COOPER TIRE & RUBBER COMPANY
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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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 2, 2000, at 10:00 a.m. Eastern Daylight Time
for the following purposes:
(1) To elect three (3) Directors of the Company.
(2) To consider a stockholder proposal described in the Proxy Statement
urging that stockholder rights issued pursuant to the Company's
Stockholder Rights Plan be redeemed.
(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
6, 2000 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 21, 2000
Please 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.
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COOPER TIRE & RUBBER COMPANY
Lima & Western Avenues, Findlay, Ohio 45840
March 21, 2000
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PROXY STATEMENT
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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 2, 2000, at 10:00 a.m. Eastern Daylight Time 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 6, 2000 will be entitled to vote at
the Annual Meeting, and each will be entitled to one vote for each share so
held. As of that date, there were 75,810,552 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 three (3) Directors (Agenda Item 1) and consideration of a
stockholder proposal (Agenda Item 2). For Agenda item 2, the affirmative vote
of the majority of shares represented in person or by proxy at the meeting
and entitled to vote on the subject matter will constitute stockholder
approval. Directors will be elected by a plurality of the votes of the
shares represented in person or by proxy at the meeting and entitled to vote
on the subject matter.
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 eleven (11). Three Directors are to be elected to the
class having terms expiring this year and shall serve for a three-year term
expiring in 2003 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.
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Each of the nominees to be elected at the Annual Meeting, other than Ronald
L. Roudebush, has previously been elected by vote of the stockholders. Mr.
Roudebush, formerly the Vice Chairman and Chief Executive Officer of The
Standard Products Company, was elected to the Board of Directors on November
18, 1999 for a term expiring at this year's Annual Meeting. In February,
Chairman of the Board and Chief Executive Officer Patrick W. Rooney announced
he would not run for re-election and would leave the Board, effective April
28, 2000, in connection with his retirement as Chief Executive Officer on
June 3, 2000. 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 52, 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 trustee of
Wittenberg University and a director of KeyBank, Northwest Region in Toledo,
Ohio.
Director Since 1997
Nominee for Term to Expire 2003
RONALD L. ROUDEBUSH Former Vice Chairman and
(PHOTOGRAPH) Chief Executive Officer of
The Standard Products Company
Mr. Roudebush, age 52, joined the automotive group of Rockwell
International Corporation in 1973 and held numerous operational and
management positions before serving as President of Rockwell Automotive from
1991 to 1994. He owned an automotive retail dealership for two years before
joining The Standard Products Company in 1997, where he held the position of
Vice Chairman and Chief Executive Officer until the acquisition of Standard
by Cooper Tire & Rubber Company late in 1999. Mr. Roudebush received a
B.S.M.E. degree from General Motors Institute, now Kettering University, and
a Master's degree in industrial management from the Krannert Graduate School
at Purdue University. He is a director of Simpson Industries and a member of
the Board of Trustees of Kettering University.
Director Since 1999
Nominee for Term to Expire 2003
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JOHN H. SHUEY Chairman, President and Chief Executive Officer,
(PHOTOGRAPH) Amcast Industrial Corporation
Mr. Shuey, age 54, joined Amcast Industrial Corporation in 1991 as
Executive Vice President. He was elected President and Chief Operating
Officer in 1993, a director in 1994, Chief Executive Officer in 1995, and
Chairman in 1997. Amcast is in the business of producing fabricated metal
products and cast and tubular metal products. Prior to joining Amcast, he
held executive positions at The Trane Company, American Standard, and AM
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 2003
DIRECTORS WHO ARE NOT NOMINEES
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ARTHUR H. ARONSON Former Executive Vice President,
(PHOTOGRAPH) Allegheny Teledyne Incorporated
Mr. Aronson, age 64, 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 Executive Vice President of the successor corporation, Allegheny
Teledyne Incorporated, where he also served 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 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 2001
THOMAS A. DATTILO President and Chief
(PHOTOGRAPH) Operating Officer
Mr. Dattilo, age 48, was elected President and Chief Operating Officer
of the Company effective January 4, 1999. He had previously been employed at
Dana Corporation since 1977, having been appointed President, Sealing
Products in 1998 after serving in senior management positions since 1985. He
earned a B.A. degree from Ohio State University and a J.D. degree from the
University of Toledo, and also completed the Harvard Advanced Management
Program.
