UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(e) or (S)240.14a-12
Bush Industries, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
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was paid previously. Identify the previous filing by registration statement
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BUSH INDUSTRIES, INC.
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on May 15, 2003
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TO ALL STOCKHOLDERS OF BUSH INDUSTRIES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Bush
Industries, Inc., a Delaware corporation, will be held at the principal office
of the Company, One Mason Drive, Jamestown, New York 14702, on Thursday, May
15, 2003 at 10:00 a.m., New York time, for the following purposes:
1. To elect nine Directors, four of whom will be Class A Directors elected
by the holders of Class A Common Stock and five of whom will be Class B
Directors elected by the holders of Class B Common Stock, for the term
of one year and until their successors are duly elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP, as the Company's
independent auditors for the fiscal year ending January 3, 2004;
3. To vote to adjourn the Annual Meeting if there are not sufficient votes
to approve one or more matters, in order to provide additional time to
solicit proxies; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 28, 2003, are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors,
Ernest C. Artista,
Secretary
Jamestown, New York
April 18, 2003
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE PROMPTLY
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY, AND RETURN IT TO THE COMPANY. THE PROXY MAY BE
REVOKED AT ANY TIME BEFORE IT IS VOTED, AND STOCKHOLDERS EXECUTING PROXIES MAY
ATTEND THE MEETING AND VOTE IN PERSON, SHOULD THEY SO DESIRE.
BUSH INDUSTRIES, INC.
One Mason Drive
Jamestown, New York 14702
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PROXY STATEMENT
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The accompanying proxy is solicited by the Board of Directors of Bush
Industries, Inc. (the "Company"), for the Annual Meeting of Stockholders of the
Company to be held at the principal office of the Company, One Mason Drive,
Jamestown, New York 14702, on Thursday, May 15, 2003 at 10:00 a.m., New York
time. All proxies duly executed and received will be voted on all matters
presented at the Annual Meeting in accordance with the instructions given by
such proxies. In the absence of specific instructions, proxies so received will
be voted for the named nominees relating to the class of Common Stock for which
the proxy relates for election to the Company's Board of Directors; for the
ratification of Deloitte & Touche LLP, as the Company's independent auditors;
and for the adjournment of the Annual Meeting if there are not sufficient votes
to approve one or more matters. The Board of Directors does not anticipate that
any of its nominees will be unavailable for election and does not know of any
other matters that may be brought before the Annual Meeting. In the event that
any other matter should come before the Annual Meeting or that any nominee is
not available for election, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies not marked to the contrary with
respect to such matter in accordance with their best judgment. The proxy may be
revoked at any time before being voted. The Company will pay the entire expense
of soliciting the proxies, which solicitation will be by use of the mails. This
Proxy Statement is being mailed to stockholders on or about April 18, 2003.
Only holders of shares of Class A Common Stock or Class B Common Stock of
record at the close of business on March 28, 2003 will be entitled to notice of
and to vote at the Annual Meeting and at all adjournments thereof. As of the
close of business on March 28, 2003, the Company had outstanding 10,432,905
shares of Class A Common Stock and 3,395,365 shares of Class B Common Stock.
At the Annual Meeting, the holders of Class A Common Stock will be entitled,
as a class, to elect four Directors ("Class A Directors"), and the holders of
Class B Common Stock will be entitled, as a class, to elect five Directors
("Class B Directors"). The vote of a majority of the Class A shares of Common
Stock represented at the Annual Meeting is required for the election of the
Class A Directors, and the vote of a majority of the Class B shares of Common
Stock represented at the Annual Meeting is required for the election of the
Class B Directors. The vote of a majority of the shares of capital stock
represented at the Annual Meeting, voting as a single class and after taking
into account that each holder of Class A Common Stock is entitled to one-tenth
vote per share of Class A Common Stock, and each holder of Class B Common Stock
is entitled to one vote per share of Class B Common Stock, is required for the
ratification of the appointment of Deloitte & Touche LLP, as the Company's
independent auditors, and to adjourn the Annual Meeting if there are not
sufficient votes to approve one or more matters.
Shares represented by proxies which are marked "abstained" or which are
marked to deny discretionary authority will only be counted for determining the
presence of a quorum. Votes withheld in connection with the election of one or
more of the nominees for Director will not be counted as votes cast for such
individuals, but will be counted for determining the presence of a quorum. In
addition, where brokers are prohibited from exercising discretionary authority
for beneficial owners who have not provided voting instructions (commonly
referred to as "broker non-votes"), those shares will not be included in the
vote totals, but will be counted for determining the presence of a quorum.
A list of the stockholders entitled to vote at the Annual Meeting will be
available at the Company's office, One Mason Drive, Jamestown, New York 14702,
for a period of ten (10) days prior to the Annual Meeting for examination by
any stockholder.
The current Executive Officers and Directors of the Company beneficially own
approximately 16% of the outstanding shares of Class A Common Stock and
approximately 99% of the outstanding shares of Class B Common Stock. See
"Security Ownership of Management and Principal Stockholders."
1
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL STOCKHOLDERS
The following table sets forth the amount of shares of Class A Common Stock
and Class B Common Stock owned as of March 28, 2003, by each Director of the
Company, including Mr. William M. Hogan, III, a nominee for election as a
Director, by each of the Executive Officers named in the Summary Compensation
Table (set forth herein), by those persons known to the Company to own
beneficially 5% or more of the outstanding shares of Class A and/or Class B
Common Stock of the Company, and by all Directors and Executive Officers of the
Company as a group. With respect to any person who beneficially owns 5% or more
of the outstanding shares of Class A and/or Class B Common Stock, the address
of such person is also set forth.
