<PAGE>
SCHEDULE 14A INFORMATION
(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 [_]
[_] CONFIDENTIAL, FOR USE OF THE
Check the appropriate box: COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
STONERIDGE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
<PAGE>
STONERIDGE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------
Notice is hereby given that the Annual Meeting of Shareholders of
Stoneridge, Inc. will be held at 600 Golf Drive, Warren, Ohio 44483, on
Monday, May 4, 1998, at 10:00 a.m., Warren, Ohio, time, for the following
purposes:
1. To elect six directors, each to serve until the next annual meeting of
the shareholders and until his successor has been duly elected and
qualified;
2. To receive reports at the meeting. No action constituting approval or
disapproval of the matters referred to in said reports is contemplated; and
3. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on March 20, 1998, will
be entitled to notice of and to vote at the meeting or any adjournment
thereof. Shareholders are urged to complete, date and sign the enclosed proxy
and return it in the enclosed envelope. The principal address of Stoneridge,
Inc. is 9400 East Market Street, Warren, Ohio 44484.
By Order of the Board of Directors,
AVERY S. COHEN,
Secretary
Dated: March 31, 1998
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN YOUR PROXY
<PAGE>
STONERIDGE, INC.
PROXY STATEMENT
----------------
This proxy statement is furnished in connection with the solicitation of
proxies to be used at the Annual Meeting of Shareholders of Stoneridge, Inc.,
an Ohio corporation (the "Company"), to be held at 600 Golf Drive, Warren,
Ohio 44483, on Monday May 4, 1998, at 10:00 a.m., Warren, Ohio, time, and at
any adjournment thereof. This proxy statement and the accompanying notice and
proxy will first be sent to shareholders by mail on or about March 31, 1998.
Annual Report. A copy of the Company's Annual Report to Shareholders for the
fiscal year ended December 31, 1997, is enclosed with this proxy statement.
Solicitation and Revocation of Proxies. This solicitation of proxies is made
by and on behalf of the Board of Directors. The cost of the solicitation of
proxies will be borne by the Company. The Company has retained Corporate
Investor Communications, Inc. ("CIC"), at an estimated cost of $3,200, to
assist in the solicitation of proxies from brokers, nominees, institutions and
individuals. In addition to solicitation of proxies by mail, CIC and regular
employees of the Company or its affiliates may solicit proxies by telephone or
facsimile.
If the enclosed proxy is signed and returned, the shares represented thereby
will be voted in accordance with any specification made therein by the
shareholder. In the absence of any such specification, they will be voted to
elect the director nominees set forth under "Election of Directors" below. A
shareholder's presence at the meeting, without more, will not operate to
revoke his or her proxy. The proxy is revocable by a shareholder at any time
insofar as it has not been exercised by executing and delivering a later-dated
proxy or by giving notice to the Company in writing at its address indicated
on the attached Notice of Annual Meeting of Shareholders, or in open meeting.
Outstanding Shares. The close of business on March 20, 1998, has been fixed
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting. On that date, the Company's voting securities
outstanding consisted of 22,397,311 Common Shares, without par value, each of
which is entitled to one vote at the meeting.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of Stoneridge, Inc. common shares (the "Common Shares") as of
December 31, 1997, by: (a) the Company's directors (all of whom are also
nominees for director); (b) each other person who is known by the Company to
own beneficially more than 5% of the outstanding Common Shares; (c) the
Company's Chief Executive Officer and the four other most highly compensated
executive officers named in the Summary Compensation Table; and (d) the
Company's executive officers and directors as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED OF CLASS
--------------------------- ------------------ --------
<S> <C> <C>
D.M. Draime(2)..................................... 7,004,630 31.3%
Scott N. Draime(3)................................. 1,840,794 8.2
Jeffrey P. Draime(4)............................... 1,431,326 6.4
Cloyd J. Abruzzo(5)................................ 1,832,703 8.2
Avery S. Cohen(6)(7)............................... 547,002 2.4
Sheldon J. Epstein(7).............................. 420,522 1.9
Richard E. Cheney.................................. 51,079 *
Earl L. Linehan.................................... 87,079 *
Gerald V. Pisani(8)................................ 431,720 1.9
David L. Thomas.................................... 94,158 *
Kevin P. Bagby..................................... 47,079 *
Sten Forseke....................................... 352,031 1.6
All Executive Officers and Directors as a Group (10
persons).......................................... 10,868,003 48.5%
</TABLE>
- --------
* Less than 1%.
