SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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[X] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Banta Corporation
----------------------------------------------
(Name of Registrant as Specified in its Charter)
--------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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BANTA CORPORATION
225 Main Street
Menasha, Wisconsin 54952
Notice of Annual Meeting of Shareholders
To Be Held April 24, 2001
To the Shareholders of Banta Corporation:
You are hereby notified that the annual meeting of shareholders of
Banta Corporation will be held at the Park Plaza Paper Valley Hotel, 333 West
College Avenue, Appleton, Wisconsin, on Tuesday, April 24, 2001 at 2:00 p.m.,
Central Time, for the following purposes:
1. To elect nine directors to serve for the ensuing year.
2. To act upon a proposal to approve the Banta Corporation Equity
Incentive Plan, as amended.
3. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 2,
2001 as the record date for the determination of the shareholders entitled to
notice of and to vote at the annual meeting.
We hope that you will be able to attend the meeting in person, but if
you are unable to do so, please fill in, sign and promptly mail back the
enclosed proxy form, using the return envelope provided. If, for any reason, you
should subsequently change your plans, you may, of course, revoke the proxy at
any time before it is actually voted.
By Order of the Board of Directors
BANTA CORPORATION
Ronald D. Kneezel
Secretary
Menasha, Wisconsin
March 19, 2001
BANTA CORPORATION
225 Main Street
Menasha, Wisconsin 54952
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 24, 2001
This proxy statement is being furnished to shareholders by the Board
of Directors (the "Board") of Banta Corporation (the "Company"), beginning on or
about March 19, 2001, in connection with a solicitation of proxies by the Board
for use at the annual meeting of shareholders to be held on Tuesday, April 24,
2001, at 2:00 p.m., Central Time, at the Park Plaza Paper Valley Hotel, 333 West
College Avenue, Appleton, Wisconsin, and all adjournments or postponements
thereof (the "Annual Meeting"), for the purposes set forth in the attached
Notice of Annual Meeting of Shareholders.
Execution of a proxy given in response to this solicitation will not
affect a shareholder's right to attend the Annual Meeting and to vote in person.
Presence at the Annual Meeting of a shareholder who has signed a proxy does not
in itself revoke a proxy. Any shareholder giving a proxy may revoke it at any
time before it is voted by giving notice thereof to the Company in writing or in
open meeting, by attending the Annual Meeting and voting in person, or by
delivering a proxy bearing a later date.
A proxy, in the enclosed form, which is properly executed, duly
returned to the Company and not revoked will be voted in accordance with the
instructions contained therein. The shares represented by executed but unmarked
proxies will be voted FOR the nine persons nominated for election as directors
referred to herein, FOR the proposal to approve the Banta Corporation Equity
Incentive Plan, as amended, and on such other business or matters which may
properly come before the Annual Meeting in accordance with the best judgment of
the persons named as proxies in the enclosed form of proxy. Other than the
election of directors and the proposal to approve the Equity Incentive Plan, as
amended, the Board has no knowledge of any matters to be presented for action by
the shareholders at the Annual Meeting.
Only holders of record of the Company's common stock, $.10 par value
(the "Common Stock"), at the close of business on March 2, 2001 are entitled to
notice of and to vote at the Annual Meeting. On that date, the Company had
outstanding and entitled to vote 24,570,158 shares of Common Stock, each of
which is entitled to one vote per share.
ELECTION OF DIRECTORS
At the Annual Meeting, the shareholders will elect nine directors of
the Company, each to hold office until the 2002 annual meeting of shareholders
and until his or her successor is duly elected and has qualified. Set forth
below are the Board's nominees to
serve as directors of the Company. Unless shareholders otherwise specify, the
shares represented by the proxies received will be voted in favor of the
election as directors of the nine persons named as nominees herein. The Board
has no reason to believe that any of the listed nominees will be unable or
unwilling to serve as a director if elected. However, in the event that any
nominee should be unable or unwilling to serve, the shares represented by
proxies received will be voted for another nominee selected by the Board.
The following sets forth certain information, as of March 2, 2001,
about each of the Board nominees for election at the Annual Meeting. Except as
otherwise noted, each nominee has engaged in the principal occupation or
employment and has held the offices shown for more than the past five years.
Director Principal Occupation; Office, if any,
Name Age Since Held in the Company; Other Directorships
--------------------------------------------------------------------------------
Jameson A. Baxter 57 1991 President of Baxter Associates, Inc.
(management consulting and private
investments); Trustee of The Putnam
Funds; Director of Ryerson Tull, Inc.
Donald D. Belcher 62 1994 Chairman and Chief Executive Officer of
the Company since January 2001;
Chairman, President and Chief Executive
Officer of the Company prior thereto;
Director of Hunt Corporation.
John F. Bergstrom 54 1998 Chairman and Chief Executive Officer of
Bergstrom Corporation (automobile sales
and service, credit life insurance, and
automotive fleet leasing); Director of
Kimberly-Clark Corporation, Midwest
Express Holdings, Inc., Universal Foods
Corporation (d/b/a Sensient Technologies
Corporation) and Wisconsin Energy
Corporation.
Henry T. DeNero 55 1996 Former Chairman and Chief Executive
Officer of HomeSpace, Inc. (homeowner
services); Former Executive Vice
President of First Data Corporation (an
information processing and computer
services company); Former Vice Chairman
and Chief Financial Officer of Dayton
Hudson Corporation (now Target
Corporation); Director of Western
Digital Corporation.
-2-
Director Principal Occupation; Office, if any,
Name Age Since Held in the Company; Other Directorships
--------------------------------------------------------------------------------
Richard L. Gunderson 67 1995 Former Chairman and Chief Executive
Officer of Aid Association for Lutherans
(fraternal benefit society providing
insurance and financial services).
Gerald A. Henseler 60 1982 Executive Vice President and Chief
Financial Officer of the Company.
Bernard S. Kubale 72 1973 Retired partner, law firm of Foley &
Lardner, Milwaukee, Wisconsin. Foley &
Lardner has served as outside counsel to
the Company for many years.
Ray C. Richelsen 59 1998 Executive Vice President-Transportation,
Graphics and Safety Markets of 3M
Company (a manufacturer of optical films
and specialty materials) from January
1998 until his retirement in August
2000; Group Vice President of 3M Company
prior thereto.
Michael J. Winkler 55 1996 Executive Vice President and Group
General Manager of Compaq Computer
Corporation (computer services).
Directors are elected by a plurality of the votes cast (assuming a
quorum is present). An abstention from voting will be tabulated as a vote
withheld on the election, and will be included in computing the number of shares
present for purposes of determining the presence of a quorum, but will not be
considered in determining whether each of the nominees has received a plurality
of the votes cast at the Annual Meeting. A broker or nominee holding shares
registered in its name, or the name of its nominee, which are beneficially owned
by another person and for which it has not received instructions as to voting
from the beneficial owner, has the discretion to vote the beneficial owner's
shares with respect to the election of directors.
THE BOARD RECOMMENDS THE FOREGOING NOMINEES FOR ELECTION AS DIRECTORS
AND URGES EACH SHAREHOLDER TO VOTE "FOR" ALL NOMINEES. SHARES OF COMMON STOCK
REPRESENTED BY EXECUTED BUT UNMARKED PROXIES WILL BE VOTED "FOR" ALL NOMINEES.
-3-
BOARD OF DIRECTORS
General
The Board held seven meetings in 2000. Each director attended at least
75% of the aggregate of (a) the total number of meetings of the Board and (b)
the total number of meetings held by all committees of the Board on which the
director served during 2000.
The Company has Audit, Compensation, and Nominating and Corporate
Governance Committees of the Board. The Audit Committee consists of Messrs.
Gunderson (Chairperson), Kubale and Richelsen. The principal functions performed
by the Audit Committee, which met three times in 2000, are to meet with the
Company's independent public accountants before the annual audit to review
procedures and the scope of the audit; to review the results of the audit; to
review the financial control mechanisms used by the Company and the adequacy of
the Company's accounting and financial controls; and to annually recommend to
the Board a firm of independent public accountants to serve as the Company's
auditors. The Compensation Committee consists of Ms. Baxter (Chairperson) and
Messrs. Bergstrom, Gunderson, Richelsen and Winkler. The principal functions of
the Compensation Committee, which met four times in 2000, are to administer the
Company's deferred and incentive compensation plans (including the Company's
equity incentive plans); to annually evaluate salary grades and ranges; to
establish guidelines concerning average compensation increases; and to
specifically establish compensation of all officers, directors and subsidiary or
division presidents. The Nominating and Corporate Governance Committee consists
of Ms. Baxter and Messrs. DeNero (Chairperson), Gunderson and Kubale. The
principal functions of the Nominating and Corporate Governance Committee, which
met three times in 2000, are to recommend persons to be selected by the Board as
nominees for election as directors; to recommend persons to be elected to fill
any vacancies on the Board; to consider and recommend to the Board
qualifications for the office of director and policies concerning the term of
office of directors and the composition of the Board; and to consider and
recommend to the Board other actions relating to corporate governance. The
Nominating and Corporate Governance Committee will consider persons recommended
by shareholders to become nominees for election as directors. Recommendations
for consideration by the Nominating and Corporate Governance Committee should be
sent to the Secretary of the Company in writing together with appropriate
biographical information concerning each proposed nominee. The Company's By-laws
also set forth certain requirements for shareholders wishing to nominate
director candidates directly for consideration by the shareholders. With respect
to an election of directors to be held at an annual meeting, a shareholder must,
among other things, give written notice of an intent to make such a nomination
to the Secretary of the Company in advance of the meeting in compliance with the
terms and within the time period specified in the By-laws.
Director Compensation
Annual Retainer and Meeting Fees. For fiscal 2000, directors of the
Company, other than full time employees and Mr. Kubale, received an annual
retainer fee of $24,000
-4-
($12,000 of which was payable in shares of Common Stock). For fiscal 2001, the
Company has increased the annual retainer to $26,000 ($13,000 of which is
payable in shares of Common Stock). In addition, the directors in fiscal 2000
were paid a fee of $1,000 for every Board meeting they attended and $1,000
($1,250 for the committee chairperson) for every committee meeting they
attended. For fiscal 2001, directors (including the committee chairpersons) will
receive a per meeting fee of $1,000 for each Board and committee meeting they
attend. In addition, each committee chairperson will receive a $5,000 retainer
for serving in such capacity ($2,500 of which will be payable in shares of
Common Stock). Prior to the changes in 2001, the Company had last modified
director compensation in 1999. A director may elect to defer all or any part of
the cash compensation he or she is entitled to receive for serving as a
director, in which case the amount deferred will be paid in cash in three annual
installments after such person ceases to be a director and, at the direction of
the director, either will be credited with interest at the prime rate or will be
treated for valuation purposes as if such deferred compensation had been
invested in Common Stock pursuant to the phantom stock subaccount under the
director's deferred compensation plan. The portion of the retainer fee payable
in Common Stock may also be deferred. Such amount will be credited to the
phantom stock subaccount and will ultimately be paid in cash in the same manner
as cash retainer fees which are deferred.
Director Stock Options. In addition to the compensation described
above, each of Ms. Baxter and Messrs. DeNero, Gunderson, Kubale, Bergstrom,
Richelsen and Winkler automatically received an option for 1,500 shares of
Common Stock at a per share exercise price of $19.1875 on April 26, 2000 in
accordance with the terms of the Company's Equity Incentive Plan (the "Equity
Plan"). Under the terms of the Equity Plan, each person when first elected as a
non-employee director of the Company automatically receives an option for 4,500
shares of Common Stock. The Equity Plan also provides that, subsequent to the
initial grant, each non-employee director (who continues to serve in such
capacity) automatically receives an option to purchase an additional 1,500
shares of Common Stock on the day after each annual meeting of shareholders;
provided, however, that if a person who is first elected as a non-employee
director on the date of the annual meeting of shareholders receives the initial
option grant under the Equity Plan on that date, such director will not be
entitled to begin receiving subsequent grants until the day following the next
succeeding annual meeting of shareholders. Options granted to non-employee
directors under the Equity Plan have a per share exercise price equal to 100% of
the market value of a share of Common Stock on the date of grant and become
exercisable six months after the date of grant, except that if the non-employee
director ceases to be a director by reason of death, disability or retirement
during such six-month period, the option will become immediately exercisable in
full. Options granted to non-employee directors under the Equity Plan terminate
on the earlier of (a) ten years after the date of grant or (b) twelve months
after the non-employee director ceases to be a director. At the Annual Meeting,
shareholders will be asked to approve several amendments to the Equity Plan,
including an amendment that would increase the shares subject to the initial and
annual options granted to non-employee directors to 6,000 and 3,000,
respectively. For additional information on the proposed amendments to the
Equity Plan, see "Approval of the Equity Plan, As Amended."
