DEF 14A: Definitive proxy statements
Published on March 16, 1998
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 Section240.14a-11(c) or
Section240.14a-12
BALL CORPORATION
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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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.
/ / 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,
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[LOGO]
BALL CORPORATION
345 SOUTH HIGH STREET, MUNCIE, INDIANA 47305
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 22, 1998
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The Annual Meeting of Shareholders of Ball Corporation will be held at the
Corporation's offices, 345 South High Street, Muncie, Indiana, on Wednesday,
April 22, 1998, 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 2001;
2. To ratify the appointment of the firm of Price Waterhouse LLP as
independent public accountants for 1998; and
3. To transact any other business as properly may come before the meeting,
although it is anticipated that no business will be conducted other than
the matters listed above.
Only holders of Common Stock of record at the close of business March 2,
1998, 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 1997 is being mailed to you with this Notice of Annual Meeting of
Shareholders and Proxy Statement.
By Order of the Board of Directors
Elizabeth A. Overmyer
CORPORATE SECRETARY
March 16, 1998
Muncie, Indiana
YOUR VOTE IS IMPORTANT.
YOU ARE URGED TO DATE, SIGN AND RETURN PROMPTLY YOUR PROXY IN THE
ENCLOSED ENVELOPE.
__________________________
PLEASE NOTE: THE 1998 ANNUAL MEETING WILL BE HELD TO TABULATE THE VOTES CAST
AND TO REPORT THE RESULTS OF VOTING ON THE TWO ITEMS DESCRIBED ABOVE. NO
PRESENTATIONS
OR OTHER BUSINESS MATTERS ARE PLANNED FOR THE MEETING.
[LOGO]
BALL AND ARE TRADEMARKS OF BALL CORPORATION, REG. U.S. PAT. & TM. OFFICE
BALL CORPORATION
345 SOUTH HIGH STREET, MUNCIE, INDIANA 47305
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PROXY STATEMENT
MARCH 16, 1998
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ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, APRIL 22, 1998
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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 22, 1998, 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 2, 1998, there were outstanding and
entitled to vote 30,320,402 shares of Common Stock (including the associated
preferred stock purchase rights under the Rights Agreement dated as of January
24, 1996, 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.
Based on Schedule 13G filings received to date, the following table
indicates the only beneficial owner of more than 5 percent of the Corporation's
outstanding Common Stock:
1
The following table lists the beneficial ownership, as of the close of
business on March 2, 1998, of Common Stock of the Corporation, of director
nominees, continuing directors, the Chief Executive Officer 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.
(Footnotes)
1. Full voting and dispositive power, unless otherwise noted.
2. Includes 195,218 shares held in trust for the estate of another family
member for which Mr. Bracken, as co-trustee, has sole voting and shared
investment power, and 6,220 shares owned by his wife, as to which he
disclaims beneficial ownership.
3. Includes 250 shares owned by Mr. Dean's wife, as to which he disclaims
beneficial ownership.
4. Includes 1,327 shares held by Mr. Hoover's wife and 4,106 shares held in
trust for Mr. Hoover's wife, all as to which he disclaims beneficial
ownership, and 45,006 shares which he may acquire during the next 60 days
upon the exercise of stock options.
5. Includes 19,002 shares which Mr. Matsik may acquire during the next 60 days
upon the exercise of stock options.
6. Includes 120,000 shares held in family trusts for which Mr. McFadden, as
co-trustee, has shared voting and investment power, and 37,000 shares owned
by his wife, as to which he disclaims beneficial ownership.
7. Includes 8,085 shares which Mr. Seabrook may acquire during the next 60 days
upon the exercise of stock options.
8. Includes 10,000 shares owned by Mr. Sissel's wife, as to which he disclaims
beneficial ownership, and 74,339 shares which he may acquire during the next
60 days upon the exercise of stock options.
9. Includes 16,082 shares which Mr. Westerlund may acquire during the next 60
days upon the exercise of stock options.
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 22, 1998, three persons are to be elected to serve as directors
until 2001, 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 2001 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.
All director nominees in Class I were previously elected by the
shareholders. Two of the directors in Class II and all of the directors in Class
III, whose terms have not expired, were previously elected by the shareholders.
Mr. Mercure was elected by the Board of Directors to serve as a director
beginning September 25, 1996.
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 nonvotes are
considered neither votes "for" nor "against." Proxies may not be voted for a
greater number of persons than the four 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.
2
DIRECTOR NOMINEES AND CONTINUING DIRECTORS
TO BE ELECTED FOR A TERM OF THREE YEARS UNTIL THE 2001 ANNUAL MEETING (CLASS I)
3
TO CONTINUE IN OFFICE UNTIL THE 1999 ANNUAL MEETING (CLASS II)
General Partner, McFadden Director since 1996.
