<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
WALBRO CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
------------------------------------------------------------------------
(3) Filing party:
------------------------------------------------------------------------
(4) Date filed:
------------------------------------------------------------------------
<PAGE> 2
[LOGO]
WALBRO CORPORATION
6242 GARFIELD STREET
CASS CITY, MICHIGAN 48726
(517) 872-2131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
MARCH 10, 1995
To the Stockholders of
Walbro Corporation
The Annual Meeting of the stockholders of Walbro Corporation, a Delaware
corporation, will be held in Chicago, Illinois at Harris Trust and Savings
Bank, 111 West Monroe Street, on April 19, 1995 at 11:00 a.m., for the
following purposes:
(1) To elect two Directors to serve for a term of three years or until their
successors have been elected and qualified;
(2) To approve the Amended and Restated Walbro Corporation Equity Based Long
Term Incentive Plan;
(3) To amend the Walbro Corporation Restated Certificate of Incorporation to
increase the Company's authorized capital and the authorized shares of
Common Stock; and
(4) To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The Board of Directors of the Company (the "Board of Directors" or "Board")
has fixed the close of business on February 21, 1995 as the record date for the
determination of
<PAGE> 3
stockholders entitled to notice of, and to vote at, the meeting. The transfer
books of the Company will not be closed. It is anticipated that this Notice
and Proxy Statement and the enclosed form of proxy will first be sent to the
stockholders on or about March 10, 1995.
The Board of Directors would like to have all stockholders represented at the
meeting. Whether or not you plan to attend the meeting, you are urged to fill
in, date and sign your proxy, and return it in the accompanying envelope. You
have the power to revoke your proxy at any time before it is voted by written
notice to the Secretary of the Company, and the giving of a proxy will not
affect your right to vote in person if you attend the meeting. Your proxy is
solicited by the Board of Directors, and the cost of solicitation will be paid
by the Company. Proxies may be solicited by personal interview, telephone or
telegram by the officers, employees or directors of the Company, none of whom
will receive any compensation therefor in addition to his or her regular
compensation. In addition, the Company has engaged Morrow & Co., Inc. to
solicit proxies by telephone, mail or personal contact from brokers, bank
nominees, other institutional holders and the 100 individual stockholders of
record holding the greatest number of shares of the Company's common stock, par
value $.50 per share ("Common Stock"). The Company will pay Morrow & Co. a fee
of $3,500 for its services.
On February 21, 1995, there were 8,564,576 shares of Common Stock
outstanding, each of which is entitled to one vote. An Annual Report for the
fiscal year 1994 containing financial and other information pertaining to the
Company is being mailed to the stockholders together with this Notice and Proxy
Statement.
The vote of a majority of the shares present in person or by proxy at the
meeting will be required to elect the candidates for Director and to adopt
Proposals Two and Three.
Votes cast by proxy or in person at the Annual Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum and will also count abstentions for purposes of voting on
any proposal presented at the meeting or any adjournment thereof. Abstentions
will have the same effect as a vote against a proposal. If a broker indicates
on the proxy that it does not have discretionary authority as to certain shares
to vote on a particular matter, those shares will not be considered as present
and entitled to vote with respect to that matter.
PROPOSAL 1
ELECTION OF DIRECTORS
Pursuant to the power vested in it under Article VI of the Company's Restated
Certificate of Incorporation, as amended (the "Restated Certificate"), the
Board of Directors has fixed the number of Directors which shall constitute the
whole Board at eight. Article VI of the Restated Certificate also provides
that the Board members shall be classified with respect to the time for which
they shall hold office by dividing them into three classes, the members of each
class to hold office for a term of three years. Two Class II Directors are to
be elected at the Annual
2
<PAGE> 4
Meeting of Stockholders on April 19, 1995 for a term of three years expiring at
the Annual Meeting of Stockholders in 1998.
If for any reason any of the nominees shall become unavailable for election,
the proxy will be voted for nominees selected by the Board of Directors. At
this time the Company knows of no reason why any of the nominees would not be
available for election.
3
<PAGE> 5
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE NOMINEES NAMED BELOW AND
YOUR PROXY WILL BE SO VOTED UNLESS AUTHORITY IS WITHHELD.
INFORMATION AS TO NOMINEES
The names of the nominees for the office of Director, together with certain
information concerning such nominees, are set forth below:
<TABLE>
<CAPTION>
Principal Occupation Served as
and Business Experience Director
Nominees Age During the Past Five Years Since
-------- --- -------------------------- ---------
CLASS II
TERM EXPIRES IN 1998:
<S> <C> <C> <C>
Lambert E. Althaver 64 Chairman of the Board of the Company since 1968
* 1987. President and Chief Executive Officer
since 1982.
John E. Utley 54 Chairman of the Board of Kelsey-Hayes Company 1993
** since 1991 and President from 1989 to 1991 and
*** Senior Vice President of Varity Corporation.
Kelsey-Hayes produces anti-lock braking
systems, traction control systems and wheel
assemblies for the automotive industry. Also
Chairman of the Board of Hayes Wheels
International, Inc.
</TABLE>
________________________
* Member of the Executive Committee
** Member of the Audit Committee
*** Member of the Directors Committee
**** Member of the Human Resource Planning Committee
***** Member of the Compensation Committee
4
<PAGE> 6
INFORMATION AS TO DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE
MEETING
The name of, and certain information with respect to, the remaining six (6)
Directors of the Company are as follows:
<TABLE>
<CAPTION>
Principal Occupation Served as
and Business Experience Director
Directors Age During the Past Five Years Since
--------- --- -------------------------- ---------
CLASS I
TERM EXPIRES IN 1997:
<S> <C> <C> <C>
Herbert M. Kennedy 65 Professor of Business Administration, Principia 1981
* College, Elsah, Illinois since before 1989.
**
****
Robert D. Tuttle 69 A Director of FMB Corp., CMS Energy Corporation, 1981
*** Woodhead Industries, Inc. and Guardsman Products, Inc.
**** From before 1989 to 1991, Chairman, CEO and Director
***** of SPX Corporation which produces specialty tools and
equipment and distributes automotive components.
Robert H. Walpole 55 President of Walbro Engine Management Corporation 1983
since 1991. Vice President of the Company since 1983.
</TABLE>
________________________
* Member of the Executive Committee
** Member of the Audit Committee
*** Member of the Directors Committee
**** Member of the Human Resource Planning Committee
***** Member of the Compensation Committee
5
<PAGE> 7
<TABLE>
<CAPTION>
Principal Occupation Served as
and Business Experience Director
Directors Age During the Past Five Years Since
--------- --- -------------------------- ---------
CLASS III
TERM EXPIRES IN 1996:
<S> <C> <C> <C>
William T. Bacon, Jr. 72 Associate, The Chicago Corporation since 1994. 1972
* Honorary Director, Stifel Financial Corp. 1984-1994.
*** Prior thereto, Managing Partner of Bacon Whipple &
***** Co., Inc. Also a director of Safecard Services,
Incorporated.
Frank E. Bauchiero 60 President-Industrial, North American Operations, Dana 1990
** Corporation since December of 1990 and Dana Group
**** Vice-President, 1987-1990. Dana Corporation
***** manufactures automotive product systems, mobile off-
highway equipment and industrial equipment. Also a
director of Regal Beloit, M & I Bank of Beloit,
Madison Kipp Corp. and Rockford Products Corporation.
Vernon E. Oechsle 52 Chief Operating Officer of Quanex Corporation since 1994
1993. Quanex is a manufacturer of specialty steel and
aluminum products. From 1990 to 1992, Chief Executive
Officer of Allied Signal Automotive; prior thereto
Group Executive, Automotive and Truck for Dana
Corporation and President of Hayes-Dana, Dana's
Canadian subsidiary. Mr. Oechsle joined the Board in
October 1994.
</TABLE>
Mr. Robert H. Walpole is a brother-in-law of Mr. Lambert E. Althaver.
________________________
* Member of the Executive Committee
** Member of the Audit Committee
*** Member of the Directors Committee
**** Member of the Human Resource Planning Committee
***** Member of the Compensation Committee
6
<PAGE> 8
BOARD MEETINGS AND COMMITTEES
The Company has an Audit Committee, a Compensation Committee, a Directors
Committee, a Human Resource Planning Committee and an Executive Committee.
The Audit Committee, consisting of Messrs. Kennedy (Chairman), Bauchiero and
Utley, met twice in 1994 and recommended to the Board of Directors the
selection of the Company's independent public accountants and reviewed the
plan, scope and results of such independent public accountants' audit. The
primary purpose and function of the Audit Committee is to provide an
opportunity for direct communication with the Board of Directors by the
Company's independent public accountants.
The Compensation Committee of the Board of Directors held one meeting in
1994. The members of the Compensation Committee are Messrs. Bacon (Chairman),
Bauchiero and Tuttle. The Compensation Committee awards stock options under
the Company's stock option plans, determines the compensation of the Company's
executive officers and reviews, and sets the policies for, the compensation
payable to approximately the next 25 most highly compensated employees of the
Company. See "Compensation Committee Report on Executive Compensation."
The Directors Committee of the Board of Directors met once in 1994. The
members of the Directors Committee are Messrs. Utley (Chairman), Bacon and
Tuttle. The Directors Committee (i) conducts a continuing study of the size,
structure, and composition of the Board; (ii) seeks out and interviews possible
candidates and reports its recommendations to the Board; (iii) periodically
reviews the Board's tenure policy; and (iv) determines the criteria for
selection and retention of Board members. Although the Committee has its own
procedures for selecting nominees for Board membership, it will give due
consideration to nominees recommended by stockholders. A stockholder desiring
to recommend a person for nomination to the Board should submit a complete
resume of the proposed nominee's qualifications and background together with a
statement setting forth the reasons why such person should be considered for
membership. Such information should be addressed to the Secretary of the
Company.
The Company has an Executive Committee vested with the powers of the Board,
except those powers specifically reserved by Delaware law to the full Board.
The Executive Committee exists to give the Board the flexibility to make
decisions during intervals between regular meetings of the full Board. The
Committee members are Messrs. Althaver (Chairman), Bacon and Kennedy. The
Executive Committee did not meet in 1994.
The Human Resources Planning Committee of the Board met once in 1994. The
members of this committee are Messrs. Tuttle (Chairman), Bauchiero and Kennedy.
The Human Resource Planning Committee reviews the short and long range human
resource needs of the Company and advises management of its assessment. Also,
the Human Resource Planning Committee evaluates strategic human resource needs
including senior executive succession.
7
<PAGE> 9
During the year ended December 31, 1994, the Board of Directors held a total
of eleven meetings. During the period of 1994 for which he was a Director,
each Director attended at least 75% of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees of the Board on which he served.
COMPENSATION OF THE BOARD OF DIRECTORS
Employee-officers who are also Directors do not receive compensation for
their service as Directors. The non-employee Directors of the Company receive
an attendance fee of $1,200 for each Directors' meeting attended, $750 for each
committee meeting attended and $300 for each telephone meeting of the full
Board or a Committee. Additionally, non-employee Directors of the Company
receive an annual retainer of $20,000.
Subject to stockholder approval of the Amended and Restated Walbro
Corporation Equity Based Long Term Incentive Plan (the "Equity Plan"),
effective on June 20, 1994, the Company granted to each non-employee Director
of the Company, other than Mr. Oechsle, an option to purchase 10,000 shares of
Common Stock at $17.50 per share and effective October 1, 1994, the Company
granted to Mr. Oechsle an option to purchase 10,000 shares of Common Stock at
$21.75 per share. Under the Equity Plan, each non-employee Director may elect
to receive all or any portion of his annual retainer in the form of stock
options. For additional information regarding compensation pursuant to the
Equity Plan, see "Proposal 2 - Approval of the Amended and Restated Walbro
Corporation Equity Based Long Term Incentive Plan".
In addition, non-employee Directors are entitled to participate in the
Company's Retirement Income Plan for Directors (the "Retirement Income Plan").
The Retirement Income Plan, which became effective February 23, 1988, provides
an annual benefit to Directors who have completed at least five consecutive
years of service equal to the annual retainer paid to the outside Directors of
the Company as periodically modified, subject to the following vesting
schedule: five years - 50%; six years - 60%; seven years - 70%; eight years -
80%; nine years - 90%; and ten years - 100%. The benefit is paid annually
commencing at age 72 or when the individual ceases to be a Director, whichever
last occurs, and continues for life. If upon death a Director is survived by a
spouse, the spouse is entitled to receive for the balance of the spouse's life
an annual payment equal to 50% of the annual payment that would have been
payable to the Director under this policy.
8
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of February 21, 1995, to the knowledge of the Company's Board of
Directors, the following persons were owners of more than five percent (5%) of
the Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENTAGE
BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------------ ------------- ----------
<S> <C> <C>
David L. Babson & Co., Inc. 784,900(1) 9.2%
One Memorial Drive
Cambridge, MA 02142-1300
The Capital Guardian Trust 447,000(2) 5.2%
Company and The Capital
Group Companies, Inc.
333 S. Hope Street
Los Angeles, CA 90071
- -------------------------------
</TABLE>
(1) As reported on a Schedule 13G dated February 10, 1995 filed with the
Commission by David L. Babson & Co., Inc. According to such Schedule 13G,
David L. Babson & Co., Inc. has sole voting power with respect to 447,800
of these shares, shared voting power with respect to 337,100 of these
shares and sole dispositive power with respect to all 784,900 of these
shares.
(2) As reported on a Schedule 13G dated February 8, 1995 filed with the
Securities and Exchange Commission (the "Commission") by The Capital Group
Companies, Inc. and The Capital Guardian Trust Company. The Capital
Guardian Trust Company is a wholly owned subsidiary of The Capital Group
Companies, Inc. According to such Schedule 13G, The Capital Group
Companies, Inc. and The Capital Guardian Trust Company each have sole
voting power with respect to 277,000 of these shares and no voting power
with respect to the remaining 170,000 shares and have sole dispositive
power with respect to all 447,000 of these shares.
9
<PAGE> 11
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding beneficial ownership of
Common Stock by each of the Directors and nominees, each of the Named Officers
(as defined on page 13) and all Directors and executive officers of the Company
as a group as of February 21, 1995:
<TABLE>
<CAPTION>
Amount and Nature of Percentage
Names Beneficial Ownership(1) of Class
----- ----------------------- ----------
<S> <C> <C>
Lambert E. Althaver 199,549(2) 2.3%
William T. Bacon, Jr. 57,775(3) *
Frank E. Bauchiero 1,000 *
Daniel L. Hittler 11,992(4) *
Herbert M. Kennedy 2,500(5) *
Vernon E. Oechsle 1,000 *
Robert D. Tuttle 6,000(6) *
John E. Utley 500 *
Gary L. Vollmar 25,059(7) *
Robert H. Walpole 196,855(8) 2.3%
Richard H. Whitehead, III 26,546(9) *
All Directors and Executive Officers as a
Group (12 persons) 531,076(10) 6.2%
</TABLE>
- ---------------------
* Indicates that the percentage beneficially owned does not exceed one
percent.
(1) The named stockholders have sole voting and dispositive power over all
shares except as otherwise noted and except as to those shares over
which beneficial ownership is disclaimed.