-5-
STOCK OWNERSHIP
Management
The following table sets forth information, as of March 2, 2001,
regarding beneficial ownership of Common Stock by each director and nominee,
each of the executive officers named in the Summary Compensation Table set forth
below, and all of the directors and executive officers as a group. As of March
2, 2001, no director or executive officer of the Company beneficially owned one
percent or more of the Common Stock other than Mr. Belcher who owned 1.3% of the
Common Stock. On that date, the directors and executive officers as a group
beneficially owned 3.0% of the Common Stock. Except as otherwise indicated in
the footnotes, all of the persons listed below have sole voting and investment
power over the shares of Common Stock identified as beneficially owned.
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership(1)(2)
------------------------ --------------------
Jameson A. Baxter......................... 22,375
Donald D. Belcher......................... 317,792(3)
John F. Bergstrom......................... 12,944(4)
Henry T. DeNero........................... 12,800
Richard L. Gunderson...................... 16,500
Gerald A. Henseler........................ 165,816(5)
Bernard S. Kubale......................... 15,615
Ray C. Richelsen.......................... 7,500
Michael J. Winkler........................ 21,981
John E. Tiffany........................... 50,495(6)
Dennis J. Meyer........................... 48,555
Ronald D. Kneezel......................... 64,479
All directors and executive
officers as a group (14 persons)...... 756,852
-----------------------
(1) Includes shares subject to currently exercisable options and options
exercisable within 60 days of March 2, 2001 as follows: Ms. Baxter,
9,000 shares; Mr. Belcher, 265,834 shares; Mr. Bergstrom, 7,500
shares; Mr. DeNero, 10,500 shares; Mr. Gunderson, 9,000 shares; Mr.
Henseler, 69,667 shares; Mr. Kubale, 9,000 shares; Mr. Richelsen,
7,500 shares; Mr. Winkler, 10,500 shares; Mr. Tiffany, 34,750 shares;
Mr. Meyer, 39,200 shares; Mr. Kneezel, 46,500 shares; and all
directors and executive officers as a group, 520,451 shares.
(2) Does not include holdings of phantom stock units by non-employee
directors as follows: Ms. Baxter, 4,310 units; Mr. Bergstrom, 1,531
units; Mr. DeNero, 6,656 units; Mr. Gunderson, 4,444 units; Mr.
Kubale, 2,906 units; Mr. Richelsen, 3,661 units; and Mr. Winkler,
1,971 units. The value of the phantom stock units is based upon and
fluctuates with the market value of the Common Stock.
-6-
(3) Includes 1,000 shares held by Mr. Belcher's spouse. Mr. Belcher shares
voting and investment power over these shares.
(4) Includes 2,350 shares held by a trust, 2,000 shares held by a
partnership, and 900 shares held by a trust for the benefit of Mr.
Bergstrom's daughter. Mr. Bergstrom shares voting and investment power
over these shares.
(5) Includes 27,708 shares held by Mr. Henseler's spouse and 4,801 shares
held by trusts for the benefit of Mr. Henseler's daughter. Mr.
Henseler shares voting and investment power over these shares.
(6) Includes 4,272 shares held by Mr. Tiffany's spouse. Mr. Tiffany shares
voting and investment power over these shares.
Other Beneficial Owner
The following table sets forth information, as of December 31, 2000,
regarding beneficial ownership by the only person known to the Company to own
more than 5% of the outstanding Common Stock. The beneficial ownership set forth
below has been reported on a filing made on Schedule 13G with the Securities and
Exchange Commission by the beneficial owner.
Amount and Nature of Beneficial Ownership
-----------------------------------------
Voting Power Investment Power
------------ ----------------
Percent
Name and Address of
of Beneficial Owner Sole Shared Sole Shared Aggregate Class
------------------- ---- ------ ---- ------ --------- -----
Barclays Global Investors, N.A.
45 Fremont Street
San Francisco, CA 94105 1,308,560 0 1,423,203 0 1,423,203 5.79%
-7-
EXECUTIVE COMPENSATION
Summary Compensation Information
The following table sets forth certain information for each of the
last three fiscal years concerning compensation awarded to, earned by or paid to
certain executive officers of the Company. The persons named in the table are
sometimes referred to herein as the "named executive officers."
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation (1) Awards
Securities Payouts
Underlying LTIP All Other
Name and Principal Position Year Salary Bonus Options Payouts Compensation(2)
--------------------------- ---- ------ ----- ------- -------------- ---------------
Donald D. Belcher (3) 2000 $ 550,000 $ 508,200 100,000 $140,238 $ 3,400
Chairman of the Board, 1999 525,000 378,000 170,000 69,655 3,200
President and Chief 1998 438,000 123,516 100,000 17,155 3,200
Executive Officer
Gerald A. Henseler 2000 352,500 271,425 - 91,906 3,400
Executive Vice President 1999 339,000 203,400 20,000 46,668 3,082
and Chief Financial Officer 1998 326,000 76,610 18,000 12,768 3,024
John E. Tiffany 2000 211,000 129,976 - 54,659 3,400
Vice President 1999 201,000 96,480 15,000 27,581 2,569
Manufacturing 1998 191,000 35,908 12,000 7,481 2,499
Dennis J. Meyer 2000 206,000 126,896 12,000 53,659 3,400
Vice President 1999 198,000 95,040 12,000 27,222 2,691
Marketing and Planning 1998 189,500 35,626 12,000 7,422 3,096
Ronald D. Kneezel 2000 206,000 126,896 12,000 53,600 3,400
Vice President, General 1999 198,000 95,040 12,000 27,163 2,986
Counsel and Secretary 1998 188,000 35,344 12,000 7,363 2,959
----------------------------
(1) Certain personal benefits provided by the Company to the named executive officers are not included in the
table. The aggregate amount of such personal benefits for each named executive officer in each year
reflected in the table did not exceed the lesser of $50,000 or 10% of the sum of such officer's salary
and bonus in each respective year.
(2) For fiscal 2000, consists of Company matching contributions under the Company's Incentive Savings Plan,
which is a profit sharing plan under Section 401(k) of the Internal Revenue Code.
(3) Since January 22, 2001, Mr. Belcher has served as Chairman and Chief Executive Officer of the Company.
Stephanie A. Streeter was appointed President and Chief Operating Officer of the Company on that date.
-8-
Stock Options
The Company has in effect equity plans pursuant to which options to
purchase Common Stock may be granted to key employees (including executive
officers) of the Company and its subsidiaries. The following table presents
certain information as to grants of stock options made during fiscal 2000 to
each of the named executive officers.
Option Grants in 2000 Fiscal Year
Grant
Date
Individual Grants Value
----------------------------------------------------------------------------------------------- --------------
Percentage of
Number of Total Options
Securities Granted to Exercise or Grant Date
Underlying Employees in Base Price Expiration Present
Name Options Granted(1) Fiscal Year ($/share) Date Value(2)
---- ------------------ ------------- ---------- ---------- ----------
Donald D. Belcher........... 100,000 17.6% $18.375 7/24/10 $448,000
Gerald A. Henseler.......... - - - - -
John E. Tiffany............. - - - - -
Dennis J. Meyer............. 12,000 2.1 18.375 7/24/10 53,760
Ronald D. Kneezel........... 12,000 2.1 18.375 7/24/10 53,760
-----------------------
(1) The options reflected in the table (which are nonstatutory stock options for purposes of the Internal
Revenue Code) were granted on July 24, 2000 and vest ratably over the three-year period following the
date of grant. The options are subject to early vesting in the case of the optionee's death, disability
or retirement after reaching age 65.
(2) The option values presented are based on the Black-Scholes option pricing model adopted for use in
valuing stock options. Material assumptions and adjustments incorporated in the Black-Scholes model in
estimating the value of the options reflected in the table above include the following: (a) an exercise
price of the option equal to the fair market value of the underlying stock on the date of grant; (b) a
risk-free rate of return representing the interest rate on a U.S. Treasury security with a maturity date
corresponding to the term of the option; (c) volatility of 34.75%, which was calculated using daily
Common Stock prices for the one-year period prior to the date of grant; (d) a dividend yield equal to
3.27% representing the dividend yield on the Common Stock as of the date of grant; (e) an option term of
ten years; and (f) reductions of 15.59% to reflect the probability of forfeiture due to termination prior
to vesting and 16.81% to reflect the probability of a shortened option term due to termination of
employment prior to the expiration date. The actual value, if any, that an optionee may realize upon
exercise will depend on the excess of the price of the Common Stock over the option exercise price on the
date that the option is exercised. There is no assurance that the value realized by an optionee will be
at or near the value estimated under the Black-Scholes model.
-9-
The following table sets forth information regarding the fiscal
year-end value of unexercised options held by the named executive officers. No
options were exercised by the named executive officers in the 2000 fiscal year.
Fiscal Year-End Option Values
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options at Fiscal
Options at Fiscal Year-End Year-End (1)
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Donald D. Belcher.............. 265,834 246,666 $ 416,889 $ 1,096,261
Gerald A. Henseler............. 69,667 19,333 92,361 25,599
John E. Tiffany................ 46,750 14,000 62,640 19,200
Dennis J. Meyer................ 40,000 24,000 47,460 99,900
Ronald D. Kneezel..................... 46,500 24,000 60,720 99,900
---------------------------
(1) The dollar values are calculated by determining the difference between the fair
market value of the underlying Common Stock and the exercise price of the options at
fiscal year-end.
Long-Term Incentives
The Company maintains the Banta Corporation Economic Profit (EP)
Long-Term Incentive Plan (the "EP Long-Term Plan"), which provides an incentive
based both on earnings per share performance and on the value created (i.e.,
"economic profit") when a business generates a financial return that exceeds the
total cost of capital employed. The EP Long-Term Plan defines economic profit as
the difference between (a) net operating profit after tax and (b) the charge for
capital employed in the business. Payouts under the EP Long-Term Plan are made
in three annual installments and outstanding installments remain "at risk" and
subject to total loss or offset depending on future Company performance. The
Company also maintains the Banta Corporation Economic Profit (EP) Incentive
Compensation Plan (the "EP Incentive Plan"), which provides an annual incentive
based on earnings per share performance, the creation of economic profit and,
for participants affiliated with a specific business unit, the operating
earnings for such unit. The EP Incentive Plan incorporates a "bonus bank" into
which annual awards thereunder in excess of 200% of target, if any, are credited
but not paid. Such bonus amounts are thereafter scheduled to be paid out over
time, but remain "at risk" and subject to total loss or partial offset depending
upon future performance.
Set forth below under the heading "Maximum" is the sum of (a) the
amount of unpaid installments under the EP Long-Term Plan and (b) the amount
credited to the "bonus bank" under the EP Incentive Plan for each of the named
executive officers at the end of fiscal 2000. The amounts under the heading
"Threshold" reflect the fact that the foregoing amounts are "at risk" and
subject to total loss.
-10-
Long-Term Incentive Plans -- Awards in 2000 Fiscal Year
Name Estimated Future Payouts
---- ------------------------------------------------
Threshold Maximum
--------- -------
Donald D. Belcher............ $ 0 $193,666
Gerald A. Henseler........... 0 124,376
John E. Tiffany.............. 0 74,256
Dennis J. Meyer.............. 0 72,674
Ronald D. Kneezel............ 0 72,674
The Company also has in effect the Banta Corporation Key Management
Retention Plan (the "Retention Plan"), which provides an incentive based on the
Company's earnings per share over the two-year period ending March 31, 2001.
Payouts under the Retention Plan will be based on the Company's cumulative
earnings per share on a fully diluted basis (subject to certain adjustments) for
the period from April 4, 1999 through March 31, 2001. For each full cent that
such earnings per share exceed $3.60, each participant will receive 1.25% of his
maximum award, but in no case more than 100% of such maximum award. A
participant whose employment with the Company is terminated on or before March
31, 2001 for any reason, except death or permanent disability, will not be
eligible to receive any award under the Retention Plan. Payouts under the
Retention Plan if earned will be made in one lump sum after March 31, 2001.
Notwithstanding the foregoing, in the event of a change of control of the
Company (as defined in the Retention Plan), all awards thereunder will
immediately vest and become payable.
Set forth below under the heading "Maximum" is the highest amount that
may be earned under the Retention Plan by each of the named executive officers
other than Mr. Belcher who does not participate in the Plan. The amounts under
the heading "Threshold" reflect the fact that the foregoing amounts may not be
earned if the earnings per share threshold is not achieved or if the named
executive officer's employment is terminated prior to the award being earned.
Key Management Retention Plan - Awards in 2000 Fiscal Year
Performance or other period
Name until maturation or payout Estimated Future Payouts
---- -------------------------- -------------------------
Threshold Maximum
--------- -------
Gerald A. Henseler..... 4/4/99 to 3/31/01 $ 0 $225,000
John E. Tiffany........ 4/4/99 to 3/31/01 0 225,000
Dennis J. Meyer........ 4/4/99 to 3/31/01 0 225,000
Ronald D. Kneezel...... 4/4/99 to 3/31/01 0 225,000
Pension Plan Benefits
The following table sets forth the estimated annual pension benefits
payable to a covered participant at normal retirement age under the Company's
Employees Pension Plan as well as under the Company's Supplemental Retirement
Plan (which, in part, provides benefits
-11-
that would otherwise be denied participants by reason of (i) certain Internal
Revenue Code limitations on qualified benefit plans and (ii) the exclusion of
cash incentive awards and deferred compensation in calculating benefits under
the qualified plan). The benefits that are payable under the pension and
retirement plans are based upon remuneration that is covered under the plans and
years of service with the Company and its subsidiaries.
