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 Section 240.14a-12
Alamo Group Inc.
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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)
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/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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
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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,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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[ALAMO GROUP INC. LOGO]
ALAMO GROUP INC.
1502 EAST WALNUT STREET
SEGUIN, TEXAS 78155
Dear Fellow Stockholders:
You are cordially invited to attend the 2002 Annual Meeting of
Stockholders of Alamo Group Inc. to be held on Wednesday, May 8, 2002, at 9:00
a.m. local time, at the Hyatt Regency Hotel, 123 Losoya Street, San Antonio,
Texas. We hope that you will be able to attend the meeting. Matters on which
action will be taken at the meeting are explained in detail in the notice of
meeting and proxy statement accompanying this letter.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the stockholders.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AND REGARDLESS OF THE NUMBER OF
SHARES YOU OWN, PLEASE MARK, SIGN AND MAIL THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED AS SOON AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR
PROXY AND VOTE IN PERSON.
Thank you for your support. We hope to see you at the meeting.
Donald J. Douglass
Chairman of the Board
March 28, 2002
ALAMO GROUP INC.
1502 EAST WALNUT STREET
SEGUIN, TEXAS 78155
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 8, 2002
--------------------
To the Stockholders of
Alamo Group Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Alamo
Group Inc. (the "Company") will be held at the Hyatt Regency Hotel, 123 Losoya
Street, San Antonio, Texas, on Wednesday, May 8, 2002, at 9:00 a.m. local time,
for the following purposes:
(1) To elect six (6) directors to serve until the next annual meeting of
stockholders or until their successors are elected and qualified;
(2) To approve the appointment of Ernst & Young LLP as the Company's
auditors for the 2002 fiscal year;
(3) To transact such other business as may properly come before the meeting or
any adjournment thereof.
In accordance with the By-Laws of the Company, the Board of Directors has
fixed the record date for the meeting at March 15, 2002. Only stockholders of
record at the close of business on that date will be entitled to vote at the
meeting or any adjournment thereof.
Stockholders who do not expect to attend the meeting in person are urged
to sign the enclosed proxy and return it promptly. A return envelope is enclosed
for that purpose.
A complete list of stockholders entitled to vote at the meeting, showing
the address of each stockholder and the number of shares registered in the name
of each stockholder, shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of twelve days commencing April 22, 2002, at the offices of the Company's
Counsel which is Oppenheimer, Blend, Harrison and Tate, Inc. located at 711
Navarro, Suite 600, San Antonio, Texas 78205-1796
By Order of the Board of Directors
/s/ ROBERT H. GEORGE
Robert H. George
Secretary
Dated: March 28, 2002
ALAMO GROUP INC.
1502 East Walnut Street
Seguin, Texas 78155
PROXY STATEMENT
The accompanying Proxy is solicited by the Board of Directors of Alamo
Group Inc., a Delaware corporation (the "Company"), to be voted at the 2002
Annual Meeting of Stockholders to be held on May 8, 2002, and at any
adjournments thereof. The meeting will be held at 9:00 a.m. local time, at the
Hyatt Regency Hotel, 123 Losoya, San Antonio, Texas. This Proxy Statement and
the accompanying Proxy are being mailed to Stockholders on or about March 28,
2002. The Annual Report of the Company for 2001, including audited financial
statements, is enclosed.
VOTING AND PROXIES
Only holders of record of common stock of the Company at the close of
business on March 15, 2002 (the "Record Date"), shall be entitled to vote at the
meeting. There were 20,000,000 authorized shares of common stock, par value $.10
per share ("Common Stock"), of the Company and 9,710,959 shares of common stock
outstanding on the Record Date. Each share of Common Stock is entitled to one
vote. Any Stockholder giving a proxy has the power to revoke same at any time
prior to its use by giving notice in person or in writing to the Secretary of
the Company.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
2002 Annual Meeting of Stockholders and any adjournment thereof.
Votes cast by proxy or in person at the Annual Meeting will be tabulated
by the inspectors of election appointed by the Company for the meeting. The
inspectors of election will treat abstentions and broker non-votes as shares
that are present for purposes of determining the presence of a quorum.
Abstentions may be specified on all proposals except the election of directors.
Abstentions are present and entitled to vote for purposes of determining the
approval of any matter submitted to the Stockholders for a vote and will thus
have the same effect as a negative vote for the item on which the abstention is
noted. If a broker indicates on a proxy that it does not have the discretionary
authority as to certain shares to vote on a particular matter, those shares will
not be considered present and entitled to vote with respect to that matter.