(2) Includes 74,643 shares owned by Mr. Althaver's wife. Mr. Althaver
disclaims beneficial ownership of these shares. Also includes 40,790
shares which are covered by presently exercisable options under the
Company's stock option plans and 17,734 shares held for the account of
Mr. Althaver by the trustee of the Company's Advantage Plan.
(3) Includes 3,300 shares owned by Mr. Bacon's wife and 5,025 shares owned
by Mr. Bacon's son. Mr. Bacon disclaims beneficial ownership of these
shares. Also includes 10,000 shares over which Mr. Bacon shares voting
power as co-trustee of two trusts for the benefit of the beneficiaries
of the estate of his deceased mother.
10
<PAGE> 12
(4) Includes 1,600 shares owned by Mr. Hittler's wife. Mr. Hittler
disclaims beneficial ownership of these shares. Also includes 9,154
shares which are covered by presently exercisable options under the
Company's stock option plans and 1,238 shares held for the account of
Mr. Hittler by the trustee of the Company's Employee Stock Ownership
Plan.
(5) Includes 1,250 shares over which Mr. Kennedy has voting power as trustee
of a trust. Also includes 1,250 shares over which Mr. Kennedy's wife
has sole voting power as trustee of a trust and as to which Mr. Kennedy
disclaims beneficial ownership.
(6) Includes 3,000 shares which Mr. Tuttle owns jointly with his wife, over
which Mr. Tuttle and his wife share voting and dispositive power.
(7) Includes 19,916 shares which are covered by presently exercisable
options under the Company's stock option plans and 3,643 shares held for
the account of Mr. Vollmar by the trustee of the Company's Advantage
Plan.
(8) Includes 79,385 shares over which Mr. Walpole shares voting power as
co-trustee of a trust for the benefit of the beneficiaries of the estate
of his deceased father. Includes 13,325 shares owned by Mr. Walpole's
wife. Mr. Walpole disclaims beneficial ownership of these shares. Also
includes 2,400 shares which are covered by presently exercisable options
under the Company's stock option plans and 165 shares held for the
account of Mr. Walpole by the trustee of the Company's Advantage Plan.
(9) Includes 6,083 shares which are covered by presently exercisable options
under the Company's stock option plans. Also includes 463 shares held
for the account of Mr. Whitehead by the trustee of the Company's
Advantage Plan.
(10) Includes 78,343 shares which are covered by presently
exercisable options under the Company's stock option plans.
Also includes 22,005 shares held for the account of three
officers of the Company by the trustee of the Company's
Advantage Plan and includes 1,238 shares held for one officer
of the Company by the trustee of the Company's Employee Stock
Ownership Plan.
11
<PAGE> 13
IDENTIFICATION OF OTHER EXECUTIVE OFFICERS
A description of the Company's other executive officers, excepting
those officers who are also Directors, is set forth below:
<TABLE>
<CAPTION>
EXPERIENCE DURING THE
NAME AGE PAST FIVE YEARS
---- --- ---------------------
<S> <C> <C>
Daniel L. Hittler 59 Secretary of the Company since 1993. Director of
Administration since 1992. Director of Technical Planning
from 1989 to 1992.
Michael A. Shope 50 Chief Financial Officer of the Company since December 1993.
Treasurer of Libbey-Owens-Ford Co., a manufacturer of glass
for automotive and industrial applications, from 1987 to
1993.
Gary L. Vollmar 43 President of Walbro Automotive Corporation since 1993.
Vice-President of the Company since 1989. Chief Financial
Officer of the Company from 1989 to 1993.
Richard H. Whitehead, III 50 Vice-President of the Company since 1988. Vice-
President/General Manager, Automotive Division-Whitehead
from 1988 to 1990.
</TABLE>
For a description of those executive officers who are also Directors or
nominees for the office of Director, see the Class I and II Director charts.
Each executive officer shall serve in the capacity described above until such
time as his successor is duly elected and qualified.
12
<PAGE> 14
INDEBTEDNESS OF MANAGEMENT
The following Named Officers (as defined on page 13) are indebted to
the Company as disclosed in the following table. The principal amount of the
indebtedness in each case relates to loans made by the Company to the Named
Officers and to approximately 24 other employees (collectively the "Borrowers")
to permit them to repay individual bank loans that came due. The bank loans
originated approximately five years ago to enable the borrowers collectively to
acquire approximately 84,500 shares of the Common Stock from UIS, Inc. which
had acquired the shares in 1987 as part of an unsuccessful tender offer
strategy. In addition, in 1993 the Company provided Mr. Vollmar short-term
loans in connection with the exercise of certain stock options and the
construction of a house. All of these short-term loans have been repaid by Mr.
Vollmar. The loans carry interest at prime.
<TABLE>
<CAPTION>
Maximum
Indebtedness Indebtedness at
Since January 1, February 21,
Name Position 1994 1995
---- -------- ------------------ ----------------
<S> <C> <C> <C>
L.E. Althaver Chairman, President and Chief $161,250 $161,250
Executive Officer
Gary L. Vollmar Vice-President 380,125 145,125
Robert H. Walpole Vice-President 112,875 112,875
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who own
greater than 10% of a registered class of the Company's equity securities to
file reports of ownership and changes in ownership with the Commission. Based
solely on a review of the forms it has received and on written representations
from certain reporting persons that no such forms were required for them, the
Company believes that, except as set forth below, during 1994 all Section 16
filing requirements applicable to its officers, directors and 10% beneficial
owners were complied with by such persons.
Mr. Bauchiero did not timely report one transaction on a Form 4 during
1994; however, the information required was included in a subsequent Form 4.
Mr. Hittler did not timely report on a 1993 Form 5 shares held under the
Company's Employee Stock Ownership Plan. Mr. Whitehead did not timely report
on a 1993 Form 5 shares held under the Company's Advantage Plan. The
information required for Mr. Hittler and Mr. Whitehead was included in Form 5's
filed in February 1995.
13
<PAGE> 15
EXECUTIVE COMPENSATION
The table below provides information concerning the annual and
long-term compensation for services in all capacities to the Company for the
fiscal years ended December 31, 1994, 1993 and 1992 of the persons who were at
December 31, 1994 (i) the Chief Executive Officer and (ii) the four other most
highly compensated (based upon combined salary and bonus) executive officers of
the Company (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS(1)
- -------------------------------------------------------------------------------------------------------------------
Name and Year Salary Bonus Securities ALL OTHER
Principal Position ($) ($) Underlying COMPENSATION
Options(#) ($)(2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lambert E. Althaver 1994 $330,000 -0- 14,559 $11,575
Chairman, President, and Chief 1993 305,000 -0- 11,244 11,229
Executive Officer 1992 280,008 13,147 8,076 2,220
Robert H. Walpole, 1994 242,000 -0- -0- 11,725
Vice-President 1993 235,000 -0- -0- 10,244
1992 220,008 9,260 -0- 1,200
Gary L. Vollmar, 1994 200,000 -0- 8,824 8,849
Vice-President 1993 166,670 -0- 6,452 7,705
1992 125,004 11,832 3,605 1,563
Richard H. Whitehead, III 1994 170,000 -0- 7,500 5,006
Vice-President 1993 165,000 -0- 6,083 6,866
1992 165,000 192,752 -0- -0-
Daniel L. Hittler 1994 125,000 -0- 5,515 7,422
Secretary 1993 120,000 -0- 4,424 7,136
1992 112,008 -0- 3,230 1,750
</TABLE>
(1) None of the Named Officers had any restricted stockholdings as of
December 31, 1994.
(2) These amounts represent matching and retirement contributions made by
the Company pursuant to its salary savings plan, entitled the Advantage
Plan.
14
<PAGE> 16
The following table provides information on grants of stock options in
1994 to the Named Officers pursuant to the Equity Plan. No stock appreciation
rights were granted under the Equity Plan during 1994.
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Individual Appreciation for Option
Grants Terms (2)
- ---------------------------------------------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options
Options Granted to Exercise
Granted Employees Price Expiration
Name (#) (1) in 1994 ($/Sh) Date 5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lambert E. Althaver 14,559 13.1% $17.00 12/6/2004 $155,653 $394,456
Robert H. Walpole 0 0 - - - -
Gary L. Vollmar 8,824 7.9 17.00 12/6/2004 94,339 239,042
Richard H. Whitehead, III 7,500 6.7 17.00 12/6/2004 80,175 203,175
Daniel L. Hittler 5,515 5.0 17.00 12/6/2004 58,955 149,401
</TABLE>
(1) These options were granted under the Equity Plan, approved, as amended,
by the stockholders on April 23, 1992. The Named Officers may exercise
the options at a price of $17.00 per share at any time after June 5,
1995 through December 6, 2004. Each option includes the grant of a
stock performance award under the terms of which the Named Officer will
receive a target number of shares of Common Stock if the $17.00 share
price appreciates to $37.27 per share by December 6, 1999.
(2) Gains are reportable net of the option exercise price but before taxes
associated with exercise. These amounts represent certain assumed
rates of appreciation only. Actual gains, if any, on stock option
exercise are dependent on the future performance of Common Stock, as
well as the option holder's continued employment throughout the vesting
period. The amounts reflected in the Table may not necessarily be
achieved.
15
<PAGE> 17
The following table provides information for the Named Officers'
unexercised options at December 31, 1994. Included are options granted under
the Equity Plan and the 1983 Incentive Stock Option Plan. No options were
exercised by the Named Officers in 1994.
AGGREGATED OPTION EXERCISES IN 1994
AND YEAR-END 1994 OPTION VALUES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying
Unexercised Options at Value of Unexercised In-the-Money
December 31, 1994 (#) Options at December 31, 1994 ($)(1)
- ---------------------------------------------------------------------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lambert E. Althaver 40,790 14,559 $135,563 $29,118
Robert H. Walpole 2,400 0 19,488 0
Gary L. Vollmar 19,916 8,824 63,671 17,648
Richard H. Whitehead, III 6,083 7,500 0 15,000
Daniel L. Hittler 9,154 5,515 12,180 11,030
</TABLE>
(1) Based upon the difference between the exercise price and the $19.00
closing price of the Common Stock on the Nasdaq National Market on
December 30, 1994.
16
<PAGE> 18
The following table provides information on awards in 1994 to the Named
Officers pursuant to the Company's Equity Plan and its Engine Management
Corporation Incentive Compensation Plan.
LONG-TERM INCENTIVE PLANS AWARDS IN 1994
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Estimated Future Payouts
under
Non-Stock Price-Based
Plans
- ---------------------------------------------------------------------------------------------------------------------
Performance or
Number of Shares, Other Period
Units or Other Until Maturation Target
Name Rights (#) or Payout ($)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lambert E. Althaver -0- N/A N/A
Robert H. Walpole 24 Units (1) 1 1/2 years $362,779
Gary L. Vollmar -0- N/A N/A
Richard H. Whitehead, III -0- N/A N/A
Daniel L. Hittler -0- N/A N/A
</TABLE>
(1) Award granted under the Company's Engine Management Incentive
Compensation Plan, which provides an opportunity for participants to
share a pool of money (the "Pool") if Engine Management Corporation
("EMC") meets cumulative financial performance goals ("EBIT Target")
over a five year period, commencing July 1, 1991. A total of 500 units
are being granted under the Plan, 100 each fiscal year. Each
participant, including the Named Officer, is entitled to the percentage
of the Pool calculated by dividing his total units granted by 500.
Threshold before any dollars are assigned to the Pool is 70% of the
EBIT Target. The value of the Pool as of the determination date is
equal to the product of the fair market value of EMC (as determined by
an independent investment advisor) and a target percentage. If the
cumulative financial performance goal is achieved or exceeded, the
target is 15%. If the performance is between 70% and 100% of the goal,
the target percentage is decreased proportionately.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company has entered into employment agreements with Messrs.
Althaver, Hittler and Vollmar which have terms beginning on August 6, 1993 and
ending on August 5, 1994 and provide them minimum base salaries of $305,000,
$120,000 and $150,000, respectively, subject to review and increase by the
Compensation Committee. Each employment agreement is renewable automatically
for twelve months, subject to cancellation by the Company prior to the
17
<PAGE> 19
anniversary date. The employment agreements with Messrs. Althaver, Hittler and
Vollmar have been renewed through August 5, 1995. In addition, each is
entitled to participate in the Equity Plan. The Company has also entered into
an employment agreement with Mr. Walpole which has a term beginning on October
1, 1993 and ending on September 30, 1994 and provides him a minimum base salary
of $235,000, subject to review and increase by the Compensation Committee. The
employment agreement with Mr. Walpole has been renewed through September 30,
1995. In addition, he is entitled to participate in the Company's Engine
Management Incentive Compensation Plan. See "Compensation Committee Report on
Executive Compensation."
Each employment agreement includes a severance clause under the terms
of which the employee is entitled to severance pay if during the initial term
of the agreement or a renewal term, his employment is terminated by the Company
other than as a result of his (i) permanent disability or (ii) termination for
cause. The severance pay payable under the agreements is an amount equal to
the annual base compensation being paid to the Named Officer at the date of
termination, offset by the amount due under the portion of the employment
agreement that had not yet been performed, if any, and the amount of
compensation the Named Officer may receive from any other employers during the
twelve months immediately following the date notice of termination is given to
him by the Company.
In 1990, the Company entered into Severance Compensation Consulting
Agreements (the "Severance Agreements") with over 40 senior employees,
including each of the Named Officers. The Severance Agreements were the result
of a determination by the Board of Directors that it was important to, and in
the best interests of the Company and its stockholders to ensure that, in the
event of a possible change in control of the Company, the stability and
continuity of management will continue unimpaired, free of distraction incident
to any such change in control.
The Severance Agreements provide that if during a two-year period
following a Change in Control of the Company (as described below), an
employee's employment is terminated by the Company other than for cause, death
or permanent disability, or if the employee terminates employment for good
reason, the employee will receive (1) a single sum payment equal to either
three times or two times (depending upon the individual employment agreement)
the employee's average compensation of the prior five calendar years (including
incentive bonus), and (2) 36 months of additional medical, dental, life,
disability and accident insurance and other perquisites substantially similar
to that in effect for the employee at the time of the Change in Control.
However, in no event can the payments and benefits exceed an amount which would
render them "parachute payments" under Section 280G of the Internal Revenue
Code. In order to assure an orderly transition in the event of a Change in
Control, the covered employees have agreed to remain in the employ of the
Company for a period of ninety (90) days following a Change in Control.
"Change in Control" of the Company is defined to include certain
reorganizations, consolidations or mergers of the Company, certain sales or
transfers of substantially all the assets of the Company, approval by the
stockholders of the Company of its liquidation or dissolution, a change in the
composition of the Company's Board of Directors such that it is comprised of
directors a majority of whom are not "Continuing Directors" as defined in the
agreements, or the acquisition by certain persons of thirty percent or more of
the combined voting power of the Company's outstanding securities.
18
<PAGE> 20
The Severance Agreements further provide that following a Change of
Control, if the employee terminates employment other than for good reason and
the Company could not have terminated the employee for cause, death or
disability, the employee may elect to serve as a consultant to the Company for
a one-year period following the termination of employment and will be paid a
single sum amount equal to the annual compensation, including bonus, paid the
individual during the immediately preceding calendar year. The individual will
also be provided an additional year of coverage with respect to medical,
dental, life, disability and accident insurance and other perquisites
substantially similar to the insurance and other perquisites at the time the
employee elects to render consulting services.