Director Since 1999
Expiration of Term 2001
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EDSEL D. DUNFORD Former President and
(PHOTOGRAPH) Chief Operating Officer, TRW Inc.
Mr. Dunford, age 64, 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 Cordant
Technologies, Howmet International, and National Steel Corporation.
Director Since 1994
Expiration of Term 2002
JOHN FAHL Vice President
(PHOTOGRAPH)
Mr. Fahl, age 63, 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 and of Rurban Financial Corp. in Defiance, Ohio. He
is a member of the Board of Trustees of The University of Findlay.
Director Since 1992
Expiration of Term 2002
DEBORAH M. FRETZ Senior Vice President, Lubricants and
(PHOTOGRAPH) Logistics, Sunoco, Inc.
Ms. Fretz, age 51, was named Senior Vice President, Lubricants and
Logistics, of Sunoco, Inc., an energy company, in 1997. She is responsible
for the Lubricants business which includes two refineries, blending and
packaging plants as well as all marketing and sales. In addition, she
manages all Sunoco's transportation businesses, including pipelines,
terminals, trucking and rail. Since joining Sunoco 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. 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 2002
DENNIS J. GORMLEY Former Chairman and Chief Executive Officer,
(PHOTOGRAPH) Federal-Mogul Corporation
Mr. Gormley, age 60, 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
<continued>
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Chairman in 1990. Federal-Mogul Corporation's principal products are
vehicular and industrial components. Mr. Gormley is a graduate of Rensselaer
Polytechnic Institute with a B.S.M.E. degree.
Director Since 1991
Expiration of Term 2002
BYRON O. POND Former Chairman of the Board,
(PHOTOGRAPH) Arvin Industries, Inc.
Mr. Pond, age 63, joined Arvin Industries, Inc. in 1986 with the
acquisition of Maremont Corporation where he served as Chairman, President
and Chief Executive Officer. He was appointed Executive Vice President and a
director of Arvin in 1990, was elected President and Chief Operating Officer
in 1991, and became Arvin's President and Chief Executive Officer in 1993.
He was elected Chairman and Chief Executive Officer in 1996 and Chairman of
the Board in 1998. Arvin is a worldwide manufacturer of automotive exhaust
systems and ride control products for both original equipment and replacement
markets. Mr. Pond holds a B.S. degree in Business Administration from Wayne
State University. He is a director of Intermet Corporation and of Precision
Castparts Corporation.
Director Since 1998
Expiration of Term 2001
PATRICK W. ROONEY Chairman of the Board and
(PHOTOGRAPH) Chief Executive Officer
Mr. Rooney, age 64, 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 Sky Financial Group, Alltrista Corporation, and
Huffy Corporation, and is Chairman of the Board of Trustees of The University
of Findlay.
Director Since 1990
Expiration of Term 2000
Note: The beneficial ownership of the Directors and nominees in the Common
Stock of the Company is shown in the table at pages 22 and 23 of this proxy
statement.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Compensation Committee Report on Executive Compensation
This report is submitted by all members of the Compensation Committee
(the "Committee"), for inclusion in this proxy statement, to explain the
Committee's policies applicable to the 1999 compensation reported for the
Company's executive officers.
General Philosophy
The following objectives continue to guide the Company's policies
regarding executive compensation:
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- - 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.
For many years, the compensation of the Company's executive officers has
consisted of three components - (a) cash remuneration in the form of salaries
and 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".
