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 6, 1997, at 10:00 a.m. Eastern
Daylight Time for the following purposes:
(1) To elect three (3) Directors of the Company.
(2) 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 10, 1997, 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 25, 1997
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 25, 1997
----------------
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 6, 1997, 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 10, 1997, 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 10, 1997, there were 79,254,772 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 only matter anticipated to be voted upon by stockholders at the
meeting is election of three (3) Directors (Agenda Item 1). 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.
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).
Three Directors are to be elected to the class having terms expiring
this year and shall serve for a three-year term expiring in 2000 and
until their respective successors are elected and qualified.
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.
(continued)
2
<PAGE>
Of the nominees to be elected at the Annual Meeting, Patrick W.
Rooney has been serving as a Director and has previously been elected by
vote of the stockholders. John H. Shuey was elected a Director on
November 7, 1996 to serve the unexpired term of Ivan W. Gorr, who
retired from the Board of Directors the same day. John F. Meier has not
been serving as a Director of the Company; he is a nominee for the
position as a result of Delmont A. Davis' having chosen not to stand for
reelection. 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
----------------------
JOHN F. MEIER Chairman and Chief Executive Officer,
(PHOTOGRAPH) Libbey Inc.
Mr. Meier, age 49, has been Chairman and Chief Executive Officer of
Libbey Inc., a producer of glass tableware and china, since it became
public in 1993. From December, 1990 to June, 1993, he was a Vice
President of Owens-Illinois, Inc. and Executive Vice President and General
Manager of its subsidiary, Libbey Glass Inc. His service at
Owens-Illinois, Inc. began in 1970 and included various marketing and
sales positions. Mr. Meier received a B.S. degree in Business
Administration from Wittenberg University and an M.B.A. degree from
Bowling Green State University. He is a director of Keybank, Northwest
Region, in Toledo, Ohio and is a member of the Board of Trustees of The
Toledo Hospital.
Nominee for Term to Expire 2000
PATRICK W. ROONEY Chairman of the Board, President and
(PHOTOGRAPH) Chief Executive Officer
Mr. Rooney, age 61, 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
Nominee for Term to Expire 2000
JOHN H. SHUEY President and Chief Executive Officer,
(PHOTOGRAPH) Amcast Industrial Corporation
Mr. Shuey, age 51, joined Amcast Industrial Corporation in 1991 as
Executive Vice President. He was elected President and Chief Operating
Officer in 1993, a Director in 1994, and Chief Executive Officer in
1995. Amcast produces fabricated metal products, valves and controls,
and cast and tubular metal products. Prior to joining Amcast, he held
executive positions at The Trane Company, American Standard, and AM
(continued) 3
<PAGE>
International. Mr. Shuey has a B.S. degree in industrial engineering and
an MBA degree, both from the University of Michigan.
Director Since 1996
Nominee for Term to Expire 2000
DIRECTORS WHO ARE NOT NOMINEES
------------------------------
ARTHUR H. ARONSON Executive Vice President,
(PHOTOGRAPH) Allegheny Teledyne Incorporated
Mr. Aronson, age 61, joined Allegheny Ludlum Corporation in 1988 as
Executive Vice President and was elected as a director in 1990. Mr.
Aronson was elected President and Chief Executive Officer in 1994, and
in 1996 was named to his present position with the successor
corporation, Allegheny Teledyne Incorporated, where he also serves as
President of the Metals Segment. Prior experience includes service as
President and Chief Operating Officer of Lukens Steel and as Chief
Executive Officer of Cold Metal Products. He is a director of Allegheny
Teledyne Incorporated 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
EDSEL D. DUNFORD Retired (Former President and
(PHOTOGRAPH) Chief Operating Officer, TRW Inc.)
Mr. Dunford, age 61, 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
Expiration of Term 1999
JOHN FAHL Vice President
(PHOTOGRAPH)
Mr. Fahl, age 60, 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.
(continued)
4
<PAGE>
DIRECTORS WHO ARE NOT NOMINEES (CONT.)
Fahl is a director of The Peoples Banking Company in Findlay, Ohio and
of Rurban Financial Corp. in Defiance, Ohio.