The Severance Agreements have a term of two years, renewable
automatically for additional twelve month periods, subject to cancellation by
the Company upon six months advance notice. If there has been a Change in
Control during the term of the Severance Agreements they would expire two years
after the Change in Control.
19
<PAGE> 21
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW. Recognizing that an organization's long term success is in
large part determined by the quality of leadership provided by its executive
officers, the Company has designed its executive compensation program to
attract, motivate and retain the highest level of executive talent and to align
these executives' interests with the long term interests of the stockholders.
The program is comprised of base salary, long term incentive opportunities,
cash bonuses and benefits typically offered to executives by comparably sized
manufacturing companies.
The Compensation Committee, which is comprised solely of outside
Directors, determines the compensation of the executive officers of the
Company, including the Named Officers, and sets the policies for, and reviews
the compensation awarded to, the approximately next 25 most highly compensated
employees. In reviewing the individual performances of the Named Officers
(other than Mr. Althaver, the CEO), the Compensation Committee considers the
recommendations of Mr. Althaver.
The Compensation Committee currently intends for all compensation paid
to the Named Officers to be tax deductible pursuant to Section 162(m) of the
Internal Revenue Code. In the future, however, if in the judgment of the
Compensation Committee the benefits to the Company outweigh any costs to the
Company of such failure to comply, the Compensation Committee may adopt such a
program.
BASE SALARY. The Committee believes that base compensation should
primarily be a function of the competitive environment of the marketplace.
Base salaries for new executive officers are initially determined by evaluating
the responsibilities of the position held and the experience of the individual,
and by reference to the competitive marketplace for executive talent, including
a comparison to base salaries for positions of comparable complexity and
responsibility. For this purpose the Company utilizes the services of a
compensation consultant, Hay Management Consultants, whose data are based on a
survey (the "Hay Survey") of executive positions in over 700 industrial
companies of all types, a much broader group of companies than those included
in the peer group index used in the Performance Graph on page 22. The base
salaries paid to the Named Officers are in the top quarter of comparable
positions included in the Hay Survey. Base salaries are reviewed and, where
appropriate, adjusted annually based upon the above criteria, taking into
account any new responsibilities of the position. Other components of the
executive compensation packages are more directly related to the Company's
financial performance.
With respect to the base salary granted to Mr. Althaver in 1994, the
Compensation Committee utilized the Hay Survey and also considered the
longevity of Mr. Althaver's service to the Company and its belief that Mr.
Althaver is an excellent representative of the Company to the public. Mr.
Althaver was granted a base salary of $330,000 for 1994, an increase of 8.2%
over his $305,000 base salary for 1993. The Committee's decision to increase
Mr. Althaver's base compensation was not directly based upon or related to the
Company's financial performance.
20
<PAGE> 22
LONG TERM INCENTIVE COMPENSATION. Under the Company's executive
compensation program, each Named Officer's opportunity for incentive
compensation is in large part tied to the Company's financial performance,
through participation in either the Equity Plan or Walbro Engine Management
Incentive Compensation Plan.
Equity Based Long Term Incentive Plan. Key executives not assigned to
the Engine Management Corporation subsidiary are entitled to participate in the
Equity Plan, approved by the stockholders, as amended, on April 23, 1992. The
Equity Plan provides the participants the opportunity to receive stock options
at the prevailing market rate. Included with the stock options are stock
performance awards tied to appreciation of the Common Stock.
The size of each stock option award, the aggregate exercise price of
which cannot exceed 125% of the executive's base salary, is determined by the
Compensation Committee. In making this determination the Committee considers
competitive industry practice, as reported in the Hay Survey, and the Company's
financial performance for the most recent fiscal year measured against its
short term and long term goals. In addition, the Committee considers other
performance measures which may not directly bear on short term stock
performance, including, where appropriate, sales growth, market share,
improvements in product quality and improvements in relations with customers,
suppliers and employees, assigning no specific weight to any one performance
measure.
Each stock option includes a stock performance award which provides an
opportunity to receive a target number of shares of the Common Stock if the
share price of the stock appreciates at a compound 17% rate per year for a
period of five years from the date of grant. If the appreciation is achieved,
the target number of shares will be issued to the executive. Such shares would
have a fair market value approximately equal to the exercise price of the stock
option.
In 1994, Mr. Althaver received options to purchase 14,559 shares of
Common Stock at $17.00 per share, the fair market value of the options on the
date the options were granted. In determining the number of stock options to
award Mr. Althaver, the Committee assessed the Company's financial performance
relative to its goals for net income for the year, and it took into
consideration certain subjective factors, including its evaluation of his
accomplishments in strategic planning and the steps taken to expand the
Company's products and markets. This stock option component of the CEO's 1994
compensation was 25% less than the maximum potential grant authorized under the
Equity Plan, directly reflecting the Company's below-target earnings.
Because the share price of the Company's Common Stock decreased over
the twelve month period preceding the Committee's annual meeting on executive
compensation, zero stock performance shares were issued in 1994 to the Named
Officers, including the CEO.
Engine Management Incentive Compensation Plan. Incentive compensation
for executive officers assigned to the Walbro Engine Management Corporation
subsidiary ("EMC"), including Mr. Walpole, is tied to EMC's financial
performance measured against a five year plan. Participants are entitled to
share a pool of dollars the size of which is based upon EMC's degree
21
<PAGE> 23
of success in achieving a cumulative five year earnings target. The threshold
before any dollars are assigned to the pool is 70% of the five year plan. The
value of the performance pool as of the determination date is equal to the
product of the fair market value of EMC and a target percentage determined by
the amount of imputed debt outstanding under the EMC plan.
COMPENSATION COMMITTEE
William T. Bacon, Jr., Chairman
Frank E. Bauchiero Robert D. Tuttle
22
<PAGE> 24
PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative total
returns for the Company, the S&P 500 composite index, and an index of peer
companies selected by the Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[PERFORMANCE GRAPH TO BE INSERTED HERE]
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Walbro Corporation 100.00 56.41 125.98 201.21 173.28 125.30
Auto & Motor Vehicle Part Industry Peer 100.00 77.03 99.27 162.93 255.18 189.02
Group
Standard and Poor's 500 Index 100.00 96.89 126.42 136.05 149.76 151.74
</TABLE>
The comparison assumes $100 was invested on December 31, 1989 in the
Common Stock, the S&P 500 index, and in the peer group. The companies in the
peer group, all of which are in the automotive parts industry, are as follows:
Automotive Industries Holding Mascotech Industries Inc.
Bestop Inc. Modine Manufacturing Company
Custom Chrome Inc. R & B Inc.
Defiance Inc. Republic Automotive Plans Inc.
Douglas and Lomason Company Simpson Industries
Durakon Industries Inc. TBC Corporation
Hahn Automotive Warehouse Inc. Trico Products Corporation
Insurance Auto Auctions Venturian Corporation
Lund International Holdings Inc. Walbro Corporation
In 1994, Purolator Products Company, which was included in the
Company's peer group in prior years proxy statements, was acquired by Mark
Roman IV Industries. Because the stock of Purolator Products Company is not
separately listed for trading and because Mark Roman IV Industries is engaged
in businesses outside of the automotive parts industry, Purolator Products
Company has been deleted from the peer group.
23
<PAGE> 25
PROPOSAL 2
APPROVAL OF THE
AMENDED AND RESTATED WALBRO CORPORATION
EQUITY BASED LONG TERM INCENTIVE PLAN
The stockholders are asked to consider and vote upon a proposal to
amend and restate the Walbro Corporation Equity Based Long Term Incentive Plan
("Equity Plan"). The summary of its principal features which follows is
qualified in its entirety by reference to the full text of the Equity Plan,
which is set forth in the attached Appendix A.
The Board of Directors adopted the Equity Plan to give officers and
key employees the opportunity to receive stock option grants in lieu of certain
cash compensation, to increase the proportion of compensation tied to stock
ownership and to reduce the proportion payable in cash. Consistent with this
intention, the Company adopted the Equity Plan to permit the Company to grant
options and other equity based awards to selected persons. The Board of
Directors continues to believe that the ability of the Company to make such
awards will be effective in aligning the interests of the Company's key
employees, officers and non-employee directors with its stockholders and will
help motivate and focus the Company's employees, officers and directors in the
creation and improvement of stockholder value. The Equity Plan is a flexible
plan that permits the Company broad discretion to fashion the terms of the
awards to provide eligible participants with appropriate stock-based
incentives.
Generally, effective June 20, 1994, the Board of Directors has amended
and restated the Equity Plan principally to give non-employee directors an
opportunity to receive stock options and to defer the receipt of compensation
consistent with competitive practices of other public companies. Thus, the
Equity Plan, as amended and restated, provides for the grant of 10,000 stock
options to each non-employee director of the Company. The Board of Directors
further amended the Equity Plan to permit non-employee directors to elect to
defer all or any portion of their retainer fee to a later date or to receive
stock options in substitution for the cash retainer. These changes are
described more fully below.
Also, stockholder approval of the amended and restated Equity Plan is
sought (i) to continue qualification of the Equity Plan pursuant to Rule 16b-3
under the Exchange Act, and thereby render certain transactions under the
Equity Plan exempt from certain provisions of Section 16 of the Exchange Act,
(ii) to qualify the Equity Plan under Section 162(m) of the Internal Revenue
Code, and thereby allow the Company to deduct for Federal income tax purposes
certain stock option and stock appreciation right ("SARs") awards to the Named
Executive Officers under the Equity Plan, (iii) to increase the number of
shares authorized for issuance under the Equity Plan, and (iv) to make other
changes in respect to administration to reflect regulatory changes deemed
appropriate by the Board.
An aggregate number of shares of Common Stock equal to 10% of the
number of shares of Common Stock outstanding on the date that the amendment and
restatement of the Equity Plan is approved by the stockholders of the Company
will be reserved for issuance pursuant to the Equity Plan. Based upon the
number of shares expected to be outstanding on the date
24
<PAGE> 26
stockholders approve the amendments to the Plan, there will be 856,457 shares
available for issuance under the Plan, or an expected increase of 97,159 shares
since the Equity Plan was approved in 1992. In the discretion of the Equity
Plan Committee (identified more fully herein), shares of Common Stock subject
to an award under the Equity Plan that are forfeited, otherwise remain unissued
upon termination of an award or are received by the Company in connection with
the exercise of an award shall become available for additional awards under the
Equity Plan. On February 21, 1995, the closing price of the Common Stock on
the Nasdaq National Market was $18.00 per share.
The Equity Plan is administered by the Compensation Committee of the
Board of Directors ("Committee"). The Equity Plan Committee will be composed
of such number of outside directors as is required for application of Rule
16b-3 under the Exchange Act and Section 162(m) of the Internal Revenue Code.
Officers and key employees of the Company and its affiliates who, in
the opinion of the Committee, are responsible for or contribute to the
management, growth and profitability of these companies are eligible to be
granted awards under the Equity Plan. Non-employee directors of the Company
are entitled to an award of 10,000 Stock Options, and may elect to defer all or
a portion of their retainer in return for a deferred payment of such retainer.
Additionally, stock options determined under a formula described below may be
received in lieu of the cash compensation of directors, or the compensation may
be deferred in exchange for the right to receive Common Stock at a later date.
Non-employee directors are entitled to participate only in these arrangements
for non-employee directors; otherwise no person who is a member of the
Committee or who has served as a member of the Committee within the preceding
year will be eligible for the grant of an award under the Equity Plan. There
currently are five eligible officers, six eligible non-employee directors and
sixteen other eligible key employees.
A number of types of awards can be made to officers and key employees
(but not non-employee directors except as described below) under the Equity
Plan. A summary of these awards is set forth below:
Stock Options. The Equity Plan authorizes the Committee to
award non-qualified options to purchase Common Stock at an exercise
price determined by the Committee, which may not be less than 100% of
the fair market value of such stock at the time the option is granted.
No incentive stock options may be awarded under the Equity Plan. The
Equity Plan permits optionees, with the approval of the Committee, to
pay the exercise price of options in cash, Common Stock (valued at its
fair market value on the date of exercise) or by the delivery of cash
or the extension of credit by a broker-dealer to whom the director has
submitted a notice of exercise, or a combination thereof. During any
three-calendar-year period options to purchase no more than 150,000
shares of Common Stock may be granted to any participant in the Equity
Plan.
Stock options may be granted for such terms as the Committee
may determine, provided that the term of an option may not exceed ten
years and one day from its date of grant. Except as otherwise
provided in any option agreement, options may only be
25
<PAGE> 27
transferred under the laws of descent and distribution, and all
options shall be exercisable during the participant's lifetime only by
the participant. Notwithstanding the foregoing, if permitted by and
exempt under Rule 16b-3, any option granted under the Plan shall be
freely transferable.
Upon termination of an officer's or employee's employment with
the Company due to death, the participant's then exercisable options
shall be exercisable for the shorter of their remaining term or five
years after termination of employment. Upon termination of an
officer's or an employee's employment with the Company due to
disability or retirement, the then exercisable options shall be
exercisable for the shorter of their remaining term or six years after
termination of employment. If the disabled or retired participant
dies during the remaining period of exercise, the option shall remain
exercisable for at least 12 months or the stated term of the option,
whichever is shorter. The Committee may accelerate and allow to be
exercised any option that was not otherwise exercisable. If an
officer or employee ceases to be an employee of the Company (other
than due to death, disability, retirement or as a result of
termination for cause), all of such participant's options shall
terminate, except that, to the extent such options are then
exercisable, such options may be exercised for the shorter of their
remaining terms or three months after termination of employment. If
the termination of employment is due to cause, the options shall
terminate immediately.
Upon receipt of a notice from a participant to exercise an
option, the Committee may elect to cash out all or part of any such
option by paying the participant, in cash or shares of Common Stock,
the following amount: (i) the excess of the fair market value of the
Common Stock subject to the unexercised option over the exercise price
of the option, multiplied by (ii) the number of shares for which the
option is to be exercised.
Stock Appreciation Rights ("SARs)". The Equity Plan
authorizes the Committee to grant SARs in conjunction with all or part
of any stock option granted under the Equity Plan. An SAR entitles
the holder to receive upon exercise the excess of the fair market
value of a specified number of shares of Common Stock at the time of
exercise over a specified price per share. Such amount will be paid
to the holder in Common Stock (valued at its fair market value on the
date of exercise), cash or a combination thereof, as the Committee may
determine. An SAR may be granted as an alternative to a previously or
contemporaneously granted nonqualified option. An SAR will entitle
the optionee, in lieu of exercising the option, to receive the excess
of the fair market value of a share of Common Stock on the date of
exercise over the option price multiplied by the number of shares as
to which the optionee is exercising the SAR. Since an SAR is an
alternative to an option, the option will be canceled to the extent
that the SAR is exercised and the SAR will be canceled to the extent
the option is exercised. With respect to participants who are subject
to Section 16(b) of the Act (generally officers and directors of the
Company), the Equity Plan Committee may require that the SARs be
exercised in compliance with Rule 16b-3, including the requirement
that an SAR not be exercisable within the first six months of its
term. The transferability and termination provisions of an SAR are
the same as set forth with respect to Stock Options. The Equity Plan
Committee in its discretion shall determine the number of SARs awarded
to
26
<PAGE> 28
a participant, but in no event shall SARs with respect to more than
150,000 shares of Common Stock be granted to any participant during
any three-calendar-year period.