-1-
BENEFICIAL OWNERSHIP OF COMMON STOCK
Listed in the following table are the only beneficial owners that the
Company is aware of as of February 28, 2002, of more than five percent of the
Company's outstanding Common Stock. In addition, this table includes the
outstanding voting securities beneficially owned by its directors, its executive
officers that are listed in the Summary Compensation Table and by its directors
and executive officers as a group.
BENEFICIAL OWNER AMOUNT AND NATURE OF
OF COMMON STOCK BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS (2)
-------------------------------------- ---------------------------- -----------------------
Capital Southwest Venture Corporation
12900 Preston Road, Suite 700
Dallas, TX 75230 2,821,300 (3) 29.1%
EQSF Advisors, Inc.
767 Third Avenue
New York, NY 10017 2,313,809 (4) 23.8%
T. Rowe Price Associates, Inc.
100 East Pratt
Baltimore, MD 21202 686,400 (5) 7.1%
Harris & Associates L.P.
Two North LaSalle Street, Suite 500
Chicago, IL 60602 643,650 (6) 6.6%
Donald J. Douglass
330 Argyle Avenue
San Antonio, TX 78209 630,025 (7) 6.5%
William R. Thomas (8)
Ronald A. Robinson 120,000 (9) 1.2%
James B. Skaggs 1,100 *
David H. Morris 1,018 *
Jerry E. Goldress 18,000 *
Robert H. George 6,950 (9) *
Richard J. Wehrle 3,615 (9) *
Geoffrey Davies 4,750 (9) *
Ian Burden 5,642 (9) *
All Directors and Executive Officers
as a Group (10 Persons) 791,100 (9) 8.1%
---------------------
* Less than 1% of class
(1) In each case the beneficial owner has sole voting and investment power,
except as otherwise provided herein.
-2-
(2) The calculation of percent of class is based on the number of shares of
Common Stock outstanding as of February 28, 2002, 9,710,809 shares.
(3) Includes shares purchased by Capital Southwest Corporation ("Capital
Southwest"), the parent corporation of Capital Southwest Venture
Corporation. Mr. Thomas, a director of the Company, serves as Chairman of
the Board and President of both Capital Southwest Venture Corporation and
Capital Southwest Corporation and shares voting and investment power with
respect to the shares of Common Stock owned by Capital Southwest Venture
Corporation and Capital Southwest Corporation. Mr. Thomas, personally,
disclaims beneficial ownership of these shares.
(4) Based on a Schedule 13G dated January 10, 2002 by which EQSF Advisors, Inc.
reported that as of December 31, 2001, it or M. J. Whitman Advisors, Inc. or
Martin J. Whitman, individually had shared voting power over none of such
shares, sole voting power over 2,264,309 such shares, and sole dispositive
power over 2,313,809 of such shares. EQSF Advisors, Inc. has beneficial
ownership in 2,126,509 shares. M. J. Whitman Advisors, Inc. has beneficial
ownership in 187,300 shares. Martin J. Whitman individually disclaims
beneficial ownership of these shares
(5) Based on a Schedule 13G dated February 14, 2002, by which T. Rowe Price
Associates, Inc. reported that as of December 31, 2001, it or T. Rowe Price
Small Cap Value Fund, Inc. had shared voting power over none of such shares,
sole voting power over 686,400 of such shares, and sole dispositive power
over 686,400 of such shares. T. Rowe Price Associates, Inc. and T. Rowe
Price Small Cap Value Fund, Inc. have beneficial ownership in 686,400
shares.
(6) Based on a Schedule 13G dated February 13, 2002, by which Harris Associates
L.P. reported that as of December 31, 2001, it or Harris Associates Inc. had
shared voting power over 643,650 such shares, sole voting power over none of
such shares and sole dispositive power over 501,750 such shares. Harris
Associates L.P. and Harris Associates Inc. have beneficial ownership in
643,650 shares.
(7) Includes 20,000 shares of non-qualified options exercisable for a period of
three years from January 30, 2001. Includes 69,750 shares owned by The
Douglass Foundation, a non-profit organization of which Mrs. Douglass is the
President; 100,000 shares in the Douglass Charitable Remainder Unitrust, of
which Mr. Douglass is trustee; 26,395 shares in the Douglass Charitable Lead
Unitrust of 2001 of which Mr. Douglass is trustee; 53,100 shares owned by
Helen D. Douglass, Mr. Douglass' wife. Various members of Mr. Douglass'
family hold shares of stock of the Company which are not included in this
table and Mr. Douglass disclaims beneficial ownership of these shares.
(8) See footnote 3, above.
(9) Includes shares available for exercise under various stock option plans as
follows: for Mr. Robinson 92,500 shares exercisable for 10 years from July
7, 1999; for Mr. George 1,500 shares; for Mr. Wehrle 1,500 shares; for Mr.
