SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
BRUNSWICK CORPORATION
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(Name of Registrant as Specified in Its Charter)
BRUNSWICK CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
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/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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[LOGO] BRUNSWICK CORPORATION
1 N. Field Ct., Lake Forest, Illinois 60045-4811
March 19, 1996
Dear Stockholder:
You are cordially invited to attend the 1996 Annual Meeting of Brunswick
Stockholders to be held on Wednesday, April 24, 1996 at 3:00 P.M. at Brunswick's
World Headquarters, 1 N. Field Ct., Lake Forest, Illinois. Brunswick's World
Headquarters is on Route 60, just east of the Tri-State Tollway.
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.
Therefore, I urge that you MARK, SIGN, DATE and RETURN PROMPTLY the
enclosed PROXY in the envelope furnished for that purpose. If you are present at
the meeting, you may, if you wish, revoke your proxy and vote in person. I am
looking forward to seeing you at the meeting.
Sincerely,
/s/ Peter Larson
PETER LARSON
Chairman
NOTICE OF ANNUAL MEETING
The Annual Meeting of Stockholders of Brunswick Corporation will be held at
Brunswick's World Headquarters, 1 N. Field Ct., Lake Forest, Illinois, on
Wednesday, April 24, 1996 at 3:00 P.M. for the following purposes:
(1) To elect Directors,
(2) To approve the amended and restated 1991 Stock Plan,
(3) To approve the 1995 Stock Plan for Non-Employee Directors,
(4) To ratify the appointment of Arthur Andersen LLP as auditors,
and
(5) To consider such other business as may properly come before the
meeting.
Brunswick stockholders of record at the close of business on February 26,
1996 will be entitled to notice of and to vote at the meeting and any
adjournment thereof.
By order of the Board of Directors,
/s/ Dianne M. Yaconetti
DIANNE M. YACONETTI
Vice President --
Administration and Secretary
Lake Forest, Illinois
March 19, 1996
[LOGO] BRUNSWICK CORPORATION
1 N. Field Ct., Lake Forest, Illinois 60045-4811
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Brunswick Corporation (the
"Company") which will be voted at the Annual Meeting of Stockholders to be held
on April 24, 1996 and at any adjournment thereof. This statement and form of
proxy were first mailed to stockholders on or about March 19, 1996. Any
stockholder submitting a proxy may revoke it at any time before it is voted. If
a stockholder is participating in the Company's Dividend Reinvestment Plan or
Employee Stock Investment Plan, any proxy given by such stockholder will also
govern the voting of all shares held for the stockholder's account under those
plans, unless contrary instructions are received.
Only holders of the Company's 98,218,696 shares of Common Stock outstanding
as of the close of business on February 26, 1996, the record date, will be
entitled to vote at the meeting. Each share of Common Stock is entitled to one
vote. The representation in person or by proxy of a majority of the outstanding
shares of Common Stock is necessary to provide a quorum at the Annual Meeting.
Abstentions are counted as present in determining whether the quorum requirement
is satisfied, but they have no other effect on voting for election of directors.
Abstentions are the same as a vote against on other matters. In instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned a proxy ("broker nonvotes"), those shares will be
counted for quorum purposes. The broker nonvotes will not be included in the
vote totals for a proposal and therefore will have no effect on the vote for the
proposal.
ELECTION OF DIRECTORS
The Company's 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. At the meeting, five
directors are to be elected. The Board of Directors has nominated Peter Harf,
Peter N. Larson, Jay W. Lorsch and Kenneth Roman for election as directors to
serve for terms expiring at the 1999 Annual Meeting, and until their respective
successors shall have been elected and qualified. The Board of Directors has
nominated Bernd K. Koken for election as a director to serve for a term expiring
at the 1997 Annual Meeting, and until his successor shall have been elected and
qualified, at which time he will have reached the mandatory retirement age.
Robert N. Rasmus has reached the age for mandatory retirement from the Board of
Directors and is not standing for election as a director.
It is intended that votes will be cast, pursuant to authority granted by
the enclosed proxy, for the election of the nominees named below as directors of
the Company, except as otherwise
1
specified in the proxy. Directors shall be elected by a plurality of the votes
present in person or represented by proxy at the Annual Meeting and entitled to
vote on the election of directors. In the event any one or more of such nominees
shall be unable to serve, votes will be cast, pursuant to authority granted by
the enclosed proxy, for such person or persons as may be designated by the Board
of Directors. Biographical information follows for each person nominated and
each person whose term of office will continue after the Annual Meeting. None of
the directors and nominees are affiliated with the Company except for Peter N.
Larson, Chairman and Chief Executive Officer of the Company, and Jack F.
Reichert, former Chairman and Chief Executive Officer of the Company.
NOMINEES FOR ELECTION FOR TERMS EXPIRING AT THE 1999 ANNUAL MEETING
PETER HARF Director since 1996
Chairman and Chief Executive Officer of Joh. A. Benckiser GmbH, an international
consumer products company, since 1988; director of Kimberly-Clark Corporation;
age 49
PETER N. LARSON Director since 1995
Chairman and Chief Executive Officer of Brunswick since 1995; Chairman of the
Worldwide Consumer and Personal Care Group, Johnson & Johnson, a leading health
care company, 1994-1995; Company Group Chairman, Johnson & Johnson, 1991-1994;
director of Compaq Computer Corporation; Chairman of the Advertising Education
Foundation; member of the Listed Stock Advisory Committee of the New York Stock
Exchange; age 56
JAY W. LORSCH Director since 1983
Louis E. Kirstein Professor of Human Relations since 1978, Chairman of Doctoral
Programs since 1995, Senior Associate Dean and Chairman of Executive Education
Programs 1990-1995, Harvard University Graduate School of Business
Administration; age 63
KENNETH ROMAN Director since 1995
Independent Consultant since 1991; Executive Vice President, American Express
Company, a major financial services company, 1989-1991; Chairman and Chief
Executive Officer of The Ogilvy Group, a leading advertising agency, 1988-1989;
Chairman of Ogilvy and Mather Worldwide, 1985-1989; director of Compaq Computer
Corporation, IBJ Schroder Bank and Trust Company, and PennCorp Financial Group,
Inc.; age 65
NOMINEE FOR ELECTION FOR TERM EXPIRING AT THE 1997 ANNUAL MEETING
BERND K. KOKEN Director since 1988
Chairman of the Board of Abitibi-Price, Inc. ("API"), a producer of newsprint
and uncoated groundwood papers and a converter and distributor of papers and
other forest products, since 1987; Chairman of the Board and Chief Executive
Officer of API 1987-1991; President and Chief
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Executive Officer of API 1985-1989; director of Danzer North America, Inc.,
Bradford Forest Products, Inc. and David R. Webb Co., Inc.; age 69
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1998 ANNUAL MEETING
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;
director of ITT Corporation; age 52
BETTYE MARTIN MUSHAM Director since 1993
President and Chief Executive Officer of Gear Holdings, Inc., a design,
marketing and communications firm, since 1977; age 63
JACK F. REICHERT Director since 1977
Retired; Chairman of the Board and Chief Executive Officer of Brunswick
1983-1995; President of Brunswick 1977-1993 and 1994-1995; director of The Dial
Corp.; age 65
ROGER W. SCHIPKE Director since 1993
Chairman of the Board and Chief Executive Officer of The Sunbeam Corporation, a
consumer products firm, since 1993; Chairman of the Board and Chief Executive
Officer of The Ryland Group, a company engaged in mortgage banking and home
building 1990-1993; director of Legg-Mason, Inc., Oakwood Homes Corporation and
The Rouse Company; age 59
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1997 ANNUAL MEETING
MICHAEL J. CALLAHAN Director since 1991
Executive Vice President and Chief Financial Officer of FMC Corporation, a
producer of chemicals, defense systems, machinery and equipment, since 1994;
Executive Vice President and Chief Financial Officer of Whirlpool Corporation, a
manufacturer of major home appliances, 1992-1994; Executive Vice
President -- International Grocery Products of The Quaker Oats Company, an
international manufacturer of foods, beverages and pet foods, 1989-1991; age 57
JOHN P. DIESEL Director since 1990
Retired; President of Tenneco Inc., a multi-industry firm with major operations
and interests in oil, natural gas pipelines, construction and farm equipment,
automotive components, chemicals, shipbuilding, packaging, agriculture and land
management, 1979-1988; director of Aluminum Company of America, Financial
Institutions Insurance Group, and Telepad Inc.; age 69
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GEORGE D. KENNEDY Director since 1979
Retired; Chairman of the Board of Mallinckrodt Group Inc. ("Mallinckrodt"), a
producer of medical products, specialty chemicals, products for animal health
and nutrition, and animal feed supplements, 1986-1994; Chairman of the Board and
Chief Executive Officer of Mallinckrodt 1986-1991; director of American National
Can Co., Illinois Tool Works, Inc., Kemper National Insurance Co., Scotsman
Industries, Inc. and Stone Container Corp.; age 69
COMMITTEES AND MEETINGS
The Board of Directors met eleven times during 1995. The Board of Directors
has Executive, Audit, Compensation and Corporate Governance Committees. None of
the members of these committees are affiliated with the Company except for Mr.
Larson, who is Chairman of the Executive Committee.
Members of the Executive Committee are Messrs. Larson (Chairman), Kennedy,
Koken and Lorsch.
Members of the Audit Committee are Messrs. Kennedy (Chairman), Callahan and
Rasmus and Ms. Martin Musham.
Members of the Compensation Committee are Messrs. Koken (Chairman), Diesel,
Lorsch and Schipke.
Members of the Corporate Governance Committee are Messrs. Lorsch
(Chairman), Callahan and Rasmus and Ms. Martin Musham.
The Audit Committee met five times during 1995. The Audit Committee is
responsible for assuring that, in all material respects, management shall cause
the Company's financial statements to comply with applicable laws and
regulations and to make fair and accurate disclosure of the Company's financial
position and its results of operations. The Audit Committee meets from time to
time with the Company's financial officers and employees, internal auditors and
independent public accountants to review the Company's financial statements and
reporting practices, the system of internal accounting controls, and the scope,
results and fees associated with services performed by the independent public
accountants.
The Compensation Committee met ten times during 1995. The Compensation
Committee administers the CEO Incentive Plan, Brunswick Performance Plan,
Strategic Incentive Plan, 1991 Stock Plan, 1994 Stock Option Plan for
Non-Employee Directors, 1995 Stock Plan for Non-Employee Directors and
Supplemental Pension Plan. The Compensation Committee, from time to time, also
recommends to the Board of Directors compensation of the Chairman and Chief
Executive Officer and other officers of the Company, and compensation for
members of the Board of Directors and its committees except the Compensation
Committee.
The Corporate Governance Committee met seven times during 1995. The
Corporate Governance Committee recommends to the Board of Directors nominees for
directors of the
4
Company to be elected by the stockholders and evaluates the performance of the
Board of Directors and its members. The Corporate Governance Committee also
recommends to the Board of Directors nominees to fill vacancies on the Board of
Directors as they occur and considers and makes recommendations to the Board
with regard to increases and decreases in the size of the Board. The Corporate
Governance Committee will consider nominees recommended by stockholders for
submission to the Board of Directors. Stockholders wishing to recommend nominees
should send such recommendations to the Secretary of the Company.
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. In addition the By-laws provide a procedure for stockholder
nominations. Stockholders intending to nominate director candidates for election
must deliver written notice thereof to the Secretary of the Company not later
than (i) with respect to an election to be held at an annual meeting of
stockholders, 90 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders, and (ii) with respect to an election to be held
at a special meeting of stockholders, the close of business on the tenth day
following the date on which notice of such meeting is first given to
stockholders. The notice of nomination shall set forth certain information
concerning such stockholder and the stockholder's nominee(s), including their
names and addresses, a representation that the stockholder is entitled to vote
at such 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 stockholder and each nominee, such
other information as would be required to be included in a proxy statement
soliciting proxies for the election of the nominees of such stockholder and the
consent of each nominee to serve as a director of the Company if so elected. The
chairman of the stockholders' meeting may refuse to acknowledge the nomination
of any person not made in compliance with the foregoing procedure.
DIRECTOR COMPENSATION
Directors who are not officers are entitled to an annual fee of $25,000 and
$1,500 for each Board and Committee meeting attended. The Chairmen of the Audit,
Compensation and Corporate Governance Committees each receive an additional
$5,000 per annum. If the 1995 Stock Plan for Non-Employee Directors (the "1995
Plan") is approved at this meeting, such annual fees and committee chair fees
will be paid in Common Stock of the Company, receipt of which may be deferred
until after retirement from the Board. If the 1995 Plan is approved, directors
will also be able to elect to be paid in Common Stock for such meeting fees and
to defer receipt of such Common Stock until after retirement. If the 1995 Plan
is approved by stockholders, new non-employee directors will receive an award of
Common Stock which has a value equal to the annual fee at the time they are
first elected to the Board. See the proposal on page 30 to approve the 1995
Stock Plan for Non-Employee Directors.
Pursuant to the 1994 Stock Option Plan for Non-Employee Directors,
non-employee directors at the time of each Annual Meeting of Stockholders of the
Company receive options to
5
purchase a number of shares of Common Stock such that the options will have a
value of $25,000 using the Black-Scholes pricing model with specified
assumptions. Each non-employee director received an option to purchase 3,100
shares at $21 per share at the time of the 1995 Annual Meeting pursuant to this
Plan. The exercise price of the options is 100% of the fair market value of the
Common Stock on the date of the award. The options become fully exercisable six
months after the date of the award and may be exercised at any time thereafter
until the tenth anniversary of the date of the award.
