COOPER TIRE & RUBBER COMPANY
---------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------------------
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of
Cooper Tire & Rubber Company will be held at Urbanski's, 1500 Manor Hill
Road, Findlay, Ohio on Tuesday, May 7, 1996, at 10:00 a.m. Eastern
Daylight Time for the following purposes:
(1) To elect four (4) Directors of the Company.
(2) To vote upon a proposal to approve and adopt a Stock
Option Plan.
(3) To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only holders of Common Stock of record at the close of business on
March 11, 1996, are entitled to notice and to vote at the Annual
Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Stan C. Kaiman
Secretary
Findlay, Ohio
March 26, 1996
Kindly mark, date and sign the enclosed proxy and return it promptly
in the enclosed addressed envelope, which requires no postage. If you
are present and vote in person at the meeting, the proxy will not be
used.
1
<PAGE>
COOPER TIRE & RUBBER COMPANY
Lima & Western Avenues, Findlay, Ohio 45840
March 26, 1996
-------------------
PROXY STATEMENT
-------------------
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Cooper Tire & Rubber Company
(the "Company") to be used at the Annual Meeting of the stockholders of
the Company to be held on May 7, 1996, at Urbanski's, 1500 Manor Hill
Road, Findlay, Ohio. If the enclosed form of proxy is properly executed
and returned, it will be voted in accordance therewith. Abstentions and
broker nonvotes are voted neither "for" nor "against", but are counted
in the determination of a quorum. Any proxy may be revoked at any time,
to the extent that it has not been exercised, by written notice to the
Company prior to the meeting, or by execution of a new proxy or by
voting by ballot at the meeting.
Only stockholders of record on March 11, 1996, will be entitled to
vote at the Annual Meeting, and each will be entitled to one vote for
each share so held. As of March 11, 1996, there were 83,667,472 shares
of the Company's Common Stock outstanding. Holders of a majority of the
stock of the Company issued and outstanding and entitled to vote must be
present or represented by proxy at the Annual Meeting to form a quorum
for the transaction of business thereat.
The matters anticipated to be voted upon by stockholders at the
meeting are election of four (4) Directors (Agenda Item 1) and adoption
of the 1996 Stock Option Plan (Agenda Item 2).
The affirmative vote of a plurality of the votes of the shares of
Common Stock present in person or represented by proxy and entitled to
vote at the Annual Meeting is required for election of each Director.
The affirmative vote of a majority of the shares of Common Stock present
in person or represented by proxy and entitled to vote at the Annual
Meeting is required for adoption of the 1996 Stock Option Plan.
Agenda Item 1
ELECTION OF DIRECTORS
The Bylaws of the Company provide for the Board of Directors to be
divided into three classes as nearly equal in number as the total number
of Directors constituting the entire Board permits, with the term of
office of one class expiring each year. By vote of a majority, the
Board of Directors has the authority to fix the number of Directors
constituting the entire Board at not less than six (6) nor more than
twelve (12) individuals, and the number is currently set at ten (10).
Four Directors are to be elected to the class having terms expiring this
year and shall serve for a three-year term expiring in 1999 and until
their respective successors are elected and qualified. In November of
1995, Leon F. Winbigler retired from the Board, having served since
1973; Joseph M. Magliochetti, a Director since 1992, resigned from the
Board due to time commitments; and Arthur H. Aronson was elected to the
Board for a term expiring in 1998.
(continued) 2
<PAGE>
Unless otherwise specified, the persons named as proxies in the
enclosed form of proxy intend to vote for the nominees hereinafter
indicated. Although the Board of Directors does not contemplate that
any such nominee shall be unavailable for election, if a vacancy in the
slate of nominees should be occasioned by death or other unexpected
occurrence, it is presently intended that the proxies shall be voted for
such other person as the Board of Directors may recommend.
All the nominees to be elected at the Annual Meeting, other than
Deborah M. Fretz, have been serving as Directors and have previously
been elected by vote of the stockholders. Ms. Fretz has not been
serving as a Director of the Company. A brief statement of the
background of each nominee and each Director who is not a nominee is set
forth on the following pages, including for each the period of service
as a Director of the Company and the expiration date of the term as a
Director.
NOMINEES FOR DIRECTOR
----------------------
EDSEL D. DUNFORD Retired (Former President and
(PHOTOGRAPH) Chief Operating Officer, TRW Inc.)
Mr. Dunford, age 60, was elected President and Chief Operating
Officer of TRW, Inc. and named to its Board of Directors in 1991. After
joining TRW in 1964, Mr. Dunford held a variety of technical and
management positions, including executive vice president and general
manager of TRW's space and defense businesses. He holds a B.S.E.E.
degree from the University of Washington and a master of engineering
degree from UCLA, and completed the Executive Program at Stanford
University. A member of a number of professional organizations, Mr.
Dunford is also a director of Thiokol Corporation and Blade Acquisition
Corporation. He serves as Chairman of the Board of Councilors at the
University of Southern California.
Director Since 1994
Nominee for Term to Expire 1999
JOHN FAHL Vice President
(PHOTOGRAPH)
Mr. Fahl, age 59, began his career with the Company in 1955, holding
various positions in technical, manufacturing, and transportation before
joining the purchasing department in 1962. He was named Corporate
Director of Purchasing in 1966, was elected a Vice President in 1978,
and in 1994 was named President, Tire Operations. He attended Denison
University and is a graduate of advanced management programs at Bowling
Green State University and Harvard University. Mr. Fahl is a director
of The Peoples Banking Company in Findlay, Ohio.
Director Since 1992
Nominee for Term to Expire 1999
(continued)
3
<PAGE>
DEBORAH M. FRETZ Senior Vice President,
(PHOTOGRAPH) Logistics Sun Company, Inc.
Ms. Fretz, age 47, was named Senior Vice President, Logistics, of Sun
Company, Inc., an energy company, in 1994. Since joining Sun Company in
1977, she has served in a variety of management positions including
President of Sun Pipe Line Company and Sun Marine Terminals from 1991 to
1994; these Sun Company subsidiaries transport and store crude oil and
refined petroleum products. In her current position, she is responsible
for all Sun Company transportation-related businesses, including
pipelines, terminalling, trucking, rail and marine. She is a director
of GATX Corporation. Ms. Fretz earned a B.S. degree in
Biology/Chemistry from Butler University and an M.B.A. in Finance from
Temple University, and completed the Senior Executive Program at the
M.I.T. Sloan School.
Nominee for Term to Expire 1999
DENNIS J. GORMLEY Chairman and Chief Executive Officer,
(PHOTOGRAPH) Federal-Mogul Corporation
Mr. Gormley, age 56, joined Federal-Mogul Corporation, a global
manufacturer and distributor of precision parts, in 1963. He held sales
management, corporate planning, and marketing positions before being
named Executive Vice President in 1975. He was elected President, Chief
Operating Officer, and a director in 1988, Chief Executive Officer in
1989, and Chairman in 1990. Federal-Mogul Corporation's principal
products are vehicular and industrial components. Mr. Gormley is a
director of NBD Bank. He is a graduate of Rennselaer Polytechnic
Institute with a B.S.M.E. degree.
Director Since 1991
Nominee for Term to Expire 1999
DIRECTORS WHO ARE NOT NOMINEES
------------------------------
ARTHUR H. ARONSON President and Chief Executive Officer,
(PHOTOGRAPH) Allegheny Ludlum Corporation
Mr. Aronson, age 60, joined Allegheny Ludlum Corporation in 1988 as
executive vice president and was named to his present position in 1994.
Prior experience includes service as President and Chief Operating
Officer of Lukens Steel and as Chief Executive Officer of Cold Metal
Products, a successor to LTV Steel. He is a director of Allegheny
Ludlum Corporation and a trustee of Carnegie Mellon University. Mr.