Pension Plan Table
Yearly Pension After
Average Monthly Specified Years of Service
Compensation in Five ---------------------------------------------------------------------------------
Highest Consecutive Years 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years
------------------------- -------- -------- -------- -------- -------- --------
$ 24,000 $72,000 $93,600 $115,200 $136,800 $158,400 $180,000
36,000 108,000 140,400 172,800 205,200 237,600 270,000
48,000 144,000 187,200 230,400 273,600 316,800 360,000
60,000 180,000 234,000 288,000 342,000 396,000 450,000
72,000 216,000 280,800 345,600 410,400 475,200 540,000
84,000 252,000 327,600 403,200 478,800 554,400 630,000
96,000 288,000 374,400 460,800 547,200 633,600 720,000
108,000 324,000 421,200 518,400 615,600 712,800 810,000
120,000 360,000 468,000 576,000 684,000 792,000 900,000
A participant's remuneration covered by the Company's pension
arrangement is such participant's base salary, annual bonus and long-term
incentive compensation. The covered remuneration paid for each of the last three
fiscal years to the named executive officers is set forth in the Summary
Compensation Table under the headings "Salary", "Bonus" and "LTIP Payouts." As
of December 31, 2000, Messrs. Belcher, Henseler, Tiffany, Meyer, and Kneezel had
completed 6, 34, 12, 7 and 12 years of credited service under the Company's
pension plans, respectively. Benefits shown in the table are computed as a
straight single life annuity assuming retirement at age 65. The benefits
reflected in the table are not subject to reduction for Social Security
benefits.
Agreements with Named Executive Officers
The Company has an agreement with Mr. Henseler which provides for
certain benefits in the event of termination of employment after a change of
control of the Company. The principal benefits are: (a) a bonus under any
Company bonus or incentive plan or plans for the year in which termination
occurs; (b) continued salary payments and life insurance and medical and
disability insurance for a maximum of four years, with reduced payments for a
surviving spouse; (c) additional pension benefits to fully or partially
compensate for the reduction of benefits under the Company's pension plan due to
termination of employment; and (d) full exercise rights for all stock options
for three months following termination of employment. These benefits are made
available if Mr. Henseler's employment is terminated by the Company other than
for cause as defined in the agreement or if he terminates his employment because
of significant changes made in his working conditions or status without his
consent. Continued salary payments and insurance benefits are to be reduced by
corresponding payments and benefits obtained from any successor employer. The
transactions which are deemed to result in a "change of control" of the Company
for purposes of Mr.
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Henseler's agreement include: (1) the acquisition of more than 30% of the voting
stock of the Company by any person, organization or group; (2) the sale of all
or substantially all of the Company's business or assets; (3) a consolidation or
merger, unless the Company or a subsidiary is the surviving corporation; (4) the
acquisition of assets or stock of another entity if in connection with the
acquisition new persons become directors of the Company and constitute a
majority of the Board; and (5) the election in opposition to the nominees
proposed by management of two or more directors in any one election on behalf of
any person, organization or group.
The Company also has agreements with Messrs. Belcher, Tiffany, Meyer,
Kneezel and certain other officers and key employees which, in addition to
benefits similar to those described in (a), (c) and (d) above, provide for
continued employment for periods of from two to three years after a change of
control (the "Employment Period") and for lump-sum termination payments equal to
three times the executive's base salary plus the highest incentive compensation
earned by the executive in any year during the preceding three years if
employment is terminated during the Employment Period by the Company (other than
for cause or disability) or by the executive due to significant changes in his
working conditions or status without his consent. The agreements also provide
the foregoing benefits in connection with certain terminations which are
effected in anticipation of a change of control. Under the agreements, the
executive's employee benefits such as health, accident and life insurance will
also be continued following a termination for which a termination payment is
made for up to three years or until comparable benefits are available from a new
employer. The agreements provide that, if any payments thereunder constitute an
"excess parachute payment" under the Internal Revenue Code, the Company will pay
the officer the amount necessary to offset the excise tax and any additional
taxes resulting from the payment of an excess parachute payment. In addition,
the Company has agreed to pay Mr. Belcher a severance payment of two year's
salary (and continue to provide health insurance for two years) if his
employment with the Company is terminated other than for cause or disability
prior to a change of control.
The Company has deferred compensation plans for key employees in which
the named executive officers are eligible to participate and which provide for
deferral of salary and cash incentive compensation. Payments under the deferred
compensation plans generally commence following retirement of the participant.
However, in the event of a change of control, a participant in the deferred
compensation plans will receive a lump sum payment. The lump sum payment will be
equal to the present value of the participant's future benefits if the
participant is receiving benefits at the time of such change of control or the
amount standing to the participant's credit in his or her deferred compensation
account if the participant is not otherwise entitled to receive benefits at the
time of such change of control. Payment of such deferred amounts generally
begins following the retirement of the participant and is not subject to
acceleration in the event of a change of control of the Company. The Company has
entered into an executive trust agreement with Firstar Bank, N.A. to provide a
means of segregating assets for the payment of these benefits (as well as
benefits under the Company's Supplemental Retirement Plan), subject to claims of
the Company's creditors. Such trust is only nominally funded until the
occurrence of a potential change of control.
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The Company also has an agreement with Mr. Henseler providing for
monthly payments of $2,000 for 120 months in the event that Mr. Henseler's
employment is terminated by the Company or as a result of his death or if Mr.
Henseler retires after age 62. The agreement provides that Mr. Henseler may
designate a beneficiary to receive the payments to which he is entitled in the
event of his death prior to the receipt of any or all such payments. Payments
under the agreement may be forfeited in the event Mr. Henseler engages in
specified competitive activities during the first four years following his
retirement or such termination.
Committee Report on Executive Compensation
The Compensation Committee of the Board is responsible for all aspects
of the Company's compensation package offered to its executive officers,
including the named executive officers. The following is a report of the
Compensation Committee regarding executive compensation:
Policies Governing Executive Compensation. The Company's general
policies relating to executive compensation are: (a) to establish a direct link
between executive compensation and the annual, intermediate-term and long-term
performance of the Company; (b) to provide performance-based compensation
opportunities (including equity-based awards) which allow executive officers to
earn rewards for maximizing shareholder value; (c) to attract and retain the key
executives necessary for the Company's long-term success; and (d) to reward
individual initiative and the achievement of specified goals. In applying these
general policies, the objective of the Compensation Committee has been to ensure
that a significant portion of the compensation paid to senior executive
officers, such as the named executive officers, be incentive-based since these
individuals have significant control and responsibility for the Company's
direction and performance. The intent of the Compensation Committee is that
there would be greater variability in the levels of compensation paid to these
officers which is directly linked to Company performance.
Executive Compensation Package. As reflected under the section
entitled "Executive Compensation," the Company's executive compensation package
currently consists of a mix of salary, annual and long-term bonus awards and
stock option grants as well as benefits under the employee benefit plans offered
by the Company.
In setting and adjusting executive salaries, including the salaries of
the Chief Executive Officer and the other named executive officers, the
Compensation Committee, in conjunction with the Company's independent
compensation consultants, has historically compared the base salaries paid or
proposed to be paid by the Company with the ranges of salaries paid by
corporations of similar size relative to the Company and operating in comparable
industries. The companies in the comparison group, which were selected based on
their size and performance compatibility, manufacturing orientation and
geographic diversity, are not solely in the graphic arts industry and
accordingly are not necessarily the companies in the peer group identified in
the section entitled "Performance Information." It is the judgment of the
Compensation Committee that a review of the compensation practices of companies
with
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the characteristics of the comparison group is appropriate in establishing
competitive salary ranges for the Company's executive officers.
Based on its analysis of comparative data, the Compensation Committee
increased the minimum, midpoint and maximum ranges for each salary grade by 3.0%
for fiscal 2000. The Compensation Committee also approved a 4.2% guideline for
2000 executive officer base salary increases, subject to individual variances to
reflect above or below average performance. In establishing salaries for each
individual executive officer, Mr. Belcher, the Company's Chief Executive
Officer, made specific recommendations for salary adjustments (other than his
own) to the Compensation Committee based on the foregoing guidance provided by
the Committee as well as a review of industry comparables, the level of
responsibility delegated to the particular executive officer, the expertise and
skills offered by each officer, the officer's individual job performance and the
performance of the group over which the individual had responsibility. These
various factors were considered on a case-by-case basis and no specific formula
was used to give any one factor a relative weight as compared to the others. The
Compensation Committee reviewed the foregoing recommendations and then made
final decisions on the base salaries to be paid by the Company. The Compensation
Committee also reviewed and fixed the base salary of Mr. Belcher for 2000 based
on similar competitive compensation data and individual job performance
criteria. The base salary paid to Mr. Belcher for fiscal 2000 was $550,000.
The Compensation Committee has adopted the EP Incentive Plan, which
provides an annual incentive for certain employees of the Company, including the
named executive officers. The factors on which awards under the EP Incentive
Plan are based include: (i) earnings per share performance; (ii) the creation of
economic profit (i.e., the difference between net operating profit after tax and
the charge for capital employed in the business); and (iii) for participants
affiliated with a specific business unit, the operating earnings for such unit.
For purposes of the economic value creation component of the formula, the EP
Incentive Plan defines economic profit as the difference between (a) net
operating profit after tax and (b) the charge for capital employed in the
business. The EP Incentive Plan is designed to reward executive officers and key
managers for both EPS performance and productive use of Company assets,
reduction of costs and creation of efficiencies throughout the Company's
organization. Under the EP Incentive Plan, target bonuses calculated as a
percentage of salary are fixed by the Compensation Committee. Target economic
profit levels have been established by the Committee and adjust on an annual
basis by a predetermined formula subject to Committee approval. The EP Incentive
Plan also incorporates a "bonus bank" into which that portion of an award, if
any, in excess of 200% of target is credited. Such bonus amounts are thereafter
scheduled to be paid out over time, but remain "at risk" and subject to total
loss or partial offset depending on future performance as determined under the
EP Incentive Plan. Depending upon performance, the bonus bank may have a
negative balance that would need to be offset before payments could be made from
the bank. Under the EP Incentive Plan, Mr. Belcher received a bonus of $508,200
for the 2000 fiscal year.
The Compensation Committee has also adopted the EP Long-Term Plan,
which provides long-term incentives for certain employees of the Company,
including the named
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executive officers. The EP Long-Term Plan is similar to the EP Incentive Plan.
Awards paid under the EP Long-Term Plan to the executive officers are paid based
entirely on Company performance (EPS and economic profit performance) and are
paid out in three annual installments. The payouts which are deferred remain "at
risk" and subject to total loss or partial offset depending on future Company
performance. Similar to the EP Incentive Plan, the EP Long-Term Plan
contemplates that the bonus bank may have a negative balance based on the
performance levels achieved. Mr. Belcher received an award of $140,238 under the
EP Long-Term Plan in 2000.
The Compensation Committee has also adopted the Retention Plan, which
provides an incentive tied to the Company's earnings per share over a two-year
period ending on March 31, 2001. The purpose of the Retention Plan is to provide
an additional inducement for certain key employees to remain with the Company
for at least that two-year period that such Plan is in effect. Pursuant to the
Retention Plan, a participant whose employment with the Company is terminated on
or before March 31, 2001 for any reason, except death or permanent disability,
will not be eligible to receive any award under the Retention Plan. Payouts
under the Retention Plan will be based on the Company's two-year cumulative
earnings per share on a fully diluted basis (subject to certain adjustments) for
the period from April 4, 1999 through March 31, 2001. For each full cent that
such earnings per share exceed $3.60, each participant will receive 1.25% of his
maximum award, but in no event will a participant receive more than 100% of such
maximum award. Payouts under the Retention Plan if earned will be made in one
lump sum payment after March 31, 2001. In the event of a change of control of
the Company, awards under the Retention Plan will immediately vest and become
payable. Mr. Belcher does not participate in the Retention Plan.
In addition to the foregoing annual and long-term incentive plans, the
Company's executive compensation package includes stock option grants. Under the
Equity Plan, the Compensation Committee also has the authority to grant, in
addition to stock options, other equity-based awards, including stock
appreciation rights, restricted stock and performance shares. To date, however,
only stock options have been granted under the Company's equity-based plans.
Stock options granted by the Compensation Committee have a per share exercise
price of 100% of the fair market value of a share of Common Stock on the date of
grant and, accordingly, the value of the option will be dependent on the future
market value of the Common Stock. It has been the policy of the Compensation
Committee that options should provide a long-term incentive and align the
interests of management with the interests of shareholders.