(1) Unless otherwise indicated, the beneficial owner has sole voting and
investment power over such shares.
(2) Includes 1,363,456 Common Shares held by Mr. Draime as executor of the
Estate of Steven A. Draime and 5,641,174 Common Shares held in trust for
the benefit of Mr. Draime, of which Mr. Draime is trustee. The address of
Mr. Draime is 9400 East Market Street, Warren, Ohio 44484.
(3) Includes 818,240 Common Shares held in trust for the benefit of Scott N.
Draime, of which Scott N. Draime is trustee, and 1,022,554 Common Shares
held in trusts for the benefit of Jeffrey P. Draime's and Rebecca M.
Gang's children, of which Scott N. Draime is trustee. The address of Scott
N. Draime is 9400 East Market Street, Warren, Ohio 44484.
(4) Includes 886,114 Common Shares held in trust for the benefit of Jeffrey P.
Draime, of which Jeffrey P. Draime is trustee, and 545,212 Common Shares
held in trusts for the benefit of Scott N. Draime's children, of which
Jeffrey P. Draime is trustee. The address of Jeffrey P. Draime is 9400
East Market Street, Warren, Ohio 44484.
(5) Includes 299,590 Common Shares held in trust for the benefit of Cloyd J.
Abruzzo, of which Mr. Abruzzo is trustee, and an aggregate of 1,390,856
Common shares held in trust for the benefit of D.M. Draime's children and
grandchildren, of which Mr. Abruzzo is trustee. The address of Cloyd J.
Abruzzo is 9400 East Market Street, Warren, Ohio 44484.
(6) Includes 124,481 Common Shares held under the Ohio Transfer to Minors Act
for the benefit of William M. Draime and John A. Draime, of which Mr.
Cohen is custodian.
(7) Includes 373,443 Common Shares held in separate trusts for the benefit of
Scott N. Draime, Jeffrey P. Draime and Rebecca M. Gang, of which Mr. Cohen
and Mr. Epstein are co-trustees.
(8) Includes 166,902 Common Shares held in separate trusts for the benefit of
Gerald V. Pisani's children, of which Gerald V. Pisani's wife is the
trustee.
2
<PAGE>
ELECTION OF DIRECTORS
At the Annual Meeting, the shares represented by proxies, unless otherwise
specified, will be voted for the election of the six nominees hereinafter
named, each to serve until the next Annual Meeting of Shareholders and until
his successor is duly elected and qualified.
The director nominees are identified in the following table. If for any
reason any of the nominees is not a candidate when the election occurs (which
is not expected), the Board of Directors expects that proxies will be voted
for the election of a substitute nominee designated by management. The
following information is furnished with respect to each person nominated for
election as a director.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
<TABLE>
<CAPTION>
EXPIRATION
PERIOD OF OF TERM
PRINCIPAL OCCUPATION SERVICE AS FOR WHICH
NAME AND AGE AND BUSINESS EXPERIENCE A DIRECTOR PROPOSED
- ------------ ----------------------- ------------ ----------
<S> <C> <C> <C>
D.M. Draime............. Chairman of the Board of Directors, Assistant 1988 to date 1999
65 Secretary of the Company
Cloyd J. Abruzzo........ President, Chief Executive Officer, Assistant 1990 to date 1999
47 Treasurer of the Company
Avery S. Cohen.......... Partner, Baker & Hostetler LLP, a law firm 1988 to date 1999
61
Richard E. Cheney....... Retired Chairman of Hill & Knowlton, Inc., 1988 to date 1999
76 a public relations firm
Sheldon J. Epstein...... Managing Member, Epstein, Woods & Dwyer, P.L.C., 1988 to date 1999
59 an independent public accounting firm
Earl L. Linehan......... President, Woodbrook Capital Inc., a venture capital 1988 to date 1999
56 and investment firm
</TABLE>
Each of the above nominees for election as a director has engaged in the
principal occupation or activity indicated for at least five years, except as
described below.