Aronson has a Ph.D. degree in Metallurgy from Rensselaer Polytechnic
Institute and a B.S. degree in Metallurgy from M.I.T.
Director Since 1995
Expiration of Term 1998
(continued)
4
<PAGE>
DELMONT A. DAVIS Retired (Former President and
(PHOTOGRAPH) Chief Executive Officer, Ball Corporation)
Mr. Davis, age 60, was elected President and Chief Executive Officer
of Ball Corporation in April 1991 and retired in 1994. He joined Ball
in 1969, was elected a Group Vice President in 1976, an Executive Vice
President in 1987 and President and Chief Operating Officer in 1989.
Mr. Davis is a graduate of the University of Colorado with a B.S. degree
in civil engineering and is a registered professional engineer in
several states.
Director Since 1992
Expiration of Term 1997
IVAN W. GORR Retired (Former Chairman of the Board
(PHOTOGRAPH) and Chief Executive Officer of the Company)
Mr. Gorr, age 66, retired as Chairman of the Board and Chief
Executive Officer of the Company in 1994, having served in that position
since 1989. He joined the Company as Corporate Controller in 1972, was
named Vice President and Chief Financial Officer in 1975, assumed the
additional position of Treasurer in 1976, was elected Executive Vice
President in 1977 and President in 1982. Mr. Gorr is a director of
Amcast Industrial Corporation, Arvin Industries, Inc., Borg-Warner
Automotive, Inc., Fifth Third Bancorp, and OHM Corporation. He served
in the U.S. Army during the Korean conflict and is a graduate of the
University of Toledo with a B.S. degree.
Director Since 1975
Expiration of Term 1997
ALLAN H. MELTZER University Professor of
(PHOTOGRAPH) Political Economy and Public Policy,
Carnegie-Mellon University
Dr. Meltzer, age 68, is a graduate of Duke University and received
M.A. and Ph.D. degrees from the University of California at Los Angeles.
His honors include: election to Phi Beta Kappa; Fulbright Scholar
(France); Social Science Research Fellow; Ford Faculty Research Fellow;
Ford Foundation Visiting Professor, University of Chicago; and
distinguished achievement award, UCLA. The author of approximately 200
books and papers published in professional journals, Dr. Meltzer has
been a visiting professor at a number of other universities in the U.S.
and abroad. He is a director of Advanced Materials Group, Inc., a
manufacturer of high-technology plastics, and Stillhalter Vision A.G., a
Swiss mutual fund. He has been a consultant to both the executive and
legislative branches of the U.S. Government and to foreign central banks
and governments.
Director Since 1983
Expiration of Term 1998
(continued)
5
<PAGE>
J. ALEC REINHARDT Executive Vice President and
(PHOTOGRAPH) Chief Financial Officer
Mr. Reinhardt, age 54, was elected Executive Vice President of the
Company in 1991, having served as Chief Financial Officer since 1983 and
as Vice President since 1982. He served as Secretary from 1977 to 1986
and as General Counsel from 1976 to 1983. Prior to joining the Company
in 1976, he had been Secretary and Assistant General Counsel of White
Motor Corporation. Mr. Reinhardt is a graduate of the University of
Cincinnati with a B.S.E.E. degree and has earned M.B.A. and J.D. degrees
from the Ohio State University. He is a director of the Fifth Third
Bank of Northwestern Ohio, N.A.
Director Since 1983
Expiration of Term 1998
PATRICK W. ROONEY Chairman of the Board, President and
(PHOTOGRAPH) Chief Executive Officer
Mr. Rooney, age 60, was elected Chairman of the Board and Chief
Executive Officer in 1994. He joined the Company in 1956, became
general sales manager of the Cooper brand division in 1965, Vice
President of the Tire Division in 1969, Vice President of the Company in
1987, President of the Tire Division in 1990, and President and Chief
Operating Officer in 1991. A graduate of The University of Findlay with
a B.S. degree in Business Administration, Mr. Rooney also completed the
Harvard Advanced Management Program. He is a director of the Ohio Bank,
Alltrista Corporation, and Huffy Corporation, and is Chairman of the
Board of Trustees of The University of Findlay.
Director Since 1990
Expiration of Term 1997
Note: The beneficial ownership of the Directors and nominees in the
Common Stock of the Company is shown in the table at page 20 of this
proxy statement.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Audit and Compensation Committee Report on Executive Compensation
This report is submitted by all members of the Audit and Compensation
Committee (the "Committee"), for inclusion in this proxy statement, to
explain the Committee's policies applicable to the 1995 compensation
reported for the Company's executive officers.
Philosophy and Overview
The following objectives guide the Company's policies regarding
executive compensation:
- To support the attainment of desired Company performance.
- To provide compensation that will attract and retain superior talent
and reward performance.
(continued) 6
<PAGE>
- To align the executive officers' interests with the success of the
Company by placing a significant portion of compensation at risk.
The compensation of the Company's executive officers has three
components - (a) cash remuneration in the form of salaries and annual
incentive bonuses directly related to financial performance measures,
(b) long-term incentive opportunities in the form of stock options, and
(c) other benefits typically offered to employees by major corporations.
The Committee has responsibilities for the first two components. It
recommends to the Board of Directors the cash remuneration for the
Company's executive officers and grants options, without further action
by the Board of Directors, under the Company's stock-based compensation
plans. The third component is discussed briefly below under the heading
"Other Compensation Plans".
Salaries and Bonuses
Salaries and incentive bonuses paid to the Company's executive
officers for 1995 were based upon a program which has been followed each
year since 1973. Prior to the start of a fiscal year, average
compensation levels are determined for the executive officer positions
based upon published compensation data and independent surveys relating
to similar size firms, as well as the relative executive officers'
contributions to Company performance. Company goals defining minimum,
average and excellent performance are established considering
operational plans, competitive industry information, and prevailing
economic conditions.
Base salaries for the Chief Executive Officer and the other executive
officers are then set at levels lower than the average compensation
levels. For results at or below minimum performance, the executive
officers' salaries would be as much as 30% below average compensation
levels, and no incentive bonuses would be earned. For results between
the minimum performance goal and the excellent performance goal,
incentive bonuses would be paid on a graduated scale in addition to base
salaries. For excellent performance goal attainment, the executive
officers' cash remuneration, including base salaries and incentive
bonuses, may be as much as 30% above average compensation levels;
additional incentive bonuses are earned for exceptional performance
above the excellent performance goal.
Thus, executive officers have a significant portion of their cash
remuneration at risk in the event of results below the average
performance goal. Beginning with results above the minimum performance
goal, incentive bonuses increase cash remuneration such that at the
average performance goal, executive officers' cash remuneration reaches
the average compensation levels determined earlier. Greater than
average cash remuneration is earned only as results increase further,
toward or beyond the excellent performance goal.
Performance measurement, for purposes of the program, is return on
stockholders' equity ("ROE") for officers with primarily corporate
responsibilities and return on assets managed ("ROAM") for officers with
primarily operational responsibilities. ROE is calculated by dividing the
total net income for the year by the total stockholders' equity at the
beginning of the year. ROAM is calculated by dividing pretax income
(continued) 7
<PAGE>
before interest, net of state and local income taxes, by an average of
controlled assets. ROAM, like ROE, is a measurement of employees' success
in utilizing resources but, unlike ROE, focuses on specific assets.
Thus, for any fiscal year the incentive bonus for each executive officer
results from measured performance under a formula-driven program
determined in advance of that fiscal year, rather than from a subjective
evaluation of performance made during or after that fiscal year. The
program applies to all executive officers, including the Chief Executive
Officer.
