<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 CORPORATION LOGO]
WALBRO CORPORATION
6242 GARFIELD STREET
CASS CITY, MICHIGAN 48726
(517) 872-2131
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AND
PROXY STATEMENT
APRIL 20, 1998
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 May 20, 1998 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 April 3, 1998 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 April 20, 1998.
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 being solicited by the Board of Directors on behalf of the Company, 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 $4,000 for its services.
<PAGE> 3
On April 3, 1998, there were 8,682,914 shares of Common Stock
outstanding, each of which is entitled to one vote. An Annual Report for the
fiscal year 1997 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 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 Meeting of Stockholders on May 20, 1998 for a term
of three years expiring at the Annual Meeting of Stockholders in 2001.
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.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE NOMINEES NAMED BELOW
AND YOUR PROXY WILL BE SO VOTED UNLESS AUTHORITY IS WITHHELD.
2
<PAGE> 4
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 II
TERM EXPIRES IN 2001:
Lambert E. Althaver 67 Chairman of the Board of the Company since 1987. Chief 1968
* Executive Officer since 1982. President from 1982 to 1996.
John E. Utley 57 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>
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>
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. 75 Associate, ABN AMRO since 1994. ABN AMRO is a banking services 1972
* 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 63 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.
</TABLE>
__________________
* 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
- - ------------------------ ----- ---------------------------------------------------------------- -----------
CLASS III
TERM EXPIRES IN 2000:
<S> <C> <C> <C>
Vernon E. Oechsle 55 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>
<TABLE>
<CAPTION>
Served as
Principal Occupation and Business Experience Director
Directors Age During the Past Five Years Since
- - ------------------------ ----- ---------------------------------------------------------------- -----------
CLASS I
TERM EXPIRES IN 2000:
<S> <C> <C> <C>
J. Dwane Baumgardner 57 Chairman, President and Chief Executive Officer of Donnelley 1997
Corporation since 1986. Donnelley Corporation is a
manufacturer of automotive vision systems, modular window
systems and coated glass products. From 1982 to 1986, Chief
Executive Officer, President and Chief Operating Officer of
Donnelley Corporation, prior thereto Vice President,
Technology of Donnelley Corporation. Also a director of SL
Industries, Inc.
Robert D. Tuttle 72 A Director of Woodhead Industries, Inc. From 1980 to 1991, 1981
** Chairman, CEO and Director of SPX Corporation which produces
**** specialty tools and equipment and distributes automotive
components.
Robert H. Walpole 58 President, Asia Pacific Region since January 1997. From 1983
1991 to 1996, President of Walbro Engine Management
Corporation. Vice President of the Company since 1983.
</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
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, consisting of Messrs. Vernon E. Oechsle (Chairman)
and John E. Utley, met twice in 1997 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 met once in 1997.
Mr. William T. Bacon, Jr. served as Chairman assisted by two other outside
directors, Mr. Robert D. Tuttle and Mr. John E. Utley. 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 Executive/Directors Committee of the Board met three times in 1997.
Messrs. Althaver (Chairman) and Bacon serve on this committee. The
Executive/Directors Committee is vested with the powers of the Board, except
those powers specifically reserved by Delaware law to the full Board. The
Executive/Directors Committee exists to give the Board the flexibility to make
decisions during intervals between regular meetings of the full Board. In
addition, 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 Human Resources Planning Committee of the Board met once in 1997. 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.
The Board of Directors held six meetings in 1997. During 1997, all eight
directors attended at least 75% of the aggregate of the total number of
meetings of the Board of Directors (held during the period for which a director
served) and the total number of meetings held by all committees of the Board on
which they individually served (during such period that a director 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.