If the 1995 Plan is approved by stockholders, the non-employee directors
who were elected prior to July 25, 1995 and retire after satisfying specified
age and service requirements will have the July 25, 1995 present value of their
accrued benefits at retirement under the terminated non-employee directors'
pension plan converted into Common Stock. Directors who retire before satisfying
the specified age and service requirements will have the July 25, 1995, present
value of a reduced benefit converted into Common Stock. If the 1995 Plan is not
approved, non-employee directors will be paid in cash for the present value of
their accrued and vested pension benefits.
In the event of a change in control of the Company (as defined on page 21),
the Company will be obligated to continue to provide to retired directors
insurance and benefit programs equivalent to those provided at the time of the
change in control of the Company.
STOCKHOLDERS
As of February 15, 1996, each 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:
Number of Shares Percent
Name of Individual Beneficially Owned of
or Persons in Group as of February 29, 1996 Class
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Nolan D. Archibald 1,315(2) *
Michael J. Callahan 16,619(1)(2) *
John P. Diesel 20,199(1)(2) *
Peter Harf 21,015(2) *
George D. Kennedy 25,279(1)(2) *
Bernd K. Koken 21,781(1)(2) *
Peter N. Larson 223,744(4) *
Jay W. Lorsch 23,605(1)(2) *
Bettye Martin Musham 15,418(1)(2) *
Robert N. Rasmus 30,422(1)(2) *
Jack F. Reichert 689,786(2)(3)(5) *
Kenneth Roman 6,315(2) *
Roger W. Schipke 17,971(1)(2) *
David D. Jones 78,593(3) *
William J. Barrington 66,341(3) *
Robert C. Steinway 28,625(3) *
Jim W. Dawson 63,370(3) *
All directors and executive officers as
group 1,734,689(1)(2)(3)(4)(5) 1.8%
* Less than 1%
6
(1) Includes 5,600 shares of common stock for each of these directors issuable
pursuant to currently exercisable stock options.
(2) Includes the following shares of stock issued for the directors under the
1995 Stock Plan for Non-Employee Directors, subject to stockholder approval,
receipt of which has been deferred: Messrs. Archibald 1,315 shares, Callahan
8,578 shares, Diesel 11,885 shares, Harf 1,015 shares, Kennedy 13,141
shares, Koken 12,244 shares, Lorsch 12,696 shares, Rasmus 12,754 shares,
Reichert 487 shares, Roman 1,315 shares, and Schipke 8,871 shares, and Ms.
Martin Musham 7,818 shares.
(3) Includes the following shares of restricted stock: Messrs. Jones 17,000
shares, Barrington 13,500 shares, Steinway 8,000 shares, Dawson 14,200
shares, and all executive officers as a group 154,802 shares. Also includes
the following shares of common stock issuable pursuant to currently
exercisable stock options: Messrs. Reichert 126,450 shares, Jones 30,100
shares, Barrington 26,200 shares, Steinway 14,400 shares, Dawson 25,520
shares, and all executive officers as a group 358,420 shares.
(4) Includes 192,942 shares of common stock and 30,802 shares of restricted
stock, receipt of which has been deferred.
(5) Includes 79,600 shares held by the Jack F. Reichert Foundation for which Mr.
Reichert has shared dispositive power and shared voting power.
The only stockholder known to the Company to own beneficially more than 5%
of the outstanding voting securities of the Company is:
Shares
Beneficially
Owned as of Percent
Name and Address of December 31, of
Title of Class Beneficial Owner 1995 Class
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Common Stock Sanford C. Bernstein & Co., Inc. 9,113,360(1) 9.3%
One State Street Plaza
New York, NY 10004
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(1) Sanford C. Bernstein & Co., Inc. has sole voting power for 4,829,627 of
these shares, shared voting power for 1,016,716 of these shares and sole
dispositive power for all of these shares.
In addition, Bankmont Financial Corp., 111 West Monroe Street, Chicago, IL
60690, has reported beneficial ownership as of December 31, 1995 of 5,333,616
shares of Common Stock of the Company, representing 5.4% of the outstanding
shares, with sole voting power as to all of these shares, sole dispositive power
as to 5,330,216 shares, and shared dispositive power as to 800 shares. Bankmont
Financial Corp. is the parent holding company of Harris Bankcorp, Inc. These
shares include 5,314,812 shares held by Harris Trust and Savings Bank as Trustee
of the Brunswick Employee Stock Ownership Plan, of which 2,174,267 shares have
been allocated to participants' accounts. The Trustee votes these allocated and
unallocated shares in accordance with instructions received from the
participants.
7
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than 10%
of the Company's Common Stock, to file initial reports of ownership and changes
in ownership with the Securities and Exchange Commission and the New York Stock
Exchange. Based on a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that all forms were filed in a timely manner during 1995,
except that one purchase by Ms. Martin Musham was inadvertently reported late.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee") is
comprised entirely of independent, non-employee Directors who are responsible
for administering all compensation plans in which the Chairman and Chief
Executive Officer and the Senior Executives of the Company participate. For
1995, "Senior Executives" include all Division Presidents and all Senior
Corporate Executives in the Company.
EXECUTIVE COMPENSATION PLANS
We welcome the opportunity to share with our stockholders the details of
our executive compensation plans and the philosophy which has been followed in
developing these plans.
The purpose of the plans is to attract and retain outstanding key
employees, to encourage an ownership commitment by those employees through
grants of stock and/or options, to recognize past performance and to motivate
employees by providing incentives for the successful implementation of the
Company's strategic thrusts.
The plans have been designed to place a significant amount of compensation
at risk by first setting annual base salaries at levels generally in the third
quartile of the marketplace for similar positions. Available information on the
compensation practices of manufacturing companies with revenues similar to the
total Company or the appropriate business unit is used for the purpose of
reviewing and establishing salary levels. In addition, similar survey data
regarding manufacturers of durable goods and other products is reviewed and
compared to data developed internally. Because of their smaller size, the
companies included in the peer group index on page 15 are not included in the
list of comparable companies for the determination of salary ranges for the
Senior Corporate Executives. For 1995, the total compensation package of each
Senior Executive was developed by including an annual award of stock and stock
options as well as opportunities for annual and three-year cash incentives.
During 1995 the Company challenged its Senior Executives by providing
opportunities for annual and three-year cash incentives which could be earned
based upon the performance of the Company and/or its businesses. Various
performance goals, assigned to maintain an atmosphere of continuous improvement
and growth for the future, were defined in terms of financial results of the
Company or the individual business unit, improvements in quality, achievements
of targets
8
to improve service to our customers, management development efforts, market
share increases or other assigned measurements.
Participation in the plans varied based upon the levels of responsibility
of the Senior Executive and management employees of the Company and its business
units. In this way, a greater opportunity for incentive compensation is provided
for those employees whose responsibilities are deemed to have the largest impact
on the long-term success of the Company. In its administration of the plans the
Committee may, from time to time, use judgment and discretion.
The Company feels strongly that stock and/or stock options are an integral
part of a Senior Executive's total annual compensation package. It has long been
the belief of the Company that Senior Executives who own significant amounts of
Company stock are more inclined to focus on its long-term growth, make decisions
which are in the best interests of all shareholders and contribute to higher
levels of shareholder value.
The Company has a formal policy regarding Stock Ownership and Options in
Play Guidelines. Under the Guidelines, as approved by the Compensation
Committee, Senior Executives of the Company are expected to own specific minimum
amounts of Company stock depending upon their position, calculated as a multiple
of their base salaries, and ranging from 5 times annual salary for the Chairman
and Chief Executive Officer to 2-3 times for Senior Executives. In the case of a
new hire or promotion to a Senior Executive level, the individual will be
expected to reach the targeted amount required under the policy within specified
periods of time.
For 1995, the executive compensation plans included incentives for short
and long-term performance, as described below:
The Brunswick Performance Plan is an annual bonus plan which in 1995
provided opportunities for cash bonuses to be earned by Senior Executives and
other employees of the Company. Under the Plan, bonus pools were generated based
upon the achievement of specified annual financial targets and written
objectives which were reviewed by the Committee. For 1995, 70% of the bonus was
based on pre-tax earnings goals, 10% was based on cash flow targets and the
remaining 20% was based on clearly established, generally non-financial
objectives central to the continued strength of the business. Except for
extraordinary performance, awards under this Plan for Senior Executives ranged
from zero to 60% of their base salaries in effect at the beginning of the Plan
year. Bonuses earned by Senior Executives under the Plan for 1995 were reviewed
and approved by the Committee based upon an assessment of performance against
assigned goals.
Effective with the 1996 Plan year, Senior Executives will have an
opportunity to earn from zero to 100% of their base salaries in effect at the
beginning of the year. In addition, for certain of the Senior Executives, the
bonus earned may be paid up to 50% in Brunswick stock and 50% in cash if he or
she has not met the Stock Ownership and Options in Play Guidelines as described
above. If the guidelines have been met, the payment form is at the election of
the Senior Executive. Any stock payment may be deferred at the Senior
Executive's election.
9
For the three-year performance periods which included 1995, the Strategic
Incentive Plan had been a long-term bonus plan providing for cash bonuses.
Participation includes all Senior Executives and various key management
employees who may have a significant impact on the achievement of the Company's
strategic goals. The purpose of the Plan is to provide an incentive for the
successful implementation of the Company's strategic plan by defining the
contribution necessary from each business unit to achieve the plan. Through
1995, specific written goals to be completed during the three-year performance
period of the Plan were submitted to the Compensation Committee. These included,
among others, goals related to sales volume, profitability levels, opportunities
for growth, global expansion, employee development, improvements in quality and
customer satisfaction, market share gains, the generation of cash and cost
reduction measures. The goals were specific to each operating unit and in some
cases to a specific market, such as international, serviced by the operating
unit. Amounts earned under the Plan have been based upon the percentage of the
assigned strategic goals which were achieved multiplied by the maximum bonus
which could have been paid to each participant as determined at the beginning of
the performance period. Bonuses for Division Presidents for the 1993-95
performance period were determined by measuring the level of achievement of
goals assigned to their individual business units. Senior Corporate Executives
earned bonuses based upon the weighted percentage of the total of all assigned
goals achieved multiplied by their maximum potential bonus as determined at the
beginning of the performance period. Bonuses for all Senior Executives are
approved by the Compensation Committee. Actual bonuses paid under this Plan to a
Senior Executive at the end of the three-year performance period ranged from
zero to 75% of the individual Senior Executive's base salary in effect at the
beginning of the performance period. Approximately 140 employees have been
designated as participants in the Plan for the 1995-97 performance period.
The performance period for the Plan beginning January 1, 1996 will be two
years. The goals for the 1996-1997 performance period are specified financial
targets. Bonuses for Senior Executives under the Plan will be based upon a
combination of Division performance and overall Company performance. Senior
Executives may earn from zero to 100% of base salary or zero to 75% of base
salary in effect at the beginning of the performance period depending upon their
position. From 75% to 100% of the maximum award will be denominated in stock
units at the beginning of the performance period using the January 2, 1996
closing price of the Company's common stock. Similar to the annual bonus plan,
the final payout will be made in common stock for those Senior Executives who
have not reached the Stock Ownership Guidelines. Any stock payments may be
deferred.
Under the terms of the 1991 Stock Plan, shares of restricted stock and/or
stock options have been granted to Senior Executives and certain management
employees. In determining awards of restricted stock and stock options for an
individual Senior Executive, the Committee began with a dollar amount equal to a
range of 50% to 70% of the Senior Executives' annual salary. At the time of this
calculation, restricted shares were valued at their then fair market value and,
for purposes of this calculation, stock options were valued at one-third of the
then current market price of the shares. An assessment of the performance of
each individual Senior Executive was completed,
10
after which a final award, expressed as a percentage of salary, was determined.
The size of previous awards of stock or stock options made to a Senior Executive
was not considered in the final determination. The number of shares of
restricted stock and options granted was then determined (using a ratio of
approximately one-third in restricted stock and two-thirds in options). All
awards of restricted stock and stock options granted to 17 Senior Executives
were approved by the Compensation Committee.
For the shares of restricted stock granted in 1995, restrictions will lapse
in five years or earlier in the case of normal retirement. Options granted in
1995 had an exercise price equal to the market value of the stock on the date of
grant, will vest over three years and will expire ten years after the date of
grant. The value to the participant of each stock option will depend upon the
extent to which the market value of the stock increases over the exercise price.
Grants of restricted stock were limited to Senior Executives. In 1995, 377
employees received options under the Plan.
Beginning in 1996, Senior Executives will no longer be awarded annual
grants of restricted stock. Instead, in order to align their interests more
closely to those of the Company's shareholders, Senior Executives will be
awarded grants of options to purchase stock with values up to 100% of their base
salary as determined using a Black Scholes pricing model for the stock. The
exercise price will be 100% of the fair market value of the Company's stock at
the time of grant. Options will fully vest three years from the date of grant;
however, vesting may be accelerated based upon the achievement of specific
thresholds for earnings per share or stock price.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Larson joined the Company on April 1, 1995 as Chief Executive Officer.