The specifics of the program for total cash remuneration, including
salaries and incentive bonuses, for executive officers for 1995 was
established in late 1994, along with ROE and ROAM performance goals
applicable to the program for 1995. Incentive bonuses were based upon
the Company's performance for 1995, as measured by the ROE and ROAM
performance attained for the year.
ROE for fiscal year 1995 was 17.0%, which exceeded the excellent
performance goal. In accordance with the program explained above, Mr.
Rooney's cash remuneration as Chairman of the Board, President and Chief
Executive Officer was 35% above the average compensation level
determined for that position.
Average compensation levels for the executive officers for 1995 were
based upon published data compiled by an independent firm, including
data for companies of a size comparable to the Company. Later in this
proxy statement there appears a performance graph including an Auto
Parts Index. The companies involved in the published data and in the
Auto Parts Index were not identical, although both may include some of
the same companies' data.
The Committee believes the program structure explained above has
consistently provided a fair and appropriate relationship between
Company performance and the cash remuneration of its executive officers.
For that reason, the Committee authorized the continuation of the
program structure for fiscal years 1995 and 1996.
Stock Options
Stock options are awarded to the Company's key employees, including
executive officers, in accordance with plans approved by the
stockholders. The plans currently in effect are the 1981 Incentive
Stock Option Plan (the "1981 Plan") and the 1986 Incentive Stock Option
Plan (the "1986 Plan"). These plans were amended in 1988 to allow the
granting of nonqualified stock options as well as incentive stock
options; nonqualified stock options are not intended to qualify for the
tax treatment applicable to incentive stock options within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). The exercise price of all stock options is equal to the market
value of the stock on the date of grant.
Conceptually, stock option grants are made in amounts related to the
participants' cash remuneration, with the relationship increasing with
the responsibility levels of the positions involved. The more
responsible the position, the greater the number of option grant shares
(continued)
8
<PAGE>
and thus the greater the significance to the participants' total
compensation.
More specifically, the number of shares involved in a particular
executive officer's stock option grant is derived by dividing a fixed
percentage of that executive officer's average compensation by the fair
market value of the Company's stock at or near the grant date. With
reference to the Summary Compensation Table presented later in this
proxy statement, the fixed percentage of average compensation involved
in this calculation for grants during 1995 was 50% for the highest paid
officer, 45% for the second highest paid officer, and 35% for the third
highest paid officer, with proportional grants for the Company's other
officers and key employees. Following the same philosophy indicated
above regarding incentive bonuses, the number of shares involved in
stock option grants to executive officers is in each case the result of
a formula for each position involved and not subjective criteria
relating to the particular incumbent.
In awarding stock options to the Company's key employees, including
the executive officers, consideration is given to the number of option
shares already outstanding. No stock option grants are made which would
cause the total number of outstanding option shares exercisable for the
first time during any year, or exercisable at any time, to exceed
specified percentages of the outstanding Common Stock of the Company.
It is the opinion of the Committee that stock option grants
constitute an additional tie between the Company's performance and
executive compensation and also promote the common long-term interests
of the Company's executive officers and its stockholders.
Accordingly, the Committee recommends that stockholders approve and
adopt the stock option plan described in Agenda Item 2.
Other Compensation Plans
The Company has adopted for many of its employees various benefit
plans in which the executive officers are permitted to participate,
subject to any legal limitations on the amounts that may be contributed
or the benefits that may be payable under the plans. The Committee
notes that one of the most important of these benefits plans is the
Thrift and Profit Sharing Plan, which includes a Company matching
contribution in Company stock dependent upon the profit level of the
Company.
Deductibility of Compensation Over $1 Million
Regulations issued under Section 162(m) of the Code provide that
certain compensation in excess of $1 million paid to the Chief Executive
Officer and other executive officers named in the proxy statement will
not be deductible unless it meets specified criteria for being
"performance-based". The $1 million "cap" was not exceeded by any named
executive officer during 1995, and it is unlikely that the compensation
of any executive officer will exceed that amount during 1996.
The Company believes its incentive bonus and stock option programs,
as explained above, clearly meet the spirit of the "performance-based"
(continued)
9
<PAGE>
requirement. The final regulations, which were issued in January of
1996, are being reviewed to determine what action may be required in
future years to maintain the deductiblility of these vital segments of
the executive officers' compensation.
Submitted by the Audit and Compensation Committee of the Company's
Board of Directors:
Allan H. Meltzer, Chairman
Arthur H. Aronson
Dennis J. Gormley
Agenda Item 2
PROPOSAL TO APPROVE AND ADOPT THE 1996 STOCK OPTION PLAN
The Board of Directors believes that the Company's previously adopted
stock option plans have benefited the Company by enabling it to attract
and retain qualified executive, managerial, technical and professional
employees. These plans have also provided incentive to key employees by
affording them the opportunity to benefit from an increase in the fair
market value of the Common Stock of the Company in connection with the
ownership of shares purchased upon the exercise of options.
As of March 11, 1996, 1,146,300 shares remain available for the grant
of new options under the Company's 1986 Plan, but by its terms the 1986
Plan will terminate at midnight on May 5, 1996. No grant of new options
from the remaining shares will be made prior to the termination of the
1986 Plan, and no options may be granted after such termination.
Accordingly, the Board of Directors has adopted a stock option plan
which is entitled "Cooper Tire & Rubber Company 1996 Stock Option Plan"
(the "1996 Plan"), subject to approval by the stockholders.
The 1996 Plan has terms very similar to the 1986 Plan and, as with
the 1986 Plan, contains no provisions for discounted options, restricted
stock, or option repricings. Unlike the 1986 Plan, the 1996 Plan no
longer provides for the issuance of stock appreciation rights in tandem
with option shares. A copy of the 1996 Plan is attached hereto as an
Appendix to this proxy statement, and the description set forth below is
qualified in its entirety by reference to that Appendix.
Under the proposed 1996 Plan, 3,200,000 shares of Common Stock of the
Company, par value $1.00 per share, will be reserved for issuance to key
employees. That number of shares is equivalent to the 400,000 shares
reserved for issuance under the 1986 Plan when adjusted for the three
two-for-one stock splits which occurred since the adoption of the 1986
Plan. The 400,000 shares approved in the 1986 Plan represented 3.97% of
the then outstanding shares of Common Stock, and the 3,200,000 shares
here proposed represent 3.80% of the outstanding shares of Common Stock
as of March 11,1996. The 1996 Plan also provides that options covering
no more than 100,000 shares may be granted to a participant in any
calendar year.
(continued)
10
<PAGE>
Optionees under the 1996 Plan will be selected by a committee of the
Board of Directors (the "Committee"). The Board of Directors has
designated the Audit and Compensation Committee as the Committee.
The option price per share for each option granted under the Plan
will be not less than 100% of the fair market value of the Common Stock
on the date of grant. On March 11, 1996, the average of the high and
low prices of the Common Stock as reported for the New York Stock
Exchange / Composite Transactions was $25.50 per share. The option
period may not exceed ten (10) years from the date of grant. At the
discretion of the Committee, the option may be exercisable in whole or
in consecutive installments, cumulative or otherwise. Generally,
options will be exercisable only by the optionee while in the employ of
the Company and upon payment in full of the total purchase price for the
shares purchased. Under the terms of the 1996 Plan, the Committee also
has the discretion to permit an option to remain exercisable for periods
of time following an employee's termination of employment. Proceeds
received by the Company from the sale of stock issued pursuant to the
exercise of options granted under the 1996 Plan will be used for general
corporate purposes.
