DEF 14A: Definitive proxy statements
Published on March 20, 1995
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BALL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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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 Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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.
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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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/ / Fee paid previously with preliminary materials.
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0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
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BALL CORPORATION
345 SOUTH HIGH STREET, MUNCIE, INDIANA 47305
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 26, 1995
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The Annual Meeting of Shareholders of Ball Corporation will be held at the
Horizon Convention Center, 401 South High Street, Muncie, Indiana, on Wednesday,
April 26, 1995, at 9:00 a.m. (EST) for the following purposes:
1. To elect three directors for three-year terms expiring at the Annual
Meeting of Shareholders to be held in 1998;
2. To ratify the appointment of the firm of Price Waterhouse as independent
public accountants for 1995;
3. To transact any other business as properly may come before the meeting.
Only holders of Common Stock of record at the close of business March 1,
1995, are entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
A Proxy Statement appears on the following pages. A copy of the Annual
Report for 1994 is being mailed to you with this Notice of Annual Meeting of
Shareholders and Proxy Statement.
By Order of the Board of Directors
George A. Sissel
CORPORATE SECRETARY
March 20, 1995
Muncie, Indiana
YOUR VOTE IS IMPORTANT.
YOU ARE URGED TO DATE, SIGN AND RETURN PROMPTLY YOUR PROXY IN THE ENCLOSED
ENVELOPE.
__________________________
IT WILL HELP US IN PLANNING THE ANNUAL MEETING IF YOU WILL FILL OUT AND MAIL
THE ENCLOSED CARD IF YOU PLAN TO ATTEND. CHECK-IN BEGINS AT 8:00 A.M., AND THE
MEETING WILL START PROMPTLY AT 9:00 A.M.
BALL CORPORATION
345 SOUTH HIGH STREET, MUNCIE, INDIANA 47305
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PROXY STATEMENT
MARCH 20, 1995
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ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 26, 1995
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To Shareholders of Ball Corporation:
This Proxy Statement and the accompanying proxy card are furnished to
shareholders in connection with the solicitation by the Board of Directors of
Ball Corporation of proxies to be voted at the Annual Meeting of Shareholders to
be held April 26, 1995, for the purposes stated in the accompanying notice of
the meeting.
A shareholder of the Corporation who has executed and returned a proxy may
revoke it at any time before it is voted, but only by executing and returning to
the Corporate Secretary at 345 South High Street, Muncie, IN 47305, a proxy
bearing a later date, by giving written notice of revocation to the Corporate
Secretary, or by attending the meeting and voting in person. Attendance at the
meeting does not, by itself, revoke a proxy.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
At the close of business on March 1, 1995, there were outstanding and
entitled to vote 30,131,676 shares of Common Stock (including the associated
preferred stock purchase rights under the Rights Agreement dated as of July 22,
1986, between the Corporation and The First National Bank of Chicago). Each
share of Common Stock is entitled to one vote. Shareholders do not have
cumulative voting rights with respect to the election of directors. The
Corporation-related descendants of the five founding Ball brothers, the
Corporation's directors, and its officers and employees (active and retired)
currently own approximately 29 percent of the outstanding Common Stock of Ball
Corporation, which represents approximately 27 percent of the total share vote.
Voting Preferred Stock issued pursuant to the Corporation's Employee Stock
Ownership Plan, adopted in May 1989, totals approximately 7 percent additional
share votes. This results in a total holding by Corporation-related interests of
approximately 34 percent of the total share vote.
So far as is known to the Board of Directors, the following table indicates
the only beneficial owners of more than 5 percent of the Corporation's
outstanding Common Stock as of March 1, 1995:
1
The following table lists the beneficial ownership, as of the close of
business on March 1, 1995, of Common Stock of the Corporation, of director
nominees, continuing directors, the Chief Executive Officers who served at any
time during the year and the four other most highly compensated executive
officers and, as a group, of such persons and other executive officers. Unless
otherwise noted, the beneficial owner has sole voting and investment power.
ELECTION OF DIRECTORS
At their 1985 Annual Meeting, the shareholders adopted the Amended Articles
of Incorporation of Ball Corporation, dividing the Board into three classes, as
nearly equal in number as possible, with directors serving staggered three-year
terms. On April 26, 1995, three persons are to be elected to serve as directors
until 1998, or, in each case until his respective successor is elected and
qualified. Unless otherwise instructed on the proxy card, the persons named in
the accompanying proxy intend to vote for nominees Frank A. Bracken, John F.