Number and Percentage of Number and Percentage of
Name and Address Shares of Class A Shares of Class B
of Beneficial Owner Common Stock Owned Common Stock Owned
----------------------------------------------- ----------------------- -----------------------
Paul S. Bush................................... 1,066,627 9.7%(1) 3,292,266 97.0%(2)
One Mason Drive
Jamestown, NY 14702
Robert L. Ayres................................ 168,619 1.6%(3) --
Lewis H. Aronson............................... 87,353 (4)(5) --
Paul A. Benke.................................. 2,377 (5) --
Jerald D. Bidlack.............................. 16,316 (5) --
Douglas S. Bush (6)............................ 148,763 1.4%(7) 22,804 (5)(8)
Gregory P. Bush................................ 104,995 1.0%(9) 40,936 1.2%(10)
David G. Dawson................................ 23,024 (5)(11) --
Neil A. Frederick.............................. 13,657 (5)(12) --
Robert E. Hallagan (6)......................... 4,052 (5) --
Donald F. Hauck (6)............................ 92,134 (5)(13) --
William M. Hogan, III.......................... -- --
Erland E. Kailbourne (6)....................... 4,052 (5) --
David E. White................................. 36,000 (5)(14) --
Bush Industries, Inc. Savings and
Retirement Plan................................ 738,956 7.1% --
One Mason Drive
Jamestown, NY 14702
Dimensional Fund Advisors...................... 811,868 7.8% --
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
FMR Corp....................................... 1,014,200 9.7% --
82 Devonshire St.
Boston, MA 02109
Reich & Tang Asset Management L.P.............. 1,257,000 12.0% --
600 Fifth Ave.
New York, NY 10020
Royce & Associates, Inc........................ 624,100 6.0% --
1414 Avenue of the Americas
New York, NY 10019
Tocqueville Asset Management L.P............... 941,730 9.0%
1675 Broadway
New York, NY 10019
All Executive Officers and Directors as a group
(15 persons)................................. 1,845,184 16.1%(15)(16) 3,356,006 98.8%
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(1) Includes 560,000 shares of Class A Common Stock issuable upon exercise of
outstanding options. Includes 2,200 shares of Class A Common Stock held of
record by Mr. Paul S. Bush's spouse, and with respect to such shares, Mr.
Paul S. Bush disclaims beneficial ownership. In addition, includes 161,852
shares of Class A Common Stock held in trust for the benefit of Mr. Paul S.
Bush's children, and with respect to which Mr. Paul S. Bush disclaims
beneficial ownership. Also includes 264,666 shares held by the Paul S. Bush
Charitable Remainder Unitrust, and with respect to which Mr. Paul S. Bush
disclaims beneficial ownership. Excludes 11,662 shares of Class A Common
Stock held of record by the Company's Savings and Retirement Plan (the
"401(k) Plan") for the benefit of Mr. Paul S. Bush, and with respect to
such shares, the trustees of such Plan have sole voting power. In addition,
excludes shares of Class A Common Stock issuable upon conversion of shares
of Class B Common Stock. Certain of the shares are owned of record by the
Paul S. Bush Declaration of Trust, a living trust, maintained for the
benefit of Mr. Paul S. Bush.
(2) Includes 2,261,916 shares of Class B Common Stock held by The Bush Family
Limited Partnership. Includes 2,000 shares of Class B Common Stock held of
record by Mr. Paul S. Bush's spouse, and with respect to such shares, Mr.
Paul S. Bush disclaims beneficial ownership. In addition, includes 31,038
shares of Class B Common Stock held in trust for the benefit of Mr. Paul S.
Bush's children, and with respect to which Mr. Paul S. Bush disclaims
beneficial ownership. Certain of the shares are owned of record by the Paul
S. Bush Declaration of Trust, a living trust, maintained for the benefit of
Mr. Paul S. Bush.
(3) Includes 143,750 shares of Class A Common Stock issuable upon the exercise
of outstanding options. Excludes 8,531 shares of Class A Common Stock held
of record by the Company's 401(k) Plan for the benefit of Mr. Robert L.
Ayres, and with respect to such shares, the trustees of such Plan have sole
voting power.
(4) Includes 81,563 shares of Class A Common Stock issuable upon exercise of
outstanding options. Includes 900 shares of Class A Common Stock held of
record by Mr. Lewis H. Aronson's spouse, and with respect to such shares,
Mr. Aronson disclaims beneficial ownership. Excludes 5,802 and 1,055 shares
of Class A Common Stock, held of record by the Company's 401(k) Plan for
the benefit of Mr. Aronson and his spouse, respectively, and with respect
to such shares, the trustees of such Plan have sole voting power.
(5) Less than 1%.
(6) Not standing for re-election as a Director.
(7) Includes 84,297 shares of Class A Common Stock issuable upon exercise of
outstanding options. Excludes 2,141 shares of Class A Common Stock held of
record by the Company's 401(k) Plan for the benefit of Mr. Douglas S. Bush,
and with respect to such shares, the trustees of such Plan have sole voting
power. Excludes shares of Class A Common Stock issuable upon conversion of
shares of Class B Common Stock beneficially owned by Mr. Douglas S. Bush.
(8) Includes 1,200 shares of Class B Common Stock held of record by Mr. Douglas
S. Bush's spouse, and with respect to such shares, Mr. Douglas S. Bush
disclaims beneficial ownership.
(9) Includes 50,963 shares of Class A Common Stock issuable upon exercise of
outstanding options. Includes 8,000 shares of Class A Common Stock held of
record by Mr. Gregory P. Bush's spouse, and with respect to such shares,
Mr. Gregory P. Bush disclaims beneficial ownership. Excludes 3,987 shares
of Class A Common Stock held of record by the Company's 401(k) Plan for the
benefit of Mr. Gregory P. Bush, and with respect to such shares, the
trustees of such Plan have sole voting power. Excludes shares of Class A
Common Stock issuable upon conversion of shares of Class B Common Stock
beneficially owned by Mr. Gregory P. Bush.
(10) Includes 4,130 shares of Class B Common Stock held of record by Mr.