On October 1, 1995 he also was elected Chairman of the Board. The compensation
package provided to Mr. Larson for 1995 and as included in an Employment
Agreement between Mr. Larson and the Company was developed with the assistance
of an outside firm with expertise in the area of executive compensation in
consultation with the Compensation Committee of the Board of Directors.
Under the terms of the Employment Agreement the annual base salary for Mr.
Larson has been set at $800,000. His performance is to be reviewed annually by
the Board, taking into account such financial and non-financial factors as the
Board determines to be pertinent. Approximately six months through each annual
performance cycle, the Board shall review Mr. Larson's performance, with the
interim review focusing primarily on non-financial factors.
Mr. Larson participates in an annual bonus plan which provides for a
maximum of 200% of his annual salary based upon the achievement of goals
established by the Board. Payment of this bonus shall be made one-half in fully
vested shares of the Company's common stock and the remainder in cash. Under the
terms of his Employment Agreement, he was entitled to a minimum bonus for 1995
with a value of not less than $800,000, a portion of which could be paid in
11
Company stock, with the opportunity for an increased bonus based upon
performance. After considering Mr. Larson's accomplishments since his election
as Chief Executive Officer, the Committee recommended, and the Board of
Directors approved, a bonus of $960,000 for 1995, all of which was paid in stock
at Mr. Larson's request and deferred.
Mr. Larson may earn Long Term Incentive Share Awards for the three-year
period beginning January 1, 1996 and for subsequent three-year periods beginning
immediately after the end of the prior period which have a value equal to 225%
to 300% of his annual salary at the beginning of each three-year period
depending on the achievement of performance goals, which will be established by
the Board in consultation with Mr. Larson. All earned amounts will be paid in
the Company's common stock and may be deferred according to the terms of his
Agreement. For 1995, Mr. Larson's Employment Agreement provides that he was
entitled to receive shares of the Company's common stock with a market value of
not less than $600,000 with the opportunity for additional shares based upon
performance. Again in recognition of his performance, the Committee recommended,
and the Board of Directors approved, an award of stock equal to $720,000, all of
which has been deferred.
As part of his Employment Agreement, Mr. Larson was awarded certain
one-time payments to compensate him for the forfeiture of compensation and other
employee benefits to which he had been entitled at his former employer. These
awards included 149,079 shares of the Company's common stock which have been
fully vested and deferred until Mr. Larson's termination of employment, and an
award of non-qualified options to purchase 500,000 shares of the Company's
common stock at $20.125, the fair market value on the Effective Date of his
Employment Agreement. Two hundred thousand of the options will vest over the
first three anniversaries of the Effective Date of his Employment Agreement and
the remaining 300,000 options will vest upon the attainment of specified
earnings per share targets or stock price thresholds or at the end of the third
year of the Effective Date of the Agreement, whichever is sooner.
COMPENSATION OF THE RETIRED CHAIRMAN
The 1995 compensation of Mr. Reichert, retired Chairman of the Company,
consisted of two components: cash, which included his base salary and a bonus
earned under the terms of the CEO Incentive Plan, and stock through grants of
restricted stock and stock options awarded under the 1991 Stock Plan.
Mr. Reichert's total compensation package contained both fixed and variable
components. The fixed portion of his compensation was comprised of his base
salary and the value of restricted stock awarded. This portion represented
approximately 47% of his total compensation in 1995. The balance was variable
and included payments earned under the CEO Incentive Plan, any appreciation in
the value of restricted stock during the restricted period, and the value of the
stock options granted to him during the year.
The Board of Directors reviewed Mr. Reichert's performance on a semi-annual
basis. Each performance evaluation included a review of the status of his
achievement under the CEO
12
Incentive Plan (described below) against assigned goals and an assessment of the
state of the Company and its performance.
On an annual basis the Committee reviewed Mr. Reichert's compensation and
established recommendations regarding any changes to his base salary. These
recommendations were made to the Board of Directors after considering a number
of factors, including available market data and the Committee's assessment of
Company performance as compared with its competitors, economic conditions and
industry environment. In December, 1994, the Committee discussed the history of
Mr. Reichert's compensation including his annual base salary, bonuses paid, and
restricted stock and stock options granted and recommended, and the Board of
Directors approved, an increase in Mr. Reichert's annual base salary to $800,000
effective January 2, 1995.
The CEO Incentive Plan, a cash bonus plan, provided a format for the
assignment of specific goals for Mr. Reichert which were designed to create and
enhance shareholder value. The Compensation Committee, in conjunction with Mr.
Reichert, developed these goals which included various strategic initiatives to
be achieved at specified times and which reflected the vision of the Chairman as
regularly reviewed and approved by the full Board of Directors. Mr. Reichert did
not participate in either the Brunswick Performance Plan or the Strategic
Incentive Plan. Instead, he had opportunities to earn from zero to 200% of his
salary annually under the CEO Incentive Plan, based upon the Committee's
assessment of his performance against the goals assigned and other factors.
For 1995, the Committee recommended, based upon its assessment of the level
of Mr. Reichert's achievement of his assigned goals, and the Board of Directors
approved a bonus of $600,000 under the Plan. In its deliberations, the Committee
considered all of the goals which had been assigned to him for 1995, the
improvement in the financial results of the Company, and the duration of time
that Mr. Reichert had served as Chief Executive Officer and then as Chairman of
the Board of the Company. The bonus earned was then prorated to September 30,
the date of Mr. Reichert's retirement. The most significant of the goals
achieved by Mr. Reichert were:
(i) Leadership of the Company until successful completion of the
succession process, with a focus on:
(a) maintaining the momentum in earnings;
(b) continuing implementation of the strategies in place; and
(c) preservation of the culture and values of the Company.
(ii) Assistance in the search for a new Chief Executive Officer.
(iii) The completion of a successful transition once his successor was
identified.
Under the 1991 Stock Plan, Mr. Reichert could receive grants of restricted
stock and/or stock options. The terms of his Employment Agreement with the
Company entitled Mr. Reichert to an annual, non-performance based grant of
restricted stock with a minimum value equivalent to 75% of his salary. In
accordance with those terms, in January, 1995, a grant of restricted shares was
made to Mr. Reichert which had a value equal to 75% of his salary. In addition,
in February, 1995, in recognition of the significant increase in operating
earnings from 1993 to 1994, the Compensation Committee also awarded Mr. Reichert
an option to purchase 25,000 shares of the Company's
13
common stock at its then current fair market value. Upon his retirement on
September 30, 1995 he was awarded under the terms of his Employment Agreement a
cash payment of $450,000 in lieu of an additional grant of stock prorated to the
date of his retirement.
OMNIBUS BUDGET RECONCILIATION ACT OF 1993
The Company has reviewed its executive compensation plans in response to
the Omnibus Budget Reconciliation Act of 1993 ("the Act"), which established a
million dollar tax deduction limitation in August, 1993 for the taxable years
beginning on or after January 1, 1994. The limitation applies to compensation in
excess of $1 million paid to any executive who is employed by the Company on
December 31 and named in the summary compensation table, with certain exceptions
including an exception for compensation based upon objective performance
measurements which are administered by a committee of outside directors and
approved by stockholders.
After a detailed review of the provisions of the Act as they pertain to the
Plans currently in effect in the Company, the Committee has determined the
following:
(i) As specified in the regulations, in order for compensation
attributable to the exercise of stock options to remain deductible,
the 1991 Stock Plan is being amended and shareholder approval is
being sought to include a limitation on the number of options which
may be granted to any one participant;
(ii) The Company does not currently intend to qualify the Brunswick
Performance Plan for an exception to the deduction limitation of such
compensation resulting from payments made under the Plan. The
Chairman and Chief Executive Officer does not participate in this
Plan; and
(iii) The Company does not intend to submit the Strategic Incentive Plan to
shareholders for approval in order to qualify the payments as
performance-based compensation. For 1995, bonus payments under the
Plan were earned by the accomplishment of strategic goals, the
assessment of which are partly judgmental rather than being solely
formula driven. Beginning in 1996, specific financial targets will
be set. Because the goals set under the Plan are often competitively
or strategically sensitive, the Company does not currently believe
it appropriate to attempt to satisfy the requirements for an
exception to the deduction limitation. The Chairman and Chief
Executive Officer of the Company does not participate in the
Strategic Incentive Plan.
The Company and the Committee will continue to monitor the impact of these
Plans with respect to the deduction limitation.
Submitted by Members of the Compensation Committee of the Board of
Directors,
B. K. Koken, Chairman
J. P. Diesel
J. W. Lorsch
R. W. Schipke
14
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG BRUNSWICK, S&P 500 INDEX AND PEER GROUP
MEASUREMENT PERIOD S&P 500
(FISCAL YEAR COVERED) BRUNSWICK PEER GROUP INDEX
1990 100 100 100
1991 160.1 130.0 130.5
1992 193.0 150.4 140.4
1993 219.3 189.3 154.6
1994 235.4 170.5 156.6
1995 306.3 221.7 215.4
Basis of comparison is a $100 investment at December 31, 1990 in each of
Brunswick, the S&P 500 Index and a peer group of three recreation manufacturing
companies (Outboard Marine Corporation, Anthony Industries, Inc. and Johnson
Worldwide Associates, Inc.) weighted by the beginning of the year market value
of each company. All dividends are reinvested.
15
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation of the Chief Executive
Officer, the retired Chief Executive Officer and each of the four other most
highly paid executive officers for each of the last three years.
Long-Term
Compensation
Annual Compensation -----------------------------------
-------------------------------- Awards Payouts
Other ----------------------- ---------
Annual Restricted Securities Long-Term All Other
Compen- Stock Underlying Incentive Compen-
Name/Position Year Salary Bonus sation Award(4) Options(#) Payouts sation(6)
- ----------------------------------------------------------------------------------------------------------------------
Peter N. Larson/Chairman 1995 $600,000 $ 983,721 $116,505(3) $720,000 500,000(5) 0 $3,000,215
and Chief Executive
Officer(1)
- ----------------------------------------------------------------------------------------------------------------------
Jack F. Reichert/Chairman 1995 $596,164 $ 600,000 $23,079 $551,263 25,000 0 $ 624,520
and Chief Executive 1994 735,000 1,000,000 7,281 551,254 25,000 0 69,787
Officer(1) 1993 717,644 700,000 62,964 268,494 48,450 0 71,247
- ----------------------------------------------------------------------------------------------------------------------
David D. Jones/President, 1995 $402,877 $ 233,600 $ 1,809 $132,125 14,000 $207,800 $ 41,287
Mercury Marine Division 1994 338,384 250,000 1,195 90,625 10,000 200,000 21,445
1993 316,041 80,000 1,089 83,125 10,000 0 20,330
- ----------------------------------------------------------------------------------------------------------------------
William J. Barrington/ 1995 $334,849 $ 192,000 $ 2,678 $ 94,375 10,000 $213,750 $ 67,296
President, Sea Ray 1994 313,699 180,000 901 72,500 8,000 185,000 32,182
Division 1993 300,000 45,000 530 74,812 9,000 0 27,670
- ----------------------------------------------------------------------------------------------------------------------
Robert C. Steinway/ 1995 $261,178 $ 144,000 $ 209 $ 94,375 10,000 $212,000 $ 48,338
President, US Marine 1994 198,918 125,000 901 64,500 5,000 80,000 32,076
Division(2)
- ----------------------------------------------------------------------------------------------------------------------
Jim W. Dawson/President, 1995 $262,301 $ 131,300 $ 278 $ 98,150 10,400 $156,750 $ 42,123
Zebco Division 1994 236,301 110,000 1,197 81,562 9,000 150,000 19,368
1993 220,781 60,000 1,091 74,812 9,000 0 18,486
- ----------------------------------------------------------------------------------------------------------------------
(1) Mr. Larson has been Chief Executive Officer since April 1995 and Chairman
since October 1995. Mr. Reichert was Chief Executive Officer until April
1995 and Chairman until October 1995.
(2) Mr. Steinway first became an executive officer in 1994.
(3) Includes $80,715 for use of the Company's aircraft for relocation and
authorized non-corporate uses.
(4) The amounts shown in this column are the value of the restricted shares as
of the date of grant. The total number and value of restricted stock
holdings as of December 31, 1995 for the named officers are as follows:
Messrs. Jones 19,250 shares, $462,000; Barrington 15,625 shares, $375,000;
Steinway 9,250 shares, $222,000 and Dawson 16,200 shares, $388,800. Mr.
Larson did not hold any restricted stock at December 31, 1995; he received
an award of 30,802 restricted shares with a value of $720,000 in February
1996 based on the Company's 1995 performance, which shares will become
fully vested on April 1, 1998, and receipt of these shares is deferred
until retirement. Dividends are paid quarterly on all shares of restricted
stock.
(5) The options to purchase 500,000 shares of Common Stock are part of Mr.
Larson's initial employment agreement.
16
(6) All Other Compensation for 1995 for the named officers is comprised of the
following: (i) Mr. Larson's amount represents the value of the 149,079
shares of Common Stock awarded to Mr. Larson to compensate him for the
restricted stock he forfeited at his former employer; (ii) $450,000 of Mr.