Lehman and George A. Sissel to hold office as directors of the Corporation until
the 1998 Annual Meeting of Shareholders, or, in each case until his respective
successor is elected and qualified. All nominees have consented to be named as
candidates in the Proxy Statement and have agreed to serve if elected. If, for
any reason, any of the nominees becomes unavailable for election, the shares
represented by proxies will be voted for any substitute nominee or nominees
designated by the Board of Directors. The Board has no reason to believe that
any of the nominees will be unable to serve.
Delbert C. Staley, who has served as a director since 1977, has reached the
retirement age of 70 for directors and is, therefore, ineligible to stand for
reelection. All directors in Classes II and III, whose terms have not expired,
and John F. Lehman, one of the director nominees for Class I, were previously
elected by the shareholders. The other nominees for Class I, Frank A. Bracken
and George A. Sissel, have not been elected by the shareholders. Mr. Sissel was
elected by the Board of Directors to serve as a director beginning January 24,
1995, and to stand for reelection as a director in Class I by the shareholders
on April 26, 1995. Mr. Bracken was nominated as a director in Class I to stand
for election by the shareholders on April 26, 1995.
2
In accordance with Indiana Business Corporation Law, directors are elected
by a plurality of the votes cast by the shares entitled to vote in the election
at a meeting at which a quorum is present. Abstentions and broker non-votes are
considered neither votes "for" nor "against." Proxies may not be voted for a
greater number of persons than the three nominees named.
Set forth for each director nominee in Class I and for each continuing
director in Classes II and III are his principal occupation and employment
during the past five years, the period during which he has served as a director
and certain other information.
DIRECTOR NOMINEES AND CONTINUING DIRECTORS
TO BE ELECTED FOR A TERM OF THREE YEARS UNTIL THE 1998 ANNUAL MEETING (CLASS I)
3
TO CONTINUE IN OFFICE UNTIL THE 1996 ANNUAL MEETING (CLASSII)
4
TO CONTINUE IN OFFICE FOR A TERM OF THREE YEARS UNTIL THE 1997 ANNUAL MEETING
(CLASS III)
5
CERTAIN COMMITTEES OF THE BOARD
Among the standing committees of the Board of Directors are the Audit,
Nominating and Human Resources Committees.
AUDIT COMMITTEE:
The duties of the Audit Committee are: (a) recommend for nomination by the
Board of Directors the independent certified public accountants who shall
conduct the annual audit of the Corporation; (b) provide assistance to the Board
of Directors in fulfilling its fiduciary responsibilities relating to corporate
accounting and reporting practices, including review by the Committee of
accounting policies, financial statements, annual audit procedures and results,
and general financial disclosure procedures; (c) maintain, through regularly
scheduled meetings as well as informal conferences, a direct line of
communication with the independent accountants to provide for exchanges of views
and information; and (d) review the continuing effectiveness of the
Corporation's accounting and operating conflicts of interest policies. Current
members of the Audit Committee, none of whom are employees of the Corporation,
are Messrs. Stiritz (Chairman), Dean, Owsley and Staley and Ms. Nicholson. The
Audit Committee met four times during 1994.
NOMINATING COMMITTEE:
The duties of the Nominating Committee are: (a) develop and maintain a list
of qualified candidates to fill vacancies on the Board and aid in attracting
qualified candidates to the Board; (b) recommend to the Board candidates to fill
any vacancies on the Board; (c) recommend to the Board annually a slate of
directors to be elected by the shareholders at the Annual Meeting and recommend
to the Board the inclusion of the slate in the Proxy Statement; and (d)
recommend the compensation for services as director to be paid to non-management
directors. Current members of the Nominating Committee are Messrs. Staley
(Chairman), Hackett, Lehman, Owsley and Stiritz. The Nominating Committee met
twice during 1994. The Nominating Committee will consider nominees recommended
by shareholders. Any such recommendation should be in writing and addressed to
the Corporate Secretary, Ball Corporation, 345 South High Street, Muncie, IN
47305.