Gregory P. Bush's spouse, and with respect to such shares, Mr. Gregory P.
Bush disclaims beneficial ownership. Includes 15,202 shares of Class B
Common Stock held as custodian by Mr. Gregory P. Bush's spouse for the
benefit of Mr. Gregory P. Bush's children, and with respect to such
shares, Mr. Gregory P. Bush disclaims beneficial ownership.
(11) Includes 11,630 shares held by a company wholly-owned by Mr. David G.
Dawson.
(12) Includes 12,657 shares of Class A Common Stock issuable upon exercise of
outstanding options. Excludes 4,358 shares of Class A Common Stock held of
record by the Company's 401(k) Plan for the benefit of Mr. Neil A.
Frederick, and with respect to such shares, the trustees of such Plan have
sole voting power.
3
(13) Includes 23,907 shares of Class A Common Stock issuable upon the exercise
of outstanding options. Excludes 6,937 shares of Class A Common Stock held
of record by the Company's 401(k) Plan for the benefit of Mr. Donald F.
Hauck, and with respect to such shares, the trustees of such Plan have
sole voting power.
(14) Includes 36,000 shares of Class A Common Stock issuable upon the exercise
of outstanding options.
(15) Includes shares of Class A Common Stock issuable upon exercise of
outstanding options, as described in the Notes above. In addition,
includes shares of Class A Common Stock beneficially owned by Mr. Ernest
C. Artista, the Company's Secretary and Corporate Vice President of
Corporate Communications and Mr. Larry C. Genareo, the Company's Senior
Vice President of Operations. Excludes shares of Class A Common Stock
issuable upon conversion of outstanding shares of Class B Common Stock.
Excludes shares held of record by the Company's 401(k) Plan, as described
in the Notes above. In addition, excludes shares of Class A Common Stock
issuable to the spouse of a certain Officer upon exercise of outstanding
options.
(16) In calculating the percentage of shares of Class A Common Stock owned,
included in the total number of shares of Class A Common Stock outstanding
are the shares of Class A Common Stock issuable upon exercise of
outstanding options, as described in the foregoing Notes.
ELECTION OF DIRECTORS
Nine (9) Directors are to be elected for the ensuing year and until their
successors are duly elected and qualified. Four of such Directors will be Class
A Directors, elected by the holders of the Class A Common Stock, and five of
such Directors will be Class B Directors, elected by the holders of the Class B
Common Stock. If, at the time of election, any of the nominees should be
unavailable for election, a circumstance which is not expected by the Company,
it is intended that the proxies will be voted for such substitute nominee as
may be selected by the Company. Proxies not marked to the contrary will be
voted for the election of the following persons with respect to that class of
Common Stock represented thereby. All of the nominees are standing for
re-election by the stockholders from the current term, except for Mr. William
M. Hogan, III.
Name and Age Director Since Position with the Company
------------------------------ -------------- ------------------------------------------------
Nominees for Class A Directors
Paul A. Benke (81)............ 1985 Director
Jerald D. Bidlack (67)........ 1985 Director
David G. Dawson (55).......... 1998 Director
William M. Hogan, III (62).... -- --
Nominees for Class B Directors
Paul S. Bush (66)............. 1965 Chairman of the Board,
Chief Executive Officer
Robert L. Ayres (59).......... 1988 President, Chief Operating Officer,
Chief Financial Officer and Director
Lewis H. Aronson (51)......... 1993 Corporate Executive Vice President and Director
Gregory P. Bush (38).......... 1993 Director
Neil A. Frederick (50)........ 2002 Treasurer, Corporate Vice President and Director
Mr. Paul A. Benke has served as a Director of the Company since 1985. In
1982, Mr. Benke founded the Roger Tory Peterson Institute, a not-for-profit
environmental education institute, and is titled "Founder". He served as its
President from 1995 to 1996 and as its Executive Vice President/Executive
Director from 1991 through 1995.
4
Mr. Jerald D. Bidlack has served as a Director of the Company since 1985.
Mr. Bidlack has been President of Griffin Automation, Inc., West Seneca, New
York since 1992, a designer and manufacturer of automation equipment. He also
serves as a Director of Graham Corporation of Batavia, New York and is a
Trustee of Keuka College, Keuka Park, New York.
Mr. David G. Dawson has served as a Director of the Company since 1998. Mr.
Dawson has been Chairman of the Board and President of Dawson Metal Company and
Dawson Doors DBA since 1983 and has been President of Spray Tech, Inc. since
1994. In addition, Mr. Dawson serves on a number of charitable boards and
commissions.
Mr. William M. Hogan, III is currently the Executive Vice President and
Chief Operating Officer of Oatey Co., a manufacturer and distributor of
plumbing products worldwide. From 1998 through 2001, Mr. Hogan was Executive
Vice President of the Architectural Wall Division of Steelcase, Inc., a office
furniture manufacturer and from 1990 through 1998, Mr. Hogan held a variety of
management positions, including President and Chief Operating Officer, with
Clestra Hauserman, Inc., a manufacturer of moveable walls for offices and clean
rooms.
Mr. Paul S. Bush has been with the Company since it was founded in 1959. Mr.
Paul S. Bush has served as the Chairman of the Board of Directors and Chief
Executive Officer of the Company since 1971. He is the father of Messrs.
Gregory P. and Douglas S. Bush.
Mr. Robert L. Ayres has been employed by the Company since 1988 and has held
a variety of management positions within the Company since that time. Currently
Mr. Ayres is President, Chief Operating Officer and Chief Financial Officer.
Mr. Lewis H. Aronson has been employed by the Company since 1988 and has
held a variety of management positions within the Company since that time.
Currently Mr. Aronson is Corporate Executive Vice President.
Mr. Gregory P. Bush was employed by the Company from 1988 to March 2003, and
held a variety of management positions within the Company, most recently as
President of Bush Furniture. He is the son of Mr. Paul S. Bush and the brother
of Mr. Douglas S. Bush.