The Committee will also determine the extent to which an option is
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or a nonqualified stock option, which is not intended to
qualify as an incentive stock option within the meaning of such Code
Section 422. Under currently applicable provisions of the Code, there
are generally no federal income tax consequences either to the optionee
or to the Company upon the grant of a stock option. On exercise of an
incentive stock option, the optionee will not recognize any income and
the Company will not be entitled to a deduction for tax purposes,
although such exercise may give rise to liability for the optionee under
the alternative minimum tax provisions of the Code. On exercise of a
nonqualified stock option, the amount by which the fair market value of
the shares on the date of exercise exceeds the option exercise price
will generally be taxable to the optionee as compensation income and
will generally be deductible for tax purposes by the Company. Options
granted under the 1996 Plan are intended to qualify as
"performance-based compensation" for purposes of Section 162 (m) of the
Code.
If the 1996 Plan is approved by the stockholders, all executive
officers of the Company, including those who are also Directors, would
be eligible to participate. Options may also be granted to more or
fewer persons than the approximately 185 who currently hold options
granted under the 1986 Plan. To date, no grants have been made under
the 1996 Plan, and no grants will be made unless the stockholders
approve the 1996 Plan. Since the Committee will have the right to
select recipients of options and determine the number of shares as to
which options will be granted to each recipient and the time or times
for granting options, it is impossible to state how many option shares
would have been granted under the 1996 Plan had it been in effect during
1995 or will be granted in the immediate future, who will receive
options, or the number of shares which will be optioned to each
participant.
(continued)
11
<PAGE>
The 1996 Plan will continue until midnight on May 6, 2006, but may be
amended from time to time by the Board of Directors as it may deem
proper and in the best interests of the Company including such changes
and additions as may be necessary or desirable in order that the same
will conform to the requirements of the Internal Revenue Code in effect
at the time and to any Rules and Regulations issued pursuant thereto.
Under Delaware law the affirmative vote of the stockholders of a
majority of the shares of Common Stock in person or represented by proxy
at the Annual Meeting is required for approval and adoption of this
proposal.
The Board of Directors recommends that stockholders vote FOR this
proposal.
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ending December 31,
1993, 1994, and 1995, the cash compensation paid by the Company as well
as certain other compensation paid or accrued for those years, to Mr.
Rooney, the Chairman of the Board, President and Chief Executive
Officer, and the four most highly compensated officers other than Mr.
Rooney who were serving as executive officers as of December 31, 1995
(the "Named Executive Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Long-Term All Other
Compensation Compensation Compensation*
--------------------- ------------ -------------
Number of
shares
underlying
Name and stock option
Principal Position Year Salary Bonus awards
- ------------------ ---- ------ ----- ----------
<S> <C> <C> <C> <C> <C>
Patrick W. Rooney 1995 $402,639 $374,455 11,900 $47,012
Chairman of the Board, 1994 298,251 344,693 7,800 39,134
President and Chief 1993 284,049 311,236 7,300 35,520
Executive Officer
J. Alec Reinhardt 1995 302,044 280,902 8,000 35,468
Executive Vice 1994 251,704 290,898 5,100 32,737
President 1993 239,718 262,662 4,800 29,976
John Fahl 1995 206,793 192,316 4,300 22,483
Vice President 1994 185,386 173,044 2,300 17,779
1993 185,386 158,566 2,300 18,461
William S. Klein 1995 243,002 145,373 2,600 22,299
Vice President 1994 227,105 160,309 2,300 24,466
1993 216,290 152,676 2,300 20,916
(continued)
12
<PAGE>
Robert C. Gasser 1995 191,245 134,996 2,700 20,294
Vice President 1994 177,079 124,997 2,300 19,194
1993 168,647 94,640 2,300 15,025
<FN>
(*) Includes total amounts paid or accrued for the indicated fiscal
years, consisting of Company matching contributions to the Thrift and
Profit Sharing Plan and allocations to the Nonqualified Supplementary
Benefit Plan which provides benefits otherwise denied participants
because of Internal Revenue Code limitations on qualified benefits.
</TABLE>
Stock Option Grants
The following table contains information concerning the grant of
stock options under the Company's 1986 Incentive Stock Option Plan to
the Named Executive Officers during the 1995 fiscal year. In addition,
in accordance with rules of the Securities and Exchange Commission (the
"SEC"), a valuation is assigned to each reported option as of the grant
date. In assessing these values it should be kept in mind that no
matter what theoretical value is placed on a stock option on the date of
grant, its ultimate value will be determined only by the market value of
the Company's stock at a future date.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Grant Date
Individual Grants Value
------------------------------------------------ --------
Number of Percent of
shares total options Grant
underlying granted to Exercise date
options employees in price Expiration present
Name granted* fiscal year per share date# value+
- -------------- ---------- ------------ -------- ------------ --------
<S> <C> <C> <C> <C> <C>
Patrick W. Rooney 11,900 11.5% $24.125 July 23, 2005 $138,696
J. Alec Reinhardt 8,000 7.7 24.125 July 23, 2005 111,437
John Fahl 4,300 4.1 24.125 July 23, 2005 46,038
William S. Klein 2,600 2.5 24.125 July 23, 2005 30,366
Robert C. Gasser 2,700 2.6 24.125 July 23, 2005 28,365
<FN>
(*) The options become exercisable for 50% of the shares on the first
anniversary of the date of grant and for the balance on the second
anniversary of the date of grant.
(#) Subject to earlier expiration if the executive officer ceases to
be an employee of the Company, with specified periods for exercise after
termination provided in the event of termination without cause,
retirement, or death.
(continued)
13
<PAGE>
(+) Calculated using the Black-Scholes option pricing model.
Assumptions used in calculating the reported values include (a) an
expected volatility based on the monthly change for the seven-year
period January 1, 1989 through December 31, 1995, (b) a risk-free rate
of return of 6.5%, (c) a dividend yield reflected in the stock price
volatility, and (d) a time of exercise at the latest permissible date.
No adjustments were made for non-transferability or forfeiture.
</TABLE>
Option Exercises and Holdings
The following table sets forth information, with respect to the Named
Executive Officers, concerning the exercise of options during the 1995
fiscal year and unexercised options held as of the end of the fiscal
1995 year.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Value of
shares underlying unexercised in-
unexercised options the-money options#
Shares at fiscal year-end at fiscal year-end
acquired ------------------- ------------------
on Value Exercis- Unexercis- Exercis- Unexercis-
Name exercise realized* able able able able
- --------------- -------- -------- ------ --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Patrick W. Rooney - - 31,600 15,800 $171,853 $1,488
J. Alec Reinhardt - - 11,550 10,550 - 1,000
John Fahl - - 9,450 5,450 36,250 538
William S. Klein _ _ 7,450 3,750 18,125 325
Robert C. Gasser _ _ 9,450 3,850 36,250 338
<FN>
(*) In accordance with SEC rules, this value is based upon the average
of the high and low market prices on the New York Stock Exchange on the
date of exercise less the exercise price. Whether any actual profits
will be realized will depend upon whether the shares acquired are sold
and the amount received upon any such sale.
(#) In accordance with SEC rules, this value is based upon the average
of the high and low market prices on the New York Stock Exchange on the
last trading day of the fiscal year, which was $24.25, less the exercise
price. Whether any actual profits will be realized will depend upon
whether the shares acquired are sold and the amount received upon any
such sale.
</TABLE>
Pension Plans
The following table shows the estimated annual pension benefits
payable to a covered participant at normal retirement age under the
Company's Salaried Employees' Retirement Plan, a qualified defined
benefit pension plan, as well as under the Company's Nonqualified
(continued)
14
<PAGE>
Supplementary Benefit Plan, which provides benefits that would otherwise
be denied participants by reason of certain Internal Revenue Code
limitations on qualified plan benefits.
