1
TWIN DISC, INCORPORATED
1328 Racine Street, Racine, Wisconsin 53403
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 21, 2005
NOTICE IS HEREBY GIVEN TO THE
SHAREHOLDERS OF TWIN DISC, INCORPORATED
The Annual Meeting of Shareholders of Twin Disc, Incorporated, a Wisconsin
corporation, will be held at 2 P.M. (Central Daylight Time) on Friday,
October 21, 2005, at the Corporate Offices, 1328 Racine Street, Racine,
Wisconsin for the following purposes:
1. Election of three Directors to serve until the Annual Meeting in 2008.
2. To transact any other business that may properly come before the
meeting.
Only holders of record of shares of common stock of the Corporation at the
close of business on September 2, 2005, shall be entitled to vote at the
meeting.
A proxy appointment and proxy statement are enclosed herewith. The proxy
appointment shows the form in which your shares are registered. Your signature
should be in the same form.
FRED H. TIMM
Secretary
September 21, 2005
IF YOU ARE UNABLE TO ATTEND THE MEETING IN PERSON, PLEASE SIGN AND RETURN
YOUR PROXY APPOINTMENT IN THE ENCLOSED ENVELOPE BEFORE THE DEADLINE STATED IN
THE PROXY STATEMENT. IF YOUR PROXY APPOINTMENT IS NOT RECEIVED BY THE
SECRETARY BEFORE THAT DEADLINE, IT WILL BE RULED INVALID. SHOULD YOU FIND IT
CONVENIENT TO ATTEND THE MEETING PERSONALLY, AND DESIRE TO VOTE IN PERSON, YOU
MAY REQUEST BEFORE ANY VOTE THAT YOUR PROXY APPOINTMENT BE RETURNED TO YOU IN
ORDER THAT YOU MAY VOTE IN PERSON.
YOUR VOTE IS IMPORTANT!
PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY APPOINTMENT
IMMEDIATELY.
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2005 Proxy Statement
TWIN DISC, INCORPORATED
September 21, 2005
DATE, TIME AND PLACE OF MEETING
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of the Corporation of proxies for use at the Annual
Meeting of Shareholders to be held at 2 P.M. (Central Daylight Time), at the
Corporate Offices, 1328 Racine Street, Racine, Wisconsin on Friday, October 21,
2005, or any adjournment thereof. Holders of common stock of record at the
close of business on the 2nd day of September 2005, are entitled to vote at the
meeting and each shareholder shall have one vote for each share of common stock
registered in the shareholder=s name. Shares represented by a signed proxy
appointment will be voted in the manner specified in the form of proxy or, if
no specification is made, in favor of each of the propositions mentioned
therein. The presence of a majority of the outstanding shares of common stock
of the Corporation, either in person or represented by a signed proxy
appointment, will constitute a quorum at the meeting. The Corporation intends
to mail this statement to shareholders on or about September 21, 2005.
Shareholders may vote by delivery, either in person, by mail or by
messenger, of the enclosed proxy appointment form. The proxy appointment form
must be signed. Internet and telephone voting are also available at
www.proxyvoting.com/tdi and 1-866-540-5760, respectively. Furthermore,
appointment forms must be received by the Secretary not less than 48 hours
prior to the date of the meeting. PROXY APPOINTMENT FORMS NOT MEETING THE ABOVE
REQUIREMENTS WILL BE RULED INVALID.
The proxy appointment form must be signed in handwriting. The signature
must be sufficiently legible to allow the inspector to distinguish it as
representing the name of the registered shareholder, or must be accompanied by
a rubber stamp facsimile or hand-printed name, including the shareholder's
surname and either the shareholder's first or middle name as represented on the
corporate records, and any titles, offices or words indicating agency which
appear in the Corporate records.
The person giving the proxy may revoke it before it is exercised, either
in person, by mail, or by messenger, by submitting a later dated proxy
appointment form to the Secretary at least forty-eight (48) hours prior to the
date of the meeting. The person giving the proxy may also revoke it by openly
stating the revocation at the meeting, by voting at the meeting in person, or
by delivering a signed written statement revoking the proxy to the Secretary
prior to the date of the meeting. ANY ATTEMPTED REVOCATIONS NOT MEETING THE
ABOVE REQUIREMENTS WILL BE RULED INVALID.
The record date with respect to this solicitation is September 2, 2005. On
September 2, 2005, there were outstanding 2,867,342 shares of common stock of
the Corporation entitled to vote at the Annual Meeting. There also are 200,000
shares of no-par preferred stock authorized, of which 50,000 shares have been
designated Series A Junior Preferred Stock, but none are outstanding.
SHAREHOLDER PROPOSALS FOR 2006
If a shareholder wishes to present a proposal for consideration for
inclusion in the Notice of the Meeting and Proxy Statement for the 2006 Annual
Meeting, the proposal must be received at the Corporation's principal executive
offices no later than May 24, 2006. Shareholder proposals received later than
July 23, 2006 will be considered untimely, and will not be considered at the
Corporation's 2006 Annual Meeting.
PERSONS MAKING THE SOLICITATION
The proxy is being solicited by the Corporation's Board of Directors and
will be voted in favor of the Directors' recommendations on each and all
matters properly brought before the meeting, unless the undersigned shareholder
specifically instructs the holder or holders of the proxy to the contrary.
VOTES REQUIRED FOR APPROVAL OR ELECTION AND HOW VOTES WILL BE COUNTED
With respect to the election of directors, votes may be cast in favor or
withheld. Votes that are withheld will be excluded entirely from the vote and
will have no effect. The affirmative vote of a majority of the votes cast at
the annual meeting (assuming a quorum is present) shall be required for the
election of directors.
Abstentions may be specified on all proposals submitted to shareholders,
other than for the election of directors. Abstentions will be counted for
purposes of determining the presence or absence of a quorum for the transaction
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of business at the meeting, but shall not be counted as voted shares for
purposes of the meeting.
In certain instances, brokers who hold shares in street name for customers
may have authority to vote on certain items when they have not received
instructions from the beneficial owners of the shares. With respect to routine
matters, including the election of directors, brokers may vote their shares
without specific instructions from the beneficial owners. However, under the
rules of the New York Stock Exchange, brokers who hold shares in street name
are not permitted to vote on certain non-routine matters, including the
adoption of stock-based compensation plans, without specific instructions from
the beneficial owners of the shares. A "broker non-vote" occurs on an item
submitted for shareholder approval when the broker does not have the authority
to vote on the item in the absence of instructions from the beneficial owner.