Restricted Stock. The Equity Plan authorizes the Committee to
grant restricted Common Stock with such restriction periods as the
Committee may designate. During the restriction period, the Committee
may require that the Common Stock certificates evidencing restricted
shares be held by the Company. Restricted Common Stock may not be
sold, assigned, transferred, pledged or otherwise encumbered. Other
than these restrictions on transfer and any other restrictions the
Committee may impose, the participants will have all the rights of a
holder of Common Stock. If a participant ceases to be an employee of
the Company, all shares still subject to restriction shall be
forfeited by the participant; provided, however, that in certain
circumstances, the Committee may waive any or all remaining
restrictions.
Deferred Stock. The Equity Plan authorizes the committee to
grant deferred shares of Common Stock conditional upon the attainment
of specified performance goals of the participant or Company, the
performance of any subsidiary, division or department by which the
participant is employed, or such other goals established by the
Committee. Deferred shares of Common Stock may be granted either
alone or in addition to options, SARs or restricted Common Stock. The
Committee shall have the sole and complete authority to determine the
duration of the period during which the receipt of Common Stock will
be deferred and all other conditions of the awards. A participant may
elect to further defer all or a portion of any such award in
accordance with procedures established by the Committee. Deferred
Common Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered during the deferral period. If a participant
ceases to be an employee of the Company during the deferral period,
the right to shares still held by the participant shall be forfeited
by the participant; provided, however, that in certain circumstances
the Committee may waive any or all remaining deferral limitations.
The Committee has broad authority to fix the terms and conditions of
the individual agreements with participants. All awards granted under the
Equity Plan must comply with the applicable requirements of Rule 16b-3 under
the Exchange Act or any successor Rule.
Certain awards can be made under the Equity Plan to non-employee
directors. A summary of these awards is set forth below:
Director Option Grants. Subject to stockholder approval of
the amended and restated Equity Plan, each non-employee Director,
other than Mr. Oechsle, on June 20, 1994 was granted 10,000 shares of
Common Stock at an exercise price equal to the fair market value of
the shares on that date and, effective October 1, 1994, Mr. Oechsle
was granted an option to purchase 10,000 shares of Common Stock at
$21.75 per share. These stock options will first be exercisable upon
stockholder approval of the amended and restated Equity Plan. Each
other director who commences his or her initial term after June 20,
1994, will be granted options for 10,000 shares of Common Stock on the
date he or she commences service as a non-employee director and the
option price will
27
<PAGE> 29
be 100% of the fair market value on that date. Such options shall be
exercisable on the earliest of the director's death or disability or
the six-month anniversary of the grant date. The Equity Plan permits
a non-employee director, with the approval of the Committee, to pay
the exercise price of the options in cash, Common Stock (valued at its
fair market value on the date of exercise) or by the delivery of cash
or the extension of credit by a broker dealer to whom the director has
submitted a notice of exercise, or a combination of the foregoing.
Deferred Retainer. The Equity Plan permits a non-employee
director to defer all or a portion of the director's retainer and
meeting fees for the year, and to have the deferred retainer and fees
applied in any of the following ways as selected by the director:
(1) To have the cash value of the deferred retainer and
fees credited to a bookkeeping account of the Company
and be credited with interest or other investment
earnings or losses from time to time;
(2) To have posted to the account the number of shares of
Common Stock equal to the fair market value of the
deferred retainer and fees and to have the account
credited or charged from time to time with gains or
losses or dividends in respect to Company Stock; and
(3) To have the deferred retainer and fees applied to the
grant of additional stock options under a formula
whereby the director receives a number of options
equal to the quotient obtained by dividing the amount
of the deferred retainer by 75% of the fair market
value of the Common Stock on the date the retainer is
deferred. The non-employer director is required in
order to exercise the option to pay an additional 25%
of the fair market value at the time of exercise.
The amount of the deferred retainer and fees, plus
the 25% amount required to be paid at the time of
option exercise, equals 100% of the fair market value
of the Common Stock on the date the option is
granted.
The Equity Plan may be amended, altered or discontinued by the Board
of Directors, but no amendment, alteration or discontinuation shall be made
which would (i) impair the rights of a holder of an award previously granted
without the holder's consent or (ii) disqualify the Equity Plan from the
exemption provided by Rule 16b-3 under the Exchange Act. The Equity Plan may
not be amended without stockholder approval to the extent such stockholder
approval is required by law, agreement or the rules of any exchange on which
the Common Stock is listed.
The Equity Plan provides that in the event of any merger,
reorganization, consolidation, recapitalization, spin-off, stock dividend,
stock split, or other change in corporate structure or capitalization affecting
the Common Stock, such substitution or adjustment shall be made in the
aggregate number of shares reserved for issuance under the Plan, in the number
and option price of shares subject to outstanding stock options and SARs, and
in the number of shares subject to other outstanding awards granted under the
Equity Plan as may be determined to be appropriate
28
<PAGE> 30
by the Board of Directors, in its sole discretion. The Equity Plan also
provides that in the event of a Change in Control, as defined in the Equity
Plan, (i) any stock options and SARs outstanding as of the date of the Change
in Control, other than SARs which have not been outstanding for at least six
months on such date, which are not then exercisable and vested shall become
fully exercisable and vested and (ii) the restrictions and limitations
applicable to restricted Common Stock and deferred Common Stock shall lapse and
such restricted Common Stock and deferred Common Stock shall become free of all
restrictions and fully vested. "Change in Control" of the Company is defined
to include certain reorganizations, consolidations or mergers of the Company,
certain sales or transfers of substantially all the assets of the Company,
approval by the stockholders of the Company of its liquidation or dissolution,
a change in the composition of the Company's Board of Directors such that it is
comprised of directors a majority of whom are not "Continuing Directors" as
defined in the Equity Plan, or the acquisition by certain persons of thirty
percent or more of (i) the outstanding shares of Common Stock of the Company or
(ii) the combined voting power of the Company's outstanding securities. In
addition, unless the Equity Plan Committee provides otherwise in an option
agreement, after the Change in Control a participant shall have the right to
surrender all or part of the outstanding awards and receive in cash from the
Company the following amount for each award: (i) the excess of the Change in
Control Price (as defined below) over the exercise price of the award,
multiplied by (ii) the number of shares of Common Stock subject to the award.
The "Change in Control Price" is the higher of (i) the highest reported sales
price of a share of Common Stock in any transaction reported on the principal
exchange on which such shares are listed during the 60-day period prior to the
Change in Control, or (ii) if the Change in Control is due to a tender offer,
merger or other reorganization, the highest price to be paid per share of
Common Stock in such transaction.
The following discussion is intended only as a brief summary of the
Federal Income tax rules relevant to stock options, SARs, restricted Common
Stock and deferred Common Stock. The laws governing the tax aspects of awards
are highly technical and such laws are subject to change in the future.
A. Nonqualified Options and SARs. Upon the grant of a
nonqualified option (with or without an SAR), the optionee, whether an
employee, officer or director, will not recognize any taxable income and the
Company will not be entitled to a deduction. Upon the exercise of such an
option or an SAR, the excess of the fair market value of the shares acquired on
the exercise of the option over the option price (the "spread"), or the
consideration paid to the optionee upon exercise of the SAR, will constitute
compensation taxable to the optionee as ordinary income. In determining the
amount of the spread or the amount of consideration paid to the optionee, the
fair market value of the Common Stock on the date of exercise is used, except
that in the case of an optionee subject to the six month short-swing profit
recovery provisions of Section 16(b) of the Exchange Act (generally officers
and directors of the Company) ("16(b) Persons"), the fair market value will be
determined six months after the date on which the option was granted (if such
date is later than the exercise date) unless such optionee elects to be taxed
based on the fair market value at the date of exercise. Any such election (a
"Section 83(b) election") must be made and filed with the IRS within 30 days
after exercise in accordance with the regulations under Section 83(b) of the
Code. The Company, in computing its Federal income tax, will be entitled to a
deduction in an amount equal to the
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<PAGE> 31
compensation taxable to the optionee. Options granted under the Equity Plan
should be fully deductible without regard to the deduction limit
of Section 162(m) of the Internal Revenue Code. SARs awarded with an exercise
price equal to or in excess of the fair market value of the
Common Stock on the grant date should be fully deductible without regard to the
deduction limit of Section 162(m) of the Internal Revenue Code.
Because the Company may grant SARs at less than 100% of fair market value, SARs
granted to Named Executive Officers at less than fair market
value may not be fully deductible, if and to the extent the income recognized
on the exercise of the options or with respect to other
compensation in the same calendar year exceeds $1,000,000. The foregoing
discussion applies equally to Stock Options granted non-employee
directors as well as officers and employees.
B. Restricted Stock. A participant who is granted restricted
Common Stock may make a Section 83(b) election to have the grant taxed as
compensation income at the date of receipt, with the result that any future
appreciation (or depreciation) in the value of the shares of Common Stock
granted shall be taxed as capital gains (or loss) upon a subsequent sale of the
shares. However, if the participant does not make a Section 83(b) election,
then the grant shall be taxed as compensation income at the full fair market
value on the date that the restrictions imposed on the shares expire, except in
the case of a 16(b) Person in which case the fair market value will be
determined six months after the date in which the restricted Common Stock was
granted (if such date is later than the expiration date of the restrictions).
Unless a participant makes a Section 83(b) election, any dividends paid on
stock subject to the restrictions are compensation income to the participant
and compensation expense to the Company. The Company is entitled to an income
tax deduction for any compensation income taxed to the participant. The
Company is entitled to an income tax deduction for any compensation income
taxed to the participant, subject to the Section 162(m) limitation on the
deductibility of non-performance based compensation in excess of $1,000,000 to
the Named Executive Officers. Restricted Stock granted under the Equity Plan
will not qualify as performance based compensation under Section 162(m).
C. Deferred Stock. A recipient of an award of deferred Common
Stock will not recognize taxable income until the applicable deferral period
has expired and the recipient is in receipt of the Common Stock subject to the
award or an equivalent amount of cash, at which time he will recognize
compensation income equal to the full fair market value of the Common Stock on
such date or the amount of cash paid to him. The Company, in computing its
Federal income tax, will be entitled to a deduction in an amount equal to the
compensation taxable to the recipient of an award at the time the deferral
period expires, subject to the Section 162(m) limitation on the deductibility
of non-performance based compensation in excess of $1,000,000 to the Named
Executive Officers. Deferred Stock granted under the Equity Plan will not
qualify as performance based compensation under Section 162(m).
D. Deferred Retainer. The deferral of the annual retainer and
other cash compensation by a non-employee director in accordance with the terms
of the Equity Plan will defer tax recognition by the director until the actual
distribution of such cash or shares of Common Stock or other property in lieu
of cash, which will generally occur upon termination of service as a director.
The bookkeeping record reflecting the Company's obligation to the director,
whether recorded in cash, in shares of Common Stock or some other unit will
reflect
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<PAGE> 32
that the director is only an unsecured creditor of the Company. If any
deferred retainer is applied to the grant of additional stock options,
the amount of such deferred retainer will be taxable to the director, and
deductible by the Company, at the time such options are exercised.
In addition, Stock Options in lieu of retainer or other cash compensation
granted in accordance with the Equity Plan will be subject to tax
recognition similarly to other stock options discussed previously.
In the event any payments or rights accruing to a participant upon a
Change in Control, or any other payments awarded under the Equity Plan,
constitute "parachute payments" under Section 280G of the Code, depending upon
the amount of such payments accruing and the other income of the participant
from the Company, the participant may be subject to an excise tax (in addition
to ordinary income tax) and the Company may be disallowed a deduction for the
amount of the actual payment.
The table below indicates the options issued to the Company's
non-employee directors under the Equity Plan. The benefits to be received by
other participants in the Equity Plan are not currently determinable.
NEW PLAN BENEFITS
Walbro Corporation Equity Based Long Term Incentive Plan
<TABLE>
<CAPTION>
Name and Position Dollar Value Number of Units
----------------- ------------ ---------------
<S> <C> <C>
Lambert E. Althaver * *
Daniel L. Hittler * *
Gary L. Vollmar * *
Robert H. Walpole * *
Richard H. Whitehead III * *
Executive Group * *
Non-Executive Director Group * 60,000(1)
Non-Executive Officer Employee Group * *
- ------------
</TABLE>
* Not currently determinable.
(1) This represents the total number of shares of the Company's Common
Stock which may be purchased upon the exercise of options issued to
the Company's current non-employee directors under the Equity Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO
APPROVE THE EQUITY PLAN AS AMENDED AND RESTATED.
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PROPOSAL 3
AMENDMENT OF RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE AUTHORIZED CAPITAL
AND NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has proposed and recommended for adoption by
the stockholders, an amendment to the Company's Restated Certificate of
Incorporation, as amended (the "Restated Certificate"), to increase the number
of authorized shares of Common Stock. The Board of Directors is seeking
approval of the amendment to make available additional shares for use in
connection with future acquisitions, the raising of additional capital,
possible stock splits and stock dividends and other corporate purposes.
The proposal would amend the Restated Certificate to increase the
total authorized capital stock of the Company from 16,000,000 to 26,000,000
shares and to increase the number of authorized shares of Common Stock from
15,000,000 to 25,000,000 shares. No changes would be made to the number of
authorized shares of Preferred Stock.
As of February 21, 1995 there were 8,564,576 shares of Common Stock
issued and outstanding. In addition, as of that date there were 856,457 shares
of Common Stock reserved for issuance under the Company's Equity Plan and
33,100 shares of Common Stock reserved for issuance under the Company's 1983
Stock Option Plan. Consequently, the Company had 5,545,867 shares of Common
Stock available for future issuance as of February 21, 1995. If the proposal
to increase the number of authorized shares of Common Stock is approved there
will be an additional 10,000,000 shares of Common Stock available for future
issuance, bringing the total available to 15,545,867 shares.
The Board of Directors believes that the proposed amendment is in the
best interests of the Company and believes that the increased authorized number
of shares will provide the Company with flexibility to act in a timely manner
to take advantage of favorable market conditions and other opportunities,
avoiding the potential delays and expenses involved in conducting a special
meeting of stockholders to authorize additional shares when needed. There are
no current plans, commitments or arrangements to issue additional shares of any
class of stock, other than issuances which may be made pursuant to the Equity
Plan and the 1983 Stock Option Plan.
The proposed amendment provides that Article IV, Section 4.1 of the
Restated Certificate be amended to read in its entirety as follows:
"SECTION 4.1. AUTHORIZED CAPITAL STOCK. The amount of the
total authorized capital stock of the Company is 26,000,000 shares,
which are divided into two classes as follows: 1,000,000 shares of
Preferred Stock having a par value of $1.00 per share and 25,000,000
shares of Common Stock having a par value of $0.50 per share."
