<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)
WALBRO CORPORATION
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
[ ] 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
[WALBRO LOGO]
[WALBRO CORPORATION LETTERHEAD]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
MARCH 21, 1997
To the Stockholders of
Walbro Corporation
The Annual Meeting of the stockholders of Walbro Corporation, a
Delaware corporation, will be held in Auburn Hills, Michigan, at the Company's
automotive systems center, 1227 Centre Road, on April 30, 1997 at 11:00 a.m.
EDT, 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; and
(2) 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 March 4, 1997 as the record date
for the determination of 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 21, 1997.
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
<PAGE> 3
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 March 4, 1997, there were 8,652,737 shares of Common Stock
outstanding, each of which is entitled to one vote. An Annual Report for the
fiscal year 1996 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.
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 seven. 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 I Directors are to
be elected at the Annual Meeting of Stockholders on April 30, 1997 for a term
of three years expiring at the Annual Meeting of Stockholders in 2000.
If for any reason either 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 either of the
nominees would not be available for election.
2
<PAGE> 4
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>
Served as
Principal Occupation and Business Experience Director
Directors Age During the Past Five Years Since
- ----------------- --- ----------------------------------------------------------------- --------
<S> <C> <C> <C>
CLASS I
TERM EXPIRES IN 2000:
Robert D. Tuttle 71 A Director of Woodhead Industries, Inc. and Guardsman Products, 1981
** 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 57 President of Walbro Engine Management Corporation since 1991. 1983
Vice President of the Company since 1983.
</TABLE>
INFORMATION AS TO DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER THE
MEETING
The name of, and certain information with respect to, the remaining
five (5) Directors of the Company are as follows:
<TABLE>
<CAPTION>
CLASS II
TERM EXPIRES IN 1998:
<S> <C> <C> <C>
Lambert E. Althaver 66 Chairman of the Board of the Company since 1987. Chief 1968
* Executive Officer since 1982. President from 1982 to 1996.
John E. Utley 56 Senior Vice President of LucasVarity, PLC since 1996. Chairman 1993
** of the Board of Kelsey-Hayes Company from 1992 to 1996 and Vice
*** Chairman and Vice President from 1989 to 1992. Senior Vice
President of Varity Corporation from 1994 to 1996. LucasVarity
is a supplier of automotive braking systems, electrical systems
and diesel systems.
</TABLE>
Mr. Robert H. Walpole is a brother-in-law of Mr. Lambert E. Althaver.
- ----------------
* Member of the Executive Committee/Directors Committee
** Member of the Compensation Committee
*** Member of the Audit Committee
**** Member of the Human Resource Planning Committee
3
<PAGE> 5
<TABLE>
<CAPTION>
Served as
Principal Occupation and Business Experience Director
Directors Age During the Past Five Years Since
- ----------------- --- ---------------------------------------------------------------- --------
<S> <C> <C> <C>
CLASS III
TERM EXPIRES IN 1999:
William T. Bacon, Jr. 74 Associate, ABN AMRO (Chicago Corporation) since 1994. ABN AMRO 1972
* is a banking services corporation with its headquarters in The
** Netherlands. Honorary Director, Stifel Financial Corp. 1984 -
1994. Stifel Financial is an investment banking services
corporation. Prior thereto, Managing Partner of Bacon Whipple
& Co., Inc. Bacon Whipple was an investment banking services
corporation which merged with Stifel Financial.
Frank E. Bauchiero 62 President and Chief Operating Officer since August 1996. 1990
**** President Industrial Group, Dana Corporation North American
Operations, Dana Corporation from 1989 to 1996, 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 Corp.
Regal Beloit manufacturers power transmissions, gears and gear
reducers, and cutting tools.
Vernon E. Oechsle 54 President, Chief Executive Officer and Director of Quanex 1994
*** Corporation since 1996; Chief Operating Officer of Quanex
**** Corporation, 1993-1995. Quanex is a manufacturer of specialty
steel and aluminum products. Director of Precision Castparts
Corp. since 1996. 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.
</TABLE>
In February, 1997, Dr. Herbert Kennedy passed away. Dr. Kennedy was a
Director of the Company for 16 years. The Board expresses its deepest
sympathy to his widow and family and is extremely grateful for Dr. Kennedy's
long and faithful years of service to the Company.