In determining proposed stock option grants to be made to the
Company's executive officers, the Compensation Committee reviews, in
consultation with the Company's independent compensation consultants, option
grants made by a select group of peer companies. In 2000, the peer group
companies, some of which are included in the peer group described in the section
entitled "Performance Information," consisted of both industry competitors as
well as Midwestern-based companies of comparable size to the Company. Based on
this analysis, Mr. Belcher received an option to purchase 100,000 shares of
Common Stock at a per share exercise price of $18.375 on July 24, 2000. By tying
a portion of each
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executive officer's overall compensation to stock price through the grant of
options, the Compensation Committee seeks to enhance its objective of providing
a further incentive to maximize long-term shareholder value.
In connection with the equity-based plans, the Company endorses the
policy that stock ownership by management is an important factor in aligning the
interests of management and shareholders. The Company has adopted stock
ownership guidelines that are intended to encourage stock ownership by
management. Under these guidelines, management personnel are expected to own a
specified number of shares of Common Stock depending upon their respective
salary grade. The Compensation Committee considers an individual's compliance
with the stock ownership guidelines in determining the size of equity-based
grants.
The Company's policy with respect to other employee benefit plans is
to provide competitive benefits to the Company's employees, including executive
officers, to encourage their continued service with the Company. In the view of
the Compensation Committee, a competitive benefits package is an essential
component in achieving the Company's goal of being able to attract new key
employees from time to time as events warrant.
Under Section 162(m) of the Internal Revenue Code, the tax deduction
by corporate taxpayers, such as the Company, is limited with respect to the
compensation of certain executive officers unless such compensation is based
upon performance objectives meeting certain regulatory criteria or is otherwise
excluded from the limitation. The Compensation Committee currently intends, in
all appropriate circumstances, to qualify compensation paid to the Company's
executive officers for deductibility by the Company under Section 162(m) of the
Internal Revenue Code.
BANTA CORPORATION
COMPENSATION COMMITTEE
Jameson A. Baxter, Chairperson
John F. Bergstrom
Richard L. Gunderson
Ray C. Richelsen
Michael J. Winkler
Compensation Committee Interlocks and Insider Participation
During 2000, the Compensation Committee consisted of Ms. Baxter
(Chairperson) and Messrs. Bergstrom, Gunderson, Richelsen and Winkler. Mr.
Winkler is Executive Vice President and Group General Manager of Compaq Computer
Corporation. The Company has an agreement with Compaq pursuant to which it
provides various supply-chain management services in connection with the
configuration, testing and worldwide distribution of Compaq's hard drives. The
Company's revenue attributable to its contract with Compaq totaled $120.6
million in 2000. The Company expects that revenues from the Compaq contract in
fiscal 2001 could equal or exceed the revenue level attained in fiscal 2000.
-17-
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is composed of three
independent directors, each of whom is independent as defined in the New York
Stock Exchange's listing standards. The Committee operates under a written
charter adopted by the Board, which is attached to this Proxy Statement as
Appendix A. The Committee recommends to the Board the selection of the Company's
independent auditors.
The Company's management ("management") is responsible for the
Company's internal controls and the financial reporting process, including the
system of internal controls. The Company's independent auditors are responsible
for expressing an opinion on the conformity of the Company's audited
consolidated financial statements with generally accepted accounting principles.
The Audit Committee has reviewed and discussed the audited consolidated
financial statements with management and the independent auditors. The Audit
Committee has discussed with the independent auditors matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication with Audit
Committees).
The Company's independent auditors have provided to the Audit
Committee the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the
Committee discussed with the independent auditors their independence. The
Committee considered whether the independent auditors provision of non-audit
services is compatible with maintaining the independent auditors' independence.
The fees paid to the independent auditors for fiscal 2000 were as follows:
Audit Fees $225,000
Financial Information Systems Design
and Implementation Fees $195,000
All Other Fees (relating primarily to
foreign statutory audits and audits of the
Company's employee benefit plans) $188,000
The Audit Committee discussed with the Company's internal and
independent auditors the overall scopes and plans for their respective audits.
The Audit Committee meets with the internal and independent auditors, with and
without management present, to discuss the results of their examinations, the
evaluation of the Company's internal controls and overall quality of the
Company's financial reporting.
Based on the Audit Committee's reviews and discussions with
management, the internal auditors and the independent auditors referred to
above, the Audit Committee recommended to the Board that the audited
consolidated financial statements be included in the Company's Annual Report on
Form 10-K for the year ended January 1, 2001 for filing with the Securities and
Exchange Commission.
-18-
BANTA CORPORATION AUDIT COMMITTEE
Richard L. Gunderson, Chairperson
Ray C. Richelsen
Bernard S. Kubale
PERFORMANCE INFORMATION
Set forth below are line graphs during the last five years comparing
the Company's cumulative total shareholder return with the cumulative total
return of companies in the Standard & Poor's 500 Stock Index and companies in a
peer group selected in good faith by the Company. The total return information
presented in the graphs assumes the reinvestment of dividends. The companies in
the peer group are: Cadmus Communications Corp.; Courier Corp.; R. R. Donnelley
& Sons Company; and Quebecor Inc. The returns of each company in the peer group
have been weighted based on such company's relative market capitalization.
Comparison Of Five Year Cumulative Total Return
Among Banta Corporation, S&P 500 Index And Peer Group Companies
[STOCK PERFORMANCE CHART]
December 31,
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Banta Value........ $100 $ 79 $ 95 $ 99 $ 83 $ 97
S&P 500 Composite.. 100 123 164 211 252 226
Peer Group......... 100 81 99 117 72 82
APPROVAL OF THE EQUITY PLAN, AS AMENDED
General
The Board has unanimously adopted amendments to the Equity Plan
contingent upon shareholder approval of the Equity Plan, as so amended, at the
Annual Meeting. Among other things, the amendments to the Equity Plan increase
the aggregate number of shares of Common Stock issuable thereunder from
2,500,000 to 5,000,000. As of the record date for the Annual Meeting, an
aggregate of 2,307,734 shares of Common Stock were subject to outstanding awards
under the Equity Plan and 105,971 shares remained available for the granting of
new awards under the Equity Plan. Although the Equity Plan provides for the
award of stock options, stock appreciation rights ("SARs"), restricted stock and
performance shares, only stock options have been granted under the Equity Plan
to date. The Board approved the above-described amendment to allow for the
issuance of additional shares under the Equity Plan.
The amendments to the Equity Plan also adjust the maximum number of
stock options that may be granted on an annual basis to individual participants.
As amended, the
-19-
Equity Plan provides that no participating key employee may be granted, during
any calendar year, stock options for more than 300,000 shares, up from the prior
limitation of 150,000 shares. In addition, the amendments to the Equity Plan
increase from 4,500 to 6,000 the number of shares subject to non-qualified stock
options automatically granted to a new non-employee director of the Company on
the date of his or her initial election as a director. The amendments to the
Equity Plan also increase from 1,500 to 3,000 the number of shares subject to
non-qualified stock options automatically granted to each non-employee director
of the Company on an annual basis. The Equity Plan, as amended, also limits the
total number of performance shares that may be awarded thereunder to 750,000
shares. Previously, there was no limit on the number of performance shares that
could be awarded under the Equity Plan. The Board's approval of the foregoing
amendments is contingent upon shareholder approval of the Equity Plan, as
amended, at the Annual Meeting.
The following summary description of the Equity Plan, as amended, is
qualified in its entirety by reference to the full text of such Plan which is
attached to this Proxy Statement as Appendix B.
Purpose
The purpose of the Equity Plan is to promote the best interests of the
Company and its shareholders by providing key employees of the Company and its
affiliates, and members of the Board who are not employees of the Company or its
affiliates, with an opportunity to acquire a proprietary interest in the
Company. The Equity Plan is intended to promote continuity of management and to
provide increased incentive and personal interest in the welfare of the Company
by those key employees who are primarily responsible for shaping and carrying
out the long-range plans of the Company and securing the Company's continued
growth and financial success. In addition, by encouraging stock ownership by
directors who are not employees of the Company or its affiliates, the Company
seeks to attract and retain on the Board persons of exceptional competence and
to provide a further incentive to serve as a director of the Company.
Administration and Eligibility
The Equity Plan is administered by a committee of the Board (the
"Committee") consisting of no less than two directors who are "non-employee
directors" within the meaning of Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and who are "outside directors" within
the meaning of Section 162(m) of the Internal Revenue Code. In the event that
the Committee is not appointed, the functions of the Committee will be exercised
by those members of the Board who qualify as "non-employee directors" under Rule
16b-3 and as "outside directors" within the meaning of Section 162(m). The
Compensation Committee is designated as the current administrator of the Equity
Plan. Among other functions, the Committee has the authority to establish rules
for the administration of the Equity Plan; to select the key employees of the
Company and its affiliates to whom awards will be granted; to determine the
types of awards to be granted to key employees and the number of shares covered
by such awards; and to set the terms and conditions of such awards. The
-20-
Committee may also determine whether the payment of any proceeds of any award
shall or may be deferred by a key employee participating in the Equity Plan. To
the extent permitted by applicable law, the Committee may delegate to one or
more executive officers of the Company any or all of the authority and
responsibility of the Committee in connection with the Equity Plan, other than
with respect to those persons who file reports under Section 16 of the Exchange
Act (e.g., executive officers and directors of the Company). Subject to the
express terms of the Equity Plan, determinations and interpretations with
respect thereto will be in the sole discretion of the Committee, whose
determinations and interpretations will be binding on all parties.
Any key employee of the Company or any affiliate, including any
executive officer or employee-director of the Company, is eligible to be granted
awards by the Committee under the Equity Plan. In addition to key employees,
each non-employee director of the Company is automatically entitled, as
described below, to receive option grants under the Equity Plan. Approximately
120 persons are currently eligible to participate in the Equity Plan. The number
of eligible participants may increase over time based upon future growth of the
Company.
Awards Under the Equity Plan; Available Shares
The Equity Plan authorizes the granting to key employees of: (a) stock
options, which may be either incentive stock options meeting the requirements of
Section 422 of the Internal Revenue Code ("ISOs") or non-qualified stock
options; (b) SARs; (c) restricted stock; and (d) performance shares. The Equity
Plan also provides for the automatic grant of non-qualified options to
non-employee directors of the Company. The Equity Plan, as amended, provides
that up to a total of 5,000,000 shares of Common Stock (subject to adjustment as
described below) are available for the granting of awards thereunder, which
number includes prior awards under the Equity Plan.
If any shares subject to awards granted under the Equity Plan, or to
which any award relates, are forfeited or if an award otherwise terminates,
expires or is cancelled prior to the delivery of all of the shares or other
consideration issuable or payable pursuant to the award, such shares will be
available for the granting of new awards under the Equity Plan. Any shares
delivered pursuant to an award may be either authorized and unissued shares of
Common Stock or treasury shares held by the Company.
Terms of Awards
Option Awards to Key Employees. Options granted under the Equity Plan
to key employees may be either ISOs or non-qualified stock options. No
individual key employee may be granted, during any calendar year, options to
purchase in excess of 300,000 shares of Common Stock under the Equity Plan, as
amended (subject to adjustment as described below).
The exercise price per share of Common Stock subject to options
granted to key employees under the Equity Plan will be determined by the
Committee, provided that the exercise price may not be less than 100% of the
fair market value of a share of Common Stock
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on the date of grant. The term of any option granted to a key employee under the
Equity Plan will be as determined by the Committee, provided that the term of an
ISO may not exceed ten years from the date of its grant. Options granted to key
employees under the Equity Plan will become exercisable in such manner and
within such period or periods and in such installments or otherwise as
determined by the Committee. Options may be exercised by payment in full of the
exercise price, either (at the discretion of the Committee) in cash or in whole
or in part by tendering shares of Common Stock or other consideration having a
fair market value on the date of exercise equal to the option exercise price.
All ISOs granted under the Equity Plan will also be required to comply with all
other terms of Section 422 of the Internal Revenue Code.
Option Awards to Non-Employee Directors. Under the Equity Plan, as
amended, any person who is first elected as a non-employee director of the
Company will automatically be granted, on the date of such election, a
non-qualified stock option to purchase 6,000 shares of Common Stock (subject to
adjustment as described below). In addition, the Equity Plan, as amended,
provides that each non-employee director (if he or she continues to serve in
such capacity) will, on the day after the annual meeting of shareholders in each
year, automatically be granted an option to purchase 3,000 shares of Common
Stock (subject to adjustment as described below). Notwithstanding the preceding
sentence, the Equity Plan provides that if a person who is first elected as a
non-employee director on the date of an annual meeting of shareholders receives
the initial option grant under the Equity Plan on that date, such director will
not be entitled to begin receiving subsequent grants until the day following the
next succeeding annual meeting of shareholders. Non-employee directors will be
entitled to receive the automatic grants under the Equity Plan as described
above only for so long as the Equity Plan remains in effect and a sufficient
number of shares are available for the granting of those options thereunder.