5
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 2, 1998 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
Beneficial Percentage
Name Ownership(1) of Class
- - -------------------------------------------------------------------- ------------------ ----------------
<S> <C> <C>
Franklin Resources, Inc. . . . . . . . . . . . . . . . . . . . . 1,200,500 (2) 13.8%
Caisse de depot et placement du Quebec . . . . . . . . . . . . . 713,900 (3) 8.2%
David L. Babson & Co., Inc. . . . . . . . . . . . . . . . . . . . 651,900 (4) 7.5%
Princeton Services, Inc. . . . . . . . . . . . . . . . . . . . . 466,900 (5) 5.4%
Lambert E. Althaver . . . . . . . . . . . . . . . . . . . . . . . 258,444 (6) 2.9%
William T. Bacon, Jr. . . . . . . . . . . . . . . . . . . . . . . 67,775 (7) *
Frank E. Bauchiero . . . . . . . . . . . . . . . . . . . . . . . 74,783 (8) *
J. Dwane Baumgardner . . . . . . . . . . . . . . . . . . . . . . 0 *
Vernon E. Oechsle . . . . . . . . . . . . . . . . . . . . . . . . 15,420 (9) *
Michael A. Shope . . . . . . . . . . . . . . . . . . . . . . . . 13,438 (10) *
Robert D. Tuttle . . . . . . . . . . . . . . . . . . . . . . . . 20,000 (11) *
John E. Utley . . . . . . . . . . . . . . . . . . . . . . . . . . 17,383 (12) *
Robert H. Walpole . . . . . . . . . . . . . . . . . . . . . . . . 195,828 (13) 2.3%
Richard H. Whitehead, III . . . . . . . . . . . . . . . . . . . . 134,586 (14) 1.5%
All Directors and Executive Officers as a Group
(12 persons) . . . . . . . . . . . . . . . . . . . . . . . . . 829,420 (15) 9.3%
- - ------------------
</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 February 11, 1998 filed with the
Commission by Franklin Resources, Inc., Rupert H. Johnson, Jr., Charles B.
Johnson and Templeton Investment 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 1,200,500 shares; Templeton Investment Counsel,
Inc. has sole voting and dispositive power with respect to 518,100 shares;
Templeton Management Limited has sole voting and dispositive power with
respect to 302,100 shares; Templeton Global Advisors Limited has sole
voting power with respect to 277,900 shares and sole dispositive power with
respect to 306,300 shares; and Templeton Investment Management Limited has
sole voting and dispositive power with respect to 74,000 shares. The
address of FRI is 777 Mariners Island Boulevard, San Mateo, California
94404 and the address of Templeton Investment Counsel, Inc. is 500 East
Broward Boulevard, Suite 2100, Ft. Lauderdale, Florida 33394.
(3) As reported on a Schedule 13G dated November 28, 1997 filed with the
Commission by Caisse de depot et placement du Quebec ("Caisse"), Caisse has
sole voting power with respect to 713,900 shares. The address of Caisse is
1981 Avenue McGill College, Montreal, Quebec H3A 3C7.
(4) As reported on a Schedule 13G dated January 20, 1998 filed with the
Commission by David L. Babson & Co., Inc., David L. Babson & Co., Inc. has
sole voting power and sole dispositive power with respect to all 651,900 of
these shares. The address of this stockholder is One Memorial Drive,
Cambridge, Massachusetts 02142-1300.
6
<PAGE> 8
(5) As reported on a Schedule 13G dated February 2, 1998 filed with the
Commission by Princeton Services, Inc. ("Princeton"), Fund Asset
Management, L.P. (d/b/a Fund Asset Management, "FAM") and Merrill Lynch
Special Value Fund, Inc. (the "Fund"), Princeton reports beneficial
ownership with respect to 466,900 shares (all of which Princeton disclaims
beneficial ownership of), while FAM and the Fund both report beneficial
ownership with respect to 434,800 of those 466,900 shares. FAM and Merrill
Lynch Asset Management, L.P. d/b/a Merrill Lynch Asset Management ("MLAM")
are investment advisers registered under the Investment Advisers Act of
1940 and are wholly-owned subsidiaries of Merrill Lynch & Co, Inc.
("ML&Co."). As a result of such affiliation, ML&Co. may be deemed to share
with FAM and MLAM investment discretion and voting authority. FAM and MLAM
act as investment advisers for certain investment companies registered
under the Investment Company Act of 1940 and for private accounts. One
such investment company managed by FAM is the Fund which holds 434,800
shares. On an aggregate basis FAM and MLAM hold 466,900 shares. Princeton
is a parent holding company. The address of Princeton, FAM and the Fund is
800 Scudders Mill Road, Plainsboro, New Jersey 08536.
(6) Includes 74,643 shares owned by Mr. Althaver's wife. Mr. Althaver
disclaims beneficial ownership of these shares. Also includes 88,621
shares which are covered by presently exercisable options granted under the
Equity Plan and 18,224 shares held for the account of Mr. Althaver by the
trustee of the Advantage Plan.