Director Since 1992
Expiration of Term 1999
DEBORAH M. FRETZ Senior Vice President, Lubricants and Logistics
(PHOTOGRAPH) Sun Company, Inc.
Ms. Fretz, age 48, 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. Named to her current position
in 1997, she is responsible for the Lubricants business as well as 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.
Director Since 1996
Expiration of Term 1999
DENNIS J. GORMLEY Former Chairman and Chief Executive Officer,
(PHOTOGRAPH) Federal-Mogul Corporation
Mr. Gormley, age 57, 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 Rensselaer Polytechnic
Institute with a B.S.M.E. degree.
Director Since 1991
Expiration of Term 1999
ALLAN H. MELTZER University Professor of
(PHOTOGRAPH) Political Economy and Public Policy,
Carnegie-Mellon University
Dr. Meltzer, age 69, 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.
(continued)
5
<PAGE>
DIRECTORS WHO ARE NOT NOMINEES (CONT.)
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
J. ALEC REINHARDT Executive Vice President
(PHOTOGRAPH) and Chief Financial Officer
Mr. Reinhardt, age 55, 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
Note: The beneficial ownership of the Directors and nominees in the
Common Stock of the Company is shown in the table at page 18 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 1996
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.
- - 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.
(continued)
6
<PAGE>
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 1996 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, compared to other employees, 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
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.
(continued)
7
<PAGE>
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 1996 was
established in late 1995, along with ROE and ROAM performance goals
applicable to the program for 1996. Incentive bonuses were based upon
the Company's performance for 1996, as measured by the ROE and ROAM
performance attained for the year.
ROE for fiscal year 1996 was 14.4%, which exceeded the average
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 27% above the average compensation level
determined for that position.
Average compensation levels for the executive officers for 1996
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 1996 and 1997.
Stock Options
Stock options are awarded to the Company's key employees, including
executive officers, in accordance with plans approved by the
stockholders. Plans currently in effect include 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.
By the terms of each of these plans, no grant of new options may be
made following the plan's termination, but some grants made prior to
such terminations are still outstanding and may be exercised. At the
Annual Meeting held on May 7, 1996, the stockholders of the Company
approved and adopted the 1996 Stock Option Plan (the "1996 Plan"). The
1996 Plan has terms very similar to the 1986 Plan but no longer provides
for issuance of stock appreciation rights in tandem with option shares.
(continued)
8
<PAGE>
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
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 1996 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.
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 Company believes its incentive bonus and stock
option programs, as explained above, clearly meet the spirit of the
"performance-based" requirement. However, no action by the Company is
yet required to comply with the regulations, as it is not expected that
(continued)
9
<PAGE>
the compensation of any executive officer will exceed $1 million during
1997.
Submitted by the Audit and Compensation Committee of the Company's
Board of Directors:
Allan H. Meltzer, Chairman
Arthur H. Aronson
Deborah M. Fretz
Dennis J. Gormley
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ending December 31,
1994, 1995, and 1996, 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, 1996
(the "Named Executive Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Long-Term All Other
Compensation Compensation Compensation1
--------------- ------------ -------------
Number of
shares
underlying
stock
Name and Principal option
Position Year Salary Bonus awards
- ------------------- ---- ------ ----- ---------
<S> <C> <C> <C> <C> <C>
Patrick W. Rooney 1996 $431,174 $351,407 16,600 $45,185
Chairman of the Board, 1995 402,639 374,455 11,900 47,012
President and Chief 1994 298,251 344,693 7,800 39,134
Executive Officer
J. Alec Reinhardt 1996 320,517 261,222 11,100 33,601
Executive Vice 1995 302,044 280,902 8,000 35,468
President 1994 251,704 290,898 5,100 32,737
John Fahl 1996 219,550 178,933 5,900 26,615
Vice President 1995 206,793 192,316 4,300 22,483
1994 185,386 173,044 2,300 17,779
William S. Klein 1996 257,582 122,124 3,800 22,185
Vice President 1995 243,002 145,373 2,600 22,299
1994 227,105 160,309 2,300 24,466
Robert C. Gasser 1996 210,794 153,818 3,800 21,533
Vice President 1995 191,245 134,996 2,700 20,294
1994 177,079 124,997 2,300 19,194
<FN>
(continued)
10
<PAGE>
(1) 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 1996 Stock Option Plan to the Named
Executive Officers during the 1996 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
------------------------------------------ ----------
Percent of
total
Number of options
shares granted to Grant
underlying employees Exercise date
options in fiscal price Expiration present
Name granted* year per share date# value+
- ----------------- ---------- --------- --------- ------------- -------
<S> <C> <C> <C> <C> <C>
Patrick W. Rooney 16,600 11.8% $18.50 July 21, 2006 $113,003
J. Alec Reinhardt 11,100 7.9 18.50 July 21, 2006 65,807
John Fahl 5,900 4.2 18.50 July 21, 2006 32,871
William S. Klein 3,800 2.7 18.50 July 21, 2006 15,010
Robert C. Gasser 3,800 2.7 18.50 July 21, 2006 20,102
<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.