<TABLE>
PENSION PLAN TABLE
<CAPTION>
Years Of Service
-----------------------------------------------------------
Remuneration 20 25 30 35 40 45 50
- ------------ ----- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$300,000 $ 90,000 $112,500 $135,000 $157,500 $180,000 $202,500 $225,000
350,000 105,000 131,250 157,500 183,750 210,000 236,250 262,500
400,000 120,000 150,000 180,000 210,000 240,000 270,000 300,000
450,000 135,000 168,750 202,500 236,250 270,000 303,750 337,500
500,000 150,000 187,500 225,000 262,500 300,000 337,500 375,000
550,000 165,000 206,250 247,500 288,750 330,000 371,250 412,500
600,000 180,000 225,000 270,000 315,000 360,000 405,000 450,000
650,000 195,000 243,750 292,500 341,250 390,000 438,750 487,500
700,000 210,000 262,500 315,000 367,500 420,000 472,500 525,000
750,000 225,000 281,250 337,500 393,750 450,000 506,250 562,500
800,000 240,000 300,000 360,000 420,000 480,000 540,000 600,000
850,000 255,000 318,750 382,500 446,250 510,000 573,750 637,500
900,000 270,000 337,500 405,000 472,500 540,000 607,500 675,000
950,000 285,000 356,250 427,500 498,750 570,000 641,250 712,500
</TABLE>
Remuneration in the table above is the average of a participant's
annual compensation, as reported in the Summary Compensation Table,
during the highest five out of the last ten years of employment.
Benefits shown reflect estimated straight-life annuity payments assuming
normal retirement at age 65; the benefits are not subject to deduction
for Social Security or other offset amounts.
The credited years of service at normal retirement for each of the
executive officers named in the Summary Compensation Table will be as
follows: Patrick W. Rooney - 42.3; J. Alec Reinhardt - 30.3; John
Fahl - 46.2; William S. Klein - 32.3; and Robert C. Gasser - 17.4.
Employment Agreements
The Company entered into employment agreements with J. Alec
Reinhardt, effective January 1, 1987; with Patrick W. Rooney, effective
January 1, 1991; and with John Fahl, effective January 1, 1995. The
agreements provide for the payment of an annual base salary and for
participation in certain employee benefit plans. The current base
salaries payable to Messrs. Reinhardt, Rooney and Fahl under the
agreements are $320,167, $430,824, and $219,200, respectively, which
amounts are reviewed annually and may be increased but not decreased. In
addition, these executive officers receive cash bonuses as described
earlier in this proxy statement. The initial term of each agreement is
four (4) years, with the term being automatically extended for one year
each January 1 unless either the Company or the executive officer gives
prior written notice of its or his desire not to extend the term. In no
(continued)
15
<PAGE>
event will the term extend beyond the end of the year in which the
executive officer's 65th birthday occurs.
The agreements restrict these executive officers from competition
with the Company, unless the prior written consent of the Board of
Directors is received, and prohibit disclosure of confidential
information. In addition, the agreements provide that in the event of
termination of employment by the Company without Cause or by the
executive officer for Good Reason the executive officer is entitled to
receive severance benefits for the remainder of the term equal to his
average annual compensation during the five years prior to the year in
which such termination occurs. In the event that any payment of such
severance benefits would, under the Internal Revenue Code of 1986, as
amended, trigger the imposition of an excise tax on, and the loss of a
deduction to the Company or its successors for, all or any part of the
payments, such payments shall be reduced until no such excise tax is
imposed or deduction lost.
The agreements also provide (i) continuation of Company-sponsored
life, accident and health insurance benefits for the remainder of the
term, (ii) a lump sum payment equal to the actuarial equivalent of the
difference between (a) the benefits which would have accrued under the
Salaried Employees' Retirement Plan or the Nonqualified Supplementary
Benefit Plan, based on full vesting and additional service credit, and
(b) the amount of the benefits actually accrued at the date of
termination, (iii) a lump sum cash payment equal to the difference
between the exercise price of stock options held by the executive
officer and the fair market value of the stock subject to such options
at the time of termination, and (iv) any legal expenses and fees
incurred as a result of his termination of employment. "Cause" under
the agreements generally includes the willful failure of the executive
officer to substantially perform his duties or the commission of a
felony or his engaging in some type of willful misconduct which is
materially injurious to the Company. "Good Reason" generally includes
any reduction in salary, benefits, an alteration of the executive
officer's responsibilities or status, relocation of the Company, and
failure of any successor of the Company or its business to assume the
employment agreements.
Compensation of Directors
The Company pays each Director who is not a Company officer an annual
retainer of $12,000 together with a $2,500 per diem fee for attendance
at Board meetings and at Committee meetings not held on the same day as
a Board meeting. Directors who are Company Officers receive no
additional compensation for serving as Directors. Board meetings were
held on six days during 1995.
At the Annual Meeting in 1991, stockholders approved the 1991 Stock
Option Plan for Non-Employee Directors. Only Directors who are not
present or former employees of the Company or any of its subsidiaries
("Non-Employee Directors") may participate in this Plan; Directors who
are present employees of the Company are eligible for participation in
the Company's Incentive Stock Option Plans.
(continued)
16
<PAGE>
The maximum number of shares of the Company's Common Stock which may
be issued pursuant to options granted under the Plan is currently
100,000 shares, subject to adjustment for subsequent stock splits, stock
dividends, or other specified events. The number of option shares
granted to a Non-Employee Director each year is determined pursuant to a
formula which provides that the dollar value of the option grant will be
equal to a fixed percentage of each Non-Employee Director's total
compensation paid by the Company for the previous fiscal year, which
percentage is based upon the Company's return on equity for such
previous fiscal year.
The exercise price for each option is equal to the fair market value
of a share of Common Stock on the grant date, calculated by averaging
the high and low sale prices of the Common Stock on the New York Stock
Exchange on that date. The maximum number of option shares which may be
awarded to a Non-Employee Director in any year is currently 1,000. All
options granted pursuant to the Plan are unexercised, except that an
option for 236 shares was exercised during 1993. The current number of
unexercised shares for each Director is indicated in the table on page
17 of this proxy statement.
Five-Year Stockholder Return Comparison
The SEC requires that the Company include in its proxy statement a
line graph presentation comparing cumulative, five-year stockholder
returns on an indexed basis with the Standard & Poors ("S&P") 500 Stock
Index and either a published industry or line-of-business index or an
index of peer companies selected by the Company. The Company has chosen
the S&P Auto Parts After Market Index as the most appropriate of the
nationally recognized industry standards. The particular stocks in each
index are selected by S&P, and each index includes the Company's stock.
The following chart assumes three hypothetical $100 investments on
January 1, 1990, and shows the cumulative values at the end of each
succeeding year resulting from appreciation or depreciation in the stock
market price, assuming dividend reinvestment.
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P 500 INDEX
AND S&P AUTO PARTS AFTER MARKET INDEX
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$100.00 $300.29 $402.89 $298.34 $284.51 $299.70
100.00 130.47 140.41 154.56 156.60 215.45
100.00 183.46 230.73 268.18 233.88 289.15
</TABLE>
As illustrated, the $100 investment in Company stock increased over
the five years to $299.70, slightly more than the S&P Auto Parts After
Market group and over $84.00 greater than the S&P 500 group.
(continued)
17
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 1995 the Company's Board of Directors held six Board meetings,
seven meetings of the Board's Audit and Compensation Committee and two
meetings of the Board's Nominating Committee. Each Director attended
more than 75% of the aggregate number of meetings of the Board of
Directors and meetings of Committees on which such Director served
during the past fiscal year.
The Company's Audit and Compensation Committee consists of Messrs.