The Company has historically targeted aggregate fixed compensation
levels for the Chief Executive Officer and other executive officers lower
than average compensation levels in the market. Individual pay levels have
been based primarily on senior management's assessment of the contributions
and responsibilities of each individual officer, with the sum of target pay
levels equaling the median of the market for a comparable group of managers.
Consistent with broader trends in executive pay practices across U.S.
industry, the Company has in recent years increased the role of variable pay
in the total compensation of senior managers. This has included increasing
the size of stock option grants and introducing a longer-term cash incentive
plan tied to achieving specific multi-year operating results. The Committee
believes these actions have helped to strengthen the alignment of interests
between shareholders and Company management.
During 1999, the Company made one significant acquisition (The Standard
Products Company) and announced plans to acquire the Siebe Automotive
Division of Invensys p.l.c. which closed in January. These acquisitions will
have a dramatic impact on the Company's organization structure and business
portfolio. Given the magnitude of change associated with these transactions,
the Committee undertook a review of how the Company's executive compensation
programs should be revised to better support the new organization. As a
result of this review, a number of changes were made to the senior management
compensation program for 2000, all of which are within the boundaries of the
1998 Incentive Compensation Plan approved by stockholders in 1998. These
changes include:
- - Targeting each element of direct pay (i.e., base salary, annual bonus,
long-term incentives) at median levels for comparable positions at
companies with a comparable level of revenues.
- - Replacing return on equity with return on invested capital as the
performance measure for corporate officers and providing for a growth
element in the annual bonus plan.
- - Replacing return on equity for corporate officers and return on assets
managed for division officers with a growth element as the performance
measure in the long-term cash incentive plan.
<continued>
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These changes will, for some executives, result in increased base
salaries and reduced target annual incentive awards. However, it is expected
that the sum of base salary and bonus at target levels of performance for
2000 will be consistent with 1999 pay levels adjusted for normal increase
patterns. The Committee believes these changes reflect the needs of the new
organization and provide a competitive, performance-based compensation system
that should motivate and reward senior managers to create superior
shareholder value.
Salaries and Annual Bonuses
Salaries and annual incentive bonuses paid to the Company's executive
officers for 1999 were based upon a program which has been followed each year
since 1973. Prior to the start of the 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 in a broad cross-section of industries and each officer's contributions
to Company performance. The sum of average compensation levels for the
executive officer group is intended to equal the aggregate competitive median
total cash compensation (i.e., salary plus bonus) for the group.
Base salaries for the Chief Executive Officer and the other executive
officers are then set at levels lower than the average compensation levels,
but near competitive median base salary levels. Company goals defining
minimum, average and excellent performance under the Company's annual bonus
plan are established considering operational plans, competitive industry
information, and prevailing economic conditions.
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, though
still below competitive median levels, as noted 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 1999 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 (a) income before
interest, foreign currency gains or losses, and federal income taxes by (b)
an average of controlled assets. ROAM, like ROE, is a measurement of
employees' success in utilizing resources but, unlike ROE, focuses on
specific assets.
The Committee added a discretionary adjustment provision in 1999 for
three executives (Messrs. Rooney, Fahl and Millhof). Under this provision,
awards calculated under the aforementioned formula can be adjusted downward
by up to 25% at the Committee's discretion. In addition, the Committee may
grant, at its discretion, restricted stock to these individuals if
performance is deemed to exceed that which was used to calculate the bonus
award.
Thus, for any fiscal year the incentive bonus for each executive officer
primarily 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.
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Long-Term Incentives
In addition to base salaries and annual bonuses, the Company also
provides two forms of long-term incentive. These awards, in aggregate, are
intended to deliver a competitive level of long-term incentive that provides
incentive, retention and motivation relative to the creation of shareholder
value.