Such "broker non-votes" will be counted for purposes of determining the
presence or absence of a quorum.
PRINCIPAL SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
PRINCIPAL SHAREHOLDERS
Based upon the records of the Corporation and filings with the Securities
and Exchange Commission as of July 31, 2005, the following table sets forth
the persons or group of persons having beneficial ownership (as defined by the
Securities and Exchange Commission) of more than 5% of the issued and
outstanding common stock of the Corporation.
Nature of
Beneficial Amount Percent of
Name Address Ownership Owned Class
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Michael E. Batten 3419 Michigan Blvd. Power to vote 538,431(1) 18.7%
Racine, WI Beneficial 123,713(2) 4.3%
Fidelity Management 82 Devonshire St. Power to vote & 285,900 9.9%
& Research Corp. Boston, Ma Dispose of stock
Dimensional Fund 1299 Ocean Ave. Power to vote & 158,800 5.5%
Advisors Santa Monica, CA dispose of stock
(1) Held as trustee under various trusts.
(2) Includes 2,600 shares owned by the wife of Michael E. Batten and 43,000
subject to currently exercisable stock options.
DIRECTORS AND EXECUTIVE OFFICERS
Based upon the records of the Corporation and filings with the Securities
and Exchange Commission as of July 31, 2005, the following table sets forth the
number of shares of common stock of the Corporation beneficially owned by each
of the Directors of the Corporation, each of the executive officers named in
the Summary Compensation Table and the number of shares beneficially owned by
all Directors and executive officers of the Corporation as a group.
Amount and Nature
Name of of Beneficial Percent of
Beneficial Owner Ownership (F1) Class
- - - - - - - - - - - - - - - - - - - - - - - -
Michael E. Batten 662,144 (F2) 23.0%
Michael H. Joyce 12,500 (F3) *
Christopher J. Eperjesy 21,913 (F4) *
James E. Feiertag 11,356 (3) *
John H. Batten 600 (3) *
John A. Mellowes 5,800 (3) *
David B. Rayburn 4,500 (3) *
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David L. Swift 6,800 (3) *
George E. Wardeberg 5,700 (3) *
David R. Zimmer 8,240 (3) *
Harold M. Stratton II 600 (3) *
All Directors and
Executive Officers
as a group (14 persons) 724,336 (3) 25.2%
* Denotes ownership of less than one percent of shares outstanding.
(F1) Shares listed include any shares owned by a spouse, minor children and
immediate relatives who share the same household as a Director or officer.
Inclusion of any such shares is not to be considered an admission of beneficial
ownership.
(F2) Includes 2,600 shares held by Mr. Batten's wife, 538,431 shares held by him
as trustee under various family trusts, and 43,000 shares subject to presently
exercisable stock options.
(F3) Shares subject to currently exercisable stock options included in the above
are as follows: Mr. Joyce 12,500, Mr. Rayburn 4,500, Mr. Swift 6,800,
Mr. Zimmer 6,800, Mr. Feiertag 9,500, Mr. Mellowes 5,300, Mr. Wardeberg 5,500,
Mr. J.Batten 600,Mr. Stratton 600 and all Directors and executive officers as a
group 98,250.
(F4) Includes restricted stock grants of 21,500 shares. The restricted stock
vests as follows: 10,500 in fiscal 2006,1,500 in fiscal 2007, 8000 in fiscal
2008 and 1,500 in fiscal 2009.
ELECTION OF DIRECTORS
Three directors are to be elected for a term to expire at the annual
meeting following the fiscal year ended June 30, 2008. Shares of common stock
represented by properly executed proxy appointments in the accompanying form
will be voted for the nominees listed for the term indicated unless authority
to do so is withheld.
The nominees for the Board of Directors and the Directors whose terms will
continue and the class to which he has been or is to be elected are as set
forth below. Each nominee and each Director was elected to his present term of
office by a vote of shareholders at a meeting for which proxies were solicited.
John H. Batten is the son of Michael E. Batten.
Served as
Principal Occupation Director
Name of Director and other Public Continuously
and Current Age Company Directorships Since
- - - - - - - - - - - - - - - - - - - - - - - - - -
NOMINEES FOR DIRECTORS FOR TERMS TO EXPIRE IN 2008:
Michael E. Batten . . . . . Chairman and Chief Executive Officer, May 1974
Age 65 Twin Disc, Incorporated
Also Director,
Briggs & Stratton Corporation,
Sensient Technologies Corporation
David L. Swift . . . . . . . Former Chairman, President and July 1995
Age 68 Chief Executive Officer,
Acme-Cleveland Corporation,
Pepper Pike, Ohio
(A manufacturer of diversified
industrial products)
David R. Zimmer. . . . . . . Managing Partner,Stonebridge July 1995
Age 59 Equity LLC, Troy,Michigan, since
2005 (A merger, acquisition and
finance value consulting firm)
Formerly Chief Executive Officer,
Twitchell Corporation,
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Dothan, AL
(A privately held manufacturer
and marketer of highly engineered,
synthetic yarns, fabrics, extrusions,
and coatings)
DIRECTORS WHOSE TERMS EXPIRE IN 2006:
Michael H. Joyce . . . . . . President and October 1991
Age 64 Chief Operating Officer,
Twin Disc, Incorporated
Also Director, Woodward
Governor Company and
Oil Gear Company
David B. Rayburn . . . . . . President and July 2000
Age 57 Chief Executive Officer,
Modine Manufacturing Company,
Racine, Wisconsin
(A manufacturer of heat
exchange equipment)
George E. Wardeberg . . . . Retired Vice Chairman, July 1997
Age 70 Wisconsin Energy Corporation
Milwaukee, Wisconsin
(A holding company with subsidiaries in
utility and non-utility businesses)
Also Director,
Marshall & Ilsley Corporation,
Wisconsin Energy Corporation
DIRECTORS WHOSE TERMS EXPIRE IN 2007:
John H. Batten . . . . . . . Executive Vice President since December 2002
Age 40 October 2004; formerly Vice
President and General Manager
Marine & Propulsion since
October 2001
John A. Mellowes . . . . . . Chairman and October 1998
Age 67 Chief Executive Officer,
Charter Manufacturing Co.,
Mequon, Wisconsin
(A privately held producer of bar,
rod wire and wire parts)
Also Director,
Marshall & Ilsley Corporation
Harold M. Stratton II. . . . Chairman and Chief Executive Officer, July 2004
Age 56 Strattec Security Corporation,
Milwaukee, Wisconsin
(A leading manufacturer of mechanical
locks, electromechanical locks and
and related security/access control
products for global automotive
manufacturers)
CORPORATE GOVERNANCE
The Company's business is conducted under the direction of the Board of
Directors, pursuant to the laws of the State of Wisconsin and our Restated
By-laws. Members of the Board of Directors are kept informed of the Company's
business through discussions with the Chairman and Chief Executive Officer,
and with key members of management, by reviewing materials provided to them and
by participating in meetings of the Board of Directors and its committees.