HUMAN RESOURCES COMMITTEE:
The duties of the Human Resources Committee are: (a) approve the salaries of
all elected corporate officers and other employees of the Corporation, as the
Board of Directors may determine and direct from time to time; (b) approve the
Corporation's schedule of salary ranges and grades for all salaried employees;
(c) approve the Corporation's schedule for approval signatures to be required
for salary and employee status changes; (d) approve the Corporation's incentive
compensation program, including its design, participation basis and
participation rates, as they apply to all elected corporate officers and other
employees of the Corporation as the Board of Directors may determine and direct
from time to time; (e) approve major salaried benefit plans, changes, plan
additions, terminations, and discontinuations; (f) direct the administration of
the Corporation's various stock option plans, and stock appreciation rights
plans, the restricted stock plans, and deferred compensation plans, in
accordance with such plans; (g) designate from time to time those officers and
other key employees of the Corporation and its subsidiaries to whom option
and/or restricted stock awards are to be granted and approve the number of
shares to be optioned and/or granted from time to time to any individual; and
(h) perform such other functions with respect to employee compensation as may be
requested by the Board of Directors. Current members of the Human Resources
Committee are Messrs. Stephens (Chairman), Hackett, Staley and Stiritz. The
Human Resources Committee met four times during 1994.
BOARD MEETINGS
The Board of Directors held eight meetings during 1994. No director attended
less than 75 percent of the aggregate of (1) the total number of meetings of the
Board of Directors and (2) the total number of meetings held by all committees
of the Board on which he served, except Mr. Staley, who attended five of the
eight Board meetings and eight of eleven meetings of committees on which he
served.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the April 23, 1996,
Annual Meeting must be in writing and received by the Corporate Secretary at the
Corporation's principal executive offices, 345 South High Street, Muncie, IN
47305, by November 21, 1995, for inclusion in the Corporation's 1996 Proxy
Statement.
6
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Corporation by the
Chief Executive Officer and each of the next four most highly compensated
executive officers of the Corporation (the Named Executive Officers):
SUMMARY COMPENSATION TABLE
LONG-TERM INCENTIVE COMPENSATION
STOCK OPTION GRANTS AND EXERCISES
The following tables present certain information for the Named Executive
Officers relating to stock option grants and exercises during 1994 and, in
addition, information relating to the valuation of unexercised stock options:
STOCK OPTION GRANTS IN 1994
8
AGGREGATED STOCK OPTION EXERCISES IN 1994
AND FISCAL YEAR-END OPTION/SAR VALUES
LONG-TERM CASH INCENTIVE
The following table presents information for the Named Executive Officers
concerning the Long-Term Cash Incentive Plan and, in addition, information
relating to the estimated future payouts.
LONG-TERM CASH INCENTIVE PLAN -- AWARDS IN 1994
9
RETIREMENT PLANS
The following table, for purposes of illustration, indicates the amounts of
annual retirement income which would be payable in 1995, to the Named Executive
Officers at normal retirement age 65. The calculation of retirement benefits
under the plans generally is based upon average earnings for the highest five
consecutive years of the ten years preceding retirement.
PENSION PLAN TABLE
The Corporation's qualified salaried retirement plans provide defined
benefits determined by base salary and years of service. The Corporation has
also adopted a nonqualified supplemental executive retirement plan which
provides benefits otherwise not payable under the qualified pension plan to the
extent that the Internal Revenue Code limits the pension to which an executive
would be entitled under the qualified pension plan. The benefit amounts shown in
the above table reflect the amount payable as a straight life annuity and
include amounts payable under the supplemental retirement plan. Certain key
employees, including the Named Executive Officers, participate in a split-dollar
life insurance plan and supplemental retirement benefits cease thirty days
following the termination of the Corporation's interest in the participant's
split-dollar policy.
Average Annual Earnings used under the pension formula to calculate
benefits, together with years of benefit service, as of December 31, 1994, for
the Named Executive Officers are: George A. Sissel, $158,312.80 (24.33 years);
William A. Lincoln, $184,274.04 (24.00 years); Donovan B. Hicks, $179,047.04
(33.25 years); David B. Sheldon, $157,712.32 (24.00 years); Duane E. Emerson,
$148,443.11 (21.33 years); and Delmont A. Davis, $414,057.66 (24 years).