Mr. Cohen was a partner with the law firm of Benesch, Friedlander, Coplan &
Aronoff from 1989 until August 1993. Mr. Epstein was the managing partner of
Epstein, Rehbock & Applebaum, an independent public accounting firm, from 1992
to 1994.
Mr. Abruzzo is a director of Second National Bank of Warren. Mr. Cheney is a
director of Rowe Furniture, Inc. and Chattem, Inc.
The Company consummated its initial public offering of Common Shares October
10, 1997. During the fiscal year ended December 31, 1997, the Board of
Directors held five meetings. In connection with its October initial public
offering, the Board of Directors established an Audit Committee and a Stock
Option Committee. The Board of Directors also has a Compensation Committee.
Each of these committees is comprised of the Company's three outside
directors, Messrs. Cheney, Epstein and Linehan. Each member of the Board of
Directors attended at least 75% of the meetings of the Board of Directors held
in fiscal 1997.
The Audit Committee makes recommendations to the Board of Directors
concerning the engagement of independent public accountants for the Company,
reviews with the independent public accountants the plans and results of audit
engagements, approves professional services provided by the independent public
accountants, reviews the independence of the independent public accountants,
considers the range of audit and nonaudit fees, reviews the independent public
accountants' management letters and the Company's responses, reviews the
3
<PAGE>
adequacy of the Company's internal accounting controls, and reviews major
accounting or reporting changes. The Audit Committee held one meeting in 1997.
The Compensation Committee reviews employment, development, reassignment and
compensation matters involving corporate officers and other executive level
employees, including issues relating to salary, bonus and incentive
arrangements. The Compensation Committee held one meeting in 1997.
The Stock Option Committee administers the Company's Long-Term Incentive
Plan. The Stock Option Committee held three meetings in 1997.
Directors' Compensation. Each director who is not an employee of the Company
or of a subsidiary of the Company is compensated at the rate of $16,000 per
year. Each director also receives $1,000 for attendance at each meeting of the
Board of Directors. There is no additional fee received for attending
committee meetings. Directors of the Company who are also Company employees
are not paid any director's fee. The Company reimburses out-of-pocket expenses
incurred by all directors in connection with attending Board and committee
meetings.
JOINT REPORT BY THE COMPENSATION COMMITTEE AND THE STOCK OPTION COMMITTEE
Introduction. The Compensation Committee (the "Committee") is responsible
for determining the compensation to be paid to the Company's executive
officers. The Long-Term Incentive Plan is administered by the Company's Stock
Option Committee.
The Committee's philosophy with respect to the compensation of the Company's
executive officers is (i) to provide a competitive total compensation package
that enables the Company to attract and retain qualified executives and align
their compensation with the Company's overall business strategies, and (ii)
through the Stock Option Committee, to provide each executive officer with a
significant equity stake in the Company through share options.
To this end, the Committee determines executive compensation with a focus on
compensating executive officers based on their responsibilities and the
Company's performance. The primary components of the Company's executive
compensation program are (i) base salaries and certain other annual
compensation, (ii) bonuses, and (iii) share options. The overall objectives of
this strategy are to attract and retain the best possible executive talent, to
motivate these executives to achieve the goals inherent in the Company's
business strategy, to link executive and shareholder interests through share
options plans and, finally, to provide a compensation package that recognizes
individual contributions as well as overall business results.