The Company reviewed its corporate governance policies and practices,
particularly in light of the Sarbanes-Oxley Act of 2002 and rule changes made
or proposed by the Securities and Exchange Commission and the NASDAQ Stock
Market. We believe that our current policies and practices meet all applicable
requirements. Our updated corporate governance policies, including updated
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charters for committees of the Board, are made available to our shareholders
on our website, www.twindisc.com, and/or through appropriate mailings.
Board Independence
The Company requires, as set forth in its Guidelines for Corporate
Governance, that a majority of the Board members be independent outside
directors. However, the Company is not opposed to having members of the
Company's management, including the CEO, serve as directors. "Independent
Director," as used here, means a person other than an officer or employee of
the Company or its subsidiaries or any other individual having a relationship
which, in the opinion of the Board, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. At a
minimum, to qualify as "independent," a director must so qualify under
governing rules, regulations and standards, including those issued by the SEC
and the NASDAQ Stock Market. The Nominating and Governance Committee shall
assess independence on an ongoing basis, and each director is responsible for
bringing to the attention of the Nominating and Governance Committee any
changes to his or her status that may affect independence. In addition, the
directors shall complete, on at least an annual basis, a questionnaire prepared
by the Company that is designed to elicit information that relates to the
independence assessment. A majority of the Company's current directors are
Independent Directors.
The Board has determined that the following directors are independent
within the meaning of the SEC regulations, the listing standards of NASDAQ
Stock Market and the Company's Guidelines on Corporate Governance:
Messrs. Mellowes, Rayburn, Stratton, Swift, Wardeberg and Zimmer.
Guidelines for Business Conduct and Ethics
Our Guidelines for Business Conduct and Ethics (our "Guidelines")
summarize the compliance and ethical standards and expectations we have
for all our employees, officers and directors with respect to their conduct
in furtherance of Company business. It contains procedures for reporting
suspected violations of the Guidelines, including procedures for the reporting
of questionable accounting or auditing matters, or other concerns regarding
accounting, internal accounting controls or auditing matters. These materials
are also available in print to any shareholder upon request. If we make any
substantive amendment to the Guidelines, we will disclose the nature of such
amendment on our website or in a current report on Form 8-K. In addition, if a
waiver from the Guidelines is granted to an executive officer or director, we
will disclose the nature of such waiver on our website at www.twindisc.com or
in a current report on Form 8-K.
DIRECTOR COMMITTEES AND ATTENDANCE
BOARD OF DIRECTORS MEETINGS AND ATTENDANCE
The Corporation's Board of Directors met 6 times during the year ended
June 30, 2005. There was one absence from these meetings.
DIRECTORS COMMITTEE MEETINGS AND ATTENDANCE
The Audit Committee met 4 times during the year. The Compensation
Committee met 3 times during the year. The Pension, Nominating and Governance
and Finance Committees each met 2 times during the year. Each Director attended
at least 75% of the meetings requiring his attendance.
DIRECTOR COMMITTEE FUNCTIONS
Audit Committee
The Company has a separately-designated Audit Committee established in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.
The charter of the Audit Committee is available on the Company's website,
www.twindisc.com. The Board most recently revised its Audit Committee charter
on April 16, 2004.
In October of each year, the Board selects the members of the Audit
Committee. All of the members of the Audit Committee are independent within
the meaning of the SEC regulations, the listing standards of NASDAQ Stock
Market and the Company's Guideline on Corporate Governance. No member is
qualified as an audit committee financial expert within the meaning of the
SEC regulations or the NASDAQ Stock Market. The collective expertise of the
Audit Committee is believed to be sufficient to carry out the duties of the
Audit Committee.
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As set forth in the charter, the Audit Committee's purpose is to assist
the Board of Directors in monitoring the:
* Integrity of the Company's financial statements;
* Independent auditor's qualifications and independence;
* Performance of the Company's internal audit function and the
independent auditors; and
* Company's compliance with legal and regulatory requirements.
In carrying out these responsibilities, the Audit Committee, among other
things:
* Appoints the independent auditor for the purpose of preparing and
issuing an audit report and to perform related work, and discusses with
the independent auditor appropriate staffing and compensation;
* Retains, to the extent it deems necessary or appropriate, independent
legal, accounting or other advisors;
* Oversees management's implementation of systems of internal controls,
including review of policies relating to legal and regulatory
compliance, ethics and conflicts of interests; and reviews the
activities and recommendations of the Company's internal auditing
program;
* Monitors the preparation of quarterly and annual financial reports by
the Company's management, including discussions with management and the
Company's outside auditors about draft annual financial statements and
key accounting and reporting matters;
* Determines whether the outside auditors are independent (based in part
on the annual letter provided to the Company pursuant to Independence
Standards Board Standard No. 1); and
* Annually reviews management's programs to monitor compliance with the
Company's Guidelines on Business Conduct and Ethics.
Finance Committee
The Finance Committee is appointed by the Board of Directors of the
Company to assist the Board in fulfilling its oversight responsibilities for
considering management's proposed financial policies and actions, and making
appropriate recommendations to the Board regarding: Debt and capital structure,
acquisitions, capital budgets, dividend policy and other financial and risk
management matters.
Nominating and Governance Committee
The Nominating and Governance Committee recommends nominees for the Board
to the Board of Directors. The Committee will consider nominees recommended by
shareholders in writing to the Secretary. In addition, the Committee develops
and recommends to the Board a set of effective corporate governance policies
and procedures applicable to the Company; and reviews proposed changes in
corporate structure and governance, committee structure and function, and
meeting schedules, making recommendations to the Board as appropriate. The
charter of the Nominating and Governance Committee is available on the
Company's website, www.twindisc.com.
In October of each year, the Board selects members of the Nominating and
Governance Committee for the coming year. The independence of the Committee is
in compliance with SEC regulations, the listing standards of the NASDAQ Stock
Market and the Company's Guidelines for Corporate Governance.