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Corporation has established a revocable, funded grantor trust, which, in
the event a change in control of the Corporation occurs, would become
irrevocable with funds thereunder to be available to apply to the Corporation's
obligations under two of its deferred compensation plans. Those plans cover key
employees, including Messrs. Sissel, Lincoln, Hicks, Sheldon, and Emerson. Under
the trust, "change in control" can occur by virtue, in general terms, of an
acquisition by any person of 40 percent or more of the Corporation's voting
shares; a merger in which shareholders of the Corporation before the merger own
less than 60 percent of the Corporation's Common Stock after the merger;
shareholder approval of a plan to sell or dispose of substantially all of the
assets of the Corporation; a change of a majority of the Corporation's Board of
Directors within a 12-month period unless approved by two-thirds of the
directors in office at the beginning of such period; a threatened change in
control, deemed to exist if there is an agreement or public announcement of a
change in control; and by the adoption by the Board of Directors of a resolution
to the effect that a change in control has occurred for purposes of the trust.
The trust is funded with the cash values of company-owned life insurance
policies on the lives of various employees, including participants in the plans.
Approximately $94 million of cash value under the policies would be available
currently to cover the approximately $37 million of current deferred
compensation account balances of the beneficiaries of the trust. If the funds
set aside in the trust would be insufficient to pay amounts due the
beneficiaries, then the Corporation would remain obligated to pay those amounts.
In the event of the insolvency of the Corporation, the funds in the trust would
be available to satisfy the claims of the creditors of the Corporation. The
trust was not established in response to any effort to acquire control of the
Corporation, and the Board is not aware of any such effort.
10
The Corporation has change in control severance agreements with certain key
employees, including Messrs. Sissel, Lincoln, Hicks, Sheldon, and Emerson. The
agreements are effective on a year-to-year basis and would provide severance
benefits in the event of both a change in control of the Corporation and an
actual or constructive termination of employment within two years after a change
in control. Under the agreements, a "change in control" can occur by virtue, in
general terms, of an acquisition by any person of 30 percent or more of the
Corporation's voting shares; a merger in which the shareholders of the
Corporation before the merger own 50 percent or less of the Corporation's voting
shares after the merger; shareholder approval of a plan of liquidation or to
sell or dispose of substantially all of the assets of the Corporation; and if,
during any two-year period, directors at the beginning of the period fail to
constitute a majority of the Board of Directors. "Actual termination" is any
termination other than by death or disability, by the Corporation for cause, or
by the executive other than for constructive termination. "Constructive
termination" means, in general terms, any significant reduction in duties,
compensation or benefits or change of office location from those in effect
immediately prior to the change in control, unless agreed to by the executive.
The severance benefits payable, in addition to base salary and incentive
compensation accrued through the date of termination, shall include two times
current annual base salary and target incentive compensation, the bargain
element value of then outstanding stock options, the present value of the amount
by which pension payments would have been larger had the executive accumulated
two additional years of benefit service; two years of life, disability, accident
and health benefits; outplacement services; and legal fees and expenses
reasonably incurred in enforcing the agreements. Such benefits, together with
other benefits paid because of a change in control, may not exceed 2.99 times
the executive's "base amount" as defined in Section 280G of the Internal Revenue
Code. The agreements were not entered into in response to any effort to acquire
control of the Corporation, and the Board is not aware of any such effort.
The Corporation has severance benefit agreements with certain key employees,
including Messrs. Sissel, Lincoln, Hicks, Sheldon, and Emerson. After an initial
three-year term, the agreements are effective on a year-to-year basis and would
provide severance benefits in the event of an actual or constructive termination
of employment. (Mr. Hicks' agreement is for a fixed term of two years and
provides for payment of a retention bonus at the expiration of the two-year term
provided he is employed by the Corporation or a successor owner of the aerospace
business, or in the event of actual or constructive termination prior to
expiration of the agreement.) "Actual termination" is any termination other than
by death or disability, by the Corporation for cause, or by the executive other
than for constructive termination. "Constructive termination" means, in general
terms, any significant reduction in duties, compensation or benefits, unless
agreed to by the executive. The severance benefits payable, in addition to base
salary and incentive compensation accrued through the date of termination, shall
include two times current annual base salary and target incentive compensation,
the bargain element value of then outstanding stock options, the present value
of the amount by which pension payments would have been larger had the executive
accumulated two additional years of benefit service; two years of life,
disability, accident and health benefits; outplacement services; and legal fees
and expenses reasonably incurred in enforcing the agreements. Upon the
occurrence of a change in control as defined in the change in control severance
agreements, the executive is entitled to the greater of the benefit provided in
this agreement and the benefit provided in the change in control severance
agreement. Such benefits, together with other benefits paid because of a change
in control, may not exceed 2.99 times the executive's "base amount" as defined
in Section 280G of the Internal Revenue Code.