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<PAGE> 34
The proposed amendment will have no impact, positive or negative, upon
the terms or the rights of the holders of other classes of the Company's
capital stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO
AMEND THE RESTATED CERTIFICATE TO INCREASE THE COMPANY'S AUTHORIZED CAPITAL AND
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
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<PAGE> 35
INDEPENDENT PUBLIC ACCOUNTANT
The Board of Directors, upon recommendation of the Audit Committee,
has appointed Arthur Andersen & Co. to audit the financial statements of the
Company and its subsidiaries for the year ending December 31, 1995. Arthur
Andersen & Co. has been the Company's independent public accountant for nine
years. A representative of Arthur Andersen & Co. is expected to be present at
the Annual Meeting with the opportunity to make a statement, if he or she
desires, and is expected to be available to respond to appropriate questions
with respect to that firm's examination of the Company's Consolidated Financial
Statements.
PROPOSALS OF SECURITY HOLDERS
Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders must be received by the Secretary of the Company, 6242
Garfield Street, Cass City, MI 48726, no later than November 10, 1995.
FORM 10-K
The Company will furnish without charge a copy of its Annual Report on
Form 10-K for the fiscal year ended December 31, 1994, including the financial
statements and the schedules thereto, upon the written request of any security
holder as of the record date, and will provide copies of the exhibits to such
Annual Report upon payment of a reasonable fee which shall not exceed the
Company's reasonable expenses incurred in connection therewith. Requests for
such materials should be directed to Secretary, Walbro Corporation, 6242
Garfield Street, Cass City, Michigan, 48726.
OTHER BUSINESS
It is not anticipated that any matters will be presented to the
stockholders other than those mentioned in this Notice. However, if other
matters are brought before the meeting, it is intended that the persons named
in the Proxy will vote as the Board of Directors directs.
By order of the Board of Directors
/s/ Daniel L. Hittler
Daniel L. Hittler, Secretary
ALL STOCKHOLDERS ARE URGENTLY REQUESTED
TO SIGN AND MAIL THEIR PROXIES PROMPTLY
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<PAGE> 36
APPENDIX A
WALBRO CORPORATION
EQUITY BASED LONG TERM INCENTIVE PLAN
(AS AMENDED AND RESTATED EFFECTIVE JUNE 20, 1994)
SECTION 1. Purposes; Definitions.
This Equity Based Long Term Incentive Plan was adopted by the Board of
Directors on February 6, 1991 and approved by the Company's stockholders on
April 23, 1991. The Board of Directors of the Company has determined to amend
and restate the Plan, effective June 20, 1994 to permit certain awards in
respect of non-employee directors, and effective as of the date of the
execution hereof, to permit certain other modifications the Board of Directors
deems appropriate, subject to the approval of the Company's stockholders. The
purpose of the Plan as amended and restated is to enable officers, key
employees and directors of the Company and its Affiliates to participate in the
Company's future and to enable the Company to attract and retain such persons
by offering them proprietary interests in the Company. The Plan also provides
a means through which the Company can attract and retain such key persons of
merit.
For purposes of the Plan, the following terms are defined as set forth
below:
(a) "Account" means the record of an interest in this
Plan with respect to a Director's Deferred Retainer represented by his
or her:
(1) "Cash Account" which means an interest in
this Plan composed of Deferred Retainers posted with a cash
value to the credit of the Director, plus all income and gains
credited to and minus all losses charged to such account, and
minus all distributions charged to such account.
(2) "Stock Account" which means an interest in
this Plan composed of Deferred Retainers posted with shares of
Common Stock to the credit of the Director, plus all income
and gains credited to and minus all losses charged to such
account, and minus all distributions charged to such account.
The value of an Account at any time, other than on a Valuation Date,
shall be the Account accrued as of the immediately preceding Valuation
Date increased by the amount credited to the Account since the
previous Valuation Date, and reduced by the value of any distributions
from the Account. On the Valuation Date, the value shall be that as
determined under the preceding sentence increased by the value of any
income and gains and decreased by the value of all losses for that
Valuation Date. Each Account represents an unfunded commitment of the
Company to pay in the future the amounts credited thereunder, subject
to all of the terms and conditions of this Plan. The Committee may
establish more than one Account with respect to a Director, and the
Plan shall apply separately with respect to each Account.
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(b) "Affiliate" means a corporation or other entity
controlled by the Company and designated by the Committee as such.
(c) "Award" means a Stock Appreciate Right, Stock Option,
Deferred Option, Restricted Stock or Deferred Stock.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" means an act or acts of dishonesty by the
optionee constituting a felony under applicable law and resulting or
intending to result directly or indirectly in gain to or personal
enrichment of the optionee at the Company's expense. Notwithstanding
the foregoing, the optionee shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered
to him a copy of a resolution, duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Board at a
meeting of the Board called and held for that purpose (after
reasonable notice to him has been given or has been made and an
opportunity for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board the
optionee was guilty of conduct set forth above in the first sentence
of this Section 2(e) and specifying the particulars thereof in detail.
(f) "Change in Control" and "Change in Control Price"
have the meanings set forth in Sections 15(b) and (c), respectively.
(g) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(h) "Commission" means the Securities and Exchange
Commission or any successor agency.
(i) "Committee" means the Committee referred to in
Section 3.
(j) "Common Stock" means common stock, par value $0.50
per share, of the Company.
(k) "Company" means Walbro Corporation, a Delaware
corporation.
(l) "Conversion Election" means a non-binding election,
on such form as may be required by the Committee, by a Director to
change the method of measuring the investment return on all or some
specified portion of the Director's Cash Account.
(m) "Deferral Election" or "Election" means an election
by a Director to (a) either receive all of his or her Retainer on a
current basis or to reduce his or her Retainer for a Retainer Year by
an amount or percentage specified in the Election; and (b) to select
whether the Deferred Retainer for that Retainer Year will be posted to
the Cash Account, the Stock Account, converted to Deferred Options or
a combination of the foregoing. With respect to any period or
Election for which Rule 16b-3 as in effect
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on April 30, 1991 is in effect or applies, the Election shall be a
one-time, irrevocable Election and shall apply to each and every
Retainer during the period such Rule 16b-3 applies to the Plan (or any
later period if designated by the Committee), and with respect to any
period or Election for which Rule 16b-3 as promulgated in Securities
and Exchange Commission Release 34-28869 (including any amendment or
successor thereto) applies, the Deferral Election shall be effective
only if received on a Notice Date that is at least six months prior to
the transaction to which the Election relates and is irrevocable with
respect to any Retainer Year that has commenced.
(n) "Deferred Option" means an Option granted to the
Director pursuant to a Deferral Election.
(o) "Deferred Retainer" means the amount of the Retainer
posted to the Account from time to time based upon the Director's
Deferral Election to defer some or all of his or her Retainer.
(p) "Deferred Stock" means an award made pursuant to
Section 10.
(q) "Director" means each and any director who serves on
the Board and who is not an officer or employee of the Company or any
of its Affiliates.
(r) "Director Grant Date" means (1) with respect to a
person who was a Director on June 20, 1994, and (2) with respect to a
Director who was not a Director on June 20, 1994, the first business
day of the initial term for which the Director is elected or
appointed; and (3) with respect to a Deferred Option, the date the
Retainer would have been paid in cash if not deferred pursuant to an
Election.
(s) "Disability" means a permanent and total disability
as determined under procedures established by the Committee for
purposes of the Plan.
(t) "Disinterested Person" shall have the meaning set
forth in Rule 16b-3, or any successor definition adopted by the
Commission and shall mean a person who is also an "outside director"
under Section 162(m) of the Code.
(u) "Early Retirement" means retirement from active
employment with the Company or an Affiliate on or after age 55 but
prior to age 65.
(v) "Earnings Factor" means the product of (1) the prime
interest rate as of the first business day within the accounting
period as established by the Company's principal bank, or such other
interest rate as may be designated from time to time by the Committee
and (2) a fraction, the numerator of which is the number of full
calendar months in the accounting period and the denominator of which
is 12. If the accounting period is other than one or more full
calendar months, the Committee shall appropriately modify the fraction
calculated under the preceding sentence.
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(w) "Effective Date" means the date specified by the
Board at the time the Plan is approved by the Board.
(x) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor thereto.
(y) "Fair Market Value" means, except as otherwise
provided in this Plan, the mean, as of any given date, between the
highest and lowest reported sales prices of the Common Stock on the
New York Stock Exchange Composite Tape or, if not listed on such
exchange, any other national exchange on which the Common Stock is
listed or on The Nasdaq Stock Market. If there is no regular public
trading market for such stock, the Fair Market Value of the Common
Stock shall be determined by the Committee in good faith.
(z) "Investment Election" means an election, on such form
as may be required by the Committee, by the Director to direct the
method of measuring the investment return of his or her Cash Account.
(aa) "Investment Fund" means one or more of the investment
alternatives (other than Common Stock) which are available and
designated by the Committee, and which are used as a measurement of
investment return on Cash Accounts.
(bb) "Normal Retirement" means retirement from active
employment with the Company or an Affiliate at or after age 65.
(cc) "Notice Date" means the date established by the
Committee as the deadline for it to receive a Deferral Election or any
other notification with respect to an administrative matter in order to
be effective under this Plan.
(dd) "Payment Date" means, with respect to an Account, the
first day of the month coincident with or next following the earlier of
(1) the date of the Director's Termination of Directorship and (2) the
date of a Change in Control.
(ee) "Plan" means the Walbro Corporation Equity Based Long
Term Incentive Plan, as set forth herein and as hereinafter amended
from time to time.
(ff) "Restricted Stock" means an award under Section 9.
(gg) "Retainer" means the retainer provided to a Director
for services rendered as a Director, including attendance at meetings,
but not the reimbursement of expenses, in his or her capacity as a
Director.
(hh) "Retainer Year" means the calendar year.
(ii) "Retirement" means Normal or Early Retirement.
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(jj) "Rule 16b-3" means Rule 16b-3, as promulgated by the
Commission under Section 16(b) of the Exchange Act, as amended from
time to time.
(kk) "Settlement Date" means the date on which financial
transactions from a Trade Date are considered to be settled.
(ll) "Stock Appreciation Right" means a right granted
under Section 8.
(mm) "Stock Option" or "Option" means an option granted
under Section 6.
(nn) "Sweep Date" means the date established by the
Committee as the cutoff date and time for the Committee to receive
notification with respect to a financial transaction in order to be
processed with respect to a Trade Date.
(oo) "Termination of Directorship" means the occurrence of
any act or event that actually or effectively causes or results in the
person's ceasing, for whatever reason, to be a Director of the Company,
including, without limitation, death, Disability, removal, severance at
the election of the Director, retirement, failure to be elected or
stand for election as a Director, or severance as a result of the
discontinuance, liquidation, sale or transfer by the Company or its
Affiliates of all businesses owned or operated by the Company or its
Affiliates.
(pp) "Termination of Employment" means the termination of
the participant's employment with the Company or any Affiliate. A
participant employed by an Affiliate of the Company shall also be
deemed to incur a termination of employment if the Affiliate ceases to
be an Affiliate and the participant does not immediately thereafter
become an employee of the Company or another Affiliate.
(qq) "Trade Date" means the date as of which a financial
transaction is considered by this Plan to have occurred.
(rr) "Trust" means the Walbro Corporation 1994 Director's
Stock Incentive Trust.
(ss) "Valuation Date" means the dates established by the
Committee.
In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.
SECTION 2. Plan Awards.
To carry out the purpose of the Plan, the Company and its Affiliates
will from time to time enter into various arrangements with persons eligible to
participate in the Plan and confer various benefits upon them. If their terms
and conditions and the benefits conferred by them are not inconsistent with the
provisions of the Plan, such arrangements are authorized under the Awards. The
authorized categories of benefits for which Awards may be granted, which are
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more fully described elsewhere in this Plan, are Stock Options, Deferred
Options, Stock Appreciation Rights, Restricted Stock and any other
benefits granted under the Plan that are not among those listed above, but
which (a) by their terms will or might involve the issuance or sale
of Common Stock, (b) are measured, in whole or in part, by the value,
appreciation, dividend yield or other features attributable to a
specified number of shares of Common Stock, or (c) may result in a cash
payment.
An Award may confer one such benefit or two or more of them in tandem
or in the alternative. Subject to the provisions of the Plan, any Award
granted pursuant to the Plan shall contain such additional terms and provisions
as those administering the Plan for the Company may consider appropriate.
Among other things, any such Award may, but need not, also provide for the
satisfaction of any applicable tax withholding obligation by the retention of
shares to which the grantee would otherwise be entitled or by the grantee's
delivery of previously owned shares or other property.
SECTION 3. Administration.
The Plan shall be administered by the Compensation Committee of the
Board or such other committee of the Board, composed of such number of
Disinterested Persons as is required for an application of Rule 16b-3, each of
whom shall be appointed by and serve at the pleasure of the Board. If at any
time no Committee shall be in office, the functions of the Committee specified
in the Plan shall be exercised by the members of the Board who are
Disinterested Persons.
The Committee shall have plenary authority to grant Awards to
officers, key employees and Directors of the Company and its Affiliates.
Among other things, the Committee shall have the authority, subject to
the terms of the Plan:
(a) to select the officers and key employees to whom
Awards may from time to time be granted;
(b) to determine whether and to what extent Stock
Options, Deferred Options, Stock Appreciation Rights, Restricted Stock
and Deferred Stock or any combination thereof are to be granted
hereunder;
(c) to determine the number of shares of Common Stock to
be covered by each Award granted hereunder;
(d) to determine the terms and conditions of any Award
granted hereunder (including, but not limited to, the share price, any
vesting restriction or limitation and any vesting acceleration or
forfeiture waiver regarding any Award and the shares of Common Stock
relating thereto, based on such factors as the Committee shall
determine);
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(e) to adjust the terms and conditions, at any time or
from time to time, of any Awards, including with respect to
performance goals and measurements applicable to performance-based
awards pursuant to the terms of the Plan;
(f) to determine under what circumstances an Award may be
settled in cash or Common Stock under the terms of the Plan;
(g) to determine to what extent and under what
circumstances Common Stock and other amounts payable with respect to
an Award shall be deferred;
(h) to establish, maintain and adjust Accounts;
(i) to administer Deferral Elections, and to determine
whether to permit and administer Investment Elections and Conversion
Elections;
(j) to establish and determine the Earnings Factor, if
any;
(k) to establish and determine the Investment Funds, if
any, to be applied under the Plan;
(l) to direct and implement the payment of Accounts as
of the Payment Date; and
(m) to interpret and make final determination with
respect to the number of shares of common stock remaining available.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in
office, except that the members thereof may authorize any one (1) or more of
their number or any officer of the Company to execute and deliver documents on
behalf of the Committee.
Any determination made by the Committee pursuant to the provisions of
the Plan with respect to any Award shall be made in its sole discretion at the
time of the grant of the Award or, unless in contravention of any express term
of the Plan, at any time thereafter. All decisions made by the Committee
pursuant to the provisions shall be final and binding on all persons, including
the Company and the Plan participants.
SECTION 4. Common Stock Subject to the Plan.
The total number of shares of Common Stock reserved and available for
distribution pursuant to Awards under the Plan shall be equal to ten percent
(10%) of the number of shares of Common Stock outstanding on the date the
amendment and restatement of the Plan is
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approved by the stockholders of the Company. Such shares may consist, in whole
or in part, of authorized and unissued shares or treasury
shares.