Selection of Nominees for the Board
The Nominating and Goverance Committee shall identify candidates for
director nominees in consultation with the Chief Executive Officer and Chairman
of the Board, through the use of search firms or other advisers or through such
other methods as the Committee deems to be helpful to identify candidates,
including the processes identified herein. The Committee will also consider
director candidates recommended by stockholders. The procedures for
recommendation of nominees by stockholders is available on the Company's web
site, www.twindisc.com.
Stockholders, in submitting recommendations to the Committee for director
candidates, shall follow the following procedures:
a. The Committee must receive any such recommendation for nomination by a
date not later than the 80th calendar day before the date the
Corporation's proxy statement was released to stockholders in
connection with the previous year's annual meeting.
b. Such recommendation for nomination shall be in writing and shall
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include the following information:
i. Name of the Stockholder, whether an entity or an individual,
making the recommendation;
ii. A written statement disclosing such stockholder's beneficial
ownership of the Corporation's securities;
iii. Name of the individual recommended for consideration as a director
nominee;
iv. A written statement from the stockholder making the recommendation
stating why such recommended candidate would be able to fulfill
the duties of a director;
v. A written statement from the stockholder making the recommendation
stating how the recommended candidate meets the independence
requirements established by the SEC and the NASDAQ Stock Market;
vi. A written statement disclosing the recommended candidate's
beneficial ownership of the Corporation's securities; and
vii. A written statement disclosing relationships between the
recommended candidate and the Corporation which may constitute a
conflict of interest.
c. Nominations may be sent to the attention of the Committee via the
method listed below:
U.S. Mail or Expedited Delivery Service:
Twin Disc, Incorporated
1328 Racine Street
Racine, WI 53403
Attn: Nominating and Governance Committee
c/o Secretary of Twin Disc, Incorporated
Once candidates have been identified, the Committee shall confirm that the
candidates meet all of the minimum qualifications for director nominees set
forth below. The Committee may gather information about the candidates through
interviews, background checks, or any other means that the Committee deems to
be helpful in the evaluation process. The Committee shall then meet as a group
to discuss and evaluate the qualities and skills of each candidate, both on an
individual basis and taking into account the overall composition and needs of
the Board. There shall be no difference in the manner by which the Committee
evaluates director nominees, whether nominated by the Board or by a nominating
stockholder.
The Corporation evaluates each individual candidate in the context of the
overall composition and needs of the Board, with the objective of recommending
a group that can best manage the business and affairs of the Corporation and
represent Stockholder interests using its diversity of experience. A director
must have substantial or significant business or professional experience or an
understanding of technology, finance, marketing, financial reporting,
international business or other disciplines relevant to the business of the
Corporation. A director must be free from any relationship that, in the opinion
of the Board, would interfere with the exercise of his or her judgment as a
member of the Board or of a Board committee. This shall not preclude an
otherwise qualified employee of the Corporation from serving as a director, as
long as the majority of directors satisfy the independence requirements of the
regulatory bodies. Each director will be expected to review and agree to adhere
to the Corporation's Guidelines for Business Conduct and Ethics, as in effect
from time to time. The Committee will consider these and other qualifications,
skills and attributes when recommending candidates for the Board's selection as
nominees for the Board and as candidates for appointment to the Board's
committees.
Compensation Committee
The primary purpose of the Compensation Committee is: (i) to assist the
Board in discharging its responsibilities in respect to the compensation of the
Company's executive officers; and (ii) to produce an annual report for
inclusion in the Company's proxy statement on executive compensation. The
Committee approves the design of, assesses the effectiveness of, and
administers executive compensation programs in support of compensation policies
of the Company.
Pension Committee
The Pension Committee reviews and recommends to the Board for approval the
pension funds professional advisors and auditors. The Committee annually
reviews actuarial assumptions, actuarial valuations, investment performance,
funding policies and investment policies.
Committee Membership
The Board's committees are currently comprised of the following Directors;
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the Chairman of the Committee is listed first:
Nominating
and
Audit Finance Pension Compensation Governance
- - - - - - - - - - - - - - - - - - - - - - - - - - -
Zimmer Mellowes Rayburn Wardeberg Swift
Rayburn Swift Mellowes Mellowes Rayburn
Stratton Zimmer Swift Zimmer Wardeberg
Wardeberg Stratton
Joyce
Attendance at Annual Meeting
The Company does not have a formal policy that its directors attend the
Annual Meeting of Shareholders because it expects them to do so and because the
Company's directors historically have attended these meetings. All of the
members of the Board of Directors attended last year's annual meeting. The
Board of Directors conducts its annual meeting directly before the Annual
Meeting of Shareholders at the Company's headquarters.
Stockholder Communication with the Board
The Board provides to every stockholder the ability to communicate with
the Board, as a whole, and with individual directors on the Board through an
established process for stockholder communication ("Stockholder Communication")
as follows:
1. Stockholder Communication to Entire Board. For Stockholder
Communication directed to the Board as a whole, stockholders may send such
communication to the attention of the Chairman of the Board via the method
listed below:
U.S. Mail or Expedited Delivery Service:
Twin Disc, Incorporated
1328 Racine Street
Racine, WI 53403
Attn: Chairman of the Board of Directors
2. Stockholder Communication to Individual Director. For Stockholder
Communication directed to an individual director in his or her capacity as a
member of the Board, stockholders may send such communication to the attention
of the individual director via the method listed below:
U.S. Mail or Expedited Delivery Service:
Twin Disc, Incorporated
1328 Racine Street
Racine, WI 53403
Attn: [Name of Individual Director]
The Corporation will forward by U.S. mail any such Stockholder
Communication to each director, and the Chairman of the Board in his or her
capacity as a representative of the Board, to whom such Stockholder
Communication is addressed to the address specified by each such director and
the Chairman of the Board.
Communications from an officer or director of the Corporation and
proposals submitted by stockholders to be included in the Corporation's
definitive proxy statement, pursuant to Rule 14a-8 of the Securities Exchange
Act of 1934, (and related communications) will not be viewed as a Stockholder
Communication. Communications from an employee or agent of the Corporation will
be viewed as Stockholder Communication only if such communications are made
solely in such employee's or agent's capacity as a stockholder.
From time to time, the Board may change the process by which stockholders
may communicate with the Board or its members. Please refer to the Company's
website, www.twindisc.com, for any changes to this process.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation received by the
Corporation's Chief Executive Officer and the 4 most highly paid executive
officers for the 3 fiscal years ended June 30, 2005, 2004, and 2003,
respectively.