Mr. Neil A. Frederick has been employed by the Company since 1988 and has
held a variety of management positions with the Company since that time.
Currently, Mr. Frederick is Treasurer and Corporate Vice President.
The business background of the following Executive Officers of the Company,
to the extent not otherwise set forth herein, are described below:
Mr. Ernest C. Artista (51) has been employed by the Company since 1988 and
has held a variety of management positions with the Company since that time.
Currently, Mr. Artista is Secretary of the Company and Corporate Vice President
of Corporate Communications.
Mr. Larry C. Genareo (54) has been employed by the Company since 1989 and
has held a variety of management positions with the Company since that time.
Currently, Mr. Genareo is Senior Vice President of Operations.
Mr. Donald F. Hauck (59) has been employed by the Company since 1971 and has
held a variety of management positions with the Company since that time.
Currently, Mr. Hauck is Senior Vice President.
Mr. David E. White (48) has been employed by the Company since April, 2002
as President, Bush Business Furniture. From 1979 until 2002, Mr. White held a
variety of management positions with HON Industries, Inc. operating companies,
most recently as Vice President of the Seating Business Unit of Allsteel.
5
MEETINGS OF THE BOARD OF DIRECTORS
AND INFORMATION REGARDING COMMITTEES
The Board of Directors has two standing committees, an Audit Committee and a
Compensation Committee. The Company does not have a Nominating Committee.
The Audit Committee is currently composed of Messrs. Paul A. Benke
(Chairman), Jerald D. Bidlack, Robert E. Hallagan and Erland E. Kailbourne.
Messrs. Hallagan and Kailbourne are not standing for re-election as Directors,
and it is anticipated that Mr. William M. Hogan, III, a nominee for election to
the Company's Board of Directors, will serve on the Audit Committee. All
members of the Audit Committee are "independent" within the meaning of the
rules of the New York Stock Exchange ("NYSE"). The duties of the Audit
Committee include responsibility for appointing, overseeing and determining the
compensation of the independent auditors, reviewing and considering actions of
Management in matters relating to audit functions, reviewing with independent
auditors the scope and results of its audit engagement, reviewing reports from
various regulatory authorities, reviewing the system of internal controls and
procedures of the Company, and reviewing the effectiveness of procedures
intended to prevent violations of law and regulations. Additional information
regarding the Audit Committee and its functions and responsibilities is
included under the caption "Report of the Audit Committee". In addition to
reviews of the Company's earnings releases, Form 10-Qs and Form 10-K, the Audit
Committee held four regular meetings in 2002.
The Compensation Committee is currently comprised of Messrs. Jerald D.
Bidlack (Chairman), Paul A. Benke, Robert E. Hallagan and Erland E. Kailbourne.
Messrs. Hallagan and Kailbourne are not standing for re-election as Directors,
and it is anticipated that Mr. William M. Hogan, III, a nominee for election to
the Company's Board of Directors, will serve on the Compensation Committee. The
duties of the Compensation Committee include recommending to the Board of
Directors remuneration to be paid to Executive Officers of the Company,
determining the number of shares and options to be awarded pursuant to the
Company's 1995 Stock Plan, administering and monitoring compensation, including
administering the Company's Performance Bonus Plan, and recommending the
establishment of incentive and bonus programs for executives of the Company.
The Compensation Committee held four meetings in 2002.
The Board of Directors held nine meetings in 2002. All Directors attended at
least 75% of the meetings of the Board of Directors and Committees on which
they then served.
Report of the Audit Committee
The Audit Committee operates under an Audit Committee Charter, which has
been approved by the Board of Directors. The Committee is currently composed of
four members of the Board of Directors and each member is free of any
relationship that would interfere with his independent judgment and each member
fully satisfies the requirement of independence promulgated by the NYSE.
The Committee met regularly with the independent auditors:
. To determine the full and qualified independence of the outside auditors,
including an assessment of the relevance of non-audit services to that
independence. The Committee has received written affirmation that the
auditors are independent pursuant to Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees, as
amended, by the Independence Standards Board, and has discussed with the
auditors their independence.
. To confirm the integrity and credibility of the published accounting
reports.
. To assess the nature of communications among the Committee, auditors and
Management and to insure full, open dialogue.
6
. To discuss with the auditors all matters peripheral to basic accounting
but which have a bearing on the finances of the Company such as
litigation, taxation, and internal controls.
. To insure that all matters related to the Committee's responsibilities
have been conveyed to the Committee by the auditors.
. To discuss with the independent auditors matters required to be discussed
by Statement on Auditing Standards No. 61, Communication with Audit
Committees, as amended, by the Auditing Standards Board of the American
Institute of Certified Public Accountants.
Copies of quarterly and other reports are provided to all members of the
Committee, who then review the reports and provide feedback to the Committee
Chairman. The Chairman, along with other Committee members, then discuss with
the independent auditors such reports prior to their release. The Committee has
reviewed and discussed the audited financial statements of the Company for the
fiscal year ended December 28, 2002 with the independent auditors and
Management. Further, the Chairman meets periodically with selected members of
Management to explore reporting and other pertinent issues. Based on the review
and discussions referred to above, the Committee has recommended to the Board
of Directors that the audited financial statements of the Company for the
fiscal year ended December 28, 2002 be included in the Company's Annual Report
on Form 10-K, for filing with the Securities and Exchange Commission.
The Audit Committee has appointed Deloitte & Touche LLP, as the Company's
independent auditors for fiscal year 2003.
Paul A. Benke, Chairman
Jerald D. Bidlack
Robert E. Hallagan
Erland E. Kailbourne
EXECUTIVE COMPENSATION
Report of the Compensation Committee on Executive Compensation
All decisions on the compensation of the Company's Executive Officers are
made by the Compensation Committee of the Board of Directors (the "Compensation
Committee"). Grants or awards of stock options or shares of the Company's Class
A Common Stock to Executive Officers are made solely by the Compensation
Committee in compliance with the requirements of Rule 16b-3, promulgated under
the Securities Exchange Act of 1934.