Brothers, New York, New Member, Audit and
York, since 1978. Age 57. Finance Committees.
Mr. McFadden is a
director of Triangle
Pharmaceuticals, Inc.,
Durham, North Car-
[PHOTO] olina.
GEORGE MCFADDEN
Chairman and Chief Director since 1996.
Executive Officer, CDM Member, Audit and
Optics, Inc., Boulder, Finance Committees.
Colorado, since 1997 and
Chairman, WITI Mr. Mercure is a director
Corporation, Boulder, of Applied Magnetics
Colorado, since 1991; Corp., Goleta,
Member of the faculty, California.
University of Colorado,
1988 to
1996; Owner, Colorado
[PHOTO] Venture Management, 1980
to 1988; various
executive aerospace
positions, Ball
Corporation, 1956 to
1980. Age 66.
RUEL C. MERCURE, JR.
Chairman, Chief Executive Director since 1983.
Officer and President, Member, Audit, Human
Agribrands International, Resources and Nominating
Inc., St. Louis, Committees.
Missouri, since March
1998,and Chairman, Mr. Stiritz is a director
Ralston Purina Company, of Agribrands Inter-
St. Louis, Missouri,
since October 1997;
Chair-
man, President and Chief national, Inc., Ralston
[PHOTO] Executive Officer, 1982 Purina Company, Angelica
to 1997. Age 63. Corp., Ralcorp Holdings,
Inc., Reinsurance Group
of America, Inc. and May
Department Stores Co.,
all of St. Louis,
Missouri, and Vail
Resorts Inc., Avon, Colo-
rado.
WILLIAM P. STIRITZ
4
TO CONTINUE IN OFFICE UNTIL THE 2000 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), Bracken, McFadden and Mercure, and Ms.
Nicholson. The Audit Committee met three times during 1997.
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. Bracken
(Chairman), Dean, Hackett, Lehman and Stiritz. The Nominating Committee met
twice during 1997. 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 (after September 1, 1998: 10 Longs Peak Drive, Broomfield, CO 80021-2510).
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, 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. Dean (Chairman), Hackett, Lehman and Stiritz. The Human Resources
Committee met four times during 1997.
BOARD MEETINGS
The Board of Directors held six meetings during 1997. 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.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the April 28, 1999,
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 (after September 1, 1998: 10 Longs Peak Drive, Broomfield, CO 80021-2510),
by November 16, 1998, for inclusion in the Corporation's 1999 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 of the
Chief Executive Officer and each of the next four most highly compensated
executive officers of the Corporation (the Named Executive Officers) in office
on December 31, 1997:
SUMMARY COMPENSATION TABLE
- ------------------------
(1) As noted in the Report of the Human Resources Committee, Ball Corporation
uses the term Incentive Compensation rather than Bonus. Also noted in the
Report of the Human Resources Committee is the performance level of the
Corporation and each of the operating groups in relation to incentive
targets and the resulting impact on the "bonus" amounts shown above. As
discussed in the report of the Human Resources Committee, included in the
"bonus" amount is Restricted Stock awarded pursuant to the supplement to the
Annual Incentive Compensation Plan for 1997: Mr. Sissel, $71,500; Mr.
Hoover, $37,273; Mr. Matsik, $35,095; Mr. Seabrook, $19,067; and Mr.
Westerlund, $17,489.
(2) Pursuant to the plan as outlined in the report of the Human Resources
Committee, one-half of the award to the Named Executive Officers, including
the Chief Executive Officer, was in Restricted Stock.
(3) The amounts shown in the All Other Compensation column for 1997 consist of
the following:
Mr. Sissel -- above-market interest on deferred compensation account,
$54,467; company contribution to Employee Stock Ownership Plan, $1,239;
company contribution to Employee Stock Purchase Plan, $1,015; Supplemental
Long-Term Disability premium, $2,300; compensation attributable to the
split-dollar life insurance program, $51,332.
Mr. Hoover -- above-market interest on deferred compensation account,
$13,251; company contribution to Employee Stock Ownership Plan, $1,239;
company contribution to Employee Stock Purchase Plan, $1,008; Supplemental
Long-Term Disability premium, $2,300; compensation attributable to the
split-dollar life insurance program, $85,844.
Mr. Matsik -- above-market interest on deferred compensation account,
$19,067; company contribution to Employee Stock Ownership Plan, $1,239;
company contribution to Employee Stock Purchase Plan, $1,200; Supplemental
Long-Term Disability premium, $2,300.