SUMMARY COMPENSATION TABLE
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Annual Long-Term
Compensation Compensation
- - - - - - - - - - - - - - -------
Restricted
Name and Stock Stock All Other
Principal Position Year Salary Bonus Options Grants Compensation
(F1) (F3) (F4) (F2)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Michael E. Batten 2005 $386,829 $282,425 - $ - $20,168
Chairman and 2004 358,539 - - - 70,025
Chief Executive 2003 393,309 - - - 23,957
Officer
Michael H. Joyce 2005 $289,627 $179,685 - $ - $10,076
President and 2004 276,439 - - - 40,105
Chief Operating 2003 295,802 - 4,000 - 13,674
Officer
James E. Feiertag 2005 $225,139 $114,840 - $ - $ 7,207
Executive Vice 2004 222,167 - - - 41,377
President 2003 229,198 - 3,000 - 40,862
Christopher J. 2005 $216,385 $113,850 - $ 65,700 $ 8,870
Eperjesy
Vice President 2004 185,077 - 2,500 269,600 22,281
Finance/Treasurer 2003 132,969 - 2,500 31,750 3,427
John H. Batten 2005 $156,137 $ 84,150 - $ - $16,114
Executive Vice 2004 135,076 - - - 7,608
President 2003 108,775 - - - 16,002
(F1) Represents annual incentive bonuses determined by the Board of Directors.
See "Board Compensation Committee Report on Executive Compensation-Annual
Incentives". Bonuses represent amounts earned during the fiscal year and are
paid in the subsequent fiscal year.
(F2) Amounts are comprised of Corporation's 401(k) matching contributions and
Corporation paid life insurance
(F3) There were no stock options granted in fiscal 2005.
(F4) At June 30, 2005 Mr. Eperjesy had 21,500 restricted stock grants valued at
$470,850 based on the closing stock price as of June 30,2005. The restricted
stock vests as follows: 10,500 in fiscal 2006, 1,500 in fiscal 2007, 8000 in
fiscal 2008 and 1,500 in fiscal 2009. Dividends are paid on the restricted
stock.
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table provides information on option exercises in fiscal
2005 by the named executive officers and the value of such officers'unexercised
options at June 30, 2005.
Total Number Total Value
of Unexercised of Unexercised,
Options Held In-the-Money Options
Shares Value at Fiscal Year End Held at Fiscal Year End
Acquired on Real- Exer- Unexer- Exer- Unexer-
Name Exercise ized cisable cisable cisable cisable
---- ----------- ----- --------- --------- --------- -----------
M. Batten 7,500 $12,231 43,000 0 $133,528 $ 0
M. Joyce 22,350 $144,939 12,500 0 88 0
J. Feiertag 0 N/A 9,500 0 63,138 0
C. Eperjesy 0 N/A 0 0 0 0
J. Batten 0 N/A 600 0 1,513 0
11
Long-Term Incentive Plans- Awards in Last Fiscal Year
The annual 2005 long-term grants for all the named executives were made in
the form of performance stock grants. The following table identifies the
performance shares granted to the named executives during the 2005 fiscal year.
Performance Estimated Future Payouts
Number of or Other Under Plans
Share,Units Period Until ----------------------------
Or Other Maturation Threshold Target Maximum
Rights(#) or Payout(F1) (#) (#) (#)
----------- ------------ --------- ------- -------
M.Batten 7,200 6/30/07 0 7,200 7,200
M.Joyce 5,100 6/30/07 0 5,100 5,100
J.Feiertag 3,000 6/30/07 0 3,000 3,000
C.Eperjesy 3,000 6/30/07 0 3,000 3,000
J.Batten 2,100 6/30/07 0 2,100 2,100
(F1)The performance shares granted under the 1998 Incentive Compansation
Plan and the 2004 Stock Incentive Plan vest on June 30, 2007 provided the
Company achieves at least $235,000,000 in consolidated annual revenue for the
fiscal year ended June 30, 2007.
If prior to attaining the performance objective an employee voluntarily
terminates before becoming eligible for retirement under the Company's defined
benefit plan covering the employee or employment is terminated for cause, the
performance stock awards shall be forfeited.
If an event constituting a change in control of the Company occurs and the
employee thereafter terminates employment for any reason, then all performance
stock awards granted shall immediately vest as if the performance objective had
been fully achieved.
If prior to attaining the performance objective employment is terminated
other than for the above the performance stock awards granted shall be paid on
a prorated basis if and when the performance objective is achieved.
Retirement Income Plan
The Twin Disc, Inc., Retirement Plan for Salaried Employees provides
non-contributory benefits based upon both years of service and the employees'
highest consecutive 5-year average annual compensation during the last 10
calendar years of service. As of December 31, 1996, the then-current accrued
benefits under the plan were frozen and the plan was amended to provide for
future accruals under a cash-balance formula, as described below.
AVERAGE HIGH NON-CONTRIBUTORY PENSION BASED ON
5-YEAR ANNUAL YEARS OF CREDIT SERVICE
COMPENSATION 10 YEARS 20 YEARS 25 YEARS 30 YEARS 40 YEARS
------------ -------- -------- -------- -------- --------
$ 50,000 $ 9,265 $16,378 $18,000 $19,743 $23,075
75,000 14,465 25,702 28,419 31,143 36,234
100,000 19,664 35,026 38,838 41,103 49,393
150,000 30,065 53,674 59,676 65,343 75,711
The values reflected in the table represent the application of the Plan
formula to the appropriate amounts of compensation and years of service.
Benefits payable under the Plan, however, must be in compliance with the
applicable guidelines or maximum prescribed in the Internal Revenue Code and
in the Employee Retirement Income Security Act of 1974 (ERISA), as currently
stated or as amended from time to time. As of December 31, 1996, the credited
12
years of service for each of the Corporation's executive officers named in the
Summary Compensation Table is as follows: Mr. M. Batten 27 years and Mr. Joyce
6 years. Mr. Feiertag, Mr. Eperjesy and Mr. J. Batten are not eligible for an
accrued benefit under the Plan based on pre-January 1, 1997, service.
Effective January 1, 1997, the Plan was amended to add a cash balance
formula for post-January 1, 1997, accruals. Benefits under the Plan are
generally equal to the sum of the benefits as frozen on December 31, 1996, plus
benefits that accumulate under the cash balance formula beginning on January 1,
1997. Benefits under the cash balance formula are generally stated as a lump
sum amount, but may be distributed as a lump sum or an annuity. Accruals under
the cash balance formula are based on a percentage of compensation, from 4.5%
to 6.5% based on years of service, with interest credits at the thirty-year
U.S. Treasury Bond rate, or other such rate mandated by the IRS in substitution
of the 30 year Treasury rate, with a minimum guaranty of 3%. To record these
pay credits and interest credits, a hypothetical account balance is maintained
for each participant. The hypothetical account balance for each named
executive as of June 30, 2005, is as follows: Mr. M. Batten $126,681; Mr. Joyce
$97,303; Mr. Eperjesy $24,948; Mr. Feiertag $45,583 and Mr. J. Batten $41,892.