The option price per share of any option granted to a non-employee
director must be 100% of the "market value" of a share of Common Stock on the
date of grant of such option. The "market value" of a share on the date of grant
to the non-employee director will be the closing price per share for the Common
Stock on the New York Stock Exchange on the trading day next preceding such
grant date or, if no trading occurred on the trading date next preceding the
date on which the non-qualified stock option is granted, then the "market value"
per share shall be determined with reference to the next preceding date on which
the shares were traded. An option granted to a non-employee director becomes
exercisable six months after the date of grant, except that if the non-employee
director ceases to be a director by reason of death, disability or retirement
within six months after the date of grant, the option will become immediately
exercisable in full.
Options granted to non-employee directors will terminate on the
earlier of (a) ten years after the date of grant or (b) twelve months after the
non-employee director ceases to be a director of the Company. Options granted to
non-employee directors may be exercised under the Equity Plan by payment in full
of the exercise price, either in cash or in whole or in part by tendering
previously acquired shares of Common Stock having a market value on the date of
exercise equal to the option exercise price.
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The Committee has no discretion to alter the provisions governing
options granted to non-employee directors.
SARs. An SAR granted under the Equity Plan will confer on the key
employee holder a right to receive, upon exercise thereof, the excess of (a) the
fair market value of one share of Common Stock on the date of exercise over (b)
the grant price of the SAR as specified by the Committee. The grant price of an
SAR under the Equity Plan may not be less than 100% of the fair market value of
a share of Common Stock on the date of grant. The grant price, term, methods of
exercise, methods of settlement (including whether the holder of an SAR will be
paid in cash, shares of Common Stock or other consideration), and any other
terms and conditions of any SAR granted under the Equity Plan are determined by
the Committee at the time of grant. Pursuant to the terms of the Equity Plan, no
individual key employee may be granted, during any calendar year, SARs
thereunder with respect to in excess of 50,000 shares of Common Stock (subject
to adjustment as described below).
Restricted Stock. Shares of restricted Common Stock granted to key
employees under the Equity Plan will be subject to such restrictions as the
Committee may impose, including any limitation on the right to vote such shares
or receive dividends thereon. The restrictions imposed on the shares may lapse
separately or in combination at such time or times, or in such installments or
otherwise, as the Committee may deem appropriate. Except as otherwise determined
by the Committee, upon termination of a key employee's employment for any reason
during the applicable restriction period, all shares of restricted stock still
subject to restriction will be subject to forfeiture by the key employee.
The Equity Plan limits the total number of shares of restricted stock
that may be awarded thereunder to 225,000 shares. In addition, no individual key
employee may be granted, during any calendar year, in excess of 50,000 shares of
restricted stock under the Equity Plan. The foregoing numerical limitations on
the issuance of shares of restricted stock are subject to adjustment as
described below.
Performance Shares. The Equity Plan also provides for the granting of
performance shares to key employees. The Committee will determine and/or select
the applicable performance period, the performance goal or goals (and the
performance level or levels related thereto) to be achieved during any
performance period, the proportion of payments, if any, to be made for
performance between the minimum and full performance levels for any performance
goal and, if applicable, the relative percentage weighting given to each of the
selected performance goals, the restrictions applicable to shares of restricted
stock received upon payment of performance shares if payment is made in such
manner, and any other terms, conditions and rights relating to the grant of
performance shares. Under the terms of the Equity Plan, the Committee may select
from various performance goals, including return on equity, return on
investment, return on net assets, economic value added, earnings from
operations, pre-tax profits, net earnings, net earnings per share, working
capital as a percent of net sales, net cash provided by operating activities,
market price for the Common Stock and total shareholder return. In conjunction
with selecting the applicable performance goal or goals, the Committee will also
fix the relevant performance level or levels (e.g., a 15%
-23-
return on equity) which must be achieved with respect to the goal or goals in
order for the performance shares to be earned by the key employee. The
performance goals selected by the Committee under the Equity Plan may, to the
extent applicable, relate to a specific division or subsidiary of the Company or
apply on a Company-wide basis. The Equity Plan, as amended, limits the total
number of shares of performance shares that may be awarded thereunder to 750,000
shares. Previously, there was no limit on the number of performance shares that
could be issued under the Equity Plan.
Following completion of the applicable performance period, payment on
performance shares granted to and earned by key employees will be made in shares
of Common Stock (which, at the discretion of the Committee, may be shares of
restricted stock) equal to the number of performance shares payable. The
Committee may provide that, during a performance period, key employees will be
paid cash amounts with respect to each performance share granted to such key
employees equal to the cash dividend paid on a share of Common Stock. Pursuant
to the terms of the Equity Plan, no key employee may receive, during any
calendar year, more than 50,000 performance shares thereunder (subject to
adjustment as described below).
Adjustments
If any dividend or other distribution, recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of shares of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
shares of Common Stock or other securities of the Company, or other similar
corporate transaction or event affects the shares of Common Stock so that an
adjustment is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Equity
Plan, then the Committee will generally have the authority to, in such manner as
it deems equitable, adjust (a) the number and type of shares subject to the
Equity Plan and which thereafter may be made the subject of awards, (b) the
number and type of shares subject to outstanding awards, and (c) the grant,
purchase or exercise price with respect to any award, or may make provision for
a cash payment to the holder of an outstanding award.
Limits on Transferability
No award granted under the Equity Plan (other than an award of
restricted stock on which the restrictions have lapsed) may be assigned, sold,
transferred or encumbered by any participant, otherwise than by will, by
designation of a beneficiary, or by the laws of descent and distribution. Each
award will be exercisable during the participant's lifetime only by such
participant or, if permissible under applicable law, by the participant's
guardian or legal representative.
Amendment and Termination
Subject to shareholder approval in certain circumstances, the Board
may amend, alter, suspend, discontinue, or terminate the Equity Plan; provided,
however, that the
-24-
provisions governing the granting of options to non-employee directors may not
be amended more than once every six months, other than to comport with changes
in the Internal Revenue Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules promulgated thereunder. Shareholder approval of
any amendment of the Equity Plan must be obtained if (i) the amendment (a)
increases the number of shares of Common Stock with respect to which awards may
be granted under the Equity Plan, (b) expands the class of persons eligible to
participate under the Equity Plan or (c) otherwise increases in any material
respect the benefits payable under the Equity Plan; or (ii) if otherwise
required by the Internal Revenue Code or any rules promulgated thereunder (in
order to allow for ISOs to be granted under the Equity Plan), or the listing
requirements of the New York Stock Exchange or any principal securities exchange
or market on which shares of Common Stock are then traded (in order to maintain
the listing of the shares thereon). Termination of the Equity Plan will not
affect the rights of participants with respect to awards previously granted to
them, and all unexpired awards will continue in force and effect after
termination of the Equity Plan except as they may lapse or be terminated by
their own terms and conditions.
Withholding
Not later than the date as of which an amount first becomes includible
in the gross income of a key employee for federal income tax purposes with
respect to any award under the Equity Plan, the key employee will be required to
pay to the Company, or make arrangements satisfactory to the Company regarding
the payment of, any federal, state, local or foreign taxes of any kind required
by law to be withheld with respect to such amount. Unless otherwise determined
by the Committee, withholding obligations arising with respect to awards under
the Equity Plan may be settled with shares of Common Stock (other than shares of
restricted stock), including shares of Common Stock that are part of, or are
received upon exercise of, the award that gives rise to the withholding
requirement. The obligations of the Company under the Equity Plan are
conditional on such payment or arrangements, and the Company and any affiliate
will, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the key employee. The Committee may establish
such procedures as it deems appropriate for the settling of withholding
obligations with shares of Common Stock.
Certain Federal Income Tax Consequences
Stock Options. The grant of a stock option under the Equity Plan
creates no income tax consequences to the key employee or the non-employee
director or the Company. A key employee or a non-employee director who is
granted a non-qualified stock option will generally recognize ordinary income at
the time of exercise in an amount equal to the excess of the fair market value
of the Common Stock at such time over the exercise price. The Company will be
entitled to a deduction in the same amount and at the same time as ordinary
income is recognized by the key employee or the non-employee director. A
subsequent disposition of the Common Stock will give rise to capital gain or
loss to the extent the amount realized from the sale differs from the tax basis,
i.e., the fair market value of the Common
-25-
Stock on the date of exercise. This capital gain or loss will be a long-term
capital gain or loss if the Common Stock has been held for more than one year
from the date of exercise.
In general, a key employee will recognize no income or gain as a
result of exercise of an ISO (except that the alternative minimum tax may
apply). Except as described below, any gain or loss realized by the key employee
on the disposition of the Common Stock acquired pursuant to the exercise of an
ISO will be treated as a long-term capital gain or loss and no deduction will be
allowed to the Company. If the key employee fails to hold the shares of Common
Stock acquired pursuant to the exercise of an ISO for at least two years from
the date of grant of the ISO and one year from the date of exercise, the key
employee will recognize ordinary income at the time of the disposition equal to
the lesser of (a) the gain realized on the disposition or (b) the excess of the
fair market value of the shares of Common Stock on the date of exercise over the
exercise price. The Company will be entitled to a deduction in the same amount
and at the same time as ordinary income is recognized by the key employee. Any
additional gain realized by the key employee over the fair market value at the
time of exercise will be treated as a capital gain. This capital gain will be a
long-term capital gain if the Common Stock has been held for more than one year
from the date of exercise.
Stock Appreciation Rights. The grant of an SAR will create no income
tax consequences for the key employee or the Company. Upon exercise of an SAR,
the key employee will recognize ordinary income equal to the amount of any cash
and the fair market value of any shares of Common Stock or other property
received, except that if the key employee receives an option or shares of
restricted stock upon exercise of an SAR, recognition of income may be deferred
in accordance with the rules applicable to such other awards. The Company will
be entitled to a deduction in the same amount and at the same time as income is
recognized by the key employee.
Restricted Stock. A key employee will not recognize income at the time
an award of restricted stock is made under the Equity Plan, unless the election
described below is made. A key employee who has not made such an election will
recognize ordinary income at the time the restrictions on the stock lapse in an
amount equal to the fair market value of the restricted stock at such time
reduced by any amount paid for the restricted stock. The Company will generally
be entitled to a corresponding deduction in the same amount and at the same time
as the key employee recognizes income. Any otherwise taxable disposition of the
restricted stock after the time the restrictions lapse will generally result in
capital gain or loss (long-term or short-term depending upon the length of time
the restricted stock is held after the time the restrictions lapse). Dividends
paid in cash and received by a participant prior to the time the restrictions
lapse will constitute ordinary income to the participant in the year paid. The
Company will be entitled to a corresponding deduction for such dividends. Any
dividends paid in stock will be treated as an award of additional restricted
stock subject to the tax treatment described herein.
A key employee may, within 30 days after the date of the award of
restricted stock, elect to recognize ordinary income as of the date of the award
in an amount equal to the
-26-
fair market value of such restricted stock on the date of the award reduced by
any amount paid for the restricted stock. The Company will be entitled to a
corresponding deduction in the same amount and at the same time as the key
employee recognizes income. If the election is made, any cash dividends received
with respect to the restricted stock will be treated as dividend income to the
key employee in the year of payment and will not be deductible by the Company.
Any otherwise taxable disposition of the restricted stock (other than by
forfeiture) will result in capital gain or loss (long-term or short-term
depending on the holding period). If the key employee who has made an election
subsequently forfeits the restricted stock, the key employee will not be
entitled to deduct any loss. In addition, the Company would then be required to
include as ordinary income the amount of the deduction it originally claimed
with respect to such shares.
Performance Shares. The grant of performance shares will create no
income tax consequences for the key employee or the Company. Upon the receipt of
shares of Common Stock at the end of the applicable performance period, the key
employee will recognize ordinary income equal to the fair market value of the
shares of Common Stock received, except that if the key employee receives shares
of restricted stock in payment of performance shares, recognition of income may
be deferred in accordance with the rules applicable to such restricted stock. In
addition, the key employee will recognize ordinary income equal to the dividend
equivalents paid on performance shares prior to or at the end of the performance
period. The Company will be entitled to a deduction in the same amount and at
the same time as income is recognized by the key employee.
Future Plan Benefits
During fiscal 2000, the Committee approved grants of stock options to
executive officers and others that are not subject to shareholder approval of
the Equity Plan, as amended. See "Executive Compensation-Stock Options." The
Committee has not approved any grants of awards that require shareholder
approval of the Equity Plan, as amended.
Other than the automatic grants of stock options to non-employee
directors, the Company cannot currently determine the number of shares or the
type of shares that may be granted to eligible participants under the Equity
Plan, as amended, in the future. Such determinations will be made from time to
time by the Committee.
On March 9, 2001, the closing price per share of the Common Stock on
the New York Stock Exchange was $25.95.
Vote Required
The affirmative vote of the holders of a majority of the shares of
Common Stock represented and voted at the Annual Meeting (assuming a quorum is
present) is required to approve the Equity Plan, as amended; provided that a
majority of the outstanding shares of Common Stock are voted on the proposal.