Mr. Seabrook -- above-market interest on deferred compensation account,
$6,024; company contribution to Employee Stock Ownership Plan, $1,239;
Supplemental Long-Term Disability premium, $2,144; compensation attributable
to the split-dollar life insurance program, $19,106.
Mr. Westerlund -- above-market interest on deferred compensation account,
$6,569; company contribution to Employee Stock Ownership Plan, $1,239;
company contribution to Employee Stock Purchase Plan, $680; Supplemental
Long-Term Disability premium, $1,923.
7
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 1997 and, in
addition, information relating to the valuation of unexercised stock options:
STOCK OPTION GRANTS IN 1997
- ------------------------
(1) Options were granted April 22, 1997, and are exercisable beginning one year
after grant and each year thereafter in 25 percent increments.
(2) Grant date option values are estimated at $7.01 per share based on the
Black-Scholes option pricing model adapted for use in valuing employee stock
options. The estimated value under the Black-Scholes model is based on
assumptions of volatility of 22.71 percent, a risk-free rate of return of
6.69 percent, a dividend yield of 2.33 percent, an expected option term of
five years, and no adjustment for the risk of forfeiture. The actual value,
if any, an executive may realize will depend on the excess of the stock
price over the exercise price on the date the option is exercised.
Consequently, there is no assurance the value realized by an executive will
be at or near the value estimated by the Black-Scholes model.
AGGREGATED STOCK OPTION EXERCISES IN 1997
AND FISCAL YEAR-END OPTION VALUES
- ------------------------
(1) Based on the closing price on the New York Stock Exchange -- Composite
Transactions of the Corporation's Common Stock on December 31, 1997, of
$35.375.
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.
8
LONG-TERM CASH INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
- ------------------------
(1) Participants are not awarded a number of units. Awards are expressed as a
percentage of average annual salary and "bonus" at target during the
performance period. However, Named Executive Officers, inlcuding the Chief
Executive Officer, whose Ball Corporation stock holdings are below the
established guidelines, will receive one-half of their award in Ball
Corporation Restricted Stock.
(2) Estimated future payouts ("earned awards") are based on Ball's total
shareholder return performance, i.e., stock price appreciation plus
dividends, over three-year performance cycles which begin at the start of
each calendar year, relative to the total shareholder return of companies
comprising the S&P Industrials index.
RETIREMENT PLANS
The following table, for purposes of illustration, indicates the amounts of
annual retirement income which would be payable in 1998 to the Named Executive
Officers at normal retirement age 65. The calculation of retirement benefits
under the plans generally is based upon average earnings (base salary only) 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. Messrs. Sissel,
Hoover and Seabrook 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.
9
Average Annual Earnings used under the pension formula to calculate benefits
together with years of benefit service, as of December 31, 1997, for the Named
Executive Officers are: George A. Sissel, $372,924 (27.33 years);
R. David Hoover, $212,783 (27.54 years); George A. Matsik, $178,156 (21 years);
Raymond J. Seabrook, $161,422 (5.21 years); and David A. Westerlund, $135,971
(22.33 years) (offset by benefits received from a prior employer).
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 the Named Executive Officers. 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 was funded as of December 31,
1997, with the net equity of company-owned life insurance policies on the lives
of various employees, including participants in the plans and with a Letter of
Credit that ensures that the trust will be fully funded in the event of a change
in control. Approximately $14.3 million of net equity under the policies would
be available currently to cover the approximately $44.2 million of current
deferred compensation account balances of the beneficiaries of the trust. In the
event of a change in control, up to an additional $32 million would be available
under the trust pursuant to the Letter of Credit. 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.
The Corporation has change in control severance agreements with certain key
employees, including the Named Executive Officers. 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. In the event such benefits, together with other
benefits paid because of a change in control, would be subject to the excise tax
imposed under Section 280G of the Internal Revenue Code, the Corporation would
reimburse the executive for such excise taxes paid, together with taxes incurred
as a result of such reimbursement. 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 the Named Executive Officers. Notice has been given that these
agreements will terminate on May 1, 2000, pursuant to their terms. The
agreements provide severance benefits in the event of an actual or constructive
termination of employment. "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 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 salary and target incentive compensation; 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
10
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 each of the benefits provided in this agreement and each of
the benefits provided in the change in control severance agreement, including
reimbursement thereunder resulting from excise taxes which may be incurred as a
result of such payments. The Corporation's current intention is to replace the
severance benefit agreements at the time of their termination with similar
agreements which provide severance and other benefits based on one year's annual
salary and target incentive rather than the current two-year benefit.