The Company's executive compensation program is designed to help attract,
retain, and motivate the highly qualified personnel needed to ensure maximum
stockholder returns. To meet these goals, the Company has implemented a
compensation program with the following components:
. Base salaries that reflect the scope and responsibilities of the
position, as well as the skills, knowledge, experience, abilities, and
contributions of each individual executive.
. Short term incentives that are directly linked to the financial
performance of the Company.
. Long term incentives that balance the Executive Officer's short and long
term perspectives and provide rewards consistent with stockholder returns.
All decisions regarding individual compensation for the Company's Executive
Officers and executive compensation programs are reviewed, discussed, and
approved by the Compensation Committee and/or are recommended to the Board of
Directors or stockholders for approval, as appropriate. All compensation
decisions
7
are determined following a detailed review and assessment of external
competitive data, the individual's contributions to the Company's success, any
significant changes in role or responsibility, and internal equity of pay
relationships.
The competitiveness of the Company's total compensation
program--incorporating base salaries, short term incentives, and long term
incentives--is assessed regularly. In general, the Compensation Committee
intends that the overall compensation level for the executive group should
reflect competitive levels of compensation for comparable positions in
similarly sized manufacturers of consumer durables over the long term.
The Company believes that Executive Officers should be rewarded for their
contribution to the financial success and profitability of the business, and as
such, in 1994, the Company implemented, with stockholder approval, a
Performance Bonus Plan. Under the Performance Bonus Plan, actual bonus amounts
for each Executive Officer are based on a formula which multiplies the
Executive Officer's base salary by the Company's pretax, pre-bonus profits as a
percentage of sales and a factor reflecting the Executive Officer's relative
responsibilities and ability to impact the Company's profits. All Executive
Officers, including the Chief Executive Officer, participate in the Performance
Bonus Plan. In addition, the Compensation Committee and the Board of Directors
occasionally approve special bonuses in recognition of extraordinary
achievements that have provided significant benefits to the stockholders of the
Company.
The Company believes that it is essential to link executive and stockholder
interests. To meet this objective, the Company administers a stock option
program which awards grants to provide participants with an opportunity to
share in the Company's success. In determining stock option grants, the
Compensation Committee considers the externally competitive market, the past
contributions of the individual, the individual's ability to affect Company
profitability, the scope of the individual's responsibilities, and the need to
retain the individual's service over time. All Executive Officers, including
the Chief Executive Officer, are eligible to participate in this program.
2002 Executive Compensation
The base salaries of the named Executive Officers remained unchanged in 2002
from year-end 2001, except for Mr. David E. White who joined the Company in
April 2002 and was paid in accordance with the terms of his employment
contract. Except for Mr. White, bonuses awarded to all Executive Officers,
including Mr. Paul S. Bush, are primarily a function of payouts under the
formula-based Company Performance Bonus Plan, as described above. Mr. White's
bonus was paid in accordance with the terms of his employment contract and
included a signing bonus.
Jerald D. Bidlack, Chairman
Paul A. Benke
Robert E. Hallagan
Erland E. Kailbourne
8
Summary Compensation Table
Long Term Compensation
-------------------------------
Annual Compensation Awards Payouts
---------------------------- --------------------- ---------
Securities Long
Other Restricted Underlying Term
Annual Stock Options/ Incentive All Other
Salary Bonus Compensation Awards SARs Payouts Compensation
Name and Principal Position Year ($) ($) ($)(1) ($) (#) ($) ($)(2)
--------------------------- ---- ------- ------- ------------ ---------- ---------- --------- ------------
Paul S. Bush............... 2002 630,006 124,899 26,491 -- -- -- 2,000
Chairman, 2001 630,006 307,125 28,068 -- -- -- 38,276(3)
Chief Executive Officer 2000 624,236 755,531 38,907 -- -- -- 123,602(3)
Robert L. Ayres............ 2002 435,002 67,939 15,447 -- -- -- 2,000
President, 2001 435,002 167,063 15,633 -- -- -- 77,353(3)
Chief Operating Officer, 2000 429,232 410,974 21,477 -- -- -- 78,371(3)
Chief Financial Officer
Lewis H. Aronson........... 2002 279,994 34,159 6,572 -- -- -- 1,500
Corporate Executive 2001 279,994 84,000 6,662 -- -- -- 5,100
Vice President 2000 274,226 206,640 9,242 -- -- -- 5,100
Gregory P. Bush............ 2002 215,000 22,951 8,216 -- -- -- 2,000
President, Bush 2001 215,000 56,438 8,329 -- -- -- 5,100
Furniture 2000 207,308 138,836 11,554 -- -- -- 30,081(4)
David E. White (5)......... 2002 161,250 165,500 -- -- 36,000 -- 519
President, Bush 2001 -- -- -- -- -- -- --
Business Furniture 2000 -- -- -- -- -- -- --
--------
(1) Represents income related to imputed interest from non-interest bearing
loans.
(2) Includes Company contributions to the Savings and Retirement Plan (401(k)).
In 2002, such contributions were $2,000 for Mr. Paul S. Bush, $2,000 for
Mr. Ayres, $1,500 for Mr. Aronson, $2,000 for Mr. Gregory P. Bush, and $519
for Mr. White. In 2001, such contributions were $5,100 for Mr. Paul S.
Bush, $5,100 for Mr. Ayres, $5,100 for Mr. Aronson, and $5,100 for Mr.
Gregory P. Bush. In 2000, such contributions were $5,100 for Mr. Paul S.
Bush, $5,100 for Mr. Ayres, $5,100 for Mr. Aronson, and $4,713 for Mr.
Gregory P. Bush.