Subject to Section 8(b)(iv), if any shares of Stock that have been
optioned cease to be subject to a Stock Option, if any shares of Stock that are
subject to any Award are forfeited, if any Award otherwise terminates without a
payment being made to the participant in the form of Stock or if any shares of
Common Stock that were previously issued under the Plan are received in
connection with the exercise of an Award, such shares shall again be available
for distribution in connection with Awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, spin-off, stock dividend, stock split, extraordinary
distribution with respect to the Common Stock or other similar change in
corporate structure affecting the Common Stock, such substitution or
adjustments shall be made in the aggregate number of shares reserved for
issuance under the Plan, in the number and Option price of shares subject to
outstanding Stock Options and Stock Appreciation Rights, and in the number of
shares subject to other outstanding Awards granted under the Plan as may be
determined to be appropriate by the Board, in its sole discretion; provided,
however, that the number of shares subject to any Award shall always be a whole
number. Such adjusted Option price shall also be used to determine the amount
payable by the Company upon the exercise of any Stock Appreciation Right
associated with any Stock Option.
SECTION 5. Eligibility.
Officers and key employees of the Company and its Affiliates (but
excluding members of the Committee) who are responsible for or contribute to
the management, growth and profitability of the business of the Company and its
Affiliates are eligible to be granted Awards under the Plan. Each Director
shall be eligible to be granted Stock Options to purchase shares of Common
Stock in accordance with Section 7 and shall be eligible to make a Deferral
Election as provided in the Plan. The Committee may designate any person as
not eligible to participate in the Plan even if such person would be otherwise
eligible to participate in the Plan, and members of the Committee are not
eligible to participate to the extent inconsistent with such persons intended
status as a Disinterested Person.
SECTION 6. Stock Options.
(a) Administration. Stock Options may be granted either
alone or in addition to other Awards granted under the Plan. The
Committee shall determine the officers and key employees to whom, and
the time or times at which grants of Stock Options will be made, the
number of shares of Common Stock with respect to which Stock Options
will be granted, the time or times within which such Stock Options
will be subject to forfeiture, and any other terms and conditions of
the Stock Options, in addition to those contained in Section 6(c).
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve and the Committee shall have
the authority to grant any optionee Stock Options. However, no Stock
Options within the meaning of Section 422 of the Code may be granted
under the Plan, and no Stock Option shall be granted under this
Section 6 to a Director. During any three-calendar-year
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period, Stock Options for no more than 150,000 shares of Common Stock
shall be granted to any person.
(b) Option Agreements. Stock Options shall be evidenced
by Option agreements, the terms and provisions of which need not be
the same with respect to each optionee. The grant of a Stock Option
shall occur on the date the Committee by resolution selects an
individual as a participant in any grant of Stock Options, determines
the number of shares of Common Stock to be subject to such Stock
Option to be granted to such individual and specifies the terms and
provisions of the Option agreement. The Company shall notify a
participant of any grant of a Stock Option, and a written Option
agreement or agreements shall be duly executed and delivered by the
Company to the participant. Such agreement or agreements shall become
effective upon execution by the participant.
(c) Terms and Conditions. Options granted under the Plan
shall be subject to the following terms and conditions and the
relevant Option agreements shall contain such additional terms and
conditions as the Committee shall deem desirable:
(i) Option Price. The Option price per share of
Common Stock purchasable under a Stock Option shall be set
forth in the Option agreement and shall be equal to the Fair
Market Value of the Common Stock subject to the Stock Option
on the date of grant.
(ii) Option Term. The term of each Stock Option
shall be fixed by the Committee, but no Stock Option shall be
exercisable more than the ten (10) years and one (1) day after
the date the Stock Option was granted.
(iii) Exercisability. Subject to Section 6(c)(i)
and 15(a)(i), Stock Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be
determined by the Committee. If the Committee provides that
any Stock Option is exercisable only in installments, the
Committee may at any time waive such installment exercise
provisions, in whole or in part, based on such factors as the
Committee may determine.
In addition, the Committee may at any time accelerate the
exercisability of any Stock Option.
(d) Method of Exercise. Subject to the provisions of this
Section 6, Stock Options may be exercised, in whole or in part, at any
time during the option period by giving written notice of exercise to
the Company specifying the number of shares of Common Stock subject to
the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the
purchase price by certified or bank check or such other instrument as
the Company may accept. If approved by the Committee, payment in full
or in part may also be made (i) by delivering Common Stock already
owned by the optionee having a total Fair Market Value on the date of
such delivery equal to the Option price; (ii) by authorizing the
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Company to retain shares of Common Stock which would otherwise be
issuable upon exercise of the Option having a total Fair Market Value
as of the date of delivery equal to the Option price; (iii) by delivery
of cash or the extension of credit by a broker-dealer to whom the
optionee has submitted a notice of exercise (in accordance with Part
220, Chapter II, Title 12 of the Code of Federal Regulations, so-called
"cashless" exercise"); or (iv) any combination of the foregoing.
If payment of the option exercise price of a Non-Qualified
Stock Option is made in whole or in part in the form of Restricted
Stock or Deferred Stock, the number of shares of Stock to be received
upon such exercise equal to the number of shares of Restricted Stock or
Deferred Stock used for payment of the option exercise price shall be
subject to the same forfeiture restrictions or deferral limitations to
which such Restricted Stock or Deferred Stock was subject, unless
otherwise determined by the Committee.
No shares of Common Stock shall be issued until full payment
therefor has been made. Subject to any forfeiture restrictions or
deferral limitations that may apply if a Stock Option is exercised
using Restricted Stock or Deferred Stock, an optionee shall have all of
the rights of a stockholder of the Company holding the class or series
of Common Stock that is subject to such Stock Option (including, if
applicable, the right to vote the shares and the right to receive
dividends), when the optionee has given written notice of exercise, has
paid in full for such shares, has given, if requested, the
representation described in Section 18(a) and such shares have been
recorded on the Company's official stockholder records as having been
issued or transferred. No adjustment shall be made for cash dividends
or other rights for which the record date is prior to the date such
shares are recorded on the Company's official stockholder records as
having been issued or transferred, except as provided in Section 4.
(e) Non-transferability of Options. Except as provided in
an Option agreement, no Stock Option shall be transferable by the
optionee other than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee or by the guardian or legal
representative of the optionee. Notwithstanding the foregoing, if and
to extent transferability is permitted and exempt under Rule 16b-3 and
except as otherwise provided in an Option agreement, every Stock Option
shall be freely transferable. The terms "holder" and "optionee"
include the guardian and legal representative of the optionee named in
the Option agreement and any person to whom an Option is transferred.
(f) Effect of Termination of Employment on Option.
(i) By Reason of Death. If an optionee's
employment terminates by reason of death, any Stock Option
held by such optionee may thereafter be exercised, to the
extent then exercisable or on such accelerated basis as the
Committee may determine, for a period of five (5) years (or
such other period as the Committee may specify in the relevant
Option agreement) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever
period is the shorter.
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(ii) By Reason of Disability. If an optionee's
employment terminates by reason of Disability, any Stock
Option held by such optionee may thereafter be exercised by
the optionee, to the extent then exercisable or on such
accelerated basis as the Committee may determine, for a period
of six (6) years (or such other period as the Committee may
specify in the relevant Option agreement) from the date of
such Disability or until the expiration of the stated term of
such Stock Option, whichever period is shorter; provided,
however, that if the optionee dies within such six (6) year
period (or such shorter period), an unexercised Stock Option
held by such optionee shall, notwithstanding the expiration of
such six (6) year (or shorter) period, continue to be
exercisable to the extent to which it was exercisable at the
time of death for a period of twelve (12) months from the date
of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.
(iii) By Reason of Retirement. If an optionee's
employment terminates by reason of Retirement, any Stock
Option held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time of
such Retirement or on such accelerated basis as the Committee
may determine, for a period of six (6) years (or such shorter
period as the Committee may specify in the relevant Option
agreement) from the date of such termination of employment or
until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if
the optionee dies within such six (6) year (or such shorter)
period any unexercised Stock Option held by such optionee
shall, notwithstanding the expiration of such six (6) year (or
such shorter) period, continue to be exercisable to the extent
to which it was exercisable at the time of death for a period
of twelve (12) months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever
period is the shorter.
(iv) Other Termination. Unless otherwise
determined by the Committee and set forth in the relevant
Option agreement, if an optionee incurs a Termination of
Employment for any reason other than death, Disability or
Retirement, any Stock Option held by such optionee shall
thereupon terminate, except that such Stock Option, to the
extent then exercisable, may be exercised for the lesser of
three (3) months from the date of such Termination of
Employment or the balance of such Stock Option's term if such
Termination of Employment of the optionee is involuntary and
without Cause. Notwithstanding the foregoing, if an optionee
incurs a Termination of Employment at or after a Change in
Control, other than by reason of death, Disability or
Retirement, any Stock Option held by such optionee shall be
exercisable for the lesser of (x) six (6) months and one (1)
day from the date of such Termination of Employment, and (y)
the balance of such Stock Option's term.
(g) Cashing Out of Option; Settlement of Spread Value in
Stock. On receipt of written notice of exercise, the Committee may
elect to cash out all or part of the portion of any Stock Option to be
exercised by paying the optionee an amount in cash or Common Stock,
equal to the excess of the Fair Market Value of the Common Stock
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that is the subject of the Option over the Option price times the
number of shares of Common Stock subject to the Option on the effective
date of such cash out. Cash outs relating to Options held by optionees
who are actually or potentially subject to Section 16(b) of the
Exchange Act shall comply with the "window period" provisions of Rule
16b-3, to the extent applicable, and the Committee may determine Fair
Market Value based on the highest mean sales price of the Common Stock
on any exchange on which the Common Stock is listed (or The Nasdaq
Stock Market) on any day during such "window period" under the pricing
rules set forth in Section 8(b)(ii)(2).
(h) Change in Control. Notwithstanding any other
provision of the Plan, upon a Change in Control, in the case of Stock
Options other than Stock Options held by an officer or director of the
Company (within the meaning of Section 16 of the Exchange Act) which
were granted less than six (6) months prior to the Change in Control
(which will be governed by the proviso to this sentence) during the
sixty (60) day period from and after a Change in Control (the "Exercise
Period"), unless the Committee shall determine otherwise at the time of
grant, an optionee shall have the right, whether or not the Stock
Option is fully exercisable, in lieu of the payment of the exercise
price of the shares of Common Stock being purchased under the Stock
Option and by giving notice to the Company, to elect (within the
Exercise Period) to surrender all or part of the Stock Option to the
Company and to receive cash, within thirty (30) days of such notice, in
an amount equal to the amount by which the Change in Control Price per
share of Common Stock on the date of such election shall exceed the
exercise price per share of the Common Stock under the Stock Option
(the "Aggregate Spread") multiplied by the number of shares of Common
Stock granted under the Stock Option as to which the right granted
under this Section 6 shall have been exercised; provided, however, that
if the end of such sixty (60) day period from and after a Change in
Control is within six (6) months of the date of grant of a Stock Option
held by an optionee who is an officer or director of the Company
(within the meaning of Section 16(b) of the Exchange Act), such Stock
Option shall be cancelled in exchange for a cash payment to the
optionee at the time of optionee's termination of employment equal to
the Aggregate Spread multiplied by the number of shares of Common Stock
granted under said Stock Option, plus interest on such amount at the
prime rate as reported in the Wall Street Journal, compounded annually
and determined from time to time. Notwithstanding the foregoing, if
any right under this Section would cause a transaction to be ineligible
for pooling of interest accounting that would but for the right
hereunder be eligible for such accounting treatment, the Committee may
modify or adjust the right so that pooling of interest accounting shall
be available, including the substitution of Common Stock having a Fair
Market Value equal to the cash otherwise payable hereunder for the
right which caused the transaction to be ineligible for pooling of
interest accounting.
SECTION 7. Director Option Grants.
(a) Eligibility. Each Director shall be eligible to be
granted Stock Options or Deferred Options to purchase shares of Common
Stock as provided in this Section.
(b) Grant and Exercise. Each Director who is a Director
on June 20, 1994 shall be granted a Stock Option on such date to
purchase 10,000 shares of Common
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Stock without further action by the Board of Directors or the
Committee. Each Director whose initial term as a member of the Board
commences after June 20, 1994 shall be granted a Stock Option (other
than a Deferred Option) on the Director Grant Date to purchase 10,000
shares of Common Stock without further action by the Board of Directors
or the Committee. A Director shall be granted Deferred Options if
elected by the Director in a Deferral Election on the Director Grant
Date applicable to that Election. The number of Deferred Options to be
granted for any Retainer Year shall equal the quotient obtained by
dividing the amount of the Deferred Retainer by 75% of the Fair Market
Value per share of the Common Stock on the relevant date. If the
number of shares of Common Stock available to grant under the Plan on a
scheduled date of grant is insufficient to make all automatic grants
required to be made pursuant to the Plan on such date, then each
eligible Director shall receive an Option to purchase a pro rata number
of the remaining shares of Common Stock available under the Plan;
provided further, however, that if such proration results in fractional
shares of Common Stock, then such Option shall be rounded down to the
nearest number of whole shares of Common Stock. The Option price of
all Deferred Options shall be 25% of the Fair Market Value per share on
the Director's Grant Date.
(c) Terms and Conditions. Options shall be subject to
such terms and conditions as shall be determined by the Committee and
unless otherwise provided in an Agreement shall include the following:
(d) Option Period. The Option Period of each Option
shall be ten (10) years.
(e) Exercisability. Subject to Section 15(a), Options
shall be exercisable upon the earliest of the date of the Director's
death or Disability and the date that is the six-month anniversary of
the Director's Grant Date. If the Committee provides that any Option
is exercisable only in installments, the Committee may at any time
waive such installment exercise provisions, in whole or in part. In
addition, the Committee may at any time accelerate the exercisability
of any Option. An Award, including any Options not yet exercised and
the value of the Account not yet distributed, shall be forfeited if the
Director incurs a Termination of Directorship due to Cause.
(f) Method of Exercise. A Director desiring to exercise
an Option, in whole or in part, at any time during the Option period
must give written notice of exercise on a form provided by the
Committee (if available) to the Company specifying the number of shares
of Common Stock subject to the Option to be purchased. Such notice
shall be accompanied by payment in full of the purchase price by cash
or check or such other form of payment as the Company may accept. If
approved by the Committee, payment in full or in part may also be made
(i) by delivering Common Stock already owned by the Director having a
total Fair Market Value on the date of such delivery equal to the
Option price; (ii) by authorizing the Company to retain shares of
Common Stock which would otherwise be issuable upon exercise of the
Option having a total Fair Market Value on the date of delivery equal
to the Option price; (iii) by the delivery of cash or the extension of
credit by a broker-dealer to whom the Director has submitted a notice
of exercise (in accordance with Part 220, Chapter II, Title 12 of the
Code of Federal
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Regulations, so-called "cashless" exercise); or (iv) by any combination
of the foregoing. No shares of Common Stock shall be issued until full
payment therefor has been made.
(g) Non-transferability of Options. Except as provided in
an Option agreement, no Stock Option shall be transferable by the
optionee other than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee or by the guardian or legal
representative of the optionee. Notwithstanding the foregoing, if and
to extent transferability is permitted and exempt under Rule 16b-3 and
except as otherwise provided in an agreement, every Stock Option shall
be freely transferable. The terms "holder" and "optionee" include the
guardian and legal representative of the optionee named in the Option
agreement and any person to whom an Option is transferred.