If the named executives continue in their respective positions and retire at
the normal retirement age of 65, their estimated annual pension amount under
cash balance portion of the Plan would be: Mr. M. Batten $11,805; Mr. Joyce
$8,500; Mr. Eperjesy $46,129; Mr. J. Batten $37,505 and Mr. Feiertag $25,765.
Supplemental Retirement Benefit Plan
A supplemental retirement plan is extended to qualified management. For
those who were participants in the plan before January 1, 1998 (including
Messrs. Batten and Joyce), the supplemental retirement benefit is calculated
as an annual benefit approximating 50% of the highest rate of pay attained
during a specified period, minus amounts accrued under the Company's qualified
defined benefit plan. The plan also preserved the level of benefits that had
accrued prior to 1998. For those who became participants in the plan on or
after January 1, 1998 (including Mr. Feiertag, Mr. Eperjesy and Mr. J. Batten),
the supplemental retirement benefit is calculated as the additional benefit
that the participant would have received at retirement under the Company's
qualified defined benefit plan but for the limitation on compensation that is
used in determining benefits under the defined benefit plan. The benefit is
payable in the form of a single life annuity or two payments. Under the two
lump sum payment method, payments are made on the first and second February 1
in the years following retirement. The maximum payment in any given year is
$500,000 any amounts in excess of $500,000 will be paid in the third and
subsequent years following retirement. In the event of the death of a plan
participant after attaining a retirement age but prior to retirement, the
surviving spouse will receive a lump sum benefit. As of June 30, 2005, the
annual benefit accrued for each named executive at his respective normal
retirement date is as follows: Mr. M. Batten, $131,786; Mr. Joyce, $103,423;
Mr. Eperjesy, $60,340; Mr. Feiertag $18,906 and Mr. J.Batten $15,510.
Retention and Non-Compete Agreement
During fiscal 2003, Mr. Joyce and the Company entered into a Retention
and Non-Compete Agreement. Under the agreement, Mr. Joyce agrees to continue
as President and Chief Operating Officer until age 65 or earlier with consent
of the Chief Executive Officer. In consideration for the above, Twin Disc,
Incorporated will pay Mr. Joyce a retention bonus of $300,000 upon his
attaining the age of 65. The entire bonus is payable in the event of an
involuntary termination and a pro-rated retention bonus is payable in the
event of early voluntary termination. In addition, Mr. Joyce has agreed to a
three-year non-disclosure and non-compete agreement.
Compensation of Directors
Outside Directors of the Corporation are paid an annual retainer of
$12,000. In addition, outside Directors receive a $1,500 fee for each board
meeting and each committee meeting attended and $3,000 per year for serving as
a committee chairman. Directors who are officers do not receive any fees in
addition to their remuneration as officers.
Outside Directors (non-Corporation employees) are eligible to participate
in the 1988 Non-Qualified Stock Option Plan for Officers, Key Employees and
Directors, the 1998 Stock Option Plan for Non-Employee Directors and the 2004
Stock Incentive Plan for Non-Employee Directors. Under the 2004 Plan, each
outside Director receives 300 options and 300 restricted stock grants upon
election or re-election at an annual meeting and each eligible Director who
is continuing to serve on the Board.
Outside Directors (non-Corporation employees) who reach the age of 68 or
who retire from full-time employment may be required to retire from the Board
13
of Directors effective as of the completion of their current term. Retired
outside directors are entitled to an annual retirement benefit equal to the
sum of:
a) The annual retainer at the time of retirement.
b) 6 monthly fees for Director Meetings at the rate prevailing at the time
of retirement.
The benefit is payable for a term equal to the Director's years of service
or life, whichever is shorter.
Employment Contracts and Change in Control Arrangements
The Corporation has entered into agreements with certain of its key
executives, including Messrs. M. Batten, Joyce, Eperjesy ,Feiertag and
J. Batten. The agreements provide for severance benefits to be paid to the
executive following a change in control of the Corporation (as defined in those
agreements) and a termination (as defined in those agreements) of the
employment of the executive. Upon the occurrence of the events, as specified in
the agreements, which would entitle the executive to the payment of severance
benefits, the maximum contingent liability of the Corporation for the payment
of such severance benefits would be approximately $2,459,000. Severance
benefits for an executive officer would generally consist of the sum of the
executive's highest annual base salary between the change in control and the
date of termination plus the executive's most recent annual bonus times the
lesser of 1.50 (2.50 for Messrs. Batten and Joyce) or the number of whole and
fractional years between the termination date and his normal retirement date.
In addition, the executive would be entitled to the cash value of any shares of
common stock subject to unexercised stock options held by the executive and a
continuance of fringe benefits for 24 months following termination. The
agreements are specifically designed to assure that benefits will not exceed
the limitations and provisions of Sec. 280(g) of the Internal Revenue Code.
Mr. Eperjesy has also entered into restricted stock grant agreements with
the Company that have certain change in control provisions. Specifically, if a
change in control (as defined in the grant agreement) occurs and the employee
thereafter terminates employment, all shares granted under the agreement shall
become freely transferable and non-forfeitable.
Board Compensation Committee Report
on Executive Compensation
Compensation Philosophy
The Corporation's primary business objective is to grow shareholder value
on a sustainable basis over the long term. To accomplish this objective, the
Corporation has developed a comprehensive business strategy that emphasizes
generating long-term positive cash flow and achieving earnings in excess of its
cost of capital; maintaining leadership or becoming the leader in its markets;
and providing products of the highest quality.
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of three independent directors, none of whom has interlocking or
other relationships which might be considered conflicts of interest. The
Committee establishes compensation programs which are designed to foster the
Corporation's business objectives. The Committee approves the design of,
assesses the effectiveness of, and administers executive compensation programs
in support of compensation policies.
Committee members believe that the compensation program should target
compensation levels at rates that are reflective of current market practices.
Offering market-comparable pay opportunities allows the Corporation to maintain
a stable, successful management team.
Competitive market data is provided by an independent compensation
consultant. The data provided compares the Corporation's compensation
practices to a group of comparative companies. The Corporation's market for
compensation comparison purposes is comprised of a group of companies that
have national and international business operations and similar sales volumes,
market capitalizations, employment levels, and lines of business. In
establishing a comparative group for compensation purposes, the Committee
exercises its judgment and makes its decision after considering the factors it
deems relevant.