The Corporation entered into a retirement agreement with Mr. Davis on June
17, 1994, which provides for certain severance compensation and benefits in
addition to those to which he is entitled as a retiree of the Corporation.
Severance compensation under the agreement comprises a lump-sum payment of
$580,000 plus annual amounts of $600,000 for each twelve-month period from June
17, 1994, to the third anniversary thereof to be paid in equal biweekly
installments. Vesting of the Ball Corporation stock options held by Mr. Davis
which were not exercisable on the date of retirement was accelerated and such
options became fully exercisable as of that date. Benefits in addition to those
normally provided to early retirees include payments representing the excess of
retirement benefits calculated as if he had continued to be employed for the
three-year period following June 17, 1994, over those actually payable from the
Corporation's pension plan for salaried employees and the supplemental executive
retirement plan. Premiums for the Corporation's retiree medical program will
also be paid on his behalf for the three-year period ending June 17, 1997. The
Corporation paid market value for his residence and paid relocation expenses for
his return to Colorado. Mr. Davis agreed that during the three-year period
following June 17, 1994, he would not be employed with or act as a consultant
for any competitive businesses. Mr. Davis is further entitled to receive
benefits pursuant to plans of the Corporation not otherwise addressed in the
agreement to the extent retirees of the Corporation are entitled to such
benefits in the ordinary course of business.
11
DIRECTORS' COMPENSATION
Directors who are not employees of the Corporation receive as compensation
an annual retainer of $22,000. The Chairman of the Board receives an additional
annual retainer of $100,000. Nonemployee directors receive a fee of $1,000 for
attending each Board meeting; a fee of $750 for attending one or more committee
meetings held on any one day; a fee of $250 per month for serving as chairman of
a Board committee; and a per diem allowance of $500 for special assignments. In
addition, nonemployee members of the Executive Committee receive a fee of $1,000
for attending each committee meeting. Directors who are also employees of the
Corporation receive no additional compensation for their service on the Board or
on any Board committee.
Under the Ball Corporation 1986 Deferred Compensation Plan for Directors,
nonemployee directors may elect to defer the payment of all or a portion of
their directors' fees, including the annual retainer and the board and committee
meeting fees. Interest is credited annually to the accounts at a rate equal to
the annual average composite yield on Moody's Seasonal Corporate Bond Yield
Index plus five percent. The fees, together with credited interest, may be
deferred until no later than the year following the year of retirement as a
director and may be distributed over a period not to exceed fifteen (15) years,
both as selected by the director. In order to provide for its liabilities under
the Plan, the Corporation purchased insurance on lives of participating
directors.
The 1991 Restricted Stock Plan for Nonemployee Directors of Ball Corporation
authorizes the award of Common Stock of the Corporation to directors who, at the
time of grant, are not employees of the Corporation or any of its subsidiaries.
Mr. Hackett and Ms. Nicholson received 1,000-share awards each upon election as
directors on January 26 and April 26, 1994, respectively, and Mr. Dean received
a 1,000-share award upon re-election as a director on April 26, 1994. All
participants will receive additional 1,000-share awards each upon re-election
for three-year terms. Newly eligible participants will receive 1,000-share
awards each when they are elected or appointed for initial terms and upon
re-election for three-year terms. The restrictions against disposal of the
shares will lapse upon the termination of the director's service to the
Corporation as a director, for whatever reason other than voluntary resignation,
in which case the restriction will not lapse and the director will forfeit the
shares. For federal income tax purposes, the value of the shares will be taxable
to the recipient as compensation income in an amount equal to the fair market
value of the Common Stock on the date the restrictions lapse.
The Corporation has a Retirement Plan for Nonemployee Directors of Ball
Corporation, under which a retiring director who is not and has not been an
employee of the Corporation will be eligible for benefits under the Plan if he
has attained the age of 65 and has five or more full years of service as a
director. The amount of annual retirement income will be a percentage of the
annual retainer being paid to the director in effect at the time of his
retirement from the Board. A retiring director with the minimum of five years of
service will receive 50 percent of the annual retainer. For each additional year
of service, the retired director will receive an additional 10 percent of the
annual retainer, up to a maximum total annual retirement benefit income equal to
100 percent of the annual retainer. The annual retirement benefit will be paid
for up to the same number of years as those served on the Board, but will be
discontinued upon and not payable after the death of the retired director.