Davies 1,000 shares; for Mr. Burden 3,000 shares; for 10 years from August
31, 1999.
ITEM 1: ELECTION OF DIRECTORS
The By-Laws of the Company provide that the number of directors which
shall constitute the whole Board shall be fixed and determined from time to time
by resolution adopted by the Board of Directors. Currently, the size of the
Board of Directors has been fixed at six (6) directors. Each director elected at
the annual meeting will serve until the next annual meeting of Stockholders or
until his successor is elected and qualified. Unless otherwise instructed,
shares represented by properly executed proxies in the accompanying form will be
voted for the individuals nominated by the Board of Directors set forth below.
Although the Board of Directors anticipates that the listed nominees will be
able to serve, if at the time of the meeting any such nominee is unable or
unwilling to serve, such shares may be voted at the discretion of the proxy
holders for a substitute nominee. Certain information concerning such nominees,
including all positions with the Company and principal occupations during the
last five years, is set forth below:
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Donald J. Douglass, age 70, founded the Company in 1969 and has served as
Chairman of the Board and Chief Executive Officer of the Company. Mr. Douglass
resigned his position as Chief Executive Officer on July 7, 1999 and his
position as an employee of the Company on December 31, 1999, but continues to
serve as a director and Chairman of the Board for the Company.
Ronald A. Robinson, age 50, has been President, Chief Executive Officer
and director of the Company since 1999. Mr. Robinson had previously been
President of Svedala Industries, Inc. the U.S. subsidiary of Svedala Industries
AB of Malmo, Sweden, a leading manufacturer of equipment and systems for the
worldwide construction, mineral processing and materials handling industries.
Mr. Robinson joined Svedala in 1992 when it acquired Denver Equipment Company of
which he was Chairman and Chief Executive Officer.
Jerry E. Goldress, age 71, has been a director of the Company since May 2,
2000 and is Chairman and Chief Executive Officer of Grisanti, Galef & Goldress,
Inc. ("GGG"), a turnaround management consulting firm. Mr. Goldress has been
with GGG since 1973 and has been its Chairman and Chief Executive Officer since
1981. In his consulting capacity, he has been President of more than one hundred
manufacturing, distribution, and retail organizations.
-3-
David H. Morris, age 60, has been a director of the Company since 1996.
Since 1995, he has been involved in various consulting capacities and from
September of 1999 through May of 2000 he served as Chief Operating Officer of
YardMart.com. Mr. Morris retired as President and Chief Operating Officer of The
Toro Company in November 1995. He had served in this capacity since December
1988. Mr. Morris was first employed by Toro in February 1979 and served in
various executive capacities with Toro and its subsidiaries.
James B. Skaggs, age 64, has been a director of the Company since 1996 and
retired as Chairman of the Board, Chief Executive Officer and President of
Tracor, Inc. in June 1998. Tracor provided leading edge technology to government
and commercial customers worldwide in the areas of information systems,
aerospace, and systems engineering. Mr. Skaggs had been Tracor's Chief Executive
Officer, President and Director since November 1990 and its Chairman of the
Board since December 1993.
William R. Thomas, age 73, has been a director of the Company since 1969.
Since 1980, Mr. Thomas has been President, and since 1982, Chairman of the
Board, of Capital Southwest Corporation, a publicly owned venture capital
investment company located in Dallas, Texas.
ADDITIONAL INFORMATION CONCERNING DIRECTORS
None of the nominees for director or the executive officers of the Company
has a family relationship with any of the other executive officers or other
nominees for director. Except for Mr. Thomas and Mr. Goldress, none of the
directors or nominees is a director of any other company which has a class of
securities registered under, or is required to file reports under, the
Securities Exchange Act of 1934 or of any company registered under the
Investment Company Act of 1940. Mr. Thomas is a director of Capital Southwest
Corporation, Encore Wire Corporation, Mail-Well, Inc. and Palm Harbor Homes,
Inc. Mr. Goldress is a director of K2 Inc., Rockford Corp. and Frontier
Insurance Group, Inc.
VOTE REQUIRED. A PLURALITY OF THE VOTES CAST AT THE ANNUAL MEETING IS
REQUIRED FOR THE ELECTION OF EACH INDIVIDUAL NOMINATED BY THE BOARD OF
DIRECTORS. ALL PROXIES WILL BE VOTED FOR UNLESS A CONTRARY CHOICE IS INDICATED.
THE BOARD HAS APPROVED THE SLATE OF DIRECTORS AND
RECOMMENDS ITS APPROVAL BY THE STOCKHOLDERS
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended December 31, 2001, the Board of Directors
held six meetings. All members of the Board attended at least 75% of the
meetings, except Mr. Douglass who was absent from two meetings.