Reichert's amount represents a cash payment in lieu of a restricted stock
award in connection with his retirement, $95,387 represents payment at
retirement for unused vacation, and $9,135 represents the difference
between the amount Mr. Reichert paid for a Company car he purchased when he
retired and the fair market value of the car; (iii) Company contributions
to the Brunswick Retirement Savings Plan for Messrs. Reichert $2,772; Jones
$2,772; Barrington $2,000; Steinway $2,772; and Dawson $2,382; (iv) Company
contributions to the Brunswick Employee Stock Ownership Plan for Messrs.
Jones $510; Barrington $628; Steinway $491 and Dawson $628; (v) Company
contributions for the Sea Ray Employees' Stock Ownership and Profit Sharing
Plan and Supplemental Profit Sharing Plan for Mr. Barrington of $47,382;
(vi) Company contributions for the Bayliner Profit Sharing Plan and
Supplemental Profit Sharing Plan for Mr. Steinway of $26,662; and (vii) the
term life portion of the premiums plus the present value of the remaining
premiums paid for the benefit of the named executives, measuring such value
by assuming an interest free loan to the named executives until the Company
is reimbursed for such remaining premiums: Messrs. Reichert $67,226, Jones
$38,005, Barrington $17,286; Steinway $18,413 and Dawson $39,113.
OPTION GRANTS IN 1995
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
Options Employees Exercise Expiration -------------------------------------
Name Granted in 1995(4) Price Date 0% 5% 10%
- ------------------------------------------------------------------------------------------------------------------
Peter N. Larson(2)....... 500,000 35.82% $20.125 4/1/05 0 $6,328,252 $16,037,033
Jack F. Reichert(3)...... 25,000 1.79% $19.875 2/7/05 0 312,482 791,891
David D. Jones(3)........ 14,000 1.00% $18.875 1/3/05 0 166,185 421,146
William J.
Barrington(3).......... 10,000 .72% $18.875 1/3/05 0 118,704 300,819
Robert C. Steinway(3).... 10,000 .72% $18.875 1/3/05 0 118,704 300,819
Jim W. Dawson(3)......... 10,400 .75% $18.875 1/3/05 0 123,452 312,852
All Shareholders(5)...... N/A N/A N/A N/A 0 $1,197,316,940 $3,034,236,206
(1) Non-qualified stock options were granted at 100% of the closing fair market
value on the date of grant with a ten year option term. When exercising
options, an option holder may deliver previously acquired shares of Common
Stock or may request that shares be withheld to satisfy the required
withholding taxes.
17
(2) The options vest in increments of 12%, 12% and 76% on the first three
anniversaries of the grant date, or earlier if there is a change in control
of the Company. In addition, options will vest earlier for 18% of the
shares when the per share price of the Common Stock attains $25.00 or
annual net earnings of the Company exceed $2.00 per share, for an
additional 18% of the shares when the per share price of the Common Stock
attains $30.00 or annual net earnings of the Company exceed $2.35 per
share, and for 24% of the shares when the per share price of the Common
Stock attains $35.00 or annual net earnings of the Company exceed $2.70 per
share.
(3) The options vest in increments of 30%, 30% and 40% on the first three
anniversaries of the grant date, or earlier if there is a change in control
of the Company.
(4) Based on 1,395,850 options granted to 377 employees during 1995.
(5) The potential realizable values for all shareholders were calculated using
the weighted average exercise price of option shares awarded during 1995
and the total outstanding shares of Common Stock on December 31, 1995. At
5% and 10% annual appreciation the value of the Common Stock would be
approximately $31.68 per share and $50.44 per share, respectively, at the
end of the 10-year period.
OPTION EXERCISES AND YEAR-END VALUE TABLE
Number of Securities Value of
Number of Underlying the Unexercised Unexercised, In-the-Money
Shares Options at 12/31/95 Options Held at 12/31/95(1)
Acquired on ------------------------------- -------------------------------
Executive Exercise Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------
Peter N. Larson 0 0 500,000 0 $1,937,500
Jack F. Reichert 0 126,450 0 $ 843,944 0
David D. Jones 0 18,900 25,000 162,112 142,375
William J. Barrington 0 17,200 19,200 149,100 110,700
Robert C. Steinway 0 8,580 14,820 75,052 81,547
Jim W. Dawson 0 16,100 20,300 136,687 116,862
(1) Represents the difference between the option exercise price and the fair
market value of the Company's Common Stock on December 31, 1995.
18
LONG-TERM INCENTIVE PLAN -- AWARDS DURING 1995
Estimated Future Payouts Under
Non-Stock Price-Based Plans
Executive Performance Period Target Maximum
- -----------------------------------------------------------------------------------------------------------------
Peter N. Larson(1) 1/1/96 - 12/31/98 $1,800,000 $2,400,000
David D. Jones 1/3/95 - 12/31/97 N/A 300,000(2)
William J. Barrington 1/3/95 - 12/31/97 N/A 240,000(2)
Robert C. Steinway 1/3/95 - 12/31/97 N/A 180,000(2)
Jim W. Dawson 1/3/95 - 12/31/97 N/A 195,000(2)
(1) Mr. Larson receives incentive awards pursuant to his employment agreement
for the three-year period beginning January 1, 1996 and for subsequent
three-year periods beginning immediately after the end of the prior period
which have a value equal to 225% to 300% of his annual salary at the
beginning of the three-year period depending on the achievement of
performance goals. These awards are paid in Common Stock based on the price
of Common Stock at the time the amount of the award is determined.
(2) These amounts are the maximum payments which may be paid if all the goals
are achieved under the Strategic Incentive Plan, a bonus plan in which
certain officers and key executives of the Company and its Divisions
participate.
PENSION PLANS
The following table shows the maximum retirement income which may be
payable as a straight life annuity pursuant to the Company's salaried pension
plans at age 65 under various assumed conditions prior to reduction for Social
Security benefits.
Average of the
Three Highest Retirement Income for
Consecutive Years' Years of Participating Service
Earnings as a ---------------------------------------------------------------------
Participant 15 20 25 30
- ---------------------------------------------------------------------------------------------------------------
$ 300,000 $ 99,000 $132,000 $ 165,000 $ 198,000
600,000 198,000 264,000 330,000 396,000
900,000 297,000 396,000 495,000 594,000
1,600,000 528,000 704,000 880,000 1,056,000
2,200,000 726,000 968,000 1,210,000 1,452,000
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 bonuses earned
under the Strategic Incentive Plan), and age.
The 1995 earnings used to calculate benefits under the salaried pension
plans and the years of service of the officers named in the summary compensation
table are: Messrs. Reichert $1,796,164, 30 years; Larson $600,000, 16 years;
Jones $652,885, 14 years; and Dawson $372,309,
19
30 years. The foregoing amounts include the annual bonuses paid in 1995 for 1994
performance and differ from the amounts listed in the summary compensation
table, which include the annual bonuses paid in 1996 for 1995 performance. In
addition, Mr. Reichert received part of his 1995 bonus in 1995. Messrs.
Barrington and Steinway do not participate in any salaried pension plan.
If there is a change in control of the Company on or before April 1, 2001
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 the
Company, 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 such change in control of the Company, the participant's pension
would not be reduced as a result of early retirement.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Larson which provides for
his employment through April 1, 1998 at an annual salary of not less than
$800,000 per year. The agreement will be extended for an additional three-year
term and thereafter for successive additional one-year terms unless the Company
or Mr. Larson elects not to extend the term at least six months before the new
term otherwise would begin. The agreement provides for an annual bonus of up to
200% of salary based on the accomplishment of specified goals, which will be
paid in a combination of cash and Common Stock of the Company. Pursuant to the
Agreement Mr. Larson received an award of 149,079 shares of Common Stock and
options to purchase 500,000 shares of Common Stock at $20 1/8 per share for ten
years. Mr. Larson received an award of 30,802 shares of Common Stock under the
agreement based on his 1995 performance, which will become fully vested on April
1, 1998 or earlier in the event of death, disability or a change in control of
the Company.
The agreement provides for long term incentive awards of Common Stock for
the three-year period beginning January 1, 1996 and for subsequent three-year
periods beginning immediately after the end of the prior period which have a
value equal to 225% to 300% of his annual salary at the beginning of each
three-year period depending on the achievement of performance goals. Mr. Larson
is also entitled under the agreement to an annual award of options to purchase
Common Stock which options are to have a value of $750,000 using the
Black-Scholes pricing model. The agreement also provides that with some
exceptions Mr. Larson shall participate in all benefit plans offered to the
Company's Senior Executives during the term of the agreement and for two years
following termination of the agreement for any reason other than death,
incapacity or cause. In addition, the agreement provides that he shall be
entitled for six years following the termination of the agreement to coverage
under any directors and officers liability insurance policy, indemnification
by-law and indemnification agreement then maintained or offered by the Company.
20
Mr. Larson may elect to defer receipt of cash or Common Stock compensation
under his agreement. Cash amounts deferred either will be invested or will
accrue interest at the prime rate in effect at the First National Bank of
Chicago, or, if greater, at the Company's short term borrowing rate. Dividends
on Common Stock which is deferred will be reinvested in additional shares of
Common Stock unless Mr. Larson elects to receive the dividends on a current
basis. Life insurance of three and one-half times Mr. Larson's base salary is to
be maintained for him during the term of the agreement and for two years
following termination of the agreement for any reason other than death,
incapacity or cause. Mr. Larson may elect to reduce the amount of life insurance
provided to him and to receive the premiums which otherwise would have been paid
for the insurance.
If Mr. Larson's employment is terminated before completion of the term of
his agreement for any reason other than death, incapacity or cause, or if Mr.
Larson resigns following a significant change in the nature or scope of his
duties, a reduction in his compensation, a reasonable determination by Mr.
Larson that as a result of a change in the circumstances regarding his duties,
he is unable to exercise his authorities or duties, a change in control of the
Company (as defined below), or breach by the Company of the agreement, the
agreement provides that he shall receive a lump sum payment equal to (i) his
salary for two years following termination at the rate in effect as of the date
of termination and (ii) annual bonus and long term incentive awards for the two
year period following termination based on performance to date extrapolated
through the termination date and that non-performance restrictions on stock
options shall lapse, performance restrictions on options shall lapse to the
extent authorized by the Board of Directors, and options which are then
exercisable or become exercisable because of the lapse of restrictions shall
remain exercisable until the later of (i) their expiration or (ii) five years
following termination of employment. The agreement prohibits competition with
the Company by Mr. Larson during the term of the agreement and for two years
thereafter and requires confidentiality on the part of Mr. Larson during and
after the term of the agreement.
The agreement provides that Mr. Larson will receive a pension from the
Company as if he had been employed by the Company for an additional 15 years,
reduced by the pension he receives from Johnson & Johnson, his former employer,
and reduced by the amount of his Social Security benefit.
Upon Mr. Larson's request after a change in control of the Company, the
Company is required under the agreement to pay Mr. Larson any amount then held
for him in a deferred compensation account, and to pay a lump sum pension
payment equal to the present value of benefits accrued under the Company's
supplemental pension plan. The definition of a change in control includes (i)
the ownership of 30% or more of the outstanding voting stock of the Company by
any person other than an employee benefit plan of the Company, (ii) a tender
offer which has not been negotiated and approved by the Board of Directors of
the Company for stock of the Company if (a) the offeror owns or has accepted for
payment 25% or more of the outstanding voting stock of the Company or (b) the
offer remains open three days before its stated termination date and if the
offeror could own 50% or more of the outstanding voting stock
21
of the Company as a result of the offer, or (iii) the failure of the Board of
Directors' nominees to constitute a majority of the Board of Directors of the
Company following a contested election of directors.
Mr. Reichert retired as Chairman of the Board on October 1, 1995. The
Company has agreed to provide him until October 1, 2010 with life insurance of
three and one-half times his former base salary (less the face value of any
policy released to him under the Split Dollar Life Insurance Plan). This
obligation is being satisfied through the Split Dollar Life Insurance Plan. The
Company also has agreed to provide Mr. Reichert with office space and
secretarial service until October 1, 2000.
The Company also has employment agreements with Messrs. Jones, Barrington,
Steinway, and Dawson and certain other officers which provide that after a
change in control of the Company each executive will be employed for three years
(but not beyond the executive's 65th birthday) during which the executive will
be entitled to a salary not less than the executive's annual salary immediately
prior to the change in control, with the opportunity for regular increases, and
incentive compensation, employee benefits and perquisites equivalent to those
provided by the Company to executives with comparable duties, but at least as
great as those to which the executive was entitled immediately prior to the
change in control. The definition of a change in control in these agreements is
the same as the definition in Mr. Larson's agreement described above. Within 60
days after a change in control, the Company is required to pay the executive a
lump sum pension payment equal to the present value of benefits accrued under
the Company's supplemental pension plan as of the end of the prior year.