(3) Includes premiums paid by the Company with respect to split-dollar life
insurance policies for Mr. Paul S. Bush and Mr. Ayres. The Company will be
reimbursed to the extent of the premiums paid, and expects to receive such
payments upon the earlier of the death of the participant, or rollout of
the policies, the timing of which is contingent upon the amount of premiums
paid and policy performance. No premiums were paid in 2002 for either Mr.
Paul S. Bush or for Mr. Ayres. Premiums in 2001 were $33,176 for Mr. Paul
S. Bush and $72,253 for Mr. Ayres. Premiums in 2000 were $118,502 for Mr.
Paul S. Bush and $73,271 for Mr. Ayres.
(4) Includes a special bonus of $25,368 awarded in 2000 by the Company, which
was used to retire outstanding indebtedness to the Company.
(5) Mr. David E. White joined the Company as President, Bush Business Furniture
on April 1, 2002.
9
Option/SAR Grants in Last Fiscal Year
Individual Grants
---------------------------------------------------
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Grant Date Present
Name Granted (#) Fiscal Year ($/Share) Expiration Date Value $(000) (1)
---------------- ------------ ------------ --------- --------------- ------------------
Paul S. Bush.... -- -- -- -- --
Robert L. Ayres. -- -- -- -- --
Lewis H. Aronson -- -- -- -- --
Gregory P. Bush. -- -- -- -- --
David E. White.. 36,000(2) 87.8% 13.06 March 31, 2012 127
--------
(1) The following assumptions were used in applying the Black-Scholes method to
determine the Grant Date Present Value: the risk free interest rate is
assumed to be 5.25%; the dividend yield is assumed to be 2.07%; the
volatility factor of the expected market price of the Company's Class A
Common Stock is assumed to be 67%; and the expected life is assumed to be
seven years.
(2) Represents options of which 12,000 first became exercisable on April 1,
2003. An additional 12,000 options first become exercisable on April 1,
2004 with the remaining 12,000 options first becoming exercisable on April
1, 2005.
Aggregated Options/SAR Exercises in the Last Fiscal Year and Fiscal Year-End
Options/SAR Value
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/
Shares Options/SARs at Fiscal SARs at Fiscal Year-End
Acquired Value Year-End (#) $(000)
On Realized ------------------------- -------------------------
Name Exercise $(000) Exercisable Unexercisable Exercisable Unexercisable
---------------- -------- -------- ----------- ------------- ----------- -------------
Paul S. Bush.... -- -- 560,000 -- -- --
Robert L. Ayres. -- -- 143,750 -- -- --
Lewis H. Aronson -- -- 81,563 -- -- --
Gregory P. Bush. 8,100 30 50,963 -- -- --
David E. White.. -- -- -- 36,000 -- --
Compensation of Directors
Directors who are not employees of the Company were paid an annual fee of
$28,000.
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements
As of December 28, 2002, the Executive Officers named in the Summary
Compensation Table have employment agreements with the Company, which provide
for a rolling three year term of employment. The base salaries payable on an
annualized basis under the agreements are as follows: Mr. Paul S. Bush
$630,000; Mr. Robert L. Ayres $435,000; Mr. Lewis H. Aronson $280,000; Mr.
Gregory P. Bush $215,000; and Mr. David E. White $225,000. The agreements also
provide that upon termination of an executive's employment due to disability,
the executive will receive the severance payments he would have received upon
termination of his employment by the Company without good cause, reduced by the
benefits that he may receive under any short term disability and long term
disability plans provided by the Company. In addition, in the case of Mr. Paul
S. Bush and Mr. Ayres, the agreements provide for the continuation of certain
split dollar life insurance arrangements with the Company, despite termination
of their employment by the Company without good cause, until the earlier of
their death or rollout of the policies. The Company did not pay any premiums on
such split dollar life insurance policies in 2002, and depending upon
applicable law and regulation, does not currently anticipate paying any
premiums in the future.
10
Pursuant to the agreements, if the executive's employment with the Company
is terminated without good cause during the term of his agreement, the
executive will be entitled to severance pay equal to the compensation and
benefits he would have been paid, absent such termination or material breach,
for a number of months specified as follows: Mr. Paul S. Bush (36 months); Mr.
Ayres (36 months); Mr. Aronson (18 months); Mr. Gregory P. Bush (18 months);
and Mr. White (24 months).
The agreements provide that if the executive terminates his employment
following a change in control of the Company (as defined in the agreements), or
if the Company terminates the executive's employment without good cause
following a change in control of the Company, the executive will be entitled to
severance pay equal to the compensation and benefits he would have been paid
for a number of months specified as follows: Mr. Paul S. Bush (48 months); Mr.
Ayres (36 months); Mr. Aronson (36 months); Mr. Gregory P. Bush (36 months);
and Mr. White (24 months or 30 months, depending upon the circumstances, as
defined in the agreement). The compensation payable to an executive upon a
"change in control" will be reduced, if necessary, to assure that the payments
would not constitute "excess parachute payments" under the Internal Revenue
Code of 1986, as amended.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was an officer or employee of the
Company or of any of its subsidiaries during the prior year or was formerly an
officer of the Company or of any of its subsidiaries. None of the Executive
Officers of the Company have served on the Board of Directors or Compensation
Committee during the last fiscal year of any other entity, any of whose
officers served either on the Board of Directors of the Company or on the
Compensation Committee of the Company.
Certain Indebtedness
Prior to July 30, 2002, the Company loaned money to certain of its Executive
Officers from time to time for various reasons, including to facilitate the
purchase of the Company's stock, at fair market value, under the Company's
Stock Plans. The loans made to facilitate the purchase of the Company's Class A
Common Stock are non-interest bearing only until November 2003. The largest
aggregate amount of indebtedness outstanding at any time during 2002 for Mr.