Assuming such proviso is met, any shares not voted at the Annual Meeting with
respect to the Equity Plan, as amended, will have no impact on the vote. In the
event that the Equity Plan, as amended, is not approved by shareholders at the
-27-
Annual Meeting, the Equity Plan (except for the amendments recently adopted by
the Board as described above) will remain in full force and effect.
THE BOARD RECOMMENDS A VOTE "FOR" THE Equity Plan, AS AMENDED. SHARES
OF COMMON STOCK REPRESENTED AT THE ANNUAL MEETING BY EXECUTED BUT UNMARKED
PROXIES WILL BE VOTED "FOR" THE Equity Plan, AS AMENDED.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP acted as the independent auditors for the Company
during the fiscal year ended January 1, 2001, and it is anticipated that such
firm will be similarly appointed to act in the current fiscal year.
Representatives of Arthur Andersen LLP are expected to be present at the Annual
Meeting to answer appropriate questions and, if they so desire, to make a
statement.
OTHER MATTERS
Solicitation Expenses
All expenses of solicitation of proxies will be borne by the Company.
In addition to soliciting proxies by mail, proxies may be solicited personally
and by telephone by certain officers and regular employees of the Company. The
Company has retained D.F. King & Co., Inc. to assist in the solicitation of
proxies, and expects to pay such firm a fee of approximately $4,000 plus
out-of-pocket expenses. Brokers, nominees and custodians who hold Common Stock
in their names and who solicit proxies from the beneficial owners will be
reimbursed by the Company for out-of-pocket and reasonable clerical expenses.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors to file reports of ownership and changes of
ownership with the Securities and Exchange Commission and the New York Stock
Exchange. The regulations of the Securities and Exchange Commission require the
officers and directors to furnish the Company with copies of all Section 16(a)
forms they file. Based on such forms, the Company believes that all its officers
and directors have complied with the Section 16(a) filing requirements.
SHAREHOLDER PROPOSALS
Proposals of shareholders pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934 ("Rule 14a-8") that are intended to be presented at the
2002 annual meeting of shareholders must be received by the Company no later
than November 19, 2001 to be included in the Company's proxy materials for that
meeting. Further, a shareholder who otherwise intends to present business at the
2002 annual meeting must comply with the requirements set forth in the Company's
By-laws. Among other things, to bring business
-28-
before an annual meeting, a shareholder must give written notice thereof,
complying with the By-laws, to the Secretary of the Company not less than 60
days and not more than 90 days prior to the second Tuesday in the month of
April, provided that the date of the annual meeting is not advanced by more than
30 days or delayed by more than 60 days from the second Tuesday in the month of
April. The 2002 annual meeting of shareholders is tentatively scheduled to be
held on April 23, 2002. Under the By-laws, if the Company does not receive
notice of a shareholder proposal submitted otherwise than pursuant to Rule 14a-8
(i.e., a proposal a shareholder intends to present at the 2002 annual meeting of
shareholders but does not intend to have included in the Company's proxy
materials) on or prior to February 8, 2002 (assuming an April 23, 2002 meeting
date), then the notice will be considered untimely and the Company will not be
required to present such proposal at the 2002 annual meeting. If the Board
nonetheless chooses to present such proposal at the 2002 annual meeting, then
the persons named in proxies solicited by the Board for the 2002 annual meeting
may exercise discretionary voting power with respect to such proposal.
By Order of the Board of Directors
BANTA CORPORATION
Ronald D. Kneezel
Secretary
The Company will furnish to any shareholder, without charge, a copy of its
Annual Report on Form 10-K for the fiscal year 2000. Requests for the Form 10-K
must be in writing and addressed to Gerald A. Henseler, Executive Vice President
and Chief Financial Officer, Banta Corporation, P.O. Box 8003, Menasha,
Wisconsin 54952.
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Appendix A
----------
Banta Corporation
Charter of the Audit Committee of the Board of Directors
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
* Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
* Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
* Provide an open avenue of communication among the independent
auditors, management, the internal auditing department, and the Board
of Directors.
* Provide sufficient opportunity for the internal and independent
auditors to meet with the audit committee without members of
management present.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to
the independent auditors as well as anyone in the organization. The Audit
Committee has the ability to retain, at the Company's expense, special
legal, accounting, or other consultants or experts it deems necessary in
the performance of its duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the New York Stock
Exchange. The Audit Committee shall be comprised of three or more directors
as determined by the Board, each of whom shall be independent nonexecutive
directors, free from any relationship that would interfere with the
exercise of his or her independent judgement. All members of the Committee
shall have a basic understanding of finance and accounting and be able to
read and understand fundamental financial statements, and at least one
member of the Committee shall have accounting or related financial
management expertise.
Audit Committee members shall be appointed by the Board on recommendation
of the Nominating and Corporate Governance Committee. If an audit committee
Chair is not designated or present, the members of the Committee may
designate a Chair by majority vote of the Committee membership.
The Committee shall meet at least two times annually, or more frequently as
circumstances dictate. The Committee may ask members of management or
others to attend the meeting and provide pertinent information as
necessary. The Audit Committee Chair shall prepare and/or approve an agenda
in advance of each meeting. The Committee shall meet privately in executive
session at least annually with management, the internal auditing
department, the independent auditors, and as a committee to discuss any
matters that the Committee or each of these groups believe should be
discussed. In addition, the Committee, or at least its Chair,
A-1
should communicate with management and the independent auditors quarterly
to review the Company's financial statements and significant findings based
upon the auditors' limited review procedures.
III. Audit Committee Responsibilities and Duties
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the directors and shareholders that
the corporate accounting and reporting practices of the Company are in
accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
Review Procedures
-----------------
1. Review and reassess the adequacy of this Charter at least annually.
Submit the Charter to the Board of Directors for approval and have the
document published in the proxy statement at least every three years
in accordance with SEC regulations.
2. Review the Company's annual audited financial statements contained in
the annual report to shareholders prior to filing or distribution.
Review shall include discussion with management and independent
auditors of significant issues regarding accounting principles,
practices, judgements and any serious difficulties or disputes with
management encountered during the course of the audit.
3. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial
reporting processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control, and
report such exposures. Review significant findings prepared by the
independent auditors and the internal auditing department together
with management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of earnings
and/or the Company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's
accounting principles and any items required to be communicated by the
independent auditors in accordance with AICPA SAS 61(see item 9). The
Chair of the Committee may represent the entire Audit Committee for
purposes of this review.
Independent Auditors
--------------------
5. Recognizing that the independent auditors are ultimately accountable
to the Audit Committee and the Board of Directors, review the
performance of the independent auditors and annually recommend to the
Board of Directors the appointment of the auditors or approve any
discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
A-2
7. On an annual basis, review and discuss with the independent auditors
all significant relationships they have with the Company that could
impair the auditors' independence.
8. Review the independent auditors' audit plan - discussing scope,
staffing, locations, reliance upon management, and internal audit and
general audit approach.
9. Prior to releasing the year-end earnings, discussing the results of
the audit with the independent auditors. Discuss certain matters
required to be communicated to audit committees in accordance with
AICPA SAS 61.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
Internal Audit Department and Legal Compliance
----------------------------------------------
11. Review the internal audit function of the Company including
independence and the proposed audit plans for the coming year.
12. Review the budget, any changes in plan, activities, organizational
structure, and qualifications of the internal audit department, as
needed.
13. Review the appointment, performance, replacement, reassignment or
dismissal of the internal audit manager.
14. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
15. On at least an annual basis, review with the Company's counsel any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations, and inquiries received from
regulators or governmental agencies.
Other Audit Committee Responsibilities
--------------------------------------
16. Annually prepare a report to shareholders as required by the SEC and
include said report in the Company's annual proxy statement.
17. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
18. Annually review a summary of director and officer related party
transactions and potential conflicts of interest.
A-3
Appendix B
----------
BANTA CORPORATION
EQUITY INCENTIVE PLAN
As Amended
Section 1. Purpose
The purpose of the Banta Corporation Equity Incentive Plan, as
amended (the "Plan"), is to promote the best interests of Banta Corporation
(together with any successor thereto, the "Company") and its shareholders by
providing key employees of the Company and its Affiliates (as defined below) and
members of the Company's Board of Directors who are not employees of the Company
or its Affiliates with an opportunity to acquire a proprietary interest in the
Company. It is intended that the Plan will promote continuity of management and
increased incentive and personal interest in the welfare of the Company by those
key employees who are primarily responsible for shaping and carrying out the
long-range plans of the Company and securing the Company's continued growth and
financial success. In addition, by encouraging stock ownership by directors who
are not employees of the Company or its Affiliates, the Company seeks to attract
and retain on its Board of Directors persons of exceptional competence and to
provide a further incentive to serve as a director of the Company.
Section 2. Definitions
As used in the Plan, the following terms shall have the
respective meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through
one or more intermediaries, is controlled by, controls, or is under common
control with, the Company.
(b) "Award" shall mean any Option, Stock Appreciation Right,
Restricted Stock or Performance Share granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract,
or other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(e) "Commission" shall mean the United States Securities and
Exchange Commission or any successor agency.
(f) "Committee" shall mean a committee of the Board of Directors
of the Company designated by such Board to administer the Plan and composed of
not less than two directors, each of whom is a "non-employee director for
purposes of Section 16" within the meaning of Rule 16b-3 and each of whom is an
"outside director" within the meaning of Section 162(m)(4)(C) of the Code (or
any successor provision thereto).
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
B-1
(h) "Excluded Items" shall mean any items which the Committee
determines shall be excluded in fixing Performance Goals, such as any gains or
losses from discontinued operations, any extraordinary gains or losses and the
effects of accounting changes.
(i) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee.
(j) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of Section
422 of the Code (or any successor provision thereto).
(k) "Key Employee" shall mean any officer or other key employee
of the Company or of any Affiliate who is responsible for or contributes to the
management, growth or profitability of the business of the Company or any
Affiliate as determined by the Committee.
(l) "Non-Employee Director" shall mean any member of the
Company's Board of Directors who is not an employee of the Company or of any
Affiliate.
(m) "Non-Qualified Stock Option" shall mean an option granted
under Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option and shall mean any option granted to a Non-Employee Director under
Section 6(b) of the Plan.
(n) "Option" shall mean an Incentive Stock Option or a
Non-Qualified Stock Option.
(o) "Participating Key Employee" shall mean a Key Employee
designated to be granted an Award under the Plan.
(p) "Performance Goals" shall mean the following (in all cases
after excluding the impact of applicable Excluded Items):
(i) Return on equity for the Performance Period for the
Company on a consolidated basis.
(ii) Return on investment for the Performance Period (aa)
for the Company on a consolidated basis, (bb) for any one or more
Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
(iii) Return on net assets for the Performance Period (aa)
for the Company on a consolidated basis, (bb) for any one or more
Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
(iv) Economic value added (as defined by the Committee at
the time of selection) for the Performance Period (aa) for the Company
on a consolidated basis, (bb)
B-2
for any one or more Affiliates or divisions of the Company and/or (cc)
for any other business unit or units of the Company as defined by the
Committee at the time of selection.
(v) Earnings from operations for the Performance Period (aa)
for the Company on a consolidated basis, (bb) for any one or more
Affiliates or divisions of the Company and/or (cc) for any other
business unit or units of the Company as defined by the Committee at
the time of selection.
(vi) Pre-tax profits for the Performance Period (aa) for the
Company on a consolidated basis, (bb) for any one or more Affiliates
or divisions of the Company and/or (cc) for any other business unit or
units of the Company as defined by the Committee at the time of
selection.
(vii) Net earnings for the Performance Period (aa) for the
Company on a consolidated basis, (bb) for any one or more Affiliates
or divisions of the Company and/or (cc) for any other business unit or
units of the Company as defined by the Committee at the time of
selection.
(viii) Net earnings per Share for the Performance Period for
the Company on a consolidated basis.
(ix) Working capital as a percent of net sales for the
Performance Period (aa) for the Company on a consolidated basis, (bb)
for any one or more Affiliates or divisions of the Company and/or (cc)
for any other business unit or units of the Company as defined by the
Committee at the time of selection.
(x) Net cash provided by operating activities for the
Performance Period (aa) for the Company on a consolidated basis, (bb)
for any one or more Affiliates or divisions of the Company and/or (cc)
for any other business unit or units of the Company as defined by the
Committee at the time of selection.
(xi) Market price per Share for the Performance Period.
(xii) Total shareholder return for the Performance Period
for the Company on a consolidated basis.
(q) "Performance Period" shall mean, in relation to Performance
Shares, any period for which a Performance Goal or Goals have been established;
provided, however, that such period shall not be less than one year.
(r) "Performance Share" shall mean any right granted under
Section 6(e) of the Plan that will be paid out as a Share (which, in specified
circumstances, may be a Share of Restricted Stock).
(s) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
B-3
(t) "Released Securities" shall mean Shares of Restricted Stock
with respect to which all applicable restrictions have expired, lapsed, or been
waived.
(u) "Restricted Securities" shall mean Awards of Restricted Stock
or other Awards under which issued and outstanding Shares are held subject to
certain restrictions.