Aronson, Gormley, and Meltzer. The functions of this Committee include
recommending the engaging and discharging of the Company's independent
auditors, directing and supervising special investigations, reviewing
with the independent auditors the plan for and results of the audit
engagement, reviewing the scope and results of the Company's procedures
for internal auditing, approving professional services provided by the
independent auditors, reviewing the independence of the independent
auditors, considering the range of audit and non-audit fees, and
reviewing the adequacy of the Company's system of internal accounting
controls. In addition, the Committee recommends the remuneration
arrangements for the Company's officers, the adoption of a compensation
plan in which officers are eligible to participate, and the granting of
options or other benefits under any such plan.
The Nominating Committee, composed of Messrs. Davis, Dunford, and
Gorr, conducts the search for, evaluation of, and proposal to the Board
for nomination of qualified, competent and worthy candidates. The
Nominating Committee will consider candidates proposed by stockholders
of this Company or other parties. Such a recommendation must be in
writing, accompanied by a description of the proposed nominee's
qualifications and other relevant biographical information, and an
indication of the consent of the proposed nominee to serve. The
recommendation should be addressed to the Nominating Committee of the
Board of Directors, Attention: Secretary, Cooper Tire & Rubber Company,
Findlay, Ohio 45840.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP has been the Company's independent auditors for a
number of years and will continue in that capacity during 1996. Ernst &
Young LLP has advised the Company that neither the firm nor any of its
members or associates has any direct or indirect financial interest in
the Company or any of its affiliates. During 1995, Ernst & Young LLP
rendered audit and related services to the Company, including an audit
of the Company's annual financial statements and reviews of quarterly
reports. There is no understanding or agreement between the Company and
its independent auditors that places a limit on audit fees since the
Company pays only for services actually rendered and at what it believes
are customary rates.
A representative of Ernst & Young LLP will be present at the Annual
Meeting of Stockholders and will be available to respond to appropriate
questions and to make a statement if he desires to do so. Professional
services rendered by the Company's independent auditors are reviewed by
(continued)
18
<PAGE>
the Audit and Compensation Committee both as to the advisability and
scope of the service, and also to consider whether such service would
affect the continuing independence of the Company's independent
auditors.
BENEFICIAL OWNERSHIP OF SHARES
The information which follows is furnished as of March 11, 1996, to
indicate those persons known by the Company to be holders of record of,
or who may be the beneficial owners of, more than 5% of any class of the
Company's voting securities.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership Of Class
- -------------- ------------------- -------------------- --------
<S> <C> <C> <C>
Common Stock National City Bank* 8,324,793 shs# 9.95%
P.O. Box 5756,
Cleveland, OH 44101
Common Stock J. P. Morgan & Co. 7,381,850 shs+ 8.82%
Incorporated
60 Wall Street,
New York, NY 10260
Common Stock The Capital Group 5,075,600 shs++ 6.07%
Companies, Inc.
333 South Hope Street,
Los Angeles, CA 90071
<FN>
(*) Trustee for the Company's Thrift and Profit Sharing Plan and the
Pre-Tax Savings Plans at the Auburn, Bowling Green, Findlay, El Dorado,
and Texarkana Plants.
(#) National City Bank, in its fiduciary capacity as Trustee of each
Plan, has no investment powers and will vote the shares held in such
Plan in accordance with the written instructions from the respective
Plan participants. However, if no such instructions are received by the
close of business two (2) days prior to the meeting date, the provisions
of each Plan direct the Trustee to vote such participant's shares in the
same manner in which the Trustee was directed to vote the majority of
the shares of the other participants who gave directions as to voting.
(+) According to an amendment dated December 29, 1995, updating a
prior filing on Schedule 13G with the Securities and Exchange
Commission, J. P. Morgan & Co. Incorporated, a holding company, and its
subsidiaries acquired the indicated shares in the ordinary course of
business and not for the purpose of changing or influencing the control
of the Company. The nature of the beneficial ownership consists of sole
power to vote with respect to 4,415,835 shares; shared power to vote
with respect to 39,450 shares; sole power to dispose with respect to
7,283,650 shares; and shared power to dispose with respect to 63,100
shares.
(continued)
19
<PAGE>
(++) According to a filing on Schedule 13G with the Securities and
Exchange Commission dated February 9, 1996, operating subsidiaries of
The Capital Group Companies, Inc., a holding company, exercised
investment discretion over institutional accounts which held the
indicated shares; the shares are held solely for investment purposes in
the ordinary course of business and not for the purpose of changing or
influencing the control of the Company. The nature of the beneficial
ownership consists of sole power to vote with respect to 2,440,800
shares, shared power to vote with respect to no shares, sole power to
dispose with respect to 5,075,600 shares, and shared power to dispose
with respect to no shares.
</TABLE>
The information which follows is furnished as of March 11, 1996, to
indicate ownership by all executive officers and Directors of the
Company, as a group, and each Named Executive Officer, Director or
nominee, individually, of each class of the Company's voting securities.
Unless otherwise indicated, the nature of the beneficial ownership
consisted of sole voting and investment power.
<TABLE>
<CAPTION>
Name of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
- -------------- ---------------- -------------------- --------
<S> <C> <C> <C>
Common Stock All executive officers 1,655,481 shs* 2.0%
and Directors as a group
Common Stock Arthur H. Aronson 500 shs ##
Common Stock Delmont A. Davis 1,247 shs# ##
Common Stock Edsel D. Dunford 1,391 shs# ##
Common Stock John Fahl 94,005 shs# ##
Common Stock Deborah M. Fretz - shs -
Common Stock Robert C. Gasser 68,410 shs# ##
Common Stock Dennis J. Gormley 1,629 shs# ##
Common Stock Ivan W. Gorr 496,756 shs# ##
Common Stock William S. Klein 142,574 shs# ##
Common Stock Allan H. Meltzer 9,536 shs#+ ##
Common Stock J. Alec Reinhardt 301,489 shs#++ ##
Common Stock Patrick W. Rooney 261,395 shs# ##
<FN>
##Less than 1%
(*) Includes 168,889 shares obtainable on exercise of stock options
within 60 days following March 11, 1996, which options have not been
exercised. The nature of the beneficial ownership consists of 892,911
shares subject to sole voting and investment power, and 29,134 shares
subject to shared voting and investment power. Of the shares shown as
beneficially owned, 564,547 or .7% of the shares outstanding, are shares
held in the Company's Thrift and Profit Sharing Plan for the account of
the various officers and Directors.
(continued)
20
<PAGE>
(#) Includes shares obtainable on exercise of stock options within 60
days following March 11, 1996, which options have not been exercised, as
follows: Delmont A. Davis - 1,147; Edsel D. Dunford - 391; John Fahl -
10,600; Robert C. Gasser - 10,600; Dennis J. Gormley - 1,629; Ivan W.
Gorr - 61,136; William S. Klein - 8,600; Allan H. Meltzer - 3,136;
J. Alec Reinhardt - 14,100; and Patrick W. Rooney - 35,500.
(+) Includes 6,400 shares subject to shared voting and investment
power.
(++) Includes 11,300 shares subject to shared voting and investment
power.
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers, and persons who own more
than ten percent of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission and the
New York Stock Exchange initial reports of ownership and reports of
changes in ownership of Common Stock of the Company.
To the Company's knowledge, based upon the reports filed and written
representations that no other reports were required, during the fiscal
year ended December 31, 1995, its Directors and executive officers
complied with all applicable Section 16(a) filing requirements.
STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
Any stockholder who intends to present a proposal at the 1997 Annual
Meeting and who wishes to have the proposal included in the Company's
proxy statement and form of proxy for that meeting must deliver the
proposal to the Secretary of the Company not later than November 26,
1996.