Each year the Compensation Committee conducts a review of the Company's
executive compensation program. In connection with the Company's new status as
a public company, the Compensation Committee commissioned a comprehensive
report from Arthur Andersen LLP (the "Executive Pay Benchmarking Analysis")
assessing the Company's compensation program and comparing the Company's
executive compensation, corporate performance, and total return to
shareholders to a peer group of public corporations that represent the
Company's most direct competitors for executive talent. The Compensation
Committee considered the Executive Pay Benchmarking Analysis in determining
the total compensation awarded in 1997. The Compensation Committee reviews the
selection of peer companies used for compensation analysis. The peer groups
used for compensation analysis are generally not the same as the peer group
index in the Performance Graph included in this proxy statement. The
Compensation Committee believes that the Corporation's most direct competitors
for executive talent are not necessarily all of the companies that would be
included in a peer group established for comparing shareholder returns. This
year's compensation reviews permitted an evaluation of the link between the
Company's performance and its executive compensation in the context of the
compensation programs of other companies.
The Compensation Committee determines the compensation of the most highly
compensated corporate executives, including the individuals whose compensation
is detailed in this proxy statement, and reviews the
4
<PAGE>
compensation awarded to other highly compensated corporate executives. This is
designed to ensure consistency throughout the executive compensation program.
In reviewing the individual performance of the executives whose compensation
is detailed in this proxy statement (other than Mr. Abruzzo), the Compensation
Committee takes into account the views of Mr. Abruzzo.
Base Salaries and Other Annual Compensation.
Salary levels for the Company's executive officers are established
principally on the basis of the executive's responsibilities. In each case,
consideration is given to both personal factors, such as the individual's
experience and record and the responsibility associated with his position, and
external factors, such as salaries paid to similarly situated executive
officers by peer companies and prevailing conditions in the geographic area
where the executive's principal services will be performed. In the case of
executive officers with responsibility for a particular business unit, such
unit's financial results are also considered.
Annual adjustments to each executive officer's salary are determined based
on the foregoing factors but with due consideration also being given to
prevailing economic conditions, to the relationship of such adjustments to
those being given to other employees within the Company, to the performance of
the executive's duties and responsibilities and to other individual
performance-related criteria that may be relevant with respect to such
executive officer at the time.
In determining the appropriate levels for Mr. Abruzzo's 1997 base salary,
bonus and share option grant, the Compensation Committee considered the same
factors that it considered when fixing compensation levels for the Company's
other executive officers and sought to achieve the same corporate goals. The
Compensation Committee also considered the major initiatives and programs
which, in 1997, were commenced or furthered under Mr. Abruzzo's leadership,
such as: (a) the integration of two acquisitions; (b) the completion of the
Company's initial public offering; (c) the development of a more experienced
senior management team with greater depth; and (d) the continued progress of
the Company in expanding its international presence.
Bonuses.
The Company's executive officers are eligible for an annual cash bonus.
Bonuses are viewed as a reward for individual contributions to the Company's
performance, based not only on the Company's short-term results but also on
the investments made by the Company for the future growth of the Company's
profits. In addition, consideration is given to the achievement of selected
financial goals (i.e., operating performance, asset management and business
growth development) and progress in meeting other long-term objectives, as
well as the executive officers' leadership role in these activities. Bonus
awards are generally made toward the end of each year by the Compensation
Committee. Based on the above-described factors and on the Executive Pay
Benchmarking Analysis, Mr. Abruzzo was awarded a bonus of $500,000, a 100%
increase over the bonus paid in 1996.
Share Options.
All of the Company's executive officers are eligible to receive options to
purchase Common Shares of the Company under the Long-Term Incentive Plan,
which was approved by the Company's shareholders. The Company believes that
share option grants are a valuable motivating tool and provide a long-term
incentive to management. Share option grants reinforce long-term goals by
providing the proper nexus between the interests of management and the
interests of the Company's shareholders. Share options are granted with an
exercise price equal to the market price of the Common Shares on the date of
grant and vest over two years. This approach is designed to incentivize the
creation of shareholder value over the long term since the full benefit of the
compensation package cannot be realized unless share price appreciation occurs
over a number of years. Accordingly, the Stock Option Committee granted to
current executive officers options to purchase an aggregate of 400,000 Common
Shares under the Long-Term Incentive Plan (200,000 for Mr. Abruzzo, 100,000
for Mr. Pisani and 50,000 for each of Messrs. Thomas and Bagby). The number of
options granted to each of the
5
<PAGE>
executive officers was determined after consultation with the managing
underwriters of the Company's initial public offering and was based on the
expected contribution of each such officer to the performance of the Company.