- ------------------
* Member of the Executive Committee/Directors Committee
** Member of the Compensation Committee
*** Member of the Audit Committee
**** Member of the Human Resource Planning Committee
4
<PAGE> 6
BOARD MEETINGS AND COMMITTEES
The Company has an Audit Committee, a Compensation Committee, an
Executive/Directors Committee and a Human Resource Planning Committee.
The Audit Committee was chaired by Dr. Herbert M. Kennedy and two
other outside directors. Mr. John E. Utley served for the entire year; Mr.
Frank E. Bauchiero served from January through August and was replaced by Mr.
Vernon Oechsle in October. The Committee met twice in 1996 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 also met twice in
1996. Mr. William T. Bacon, Jr. served as Chairman assisted by two other
outside directors. Mr. Robert D. Tuttle served for the entire year; Mr. Frank
E. Bauchiero served from January through August and was replaced by Mr. John E.
Utley in October. 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 did not meet in 1996. For the
period from January to October the members were Messrs. Utley (Chairman),
Oechsle and Tuttle. In October the Directors Committee was combined with the
Executive Committee such that the membership became common with the Executive
Committee. The Executive/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 had 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 existed 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) and Bacon. Dr. Kennedy
was a member until February, 1997. The Executive Committee did not meet in
1996. Note that the Directors Committee and the Executive Committee were
combined in October (see above).
The Human Resources Planning Committee of the Board met once in 1996.
The members of this committee are Messrs. Tuttle (Chairman), Bauchiero and
Oechsle. 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.
5
<PAGE> 7
The Board of Directors held six meetings in 1996. During 1996, seven
directors 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 they individually served. Dr. Herbert M.
Kennedy did not attend any of the meetings of the Board. He did attend one
Audit Committee meeting via teleconference.
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.
6
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of February 13, 1997, 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>
Name and Address of Amount and Nature of Percentage of
Beneficial Owner Beneficial Ownership Class
- ----------------------------------------------------------------- -------------------- -------------
<S> <C> <C>
Franklin Resources, Inc. 1,134,582(1) 13.1%
777 Mariners Island Blvd.
San Mateo, CA 94404
David L. Babson & Co., Inc. 509,800(2) 5.9%
One Memorial Drive
Cambridge, MA 02142
</TABLE>
- ----------------
(1) As reported on a Schedule 13G dated January 24, 1997 filed with the
Securities and Exchange Commission (the "Commission") by Franklin
Resources, Inc., Rupert H. Johnson, Jr., Charles B. Johnson and Templeton
Investments Counsel, Inc., the securities reported therein are beneficially
owned by one or more open or closed-end investment companies or other
managed accounts which are advised by direct and indirect investment
advisory subsidiaries (the "Adviser Subsidiaries") of Franklin Resources,
Inc. ("FRI"). Charles B. Johnson and Rupert H. Johnson, Jr. (the
"Principal Shareholders") each own in excess of 10% of the outstanding
Common Stock of FRI and are the principal shareholders of FRI. FRI and the
Principal Shareholders may be deemed to be, for purposes of Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
the beneficial owner of securities held by persons and entities advised by
FRI or its subsidiaries. FRI, the Principal Shareholders and each of the
Adviser Subsidiaries disclaim any economic interest or beneficial ownership
in any of the securities covered by this Statement. FRI, the Principal
Shareholders, and each of the Adviser Subsidiaries are of the view that
they are not acting as a "group" for purposes of Section 13(d) under the
Exchange Act and that they are not otherwise required to attribute to each
other the "beneficial ownership" of securities held by any of them or by
any persons or entities advised by FRI or its subsidiaries.
According to such Schedule 13G, neither FRI, Charles B. Johnson nor Rupert
H. Johnson, Jr. have any power to dispose or to direct the disposition of
any of the 1,134,582 shares; Templeton Investment Counsel, Inc. has sole
voting and dispositive power with respect to 428,500 shares; Templeton
Management Limited (including 1,500 shares advised under a sub-advisor
agreement) has sole voting and dispositive power with respect to 252,500
shares; Templeton Global Advisors Limited: has sole voting and dispositive
power with respect to 177,000 shares; Templeton Investment Management
(Australia) Limited has sole voting and dispositive power with respect to
173,300 shares; Templeton Investment Management Limited has sole voting and
dispositive power with respect to 74,000 shares; Templeton/Franklin
Investment Services Inc. has sole voting and dispositive power with respect
to 29,282 shares.