Stock options represent the primary long-term incentive vehicle, with
awards targeted to deliver approximately 70% of the total target long-term
incentive value. Stock options are granted annually to eligible managers
based on competitive practice and performance. In addition to stock options,
the Company has a long-term cash performance plan tied to financial results
over a three-year period. The objective of the plan is to provide focus on
achieving longer-term operating goals that ultimately should lead to
shareholder value creation. Only Company and Division officers participate
in this plan, which is targeted to deliver approximately 30% of the total
target long-term incentive value. Performance under the plan, which was
introduced in 1998, is measured over rolling three-year periods.
Cash Compensation for 1999
The specifics of the program for total cash compensation, including
salaries and incentive bonuses, for executive officers for 1999 was
established in late 1998, along with ROE and ROAM performance goals
applicable to the program for 1999. Incentive bonuses were based upon the
Company's performance for 1999, as measured by the ROE and ROAM performance
attained for the year.
ROE for fiscal year 1999 was 16.0%, which exceeded the Company's average
performance goal. Mr. Rooney's remuneration for 1999 as Chairman of the Board
and Chief Executive Officer was determined in accordance with the program
explained above. It was below competitive median pay levels for his position,
consistent with the earlier-cited reference to the Company's below-market
compensation levels for its officers.
Average cash compensation levels for the executive officers for 1999
were based upon published data compiled by an independent consulting 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 included in the published survey
data and in the Auto Parts Index were not identical, although each may
include some of the same companies' data.
The Committee believes that the program structure explained above has
consistently provided a fair and appropriate relationship between Company
performance and the cash remuneration of its executive officers.
1999 Long-Term Incentive Grants
Key employees of the Company, including executive officers, are eligible
for annual stock option and performance cash plan grants in accordance with a
number of plans approved by the stockholders. Stock options have been issued
and are currently outstanding under the 1981 Incentive Stock Option Plan (the
"1981 Plan"), the 1986 Incentive Stock Option Plan (the "1986 Plan"), the
1996 Stock Option Plan and the 1998 Incentive Compensation Plan (the "1998
Plan"). The 1981 Plan and the 1986 Plan were amended in 1988 to allow the
granting of nonqualified stock options as well as incentive stock options;
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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 1996 Plan and
the 1998 Incentive Compensation Plan also provide for the granting of non-
qualified options. The 1998 Plan authorizes the use of the Long-Term
Performance Cash Plan.
In awarding stock options to the Company's key executives, 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. In general, the stock option
grants are based on competitive practices and internal equity, as well as on
assessments of responsibilities, performance, and contributions. By the terms
of each of these plans, no grant of new options may be made following the
plan's termination, but grants made prior to termination may be exercised
following the Plan's termination.
In combination with the new incentive plan implemented in 1998, stock
option grants in 1999 were targeted, as a percentage of salary, to deliver
100% of the median expected market value for long-term incentives, again
adjusted for individual contributions. However, because of the Company's
below market salaries, the actual value of long-term incentives is slightly
below market value.
In 1999, Mr. Rooney received a stock option grant for 40,000 shares in
accordance with the provisions cited earlier in this section. He also
received 8,210 shares of restricted stock in lieu of a portion of his 1998
cash compensation. Mr. Rooney also participates in the Company's Long-Term
Performance Cash Plan and is eligible for a target award of $285,000 for the
performance cycle initiated in 1999.
It is the opinion of the Committee that this program constitutes an
appropriate alignment between the Company's performance and executive
compensation and also promotes 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 again recognizes that one of
the most important of these benefits is the Thrift and Profit Sharing Plan,
which includes a Company matching contribution in Company stock.
Deductibility of Compensation Over $1 Million
Regulations issued under Section 162(m) of the Internal Revenue Code
provide that 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 Committee believes the 1998 Incentive Compensation Plan includes
provisions which comply with the "performance-based" criteria and accordingly
should result in the Company retaining the tax deductibility of any amounts
earned under this plan in future years.