The companies chosen for the comparative group used for compensation
purposes are not necessarily the same companies which comprise the peer group
index in the Performance Graph included in this proxy statement. The Committee
believes that the Corporation's most direct competitors for executive talent
14
include many companies in geographical areas in which the Corporation operates
as well as many of the companies that are included in the peer group
established for comparing shareholders returns.
The key elements of the Corporation's executive compensation are base
salary, annual incentives, long-term compensation, and benefits. These key
elements are addressed separately below. In determining compensation, the
Committee considers all elements of an executive's total compensation package,
including severance plans, insurance, and other benefits, with the objective
of being competitive but not trend setting.
Base Salaries
The Committee regularly reviews each executive's base salary. Base salary
ranges are targeted at market levels, based upon the Committee's analysis of
marketplace practices. Base salaries for executives are initially determined
by evaluating executives' levels of responsibility, prior experience, breadth
of knowledge, internal equity issues, and external pay practices.
Base salaries offer stability to executives and allow the Corporation to
attract competent executive talent and maintain an effective management team.
They also allow executives to be rewarded for individual performance based on
the Corporation's evaluation process which encourages the development of
executives. Pay for individual performance rewards executives for achieving
goals which may not be immediately evident in common financial measurement.
Increases to base salaries are driven primarily by individual performance.
Individual performance is evaluated based on sustained levels of individual
contribution to the Corporation. When evaluating individual performance, the
Committee considers the executive's effort in promoting Corporate values;
improving product quality; developing relationships with customers, suppliers,
and employees; demonstrating leadership abilities among coworkers; and other
goals. Generally, executive salaries are increased at rates comparable to the
increases provided at other companies and are near market levels.
Generally, in order to determine Mr. Batten's base salary, the Committee
considers the Company's financial performance for the year, Mr. Batten's
individual performance, and his long-term contributions to the success of the
Corporation. The Committee also compares Mr. Batten's base salary to the base
salaries of CEOs at comparative companies. As reflected in the Summary
Compensation Table on page 10, Mr. Batten's base salary was restored to
$395,000 in fiscal 2005, after the temporary corporate-wide wage cost reduction
program of fiscal 2004.
Annual Incentives
The Twin Disc Corporate Incentive Plan promotes the Corporation's
pay-for-performance philosophy by providing executives with direct financial
incentives in the form of annual cash bonuses for achieving corporate, business
unit, and individual performance goals. The Corporate Incentive Plan allows
the Corporation to communicate specific goals that are of primary importance
during the coming year and motivate executives to achieve these goals. The
Plan emphasizes the achievement of earnings returns in excess of the Company's
cost of capital as well as other financial and non-financial objectives.
Eligibility to participate in the Corporate Incentive Plan, as well as
the individual payout percentages assigned to each eligible executive's
position, are determined annually by Mr. Batten, as chief executive officer,
subject to the approval of the Committee.
Each year, the Committee approves specific goals relating to each
executive's bonus opportunity. Eligible executives are assigned threshold,
target and maximum bonus levels based on a percentage of base salary.
Executives earn bonuses to the extent to which pre-established performance
goals are achieved.
Target bonus awards have been established at levels approximating the
75th percentile of marketplace practices for each executive. Targets are
considered by the Committee to be achievable, but to require above average
performance for each of the executives.
For fiscal year 2005, Mr. Batten received a bonus of $282,425 as a result
of the Corporation's achievement of designated economic profit and inventory
reduction goals.
Long-Term Incentives
Long-term incentive opportunities are provided pursuant to the
Corporation's 1988 Non-Qualified Stock Option Plan for Officers, Key Employees
15
and Directors, the 1988 Incentive Stock Option Plan, the 1998 Incentive
Compensation Plan, the 1998 Stock Option Plan for Non-Employee Directors, the
2004 Stock Incentive Plan and the 2004 Stock Incentive Plan for Non-Employee
Directors.
In keeping with the Corporation's commitment to provide a total
compensation package which includes at-risk components of pay, the Committee
makes annual decisions regarding appropriate stock options, performance shares,
and restricted stock grants for each executive. When awarding stock
incentives, the Committee considers executives' levels of responsibility,
prior experience, historical award data, various performance criteria, and
compensation practices at comparator companies. Mr. Batten received 7,200
performance shares for FY2005, with vesting subject to the achievement of a
specified level of consolidated revenue in fiscal 2007.
The plan design focuses executives on the creation of shareholder value
over the long term and encourages equity ownership in the Corporation. Stock
incentives are granted at a price not less than the fair market value of the
Corporation's common stock on the date of grant. Accordingly, stock options
have value only if the stock price appreciates from the date the options are
granted; performance shares have value only if specific objectives are
achieved; and restricted stock serves retention and equity ownership goals.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the Company's CEO and four other most highly compensated executive
officers. Qualifying performance-based compensation will not be subject to
the deduction limit if certain requirements are met. The compensation of the
Corporation's CEO and the four other most highly compensated executive officers
are currently below the disqualifying threshold. In the future, in the event
the disqualifying threshold becomes an issue, the Committee will weigh all the
facts and circumstances in existence at the time.
Compensation Committee
George E. Wardeberg, Chairman
John A. Mellowes
David A. Zimmer
July 28, 2005
The following Report of the Audit Committee does not constitute soliciting
material and should not be deemed filed or incorporated by reference into any
other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, except to the extent the Company specifically
incorporates this report by reference therein.
Audit Committee Report
The charter reflects standards set forth in SEC regulations and NASDAQ
Stock Market rules. All members of the Audit Committee are independent, as
defined in Rules 4200 and 4350 of the listing standards of the NASDAQ Stock
Market.
The Committee has implemented procedures to ensure that during the course
of each fiscal year it devotes the attention that it deems necessary or
appropriate to each of the matters assigned to it under the Committee's
charter. To carry out its responsibilities, the Committee met four times
during fiscal 2005.
As part of its responsibilities, and as set forth in its charter, the
Audit Committee met with both management and the Corporation's independent
accountants to review and discuss the audited financial statements prior to
their issuance and to discuss significant accounting issues. Management
advised the Committee that all financial statements were prepared in accordance
with generally accepted accounting principles, and the Committee discussed the
statements with both management and the independent accountants. The
Committee's review included discussion with the independent accountants of
matters required to be discussed pursuant to Statement on Auditing Standards
No. 61 (Communication with Audit Committee).