(2) As reported on a Schedule 13G dated February 7, 1997 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 298,700
of these shares, shared voting power with respect to 211,100 of these
shares and sole dispositive power with respect to all 509,800 of these
shares.
7
<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of February 13, 1997 the total
number of shares of Common Stock of the Company beneficially owned, and the
percentage so owned, by (i) each director of the Company, (ii) each person
known to the Company to be the beneficial owner of more than five percent of
the outstanding Common Stock of the Company, (iii) each of the Company's
executive officers, and (iv) all directors and executive officers as a group.
The number of shares owned are those "beneficially owned," as determined under
the rules of the Commission, and such information is not necessarily indicative
of beneficial ownership for any other purpose.
<TABLE>
<CAPTION>
Amount and Nature of Percentage
Names Beneficial Ownership (1) of Class
- ------------------------------------------------------- ------------------------ ----------
<S> <C> <C>
Franklin Resources, Inc. . . . . . . . . . . . . . . . 1,134,582(2) 13.1%
David L. Babson & Co., Inc. . . . . . . . . . . . . . . 509,800(3) 5.9%
Lambert E. Althaver . . . . . . . . . . . . . . . . . . 240,391(4) 2.8%
William T. Bacon, Jr. . . . . . . . . . . . . . . . . . 67,775(5) *
Frank E. Bauchiero . . . . . . . . . . . . . . . . . . 43,950(6) *
Daniel L. Hittler . . . . . . . . . . . . . . . . . . . 25,007(7) *
Herbert M. Kennedy . . . . . . . . . . . . . . . . . . 12,500(8) *
Vernon E. Oechsle . . . . . . . . . . . . . . . . . . . 13,907(9) *
Michael A. Shope . . . . . . . . . . . . . . . . . . . 10,009(10) *
Robert D. Tuttle . . . . . . . . . . . . . . . . . . . 16,000(11) *
John E. Utley . . . . . . . . . . . . . . . . . . . . . 15,292(12) *
Gary L. Vollmar . . . . . . . . . . . . . . . . . . . . 52,918(13) *
Robert H. Walpole . . . . . . . . . . . . . . . . . . . 195,158(14) 2.2%
Richard H. Whitehead, III . . . . . . . . . . . . . . . 125,741(15) 1.4%
All Directors and Executive Officers as
a Group (12 persons) . . . . . . . . . . . . . . . . 818,648(16) 8.8%
</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) As reported on a Schedule 13G dated January 24, 1997 filed with the
Commission by Franklin Resources, Inc., Rupert H. Johnson, Jr.,
Charles B. Johnson and Templeton Investments Counsel, Inc., the
securities reported therein are beneficially owned by one or more open
or closed-end investment companies or other managed accounts which are
advised by direct and indirect investment advisory subsidiaries of
Franklin Resources, Inc. ("FRI"). According to such Schedule 13G,
neither FRI, Charles B. Johnson nor Rupert H. Johnson, Jr. have any
power to dispose or to direct the disposition of any of the 1,134,582
shares; Templeton Investment Counsel, Inc. has sole voting and
dispositive power with respect to 428,500 shares; Templeton Management
Limited (including 1,500 shares advised under a sub-advisor agreement)
has sole voting and dispositive power with respect to 252,500 shares;
Templeton Global Advisors Limited: has sole voting and dispositive
power with respect to 177,000 shares; Templeton Investment Management
(Australia) Limited has sole voting and dispositive power with respect
to 173,300 shares; Templeton Investment Management Limited has sole
voting and dispositive power with respect to 74,000 shares;
Templeton/Franklin Investment Services Inc. has sole voting and
dispositive power with respect to 29,282 shares. The address of the
Stockholder is 777 Mariners Island Boulevard, San Mateo, California
94404.
(3) As reported on a Schedule 13G dated February 7, 1997 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
298,700 of these shares, shared voting power with respect to 211,100
of these shares and sole dispositive power with respect to all 509,800
of these shares. The address of the Stockholder is One Memorial
Drive, Cambridge, Massachusetts 02142-1300.
(4) Includes 74,643 shares owned by Mr. Althaver's wife. Mr. Althaver
disclaims beneficial ownership of these shares. Also includes 70,974
shares which are covered by presently exercisable options under the
Company's stock option plans and 17,951 shares held for the account of
Mr. Althaver by the trustee of the Company's Advantage Plan.