DIRECTORS' COMPENSATION
Directors who are not employees of the Corporation receive as compensation a
total target annual retainer composed of a $22,000 annual fixed retainer, plus
an annual incentive retainer based upon the Corporation's actual operating
performance for each fiscal (calendar) year. The annual incentive retainer is
calculated in accordance with the Corporation's performance-based Incentive
Compensation Plan at a rate of 40 percent of the directors' annual fixed
retainer. Both annual retainers are paid 50 percent in cash and 50 percent in
Restricted Stock. The restrictions will lapse upon the director ceasing to serve
as a director, for any reason other than voluntary resignation, in which case
the restrictions 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 Corporation's Common Stock on the date the restrictions lapse.
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.
The Retirement Plan for Nonemployee Directors of Ball Corporation was
terminated on April 23, 1997. Directors received the number of restricted shares
equal to the value of the amount each director would have been entitled to
receive had his account been vested in the Plan: Mr. Bracken, $5,393; Mr. Dean,
$78,972; Mr. Hackett, $14,024; Mr. Lehman, $43,664; Mr. McFadden, $925; Mr.
Mercure, $916; Ms. Nicholson, $4,976; and Mr. Stiritz, $105,165. The
restrictions will lapse upon the director ceasing to serve as a director, for
any reason other than voluntary resignation, in which case the restrictions will
not lapse and the director will forfeit the shares.
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.
Messrs. Dean and Hackett and Ms. Nicholson received 1,000-share awards each upon
reelection as directors on April 23, 1997. All participants will receive
additional 1,000-share awards each upon reelection 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.
11
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). The external
comparison is based upon the results of an annual report prepared by the
corporate compensation department and reviewed with the compensation consulting
firm employed by the Board of Directors. This report gathers information from
compensation surveys that report on executive level positions at other
manufacturing firms of similar size.
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
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's 50th percentile, 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, approximated the 50th percentile.
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
Annual Incentive Compensation Plan (the "Annual IC 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, the Chief Executive
Officer participates at one rate, senior executive officers participate at
another 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 55 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 driven by the
economic value added targets approved by the Committee at the beginning of the
year. The Annual IC Plan 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
economic value added each year. The Annual IC Plan design applies to all
officers and other key employees.
The Annual IC 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 economic value added relative to the established
targets. Improvement in economic value added 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. Economic value added
was selected as the measure for the Corporation's Annual IC Plan because it has
been demonstrated that it correlates closely management's incentive with
shareholder total return.
12
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 Annual
IC 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 ranges from 33 to
approximately 45 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,
1996, actual incentive compensation for the Named Executive Officers was below
target for each named executive, reflecting below-target performance. The
incentive compensation levels for 1997 reflect the above-target performance of
the Corporation as a whole and for the packaging operations. The aerospace and
technologies operations continued to perform above target levels in 1997.
Incentive compensation for Messrs. Sissel, Hoover, Seabrook and Westerlund was
based entirely on the performance of the Corporation as a whole, while Mr.
Matsik's incentive compensation was based 80 percent on the performance of his
area of profit responsibility and 20 percent on the performance of the
Corporation as a whole. For 1997 only, certain key employees, including the
Named Executive Officers, participated in a supplement to the Annual IC Plan.
The supplement provided for an additional award of 20 percent of the executive's
target incentive compensation rate, made in the form of restricted stock, if
1997 actual performance under the Annual IC Plan exceeded target performance.
Each Named Executive Officer received an award of restricted stock pursuant to
the supplement.
LONG-TERM INCENTIVE PROGRAM
The Corporation's long-term incentive program consists of two types of
plans, the calculation of which is targeted at the 50th percentile of market,
both based upon the performance of Ball Corporation's Common Stock. The first
type comprises 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
Annual IC Plan.
The second part of the Corporation's long-term incentive program is the
Long-Term Cash Incentive Plan. This plan is limited in its participation to
selected key executives, including the Named Executive Officers, who contribute
materially to the success of Ball Corporation and its subsidiaries through their
leadership skills, vision and dedication. The plan provides cash and restricted
stock awards on the basis of Ball's total shareholder return performance; i.e.,
stock price appreciation plus dividends, over three-year performance cycles
which begin at the start of each calendar year, relative to the total
shareholder return of companies comprising the S&P Industrials index. The
performance requirements for the cycle ending December 31, 1997, however, were
based on total shareholder return in relation to the base year of 1996.