Paul S. Bush was $376,245, and as of February 23, 2003, Mr. Paul S. Bush owed
the Company $354,994. The largest aggregate amount of indebtedness outstanding
at any time during 2002 for the Executive Officers named in the Company's
Summary Compensation Table was as follows: Mr. Robert L. Ayres, $187,494; Mr.
Lewis H. Aronson, $69,988; and Mr. Gregory P. Bush, $87,492, with said amounts
remaining outstanding as of February 22, 2003. Income related to imputed
interest on loans to named Executive Officers is reflected in the Summary
Compensation Table under the Column "Other Annual Compensation". With the
adoption of the Sarbanes-Oxley Act on July 30, 2002, the Company is prohibited
from extending or maintaining credit or arranging for the extension of credit
or renewing credit in the form of a personal loan for any Director or Executive
Officer. As a result, the Company has not made any new loans, or modified the
terms of existing loans, to any of its Executive Officers or Directors since
July 30, 2002.
11
Comparison of Total Stockholder Return
The following graph sets forth total stockholder returns for the New York
Stock Exchange, the S&P Household Furnishings Index, and the Company for the
five-year period beginning January 1, 1998 and ending January 1, 2003. Total
stockholder returns for the graph assumes that $100 was invested at the
beginning of the period, and that all dividends were reinvested.
[CHART]
1/1/98 1/1/99 1/1/00 1/1/01 1/1/02 1/1/03
------ ------ ------ ------ ------ ------
Bush Industries, Inc. $100.00 $48.27 $67.72 $46.47 $44.09 $20.10
New York Stock Exchange $100.00 $116.55 $127.21 $128.50 $115.38 $92.50
S&P Household Furnishings $100.00 $82.05 $68.42 $60.70 $75.34 $75.04
The preceding sections entitled "Report of the Audit Committee", "Report of
the Compensation Committee on Executive Compensation" and "Comparison of Total
Stockholder Return" do not constitute soliciting material for purposes of Rule
14a-9 of the Securities and Exchange Commission (the "Commission"), will not be
deemed to have been filed with the Commission for purposes of Section 18 of the
Securities Exchange Act of 1934, and are not to be incorporated by reference
into any other filing made by the Company with the Commission.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has appointed Deloitte & Touche LLP, as the Company's
independent auditors for the fiscal year ending January 3, 2004. Deloitte &
Touche LLP has been the independent auditors for the Company for the past
nineteen years and has no financial interest, either direct or indirect, in the
Company. A representative of Deloitte & Touche LLP is expected to attend the
Annual Meeting and to have an opportunity to make a statement and/or respond to
appropriate questions from stockholders. If the stockholders do not ratify the
appointment of Deloitte & Touche LLP, as the Company's independent auditors,
the Audit Committee may consider the selection of another auditing firm, but is
not obligated to do so.
12
The vote of a majority of the shares of Class A and Class B Common Stock
represented at the Annual Meeting, voting as a single class, after giving
effect that each holder of Class A Common Stock is entitled to one-tenth vote
per share of Class A Common Stock, and each holder of Class B Common Stock is
entitled to one vote per share of Class B Common Stock, is required for the
ratification of Deloitte & Touche LLP, as the Company's independent auditors.
The Board of Directors recommends a vote "FOR" the ratification of the
appointment of Deloitte & Touche LLP, as the Company's independent auditors.
Audit Fees - The aggregate fees billed by Deloitte & Touche LLP and a member
firm of Deloitte Touche Tohmatsu (collectively, "Deloitte") for professional
services rendered for the audit of the Company's annual consolidated financial
statements for the fiscal year ended December 28, 2002 and for the reviews of
the consolidated financial statements included in the Company's Quarterly
Reports on Form 10-Q for that fiscal year were approximately $214,400.
All Other Fees - The aggregate fees billed by Deloitte for services rendered
to the Company, other than the services described above under "Audit Fees" for
the fiscal year ended December 28, 2002 were approximately $74,400, including
audit related services of approximately $10,900 and non-audit related services
of $63,500. Audit related services generally include fees for consents and for
the audit of the Company's employee benefit plan.
There were no services rendered for financial information systems design and
implementation for the fiscal year ended December 28, 2002.
The Audit Committee of the Board of Directors has considered whether the
provision of non-audit services is compatible with maintaining the principal
accountant's independence.
AUTHORITY TO ADJOURN THE ANNUAL MEETING
Stockholders are being asked to provide proxies to give the authority, in
the discretion of the proxy holders, to vote to adjourn the Annual Meeting if
there are not sufficient votes at the date of the Annual Meeting to approve one
or more of the matters to be voted upon at the Annual Meeting. Approval of this
proposal will allow the Company, to the extent that shares voted by proxy are
required to approve a proposal to adjourn the Annual Meeting, to continue to
solicit proxies to determine whether sufficient shares will be voted in favor
or against one or more of the proposals. If the Annual Meeting cannot be
adjourned because shares voted by proxy may not be voted in favor of a motion
to adjourn the Annual Meeting, it may mean that one or more of the proposals
described in this proxy statement will fail, not because such proposals did not
receive the votes of a majority of the shares represented at the Annual
Meeting, but rather because such proposals did not obtain the requisite
percentage vote of the stockholders in time to be approved by the time of the
Annual Meeting. The Board of Directors recommends a vote "FOR" this proposal.
CERTAIN TRANSACTIONS
The Company has entered into employment agreements with Messrs. Paul S.
Bush, Robert L. Ayres, Lewis H. Aronson, Gregory P. Bush and David E. White.
See "Executive Compensation - Employment Contracts and Termination of
Employment and Change-in-Control Arrangements."
The Company maintains "key man" life insurance in the amount of
approximately $21.4 million on the life of Mr. Paul S. Bush, the Chairman of
the Board and Chief Executive Officer of the Company. Effective July 1997, the
Company entered into a stock redemption agreement with Mr. Paul S. Bush, which
provides that upon Mr. Paul S. Bush's demise the Company may be required to
redeem a portion of the Company's capital stock then owned by Mr. Paul S.