(+) 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 thirty-seven month
period July 1, 1993 through July 31, 1996, (b) a weighted average
risk-free rate of return of 6.6%, (c) a dividend yield of 1%, and
(d) a time of exercise based on the earlier of the historical
exercise pattern of each individual or the latest permissable
date. No adjustments were made for non-transferability or forfeiture.
</TABLE>
11
<PAGE>
Option Exercises and Holdings
The following table sets forth information, with respect to the
Named Executive Officers, concerning the exercise of options during the
1996 fiscal year and unexercised options held as of the end of the
fiscal 1996 year.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Value of
shares underlying unexercised in-the-
unexercised options money options2 at
Shares at fiscal year-end fiscal year-end
acquired ------------------- ------------------
on Value Exercis- Unexercis- Exercis- Unexercise-
Name exercise realized1 able able able able
- --------------- -------- -------- -------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Patrick W. Rooney - - 41,450 22,550 $110,603 $22,825
J. Alec Reinhardt - - 18,100 15,100 - 15,263
John Fahl - - 12,750 8,050 18,750 8,113
William S. Klein - - 9,900 5,100 9,375 5,225
Robert C. Gasser - - 11,950 5,150 18,750 5,225
<FN>
(1) 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.
(2) 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 $19.875, 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
Supplementary Benefit Plan, which provides benefits that would otherwise
be denied participants by reason of certain Internal Revenue Code
limitations on qualified plan benefits.
(continued
12
<PAGE>
<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 $336,543, $452,733, and $230,528, 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
event will the term extend beyond the end of the year in which the
executive officer's 65th birthday occurs.
(continued)
13
<PAGE>
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 $13,000 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 seven days during 1996. During 1996, the Audit and Compensation
Committee met three times on days other than on a Board meeting day, and
the Nominating Committee met once on a day other than on a Board meeting
day.
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)
14
<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 15 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 in 1993
chose the S&P Auto Parts After Market Index as the most appropriate of
the nationally recognized industry standards and used that index for its
stockholder return comparisons in the Proxy Statements for its Annual
Meetings of Stockholders held in 1993 through 1996. The particular
stocks in each index are selected by S&P, and each index includes the
Company's stock. In June of 1996, S&P changed the name and composition
of its Auto Parts After Market index. The new index name is Auto Parts
& Equipment, and the new index deletes two stocks from the former index
and adds four new stocks.