12
REPORT OF THE HUMAN RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
OVERALL POLICY
The Human Resources Committee (the "Committee") of the Board of Directors
oversees the administration of executive compensation programs and determines
the compensation of the executive officers of Ball Corporation. The Committee is
composed solely of independent, nonemployee directors and employs a compensation
consulting firm to advise and provide input in the course of its deliberations.
Total compensation of executive officers of the Corporation, including the
Chief Executive Officer, is determined after reviewing the executive's
performance and the pay of similarly situated executives at other manufacturing
firms of similar size (based upon total employment and sales), capital
structure, customer base, market orientation and employee demographics.
Companies chosen for this comparison are the same as those included in the peer
group for purposes of the performance graph, except that such information was
not available for two of the peer group companies.
ANNUAL COMPENSATION
The Committee generally intends that target total annual compensation,
defined as the sum of base salary and incentive compensation at target, for each
of the Corporation's executive officers will approximate the 50th percentile of
what comparable companies are paying. The target total annual compensation level
within that range for each executive, other than the Chief Executive Officer, is
determined based on recommendation from the Chief Executive Officer, together
with the Committee's consideration of the executive's responsibilities,
individual performance and the performance of the executive's area of
responsibility. The Chief Executive Officer's target total annual compensation
is similarly determined in relation to the market percentile range above, the
Committee's assessment of individual performance and the financial performance
of the Corporation. For the purpose of determination of target total annual
compensation, the evaluation of each executive's performance, including the
Chief Executive Officer, is largely subjective and no specific weighting is
assigned to any particular factor. Target total annual compensation for each of
the executives named in the accompanying Executive Compensation Summary,
including the Chief Executive Officer, was within the established percentile
range.
After the Committee has established the appropriate target total annual
compensation for an executive, base salary is determined by dividing target
total annual compensation by the sum of one plus the executive's incentive
compensation participation rate. When target performance as defined in the EVA
Incentive Compensation Plan (the "EVA Plan"), discussed below, is attained, the
executive will be paid a total annual compensation which equals that established
by the Committee as appropriate for his performance and when compared to
similarly situated executives at other companies. Incentive compensation
participation rates for executives, including the Chief Executive Officer, are
set by organizational level; for example, all senior executive officers,
including the Chief Executive Officer, participate at the same rate, while other
officers participate at lower rates and other key employees at lower rates yet.
The Committee intends that a larger percentage of an executive's target total
annual compensation be at risk, when compared with compensation survey data.
Such data is analyzed to determine the levels of incentive participation and
target total compensation. If the survey data indicates a target incentive
compensation rate of 50 to 60 percent, for example, Ball Corporation could be
expected to use a rate of 65 percent, thereby causing target total annual
compensation to be composed of a lower base salary and a higher at-risk
incentive compensation.
Base salary is referred to as "salary" in the Summary Compensation Table and
incentive compensation actually earned by an executive officer is reported under
the heading "Bonus." Actual incentive compensation earned is not, in part or in
total, discretionary, but instead is driven by the Economic Value Added (EVA)
targets approved by the Committee at the beginning of the year. The EVA targets
are calculated taking into account historical performance, the company's cost of
capital and the capital investment of each business unit. The resulting targets
are set at levels requiring improvement in EVA each year. The EVA Plan applies
to all officers and other key employees.
13
The EVA Plan awards incentive compensation to executives based upon actual
performance of the Corporation, or in certain cases the actual performance of
the profit center for which the executive is responsible, in achieving
improvements in EVA relative to the established EVA targets. Improvement in EVA
occurs when the ratio of net operating profit after tax to capital employed in
the business increases over time. It establishes a direct link between incentive
compensation and return earned on capital relative to a specified target return.
EVA was selected as the measure for the Corporation's incentive plan in the
belief that it correlates closely management's incentive with shareholder total
return.
If actual performance for the year is higher than the target performance
level, then the actual incentive compensation for such year will be higher than
target. Whenever actual performance falls below the target performance level,
the executive will receive incentive compensation less than target. If
performance falls below the minimum acceptable level established in the EVA
Plan, then no incentive compensation will be earned, and the executive's annual
compensation will consist only of base salary for the year. The Committee
intends that an executive's target incentive compensation should be a
significant portion of his target total compensation. In the case of the named
executives in the Summary Compensation Table, the portion of target total annual
compensation represented by target incentive compensation is approximately 40
percent. It is not intended or perceived as a "bonus" but rather as the
component of total compensation which is "at risk" as an incentive, dependent on
operating performance. For the year ended December 31, 1994, actual incentive
compensation for the Named Executive Officers was above target, while for the
year ended December 31, 1993, two of the named executives received incentive
compensation below target, one at target and two above target. The incentive
compensation levels for 1994 reflect the above-target performance of the
Corporation as a whole, as well as that of individual operating groups.