(7) 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
covered by presently exercisable options granted under the Equity Plan.
(8) Includes 32,514 shares which are covered by presently exercisable
options granted under the Equity Plan and 9,976 shares which represent
shares convertible from the Convertible Trust Preferred Securities. Also
includes 30,000 shares restricted per terms of an agreement dated October
3, 1996.
(9) Includes 14,420 shares which are covered by presently exercisable options
granted under the Equity Plan.
(10) Includes 11,338 shares which are covered by presently exercisable options
granted under the Equity Plan.
(11) Includes 10,000 shares over which Mr. Tuttle shares voting power as
co-trustee with his wife. Includes 10,000 shares which are covered by
presently exercisable options granted under the Equity Plan.
(12) Includes 500 shares over which Mr. Utley has voting power as trustee
of a trust and 15,883 shares which are covered by presently exercisable
options granted under the Equity Plan.
(13) 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 2,093 shares held for the account of Mr. Walpole by the trustee
of the Advantage Plan.
(14) Includes 31,426 shares which are covered by presently exercisable options
granted under the Equity Plan. Also includes 3,160 shares held for the
account of Mr. Whitehead by the trustee of the Advantage Plan.
(15) Includes 240,753 shares which are covered by presently exercisable options
granted under the Equity Plan, as well as 10,797 shares which represent
shares convertible from the Convertible Trust Preferred Securities. Also
includes 23,477 shares held for the account of three officers of the
Company by the trustee of the 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.
7
<PAGE> 9
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 62 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 53 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.
Lawrence C. Ward 45 President, North American Region since February 1998. From 1993 to
1998, Vice President - Global Operations for Allied Signal Safety
Restraints, a Division of Allied Signal Automotive (Allied Signal's
Safety Restraint division was acquired by Breed Technologies Inc.
in November 1997). Allied Signal Safety Restraints is a global
manufacturer of automotive air-bag systems and related safety
components. Prior thereto, Vice President, Manufacturing and
Services of Exabyte Corporation from 1993 to 1996 and Director,
Worldwide Manufacturing and Operations of Quantum Corporation from
1992 to 1993.
Richard H. Whitehead, III 53 President, Europe and South America Region since January 1997.
Vice-President of the Company from 1988 to 1996. 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.
INDEBTEDNESS OF MANAGEMENT
Lambert E. Althaver, the Chairman and Chief Executive Officer as of
April 2, 1998 owed $100,000 to the Company which is the maximum amount of
indebtedness Mr. Althaver has had to the Company since January 1, 1997. The
indebtedness relates to loans made by the Company to Mr. Althaver 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 eight 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.
8
<PAGE> 10
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 1997 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
1997; however, the information required was subsequently filed in 1997.
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, 1997, 1996 and 1995 of the persons who were at
December 31, 1997 (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 Compensation Awards
----------------------------------
Annual Compensation Awards Payouts
------------------- ----------------------------------
Other Securities All Other
Annual Restricted Underlying Compen-
Name and Salary Bonus Compen- Stock Options/ LTIP sation
Principal Position Year ($) ($) sation ($) Awards (#) SARs(#) Payouts($) ($)(1)
- - ----------------------- ------ -------- ------- ----------- ------------ -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lambert E. Althaver, 1997 450,000 0 0 0 0 1,862 9,000
Chairman and 1996 450,000 0 0 0 17,647 204,379 8,870
Chief Executive Officer 1995 375,000 0 0 0 15,625 0 9,100
Frank E. Bauchiero, 1997 375,000 0 0 0 0 0 4,500
President and Chief 1996 141,173(2) 0 0 30,000 19,607 0 0
Operating Officer
Robert H. Walpole, 1997 265,000 386,338(3) 0 0 0 0 9,000
Vice President 1996 265,000 283,070(3) 0 0 0 0 9,717
1995 254,000 0 0 0 0 0 8,550
Richard H. Whitehead, III, 1997 200,000 0 42,929(4) 0 0 0 10,500
Vice President 1996 200,000 0 42,000(4) 0 7,843 0 10,460
1995 180,000 0 42,000(4) 0 10,000 0 6,040
Michael A. Shope, 1997 165,000 22,500 0 0 0 0 9,090
Treasurer and 1996 150,000 27,000 0 0 3,529 0 10,035
Chief Financial Officer 1995 135,000 18,750 0 0 4,500 0 2,025
- - ------------------
</TABLE>
(1) These amounts represent matching and retirement contributions made by the
Company pursuant to its salary savings plan, entitled the
"Advantage Plan."