(5) 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. Includes 10,000
shares which are exercisable under the Equity Plan.
(6) Includes 12,907 shares which are exercisable under the Equity Plan.
Also includes 30,000 shares restricted per terms of an agreement dated
October 3, 1996.
8
<PAGE> 10
(7) Includes 1,600 shares owned by Mr. Hittler's wife. Mr. Hittler
disclaims beneficial ownership of these shares. Also includes 20,669
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.
(8) 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. Includes 10,000
shares which are exercisable under the Equity Plan.
(9) Includes 12,907 shares which are exercisable under the Equity Plan.
(10) Includes 7,809 shares which are covered by presently exercisable
options under the Company's stock option plans.
(11) Includes 3,000 shares which Mr. Tuttle owns jointly with his wife,
over which Mr. Tuttle and his wife share voting and dispositive
power. Includes 10,000 shares which are exercisable under the Equity
Plan.
(12) Includes 500 shares over which Mr. Utley has voting power as trustee
of a trust and 13,792 shares which are exercisable under the Equity
Plan.
(13) Includes 38,115 shares which are covered by presently exercisable
options under the Company's stock option plans and 6,805 shares held
for the account of Mr. Vollmar by the trustee of the Company's
Advantage Plan. Mr. Vollmar's employment with the Company ended on
February 17, 1997.
(14) 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 1,423 shares held for the account of Mr.
Walpole by the trustee of the Company's Advantage Plan.
(15) Includes 23,583 shares which are covered by presently exercisable
options under the Company's stock option plans. Also includes 2,158
shares held for the account of Mr. Whitehead by the trustee of the
Company's Advantage Plan.
(16) Includes 230,756 shares which are covered by presently exercisable
options under the Company's stock option plans. Also includes 28,337
shares held for the account of four 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.
9
<PAGE> 11
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>
Name Age Experience During the Past Five Years
- --------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
Daniel L. Hittler 61 Secretary of the Company since 1993. Chief Administrative Officer
of the Company from 1994 to present. Director of Administration
from 1992 to 1993. Director of Technical Planning from 1989 to
1992.
Michael A. Shope 52 Chief Financial Officer of the Company since December 1993.
Treasurer of the Company since April 1994. Treasurer of Libbey-
Owens-Ford Co., a manufacturer of glass for automotive and
industrial applications, from 1986 to 1993.
Richard H. Whitehead, III 52 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,
see the Classes I, II and III Director charts. Each executive officer shall
serve in the capacity described above until such time as his successor is duly
elected and qualified.
10
<PAGE> 12
INDEBTEDNESS OF MANAGEMENT
The following Named Officers (as defined on page 12) 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 seven 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. The loans carry interest at prime.
<TABLE>
<CAPTION>
Maximum
Indebtedness Since Indebtedness at
Name Position January 1, 1996 February 19, 1997
- ------------------- ------------------------------------ ----------------- -----------------
<S> <C> <C> <C>
Lambert E. Althaver Chairman and Chief Executive Officer $161,250 $100,000
Gary L. Vollmar Vice-President 145,125 145,125
Robert H. Walpole Vice-President 112,875 0
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Exchange Act requires the Company's officers,
directors and persons who own greater than 10% of a registered class of
the Company's equity securities to file reports of ownership and changes in
ownership with the Commission. Based solely on a review of the forms it has
received and on written representations from certain reporting persons that no
such forms were required for them, the Company believes that, except as set
forth below, during 1996 all Section 16 filing requirements applicable to its
officers, directors and 10% beneficial owners were complied with by such
persons.
Mr. Whitehead did not timely report one transaction on a Form 4 during
1996; however, the information required was subsequently filed in 1996.
