nominees
01) George W. Buckley FOR WITHHOLD FOR ALL To withhold authority to
02) Michael J. Callahan ALL ALL EXCEPT vote, mark "For All Except"
03) Manuel A. Fernandez and write the nominee's
04) Peter B. Hamilton number on the line below.
05) Roger W. Schipke __ __ __
|__| |__| |__| __________________________
FOR AGAINST ABSTAIN
__ __ __
2. Approval of the Brunswick Corporation 2003 Stock Incentive Plan |__| |__| |__|
__ __ __
3. Ratification of Ernst & Young LLP as independent auditors |__| |__| |__|
4. In their discretion, on such other business as may properly come before the
meeting
THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
NOTE: Please sign exactly as name(s) appear hereon. When signing as attorney,
executor, administrator, trustee, or guardian, please give full name as such.
Address change/comments? Please mark box to the __
right and note on the reverse side of card. |__|
YES NO
If you plan to attend the annual meeting, please mark "YES" __ __
to ensure that you will receive an admission ticket, which |__| |__|
you are required to obtain to attend the annual meeting.
- -------------------------------------------- ----------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date