Incentive compensation for Messrs. Davis, Sissel and Emerson was based entirely
on the performance of the Corporation as a whole, while the other named
officers' incentive compensation levels were based 80 percent on the performance
of their areas of profit responsibility and 20 percent on the performance of the
Corporation as a whole.
LONG-TERM INCENTIVE PROGRAM
The Corporation's long-term incentive program consists of two types of
plans, both based upon the performance of Ball Corporation's Common Stock. The
first type comprises the several broad-based employee stock option plans
designed to encourage employee stock ownership and to recognize and reward
employees for their levels of responsibility in building shareholder value.
Grants of stock options to employees, including executive officers, are
generally made by the Committee after considering the recommendation of the
Chief Executive Officer, based primarily on the level of the employee's position
within the Corporation, taking into account the number of outstanding and
previously granted options. Stock options granted to the Chief Executive Officer
are determined by the Committee in relation to grant levels of other executive
officers within the Corporation and a subjective evaluation of his past and
expected performance as well as the number of outstanding and previously granted
options. As the stock option plans are long term in nature, grants are
determined independently of the shorter-term EVA Plan.
The second part of the Corporation's long-term incentive program is the
Long-Term Cash Incentive Plan adopted by the Corporation's Board of Directors in
1994. This plan is limited in its participation to selected key executives,
including Messrs. Sissel, Lincoln, Hicks, Sheldon and Emerson, who contribute
and are expected to continue to contribute materially to the success of Ball
Corporation and its subsidiaries through their leadership skills, vision and
dedication. The plan provides cash awards on the basis of Ball's total return
performance, i.e., stock price appreciation plus dividends, relative to targets
predetermined by the Committee, over three-year performance cycles which begin
at the start of each calendar year. The first two cycles, however, are of
shorter duration in the start-up phase of this plan. The first opportunity for
payout under this plan will be based on the period August 1, 1994, through
December 31, 1995, and therefore no compensation under this plan is reported in
the accompanying Summary Compensation Table.
Under present circumstances, the Committee believes that the compensation
program described above will not result in compensation for any of the
Corporation's executives in excess of the one million dollar federal income tax
deduction cap applicable for years beginning January 1, 1994.
14
OTHER EXECUTIVE COMPENSATION ARRANGEMENTS
As shown in the accompanying Summary Compensation Table, Mr. Davis occupied
the position of President and Chief Executive Officer until May 11, 1994, at
which time he retired from the Corporation. In view of Mr. Davis' many years of
service, his contributions as President and Chief Executive Officer, and his
agreement to assist the Corporation in the transition, the Board of Directors
entered into a retirement agreement with Mr. Davis on June 17, 1994, more fully
described under Termination of Employment and Change in Control Arrangements.
The Committee further determined that, with the election of Mr. Sissel as
Acting President and Chief Executive Officer, a salary increase would be
provided for him to be effective during the period in which he serves in such
capacity. The Committee subsequently awarded Mr. Sissel a supplemental bonus for
the additional responsibilities he assumed and for the Corporation's performance
in 1994. He was also awarded additional stock options for 15,000 shares of the
Corporation's Common Stock concurrent with his election to the acting position.
The foregoing report has been furnished by the following directors and
members of the Human Resources Committee:
W. Thomas Stephens, Chairman
John T. Hackett
Delbert C. Staley
William P. Stiritz
15
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in
Ball Corporation's cumulative total shareholder return on its Common Stock with
the cumulative total return of the S&P Composite 500 Stock Index and a peer
group of companies selected for the period of five years commencing January 1,
1989, and ending December 31, 1994.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG BALL CORPORATION
COMMON, S&P COMPOSITE 500 AND SELECTED PEER ISSUER GROUP
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
The Peer Issuer Group was selected from among manufacturing firms having
similarities in the following criteria:
- Size (total employment and sales)
- Capital structure (similar debt/equity ratios)
- Customer base (companies selling to other companies rather than
directly to the consumer)
- Market orientation (primarily domestic with some international)
- Employee demographics (companies with long-service employees
with ages similar to Ball Corporation employees)
Companies included in the Peer Issuer Group in addition to Ball Corporation
are: Arvin Industries, Inc.; Cummins Engine Company, Inc.; Eaton Corporation;
GenCorp Inc.; General Signal Corporation; Harsco Corp.; Illinois Tool Works,
Inc.; Maytag Corporation; Parker-Hannifin Corp.; Sequa Corporation; The Stanley
Works; Sundstrand Corporation; and Tyco Laboratories, Inc.