(v) "Restricted Stock" shall mean any Share granted under Section
6(d) of the Plan or, in specified circumstances, a Share paid in connection with
a Performance Share under Section 6(e) of the Plan.
(w) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission under the Exchange Act, or any successor rule or regulation thereto.
(x) "Shares" shall mean shares of common stock of the Company,
$.10 par value, and such other securities or property as may become subject to
Awards pursuant to an adjustment made under Section 4(b) of the Plan.
(y) "Stock Appreciation Right" shall mean any right granted under
Section 6(c) of the Plan.
Section 3. Administration
The Plan shall be administered by the Committee; provided,
however, that if at any time the Committee shall not be in existence, the
functions of the Committee as specified in the Plan shall be exercised by a
committee consisting of those members of the Board of Directors of the Company
who qualify as "non-employee directors for purposes of Section 16" under Rule
16b-3 and as "outside directors" under Section 162(m)(4)(C) of the Code (or any
successor provision thereto). To the extent permitted by applicable law, the
Committee may delegate to one or more executive officers of the Company any or
all of the authority and responsibility of the Committee with respect to the
Plan, other than with respect to Persons who are subject to Section 16 of the
Exchange Act. To the extent the Committee has so delegated to one or more
executive officers the authority and responsibility of the Committee, all
references to the Committee herein shall include such officer or officers.
Subject to the terms of the Plan and without limitation by reason of
enumeration, the Committee shall have full power and authority to: (i) designate
Participating Key Employees; (ii) determine the type or types of Awards to be
granted to each Participating Key Employee under the Plan; (iii) determine the
number of Shares to be covered by (or with respect to which payments, rights, or
other matters are to be calculated in connection with) Awards granted to
Participating Key Employees; (iv) determine the terms and conditions of any
Award granted to a Participating Key Employee; (v) determine whether, to what
extent, and under what circumstances Awards granted to Participating Key
Employees may be settled or exercised in cash, Shares, other securities, other
Awards, or other property, and the method or methods by which Awards may be
settled, exercised, cancelled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other Awards, and
other amounts payable with respect to an Award granted to Participating Key
Employees under the Plan shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan (including, without limitation, any Award Agreement); (viii)
establish, amend, suspend, or waive
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such rules and regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; and (ix) make any other determination
and take any other action that the Committee deems necessary or desirable for
the administration of the Plan. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under or
with respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time, and shall be final, conclusive, and binding
upon all Persons, including the Company, any Affiliate, any Participating Key
Employee, any Non-Employee Director, any holder or beneficiary of any Award, any
shareholder, and any employee of the Company or of any Affiliate.
Notwithstanding the foregoing, Awards to Non-Employee Directors under the Plan
shall be automatic and the amount and terms of such Awards shall be determined
as provided in Section 6(b) of the Plan.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in
Section 4(b):
(i) Number of Shares Available. The number of Shares with
respect to which Awards may be granted under the Plan shall be
5,000,000. If, after the effective date of the Plan, any Shares
covered by an Award granted under the Plan, or to which any Award
relates, are forfeited or if an Award otherwise terminates, expires or
is cancelled prior to the delivery of all of the Shares or of other
consideration issuable or payable pursuant to such Award, then the
number of Shares counted against the number of Shares available under
the Plan in connection with the grant of such Award, to the extent of
any such forfeiture, termination, expiration or cancellation, shall
again be available for granting of additional Awards under the Plan.
(ii) Limitations on Awards to Individual Participants. No
Participating Key Employee shall be granted, during any calendar year,
Options for more than 300,000 Shares, Stock Appreciation Rights with
respect to more than 50,000 Shares, more than 50,000 Shares of
Restricted Stock and/or more than 50,000 Performance Shares under the
Plan. Such number of Shares as specified in the preceding sentence
shall be subject to adjustment in accordance with the terms of Section
4(b) hereof. In all cases, determinations under this Section 4(a)(ii)
shall be made in a manner that is consistent with the exemption for
performance-based compensation provided by Section 162(m) of the Code
(or any successor provision thereto) and any regulations promulgated
thereunder.
(iii) Accounting for Awards. The number of Shares covered by
an Award under the Plan, or to which such Award relates, shall be
counted on the date of grant of such Award against the number of
Shares available for granting Awards under the Plan.
(iv) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of
authorized and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall determine
that any dividend or other distribution (whether in the form of cash, Shares,
other securities, or other
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property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee may, in such manner as it may deem equitable,
adjust any or all of (i) the number and type of Shares subject to the Plan and
which thereafter may be made the subject of Awards under the Plan, (ii) the
number and type of Shares subject to outstanding Awards, and (iii) the grant,
purchase, or exercise price with respect to any Award, or, if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
Award; provided, however, in each case, that with respect to Awards of Incentive
Stock Options no such adjustment shall be authorized to the extent that such
authority would cause the Plan to violate Section 422(b) of the Code (or any
successor provision thereto); and provided further that the number of Shares
subject to any Award payable or denominated in Shares shall always be a whole
number. Notwithstanding the foregoing, Non-Qualified Stock Options subject to
grant or previously granted to Non-Employee Directors under Section 6(b) of the
Plan at the time of any event described in the preceding sentence shall be
subject to only such adjustments as shall be necessary to maintain the relative
proportionate interest represented thereby immediately prior to any such event
and to preserve, without exceeding, the value of such Options.
Section 5. Eligibility
Any Key Employee, including any executive officer or
employee-director of the Company or of any Affiliate, shall be eligible to be
designated a Participating Key Employee. All Non-Employee Directors shall
receive Awards of Non-Qualified Stock Options as provided in Section 6(b).
Section 6. Awards
(a) Option Awards to Key Employees. The Committee is hereby
authorized to grant Options to Key Employees with the terms and conditions as
set forth below and with such additional terms and conditions, in either case
not inconsistent with the provisions of the Plan, as the Committee shall
determine.
(i) Exercise Price. The exercise price per Share of an
Option granted pursuant to this Section 6(a) shall be determined by
the Committee; provided, however, that such exercise price shall not
be less than 100% of the Fair Market Value of a Share on the date of
grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by
the Committee; provided, however, that in no event shall the term of
any Incentive Stock Option exceed a period of ten years from the date
of its grant.
(iii) Exercisability and Method of Exercise. An Option shall
become exercisable in such manner and within such period or periods
and in such installments or otherwise as shall be determined by the
Committee. The Committee also shall determine
B-6
the method or methods by which, and the form or forms, including,
without limitation, cash, Shares, other securities, other Awards, or
other property, or any combination thereof, having a Fair Market Value
on the exercise date equal to the relevant exercise price, in which
payment of the exercise price with respect to any Option may be made
or deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive
Stock Option granted under the Plan shall comply in all respects with
the provisions of Section 422 of the Code (or any successor provision
thereto) and any regulations promulgated thereunder. Notwithstanding
any provision in the Plan to the contrary, no Incentive Stock Option
may be granted hereunder after December 6, 2004.
(b) Non-Qualified Stock Option Awards to Non-Employee Directors.
(i) Eligibility. Each Non-Employee Director shall
automatically be granted Non-Qualified Stock Options under the Plan in
the manner set forth in this Section 6(b). A Non-Employee Director may
hold more than one Non-Qualified Stock Option, but only on the terms
and subject to any restrictions set forth herein.
(ii) Grant of Options to Newly-Elected Non-Employee
Directors. Any Person who is first elected as a Non-Employee Director
after the effective date of the Plan shall, on the date of such
election, automatically be granted a Non-Qualified Stock Option to
purchase 6,000 Shares (which number of Shares shall be subject to
adjustment in the manner provided in Section 4(b) hereof).
(iii) Annual Option Grants to Non-Employee Directors. Each
Non-Employee Director (if he or she continues to serve in such
capacity) shall, on the day following the annual meeting of
shareholders in each year during the time the Plan is in effect,
automatically be granted a Non-Qualified Stock Option to purchase
3,000 Shares (which number of Shares shall be subject to adjustment in
the manner provided in Section 4(b) hereof); provided, however, that a
Person who is first elected as a Non-Employee Director on the date of
an annual meeting of shareholders and who receives on that date a
Non-Qualified Stock Option pursuant to Section 6(b)(ii) hereof shall
not be eligible to begin to receive grants pursuant to this Section
6(b)(iii) until the day following the next succeeding annual meeting
of shareholders.
(iv) Grant Limitation. Notwithstanding the provisions of
Sections 6(b)(ii) and 6(b)(iii) hereof, Non-Qualified Stock Options
shall be automatically granted to Non-Employee Directors under the
Plan only for so long as the Plan remains in effect and a sufficient
number of Shares are available hereunder for the granting of such
Options.
(v) Exercise Price. The exercise price per Share for a
Non-Qualified Stock Option granted to a Non-Employee Director under
the Plan shall be equal to 100% of the "market value" of a Share on
the date of grant of such Option. The "market value" of a Share on the
date of grant to the Non-Employee Director shall be the closing price
per Share for the Shares on the New York Stock Exchange on the trading
date next preceding the date of grant, or if no trading occurred on
the trading date next preceding the date on
B-7
which the Non-Qualified Stock Option is granted, then the "market
value" per Share shall be determined with reference to the next
preceding date on which the Shares were traded.
(vi) Exercisability and Termination of Options.
Non-Qualified Stock Options granted to Non-Employee Directors under
the Plan shall become exercisable six months following the date of
grant; provided, however, that if a Non-Employee Director ceases to be
a director of the Company by reason of death, disability or retirement
within six months after the date of grant, the Option shall become
immediately exercisable in full. Non-Qualified Stock Options granted
to Non-Employee Directors shall terminate on the earlier of:
(A) ten years after the date of grant; or
(B) twelve months after the Non-Employee Director
ceases to be a director of the Company for any reason,
including as a result of the Non-Employee Director's death,
disability or retirement.
(vii) Exercise of Options. A Non-Qualified Stock Option
granted to a Non-Employee Director may be exercised, subject to its
terms and conditions and the terms and conditions of the Plan, in full
at any time or in part from time to time by delivery to the Secretary
of the Company at the Company's principal office in Menasha,
Wisconsin, of a written notice of exercise specifying the number of
shares with respect to which the Option is being exercised. Any notice
of exercise shall be accompanied by full payment of the exercise price
of the Shares being purchased (x) in cash or its equivalent; (y) by
tendering previously acquired Shares (valued at their "market value"
[as determined in accordance with Section 6(b)(v)] as of the date of
exercise); or (z) by any combination of the means of payment set forth
in subparagraphs (x) and (y). For purposes of subparagraphs (y) and
(z) above, the term "previously acquired Shares" shall only include
Shares owned by the Non-Employee Director prior to the exercise of the
Option for which payment is being made and shall not include Shares
which are being acquired pursuant to the exercise of said Option. No
shares will be issued until full payment therefor has been made.
(c) Stock Appreciation Rights. The Committee is hereby authorized
to grant Stock Appreciation Rights to Key Employees. Non-Employee Directors are
not eligible to be granted Stock Appreciation Rights under the Plan. Subject to
the terms of the Plan and any applicable Award Agreement, a Stock Appreciation
Right granted under the Plan shall confer on the holder thereof a right to
receive, upon exercise thereof, the excess of (i) the Fair Market Value of one
Share on the date of exercise over (ii) the grant price of the Stock
Appreciation Right as specified by the Committee, which shall not be less than
100% of the Fair Market Value of one Share on the date of grant of the Stock
Appreciation Right. Subject to the terms of the Plan, the grant price, term,
methods of exercise, methods of settlement (including whether the Participating
Key Employee will be paid in cash, Shares, other securities, other Awards, or
other property, or any combination thereof), and any other terms and conditions
of any Stock Appreciation Right shall be as determined by the Committee. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it may deem appropriate.
B-8
(d) Restricted Stock Awards.
(i) Issuance. The Committee is hereby authorized to grant
Awards of Restricted Stock to Key Employees; provided, however, that
the aggregate number of Shares of Restricted Stock granted under the
Plan to all Participating Key Employees as a group shall not exceed
225,000 (such number of Shares subject to adjustment in accordance
with the terms of Section 4(b) hereof). Non-Employee Directors are not
eligible to be granted Restricted Stock under the Plan.
(ii) Restrictions. Shares of Restricted Stock granted to
Participating Key Employees shall be subject to such restrictions as
the Committee may impose (including, without limitation, any
limitation on the right to vote a Share of Restricted Stock or the
right to receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time or
times, in such installments or otherwise, as the Committee may deem
appropriate.
(iii) Registration. Any Restricted Stock granted under the
Plan to a Participating Key Employee may be evidenced in such manner
as the Committee may deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in respect
of Shares of Restricted Stock granted under the Plan to a
Participating Key Employee, such certificate shall be registered in
the name of the Participating Key Employee and shall bear an
appropriate legend (as determined by the Committee) referring to the
terms, conditions, and restrictions applicable to such Restricted
Stock.