If employment is terminated under any of these agreements before completion
of the term of employment for any reason other than death, incapacity or cause,
or if an executive resigns following a significant change in the nature or scope
of the executive's duties, a reduction in total compensation, a reasonable
determination by the executive that as a result of a change in the circumstances
affecting the executive's position the executive is unable to exercise the
authorities and duties attached to the executive's position, or breach by the
Company of the agreement, the executive would be paid a lump sum payment equal
to (i) his or her salary for three years at the rate in effect as of the date of
termination, (ii) a bonus of 50% of salary for each of the three years, and
(iii) an additional bonus under the Brunswick Strategic Incentive Plan equal to
50% of salary for each of the three years. If the executive attains age 65
during such three-year period, all of the foregoing payments will be reduced
proportionally. If the lump sum payments are paid, the executive shall be
treated as though he or she had continued to participate in the Company's
incentive compensation and employee benefit plans for the three years, and the
executive will receive a lump sum payment equal to the then present value of the
additional pension benefit accrued for the three years. The agreements prohibit
competition with the Company by the executive for one year after termination of
employment and require confidentiality on the part of the executive during and
after the term of the agreements. The agreements also provide that if any
executive is required to pay any excise tax on payments from the Company by
reason of
22
Section 4999 of the Internal Revenue Code of 1986, the Company will reimburse
the executive for such excise tax plus any other taxes owed as a result of such
reimbursement.
The agreements provide that each executive may resign during the six months
following a change in control of the Company and elect to receive a lump sum
payment equal to (i) his or her salary for two years at the rate in effect as of
the date of termination, (ii) a bonus of 50% of salary for the two years, and
(iii) an additional bonus under the Brunswick Strategic Incentive Plan equal to
50% of salary for the two years. Also, the executive would be treated as though
he or she had continued to participate in the Company's incentive compensation
and employee benefit plans for the two years, and the executive will receive a
lump sum payment equal to the then present value of the additional pension
benefit that would have accrued for the two years. If the executive attains age
65 during such two-year period, all of the foregoing payments will be reduced
proportionally.
PROPOSAL TO APPROVE THE AMENDED AND RESTATED 1991 STOCK PLAN
GENERAL
The Company's 1991 Stock Plan (the "1991 Plan"), which was approved by
stockholders at the 1991 Annual Meeting of Stockholders, provides for the grant
of incentive stock options, nonqualified stock options, stock appreciation
rights, restricted stock, and other stock-based awards to management employees
of the Company and its subsidiaries. The purpose of the 1991 Plan is to promote
the long term financial interests and growth of the Company by (i) attracting
and retaining management personnel, (ii) motivating management personnel by
means of growth-related incentives; (iii) providing incentive compensation
opportunities that are competitive with those of other major corporations, and
(iv) furthering the identity of interests of participants with those of the
stockholders of the Company.
On October 24, 1995, the Board of Directors of the Company adopted
amendments to the 1991 Plan effective as of January 1, 1996, subject to the
approval of stockholders. The amendments (a) increase the number of shares
authorized and allotted to the 1991 Plan by an additional 6,200,000 shares of
Common Stock and (b) provide that after January 1, 1996, no participant may
receive awards of stock options and stock appreciation rights with respect to
more than 300,000 shares of Common Stock in any calendar year under the 1991
Plan to ensure that such awards qualify as "performance-based compensation" that
is fully deductible by the Company under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code"). The Board of Directors recommends
approval of the amended and restated 1991 Plan by the Stockholders. If the 1991
Plan, as proposed to be amended, is not approved by stockholders, the Company
intends to continue the 1991 Plan in its current form.
A copy of the 1991 Plan as proposed to be amended and restated is set forth
as Exhibit A to this Proxy Statement. The following descriptions are qualified
in their entirety by reference to the full text of the amended and restated 1991
Plan set forth as Exhibit A.
23
The amended 1991 Plan provides for the issuance of a maximum of 11,200,000
shares of Common Stock of the Company (subject to adjustment as described
below). The shares may be authorized but unissued shares or treasury shares.
Before the amendment in 1995 the 1991 Plan provided for the issuance of
5,000,000 shares of Common Stock, of which 3,341,625 shares are subject to
outstanding awards and 795,349 shares are available for future grants. In
addition, options for 1,817,655 shares have been granted subject to stockholder
approval of the amended 1991 Plan. If the amended 1991 Plan is approved by
stockholders, 5,177,694 shares will be available for future awards.
Shares related to awards that expire unexercised or are forfeited,
terminated, surrendered, cancelled, or settled in cash in lieu of stock or in
such manner that all or some of the shares covered by an award are not issued to
a participant shall immediately become available for additional awards under the
Plan, except for shares withheld to satisfy tax withholding requirements.
The closing price of the Common Stock on March 5, 1996 as reported on the
New York Stock Exchange Composite Tape was $23 per share.
ELIGIBILITY AND PARTICIPATION
Participants in the 1991 Plan are selected by the Compensation Committee of
the Board of Directors (the "Committee") which administers the Plan (see
"Administration"). The 1991 Plan contemplates that awards will be granted to
management employees, and that participants will be such employees of the
Company and its subsidiaries, including officers of the Company, as from time to
time are designated by the Committee. Approximately 500 employees are eligible
to receive awards under the 1991 Plan. Directors of the Company are not eligible
to participate unless they are also employees.
ADMINISTRATION
Under the 1991 Plan and subject to the limitations thereunder, the
Committee is authorized: (i) to select participants in the Plan, (ii) to make
awards in such forms and amounts as it shall determine, (iii) to impose such
limitations, restrictions and conditions upon such awards as it shall deem
appropriate, (iv) to interpret the 1991 Plan and to adopt, amend and rescind
administrative guidelines and other rules and regulations relating to the 1991
Plan, (v) to correct any defect or omission or to reconcile any inconsistency in
the 1991 Plan or in any award granted thereunder and (vi) to make all other
determinations and to take all other actions necessary or advisable for the
implementation and administration of the 1991 Plan.
AMENDMENT AND TERMINATION
The Board of Directors or the Committee may suspend or terminate the 1991
Plan or any portion thereof at any time and may amend it from time to time in
such respects as the Board of Directors or the Committee may deem advisable,
provided, however, that no such amendment
24
shall be made, without stockholder approval to the extent such approval is
required by law, agreement or the rules of any exchange upon which the Common
Stock is listed. No such amendment, suspension or termination shall impair the
rights of participants under outstanding awards without the consent of the
participants affected thereby or make any change that would disqualify the 1991
Plan, or any other plan of the Company intended to be so qualified, from the
exemption provided by Rule 16b-3 under the Securities Exchange Act of 1934.
The Committee may amend or modify any award in any manner to the extent
that the Committee would have had the authority under the 1991 Plan to initially
grant such award. No such amendment or modification shall impair the rights of
any participant under any award without the consent of such participant.
CHANGES IN CAPITALIZATION AND SIMILAR CHANGES
In the event that each of the outstanding shares of Common Stock shall be
changed into or exchanged for a different number or kind of shares of stock or
securities of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, stock dividend, stock
split, combination of shares, or otherwise), then there shall be substituted for
each share of Common Stock then offered or available for offer under the 1991
Plan the number and kind of shares of stock into which such outstanding shares
of the Common Stock of the Company shall be so changed or for which such shares
shall be so exchanged. In the event of a spin-off, extraordinary dividend, or
other distribution or similar transaction, the Committee may adjust equitably
the exercise price of any outstanding options or the terms of any outstanding
stock appreciation rights.
The awards under the 1991 Plan may provide that within 90 days after there
is a change in control of the Company the participant may (a) exercise any
outstanding options or SARs which would not then be exercisable by the
participant absent the change in control, provided that with respect to certain
officers such options or SARs have been outstanding for six months as of the
date of exercise; (b) require the Company to release all restrictions on shares
of restricted stock awarded to the participant; and (c) require the Company to
pay the participant the fair value (prorated to the date of the change in
control) of any other awards under the 1991 Plan then held by the participant.
The definition of a change in control is the same as the definition in Mr.
Larson's agreement described above.
STOCK OPTIONS
Under the 1991 Plan, an employee to whom an option is granted will have the
right to purchase the number of shares of Common Stock covered by the option,
subject to the terms and provisions of the 1991 Plan. The option price to be
paid by a participant is determined by the Committee and cannot be less than
100% of the fair market value of the Common Stock on the date on which the
option in respect thereof is granted, provided, however, that the option price
may be reduced below 100% of such fair market value to the extent that the
participant forgoes
25
current or deferred cash compensation in an amount equal to such reduction. The
Committee may require options other than incentive stock options to be purchased
by participants for a purchase price determined by the Committee.
Under the 1991 Plan, the exercise price of an option is payable in cash, by
the surrender, at the fair market value on the date on which the option is
exercised, of shares of Common Stock, or by any combination of cash and such
shares. Any option granted under the Plan will be exercisable for specified
periods determined by the Committee.
STOCK APPRECIATION RIGHTS
In addition, the 1991 Plan authorizes the Committee to grant stock
appreciation rights ("SARs"). An SAR entitles its holder to receive from the
Company, at the time of exercise of such right, an amount equal to the excess of
the fair market value (at the date of exercise) of a share of Common Stock over
a specified price fixed by the Committee multiplied by the number of shares as
to which the holder is exercising the SAR. SARs may be in tandem with any
previously or contemporaneously granted option or independent of any option. The
specified price of a tandem SAR shall be the option price of the related option.
The amount payable may be paid by the Company in Common Stock (valued at its
fair market value on the date of exercise), cash or a combination thereof, as
the Committee may determine, which determination shall be made after considering
any preference expressed by the holder. To the extent a tandem SAR is exercised,
the related option will be cancelled and, to the extent the related option is
exercised, the tandem SAR will be cancelled.
AWARDS OF RESTRICTED STOCK
The 1991 Plan also permits the Committee to grant shares of restricted
Common Stock to a participant subject to the terms and conditions imposed by the
Committee ("restricted stock"). Each certificate for restricted stock will be
registered in the name of the participant and deposited, together with a stock
power endorsed in blank, with the Company. There shall be established for each
restricted stock award a restriction period (the "restriction period") of such
length as shall be determined by the Committee. Shares of restricted stock may
not be sold, assigned, transferred, pledged or otherwise encumbered except as
hereinafter provided, during the restriction period. Except for such
restrictions on transfer and such other restrictions as the Committee may
impose, the participant shall have all the rights of a holder of Common Stock as
to such restricted stock. At the expiration of the restriction period, the
Company shall redeliver to the participant (or the participant's legal
representative) the certificates deposited. Except as provided by the Committee
at the time of grant or otherwise, upon termination of employment for any reason
during the restriction period all shares still subject to restriction shall be
forfeited by the participant.
26
OTHER AWARDS UNDER THE 1991 PLAN
Under the 1991 Plan, in addition to stock options, stock appreciation
rights and restricted stock, participants may be awarded performance shares and
other forms of awards that the Committee in its discretion may determine are
consistent with the objectives and limitations of the 1991 Plan. Such awards may
be payable in Common Stock, cash or both, and shall be subject to such
restrictions and conditions as the Committee shall determine. At the time of
such an award, the Committee shall, if applicable, determine a performance
period and performance goals to be achieved during the performance period,
subject to such later revisions as the Committee shall deem appropriate to
reflect significant unforeseen events. Following the conclusion of each
performance period, the Committee shall determine the extent to which
performance goals have been attained or the degree of achievement between
maximum and minimum levels during the performance period in order to evaluate
the level of payment to be made, if any. The Committee may determine that all or
a portion of each award may vest at such times and upon such terms as the
Committee may select.
1996 AWARDS
Options to purchase Common Stock were granted under the 1991 Plan during
1996, subject to obtaining stockholder approval for the amended 1991 Plan. Also,
subject to obtaining stockholder approval for the amended 1991 Plan, the
executive officers named in the summary compensation table above and certain
other executive officers will be required to have 50% of their annual bonuses
paid in unrestricted Common Stock under the 1991 Plan, receipt of which may be
deferred, until they meet specified stock ownership guidelines established by
the Company for executive officers and certain other management employees. After
the executive officers satisfy the stock ownership guidelines, they still will
be able to elect to be paid 50% of their bonus in Common Stock. Actual awards
will depend upon the extent to which 1996 bonuses are earned and on the price of
the Company's stock on the date of payment. Mr. Larson may receive a bonus of
200% of his salary depending on the Company's performance, and at least 50% of
his bonus is payable in Common Stock whether or not the amended 1991 Plan is
approved by the stockholders.
If the amended 1991 Plan is approved by stockholders, the executive
officers and certain other management employees will receive stock unit awards
under the Brunswick Strategic Incentive Plan for the 1996-1997 performance
period, which will be earned based on the performance of the Company and its
Divisions. One stock unit is equal to one share of Common Stock, and
participants will be required to receive Common Stock for their stock units
until they satisfy the Company's stock ownership guidelines. Receipt of the
Common Stock may be deferred. After they satisfy the guidelines, they may elect
to receive either the Common Stock or the value of the Common Stock at the time
of payment. Mr. Larson receives long term incentive awards for three year
periods beginning January 1, 1996 as described on page 20, and under his
employment agreement he is entitled to these awards whether or not the amended
1991 Plan is approved by the stockholders.
27
The following table sets forth (a) the number of securities underlying
options granted during 1996, (b) the number of shares of Common Stock payable in
lieu of 50% of the maximum 1996 bonuses and (c) the maximum amount of Common
Stock payable to Mr. Larson for the 1996-1998 incentive award and to other
executive officers for 1996-1997 incentive awards, based on the closing price of
the Common Stock on March 5, 1996:
Maximum Number
Number of Maximum Number of Shares of
Securities of Shares of Common Stock
Underlying Common Stock Payable for
Options Payable for Incentive
Granted(1) Annual Bonus Awards
- ---------------------------------------------------------------------------------------------------------
Peter N. Larson 72,255 34,783 104,348
David D. Jones 60,000 9,783 19,252
William J. Barrington 48,000 7,826 15,402
Robert C. Steinway 41,400 6,739 13,263
Jim W. Dawson 40,000 6,522 12,835
Executive Group 511,855 86,196 238,501
Non-Executive Officer Employee Group 1,305,800 5,435 133,944
- ---------------
(1) The options expire on January 2, 2006 and have an exercise price of $23.375
per share, except for options to purchase 50,000 shares which have an
exercise price of $24.00 per share and expire on February 21, 2006. The
options are exercisable with respect to 30% of the shares when the price per
share of the Common Stock attains $30.00 or annual net earnings of the
Company exceed $2.35 per share, with respect to an additional 30% of the
shares when the price per share of the Common Stock attains $35.00 or annual
net earnings of the Company exceed $2.70 per share, and with respect to the
remaining 40% of the shares when the price per share of the Common Stock
attains $40.00 or annual net earnings of the Company exceed $3.05 per share.