The Audit Committee of the Board of Directors, which consisted of Messrs.
Goldress, Morris and Skaggs met six times during fiscal 2001. All Committee
members were present at the meetings. The functions of the Audit Committee are
to review annually the Audit Committee Charter, recommend the appointment of the
Company's independent auditors, to review the arrangements for and the scope of
the annual audit, and to review internal accounting controls.
The Compensation/Nomination Committee of the Board of Directors, which
consisted of Messrs. Goldress, Morris, Skaggs and Thomas, met one time during
fiscal 2001. All committee members were present at the meeting. The functions of
the Compensation/Nomination Committee are to review and make recommendations
concerning the compensation of officers and other key management personnel,
including the granting of stock options and the nomination of directors and
executive officers of the Company. The Compensation/Nomination Committee does
not consider nominees recommended by Stockholders of the Company.
-4-
O.S. Simpson Jr. a member of the Board of Directors since 1969, passed
away in May of 2001. Mr. Simpson was also a member of both the Audit and
Compensation Committees & attended all meetings up until his death. His
position on the Board of Directors was not replaced and effective February
13, 2002, the size of the Board has been reduced to six (6) directors.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is comprised of three independent members of the
Company's Board of Directors. Each member of the Audit Committee is independent
as defined in Rule 303.02 of the New York Stock Exchange listing standards. The
duties and responsibilities of the Audit Committee are set forth in the Audit
Committee Charter, which the Board of Directors adopted on May 1, 2000 and
reviews on an annual basis.
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the system of
internal control. In fulfilling its oversight responsibilities, the Committee
reviewed the quarterly Form 10-Q's and the audited financial statements in the
Annual Report with management, including a discussion of the quality, not just
the acceptability, of the accounting principles; the reasonableness of
significant judgements; and the clarity of disclosures in the financial
statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the committee under
generally accepted auditing standards (including Statement on Auditing Standards
No. 61). In addition, the Committee has discussed with the independent auditors
the auditors' independence from management and the Company, including the
matters in the written disclosures required by the Independence Standards Board
(including Independence Standards Board Standard No. 1), and considered the
compatibility of nonaudit services with the auditors' independence.
The Committee discussed with Company's independent auditors the overall
scope and plans for their audit. The Committee meets with independent auditors,
with and without management present, to discuss the results of their
examinations, their evaluations of the Company's internal control, and the
overall quality of the Company's financial reporting. The committee held six
meetings during fiscal year 2001.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2001 for filing with the Securities and
Exchange Commission. The Committee and the Board have also recommended, subject
to shareholder approval, the appointment of Ernst & Young LLP as the Company's
independent auditors for the year 2002.
Dated: March 15, 2002
Audit Committee
David H. Morris, Chairman
Jerry E. Goldress, Member
James B. Skaggs, Member
-5-
REPORT OF THE COMPENSATION/NOMINATION COMMITTEE
THE FOLLOWING PARAGRAPHS CONSTITUTE THE REPORT OF THE
COMPENSATION/NOMINATION COMMITTEE OF THE BOARD OF DIRECTORS (THE "COMMITTEE") ON
EXECUTIVE COMPENSATION POLICIES. IN ACCORDANCE WITH RULES PROMULGATED BY THE
SECURITIES AND EXCHANGE COMMISSION, THIS REPORT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY STATEMENTS OR REPORTS FILED BY THE COMPANY
WITH THE SEC THAT DO NOT SPECIFICALLY INCORPORATE THIS REPORT BY REFERENCE.
The goals of the Company's compensation program are to attract, retain and
motivate competent executive officers who have the experience and ability to
contribute materially to the long-term success of the Company. The principal
elements of compensation for executive officers are base salary, incentive
payments and stock options.
Base salaries were determined by the Committee in February 2001, effective
May 1, 2001, for each of the executive officers and key managers on an
individual basis, taking into consideration individual contributions to the
Company's performance, length of tenure with the Company, compensation levels of
comparable positions and internal equities among positions. Among other things,
the Committee considered each officer's and key manager's contributions to the
success of the Company's business in recent years and to its foundation for
sustained earnings growth, as well as each participant's role in achieving a
higher level of customer satisfaction, increased market penetration, and
efficient utilization of assets and employees in his area of responsibility.
The base salary level for Ronald A. Robinson, President and Chief
Executive Officer was determined by the Committee in February 2001 effective May
1, 2001. Ronald A. Robinson was appointed President and Chief Executive Officer
on July 7, 1999, at the base salary level determined by the Committee effective
that date. The base salary levels for all of the aforementioned officers were
determined by the Committee based on those factors described in the preceding
paragraph.