11
<PAGE> 13
EXECUTIVE COMPENSATION
The table below provides information concerning the annual and
long-term compensation for services in all capacities to the Company for the
fiscal years ended December 31, 1996, 1995 and 1994 of the persons who were at
December 31, 1996 (i) the Chief Executive Officer and (ii) the four other most
highly compensated (based upon combined salary and bonus) executive officers of
the Company (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual
Compensation Long Term Compensation
---------------------------------------------------------
Awards Payments
--------------------------------
Restricted Securities
Stock Underlying LTIP All Other
Name and Salary Bonus Awards Options Payouts Compensation
Principal Position Year ($) ($) (#) (#) ($) ($)(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lambert E. Althaver 1996 450,000 0 0 17,647 204,379 8,870
Chairman and Chief Executive 1995 375,000 0 0 15,625 0 9,100
Officer 1994 330,000 0 0 11,244 0 11,575
Robert H. Walpole 1996 265,000 283,070(2) 0 0 0 9,717
Vice-President 1995 254,000 0 0 0 0 8,550
1994 242,000 0 0 0 0 11,725
Gary L. Vollmar(3) 1996 250,000 0 0 9,803 95,930 9,785
Vice-President 1995 225,000 0 0 9,375 0 9,000
1994 200,000 0 0 8,824 0 8,849
Richard H. Whitehead, III 1996 200,000 0 0 7,843 0 10,460
Vice-President 1995 180,000 0 0 10,000 0 6,040
1994 170,000 0 0 7,500 0 5,006
Michael A. Shope 1996 150,000 27,000 0 3,529 0 10,035
Treasurer and Chief Financial 1995 135,000 18,750 0 4,500 0 2,025
Officer 1994 125,000 0 0 3,309 0 0
</TABLE>
(1) These amounts represent matching and retirement contributions made by the
Company pursuant to its salary savings plan, entitled the Advantage Plan.
(2) First of four cash bonus payments earned under the Company's Engine
Management Incentive Compensation Plan covering the period July 1, 1991 to
June 30, 1996.
(3) Mr. Vollmar's employment with the Company ended on February 17, 1997.
12
<PAGE> 14
The following table provides information on grants of stock options in
1996 to the Named Officers pursuant to the Equity Plan.
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock
Appreciation for Option
Individual Grants Terms (2)
- -------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise
Granted in 1996 Price Expiration
Name (#) (1) (%) ($/Sh) Date 5% ($) 10% ($)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lambert E. Althaver 17,647 15.7 19.125 12/4/2001 212,251 537,886
Robert H. Walpole 0 0 0 0 0 0
Gary L. Vollmar 9,803 8.7 19.125 12/4/2001 117,907 298,799
Richard H. Whitehead, III 7,843 7.0 19.125 12/4/2001 94,333 239,057
Michael A. Shope 3,529 3.1 19.125 12/4/2001 42,446 107,565
</TABLE>
(1) These options were granted under the Equity Plan, approved, as amended, by
the stockholders on April 19, 1995. The Named Officers may exercise the
options at a price of $19.125 per share at any time after June 4, 1997
through December 4, 2006. 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 $19.125 share price
appreciates to $41.93 per share by December 4, 2001.
(2) Gains are reportable net of the option exercise price but before taxes
associated with exercise. These amounts represent certain assumed rates
of appreciation only. Actual gains, if any, on stock option exercise are
dependent on the future performance of Common Stock, as well as the option
holder's continued employment throughout the vesting period. The amounts
reflected in the Table may not necessarily be achieved.
13
<PAGE> 15
The following table provides information for the Named Officers'
unexercised options at December 31, 1996. Included are options granted under
the Equity Plan.
AGGREGATED OPTION EXERCISES IN 1996
AND YEAR-END 1996 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options at Options at December 31, 1996
December 31, 1996 (#) ($)(1)
- -----------------------------------------------------------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lambert E. Althaver 70,974 17,647 141,565 0
Robert H. Walpole 0 0 0 0
Gary L. Vollmar 38,115 9,803 69,651 0
Richard H. Whitehead, III 23,583 7,843 11,875 0
Michael A. Shope 7,809 3,529 5,261 0
</TABLE>
(1) Based upon the difference between the exercise price and the $18.25
closing price of the Common Stock on the Nasdaq National Market on
December 31, 1996.
14
<PAGE> 16
LONG-TERM INCENTIVE PLANS --
AWARDS IN 1996
<TABLE>
<CAPTION>
Phantoms Awarded (1)
------------------------------------
Name Phantoms (#) Performance Period
---------------------------------------------------------------------------
<S> <C> <C>
Lambert E. Althaver 305 12/94 to 12/99
373 12/95 to 12/00
Robert H. Walpole 0
Gary L. Vollmar 184 12/94 to 12/99
224 12/95 to 12/00
Richard H. Whitehead, III 157 12/94 to 12/99
239 12/95 to 12/00
Michael A. Shope 69 12/94 to 12/99
107 12/95 to 12/00
</TABLE>
(1) Phantom stock grants awarded under the Equity Based Long
Term Incentive Compensation Plan approved as amended, by
stockholders on April 19, 1995 (the "Equity Plan"). The
Equity Plan provides the participants the opportunity to
receive stock options at the prevailing market rate.