Any portion not exercisable prior to January 2, 1999 will become exercisable
on that date, except for the options to purchase 50,000 shares at $24.00 per
share which will become exercisable on February 21, 1999 if they are not
exercisable prior to such date. In addition, Mr. Larson's options become
exercisable with respect to 30% of the shares on each of January 2, 1997 and
January 2, 1998 to the extent the options were not already exercisable with
respect to such shares. The options are also exercisable earlier if there is
a change in control of the Company.
AMENDMENT LIMITING NUMBER OF SHARES
In August 1991, the Omnibus Budget Reconciliation Act of 1993 added Section
162(m) to the Code, limiting the deductibility of certain compensation in excess
of $1 million per year paid by a publicly traded corporation to each of its
chief executive officer and the four other most highly compensated officers at
the end of the corporation's fiscal year. Section 162(m) and regulations issued
thereunder by the Internal Revenue Service provide, however, that the deduction
limit does not apply to "qualified performance-based compensation" meeting the
following requirements: (a) the compensation must be payable solely on account
of the attainment of one or more
28
pre-established performance goals, (b) the performance goals must be established
by a compensation committee comprised solely of two or more outside directors,
(c) the material terms of the performance goals must be disclosed to and
approved by stockholders before any compensation is paid, and (d) the
compensation committee must certify in writing that the performance goals have
been satisfied before any compensation is paid.
The Board of Directors has determined that it is desirable, to the extent
possible, to assure full deductibility of stock options and stock appreciation
rights granted under the 1991 Plan. The regulations issued by the Internal
Revenue Service provide that compensation attributable to a stock option or
stock appreciation right is deemed to be payable on account of pre-established
performance goals if, among other things, the underlying plan includes a
per-employee limitation on the number of shares for which stock options or stock
appreciation rights may be granted during a specified period. The proposed
amendment to the 1991 Plan states that effective January 1, 1996, no participant
may receive awards of stock options and stock appreciation rights with respect
to more than 300,000 shares of Common Stock under the 1991 Plan in any calendar
year.
FEDERAL INCOME TAX CONSIDERATIONS
The discussion which follows is a summary, based on current law, of some
significant federal income tax considerations relating to stock options awarded
under the 1991 Plan. A participant who is granted a stock option will not be
subject to federal income tax at the time of grant, and the Company will not be
entitled to a tax deduction by reason of such grant. Generally, upon exercise of
a non-qualified option by an employee, the difference between the option price
and the fair market value of the Common Stock will be considered ordinary income
at the time of exercise. Upon exercise of an incentive stock option (as defined
in the Code), although no taxable income will be recognized by the participant
and the Company is not entitled to a tax deduction by reason of such exercise,
the excess of the fair market value on the date of exercise over the exercise
price is treated by the participant as an item of tax preference for alternative
minimum tax purposes. If shares purchased pursuant to the exercise of an
incentive stock option are sold within two years from the date of grant or
within one year after the transfer of such shares to the participant, then the
difference, with certain adjustments, between the fair market value of the
shares at the date of exercise and the option price will be considered ordinary
income. Generally the Company is entitled to an income tax deduction for any
compensation income taxed to the participant.
The Company may withhold amounts from participants to satisfy withholding
tax requirements. Subject to the consent of the Committee, participants may have
Common Stock withheld from awards or may tender Common Stock back to the Company
to satisfy withholding tax requirements.
29
VOTE REQUIRED FOR APPROVAL OF THE 1991 AMENDED AND RESTATED PLAN
The affirmative vote of the majority of shares present in person or
represented by proxy and entitled to vote on the proposal is required for
approval of the amended and restated 1991 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL TO APPROVE 1995 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
The Board of Directors has adopted the 1995 Stock Plan for Non-Employee
Directors (the "1995 Plan"), subject to obtaining the approval of stockholders.
The 1995 Plan provides for awards of Common Stock to the non-employee directors
as their principal compensation from the Company and provides for the conversion
of the July 25, 1995 present value of the accrued benefits under the terminated
non-employee directors' pension plan of non-employee directors elected prior to
July 25, 1995 into Common Stock. The purpose of the 1995 Plan is to compensate
non-employee directors primarily with Common Stock of the Company so as to
increase their proprietary interest in the Company and their identification with
the interests of the Company's stockholders.
A copy of the 1995 Plan is set forth as Exhibit B to this Proxy Statement.
The following descriptions are qualified in their entirety by reference to the
full text of the 1995 Plan set forth as Exhibit B.
TERMINATION OF PENSION PLAN
The Board of Directors on July 25, 1995 terminated the non-employee
directors' pension plan and, subject to obtaining stockholder approval of the
1995 Plan, resolved to convert the July 25, 1995 present value of the accrued
pension benefits at retirement of the eight non-employee directors into Common
Stock using the unisex 1983 Group Annuity Mortality table and a discount rate of
6%. The Common Stock will be paid to each non-employee director after
retirement. Under the terminated pension plan each non-employee director was
entitled to an annual pension of $25,000 per year, provided the non-employee
director had satisfied specified age and years of service requirements. If any
of the 8 non-employee directors entitled to Common Stock retires from the Board
of Directors before satisfying the specified age and years of service
requirements, the Common Stock payable to the director will be reduced to the
July 25, 1995 present value of the reduced pension benefit to which the
non-employee director would have been entitled. If a non-employee director dies
before receiving the Common Stock, it will be paid to a named beneficiary.
If the stockholders do not approve this proposal, the non-employee
directors' pension plan still will be terminated, and the non-employee directors
will be paid immediately in cash a total of $903,579, the July 25, 1995 present
value of the vested portion of their accrued pension benefits.
30
ANNUAL AWARDS
The 1995 Plan provides that non-employee directors will be paid their
annual retainer fees (currently $25,000) and annual fees for serving as the
chair of a Board committee (currently $5,000) in Common Stock. These fees will
be paid monthly based on the closing market price of the Common Stock as
reported on the New York Stock Exchange Composite Tape on the last business day
of each month. These fees have been accrued in Common Stock since August 1995
and dividends on this Common Stock have been accrued as reinvested in additional
Common Stock. If the 1995 Plan is not approved by stockholders, the non-employee
directors will be paid the cash amount of those fees plus the cash amount of the
accrued dividends.
The 1995 Plan also provides that beginning in April 1996 non-employee
directors may elect to be paid their meeting fees, which are currently $1,500
per Board or committee meeting, in Common Stock. These elections must be made
six months in advance and can only be terminated with six months advance notice.
AWARD TO NEW DIRECTORS
The 1995 Plan provides that non-employee directors elected to the Board of
Directors for the first time after July 25, 1995 will receive an award of Common
Stock equal to the annual retainer then being paid to non-employee directors
(currently $25,000). Forty percent of the award will vest six months after the
date the non-employee director was first elected to the Board of Directors and
20% of the award will vest on each of the first three annual anniversaries of
the date the non-employee director first was elected to the Board of Directors.
DEFERRAL
Payment of the Common Stock as awards to new non-employee directors and as
a result of the termination of the non-employee directors' pension plan will be
deferred until the non-employee directors' retirement from the Board. The
non-employee directors also will be able to defer the payment of the Common
Stock for their annual retainer, committee chair and meeting fees until after
retirement. Dividends on deferred Common Stock will be reinvested in additional
deferred shares of Common Stock, except that dividends in the form of securities
shall be deferred to the same extent as Common Stock. The deferred Common Stock,
including the additional shares acquired through reinvestment of dividends, will
be paid in one lump sum after retirement or in up to 15 annual installments,
depending on the non-employee directors' elections.
NEW PLAN BENEFITS
The following table sets forth the shares of Common Stock payable to
non-employee directors for termination of the non-employee directors' pension
plan, new director awards, and 1996 annual retainer, committee chair and meeting
fees, assuming stockholder approval of the 1995 Plan, election by 4 non-employee
directors to be paid meeting fees in Common Stock, and
31
8 meetings of the Board of Directors and 18 meetings of its committees after
April 1, 1996 and based on the closing price of the Common Stock on March 5,
1996.
Common Stock Common Stock Common Stock
Payable for Payable for Payable for
Termination of Awards to Annual Retainer, Committee
Group Pension Plan New Directors Chair and Meeting Fees
- -----------------------------------------------------------------------------------------------------------
All non-employee directors 81,051 3,287 17,804
- -----------------------------------------------------------------------------------------------------------
CHANGE OF CONTROL
In the event of a change in control of the Company which occurs after
stockholder approval of the 1995 Plan, the entire amount of all deferred Common
Stock for the annual, committee chair and meeting fees, retirement benefits and
new director awards shall be paid to the non-employee directors at the time of
the change in control of the Company without any reduction. The definition of a
"change in control" is the same as the definition in Mr. Larson's employment
agreement described above.
NON-TRANSFERABILITY
No award under the 1995 Plan, and no interest therein, shall be
transferable by the participant otherwise than by the designation of a
beneficiary to receive the non-employee director's benefits in the event of
death or by will or the laws of descent and distribution. Any purported transfer
contrary to this provision will nullify the award.
ADMINISTRATION
The 1995 Plan is administered by the Compensation Committee (the
"Committee") of the Board of Directors. Under the 1995 Plan and subject to the
limitations thereunder, the Committee is authorized to interpret and administer
the 1995 Plan, except that the Committee shall have no power to determine the
eligibility for awards or the timing, amount or terms of awards to be granted to
any director.
AMENDMENT OR TERMINATION OF THE 1995 PLAN
The Board of Directors may, at any time, amend or terminate the 1995 Plan
provided, however, that the Plan may not be amended more than once every six
months, other than to comport with changes in the Internal Revenue Code or the
rules thereunder. No such amendment shall, without stockholder approval,
increase the size of awards under the 1995 Plan or modify the requirements for
eligibility to receive awards under the 1995 Plan. Also, no such amendment shall
be made without stockholder approval to the extent such approval is required by
law, agreement or the rules of any exchange under which the Common Stock is
listed. No such amendment, suspension or termination shall impair the rights of
directors affected thereby or
32
make any change that would disqualify the 1995 Plan, or any other plan of the
Company intended to be so qualified, from the exemption provided by Rule 16b-3.
NUMBER OF SHARES AUTHORIZED AND CHANGES IN CAPITALIZATION
The total number of shares of Common Stock which may be awarded under the
Plan is 250,000 subject to adjustment as described below. Shares related to
awards that are forfeited, terminated, surrendered, or cancelled in such manner
that all or some of the shares covered by an award are not issued to a
participant shall immediately become available for additional awards under the
1995 Plan. In the event that each of the outstanding shares of Common Stock
shall be changed into or exchanged for a different number or kind of shares of
stock or securities of the Company or of another corporation (whether by reason
of merger, consolidation, recapitalization, reclassification, dividend, split,
combination of shares, or otherwise), then there shall be substituted for each
share of Common Stock then offered, available for offer, or deferred under the
Plan the number and kind of shares into which such outstanding shares of the
Common Stock of the Company shall be so changed or for which such shares shall
be so exchanged.
VOTE REQUIRED FOR APPROVAL OF THE 1995 PLAN
The affirmative vote of the majority of shares present in person or
represented by proxy and entitled to vote on the proposal is required for
approval of the 1995 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of its Audit Committee, the Board of Directors has
appointed Arthur Andersen LLP ("Andersen"), independent public accountants,
auditors for the Company and its subsidiaries for the year 1996. The Board of
Directors recommends to the stockholders that the appointment of Andersen as
auditors for the Company and its subsidiaries be ratified. If the stockholders
do not ratify the appointment of Andersen, the selection of auditors will be
reconsidered by the Audit Committee and the Board of Directors. Representatives
of Andersen are expected to be present at the Annual Meeting of Stockholders
with the opportunity to make a statement if they desire to do so and to be
available to respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
OTHER MATTERS
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 judgment. Management
33
does not know of any business other than that referred to in the Notice which
may be considered at the Meeting.
The entire expense of proxy solicitation will be borne by the Company. In
addition to solicitation by mail, telephone, facsimile, telegraph and personal
contact by its officers and employees, the Company has retained the firm of
Georgeson & Co. to assist in the solicitation of proxies. Reasonable
out-of-pocket expenses of forwarding the proxy material will be paid by the
Company. For its services, Georgeson & Co. will be paid a fee of approximately
$9,900.