SOLICITATION AND OTHER MATTERS
The Board of Directors is not aware of any other matters which may
come before the meeting. However, if any other matters properly come
before the meeting, it is the intention of the persons named in the
accompanying form of proxy to vote the proxy in accordance with their
judgment on such matters.
The cost of soliciting proxies will be borne by the Company. In
addition to the solicitation by use of the mails, the Company has
retained Georgeson & Co., New York, New York, to aid in the solicitation
of proxies, at an anticipated cost of approximately $7,000, plus
expenses. The Company will also reimburse brokers and other persons for
their reasonable expenses in forwarding proxy material to the beneficial
owners of the Company's stock. Solicitations may be made by telephone,
telegram or by personal calls, and it is anticipated that such
solicitation will consist primarily of requests to brokerage houses,
custodians, nominees and fiduciaries to forward soliciting material to
(continued)
21
<PAGE>
the beneficial owners of shares held of record by such persons. If
necessary, officers and other employees of the Company may, by
telephone, telegram or personal interview, request the return of
proxies.
Please mark, execute and return the accompanying proxy so that your
shares may be voted at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Stan C. Kaiman, Secretary
March 26, 1996
IMPORTANT: All stockholders are earnestly requested to mark, date,
sign and mail promptly the enclosed proxy for which an
envelope is provided.
APPENDIX
COOPER TIRE & RUBBER COMPANY
1996 STOCK OPTION PLAN
1. Purpose. The purpose of the Cooper Tire & Rubber Company 1996
Stock Option Plan (the "Plan") is to provide Cooper Tire & Rubber
Company (the "Company") with a means of attracting and retaining the
services of key personnel, and to advance the interests of the Company
and its stockholders by affording to certain key employees upon whose
judgment, initiative and efforts the Company is largely dependent for
the successful conduct of its business, an opportunity for investment in
the Company and the incentive advantages inherent in stock ownership in
the Company.
2. Type of Options. Options granted under the Plan shall be either
(i) options intended to qualify as incentive stock options ("Incentive
Stock Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") or (ii) options which are
not intended to qualify as Incentive Stock Options within the meaning of
such Code Section 422 ("Nonqualified Stock Options"). As used herein,
and unless the context requires otherwise, the term "option" (or
"options") shall mean Incentive Stock Option(s) and Nonqualified Stock
Option(s).
3. Administration. The Plan shall be administered by a Committee
(the "Committee") consisting of at least two (2) members of the Board of
Directors (the "Board"), each of whom is a "disinterested person" (as
that term is defined in Rule 16b-3 of the Rules and Regulations of the
Securities and Exchange Commission, as amended from time to time), and
each of whom is an outside director within the meaning of Section 162(m)
of the Code and the regulations of the Commissioner of Internal Revenue.
Members of the Committee shall be appointed from time to time by the
Board; shall serve at the pleasure of the Board; and may resign at any
time upon written notice to the Board. The Board shall appoint a member
of the Committee to serve as chairperson thereof, and shall appoint a
secretary to the Committee (who may be, but who need not be, a member of
the Committee). In accordance with the provisions of the Plan, the
Committee shall select the persons to whom options shall be granted (the
"Optionees"), shall determine the number of shares to be subject to each
(continued)
22
<PAGE>
option, the time at which the option is to be granted, the extent to
which an option is to be an Incentive Stock Option or a Nonqualified
Stock Option, the option exercise price, the option period, and the
manner in which the option becomes exercisable. The Committee shall fix
such other provisions of the option as the Committee may deem necessary
or desirable. The Committee shall determine the form of the option
agreement to evidence each option. The Committee from time to time may
adopt such rules and regulations for carrying out the purposes of the
Plan as it may deem proper and in the best interest of the Company. The
Committee shall keep minutes of its meetings and records of its actions.
The Committee may act at any time by a majority of its members at a
meeting (which may be conducted in person or by any telecommunication
medium), or by a unanimous consent in writing of the Committee members
without a meeting.
The Committee shall determine the answers to all questions arising
under the Plan and option agreements issued under the Plan. Each
determination, interpretation or other action made or taken by the
Committee shall be final and conclusive and binding on all persons,
including without limitation, the Company, the stockholders, the
Committee and each of the members thereof, and the directors, officers,
and employees of the Company, and the Optionees and their respective
successors in interest.
No Committee member shall be liable for any action or determination
made by him in good faith with respect to the Plan or any option granted
hereunder.
4. Amendment and Modification of Plan. The Board may from time to
time make such changes in and additions to the Plan as it may deem
proper and in the best interests of the Company, including such
elections, amendments or modifications as may be necessary to conform
the Plan to, or comply with, any requirements now existing or applicable
in the future, for obtaining maximum tax benefits for Optionees under
Section 422 of the Code; provided, however, that no such change or
addition shall impair any option previously granted under the Plan or
alter the method of determining the option exercise price described in
Section 8 of the Plan, and that no change or addition shall be made by
the Board which would cause the Plan not to meet the requirements of
Rule 16b-3 of the Rules and Regulations of the Securities and Exchange
Commission, as amended from time to time.
5. The Stock. For the purpose of the Plan, the Board is authorized
to issue and sell up to 3,200,000 shares of the Company's common shares,
par value $1.00 per share (the "Common Stock"), either treasury or
authorized but unissued shares, or the number and kind of shares of
stock or other securities which, in accordance with Section 11 of the
Plan, shall be substituted for such shares or to which such shares shall
be adjusted; and the Committee is authorized to grant options hereunder
with respect to such shares. Any or all unsold shares subject to an
option which for any reason expires or otherwise terminates may again be
made subject to option under the Plan.
6. Optionees. Options shall be granted only to elected or appointed
officers or other key employees of the Company designated by the
(continued)
23
<PAGE>
Committee from time to time as Optionees, including, without limitation,
members of the Board who are also such officers or key employees,
provided, however, that no options may be granted under the Plan to
persons who are then serving on the Committee. Any Optionee may hold
more than one option to purchase Common Stock, whether such option is
held pursuant to the Plan or otherwise. No Optionee shall be granted
options covering more than 100,000 shares of Common Stock in the
aggregate under the Plan during any calendar year. No option shall be
granted to any person who, at the time of such grant, owns stock
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, or any parent or
subsidiary thereof.
7. Grant of Options. Upon determination by the Committee that an
option is to be granted to an Optionee, written notice shall be given
such Optionee, specifying the number of shares subject to the option,
the option exercise price and the other terms and conditions of such
option. In granting options hereunder, the Committee shall have
complete discretion to specify the terms and conditions related to
vesting, forfeiture and exercisability during and after an Optionee's
employment, and shall further have complete discretion to accelerate
vesting or to extend the period of exercisability of any option
previously granted under the Plan. The option shall be deemed granted
as of the date specified in the grant resolution of the Committee, and
the related option agreement evidencing such option and the terms and
conditions thereof shall be dated as of the date of grant specified in
such resolution.
8. Option Exercise Price. The price per share to be paid by the
Optionee at the time an option is exercised shall be not less than one
hundred percent (100%) of the fair market value of one share of the
optioned Common Stock on the date the option is granted. The fair
market value shall be reasonably determined by the Committee, and shall
be determined in accordance with any regulations issued by the Secretary
of the Treasury for the purposes of determining fair market value of
securities subject to an Incentive Stock Option.