The following chart assumes three hypothetical $100 investments on
January 1, 1991, 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 & EQUIPMENT INDEX
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$100.00 $134.17 $ 99.35 $ 94.74 $ 99.80 $ 81.14
100.00 107.62 118.46 120.03 165.13 203.05
100.00 125.77 146.18 127.48 157.61 176.84
</TABLE>
15
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 1996 the Company's Board of Directors held seven Board
meetings, seven meetings of the Board's Audit and Compensation Committee
and three 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
Directors Aronson, Fretz, 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 Directors Davis, Dunford,
Rooney, and Shuey, 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 1997. 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 1996, 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)
16
<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 10, 1997, 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* 7,819,490 shs# 9.9%
P.O. Box 5756
Cleveland, OH 44101
Common Stock INVESCO PLC 7,995,160 shs+ 9.7%
11 Devonshire Square
London EC2M4YR
England
Common Stock J. P. Morgan & Co. 5,393,186 shs++ 6.5%
Incorporated
60 Wall Street
New York, NY 10260
<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 a filing on Schedule 13G with the Securities and
Exchange Commission dated February 10, 1997, subsidiaries of INVESCO
PLC, a holding company, hold the indicated shares on behalf of other
persons who have the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of such 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 no shares, shared power to vote with
respect to all the indicated shares, sole power to dispose with respect
to no shares, and shared power to dispose with respect to all the
indicated shares.
(continued) 17
<PAGE>
(++) According to an amendment dated December 31, 1996, 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 3,641,964 shares; shared power to vote with respect to
19,300 shares; sole power to dispose with respect to 5,330,486 shares;
and shared power to dispose with respect to 26,350 shares.
</TABLE>
The information which follows is furnished as of March 10, 1997, 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 1,158,316 shs* 1.5%
and Directors as a group
Common Stock Arthur H. Aronson 607 shs# ##
Common Stock Delmont A. Davis 1,614 shs# ##
Common Stock Edsel D. Dunford 11,725 shs# ##
Common Stock John Fahl 96,442 shs# ##
Common Stock Deborah M. Fretz 300 shs ##
Common Stock Robert C. Gasser 70,650 shs# ##
Common Stock Dennis J. Gormley 2,060 shs# ##
Common Stock William S. Klein 146,117 shs# ##
Common Stock John F. Meier 1,000 shs ##
Common Stock Allan H. Meltzer 10,000 shs#,+ ##
Common Stock J. Alec Reinhardt 296,871 shs#, ##
Common Stock Patrick W. Rooney 270,525 shs# ##
Common Stock John H. Shuey 500 shs ##
<FN>
##Less than 1%
(*) Includes 128,006 shares obtainable on exercise of stock options
within 60 days following March 10, 1997, which options have not been
exercised. The nature of the beneficial ownership consists of 482,040
shares subject to sole voting and investment power, and 6,800 shares
subject to shared voting and investment power. Of the shares shown as
beneficially owned, 569,276 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.
(#) Includes shares obtainable on exercise of stock options within 60
days following March 10, 1997, which options have not been exercised, as
follows: Arthur H. Aronson - 107; Delmont A. Davis - 1,514; Edsel D.
Dunford - 725; John Fahl - 12,750; Robert C. Gasser - 11,950; Dennis J.
Gormley - 2,060; William S. Klein - 9,900; Allan H. Meltzer - 3,600; J.
Alec Reinhardt - 18,100; and Patrick W. Rooney - 41,450.
(continued)
18
<PAGE>
(+) Includes 6,400 shares subject to shared voting and investment power.
</TABLE>
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 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 beneficial 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, 1996, its Directors and executive
officers complied with all applicable Section 16(a) filing requirements.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
Any stockholder who intends to present a proposal at the 1998
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 25, 1997.
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 $7,500, 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
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 25, 1997
IMPORTANT: All stockholders are earnestly requested to mark, date,
sign and mail promptly the enclosed proxy for which an envelope is
provided.
19
<PAGE>
<LOGO>
COOPER TIRE & RUBBER COMPANY
NOTICE
of Annual Meeting of Stockholders
and Proxy Statement
May 6, 1997
IMPORTANT:
All stockholders are earnestly requested to mark, date,
sign and mail promptly the enclosed proxy for which
an envelope is provided.
20
<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 6, 1997, 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 10, 1997, 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:
John F. Meier Patrick W. Rooney John H. Shuey
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)
- ------------------------------------------------------------------------
(X) Please mark your votes SHARES IN YOUR NAME
as in this example.
1. Election of Directors PLEASE SIGN,
(see reverse) DATE AND
RETURN THIS
FOR WITHHELD PROXY FORM
( ) ( ) PROMPTLY
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.
21