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Submitted by the Compensation Committee of the Company's Board of Directors:
Byron O. Pond, Chairman
Edsel D. Dunford
John F. Meier
Agenda Item 2
STOCKHOLDER PROPOSAL
Michael R. Fanning, Chief Executive Officer of the Central Pension Fund
of the International Union of Operating Engineers and Participating
Employers, the beneficial holder of 12,266 shares of the Company's Common
Stock, has given notice of the Fund's intention to introduce the following
resolution at the Annual Meeting:
BE IT RESOLVED: That the shareholders of Cooper Tire and Rubber Co.
("Company") urge the Board of Directors to redeem the shareholder rights
issued pursuant to the Preferred Stock Purchase Rights Plan (amended by the
Board of Directors in 1998) unless said Plan is approved by a majority of the
voting shares at a meeting of shareholders held as soon as is practical.
SUPPORTING STATEMENT
We strongly believe that the Company's financial performance is closely
linked to its corporate governance policies and procedures, and the level of
management accountability they impose. The Company's Stock Purchase Rights
Plan (commonly known as a "poison pill") is a powerful anti-takeover device
which effectively prevents a change in control of the Company without the
approval of the board of directors, despite a level of performance which may
adversely affect shareholder value.
Cooper Tire's poison pill inhibits a potential bidder of Company stock
when they own 15% or more of the outstanding common stock of the Company.
Triggering the poison pill has the effect of substantially injuring the
bidder by allowing our Board to unilaterally cut by 50% the value of Company
shareholdings held by such a person. Such a situation, we believe, precludes
shareholders of Cooper Tire from exercising their ownership rights in
assessing offers from potential bidders.
The poison pill forces potential investors to negotiate acquisitions
with management, instead of making their offer directly to shareholders. We
strongly believe that it is the shareholders (who are the owners of the
Company), not the directors and managers (who merely act as agents for the
owners), who should have the right to decide what is or is not a fair price
for their shareholdings.
The argument that our directors need a poison pill in order to negotiate
a better offer from potential bidders or prevent so-called "abusive takeover
practices" is unpersuasive. In the past several years, proposals to redeem
or allow shareholder votes on poison pills have received majority support at
numerous U.S. publicly-traded companies including Advanced Micro Devices,
Intel, Ryder and Wellman. Moreover, since 1990 Philip Morris, Time Warner,
United Technologies and Lockheed have voluntarily redeemed their poison
pills. None of these companies have experienced any adverse impact
attributable to redemption of their poison pills.
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Poison pills can pose such an obstacle to takeover that management
becomes entrenched. We believe that the entrenchment of management, and the
lack of accountability that results, can adversely affect shareholder value.
While it is impossible to assess the degree to which the poison pill may
inhibit performance, it is indisputable that a poison pill effectively deters
attempts by shareholders to remove the current board and its management team
for nonperformance. Redemption of Cooper Tire's pill would allow
shareholders to consider all tender offers, not just those endorsed by
incumbent management.
We urge you to VOTE FOR this proposal.
BOARD'S RESPONSE TO THIS STOCKHOLDER PROPOSAL
The Board of Directors adopted the Company's stockholder rights plan in
1988, and amended and restated the plan in 1998 to reflect prevailing rights
plan terms and to extend the plan until May 11, 2008. The rights plan was
adopted in order to protect the interests of the Company's stockholders and
to allow the Board of Directors the flexibility to maximize the value of the
stockholders' investment in the Company in the event an unsolicited attempt
is made to acquire the Company. This flexibility arises from the fact that
the rights plan strongly encourages potential acquirors to negotiate with the
Board, which is in the optimal position to evaluate the adequacy of any
offer, to negotiate on behalf of all stockholders, and to protect
stockholders against abuses during the takeover process. The rights plan is
not intended to preclude a takeover on terms that are fair and equitable to
all stockholders and would not affect any takeover proposal that the Board of
Directors believes is in the best interests of the Company's stockholders.