9. Duration and Expiration of Options. The option period shall be
determined by the Committee with respect to each option granted;
provided, however, that the option period may not exceed ten (10) years
from the date as of which the option is granted. The Committee may
provide that an option may be exercisable in whole or in consecutive
installments, cumulative or otherwise. Notwithstanding the foregoing,
if, during the term of an option, (a) the Company shall merge or
consolidate with any other corporation and shall not be the surviving
corporation; (b) the Company shall transfer all or substantially all of
its assets to any other person; (c) more than fifty percent (50%) of the
Company's outstanding voting shares shall have been purchased by any
other person; or (d) the Company shall enter into a written agreement
applicable to, or the Board shall approve, a transaction the
consummation of which will result in an event described in clause (a),
(b) or (c) of this sentence, then the Committee may provide for the
acceleration of the right to exercise such option prior to the
anticipated effective date of any such transaction.
(continued)
24
<PAGE>
10. Manner of Option Exercise. An option may be exercised by the
Optionee in whole or in part from time to time, subject to the
conditions contained herein and in the agreement evidencing such option,
by giving written notice of exercise to the Company at its principal
executive office and by paying in cash the total purchase price for the
shares purchased. Thereupon, the Optionee shall be recorded on the
books of the Company as the owner of the shares and the Company shall
deliver to the Optionee one or more duly issued stock certificates
evidencing such ownership. As a condition to the granting of any option
or payment of any award, the Company may require the Optionee to pay
such sum to the Company as may be necessary to discharge the Company's
obligations with respect to any taxes, assessments or other governmental
charges imposed on property or income received by an Optionee pursuant
to the Plan.
The exercise of an option shall be conditioned upon the receipt from
the Optionee (or, in the event of his death, his heir(s) or legal
representative(s)) of a representation that, at the time of such
exercise, it is the intent of such person(s) to acquire the shares for
investment and not with a view to distribution; provided, however, that
the receipt of this representation shall not be required upon exercise
of the option in the event that, at the time of such exercise, the
shares subject to the option shall be covered by an effective and
current registration statement under the Securities Act of 1933, as
amended. The certificates for unregistered shares issued for investment
shall be restricted by the Company as to transfer unless the Company
receives an opinion of counsel satisfactory to the Company to the effect
that such restriction is not necessary under then pertaining securities
laws. Further, the Company shall not be required to sell or issue any
shares under any outstanding option if, in the opinion of the Committee,
(a) the issuance of such shares would constitute a violation by the
Optionee or the Company of any applicable law or regulation of any
governmental authority, or (b) the consent or approval of any
governmental body is necessary or desirable as a condition of, or in
connection with, the issuance of such shares.
11. Adjustments for Changes in Common Stock. In the event that each
share of the outstanding Common Stock of the Company (other than shares
held by dissenting stockholders) should be changed into, or exchanged
for, a different number or kind of shares of stock or other securities
of the Company, or, if further changes or exchanges of any stock or
other securities into which such Common Stock shall have been changed,
or for which it shall have been exchanged, shall be made (whether by
reason of merger, consolidation, reorganization, recapitalization, stock
dividends, reclassification, split up, combination of shares, or
otherwise), then, for each share of Common Stock of the Company subject
to the Plan (whether or not such shares are at the time subject to
outstanding options) there shall be substituted and exchanged therefor
the number and kind of shares of stock or other securities into which
each outstanding share of Common Stock of the Company (other than shares
held by dissenting stockholders) shall be so changed or exchanged. In
the event of any such changes or exchanges, then, if the Committee, in
its sole discretion, should determine that in order to prevent dilution
or enlargement of rights under the Plan, an adjustment should be made in
the number, kind, or option exercise price of the shares of stock or
(continued)
25
<PAGE>
other securities then subject or potentially subject to an option or
options, such adjustment shall be made and shall be effective and
binding for all purposes of the Plan.
12. Non-transferability of Option. Unless the Committee determines
otherwise, no option granted under the Plan shall be transferable by the
Optionee, either voluntarily or involuntarily, except by will or the
laws of descent and distribution. During the lifetime of the Optionee,
an option shall be exercisable only by the Optionee or by the Optionee's
legal representative.
13. Rights as a Stockholder. No person shall have any rights as a
stockholder with respect to any Common Stock covered by an option
granted pursuant to the Plan until the person shall have become the
holder of record of such shares, and no adjustments shall be made for
cash dividends or other distributions or other rights as to which there
is a record date preceding the date such person becomes the holder of
record of such shares.
14. Non-exclusivity of the Plan. Nothing contained in the Plan is
intended to amend, modify or rescind any previously approved
compensation plans or programs entered into by the Company. This Plan
shall be construed to be an addition to any and all such other plans or
programs. Neither the adoption of the Plan by the Board nor the
submission of the Plan to the stockholders of the Company for approval
shall be construed as creating any limitations on the power or authority
of the Board to adopt such additional or other compensation arrangements
as the Board may deem desirable.
15. No Right to Continued Employment. Neither the creation of the
Plan nor the granting of options thereunder shall be deemed to create a
condition of employment or right to continued employment, and each
Optionee shall be and shall remain subject to discharge by the Company
as though the Plan had never come into existence.
16. Effective Date and Termination Date. The Plan shall be
effective on the date it is approved by the affirmative vote of the
holders of a majority of the outstanding Common Stock present, or
represented, and entitled to vote at a meeting duly called and held for
that purpose and any grants made under the Plan prior to such approval
shall be expressly conditioned on such approval being obtained and shall
be void and of no further force and effect if such approval is not
obtained. Except as to options previously granted and outstanding under
the Plan, the Plan shall terminate on, and no further options may be
granted after, May 6, 2006. Options then outstanding may continue to be
exercised in accordance with their terms. The Plan may be abandoned or
terminated at any earlier time by the Board, except with respect to any
options then outstanding under the Plan.
17. Governing Law. The Plan and all rights and obligations
hereunder shall be construed and enforced in accordance with the laws of
the State of Ohio.
26
<PAGE>
<LOGO>
COOPER TIRE & RUBBER COMPANY
NOTICE
of Annual Meeting of Stockholders
and Proxy Statement
May 7, 1996
IMPORTANT:
All stockholders are earnestly requested to mark, date,
sign and mail promptly the enclosed proxy for which
an envelope is provided.
27
<PAGE>
PROXY
-----
COOPER TIRE & RUBBER COMPANY
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints J. Fahl, S. C. Kaiman, J. A.
Reinhardt, and P. W. Rooney and each of them, Proxies with full power of
substitution to attend the Annual Meeting of Stockholders of Cooper Tire
& Rubber Company to be held at Urbanski's, 1500 Manor Hill Road,
Findlay, Ohio, on May 7, 1996, and any adjournment thereof, and thereat
to vote all shares of Common Stock registered in the name of the
undersigned at the close of business on March 11, 1996, upon the matters
set forth in the notice of said meeting and on the reverse side hereof.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
Election of Directors, Nominees:
Edsel D. Dunford John Fahl Deborah M. Fretz Dennis J. Gormley
IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED, SHARES REPRESENTED
HEREBY WILL BE VOTED. IF A CHOICE IS SPECIFIED, THE SHARES WILL BE
VOTED ACCORDINGLY. IF NO INSTRUCTIONS ARE GIVEN AS TO ANY PROPOSAL,
THEY WILL BE VOTED FOR SUCH PROPOSAL, INCLUDING ELECTION OF DIRECTORS.
(Continued, and to be signed, on reverse side)
- ------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY
(X) Please mark your votes SHARES IN YOUR NAME
as in this example.
1. Election of Directors 2. Adoption of 1996 Stock
(see reverse) Option Plan
FOR WITHHELD FOR AGAINST ABSTAIN
( ) ( ) ( ) ( ) ( )
For, except vote withheld
from the following nominee(s):
-----------------------------
Signature(s) --------------------------------- Date ------------
Signature(s) --------------------------------- Date ------------
Please date and sign exactly as name appears hereon. If any shares are
held by joint tenants, both should sign. When signing as attorney, as
executor, administrator or custodian, please give full title as such.
If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.
28