(iv) Payment of Restricted Stock. At the end of the
applicable restriction period relating to Restricted Stock granted to
a Participating Key Employee, one or more stock certificates for the
appropriate number of Shares, free of restrictions imposed under the
Plan, shall be delivered to the Participating Key Employee, or, if the
Participating Key Employee received stock certificates representing
the Restricted Stock at the time of grant, the legends placed on such
certificates shall be removed.
(v) Forfeiture. Except as otherwise determined by the
Committee, upon termination of employment of a Participating Key
Employee (as determined under criteria established by the Committee)
for any reason during the applicable restriction period, all Shares of
Restricted Stock still subject to restriction shall be forfeited by
the Participating Key Employee; provided, however, that the Committee
may, when it finds that a waiver would be in the best interests of the
Company, waive in whole or in part any or all remaining restrictions
with respect to Shares of Restricted Stock held by a Participating Key
Employee.
(e) Performance Shares.
(i) Issuance. The Committee is hereby authorized to grant
Awards of Performance Shares to Participating Key Employees; provided,
however, that the aggregate number of Performance Shares granted under
the Plan to all Participating Key Employees as a group shall not
exceed 750,000 (such number of Shares subject to adjustment in
B-9
accordance with the terms of Section 4(b) hereof). Non-Employee
Directors are not eligible to be granted Performance Shares under the
Plan.
(ii) Performance Goals and Other Terms. The Committee shall
determine the Performance Period, the Performance Goal or Goals (and
the performance level or levels related thereto) to be achieved during
any Performance Period, the proportion of payments, if any, to be made
for performance between the minimum and full performance levels for
any Performance Goal and, if applicable, the relative percentage
weighting given to each of the selected Performance Goals, the
restrictions applicable to Shares of Restricted Stock received upon
payment of Performance Shares if Performance Shares are paid in such
manner, and any other terms, conditions and rights relating to a grant
of Performance Shares. The Committee shall have sole discretion to
alter the selected Performance Goals set forth in Section 2(p),
subject to shareholder approval, to the extent required to qualify the
Award for the performance-based exemption provided by Section 162(m)
of the Code (or any successor provision thereto). Notwithstanding the
foregoing, in the event the Committee determines it is advisable to
grant Performance Shares which do not qualify for the
performance-based exemption under Section 162(m) of the Code (or any
successor provision thereto), the Committee may make such grants
without satisfying the requirements thereof.
(iii) Rights and Benefits During the Performance Period. The
Committee may provide that, during a Performance Period, a
Participating Key Employee shall be paid cash amounts, with respect to
each Performance Share held by such Participating Key Employee, in the
same manner, at the same time, and in the same amount paid, as a cash
dividend on a Share. Participating Key Employees shall have no voting
rights with respect to Performance Shares held by them.
(iv) Payment of Performance Shares. As soon as is reasonably
practicable following the end of the applicable Performance Period,
and subject to the Committee certifying in writing as to the
satisfaction of the requisite Performance Goal or Goals if such
certification is required in order to qualify the Award for the
performance-based exemption provided by Section 162(m) of the Code (or
any successor provision thereto), one or more certificates
representing the number of Shares equal to the number of Performance
Shares payable shall be registered in the name of and delivered to the
Participating Key Employee; provided, however, that any Shares of
Restricted Stock payable in connection with Performance Shares shall,
pending the expiration, lapse, or waiver of the applicable
restrictions, be evidenced in the manner as set forth in Section
6(d)(iii) hereof.
(f) General.
(i) No Consideration for Awards. Awards shall be granted to
Participating Key Employees for no cash consideration unless otherwise
determined by the Committee. Awards of Non-Qualified Stock Options
granted to Non-Employee Directors under Section 6(b) of the Plan shall
be granted for no cash consideration unless otherwise required by law.
B-10
(ii) Award Agreements. Each Award granted under the Plan
shall be evidenced by an Award Agreement in such form (consistent with
the terms of the Plan) as shall have been approved by the Committee.
(iii) Awards May Be Granted Separately or Together. Awards
to Participating Key Employees under the Plan may be granted either
alone or in addition to, in tandem with, or in substitution for any
other Award or any award granted under any other plan of the Company
or any Affiliate. Awards granted in addition to or in tandem with
other Awards, or in addition to or in tandem with awards granted under
any other plan of the Company or any Affiliate, may be granted either
at the same time as or at a different time from the grant of such
other Awards or awards.
(iv) Forms of Payment Under Awards. Subject to the terms of
the Plan and of any applicable Award Agreement, payments or transfers
to be made by the Company or an Affiliate upon the grant, exercise, or
payment of an Award to a Participating Key Employee may be made in
such form or forms as the Committee shall determine, and may be made
in a single payment or transfer, in installments, or on a deferred
basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of
interest on installment or deferred payments.
(v) Limits on Transfer of Awards. No Award (other than
Released Securities), and no right under any such Award, shall be
assignable, alienable, saleable, or transferable by a Participating
Key Employee or a Non-Employee Director otherwise than by will or by
the laws of descent and distribution (or, in the case of an Award of
Restricted Securities, to the Company); provided, however, that a
Participating Key Employee at the discretion of the Committee may, and
a Non-Employee Director shall, be entitled, in the manner established
by the Committee, to designate a beneficiary or beneficiaries to
exercise his or her rights, and to receive any property distributable,
with respect to any Award upon the death of the Participating Key
Employee or the Non-Employee Director, as the case may be. Each Award,
and each right under any Award, shall be exercisable, during the
lifetime of the Participating Key Employee or the Non-Employee
Director, only by such individual or, if permissible under applicable
law, by such individual's guardian or legal representative. No Award
(other than Released Securities), and no right under any such Award,
may be pledged, alienated, attached, or otherwise encumbered, and any
purported pledge, alienation, attachment, or encumbrance thereof shall
be void and unenforceable against the Company or any Affiliate.
(vi) Term of Awards. Except as otherwise provided in the
Plan, the term of each Award shall be for such period as may be
determined by the Committee.
(vii) Share Certificates; Representation. In addition to the
restrictions imposed pursuant to Section 6(d) and Section 6(e) hereof,
all certificates for Shares delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable
under the Plan or the rules, regulations, and other requirements of
the Commission, any stock exchange or other market upon which such
Shares are then listed or traded, and any
B-11
applicable federal or state securities laws, and the Committee may
cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. The Committee may require
each Participating Key Employee, Non-Employee Director or other Person
who acquires Shares under the Plan by means of an Award originally
made to a Participating Key Employee or a Non-Employee Director to
represent to the Company in writing that such Participating Key
Employee, Non-Employee Director or other Person is acquiring the
Shares without a view to the distribution thereof.
Section 7. Amendment and Termination of the Plan; Correction of Defects and
Omissions
(a) Amendments to and Termination of the Plan. The Board of
Directors of the Company may at any time amend, alter, suspend, discontinue, or
terminate the Plan; provided, however, that the provisions of Section 6(b) of
the Plan shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules promulgated thereunder; and provided further that
shareholder approval of any amendment of the Plan shall also be obtained (i) if
such amendment (A) increases the number of Shares with respect to which Awards
may be granted under the Plan (other than increases related to adjustments made
as provided in Section 4(b) hereof), (B) expands the class of persons eligible
to participate under the Plan or (C) otherwise increases in any material respect
the benefits payable under the Plan; or (ii) if otherwise required by: (A) the
Code or any rules promulgated thereunder (in order to allow for Incentive Stock
Options to be granted under the Plan), or (B) the listing requirements of the
New York Stock Exchange or any principal securities exchange or market on which
the Shares are then traded (in order to maintain the listing of the Shares
thereon). Termination of the Plan shall not affect the rights of Participating
Key Employees or Non-Employee Directors with respect to Awards previously
granted to them, and all unexpired Awards shall continue in force and effect
after termination of the Plan except as they may lapse or be terminated by their
own terms and conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The
Committee may correct any defect, supply any omission, or reconcile any
inconsistency in any Award or Award Agreement in the manner and to the extent it
shall deem desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Key Employee, Participating Key
Employee or other Person (other than a Non-Employee Director to the extent
provided in Section 6(b) of the Plan) shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity of treatment of
Key Employees, Participating Key Employees, or holders or beneficiaries of
Awards under the Plan. The terms and conditions of Awards need not be the same
with respect to each Participating Key Employee.
(b) Withholding. No later than the date as of which an amount
first becomes includable in the gross income of a Participating Key Employee for
federal income tax purposes with respect to any Award under the Plan, the
Participating Key Employee shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal, state, local
or foreign taxes of any kind required by law to be withheld with respect to such
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amount. Unless otherwise determined by the Committee, withholding obligations
arising with respect to Awards to Participating Key Employees under the Plan may
be settled with Shares (other than Restricted Securities), including Shares that
are part of, or are received upon exercise of, the Award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and any Affiliate
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Participating Key Employee. The Committee
may establish such procedures as it deems appropriate for the settling of
withholding obligations with Shares, including, without limitation, the
establishment of such procedures as may be necessary to satisfy the requirements
of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(d) Rights and Status of Recipients of Awards. The grant of an
Award shall not be construed as giving a Participating Key Employee the right to
be retained in the employ of the Company or any Affiliate. Further, the Company
or any Affiliate may at any time dismiss a Participating Key Employee from
employment, free from any liability, or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement. The grant of
an Award to a Non-Employee Director pursuant to Section 6(b) of the Plan shall
confer no right on such Non-Employee Director to continue as a director of the
Company. Except for rights accorded under the Plan and under any applicable
Award Agreement, Participating Key Employees and Non-Employee Directors shall
have no rights as holders of Shares as a result of the granting of Awards
hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined by
the Committee, the Plan shall be unfunded and shall not create (or be construed
to create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any Participating Key Employee,
any Non-Employee Director or other Person. To the extent any Person holds any
right by virtue of a grant under the Plan, such right (unless otherwise
determined by the Committee) shall be no greater than the right of an unsecured
general creditor of the Company.
(f) Governing Law. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Wisconsin and applicable federal law.
(g) Severability. If any provision of the Plan or any Award
Agreement or any Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Award Agreement or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to applicable laws, or if it cannot be so construed or deemed amended
without, in the determination of the Committee, materially altering the intent
of the Plan, any Award Agreement or the Award, such provision shall be stricken
as to such jurisdiction, Person, or
B-13
Award, and the remainder of the Plan, any such Award Agreement and any such
Award shall remain in full force and effect.
(h) No Fractional Shares. No fractional Shares or other
securities shall be issued or delivered pursuant to the Plan, any Award
Agreement or any Award, and the Committee shall determine (except as otherwise
provided in the Plan) whether cash, other securities, or other property shall be
paid or transferred in lieu of any fractional Shares or other securities, or
whether such fractional Shares or other securities or any rights thereto shall
be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections
of the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan originally became effective on April 26, 1995.
B-14
BANTA CORPORATION Proxy for Annual Meeting of Shareholders
to be held April 24, 2001
The undersigned constitutes and appoints DONALD D. BELCHER and RONALD
D. KNEEZEL, or either of them, the true and lawful proxies of the undersigned,
with full power of substitution, to represent and to vote as designated below,
all shares of Banta Corporation which the undersigned is entitled to vote at the
annual meeting of shareholders of such corporation to be held at the Park Plaza
Paper Valley Hotel, 333 West College Avenue, Appleton, Wisconsin on April 24,
2001, at 2:00 P.M., Central Time, and at all adjournments or postponements
thereof.
The shares represented by this proxy when properly executed will be
voted in the manner directed herein by the undersigned shareholder, but, if no
direction is indicated, this proxy will be voted FOR Item 1 and FOR Item 2.
The undersigned hereby revokes any other proxy heretofore executed by
the undersigned for the meeting and acknowledges receipt of notice of the annual
meeting and the proxy statement. This proxy is solicited on behalf of the Board
of Directors of Banta Corporation.
* DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED *
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BANTA CORPORATION 2001 ANNUAL MEETING
1. ELECTION OF DIRECTORS: 1-Jameson A. Baxter 6-Gerald A. Henseler [ ] FOR all nominees [ ] WITHHOLD
2-Donald D. Belcher 7-Bernard S. Kubale listed to the left AUTHORITY
3-John F. Bergstrom 8-Ray C. Richelsen (except as to vote for all
4-Henry T. DeNero 9-Michael J. Winkler specified nominees
5-Richard L. Gunderson below). listed to the
left.
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(Instructions: To withhold authority to vote for any indicated nominee(s), write the
number(s) of the nominee(s) in the box provided to the right.) ------>
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2. Approval of the Banta Corporation Equity Incentive Plan, as amended. [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion upon all such other business as may properly come before the meeting.
Date ___________________________ NO. OF SHARES
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Check appropriate box
Indicate change below:
Address Change? [ ] Name Change? [ ]
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Signature(s) in Box
Please sign exactly as your name
appears on your stock certificate.
Joint owners should each sign
personally. A corporation should sign
full corporate name by a duly
authorized officer. When signing as
attorney, executor, administrator,
trustee or guardian, give full title
as such.
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