The Board also believes that in the event of a takeover transaction, the
rights plan will help to maximize acquisition premiums for the Company's
stockholders. Empirical studies, including 1997 studies by J.P Morgan and
Georgeson & Company, have shown that corporations that have rights plans
obtain higher acquisition premiums for their stockholders than those that
lack rights plans.
Additionally, the Board has taken steps to ensure that the rights plan
will be maintained only for so long as it remains in the best interests of
the Company's stockholders. Specifically, in October 1999, the Board adopted
an "independent director evaluation policy" with respect to the rights plan.
Under this policy, a committee of the Board comprised solely of non-employee,
independent directors, will review the rights plan at least once every three
years in order to determine whether any provisions of the rights plan should
be modified or the rights issued pursuant to the rights plan should be
redeemed. This policy exemplifies the Board's commitment to good corporate
governance and provides an additional safeguard to insure that the rights
plan continues to be in the best interest of the Company's stockholders.
As a result, the Board continues to believe that the rights plan is in
the best interests of the Company's stockholders and should be maintained.
The Board of Directors recommends that stockholders vote AGAINST this
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stockholder proposal.
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Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ending December 31,
1997, 1998, and 1999, the cash compensation paid by the Company as well as
certain other compensation paid or accrued for those years, to Mr. Rooney, as
the Chairman of the Board 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, 1999 (the "Named Executive Officers").
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
All Other
Annual Long-Term Compen-
Compensation Compensation sation 1
------------ --------------------- --------
Number of
Restricted shares
Stock and underlying
Restricted stock
Name and Principal Stock Unit option
Position 2 Year Salary Bonus Awards awards
- ------------------ ---- -------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Patrick W. Rooney 1999 $456,355 $631,518 $ - $ 40,000 $50,991
Chairman of the 1998 434,623 415,221 167,279 3,6 38,500 54,638
Board, Chief 1997 452,733 397,111 - 33,000 50,872
Executive Officer
Thomas A. Dattilo 1999 375,000 550,188 613,125 4,6 150,000 -
President and 1998 - - - - -
Chief Operating 1997 - - - - -
Officer
John Fahl 1999 232,372 321,563 - 16,000 36,571
Vice President 1998 221,306 297,643 - 11,900 18,627
1997 230,528 202,206 - 10,500 30,104
Roderick F. Millhof 1999 239,614 246,203 32,625 5,6 12,000 29,209
Vice President 1998 223,938 245,556 - 9,600 27,659
1997 159,420 129,506 - 2,600 17,311
William S. Klein 1999 276,571 198,671 - 12,000 28,340
Vice President 1998 268,516 171,022 - 9,600 26,252
1997 267,886 149,386 - 7,000 24,953
<FN>
(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.
(2) In addition to the corporate officer titles disclosed below for the
Named Executive Officers, Messrs. Fahl, Millhof, and Klein also hold the
following operating positions: Mr. Fahl - President, Cooper Tire; Mr.
Millhof - President, Global Sealing Division, Cooper-Standard Automotive; and
Mr. Klein - Senior Vice President, Global Manufacturing and Technology
Development, Cooper Tire.
<continued>
13
<PAGE>
(3) In 1998, Mr. Rooney received a grant of 8,210 restricted common shares
in lieu of a portion of his 1998 cash compensation. The dollar amount shown
in the table is the market value on the date of the grant of the shares
awarded to him. Dividends were paid on these shares through November 18,
1999. On that date, Mr. Rooney surrendered his restricted shares in exchange
for a grant of 8,210 restricted stock units, the market value of which was
$133,926 on the date of grant. The award of restricted stock units to Mr.
Rooney vested in January 2000.