STOCKHOLDER PROPOSALS
Under the rules of the Securities and Exchange Commission proposals of
stockholders to be considered for inclusion in the proxy statement and form of
proxy for the 1997 Annual Meeting must be received by the Company at its offices
at 1 N. Field Ct., Lake Forest, Illinois 60045-4811, Attention: Secretary, no
later than November 19, 1996 and must otherwise meet the requirements of those
rules.
CONFIDENTIAL VOTING POLICY
The Board of Directors has a Confidential Voting Policy that all
stockholder proxies, ballots and voting materials which identify the votes of
specific stockholders shall be kept permanently confidential and shall not be
disclosed to the Company, its affiliates, directors, officers and employees or
to any third parties except in certain limited circumstances.
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.
By order of the Board of Directors,
/s/ Dianne M. Yaconetti
DIANNE M. YACONETTI
Vice President --
Administration and Secretary
Lake Forest, Illinois
March 19, 1996
34
EXHIBIT A
BRUNSWICK CORPORATION
AMENDED 1991 STOCK PLAN
(ALL CHANGES TO BE EFFECTED BY THE PROPOSED AMENDMENTS ARE SHOWN IN BOLD FACE
TYPE.)
1. Purpose. The purpose of the Brunswick Corporation 1991 Stock Plan (the
"Plan") is to promote the long term financial interests and growth of Brunswick
Corporation (the "Company") by (a) attracting and retaining management
personnel, (b) motivating management personnel by means of growth-related
incentives, (c) providing incentive compensation opportunities that are
competitive with those of other major corporations, and (d) furthering the
identity of interests of participants with those of the stockholders of the
Company.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" means any entity in which the Company has a direct or
indirect equity interest which is so designated by the Committee.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Committee" means the Compensation Committee of the Board of Directors
of the Company.
"Common Stock" means the Common Stock, par value $.75 per share, of
the Company or such other securities as may be substituted therefor
pursuant to paragraph 5(c).
The "fair market value" of the Common Stock shall be determined in
accordance with procedures established by the Committee.
"Participant" means any management employee of the Company or an
Affiliate selected by the Committee.
"Rule 16b-3" means such rule adopted under the Securities Exchange Act
of 1934, as amended, or any successor rule.
"Section 16(b)" means Section 16(b) of the Securities Exchange Act of
1934, as amended.
3. Limitation on Aggregate Shares. The number of shares of Common Stock
with respect to which awards may be granted under the Plan and which may be
issued upon the exercise or payment thereof shall not exceed, in the aggregate,
11,200,000 shares, except for adjustments provided for in paragraph 5(c) of the
Plan and provided, however, that shares related to awards
A-1
that expire unexercised or are forfeited, surrendered, terminated, cancelled, or
settled in cash in lieu of stock or in such manner that all or some of the
shares covered by an award are not issued to a participant shall immediately
become available for additional awards under the Plan, except for shares
withheld pursuant to paragraph 5(d) of the Plan. Such 11,200,000 shares of
Common Stock may be authorized and unissued shares, treasury shares, or a
combination thereof, as the Committee shall determine.
4. Awards. The Committee may grant to participants, in accordance with
this paragraph 4 and the other provisions of the Plan, stock options, stock
appreciation rights ("SARs"), restricted stock and other awards. THE MAXIMUM
NUMBER OF SHARES OF COMMON STOCK AS TO WHICH A PARTICIPANT MAY RECEIVE STOCK
OPTIONS AND STOCK APPRECIATION RIGHTS UNDER THE PLAN IN 1996 OR IN ANY
SUBSEQUENT CALENDAR YEAR IS 300,000 SUBJECT TO THE PROVISIONS OF SECTION 5(C)
HEREOF.
(a) Options.
(i) Options granted under the Plan may be incentive stock options
("ISOs") within the meaning of Section 422 of the Code or any successor
provision, or in such other form, consistent with the Plan, as the
Committee may determine.
(ii) The option price per share of Common Stock shall be fixed by
the Committee at not less than 100% of the fair market value of a share
of Common Stock on the date of grant, provided, however, that the option
price may be reduced below 100% of such fair market value to the extent
that the participant forgoes current or deferred cash compensation in an
amount equal to such reduction, and provided that in no event shall the
option price be less than the par value.
(iii) The Committee may require options other than ISOs to be
purchased by participants for a purchase price determined by the
Committee.
(iv) Options shall be exercisable at such time or times as the
Committee shall determine at or subsequent to grant.
(v) Options shall be exercised in whole or in part by written
notice to the Company (to the attention of the Corporate Secretary) and
payment in full of the option price. Payment of the option price may be
made, at the discretion of the optionee, and to the extent permitted by
the Committee, (A) in cash (including check, bank draft, or money
order), (B) in Common Stock (valued at the fair market value thereof on
the date of exercise), (C) by a combination of cash and Common Stock or
(D) with any other consideration (including payment in accordance with a
cashless exercise program under which, if so instructed by the
participant, shares of Common Stock may be issued directly to the
participant's broker or dealer upon receipt of the option price in cash
from the broker or dealer).
A-2
(b) SARs.
(i) An SAR shall entitle its holder to receive from the Company, at
the time of exercise of such right, an amount equal to the excess of the
fair market value (at the date of exercise) of a share of Common Stock
over a specified price fixed by the Committee multiplied by the number
of shares as to which the holder is exercising the SAR. SARs may be in
tandem with any previously or contemporaneously granted option or
independent of any option. The specified price of a tandem SAR shall be
the option price of the related option. The amount payable may be paid
by the Company in Common Stock (valued at its fair market value on the
date of exercise), cash or a combination thereof, as the Committee may
determine, which determination shall be made after considering any
preference expressed by the holder.
(ii) An SAR shall be exercised by written notice to the Company (to
the attention of the Corporate Secretary) at any time prior to its
stated expiration. To the extent a tandem SAR is exercised, the related
option will be cancelled and, to the extent the related option is
exercised, the tandem SAR will be cancelled.
(iii) Officers who are subject to Section 16(b) must comply with
the requirements of Rule 16b-3 when exercising SARs.
(c) Restricted Stock.
(i) The Committee may award to any participant shares of Common
Stock, subject to this paragraph 4(c) and such other terms and
conditions as the Committee may prescribe (such shares being called
"restricted stock"). Each certificate for restricted stock shall be
registered in the name of the participant and deposited, together with a
stock power endorsed in blank, with the Company.
(ii) There shall be established for each restricted stock award a
restriction period (the "restriction period") of such length as shall be
determined by the Committee. Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as
hereinafter provided, during the restriction period. Except for the
restrictions on transfer and such other restrictions as the Committee
may impose, the participant shall have all the rights of a holder of
Common Stock as to such restricted stock. At the expiration of the
restriction period, the Company shall redeliver to the participant (or
the participant's legal representative) the certificates deposited
pursuant to this paragraph.
(iii) Except as provided by the Committee at the time of grant or
otherwise, upon termination of employment for any reason during the
restriction period all shares still subject to restriction shall be
forfeited by the participant.
(d) Other Awards. Other awards, including, without limitation,
performance shares and other forms of awards measured in whole or in part
by the value of shares, the performance of the participant or the
performance of the Company, may be granted under
A-3
the Plan. Such awards may be payable in Common Stock, cash or both, and
shall be subject to such restrictions and conditions, as the Committee
shall determine. At the time of such an award, the Committee shall, if
applicable, determine a performance period and performance goals to be
achieved during the performance period, subject to such later revisions as
the Committee shall deem appropriate to reflect significant unforeseen
events. Following the conclusion of each performance period, the Committee
shall determine the extent to which performance goals have been attained
or the degree of achievement between maximum and minimum levels during the
performance period in order to evaluate the level of payment to be made,
if any.
5. Miscellaneous Provisions.
(a) Administration. The Plan shall be administered by the Committee.
Subject to the limitations of the Plan, the Committee shall have the sole
and complete authority: (i) to select participants in the Plan, (ii) to
make awards in such forms and amounts as it shall determine, (iii) to
impose such limitations, restrictions and conditions upon such awards as it
shall deem appropriate, (iv) to interpret the Plan and to adopt, amend and
rescind administrative guidelines and other rules and regulations relating
to the Plan, (v) to correct any defect or omission or to reconcile any
inconsistency in the Plan or in any award granted hereunder and (vi) to
make all other determinations and to take all other actions necessary or
advisable for the implementation and administration of the Plan. The
Committee's determinations on matters within its authority shall be
conclusive and binding upon the Company and all other persons. All expenses
associated with the Plan shall be borne by the Company, subject to such
allocation to its Affiliates and operating units as it deems appropriate.
The Committee may, to the extent that such action will not prevent the Plan
from complying with Rule 16b-3, delegate any of its authority hereunder to
such persons as it deems appropriate.
(b) Non-Transferability. No award under the Plan, and no interest
therein, shall be transferable by the participant otherwise than by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder (but only if
permitting such transfer will not affect the status of the award under the
Code). Any purported transfer contrary to this provision will nullify the
award.
(c) Changes in Capitalization and Similar Changes. In the event that
each of the outstanding shares of Common Stock shall be changed into or
exchanged for a different number or kind of shares of stock or securities
of the Company or of another corporation (whether by reason of merger,
consolidation, recapitalization, reclassification, stock dividend, stock
split, combination of shares, or otherwise), then there shall be
substituted for each share of Common Stock then offered or available for
offer under the Plan the number and kind of shares of stock into which such
outstanding shares of the Common Stock of the company shall be so changed
or for which such shares shall be so exchanged. The Committee in its sole
discretion shall make any equitable adjustments as may be necessary. No
fraction
A-4
of a share of Common Stock shall be delivered if an adjustment in the
number of shares is necessary. In the event of a spin-off, extraordinary
dividend or other distribution or similar transaction, the Committee may
adjust equitably the exercise price of any outstanding options or the
terms of any outstanding SARs.
(d) Tax Withholding. The Committee shall have the power to withhold,
or require a participant to remit to the Company, an amount sufficient to
satisfy any withholding or other tax due with respect to any amount payable
and/or shares issuable under the Plan, and the Committee may defer such
payment or issuance unless indemnified to its satisfaction. Subject to the
consent of the Committee, a participant may make an irrevocable election to
have shares of Common Stock otherwise issuable under an award withheld,
tender back to the Company shares of Common Stock received pursuant to an
award or deliver to the Company previously acquired shares of Common Stock
having a fair market value sufficient to satisfy all or part of the
Company's withholding tax obligations for the participant associated with
the transaction. Such election must be made by a participant prior to the
date on which the relevant tax obligation arises. The Committee may
disapprove of any election and may limit, suspend or terminate the right to
make such elections.
(e) Listing and Legal Compliance. The Committee may suspend the
exercise or payment of any award so long as it determines that securities
exchange listing or registration or qualification under any securities laws
is required in connection therewith and has not been completed on terms
acceptable to the Committee.
(f) Rights to Participants. Nothing in the Plan shall interfere with
or limit in any way the right of the Company to terminate any participant's
employment at any time, nor confer upon any participant any right to
continue in the employ of the Company for any period of time or to continue
his or her present or any other rate of compensation. No employee shall
have a right to be selected as a participant, or, having been so selected,
to be selected again as a participant.
(g) Amendment, Suspension and Termination of Plan. The Board of
Directors or the Committee may suspend or terminate the Plan or any portion
thereof at any time and may amend it from time to time in such respects as
the Board of Directors or the Committee may deem advisable; provided,
however, that no such amendment shall be made, without stockholder approval
to the extent such approval is required by law, agreement or the rules of
any exchange upon which the Common Stock is listed. No such amendment,
suspension or termination shall impair the rights of participants affected
thereby or make any change that would disqualify the Plan, or any other
plan of the Company intended to be so qualified, from the exemption
provided by Rule 16b-3.
The Company may amend or modify any award in any manner to the extent
that the Committee would have had the authority under the Plan to initially
grant such award. No such amendment or modification shall impair the rights
of any participant under any award without the consent of such participant.
A-5
(h) Change in Control. "Change in Control" of the Company means a
change in the beneficial ownership of the Company's voting stock or a
change in the composition of the Company's Board of Directors which occurs
as follows:
(i) any "person" as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, other than a trustee or
other fiduciary of securities held under an employee benefit plan of the
Company or any of its subsidiaries, is or becomes a beneficial owner,
directly or indirectly, of stock of the Company representing 30% or more
of the total voting power of the Company's then outstanding stock.
(ii) a tender offer (for which a filing has been made with the SEC
which purports to comply with the requirements of Section 14(d) of the
Securities Exchange Act of 1934 and the corresponding SEC rules) is made
for the stock of the Company, which has not been negotiated and approved
by the Board of Directors of the Company, then the first to occur of
(A) any time during the offer when the person (using the
definition in (i) above) making the offer owns or has accepted for
payment stock of the Company with 25% or more of the total voting
power of the Company'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 Company's stock when the offer terminates; or
(iii) individuals who were the Board of Directors' nominees for
election as directors of the Company immediately prior to a meeting of
the stockholders of the Company involving a contest for the election of
directors shall not constitute a majority of the Board of Directors
following the election.
The Committee may provide in any award that in the event of a Change in
Control, the participant may (a) exercise any outstanding Options or SARs which
would not then be exercisable by the participant absent the Change in Control,
provided that with respect to officers subject to Section 16(b) such Options and
SARs have been outstanding for six months as of the date of exercise; (b)
require the Company to release all restrictions on shares of restricted stock
awarded to the participant; and (c) require the Company to pay the participant
the fair value (prorated to the date of the Change in Control) of any other
awards under the Plan then held by the participant.