Section 162(m) of the Internal Revenue Code of 1986 as amended generally
provides that publicly held corporations may not deduct in any one taxable year
certain compensation in excess of $1 million paid to the Chief Executive Officer
and the next four most highly compensated executive officers. One of the primary
responsibilities of the Committee is to provide a compensation program that will
attract, retain and reward executive talent necessary to maximize shareholder
return. Nevertheless, to the extent that any compensation for any Named
Executive Officer otherwise deductible for a particular tax year would not be
deductible in that year because of the limitations of Section 162(m), such
compensation will be deferred until retirement.
The foregoing report has been furnished by the following directors and
members of the Human Resources Committee:
Howard M. Dean, Chairman
John T. Hackett
John F. Lehman
William P. Stiritz
13
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 The Dow
Jones Containers & Packaging Index for the five-year period ending December 31,
1997.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG BALL CORPORATION COMMON,
THE S&P COMPOSITE 500 STOCK INDEX AND THE DOW JONES CONTAINERS & PACKAGING INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Notes: Assumes $100 invested on December 31, 1992.
Total return assumes reinvestment of dividends.
The Dow Jones Containers & Packaging Index total return weighted by
market capitalization.
This year's performance graph excludes the Peer Issuer Group which was
included in the Corporation's 1997 Proxy Statement. This peer group consisted of
the following companies, in addition to Ball Corporation: 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 International Ltd. The peer group was selected from among
manufacturing firms having similarities in size, capital structure, customer
base, market orientation and employee demographics. Based upon the same
assumptions as those used for the 1998 Proxy Statement performance graph
components, the data points for the Peer Issuer Group would have been:
1992-$100; 1993-$120; 1994-$119; 1995-$150; 1996-$193; and 1997-$293.
The elimination of the Peer Issuer Group is the culmination of a two-year
changeover to the Dow Jones Containers & Packaging Index. The peer group was
created when the performance graph was first introduced as a requirement for
proxy statements. As Ball Corporation's business has evolved, this peer group
has become less representative of the primary industry in which it participates.
After careful review, management determined that the Dow Jones Containers &
Packaging Index was a more appropriate comparison, as it reflects Ball
Corporation's performance against packaging businesses, its principal industry
group. Companies included in the Dow Jones Containers & Packaging Index, in
addition to Ball Corporation, are: Crown Cork & Seal Company, Inc.; Bemis
Company, Inc.; Owens-Illinois, Inc.; Sonoco Products Company; Stone Container
Corporation; and Temple-Inland, Inc.
14
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS AND CERTAIN
OTHER RELATIONSHIPS AND RELATED TRANSACTIONS
During 1997, Price Waterhouse LLP 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 LLP for all audit and, except for minor
assignments, non-audit services. Representatives of Price Waterhouse LLP 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 LLP as independent public
accountants for 1998. If the appointment of Price Waterhouse LLP is not ratified
by the shareholders, the Audit Committee will select another firm of independent
public accountants for 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's directors and executive officers to file reports of ownership
and changes in ownership of Ball Corporation stock with the Securities and
Exchange Commission and the New York Stock Exchange. Based on its records and
other information, Ball Corporation believes that during 1997 its directors and
executive officers complied with all Section 16 filing requirements, with the
exception of one Form 4 which was filed late for Frank A. Bracken, a director,
covering a sale of shares by his mother's estate trust.
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 interviews. 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
Elizabeth A. Overmyer
CORPORATE SECRETARY
March 16, 1998
Muncie, Indiana
15
[LOGO]
BALL CORPORATION
345 SOUTH HIGH STREET
MUNCIE, INDIANA 47305
[LOGO]
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PROXY
BALL CORPORATION PROXY/VOTING INSTRUCTION CARD
345 SOUTH HIGH STREET, MUNCIE, INDIANA 47305
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON APRIL 22, 1998.
The undersigned hereby appoints Edmund F. Ball, John W. Fisher and Alvin
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
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 Statement,
and on any other business as properly may come before the Annual Meeting of
Shareholders on Wednesday, April 22, 1998, 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 for three-year terms. 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.
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TRIANGLE FOLD AND DETACH HERE TRIANGLE
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/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 3101
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSAL 2.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR
PROPOSAL 2.
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1. Election of Directors (see reverse)
FOR WITHHOLD AUTHORITY FOR ALL NOMINEES
/ / / /
To withhold authority to vote for any specific nominee(s), mark the "FOR"
box and 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 ratify the appointment of Price Waterhouse LLP as the
independent public accountants of the Corporation.
FOR AGAINST ABSTAIN
/ / / / / /
3. At their discretion, the proxies are authorized to vote upon such other
business as properly may come before the meeting or any adjournment thereof.
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
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TRIANGLE FOLD AND DETACH HERE TRIANGLE