(h) Application of Other Sections. Sections 6(g) and 6(h)
shall apply to Options granted to Director under this Section 7, to the
extent permitted by applicable law.
SECTION 8. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option (other than
a Stock Option granted to a Director) granted under the Plan. Such
rights may be granted either at or after the time of grant of such
Stock Option, but may not be granted to a Director. A Stock
Appreciation Right shall terminate and no longer be exercisable upon
the termination or exercise of the related Stock Option.
A Stock Appreciation Right may be exercised by an optionee in
accordance with Section 6(b) by surrendering the applicable portion of
the related Stock Option in accordance with procedures established by
the Committee. Upon such exercise and surrender, the optionee shall be
entitled to receive an amount determined in the manner prescribed in
Section 8(b). Stock Options which have been so surrendered shall no
longer be exercisable to the extent the related Stock Appreciation
Rights have been exercised. During any three-calendar-year period,
Stock Appreciation Rights with respect to no more than 150,000 shares
of Common Stock shall be granted to any person.
(b) Terms and Conditions. Stock Appreciation Rights shall
be subject to such terms and conditions as shall be determined by the
Committee, including the following:
(i) Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that
the Stock Options to which they relate are exercisable in
accordance with the provisions of Section 6 and this Section
8; provided, however, that a Stock Appreciation Right shall
not be exercisable during the first six months of its term by
an optionee who is actually or potentially subject to Section
16(b) of the Exchange Act, except that this limitation shall
not apply in the event of death or Disability of the optionee
prior to the expiration of the six month period.
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(ii) Upon the exercise of a Stock Appreciation
Right, an optionee shall be entitled to receive an amount in
cash, shares of Common Stock or both equal in value to the
excess of the Fair Market Value of one share of Common Stock
over the Option price per share specified in the related Stock
Option multiplied by the number of shares in respect of which
the Stock Appreciation Right shall have been exercised, with
the Committee having the right to determine the form of
payment.
In the case of Stock Appreciation Rights relating to Stock
Options held by optionees who are actually or potentially subject to
Section 16(b) of the Exchange Act, the Committee:
(1) may require that such Stock
Appreciation Rights be exercised only in accordance
with the applicable "window period" provisions of Rule
16b-3; and
(2) may provide that the amount to be
paid upon exercise of such Stock Appreciation Rights
during a Rule 16b-3 "window period" shall be based on
the highest mean sales price of the Common Stock on
any exchange on which the Common Stock is listed (or
The Nasdaq Stock Market) on any day during such
"window period".
(iii) Stock Appreciation Rights shall be
transferable only when and to the extent that the underlying
Stock Option would be transferable under Section 6(e).
(iv) To the extent required by Rule 16b-3, upon
the exercise of a Stock Appreciation Right, the Stock Option
or part thereof to which such Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose
of the limitation set forth in Section 4 on the number of
shares of Stock to be issued under the Plan, but only to the
extent of the number of shares covered by the Stock
Appreciation Right at the time of exercise based on the value
of the Stock Appreciation Right at such time.
SECTION 9. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be
awarded either alone or in addition to other awards granted under the
Plan, but may not be awarded to a Director. The Committee shall
determine the officers and key employees to whom and the time or times
at which grants of Restricted Stock will be awarded, the number of
shares to be awarded to any participant, the time or times within which
such Awards may be subject to forfeiture and any other terms and
conditions of the Awards, in addition to those contained in Section
9(c).
The Committee may condition the grant of Restricted Stock upon
the attainment of specified performance goals of the participant or of
the Company or any subsidiary, division or department of the Company
for or within which the participant is primarily
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employed or such other factors or criteria as the Committee shall
determine. The provisions of Restricted Stock Awards need not be the
same with respect to each recipient.
(b) Awards and Certificates. Each participant receiving
an Award of Restricted Stock shall be issued a certificate in respect
of such shares of Restricted Stock. Such certificate shall be
registered in the name of such participant and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Award, substantially in the following form:
"The transferability of this certificate and shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the Walbro Corporation
Equity Based Long Term Incentive Plan and a Restricted Stock
Agreement. Copies of such Plan and Agreement are on file at
the offices of Walbro Corporation, 6242 Garfield Street, Cass
City, Michigan 48726."
The Committee may require that the certificates evidencing such shares
be held in custody by the Company until the restrictions thereon shall
have lapsed and that, as a condition of any Award of Restricted Stock,
the participant shall have delivered a stock power, endorsed in blank,
relating to the stock covered by such award.
(c) Terms and Conditions. Shares of Restricted Stock
shall be subject to the following terms and conditions:
(i) Restrictions. Subject to the provisions of
the Plan and the Restricted Stock Agreement referred to in
Section 9(c)(vi), during a period set by the Committee,
commencing with the date of such Award (the "Restriction
Period"), the participant shall not be permitted to sell,
assign, transfer, pledge or otherwise encumber shares of
Restricted Stock. Within these limits, the Committee may
provide for the lapse of such restrictions in installments and
may accelerate or waive such restrictions, in whole or in
part, based on service, performance of the participant or of
the Company or the subsidiary, division or department for
which the participant is employed or such other factors or
criteria as the Committee may determine.
(ii) Rights as Stockholder. Except as provided in
this paragraph (ii) and Section 9(c)(i), the participant shall
have, with respect to the shares of Restricted Stock, all of
the rights of a stockholder of the Company holding the class
or series of Stock that is the subject of the Restricted
Stock, including, if applicable, the right to vote the shares
and the right to receive any cash dividends. Unless otherwise
determined by the Committee and subject to Section 18(f) of
the Plan, (i) cash dividends on the class or series of Common
Stock that is the subject of the Restricted Stock shall be
automatically deferred and reinvested in additional Restricted
Stock, and (ii) non-cash dividends on the class or series of
Common Stock that is the subject of the Restricted Stock
payable in Common Stock shall be paid in the form of
Restricted Stock of the same class as the Common Stock on
which such dividend was paid.
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(iii) Forfeiture of Restricted Stock. Except to
the extent otherwise provided in the applicable Restricted
Stock Agreement (referred to in Section 9(c)(vi)) and Sections
9(c)(i), 9(c)(iv) and 15(a)(ii), upon a participant's
Termination of Employment for any reason during the
Restriction Period, all shares still subject to restriction
shall be forfeited by the participant.
(iv) Waiver of Restrictions. In the event of
hardship or other special circumstances of a participant whose
employment is involuntarily terminated (other than for Cause),
the Committee shall have the discretion to waive in whole or
in part any or all remaining restrictions with respect to such
participant's shares of Restricted Stock.
(v) Expiration of Restriction Period. If and
when the Restriction Period expires without a prior forfeiture
of the Restricted Stock subject to such Restriction Period,
unlegended certificates for such shares shall be delivered to
the participant.
(vi) Each Award shall be confirmed by, and be
subject to the terms of, a Restricted Stock Agreement.
SECTION 10. Deferred Stock.
(a) Administration. Deferred Stock may be awarded either
alone or in addition to other Awards granted under the Plan. The
Committee shall determine the officers and key employees to whom and
the time or times at which Deferred Stock shall be awarded, the number
of shares of Deferred Stock to be awarded to any participant, the
duration of the period (the "Deferral Period") during which, and the
conditions under which, receipt of the Common Stock will be deferred
and any other terms and conditions of the Award, in addition to those
contained in Section 10(b). Directors shall not be awarded Deferred
Stock.
The Committee may condition the grant of Deferred Stock upon
the attainment of specified performance goals of the participant or of
the Company or subsidiary, division or department of the Company for or
within which the participant is primarily employed or upon such other
factors or criteria the Committee shall determine. The provisions of
Deferred Stock Awards need not be the same with respect to each
recipient.
(b) Terms and Conditions. Deferred Stock Awards shall be
subject to the following terms and conditions:
(i) Subject to the provisions of the Plan and the
Deferred Stock Agreement referred to in Section 10(b)(vii),
Deferred Stock Awards may not be sold, assigned, transferred,
pledged or otherwise encumbered during the Deferral Period.
At the expiration of the Deferral Period (or Elective Deferral
Period as defined in Section 10(b)(vi), where applicable), the
Committee may elect to deliver (1) Common Stock or (2) cash
equal to the Fair Market Value of such
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Common Stock to the participant for the shares covered by the Deferred
Stock Award.
(ii) Unless otherwise determined by the Committee
and subject to Section 18(f) of the Plan, amounts equal to any
dividends declared during the Deferral Period on the class or
series of Common Stock covered by the Deferred Stock Award,
with respect to the number of shares covered by a Deferred
Stock Award, will be awarded, automatically deferred and
deemed to be reinvested in additional Deferred Stock.
(iii) Except to the extent otherwise provided in
the applicable Deferred Stock Agreement and Sections
(10)(b)(iv), 10(b)(v) and 15(a)(ii), upon a participant's
Termination of Employment for any reason during the Deferral
Period, the rights to shares still covered by the Deferred
Stock Award shall be forfeited by the participant.
(iv) Based on service, performance of the
participant or of the Company or any subsidiary, division or
department for which the participant is employed or such other
factors or criteria as the Committee may determine, the
Committee may provide for the lapse of deferral limitations in
installments and may accelerate the vesting of all or any part
of any Deferred Stock Award and waive the deferral limitations
for all or any part of such Award.
(v) Except to the extent otherwise provided in
Section 15(a)(ii), in the event that a participant's
employment is involuntarily terminated (other than for Cause),
the Committee shall have the discretion to waive in whole or
in part any or all remaining deferral limitations with respect
to any or all of such participant's Deferred Stock.
(vi) A participant may elect to further defer
receipt of the Deferred Stock payable under an Award (or an
installment of an Award) for a specified period or until a
specified event, subject in each case to the Committee's
approval and to such terms as are determined by the Committee.
Subject to any exceptions adopted by the Committee, such
election must generally be made at least 12 months prior to
completion of the Deferral Period for the Award (or for such
installment of an Award).
(vii) Each Award shall be confirmed by, and be
subject to the terms of, a Deferred Stock Agreement.
SECTION 11. Director Deferrals.
(a) Deferred Retainer. A Director who desires to have a
Deferred Retainer credited to an Account on his or her behalf shall
file a Deferral Election pursuant to the procedures of the Committee
specifying and authorizing an amount or percentage of his or her
Retainer otherwise payable to be reduced and to be:
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(1) posted to the Cash Account; or
(2) posted to the Stock Account; or
(3) replaced by Deferred Options; or
(4) a combination of any of the foregoing.
If a Director's Deferral Election is, in whole or in part, the election
to receive a Deferred Option, the terms and conditions regarding such
Deferred Option shall be determined under Section 7 and unless
otherwise specified shall be the same as any other Stock Options
granted to Directors under the Plan. A Director who does not elect a
Deferred Retainer shall be deemed to have made an Election to receive
all the Retainer on a current basis.
(b) Election Procedures. If properly executed and
received by the Committee, a Deferral Election shall be effective only
with respect to a Retainer paid in a Retainer Year to which the
Deferral Election applies and only with respect to a Retainer paid
after the Notice Date for the Deferral Election. Consistent with the
above, the Committee may establish rules and procedures governing when
a Deferral Election will be effective and what Retainer will be
deferred by the Deferral Election; provided such rules and procedures
are not more permissive than the terms and provisions of this Plan.
(c) Posting. For each Retainer Year for which a Deferral
Election is in effect, the Company shall:
(1) post to the Cash Account the amount reflected
in the Deferral Election to be so posted;
(2) post to the Stock Account the number of
shares of Common Stock equal to the amount of
the Deferred Retainer to be posted to the
Stock Account divided by the Fair Market
Value per share of the Common Stock on the
posting date;
(3) distribute to the Participant Deferred
Options; or
(4) a combination of the foregoing.
(d) Fully Vested Deferral Accounts. A Director shall be
fully vested and have a nonforfeitable right to his or her Account at
all times.
(e) Distribution. A Director shall receive the value of
the Account in cash in a single sum on the Payment Date (in the case of
a Payment Date other than due to the death of the Director).
(f) Payment to a Representative. Upon the death of a
Director, the balance in his or her Accounts shall be paid to the
Director's beneficiary in a single sum as soon
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as administratively possible after the Director's Payment Date (which
is due to the death of the Director).
SECTION 12. Accounting for Directors' Accounts and for Investment Funds.
(a) Individual Accounting.
(1) Account Maintenance. The Committee shall
cause the Accounts for each Director to
reflect transactions involving amounts posted
to the Accounts and the measurement of
investment returns on Accounts in accordance
with this Plan. Investment returns during or
with respect to an accounting period shall be
accounted for at the individual account level
by "posting" such returns to each of the
appropriate Accounts of each affected
Director. Account values shall be maintained
in shares, units or dollars. Cash dividends
credited to the Director's Stock Account
shall be deemed to be invested in additional
shares of Common Stock.
(2) Trade Date Accounting and Investment Cycle.
For any financial transaction involving a
change in the measurement of investment
returns, or distributions to be processed as
of a Trade Date, the Committee must receive
instructions by the Sweep Date and such
instructions shall apply only to amounts
posted to the Accounts as of the Trade Date.
Such financial transactions in an Investment
Fund shall be posted to a Director's Accounts
as of the Trade Date and based upon the Trade
Date values. All such transactions shall be
effected on the Settlement Date (or as soon
as is administratively feasible) relating to
the Trade Date as of which the transaction
occurs.
(3) Suspension of Transactions. Whenever the
Committee considers such action to be
appropriate, the Committee, in its
discretion, may suspend from time to time the
Trade Date.
(4) Error Correction. The Committee may correct
any errors or omissions in the administration
of this Plan by restoring or charging any
Account with the amount that would be
credited or charged to the Account had no
error or omission been made.
(b) Accounting for Investment Funds. The investment
returns of each Investment Fund shall be tracked in the manner directed
by the Committee. Investment income, earnings and losses charged
against the Accounts shall be based solely upon the actual performance
of each of the Investment Funds for the period of time all or some
portion of each of the Accounts has been designated to use such
Investment Fund as a measurement of investment returns.
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SECTION 13. Investment Funds and Elections.
(a) General. The Committee may provide in its sole
discretion for the application of Investment Funds under the Plan. If
so, a separate Investment Election and Conversion Election must be made
with respect to the Deferred Retainer and Accounts; provided, however,
if no Investment Election or Conversion Election is received from a
Director, such Director will be deemed to have submitted a Conversion
Election with respect to his or her Accounts, which designates that
such Account will have its investment returns measured by the Earnings
Factor. If Investment Funds are not applied by the Committee,
investment returns shall be measured by the Earning Factor.
(b) Investment of Deferred Retainer.
(1) Investment Election. Subject to Section
13(a), each Director may, by submission to
the Committee of a completed Investment
Election form provided for that purpose by
the Committee, request the Committee to use a
measurement of investment returns for
Deferred Retainers posted to his or her Cash
Account in one or more Investment Funds.
(2) Effective Date of Investment Election; Change
of Investment Election. A Director's initial
Investment Election will be effective with
respect to a Fund on the Trade Date which
relates to the Sweep Date on which or prior
to which the Investment Election is received
pursuant to procedures specified by the
Committee. Any Investment Election which has
not been properly completed will be deemed
not to have been received. A Director's
Investment Election will continue in effect
notwithstanding any change in the Retainer
until the effective date of a new Investment
Election. A change in Investment Election
shall be effective with respect to a Fund on
the Trade Date which relates to the Sweep
Date on which or prior to which the Committee
receives the Director's new Investment
Election.