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RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS AND CERTAIN
OTHER RELATIONSHIPS AND RELATED TRANSACTIONS
During 1994, Price Waterhouse rendered audit and non-audit services to the
Corporation. Audit services included examinations of the consolidated financial
statements and statutory financial statements required to be filed; reviews of
quarterly financial data and filings with the Securities and Exchange
Commission; and consultations relating to the application of generally accepted
accounting principles to transactions into which the Corporation has entered.
Non-audit services included advice and consultations relating to acquisitions
and dispositions then being considered by the Corporation. It is the policy of
the Audit Committee of the Board of Directors to approve in advance the
engagement of Price Waterhouse for all audit and, except for minor assignments,
non-audit services. Representatives of Price Waterhouse are expected to be
present at the Annual Meeting of Shareholders and to be available to respond to
appropriate questions and to make a statement if they so desire.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends that the shareholders vote for
ratification of the appointment of Price Waterhouse as independent public
accountants for 1995. If the appointment of Price Waterhouse is not ratified by
the shareholders, the Audit Committee will select another firm of independent
public accountants for 1995.
SOLICITATION AND OTHER MATTERS
The cost of soliciting proxies will be paid by the Corporation. In addition
to solicitations by mail, some directors, officers and regular employees of the
Corporation, without extra remuneration, may conduct solicitations by telephone,
facsimile and personal interview. The Corporation will reimburse brokerage firms
and other custodians, nominees and fiduciaries for reasonable expenses incurred
by them in sending proxy material and annual reports to the beneficial owners of
Common Stock. In addition, the Corporation has engaged Beacon Hill Partners,
Inc., to assist it in the solicitation of proxies, for a fee of approximately
$3,000, plus out-of-pocket expenses.
As of the date of this Proxy Statement, the Board of Directors of the
Corporation has no knowledge of any matters to be presented for consideration at
the meeting other than those referred to above. However, persons named in the
accompanying form of proxy shall have authority to vote such proxy as to any
other matters which do properly come before the meeting and as to matters
incidental to the conduct of the meeting, according to their discretion.
By Order of the Board of Directors
George A. Sissel
CORPORATE SECRETARY
March 20, 1995
Muncie, Indiana
17
BALL CORPORATION PROXY/VOTING INSTRUCTION CARD
345 SOUTH HIGH STREET, MUNCIE, INDIANA 47305
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P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 26, 1995.
R
The undersigned hereby appoints Edmund F. Ball, John W. Fisher and Alvin
O Owsley and each or any of them as Proxies, with full power of substitution,
to vote all shares of Ball Corporation Common Stock entitled to be voted by
X the undersigned for the election of directors and on Proposal 2 referred to
on the reverse side of this Proxy Card and described in the Proxy
Y Statement, and on any other business as properly may come before the
Annual Meeting of Shareholders on Wednesday, April 26, 1995, or any
adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR ITEMS 1 AND 2.
Election of three Directors. Nominees are:
Frank A. Bracken, John F. Lehman and George A. Sissel
YOU ARE ENCOURAGED TO SPECIFY YOUR VOTES BY MARKING THE
APPROPRIATE BOXES ON THE REVERSE SIDE.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL
PROMPTLY IN THE ENCLOSED ENVELOPE.
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S).
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS 1 AND 2.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
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1. Election of Directors.
For Withhold authority for all Nominees
/ / / / To withhold authority to
vote for any specific
nominee(s), mark the
"FOR" boxand write the
name of each such nominee
for whom you are
withholding authority to
vote on the line provided
below.
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2. Proposal to approve the appointment of Price For Against Abstain
Waterhouse as the independent public / / / / / /
accountants of the Corporation.
3. In their discretion, the proxies are authorized For Against Abstain
to vote upon such other business as properly / / / / / /
may come before the meeting.
Shareholder name and address
Please sign exactly as name appears at left. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
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Signature(s) Date