A-6
EXHIBIT B
BRUNSWICK CORPORATION
1995 STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE OF THE PLAN. The purpose of the Brunswick Corporation 1995
Stock Plan for Non-Employee Directors ("Plan") is to compensate non-employee
directors of Brunswick Corporation ("Company") primarily with Common Stock, par
value $.75 per share ("Common Stock"), of the Company so as to increase their
proprietary interest in the Company and their identification with the interests
of the Company's stockholders ("Stockholders"). The Plan shall become effective
as of August 1, 1995, provided it is approved by the Stockholders at the 1996
Annual Meeting of Stockholders.
2. ANNUAL FEES. Each non-employee director shall be paid in Common Stock
the annual retainer fee and the fee for serving as the chairperson of a
committee of the Board of Directors authorized by the Board of Directors. Such
fees should be paid monthly in arrears on the last business day of each month
beginning with fees paid for August, 1995. The Common Stock for the fees will
not be distributed to the directors until the Plan is approved by the
Stockholders, and until such approval is obtained, the dividends on the Common
Stock will be reinvested in additional shares of Common Stock. If stockholder
approval is not obtained, the directors will be paid the cash amount of the fees
and the cash amount of the dividends.
3. MEETING FEES. Each non-employee director may elect on forms provided by
the Company to be paid in Common Stock for the fees authorized by the Board of
Directors for attending meetings of the Board of Directors and its committees.
The Common Stock for such fees shall be determined on the last business day of
each month. Such elections must be made in writing six months in advance and
shall continue until terminated. Elections may be terminated upon six months
advance written notice.
4. NEW DIRECTORS' AWARDS. Each non-employee director elected to the Board
of Directors for the first time after July 25, 1995, will receive an award in
Common Stock equal to the amount of the annual retainer fee then being paid to
non-employee directors. The number of shares will be determined on the date the
non-employee director first is elected to the Board of Directors. Forty percent
of this award will vest six months after the date the director first was elected
to the Board of Directors and 20% of the award will vest on each of the first
three annual anniversaries of the date the director first was elected to the
Board of Directors.
5. FAIR MARKET VALUE. The "Fair Market Value" of the Common Stock shall be
the reported closing price for the Common Stock on the New York Stock Exchange
Composite Tape for the applicable date. The number of shares of Common Stock
which a non-employee director is to receive for annual retainer, committee chair
and meeting fees and for a new director award shall
B-1
be determined by dividing the applicable amount by the Fair Market Value on the
applicable date, and any fractional shares shall be rounded up or down to the
nearest whole number with the fraction 1/2 being rounded up.
6. RETIREMENT BENEFITS. Each non-employee director elected prior to July
25, 1995 shall receive after retirement Common Stock which has a Fair Market
Value on July 25, 1995 equal to the July 25, 1995 present value of the
director's retirement benefits at retirement under the non-employee directors'
pension plan (the "Pension Plan") using the unisex 1983 Group Annuity Mortality
table and a discount rate of 6%, provided the director at retirement has
satisfied the age and service requirements specified in the Pension Plan. If the
director retires before satisfying these requirements, the Common Stock payable
to the director will be reduced by the same percentage as the director's benefit
under the Pension Plan would have been reduced.
7. DEFERRAL. Payment of the Common Stock as awards to new directors and as
a result of the termination of the directors' pension plan will be deferred
until the director's retirement from the Board. The directors also will be able
to defer the payment of the Common Stock for their annual retainer, committee
chair and meeting fees until after retirement. Dividends on deferred Common
Stock will be reinvested in additional shares of Common Stock, except that
dividends in the form of securities shall be deferred to the same extent as
Common Stock. The deferred Common Stock, including the additional shares
acquired through reinvestment of dividends, will be paid to each non-employee
director in one lump sum after retirement unless the director elects one year
prior to retirement to have the deferred Common Stock paid after retirement in
up to 15 annual installments.
8. CHANGE OF CONTROL. In the event of a Change in Control of the Company
which occurs after stockholder approval of the 1995 Plan, the entire amount of
all deferred Common Stock for the annual, committee chair and meeting fees,
retirement benefits and new director awards shall be paid to the non-employee
directors at the time of the Change in Control of the Company without any
reduction. A "Change in Control" of the Company means a change in the beneficial
ownership of the Company's voting stock or a change in the composition of the
Company's Board of Directors which occurs as follows:
(i) any "person" as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934, other than a trustee or other
fiduciary of securities held under an employee benefit plan of the Company
or any of its subsidiaries, is or becomes a beneficial owner, directly or
indirectly, of stock of the Company representing 30% or more of the total
voting power of the Company's then outstanding stock.
(ii) a tender offer (for which a filing has been made with the SEC
which purports to comply with the requirements of Section 14(d) of the
Securities Exchange Act of 1934 and
B-2
the corresponding SEC rules) is made for the stock of the Company,
which has not been negotiated and approved by the Board of Directors of
the Company, then the first to occur of
(A) any time during the offer when the person (using the
definition in (i) above) making the offer owns or has accepted
for payment stock of the Company with 25% or more of the total voting
power of the Company'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
Company's stock when the offer terminates; or
(iii) individuals who were the Board of Directors' nominees for
election as directors of the Company immediately prior to a meeting of the
stockholders of the Company involving a contest for the election of
directors shall not constitute a majority of the Board of Directors
following the election.
9. NON-TRANSFERABILITY. No award under the Plan, and no interest therein,
shall be transferable by the participant otherwise than by the designation of a
beneficiary to receive the director's benefits in the event of death or by will
or the laws of the descent and distribution. Any purported transfer contrary to
this provision will nullify the award.
10. ISSUANCE OF STOCK. As promptly as practical following each award of
Common Stock, the Company shall issue to each Director Common Stock certificates
for the shares awarded which have not been deferred pursuant to Section 7.
Common Stock issued pursuant to the Plan may be authorized and unissued shares,
treasury shares, or a combination thereof, as the Committee shall determine. The
Common Stock issued to each Director shall not be subject to any restrictions.
11. NUMBER OF SHARES. The aggregate number of shares of Common Stock which
may be awarded under the Plan shall not exceed 250,000, except for adjustments
provided for in this Section 11. Shares related to awards that are forfeited,
surrendered, terminated, or cancelled in such manner that all or some of the
shares covered by an award are not issued to a director shall immediately become
available for additional awards under the Plan. In the event that each of the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or securities of the Company or of
another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, stock dividend, split-up, combination of
shares, or otherwise), then there shall be substituted for each share of Common
Stock then available for award or deferred under the Plan the numbers and kind
of shares of stock or securities into which shares shall be so exchanged.
12. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company ("Committee").
The Committee shall have full power, discretion and authority to interpret and
administer the Plan, except that the Committee shall have no power to determine
the eligibility for awards or the number of shares of Common Stock or timing or
value of awards to be granted to any Director. The Committee's
B-3
interpretations and actions shall, except as otherwise determined by the Board
of Directors, be final, conclusive and binding on all persons for all purposes.
13. PAYMENTS IN THE EVENT OF DEATH. If a non-employee director dies before
payment of his or her deferred Common Stock commences, all of his or her
deferred Common Stock shall be distributed to his or her Beneficiary (as
described below), as soon as practicable after his or her death, in a lump sum.
If a non-employee director dies after payment of his or her deferred Common
Stock has commenced but before the entire balance of such deferred Common Stock
has been distributed, the remaining deferred Common Stock shall be distributed
to his or her Beneficiary, as soon as practicable after his or her death, in a
lump sum. For the purposes of the Plan, a non-employee director's "Beneficiary"
is the person or persons the non-employee director designates, which designation
shall be in writing, signed by the non-employee director and filed with the
Committee prior to the non-employee director's death. A Beneficiary designation
shall be effective when filed with the Committee in accordance with the
preceding sentence. If more than one Beneficiary has been designated, the
non-employee director's deferred Common Stock shall be distributed to each such
Beneficiary per capita. In the absence of a Beneficiary designation or if no
Beneficiary survives the non-employee director, the Beneficiary shall be the
non-employee director's estate.
14. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors may, at
any time, amend or terminate the Plan provided, however, that the Plan may not
be amended more than once every six months, other than to comply with changes in
the Internal Revenue Code, the Employee Retirement Income Security Act, or the
rules thereunder. No such amendment shall, without stockholder approval,
increase the size of awards under the Plan or modify the requirements for
eligibility to receive awards under the Plan. Also, no such amendment shall be
made without stockholder approval to the extent such approval is required by
law, agreement or the rules of any exchange upon which the Common Stock is
listed. No such amendment, suspension or termination shall impair the rights of
directors affected thereby or make any change that would disqualify the Plan, or
any other plan of the Company intended to be so qualified, from the exemption
provided by Rule 16b-3.
15. NO RIGHT TO RENOMINATION. Nothing in the Plan or in any award shall
confer upon any director the right to be nominated for reelection to the Board.
B-4
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PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BRUNSWICK
CORPORATION BRUNSWICK LOGO
The undersigned hereby appoints P. N. Larson, P. B. Hamilton, and
D. M. Yaconetti, and each of them, as proxies with power of
substitution, and hereby authorizes them to represent and to vote, as
designated below, all the shares of common stock of Brunswick
Corporation which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders to be held on April 24, 1996 or any
adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. ELECTION OF DIRECTORS / / FOR the following nominees: P. Harf, B. / / WITHHOLD AUTHORITY to vote for
K. Koken, P. N. Larson, J. W. Lorsch, and all nominees or their alternates
K. Roman (except as marked to the con-
trary) or for alternate(s) designated
by the Board of Directors
(Instruction: To withhold authority to vote for any individual nominee, write
the name of such nominee(s) in the space provided below.)
---------------------------------------------------------------------
2. Approval of Amended and Restated 1991
Stock Plan FOR / / AGAINST / / ABSTAIN / /
3. Approval of 1995 Stock Plan for
Non-Employee Directors FOR / / AGAINST / / ABSTAIN / /
4. Ratification of Auditors FOR / / AGAINST / / ABSTAIN / /
5. In their discretion on such other business as may properly come
before the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
PLEASE MARK, SIGN ON REVERSE SIDE, DATE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued from other side)
Dated , 1996
------------------------------
---------------------------- ---------------------------------------
(Signature of Stockholder) (Signature ofStockholder)
Please sign as your name or names appear above, date and mail this proxy
promptly in the enclosed return envelope. If your stock is held in joint
tenancy, both joint tenants must sign. Executors, administrators, trustees,
etc. should give full title as such. If executed by a corporation, a duly
authorized officer should sign.
- --------------------------------------------------------------------------------
PROXY PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
BRUNSWICK CORPORATION
The undersigned hereby appoints P.N. Larson, P.B. Hamilton, and D.M. Yaconetti,
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 the shares of common stock of Brunswick Corporation which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders to be
held on April 24, 1996 or any adjournment thereof.
BY SIGNING AND RETURNING THIS FORM, YOU WILL BE INSTRUCTING HARRIS TRUST AND
SAVINGS BANK, THE TRUSTEE FOR THE BRUNSWICK EMPLOYEE STOCK OWNERSHIP PLAN, AND
MELLON BANK N.A., THE TRUSTEE FOR THE BRUNSWICK RETIREMENT SAVINGS PLANS AND
THE SEA RAY EMPLOYEES' STOCK OWNERSHIP AND PROFIT SHARING PLAN, TO VOTE THE
SHARES ALLOCATED TO YOUR ACCOUNT IN THESE PLANS. THE TRUSTEES WILL VOTE YOUR
SHARES AS YOU DIRECT. IF YOU SIGN AND RETURN THIS FORM WITHOUT MAKING ANY
DIRECTION, YOUR SHARES WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. IF YOU DO NOT
RETURN THIS FORM BY APRIL 22, 1996, THE TRUSTEES WILL VOTE YOUR SHARES (EXCEPT
FOR SHARES ACQUIRED WITH TAX CREDIT CONTRIBUTIONS) IN THE SAME PROPORTION AS IT
VOTES SHARES FOR WHICH IT RECEIVES INSTRUCTIONS.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
BRUNSWICK CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
[ ]
FOR ALL
FOR WITHHELD EXCEPT NOMINEE(S) WRITTEN BELOW FOR AGAINST ABSTAIN
1. Election of Directors-- / / / / / / 3. Approval of 1995 Stock / / / / / /
Nominees: P. Harf, B.K. Koken, Plan for Non-Employee
P.N. Larson, J.W. Lorsch and _______________________________ Directors.
K. Roman
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
2. Approval of Amended and / / / / / / 4. Ratification of / / / / / /
Restated 1991 Stock Plan. Auditors.
A VOTE FOR ITEMS 1, 2, 3 AND 4 IS RECOMMENDED BY THE BOARD OF DIRECTORS. 5. In their discretion on such other business
as may properly come before the meeting.
________________________________________
Signature
Dated: ___________________________, 1996
NOTE: Please sign exactly as name appears
on this proxy, date and mail this proxy
promptly in the enclosed return envelope
so that it is received prior to the
meeting. These confidential voting
instructions will be seen only by
authorized personnel of the trustees and
their tabulator.