(2) Salary for the period August 16, 1996 to December 31, 1996; executive began
employment on August 16, 1996.
(3) First and second 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.
(4) 42,000 was paid in each of 1997, 1996 and 1995, to adjust for cost of
living and expatriate status. In 1997, $929 was compensation for personal
use of a corporate automobile.
9
<PAGE> 11
INCENTIVE COMPENSATION
Beginning with fiscal year 1997, the executive officers became eligible
for a restructured incentive compensation program. The program is comprised of
both a short term and a long term incentive component. Short term incentive
awards are based solely on the financial performance of the Company for each
fiscal year. Long term incentive awards are based in part on corporate
financial performance. Accordingly, audited financials must be used to
determine these awards. Since audited financials are not available until
February following the close of any fiscal year, the annual award cycle has been
moved from December of the fiscal year to the following February, and therefor
there were no grants to the executive officer of the Company of stock options
nor any awards under the Company's long term incentive plan in 1997.
The following table provides information for the Named Officers'
unexercised options at December 31, 1997. These options were granted under the
Company's Equity Based Long Term Incentive Plan (the "Equity Plan").
AGGREGATED OPTION EXERCISES IN 1997
AND YEAR-END 1997 OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options at
at December 31, 1997 (#) December 31, 1997 ($)(1)
----------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Lambert E. Althaver . . . . . . . . . . . . 88,621 0 $38,420 0
Frank E. Bauchiero . . . . . . . . . . . . 32,514 0 0 0
Robert H. Walpole . . . . . . . . . . . . . 0 0 0 0
Richard H. Whitehead, III . . . . . . . . . 31,426 0 0 0
Michael A. Shope . . . . . . . . . . . . . 11,338 0 0 0
- - ------------------
</TABLE>
(1) Based upon the difference between the exercise prices and the $13 7/16
closing price of the Company's Common Stock on the Nasdaq National Market
on December 31, 1997.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company has entered into employment agreements with Messrs.
Althaver, Hittler, Shope, Whitehead and Walpole which have terms expiring on
August 16, 1998 and provides them minimum base salaries of $450,000, $150,000,
$150,000, $200,000 and $265,000, 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 employment agreements with Messrs. Bauchiero and Lawrence C. Ward
which have terms expiring on October 3, 1998 and February 2, 1999, respectively,
and provide them a base salary of $375,000 and $260,000, respectively, subject
to review and increase by the Compensation Committee. In addition, each is
entitled to participate in the Equity Plan.
For each of the executive 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.
10
<PAGE> 12
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.
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, incentive compensation (Short Term Incentive and Long
Term Incentive) 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 such 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 qualify as a tax deductible expense 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 of
11
<PAGE> 13
failing to so qualify outweigh any costs to the Company, then the Compensation
Committee may revise such policy.
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). The Committee relied on the results of this survey to
set 1997 salaries for officers.
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.
The Committee considered the Towers Perrin analysis and concluded that
the salaries of the four Named Officers, including Mr. Vollmar who left the
Company in February 1997, were approximately 50th percentile of the market data
base provided. The Committee concluded that two executive officers, including
one Named Officer, had salaries below market rates.
The Committee decided to hold the 1996 salaries of the four Named
Officers and to increase the salaries of the two officers whose 1996 salaries
were below market. Mr. Althaver's 1997 salary was unchanged from his 1996 rate.
INCENTIVE COMPENSATION
Beginning with fiscal year 1997, the Company's executive officers became
eligible for a restructured incentive compensation program. The plan is
composed of a Short Term Incentive component and a Long Term Incentive
component.
Short Term awards are based solely on the financial performance of the
Company for each fiscal year. Accordingly, audited financials must be used to
determine such awards. Since audited financials are not available until
February following the close of any fiscal year, the annual award cycle has been
moved from December of the fiscal year, to the following February.