Each stock option includes a stock performance award
("Phantoms") 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.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company has entered into employment agreements with Messrs.
Althaver, Hittler, Shope, Whitehead, Walpole and Vollmar which have terms
expiring on August 16, 1997 and provide them minimum base salaries of $450,000,
$150,000, $150,000, $200,000, $265,000 and $250,000, respectively, subject to
review and increase by the Board of Directors Compensation Committee (the
"Compensation Committee"). Each employment agreement is renewable
automatically for twelve months, subject to cancellation by the Company prior
to the anniversary date. The Company also entered into an employment agreement
with Mr. Bauchiero which has a term expiring on October 3, 1997 and provides
him a base salary of $375,000, subject to review and increase by the
Compensation Committee. In addition, each is entitled to participate in the
Equity Plan.
For each of the Named Officers, an employment agreement is linked to a
Termination and Change of Control Agreement ("COC Agreements"). In
combination, these agreements provide a severance provision 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 (i) is terminated (including
nonrenewal of his employment agreement) by the Company other than for cause or
(ii) is terminated voluntarily by him for good reason. 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.
15
<PAGE> 17
The employment agreements and the COC 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 COC Agreements provide that if during a three-year period
following a Change in Control of the Company, an employee's employment is
terminated by the Company for cause or if the employee terminates employment
for good reason, the employee will receive (1) a single sum payment equal to
three times the employee's average compensation of the prior three calendar
years (including incentive bonus), (2) 36 months of additional medical, dental,
life, disability and accident insurance, (3) an amount equal to the actuarial
equivalent of the benefit under a SERP which the employee would receive if
employment would have continued for three years, (4) acceleration of any
performance awards granted prior to the extension date equal to the cash amount
payable plus the value of any shares of Common Stock payable upon achievement
of maximum performance, (5) a cash amount equal to the value of any phantom
shares of Common Stock credited to employee's deferral account, (6) exercisable
stock options and restricted stock will be vested, (7) outplacement services at
the sole discretion of employee and (8) other perquisites substantially similar
to those in effect for the employee at the time of the Change of Control of the
Company. In the event the present value of these payments and benefits exceed
an amount which would render them "parachute payments" under Section 280G of
the Internal Revenue Code, the Company will pay a gross up amount to the
employee to compensate him for the additional excise tax assessed thereon.
Each employee agrees that following his termination of employment with the
Company, he will cooperate with the Company in any litigation involving the
Company, not disclose Company trade secrets, and for a one-year period
following the date of such employee's termination, not compete with the
Company. "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 twenty percent or more of
the combined voting power of the Company's outstanding securities.
16
<PAGE> 18
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 qualify, the Compensation Committee may adopt such a
program.
During 1996 a thorough analysis of total executive compensation paid
to the Company's executives was made by the Company's counsel in combination
with Towers Perrin, an executive compensation consulting firm. The focus of
this analysis was directed by the outside members of the Board (including the
Compensation Committee).
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 Committee relied on the results of Zachary D.
Ford and Associates ("Ford") who conducted a base salary analysis in November
1995. The results of the Towers Perrin analysis were not used to set 1996
salaries but were used to further confirm the relationship of such salaries to
market conditions. Accordingly, salaries for four of the Named Officers are
below the 50th percentile of market value, and salaries are approximately 70th
and 80th percentile for two other Named Officers. Mr. Bauchiero was hired in
August 1996 and his salary is approximately 50th percentile of the market data
base provided by Towers Perrin.
With respect to the base salary granted to Mr. Althaver in 1996, the
Compensation Committee utilized the Ford analysis 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 $450,000 for 1996, an increase of 20%
over his $375,000 base salary for 1995. The Committee's decision to increase
Mr. Althaver's base compensation was not directly based upon or related to the
Company's financial performance.
17
<PAGE> 19
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 19, 1995. 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 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 1996, Mr. Althaver received options to purchase 17,647 shares of
Common Stock at $19.125 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 1996
compensation was 25% less than the maximum potential grant authorized under the
Equity Plan, directly reflecting the Company's below-target earnings.