During 1999, the Committee adopted a revised version of the Alamo Group
Incentive Compensation Plan ("ICP"). The ICP is a cash incentive plan which
allows the Committee to reward certain of the Company's upper and mid-level
managers based upon three factors: the overall performance of the Company, the
performance of the segment of the Company in which the employee is expected to
contribute and the individual performance of the respective employee. ICP
payments include a 75% objective component, with the remaining 25% based on
subjective criteria. During February 2002, pursuant to the ICP, the Committee
approved total incentive payments to participating employees, including the
President and the Chief Executive Officer, of $291,438. These payments were
expensed in 2001 and payments were made during March 2002.
From time to time, the Committee has also granted stock options to
executive officers and key employees to align their long-term interests with
those of the Stockholders. Stock options are granted at exercise prices not less
than the fair market value of the stock on the date of grant and thus will have
no value unless the value of the Company's stock appreciates. The Committee
believes that these options provide a significant incentive for the option
holders to enhance the value of the Company's common stock by continually
improving the Company's performance.
On August 31, 1999, the Stockholders of the Company approved the 1999
Non-Qualified Stock Option Plan ("1999 NQSO Plan") for executive, managerial,
professional or technical employees of the Company, and reserved 400,000 shares
of Common Stock for issuance pursuant to stock options. The Committee
recommended and the Board of Directors approved granting Non-Qualified Options
to purchase 200,000 shares of the Company's Common Stock for Mr. Robinson. The
exercise price for these shares was $8.9375 per share, the closing price of the
Company's Common Stock on the grant date.
On August 31, 1999, the Stockholders of the Company also approved the
First Amended and Restated 1994 Incentive Stock Option Plan ("FAR 1994 ISO
Plan") to correct certain ambiguities and administrative problems with the
existing plan. Upon recommendation by the Committee and approval by the Board of
Directors of the Company, Incentive Stock Options to purchase 50,000 shares were
granted to Mr. Robinson on July 7, 1999 at an option price of $8.9375 per share
and Incentive Stock Options to purchase 51,000 shares were granted to other
-6-
executive officers and key members of management on August 31, 1999, at an
option price of $9.25 per share. Both option prices were the closing price of
the Company's Common Stock on the grant date. There were no option grants in
2000. In 2001, the Committee recommended and the Board of Directors approved and
granted 16,000 shares of the Company's Common Stock at option prices ranging
from $14.61 to $14.63 per share to key members of management under the FAR 1994
ISO Plan. The option prices were the closing prices of the Company's common
stock on the grant date. As of December 31, 2001, Incentive Stock Options to
purchase 86,600 shares remain outstanding and options on 172,200 shares were
available for grant.
On May 3, 2001, the Stockholders of the Company approved the First Amended
and Restated 1999 Non-Qualified Stock Option Plan ("FAR 1999 NQSO Plan") to add
non-employee directors as eligible persons to receive grants of stock options.
The Company then granted an option to purchase 5,000 shares of the Company's
Common Stock to Messrs. Goldress, Morris, Simpson, Skaggs, and Thomas
respectively at an exercise price of $13.96 per share, being the closing price
of the Company's Common Stock on the grant date. Each option becomes vested and
exercisable for up to 20% of the total optioned shares after one year following
the grant of the option and for an additional 20% of the total optioned shared
after each succeeding year until the option is fully exercisable. Mr. Simpson's
options were cancelled as a result of his death.
Dated: March 15, 2002 Compensation/Nomination Committee
William R. Thomas, Chairman
Jerry E. Goldress, Member
David H. Morris, Member
James B. Skaggs, Member
-7-
COMPENSATION OF OFFICERS AND DIRECTORS
The following table sets forth a summary of compensation for the fiscal
year ended December 31, 2001, paid by the Company to the Company's Chairman of
the Board, Donald J. Douglass and the four highest paid executive officers of
the Company, as well as the compensation paid to each such individual during the
Company's last three fiscal years:
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------- ------------------
SECURITIES
UNDERLYING ALL OTHER
FISCAL SALARY OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS ($)(4) (#) ($) (5)
----------------------------- --------- ----------- --------------- ---------------- -------------
Donald J. Douglass 2001 - - 120,763 (6)
Chairman of the Board and 2000 - 69,000 119,747 (7)
Former Chief Executive Officer (1) 1999 200,000 3,750 - 20,400
Ronald A. Robinson 2001 293,672 75,000 - 14,728
President and Chief Executive 2000 276,267 101,388 - 7,133
Officer (2) 1999 125,314 (3) - - 1,864
Robert H. George 2001 106,142 7,825 - 4,839
VP, Secretary & Treasurer 2000 103,000 8,480 - 4,593
Alamo Group Inc. 1999 98,333 11,575 - 4,530
Geoffrey Davies 2001 122,501 - 11,114 (8)
Managing Director 2000 118,500 28,493 - 13,605 (8)
Alamo Group (EUR) Ltd. 1999 110,595 24,000 - 8,741 (8)
Ian Burden 2001 120,999 14,720 - 5,729
Executive Vice President 2000 114,000 30,340 - 5,907
Alamo Group (USA), Inc. 1999 104,000 24,475 - 5,592
(1) Mr. Douglass resigned as Chief Executive Officer on July 7, 1999, and his
position as an employee of the Company on December 31, 1999 but continues
to serve as Chairman of the Board for the Company.