(c) Investment of Cash Accounts.
(1) Conversion Election. Notwithstanding a
Director's Investment Election, if the
Committee permits the application of
Investment Funds, a Director may request the
Committee, by submission of a completed
Conversion Election provided for that purpose
to the Committee, to change the measurement
of investment returns of his or her Cash
Account.
(2) Effective Date of Conversion Election. A
Conversion Election to change a participant's
measurement of investment returns of his or
her Cash Accounts in one Investment Fund to
another Investment
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<PAGE> 57
Fund shall be effective with respect to
such Investment Funds on and after the Trade
Date which relates to the Sweep Date on which
or prior to which the Conversion Election is
received pursuant to procedures specified by
the Committee. Notwithstanding the
foregoing, to the extent required by any
provisions of an Investment Fund, the
effective date of any Conversion Election may
be delayed or the amount of any permissible
Conversion Election may be reduced. Any
Investment Election which has not been
properly completed will be deemed not to have
been received.
SECTION 14. Funding.
(a) Satisfaction of Obligation. The Company's obligation
to a Director with respect to an Account shall be satisfied by payments
made to the Director from the Trust or from the Company in its sole
discretion.
(b) Trust. The Company may establish the Trust on or
about the date this Agreement is adopted. The Trust may be revocable
or irrevocable.
(c) Letter of Credit. Within thirty (30) days of the
Effective Date, the Company may place in the Trust a standing letter of
credit for an amount sufficient to pay estimated accruals under this
Agreement. Within the first thirty (30) days of commencement of each
Fiscal Year, the Company may adjust the amount of the letter of credit
to equal the sum of all Directors' Accounts as of the last Valuation
Date in the prior fiscal year of the Company plus a good faith estimate
of accruals for the current fiscal year. The letter of credit may be
irrevocable.
(d) Notice to Trustee. If a payment required under the
terms of this Agreement has not been made to a Director or
Representative, the Director or Representative must notify the Trustee
in writing of the amount owed to him pursuant to this Agreement and the
date such amount was due and payable.
SECTION 15. Change in Control Provisions.
(a) Impact of Event. Notwithstanding any other provision
of the Plan to the contrary, in the event of a Change in Control (as
defined in Section 15(b)):
(i) Any Stock Appreciation Rights, Stock Options
and Deferred Stock Options outstanding as of the date such
Change in Control is determined to have occurred and not then
exercisable and vested shall become fully exercisable and
vested in the full extent of the original grant; provided,
however, that, in the case of the holder of Stock Appreciation
Rights who is actually subject to Section 16(b) of the
Exchange Act, such Stock Appreciation Rights shall have been
outstanding for at least six months at the date such Change in
Control is determined to have occurred.
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(ii) The restrictions and deferral limitations
applicable to any Restricted Stock and Deferred Stock shall
lapse, and such Restricted Stock and Deferred Stock shall
become free of all restrictions and become fully vested and
transferable to the full extent of the original grant.
(b) Definition of Change in Control. For purposes of the
Plan, a "Change in Control" shall mean the happening of any of the
following events:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act)
of thirty percent (30%) or more of either (1) the then
outstanding shares of Common Stock of the Company or (2) the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors; provided, however, that the following
acquisitions shall not constitute a Change in Control: (1) any
acquisition directly from the Company; (2) any acquisition by
the Company; (3) any acquisition by a Person including the
participant or with whom or with which the participant is
affiliated; (4) any acquisition by a Person or Persons one or
more of whom or which is a member of the Board or an officer
of the Company or an affiliate of any of the foregoing on the
Effective Date, (5) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company; or (6) any
acquisition by any corporation pursuant to a transaction
described in clauses (A), (B) and (C) of paragraph (iii) of
this Section 15(b); or
(ii) During any period of twenty-four (24)
consecutive months, individuals who, as of the beginning of
such period, constituted the entire Board cease for any reason
to constitute at least a majority of the Board, unless the
election, or nomination for election, by the Company's
stockholders, of each new director was approved by a vote of
at least two-thirds (2/3) of the Continuing Directors, as
hereinafter defined, in office on the date of such election or
nomination for election for the new director. For purposes
hereof, "Continuing Director" shall mean:
(a) any member of the Board at the close
of business on the Effective Date; or
(b) any member of the Board who
succeeded any Continuing Director described in clause
(a) above if such successor's election, or nomination
for election, by the Company's stockholders, was
approved by a vote of at least two-thirds (2/3) of the
Continuing Directors then still in office. The term
"Continuing Director" shall not, however, include any
individual whose initial assumption of office occurs
as a result of either an actual or threatened election
contest (as such term is used in Rule 14a-11 of
Regulation 14A of the Exchange Act) or other actual or
threatened
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<PAGE> 59
solicitation of proxies or consents by or on behalf
of a person other than the Board.
(iii) Approval by the stockholders of the Company
of a reorganization, merger or consolidation, in each case,
unless following such reorganization, merger or consolidation,
(A) more than 60% of the then outstanding securities having
the right to vote in the election of directors of the
corporation resulting from such reorganization, merger or
consolidation is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who where the beneficial owners of the outstanding
securities having the right to vote in the election of
directors of the Company immediately prior to such
reorganization, merger or consolidation, (B) no Person
(excluding the Company, employee benefit plan (or related
trust) of the Company or such corporation resulting from such
reorganization, merger or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 30% or more
of the then outstanding securities having the right to vote in
the election of directors of the Company) beneficially owns,
directly or indirectly, 30% or more of the then outstanding
securities having the right to vote in the election of the
corporation resulting from such reorganization, merger or
consolidation, and (C) at least a majority of the members of
the board of directors of the corporation resulting from such
reorganization, merger or consolidation are Continuing
Directors at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the stockholders of the Company
of (A) complete liquidation or dissolution of the Company or
(B) the sale or other disposition of all or substantially all
of the assets of the Company, other than to a corporation,
with respect to which following such sale or other
disposition, (1) more than 60% of the then outstanding
securities having the right to vote in the election of
directors of such corporation is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of the
outstanding securities having the right to vote in the
election of directors of the Company immediately prior to such
sale or other disposition of such outstanding securities, (2)
no Person (excluding the Company and any employee benefit plan
(or related trust) of the Company or such corporation and any
Person beneficially owning, immediately prior to such sale or
other disposition, directly or indirectly, 30% or more of the
outstanding securities having the right to vote in the
election of directors of the Company) beneficially owns,
directly or indirectly, 30% or more of the then outstanding
securities having the right to vote in the election of
directors of such corporation and (3) at least a majority of
the members of the board of directors of such corporation are
Continuing Directors at the time of the execution of the
initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company.
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(c) Change in Control Price. For purposes of the Plan,
"Change in Control Price" means the highest price per share (i) paid in
any transaction reported on the New York Stock Exchange or other
national exchange on which such shares are listed or on The Nasdaq
Stock Market, or (ii) paid or offered in any bona fide transaction
related to a potential or actual Change in Control of the Company at
any time during the preceding sixty (60) day period as determined by
the Committee.
SECTION 16. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would (i) impair the rights
of an optionee under a Stock Option or a Deferred Option or a recipient of a
Stock Appreciation Right, Restricted Stock Award and Deferred Stock Award
theretofore granted without the optionee's or recipient's consent, except such
an amendment made to cause the Plan to qualify for the exemption provided by
Rule 16b-3 or (ii) disqualify the Plan from the exemption provided by Rule
16b-3. In addition, no such amendment shall be made without the approval of
the Company's stockholders to the extent such approval is required by law,
agreement or the rules of any exchange upon which the Common Stock is listed or
The Nasdaq Stock Market.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights
of any holder without the holder's consent except such an amendment made to
cause the Plan or Award to qualify for the exemption provided by Rule 16b-3,
and no amendment shall reduce the Option price.
Subject to the above provisions, the Board shall have the authority to
amend the Plan to take into account changes in law and tax and accounting
rules, as well as other factors necessary to administer the Plan in accordance
with the intentions of the Company in establishing the Plan and to grant Awards
which qualify for beneficial treatment under such rules without stockholder
approval.
SECTION 17. Unfunded Status of Plan.
It is presently intended that the Plan constitute an "unfunded" Plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or make payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 18. General Provisions.
(a) The Committee may require each person purchasing or
receiving shares pursuant to an Award to represent to and agree with
the Company in writing that such person is acquiring the shares without
a view to the distribution thereof. The certificates for such shares
may include any legend which the Committee deems appropriate to reflect
any restrictions on transfer.
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<PAGE> 61
All certificates for shares of Common Stock or other
securities delivered under the Plan shall be subject to such stock
transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the
Commission, any stock exchange upon which the Common Stock is then
listed (or The Nasdaq Stock Market) and any applicable Federal or state
securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
(b) Nothing contained in the Plan shall prevent the
Company or an Affiliate from adopting other or additional compensation
arrangements for its employees.
(c) The adoption of the Plan shall not confer upon any
employee any right to continued employment or service as a Director nor
shall it interfere in any way with the right of the Company or an
Affiliate to terminate the employment of any employee at any time.
(d) No later than the date as of which an amount first
becomes includible in the gross income of the participant for Federal
income tax purposes with respect to any Award under the Plan, the
participant shall pay to the Company, or make arrangements satisfactory
to the Company regarding the payment of, any Federal, state, local or
foreign taxes of any kind required by law to be withheld with respect
to such amount. Unless otherwise determined by the Company,
withholding obligations may be settled with Common Stock, including
Common Stock that is part of the Award that gives rise to the
withholding requirement. The obligations of the Company under the Plan
shall be conditional on such payment or arrangements, and the Company
and its Affiliates shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to the
participant.
(e) At the time of grant, the Committee may provide in
connection with any grant made under the Plan that the shares of Common
Stock received as a result of such grant shall be subject to a right of
first refusal pursuant to which the participant shall be required to
offer to the Company any shares that the participant wishes to sell at
the then Fair Market Value of the Common Stock, subject to such other
terms and conditions as the Committee may specify at the time of grant.
(f) The reinvestment of cash dividends in additional
Restricted Stock or Deferred Stock at the time of any dividend payment
shall only be permissible if sufficient shares of Common Stock are
available under Section 4 for such reinvestment (taking into account
then outstanding Stock Options and other Plan Awards).
(g) The Committee shall establish such procedures as it
deems appropriate for a participant to designate a beneficiary to whom
any amounts payable in the event of the participant's death are to be
paid.
(h) The Plan and all Awards made and actions taken
thereunder shall be governed by and construed in accordance with the
laws of the State of Delaware.
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<PAGE> 62
(i) In addition to such other rights of indemnification as
they may have as members of the Board and to the extent permitted by
law, the members of the Committee and the Committee shall be
indemnified and held harmless by the Company against the reasonable
expenses, including attorneys' fees, actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be
a party by reason of any action taken or any failure to act under or in
connection with the Plan or any Option granted thereunder, and against
all amounts paid by them in settlement thereof (provided such
settlement is approved by legal counsel selected by the Company) as
paid by them in satisfaction of a judgment in any action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee or
Committee member is liable for gross negligence or gross misconduct in
the performance of its or his duties; provided that, within 60 days
after institution of any such action, suit or proceeding, the Committee
or the Committee member shall offer the Company, in writing, the
opportunity, at its own expense, to handle and defend the action, suit
or proceeding.
(j) This Plan shall inure to the benefit of and be binding
upon the Company and its successors and permitted assigns.
(k) A grant of any Award pursuant to the Plan shall not
affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes in its
capital or business structures or to merge, consolidate, dissolve,
liquidate, sell or transfer all or part of its business or its assets.
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<PAGE> 63
PROXY PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS OF
WALBRO CORPORATION
TO BE HELD ON APRIL 19, 1995
The undersigned hereby appoints Lambert E. Althaver and Robert H.
Walpole, and each or either of them, with power of substitution, as attorneys
and proxies for and in the name and place of the undersigned, to vote the
number of shares that the undersigned would be entitled to vote if then
personally present at the Annual Meeting of Stockholders of Walbro Corporation
to be held in Chicago, Illinois at Harris Trust and Savings Bank, 111 West
Monroe Street, Chicago, Illinois, on the 19th day of April, 1995 at 11:00 a.m.
local time, or at any adjournment thereof, upon the matters set forth in the
Notice of Annual Meeting of Stockholders and Proxy Statement, receipt of which
is hereby acknowledged.
IF NOT MARKED TO THE CONTRARY, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED
IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED IN PROPOSAL 1
AND FOR PROPOSALS 2 AND 3.
IMPORTANT: THIS PROXY IS CONTINUED AND MUST BE SIGNED AND DATED ON THE REVERSE
SIDE.
<PAGE> 64
WALBRO CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
<TABLE>
<S><C>
[ ]
FOR ALL
EXCEPT
1. ELECTION OF CLASS II DIRECTORS: NOMINEES 3. PROPOSAL TO AMEND THE WALBRO
Lambert E. Althaver, John E. Utley FOR WITHHELD CROSSED OUT CORPORATION RESTATED CERTIFICATE FOR AGAINST ABSTAIN
(TO WITHHOLD AUTHORITY TO VOTE FOR [ ] [ ] [ ] OF INCORPORATION TO INCREASE [ ] [ ] [ ]
ANY INDIVIDUAL NOMINEE(S), STRIKE AUTHORIZED CAPITAL AND NUMBER
A LINE THROUGH THE NOMINEE'S NAME OF AUTHORIZED SHARES OF COMMON
ABOVE AND FILL IN THE "FOR ALL STOCK.
EXCEPT NOMINEES CROSSED OUT" OVAL.)
2. PROPOSAL TO APPROVE THE AMENDED FOR AGAINST ABSTAIN
AND RESTATED WALBRO CORPORATION [ ] [ ] [ ]
EQUITY BASED LONG TERM INCENTIVE
PLAN 4. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE
UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
______________________________________________
Signature
______________________________________________
Signature (if held jointly)
Dated:__________________________________, 1995
Signature(s) of holders of common stock should
agree with the name(s) shown on this Proxy. For
joint accounts, both owners should sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give title as such.
When signing as a corporation, please sign in
full corporate name by President or other
authorized officer. When signing as a
partnership, please sign in partnership name
by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
</TABLE>
<PAGE> 65
EDGAR FORMAT APPENDIX
Pursuant to Rule 304(a) of Regulation S-T, following is a list of all graphic
or image information contained in the paper format version of the Notice of
Annual Meeting of Stockholders, Proxy Statement and Form of Proxy:
1. The Notice of Annual Meeting (cover page) contains the Walbro
Corporation logo, centered at the top of the page above the Company name. The
logo consists of the word "Walbro".
2. Page 23 contains a line graph, with the horizontal axis labeled in
years from 1989 through 1994, and the vertical axis labeled in dollars from 0
to 350, in increments of 50, on which the data contained in the table on page
22 of the attached EDGAR format version is represented by three lines, labeled
"Walbro Corporation", "Auto & Motor Vehicle Part Industry Peer Group" and
"Standard and Poor's 500 Index", respectively. The key to the lines contained
in the graph is set forth above the graph and the data represented in the graph
is set forth below the graph.