Calculation of Short Term awards is based equally on three economic
factors which are compared to the Company annual business plan as approved by
the Board of Directors. The three factors are: (1) EBIT Margin, (2) Cash Flow
From Operations, and (3) Return On Invested Capital. Officers may receive cash
awards from zero to 75% of base salary, depending on the relative financial
performance to the annual business plan. Additionally, such officers have the
option to defer their award for three years. However, once deferral is elected,
payout can be made only after a three year waiting period, except as defined by
the Change of Control Agreement.
Long Term awards are based on achievement of personal objectives, the
individual's performance for the fiscal year and corporate financial
performance. Officers may receive awards from zero to three times their base
salary (where number of options is determined by dividing base salary by fair
market value of the Common Stock on the date of grant). Award of such Long Term
options is made by the Compensation Committee of the Board through the Long Term
Equity Based Incentive Plan, as approved by the stockholders on April 19, 1995.
12
<PAGE> 14
No awards were made during 1997 under this program (other than three
recruiting awards made to non-executive officers).
ENGINE MANAGEMENT INCENTIVE COMPENSATION PLAN
Incentive compensation for executive officers assigned to the Walbro
Engine Management Corporation subsidiary ("EMC"), including Mr. Walpole, was
based on EMC's financial performance measured against the five year plan ending
June 30, 1996. Although this plan is no longer operative, the awards earned
were deferred for payment over four years (1996 through 1999). Accordingly, Mr.
Walpole was paid $386,338 in 1997.
COMPENSATION COMMITTEE
William T. Bacon, Jr., Chairman
John E. Utley Robert D. Tuttle
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").
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
[GRAPH]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Walbro Corporation 100.00 86.12 62.28 60.27 62.38 46.98
Standard and Poor's 500 Index 100.00 110.08 111.53 153.45 188.68 251.63
Peer Group 100.00 158.33 116.93 110.06 149.62 181.04
</TABLE>
The comparison assumes $100 was invested on December 31, 1992 in the
Common Stock, the S&P 500 index, and in the Peer Group.
13
<PAGE> 15
The companies in the Peer Group, all of which are in the automotive
industry, are as follows:
<TABLE>
<S> <C>
Arvin Industries, Inc. Intermet Corporation
Borg Warner Automotive, Inc. Mascotech, Inc.
Breed Technologies Inc. Shiloh Industries Inc.
Collins & Aikman Products Co. Simpson Industries, Inc.
Donnelly Corporation A.O. Smith Corporation
Excel Industries, Inc. The Standard Products Company
Gentex Corporation Superior Industries International, Inc.
Harvard Industries, Inc. Tower Automotive
Hayes Lemmerg International, Inc. Walbro Corporation
</TABLE>
In 1997, Stant Corporation, which was included in the Company's peer
group in the 1997 proxy statement, was acquired by Tomkins, plc. As a result of
this acquisition, Stant Corporation has been deleted from the Peer Group.
INDEPENDENT PUBLIC ACCOUNTANT
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Arthur Andersen LLP to audit the financial statements of the Company
and its subsidiaries for the year ending December 31, 1998. Arthur Andersen LLP
has been the Company's independent public accountant for twelve years. A
representative of Arthur Andersen LLP 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 December 21, 1998.
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, 1997, 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.
14
<PAGE> 16
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
15
<PAGE> 17
PROXY PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF STOCKHOLDERS OF
WALBRO CORPORATION
TO BE HELD ON MAY 20, 1998
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 20th day of May, 1998 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.
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.
<PAGE> 18
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 2. IN THEIR DISCRETION, THE PROXIES ARE
Lambert E. Althaver and John E. Utley FOR WITHHELD CROSSED OUT AUTHORIZED TO VOTE UPON SUCH OTHER
(To withhold authority to vote for any individual / / / / / / MATTERS AS MAY PROPERLY
nominees(s), strike a line through the nominee(s) name COME BEFORE THE MEETING.
above and fill in the
"For All Except Nominees Crossed Out" oval.)
------------------------------------------
Signature
------------------------------------------
Signature (if held jointly)
Dated: ,1998
----------------------------
Signature(s) of holders of common stock
should agree with the names(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.
FOLD AND DETACH HERE