(2) Mr. Robinson was appointed President and Chief Executive Officer on July 7,
1999.
(3) Represents a partial year salary for Mr. Robinson.
(4) Discretionary ICP bonuses approved and paid in 1999, 2000 and 2001.
(5) The amounts represent the employer's contribution under the Alamo Group
(USA) Inc. tax-qualified 401k plan (the "401(k) Plan"). In the case of Mr.
Douglass and Mr. Robinson the amounts also include restoration payments
pursuant to the Alamo Group Inc. 401(k) Restoration Plan (the "Restoration
Plan"). Such restoration payments are equivalent to matching contributions
that would have been or would be made under the Company's 401(k) plan but
were foregone due to certain limitations on contributions to 401(k) plans
in the Internal Revenue Code of 1986. The amounts also include life
insurance premiums paid by the Company in the amount of $13,600 for Mr.
Douglass in 1999.
(6) All amounts reflected are payments of principal and interest relating to a
supplemental retirement benefit, and director and management fees.
(7) Reflects $118,763 in payments of principal and interest relating to a
supplemental retirement benefit, and director and management fees.
(8) The amount reflects Alamo Group (EUR) Ltd's. contribution to Mr. Davies'
retirement plan in the United Kingdom.
-8-
AGGREGATED OPTION GRANTS AND EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table presents information with respect to stock options
owned by the named executive officers at December 31, 2001.
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE FY-END (#) EXERCISABLE (E)/ FY-END ($) EXERCISABLE (E)
NAME EXERCISE REALIZED(1) UNEXERCISABLE (U) UNEXERCISABLE (U)
-------- ------------- -------------- ------------------------------ --------------------------
Donald J. Douglass
1993 Non-qualified Options 20,000 E 55,000 E(2)
Ronald A. Robinson 80,000 E 425,000 E(3)
1999 Non-qualified Options 120,000 U 637,500 U(3)
12,500 E 66,406 E(3)
1999 Incentive Options 7,500 32,844 30,000 U 159,375 U(3)
Robert H. George 1,500 E 7,800 E(4)
1999 Incentive Options 500 2,313 3,000 U 15,600 U(4)
Richard J. Wehrle 1,500 E 7,800 E(4)
1999 Incentive Options 500 2,313 3,000 U 15,600 U(4)
Geoffery Davies 1,000 E 5,000 E(4)
1999 Incentive Options 3,000 14,500 6,000 U 30,000 U(4)
Ian Burden 3,000 E 15,000 E(4)
1999 Incentive Options 1,000 4,625 6,000 U 30,000 U(4)
(1) Values are calculated by subtracting the exercise price from the fair
market value of the stock as of the exercise date.
(2) This figure was calculated assuming a fiscal year-end market price of
$14.25 per share and an exercise price of $11.50 per share
(3) These figures were calculated assuming a fiscal year-end market price of
$14.25 per share and an exercise price of $8.9375 per share. (4) These
figures were calculated assuming a fiscal year-end market price of $14.25
per share and an exercise price of $9.25 per share.
DIRECTOR COMPENSATION
During 2001, each non-employee director received $1,000 for each meeting
of the Board of Directors attended in person, $500 for each meeting of any
committee thereof attended in person, or $500 for each meeting of the Board of
Directors or any meeting of any committee thereof attended by telephone. The
Company pays directors who are not employees of the Company an additional
$12,000 retainer per year. Effective May 2002, the directors will receive $1,250
for each meeting of the Board of Directors attended in person, and $750 for each
meeting of any committee attended in person. Compensation for the Annual
retainer and any meetings attended by telephone remain the same. Directors are
reimbursed for reasonable expenses incurred as a result of attending meetings of
the Board or committees thereof.
In addition to directors' fees, on May 3, 2001, the Stockholders of the
Company approved the First Amended and Restated 1999 Non-Qualified Stock Option
Plan ("FAR 1999 NQSO Plan") to add non-employee directors as eligible persons to
receive grants of stock options. The Company then granted an option to purchase
5,000 shares of the Company's Common Stock to Messrs. Goldress, Morris, Simpson,
Skaggs, and Thomas respectively at an exercise price of $13.96 per share being
the closing price of the Company's Common Stock on the grant date. Each option
becomes vested and exercisable for up to 20% of the total optioned shares after
one year following the grant of the option and for an additional 20% of the
total optioned shared after each succeeding year until the option is fully
exercisable. Mr. Simpson's options were cancelled as a result of his death.