Bush's estate, at the then market price based upon a thirty day average prior
to the closing of any stock redemption. The amount of the redemption is limited
to the approximately $21.4 million in life insurance proceeds described above.
The Company believes that the redemption agreement would protect stockholder
valuation, by providing a mechanism for the orderly liquidation of a portion of
the estate's equity holdings in the Company, if the estate is then required to
sell such stock, for among other reasons, to satisfy, in whole or part, then
current estate tax obligations.
13
Mr. David G. Dawson, a Class A Director of the Company, served as a
consultant to the Company during the Company's 2002 fiscal year. For the fiscal
year ended December 28, 2002, the Company paid Mr. Dawson in the aggregate
approximately $88,000 for such services.
During fiscal year 2002, the following individuals, who are relatives of Mr.
Paul S. Bush, the Company's Chairman of the Board of Directors and its Chief
Executive Officer, were employed by the Company in such capacity and for such
aggregate salary and bonus as follows; Mr. James Bush, Mr. Paul S. Bush's
brother, Vice President of Sales, Commercial Office, $194,672; Ms. Margaret
Kochan, Mr. Paul S. Bush's sister, Manager of Food Operations, $76,144; Mr.
William J. Bacon, Mr. Paul S. Bush's son-in-law and brother-in-law of
Mr. Gregory P. Bush and Mr. Douglas S. Bush, Director of Multi-Media Services,
$59,975; and Mr. Douglas S. Bush, Mr. Paul S. Bush's son and brother of Mr.
Gregory P. Bush, a Director of the Company and its Vice-President of
Merchandising, $58,896. Mr. Douglas S. Bush is not standing for re-election to
the Company's Board of Directors and will serve as a marketing and
merchandising consultant to the Company in 2003.
Ms. Deborah L. Swauger, the sister-in-law of Mr. Lewis H. Aronson, a
Director of the Company and its Corporate Executive Vice President, was
employed by the Company as the Vice President of Corporate Administration and
received an aggregate salary and bonus of $104,575. In addition, the Company
utilized the services of Akerman Senterfitt, a law firm in which Mr. Alan H.
Aronson, the brother of Mr. Lewis H. Aronson, is a shareholder.
Ms. Janneth Artista, the wife of Mr. Ernest C. Artista, the Company's
Secretary and its Corporate Vice President of Corporate Communications, was
employed by the Company as the Vice President of Accounting and Finance and
received an aggregate salary and bonus of $102,483.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires that the Company's Executive Officers and Directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Executive Officers, Directors and greater
than ten percent stockholders are required by regulation to furnish to the
Company copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that during its 2002 fiscal year, all such filing requirements applicable to
its Executive Officers, Directors, and greater than ten percent beneficial
owners were complied with.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
at the Company's next Annual Meeting must be received by the Company no later
than December 19, 2003 in order for them to be included in the proxy statement
and form of proxy relating to that meeting. Additionally, the Company must have
notice of any stockholder proposal to be submitted at the 2004 Annual Meeting
(but not required to be included in the Company's Proxy Statement) by March 5,
2004, or such proposal will be considered untimely pursuant to Rule 14a-4 and
Rule 14a-5(e) under the Securities Exchange Act of 1934, and persons so named
in the proxies solicited by Management may exercise discretionary voting
authority with respect to such proposal.
By Order of the Board of Directors,
Ernest C. Artista,
Secretary
Jamestown, New York
April 18, 2003
14
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
BUSH INDUSTRIES, INC.
P.O. BOX 460
One Mason Drive, Jamestown, NY 14702-0460
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF BUSH INDUSTRIES, INC.
The undersigned hereby appoints Paul S. Bush and Robert L. Ayres as
Proxies, each with the power to appoint his substitute, and hereby authorizes
either of them to represent and to vote, as designated hereon, all the shares
of Class A Common Stock of Bush Industries, Inc. held of record by the
undersigned on March 28, 2003, at the Annual Meeting of Stockholders to be
held on May 15, 2003 at 10:00 a.m., or any adjournment(s) thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION
OF DELOITTE & TOUCHE LLP, AS THE COMPANY'S INDEPENDENT AUDITORS, FOR THE
PROPOSAL TO ADJOURN THE ANNUAL MEETING IF THERE ARE NOT SUFFICIENT VOTES TO
APPROVE ONE OR MORE MATTERS, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY COME BEFORE THE MEETING.
(Continued on reverse side)
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned Class A Common Stockholder. If no direction is made, this
proxy will be voted FOR the following Proposals:
1. ELECTION OF DIRECTORS PAUL A. BENKE, JERALD D. BIDLACK, DAVID G. DAWSON, WILLIAM M. HOGAN, III
FOR all nominees WITHHOLD
listed (except as AUTHORITY to
marked to the vote for all (INSTRUCTION: To withhold authority to vote for any individual nominee, write that
contrary) nominees listed nominee's name in the space provided below.)
/ / / /
------------------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE TO ACT UPON SUCH OTHER MATTER OR MATTERS WHICH MAY
LLP, TO ACT AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR
FISCAL YEAR ENDING JANUARY 3, 2004. ADJOURNMENTS THEREOF.
FOR AGAINST ABSTAIN
/ / / / / /
3. PROPOSAL TO ADJOURN THE ANNUAL MEETING IF THERE ARE NOT SUFFICIENT
VOTES TO APPROVE ONE OR MORE MATTERS.
FOR AGAINST ABSTAIN
/ / / / / /
This proxy should be marked, dated and signed by the stockholder(s)
exactly as his or her name appears hereon, and returned promptly in the
enclosed envelope. Persons signing in a fiduciary capacity should so
indicate. If shares are held by joint tenants or as community property,
both must sign.
Dated: , 2003
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Signature
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Signature