Conclusion.
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to individual and Company
performance and share price appreciation. The Compensation Committee intends
to continue the policy of linking executive compensation to performance and
returns to shareholders, recognizing that the ups and downs of the business
cycle from time to time may result in an imbalance for a particular period.
Compensation Committee Stock Option Committee
----------------- -----------------
Richard E. Cheney Richard E. Cheney
Sheldon J. Epstein Sheldon J. Epstein
Earl L. Linehan Earl L. Linehan
6
<PAGE>
EXECUTIVE COMPENSATION
The following information is set forth with respect to the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers. The Company does not have employment agreements with any
of its employees.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION AWARDS
----------------- -----------------------
NUMBER OF
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION UNDERLYING COMPENSATION
POSITION YEAR ($) ($) ($) OPTION (#) ($)
------------------ ------ -------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Cloyd J. Abruzzo........ 1997 $204,000 $500,000 -- 200,000 --
President and 1996 204,000 250,000 -- -- --
Chief Executive Officer 1995 192,000 200,000 -- -- --
D.M. Draime............. 1997 189,600 250,000 -- -- --
Chairman of the 1996 189,600 250,000 -- -- $174,570(1)
Board of Directors 1995 189,600 700,000 -- -- 174,990(1)
Gerald V. Pisani........ 1997 170,400 180,000 -- 100,000 --
President of 1996 159,000 140,000 -- -- --
Pollak Group 1995 159,000 130,000 -- -- --
David L. Thomas......... 1997 144,000 130,000 -- 50,000 --
President of 1996 144,000 110,000 -- -- --
Alphabet Group 1995 132,000 108,000 -- -- --
Kevin P. Bagby.......... 1997 129,500 125,000 -- 50,000 --
Chief Financial
Officer(2) 1996 120,000 65,000 -- 34,771 --
1995 55,000 40,000 -- -- --
</TABLE>
- --------
(1) Represents the aggregate amount of life insurance premiums paid by the
Company on a split-dollar life insurance policy.
(2) Mr. Bagby's employment with the Company commenced in July 1995.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED
------------------------------------------------ VALUE AT ASSUMED
PERCENTAGE OF ANNUAL RATES OF STOCK
TOTAL OPTIONS PRICE APPRECIATION
GRANTED TO EXERCISE FOR OPTION TERM(3)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED(1) FISCAL YEAR(2) ($/SHARE) DATE 5% 10%
---- ---------- -------------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Cloyd J. Abruzzo........ 200,000 40.16% $17.50 October 2007 $2,201,045 $5,578,020
D.M. Draime............. -- -- -- -- -- --
Gerald V. Pisani........ 100,000 20.08% 17.50 October 2007 1,100,523 2,789,010
David L. Thomas......... 50,000 10.04% 17.50 October 2007 550,262 1,394,505
Kevin P. Bagby.......... 50,000 10.04% 17.50 October 2007 550,262 1,394,505
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
- --------
(1) Options are not exercisable during the first two years after the date of
grant.
(2) Based on 498,000 options granted to all employees during the fiscal year.
(3) These amounts are based on hypothetical appreciation rates of 5% and 10%
and are not intended to forecast the actual future appreciation of the
Company's shares. No gain to optionees is possible without an actual
increase in the price of the Company's shares, which would benefit all the
Company's shareholders. All calculations are based on a ten-year option
period.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Cloyd J. Abruzzo........ -- -- --/200,000 --/--
D.M. Draime............. -- -- --/-- --/--
Gerald V. Pisani........ -- -- --/100,000 --/--
David L. Thomas......... -- -- --/ 50,000 --/--
Kevin P. Bagby.......... 34,771 $71,388 --/ 50,000 --/--
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From January 1, 1997 until August 5, 1997, Avery S. Cohen, a partner in
Baker & Hostetler LLP, which provides legal services to the Company, and D.M.