-9-
EMPLOYMENT AGREEMENTS
All executive officers of the Company serve at the discretion of the Board
of Directors. The executive officers are appointed to their positions by the
Board until the next annual meeting of directors or until their successors have
been duly qualified and elected. There are currently no employment agreements
with any executive officers of the company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1990 and 1997, the Company loaned amounts totaling $700,000 and
$270,000 respectively to Mr. Douglass. Proceeds from these loans were used to
pay personal income taxes resulting from the exercise of non-qualified options.
On December 31, 1999, pursuant to approval of the Board of Directors, Mr.
Douglass' $700,000 loan was renewed and extended to December 31, 2002. The
principle balance bears interest at the short-term Applicable Federal Rate which
was 2.45% at December 31, 2001 and is adjusted quarterly. Mr. Douglass' loan for
$270,000, matures on December 31, 2006 and bears interest at the mid-term
Applicable Federal Rate. On December 31, 2001 the mid-term rate was 3.91% and is
adjusted quarterly. At December 31, 2001, the outstanding principal balances on
the loans to Mr. Douglass were $700,000 and $270,000. Mr. Douglass' loans are
secured by 100,000 shares of the Company's Common Stock.
On August 31, 1999, the Board of Directors amended the Company's
Executive Loan Program to state that no new loans would be made under the
program and all outstanding loans were renewed and extended for five years from
December 31, 1999, with interest payable quarterly and a requirement that at
least 10% of the original loan amount be paid annually with the first such
payment due March 30, 2001. All other terms and conditions of the notes and
security agreements remain unchanged. Each loan under the Executive Loan Program
bears interest, payable quarterly, at the base rate of interest as published by
Bank of America, N.A. As of the date hereof, there is outstanding under the
Executive Loan Program loans for a total of $24,307 to Mr. George and $7,560 to
another qualified borrower. At December 31, 2001 the interest rate for the loans
under this program was 4.75%. All loans are secured by shares of the Company's
Common Stock. Management believes that the transactions described above were on
terms no less favorable to the Company than otherwise available from
unaffiliated third parties.
STOCK PRICE PERFORMANCE GRAPH
The following graph sets forth the cumulative total return to the
Company's Stockholders during a five-year period ended December 31, 2001, as
well as the performance of an overall stock market index (S&P 500 Index) and the
Company's selected peer group index (Russell 2000 Index).
The Company believes that there does not exist a representative industry
peer group of companies with a similar business segment profile. The Securities
and Exchange Commission has indicated that companies may use a base other than
industry or line of business for determining its peer group index, such as an
index of companies with similar market capitalization. Accordingly, the Company
has selected the Russell 2000 Index, a widely used small market capitalization
index, to use as a representative peer group.
-10-
-11-
ITEM 2. APPOINTMENT OF AUDITORS
The firm of Ernst & Young LLP are our independent auditors and the Board
of Directors desires to continue to engage the services of this firm for the
fiscal year ending December 31, 2002. Accordingly, the Board of Directors, upon
the recommendation of the Audit Committee, has reappointed Ernst & Young LLP to
audit the financial statements of the Company for fiscal 2002 and report on
those financial statements. Stockholders are being asked to vote for the
ratification of the appointment. If stockholders do not ratify the appointment
of Ernst & Young LLP, the Audit Committee and Board will reconsider their
appointment. Fees paid to Ernst & Young LLP during the last year were as
follows:
AUDIT FEES. Ernst & Young LLP's fees for professional services
rendered for the audit of the company's consolidated financial
statements for the year ended December 31, 2001 were $250,600.
ALL OTHER FEES. Other fees paid to Ernst & Young LLP in 2001 totaled
$145,650, including $135,650 of audit related services and $10,000
of tax services. Audit related services consisted primarily of
audits of separate subsidiary financial statements, accounting
research and SEC registration statements.
Representatives of Ernst & Young LLP will be present at the stockholders
meeting and will be available to respond to appropriate questions and make a
statement should they so desire.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT AUDITORS, WHICH IS DESIGNATED AS PROPOSAL NO.
2 ON THE ENCLOSED PROXY.
THE BOARD HAS APPROVED APPOINTMENT OF
ERNST & YOUNG LLP
AND RECOMMENDS ITS RATIFICATION BY THE STOCKHOLDERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During 2001, Mr. Douglass and Mr. Morris were late filing a Form 4
reporting the sale of Common Stock. Mr. Robinson was late filing a Form 4
reporting the acquisition of stock.
STOCKHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Proposals of Stockholders intended to be presented at the 2003 Annual
Meeting, pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, must be received in writing by the Company at its principal executive
offices not later than November 27, 2002. The Company's principal executive
offices are located at 1502 East Walnut Street, Seguin, Texas, 78155. Please
direct all such proposals to the attention of the President of the Company.
If a Stockholder intends to present business at the 2003 Annual Meeting
other than pursuant to Rule 14a-8, to be considered timely pursuant to Rule
14a-4(c), the Company should receive notice of the proposal at least 45 days
before the date on which the Company first mailed its proxy materials for the
prior year's Annual Meeting of Stockholders. Therefore, to be considered timely,
the Company should receive notice of a Stockholder proposal submitted, other
than pursuant to Rule 14a-8, no later than February 15, 2003.
-12-
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. Proxies may
be solicited through the mail and through telephonic communications, or meetings
with Stockholders or their representatives by directors, officers and other
employees of the Company who will receive no additional compensation therefor.
The Company requests persons such as brokers, nominees and fiduciaries
holding stock in their names for others, or holding stock for others who have
the right to give voting instructions, to forward proxy material to their
principals and to request authority for the execution of the proxy, and the
Company will reimburse such persons for their reasonable expenses.
OTHER MATTERS
No business other than the matters set forth in this Proxy Statement is
expected to come before the meeting, but should any other matters requiring a
vote of Stockholders arise, including a question of adjourning the meeting, the
persons named in the accompanying Proxy will vote thereon according to their
best judgment in the interests of the Company. If any of the nominees for office
of director should withdraw or otherwise become unavailable for reasons not
presently known, the persons named as proxies may vote for another person in his
place in what they consider the best interests of the Company.
The Company will furnish free of charge to each person whose Proxy is
being solicited, upon the written request of such person, a copy of the
Company's Annual Report on Form 10-K including financial statements and
schedules thereto filed with the Securities and Exchange Commission for the year
ended December 31, 2001. Any request for exhibits should be in writing addressed
to Robert H. George, Secretary, Alamo Group Inc., 1502 East Walnut Street,
Seguin, Texas 78155.
By Order of the Board of Directors
/s/ ROBERT H. GEORGE
Robert H. George
Secretary
Dated: March 28, 2002
-13-
================================================================================
Please mark
your votes as
indicated in
this example
[X]
--------------------------------------------------------------------------------
The Board of Directors Recommends a Vote FOR Items 1 and 2.
--------------------------------------------------------------------------------
Item 1 - Election of Directors
FOR all nominees WITHHOLD AUTHORITY 01 Donald J. Douglass
(except as specified to vote for all nominees 02 Jerry E. Goldress
below). listed at right 03 David H. Morris
04 Ronald A. Robinson
05 James B. Skaggs
06 William R. Thomas
(Instruction: To withhold authority to vote for an individual nominee write
that nominee's name on the space provided below.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
Item 2 - Proposal FOR ratification of appointment of
Ernst & Young LLP as the Company's independent [ ] [ ] [ ]
auditors for 2002.
Item 3 - In their discretion, upon such other business
as may properly come before the meeting.
This proxy when properly executed will be voted in
the manner directed herein by the undersigned.
In the absence of such direction the proxy will be
voted FOR the nominees listed in Item 1 and FOR
the Proposal set forth in Item 2.
I PLAN TO ATTEND THE MEETING [ ]
--------------------------------------------------------------------------------
(Sign exactly as name(s) appears at left. If shares are held jointly, each
holder should sign. If signing for estate, trust or corporation, title or
capacity should be stated.)
Please date, sign and return this Proxy in the enclosed business envelope.
Signature____________Signature if held jointly____________Date:__________, 2002
--------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
================================================================================
================================================================================
PROXY
ALAMO GROUP INC.
Proxy for 2002 Annual Meeting of Stockholders
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Donald J. Douglass, Ronald A. Robinson or Robert
H. George or any one of them, proxies or proxy with full power of substitution
and revocation as to each of them, to represent the undersigned and to act and
vote, with all powers which the undersigned would possess if personally present,
at the Annual Meeting of Stockholders of Alamo Group Inc. to be held at 9:00
a.m., local time, at the Hyatt Regency Hotel, 123 Losoya, San Antonio, Texas,
Wednesday, May 8, 2002 on the following matters and in their discretion on any
other matters which may come before the meeting or any adjournments thereof.
Receipt of Notice-Proxy Statement dated March 28, 2002 is acknowledged.
(continued and to be signed on the reverse side)
--------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
================================================================================