Mr. Althaver received a total of 678 stock performance award shares in
1996, all of which were pursuant to stock options granted on December 5, 1994
and December 11, 1995. The fair market value of the shares as of December 31,
1996 was $12,374. The number of stock performance award shares earned by Mr.
Althaver was determined by the formula established by the Equity Plan.
Engine Management Incentive Compensation Plan. Incentive compensation
for executive officers assigned to the Walbro Engine Management Corporation
subsidiary ("EMC"), including Mr. Walpole, has been tied to EMC's financial
performance measured against the five year plan ending June 30, 1996.
Participants earned a share of the pool of dollars the size of which is based
upon EMC's degree of success in achieving a cumulative five year earnings
target. The threshold before any dollars were assigned to the pool was 70% of
the five year plan. The value of the performance pool as of the determination
date was 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.
18
<PAGE> 20
The Plan was completed and the pool of dollars earned by the
participants was established based on the performance of EMC during the five
year period. Mr. Walpole was paid $283,070 in 1996. The remaining portion
will be paid in three equal payments on July 1, 1997, 1998 and 1999.
For the period July 1, 1996 to December 31, 1996, Mr. Walpole was not paid any
bonus.
COMPENSATION COMMITTEE
William T. Bacon, Jr., Chairman
John E. Utley Robert D. Tuttle
19
<PAGE> 21
PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative total
returns for the Company, the S&P 500 composite index, a peer group of companies
selected by the Company (the "Peer Group"). The Company determined to change
its Peer Group of companies in the 1996 proxy statement because it believes
that the companies included in the current Peer Group represent a more
comparable group of companies.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[LINE GRAPH]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Walbro Corporation 100.00 159.72 137.55 99.47 96.27 99.63
Standard and Poor's 500 Index 100.00 107.62 118.46 120.03 165.13 203.05
Peer Group 100.00 150.47 235.32 175.41 165.33 220.44
</TABLE>
The comparison assumes $100 was invested on December 31, 1991 in the
Common Stock, the S&P 500 index, and in the Peer Group.
20
<PAGE> 22
The companies in the Peer Group, all of which are in the automotive
industry, are as follows:
Arvin Industries, Inc. Mascotech, Inc.
Borg Warner Automotive, Inc. Shiloh Industries Inc.
Breed Technologies Inc. Simpson Industries, Inc.
Collins & Aikman Products Co. A.O. Smith Corporation
Donnelly Corporation The Standard Products Company
Excel Industries, Inc. Stant Corporation
Gentex Corporation Superior Industries International, Inc.
Harvard Industries, Inc. Tower Automotive
Hayes Wheels International, Inc. Walbro Corporation
Intermet Corporation
In 1996, Masland Corporation, which was included in the Company's peer
group in the 1996 proxy statement, was acquired by Lear Corporation. As a
result of this acquisition, Masland Corporation has been deleted from the Peer
Group.
21
<PAGE> 23
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, 1997. Arthur
Andersen & Co. has been the Company's independent public accountant for eleven
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, Michigan 48726, no later than November 8, 1997.
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, 1996, 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
22
<PAGE> 24
WALBRO CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
<TABLE>
<S><C>
For All Except
For Witheld Nominees
All All Crossed Out
1. ELECTION OF CLASS 1 DIRECTORS: / / / / / / 2. IN THEIR DISCRETION, THE PROXIES ARE
Robert D. Tuttle and Robert H. Walpole AUTHORIZED TO VOTE UPON SUCH OTHER
(To withhold authority to vote for any MATTERS AS MAY PROPERLY COME BEFORE
individual nominees(s), strike a line THE MEETING.
through the nominee's name above and
fill in the "For All Except Nominees
Crossed Out" oval.)
________________________________________
Signature
________________________________________
Signature (if held jointly)
Dated: ______________________________, 1997
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.
</TABLE>
PLEASE MARK, SIGN DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 25
PROXY PROXY
Proxy Solicited on Behalf of the Board of Directors for
Annual Meeting of Stockholders of
WALBRO CORPORATION
To Be Held on April 30, 1997
The undersigned hereby appoints Lambert E. Althaver and Frank E. Bauchiero, 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 Auburn
Hills, Michigan at 1227 Centre Road on the 30th day of April 1997, at 11:00 am.
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 LIST
IN PROPOSAL 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED IN PROPOSAL 1
IMPORTANT: THIS PROXY IS CONTINUED AND MUST BE SIGNED AND DATED ON THE
REVERSE SIDE.