Draime served as members of the Company's compensation committee. On August 5,
1997, in anticipation of its initial public offering, the Board of Directors
reconfigured its compensation committee by appointing Messrs. Cheney, Epstein
and Linehan. See "Transactions with Management" below.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Chip Supply, Inc. D.M. Draime and certain of his family members own in the
aggregate 56.65%, and Cloyd J. Abruzzo owns 1.17%, of Chip Supply, Inc., a
Florida corporation ("Chip"). From January 1, 1996 to September 30, 1996, Chip
leased a building located in Orlando, Florida, from the Company. During this
lease period, the Company received lease payments in the aggregate amount of
$235,200. On September 30, 1996, the Company sold the leased building to Chip
for $2.2 million.
Alphabet Greenwood Facility. D.M. Draime is the sole owner of the Alphabet
Division facility located in Greenwood, South Carolina. The Company leases the
facility from Mr. Draime pursuant to a lease expiring on September 15, 2004.
In each of 1995, 1996 and 1997, the Company made lease payments to Mr. Draime
in the aggregate amount of $157,200. In February 1997, the Company
restructured its operations and terminated its use of the Greenwood facility.
Mr. Draime has listed the Greenwood property for sale and the Company will
continue to make lease payments to Mr. Draime until the sale is consummated.
Hunters Square. D.M. Draime is a 25% owner of Hunters Square, Inc., an Ohio
corporation ("HSI"), which owns Hunters Square, a shopping mall located in
Warren, Ohio. The Company leases office space in Hunters Square for use as the
headquarters of the Alphabet Division. The Company pays all maintenance, tax
and insurance costs related to the operation of the office. Lease payments
made by the Company to HSI in 1995, 1996 and 1997 were $153,576, $189,547 and
$197,402, respectively. The Company continues to make lease payments as
required under the lease agreement, which terminates in June 2002.
Technaflow, Inc. D.M. Draime, together with certain of his family members,
owns 97.46%, and Cloyd J. Abruzzo owns 2.54%, of Technaflow, Inc., an Ohio
corporation. The Company provides management services to Technaflow, Inc.,
including the review of operations and strategic initiatives, and has received
a management fee of $300,000 annually from Technaflow, Inc. The Company has
also paid the salary of the president of Technaflow, Inc. The salary paid by
the Company was $181,900, $180,459 and $76,000 in 1995, 1996 and 1997,
respectively. Effective September 1, 1997, all salary and benefits have been
paid by Technaflow, Inc. and the annual management fee paid to the Company was
reduced to $60,000.
Industrial Development Associates LP. Earl Linehan and D.M. Draime, as
limited partners, own 11.81% and 10.00%, respectively, of Industrial
Development Associates ("IDA"), a Maryland limited partnership real
8
<PAGE>
estate development company in which the Company is a 30% general partner.
Alphabet, a division of the Company, has entered into a lease agreement with
IDA pursuant to which the Alphabet Division leases a facility located in
Mebane, North Carolina, until June 15, 2001. Alphabet is responsible for all
maintenance, taxes and insurance. Alphabet made lease payments to IDA of
$103,372, $111,631 and $113,021 for 1995, 1996, and 1997, respectively. In
addition, Alphabet subleases warehouse space in the same industrial park as the
Mebane facility from Baumgartner, Inc. Baumgartner, Inc. leased the space from
IDA. Alphabet made sublease payments to Baumgartner, Inc. of $74,622, $78,577
and $71,098 in 1995, 1996 and 1997, respectively.
Relationship with Counsel. Avery S. Cohen, a director of the Company, is a
partner in Baker & Hostetler LLP, a law firm which has served as general
outside counsel for the Company since 1993 and is expected to continue to do so
in the future.
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return of a
hypothetical investment in the Common Shares with the cumulative total return
of a hypothetical investment in each of the New York Stock Exchange Market
Index and the Media General Financial Services, Inc. Industry Group 032
(Automotive Parts and Accessories) Index based on the respective market price
of each such investment at October 10, 1997, October 31, 1997 and November 30,
1997, and December 31, 1997, assuming in each case an initial investment of
$100 on October 10, 1997, and reinvestment of dividends.