The Committee received the written disclosures and the letter required
from the independent accountants as required by the Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committee). The
Committee also discussed with PricewaterhouseCoopers LLP matters relating to
its independence.
On the basis of these reviews and discussions, the Committee recommended
16
to the Board of Directors that the Board approve the inclusion of the
Corporation's audited financial statements in the Corporation's Annual Report
on Form 10-K for the fiscal year ended June 30, 2005, for filing with the
Securities and Exchange Commission.
Audit Committee
David R. Zimmer, Chairman
Harold M. Stratton II
David B. Rayburn
July 29, 2005 George E. Wardeberg
CORPORATE PERFORMANCE GRAPH
The following table compares total shareholder return over the last 5
fiscal years to the Standard & Poor's 500 Machinery (Industrial)Index and the
Russell 2000 index. The S&P 500 Machinery(Industrial)Index consists of a broad
range of manufacturers. The Russell 2000 Index consists of a broad range of
2,000 Companies. The Corporation believes, because of the similarity of its
business with those companies contained in the S&P 500 Machinery (Industrial)
Index, that comparison of shareholder return with this index is appropriate.
Total return values for the Corporation's common stock, the S&P 500 Machinery
(Industrial) Index and the Russell 2000 Index were calculated based upon an
assumption of a $100 investment on June 30, 2000 and based upon cumulative
total return values assuming reinvestment of dividends on a quarterly basis.
Comparison of Five-Year Cumulative Total Return
Twin Disc, Inc.; S&P 500 Machinery(Industrial);
and Russell 2000
06/30/00 06/30/01 06/30/02 06/30/03 06/30/04 06/30/05
-------- -------- -------- -------- -------- --------
Twin Disc 100.00 97.04 95.03 96.21 169.49 160.15
S&P Machinery 100.00 106.03 134.50 140.69 205.14 210.88
Russell 2000 100.00 100.57 91.93 90.42 120.58 131.97
SECTION 16 (a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Based solely on a review of the copies of such forms furnished to the
Corporation and representations from executive officers and Directors, the
Corporation believes that during the period from July 1, 2004 to June 30, 2005,
all Section 16(a) filing requirements applicable to its executive officers,
Directors and greater than ten (10%) beneficial owners were complied with.
INDEPENDENT PUBLIC AUDITORS
The firm of PricewaterhouseCoopers LLP has audited the Corporation's books
annually since 1928. Representatives of PricewaterhouseCoopers LLP are expected
to be present at the meeting and, while no formal statement will be made by
them, they will be available to respond to appropriate questions.
AUDIT FEES
Aggregate fees, including out-of-pocket expenses, for professional
services rendered by PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") in
connection with (i) the audit of the Company=s consolidated financial
statements as of and for the years ended June 30, 2005 and June 30, 2004,
including statutory audits of the financial statements of the Company's
affiliates that are relied on in performance of the audit of the Company's
consolidated financial statements, and (ii) the limited reviews of the
Company's quarterly financial statements were $323,000 and $319,000,
respectively.
AUDIT-RELATED FEES
Aggregate fees,for professional services rendered by PricewaterhouseCoopers
17
for assurance and services reasonably related to the performance of the audit
or review of the Company's financial statements not included in audit fees
above were $28,000 and $32,000 in 2005 and 2004, respectively.
TAX FEES
In addition to the other fees described above, aggregate fees, including
out-of-pocket expenses,of $390,000 and $204,800 were paid to
PricewaterhouseCoopers during the years ended June 30, 2005 and 2004, primarily
for the following professional services: tax-related services, due diligence
for acquisitions, and other non-recurring audit services.
The Audit Committee has determined that the provision of services for
(a) financial information systems design and implementation fees listed above,
if any, and (b) all other fees listed above, is compatible with maintaining
PricewaterhouseCoopers LLP's independence.
ALL OTHER FEES
During the years ended June 30, 2005 and 2004, PricewaterhouseCoopers
rendered no professional services to the Company other than those listed under
audit fees, audit related fees and tax fees.
PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee annually pre-approves known or anticipated audit and
non-audit services and fees. Additional non-audit services and fees not
included in the annual pre-approval are submitted to a designated committee
member for approval before the work is performed. For the year ended June 30,
2005, 100% of audit-related, tax and non-audit fees were pre-approved.
GENERAL
The Corporation will bear the cost of the solicitation of proxies. The
firm of Georgeson Shareholder Communications Inc., New York, NY has been
retained to assist in solicitation of proxies for the Annual Meeting at a fee
not to exceed $7,000 plus expenses.
Management does not know of any other business to come before the meeting.
However, if any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying form of proxy to vote upon
such matters in their discretion in accordance with the authorization of the
proxy.
If you do not contemplate attending in person, we respectfully request
that you fill in, sign and return the accompanying proxy at your early
convenience. However, remember that in order to have your proxy validated, it
must be delivered to the Secretary either in person, by mail, or by messenger,
and it must be received by the Secretary not less than forty-eight (48) hours
prior to the date of the meeting.
TWIN DISC, INCORPORATED
17
Appendix
2005 PROXY CARD
TWIN DISC, INCORPORATED - ANNUAL MEETING - OCTOBER 21, 2005
This Proxy appointment is solicited on behalf of the Board of Directors
The undersigned hereby appoints Michael H. Joyce, David B. Rayburn and
George E. Wardeberg and each or any of then (with full power to act without the
others) attorneys and proxies of the undersigned, with full power of
substitution, to vote on behalf of the undersigned all shares of Common Stock
of Twin Disc, Incorporated to which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of Twin Disc, Incorporated, to be held
October 21, 2005 at 2:00 o'clock P.M. at the Corporate Offices, 1328 Racine
Street, Racine, Wisconsin or any adjournments there of upon the following
matters.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
TWIN DISC, INCORPORATED 2005 ANNUAL MEETING
The Board of Directors recommends a vote FOR item 1
1. ELECTION OF DIRECTORS 1. Michael E. Batten
2. David L. Swift
3. David R. Zimmer
FOR all nominees WITHHOLD
listed above AUTHORITY
(except as specified to vote for all nominees
below) listed above
(Instructions: To withhold authority to vote for any indicated nominee,
write the name(s)of the nominee(s) in the space provided below.)
------------------------------------------------------------------------
2. In their discretion, upon such other matters as may come before the
meeting
Dated______________________________, 2005
_________________________________________
Signature
_________________________________________
Signature if held jointly
Unless otherwise directed, this proxy
appointment will be voted in favor of the
election of such directors and in other
respects as recommended by the Directors.
NOTE: Please sign exactly as name appears hereon.