- -------------------------------------------------------------------------
10/10/97 10/31/97 11/30/97 12/31/97
- -------------------------------------------------------------------------
Stoneridge, Inc. 100.00 81.25 83.75 80.00
- -------------------------------------------------------------------------
Industry Index 100.00 98.30 96.42 94.32
- -------------------------------------------------------------------------
Broad Market 100.00 96.88 100.49 103.03
- -------------------------------------------------------------------------
9
<PAGE>
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any shareholder proposal intended to be presented at the Company's 1999
Annual Meeting of Shareholders must be received by the Company at 9400 East
Market Street, Warren, Ohio 44483, on or before December 1, 1998, for
inclusion in the Company's proxy statement and form of proxy relating to the
1999 Annual Meeting of Shareholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and owners of more than 10% of the Company's
Common Shares, to file with the Securities and Exchange Commission (the "SEC")
and the New York Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Shares and other equity securities of the
Company. Executive officers, directors and owners of more than 10% of the
Common Shares are required by SEC regulations to furnish the Company with
copies of all forms they file pursuant to Section 16(a).
To the Company's knowledge, based solely on its review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were complied with, except
that on one occasion Mr. Epstein inadvertently failed to timely file a Form 4.
OTHER MATTERS
Representatives of Arthur Andersen LLP, which served as the Company's
independent public accountants during the fiscal year ended December 31, 1997,
are expected to be present at the annual meeting and will have the opportunity
to make a statement if they so desire and will be available to respond to
appropriate questions.
If the enclosed proxy is executed and returned to the Company, the persons
named in it will vote the shares represented by that proxy at the meeting. The
form of proxy permits specification of a vote for the election of directors as
set forth under "Election of Directors" above, the withholding of authority to
vote in the election of directors, or the withholding of authority to vote for
one or more specified nominees.
When a choice has been specified in the proxy, the shares represented will
be voted in accordance with that specification. If no specification is made,
those shares will be voted at the meeting to elect directors as set forth
under "Election of Directors" above. Under Ohio law and the Company's Amended
and Restated Articles of Incorporation, as amended, broker non-votes and
abstaining votes will not be counted in favor of or against any nominee.
Director nominees who receive the greatest number of affirmative votes will be
elected directors. If any other matter properly comes before the meeting, the
persons named in the proxy will vote thereon in accordance with their
judgment. Management does not know of any other matter that will be presented
for action at the meeting.
By order of the Board of Directors,
Avery S. Cohen,
Secretary
Dated: March 31, 1998
10
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STONERIDGE, INC.
P R O X Y
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The undersigned hereby appoints Cloyd J. Abruzzo, Kevin P. Bagby and Avery
S. Cohen, and each of them, attorneys and proxies of the undersigned, with full
power of substitution, to attend the annual meeting of shareholders of
Stoneridge, Inc. to be held at 600 Golf Drive, Warren, Ohio 44483, on Monday,
May 4, 1998, at 10:00 a.m., Warren, Ohio, time, or any adjournment thereof, and
to vote the number of shares of the Company which the undersigned would be
entitled to vote, and with all the power the undersigned would possess if
personally present, as follows:
1. ________ FOR (except as noted below), or ________ WITHHOLD AUTHORITY
to vote for, the following nominees for election as directors, each to
serve until the next annual meeting of the shareholders and until his
successor has been duly elected and qualified: D.M. Draime, Cloyd J.
Abruzzo, Avery S. Cohen, Richard E. Cheney, Sheldon J. Epstein and
Earl L. Linehan.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY PARTICULAR
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.)
______________________________________________________________________
2. On such other business as may properly come before the meeting.
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THE PROXIES WILL VOTE AS SPECIFIED ABOVE, OR IF A CHOICE IS NOT SPECIFIED,
THEY WILL VOTE FOR THE NOMINEES LISTED IN ITEM 1.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
Receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated March 31,
1998, is hereby acknowledged.
Dated _______________________, 1998
___________________________________
___________________________________
___________________________________
Signature(s)
(Please sign exactly as your name or names appear
hereon, indicating, where proper, official
position or representative capacity.)