(4) In January 1999, Mr. Dattilo received a grant of 30,000 restricted
common shares in connection with the inception of his employment with the
Company. The dollar amount shown in the table is the market value on the
date of the grant of the shares awarded to him. The award provides for
vesting of the restricted shares in equal annual installments in January
2000, 2001, and 2002, provided that Mr. Dattilo continues to be employed by
the Company on each vesting date. Dividends were paid on these shares
through November 18, 1999. On that date, Mr. Dattilo surrendered his
restricted shares in exchange for a grant of 30,000 restricted stock units,
the market value of which was $489,375 on the date of grant. The restricted
stock unit award provides for vesting on the same dates as the restricted
stock would have vested.
(5) In November 1999, Mr. Millhof received a grant of 2,000 restricted stock
units. The dollar amount shown in the table is the market value on the date
of the grant of the shares underlying the units awarded to him. Mr.
Millhof's grant vests in November 2000, provided that he continues to be
employed by the Company at that time.
(6) All grants of restricted stock units were made under agreements that
provide for accrual of dividend equivalents and deferral of the receipt of
the underlying shares until a date (or dates) selected by the executive at
the time of the grant. Each executive's restricted stock unit account will
be settled through delivery to the executive on the date(s) selected of a
number of shares of common stock of the Company corresponding to the number
of restricted stock units awarded to the executive, plus shares representing
the value of dividend equivalents. At December 31, 1999, the number of
restricted stock units outstanding and the related market values of those
units were: Mr. Rooney - 8,267 units at $127,105; Mr. Dattilo - 30,207 units
at $464,433; and Mr. Millhof - 2,014 units at $30,965.
</TABLE>
Stock Option Grants
The following table contains information concerning the grant of stock
options under the Company's 1998 Incentive Compensation Plan to the Named
Executive Officers during the 1999 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.
14
<PAGE>
<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 1 year per share date 2 value
- ----------------- --------- --------- --------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Patrick W. Rooney 40,000 3 6.8% $22.9375 July 19, 2009 $259,420 5
Thomas A. Dattilo 125,000 21.3 20.6875 January 3, 2009 977,975 4
25,000 4.3 22.9375 July 19, 2009 219,983 5
John Fahl 16,000 2.7 22.9375 July 19, 2009 95,618 5
Roderick F. Millhof 12,000 2.0 22.9375 July 19, 2009 93,845 5
William S. Klein 12,000 2.0 22.9375 July 19, 2009 79,422 5
<FN>
(1) 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.
(2) 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.
(3) Due to Mr. Rooney's announced retirement on June 3, 2000, these options
will not vest.
(4) Calculated using the Black-Scholes option pricing model. Assumptions
used in calculating the reported values include (a) an expected volatility
based on the daily change in the share price of the Company's Common Stock
for the period January 1, 1994 through January 4, 1999, (b) a weighted
average risk-free rate of return of 5.1%, (c) a dividend yield of 1.3%, and
(d) a time of exercise based on the latest permissible date. No adjustments
were made for non-transferability or forfeiture.
(5) Calculated using the Black-Scholes option pricing model. Assumptions
used in calculating the reported values include (a) an expected volatility
based on the daily change in the share price of the Company's Common Stock
for the period July 1, 1994 through July 20, 1999, (b) a weighted average
risk-free rate of return of 5.6%, (c) a dividend yield of 1.6%, and (d) a
time of exercise based on the earlier of the historical exercise pattern of
each individual or 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 1999 fiscal
year and unexercised options held as of the end of the fiscal 1999 year.
<continued>
15
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Value of unexer-
shares underlying cised in-the-
unexercised options money options 2 at
Shares at fiscal year-end fiscal year-end
acquired ------------------ ------------------
on Value Exercis- Unexer- Exercis- Unexer-
Name exercise realized 1 able cisable able cisable
- ------------------- -------- ---------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Patrick W. Rooney - - 114,050 59,250 $33,406 -
Thomas A. Dattilo - - - 150,000 - -
John Fahl - - 37,250 21,950 610 -
Roderick F. Millhof 2,000 $29,688 15,400 16,800 12,705 -
William S. Klein - - 26,800 16,800 305 -
<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 $15.3438, 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>
Long-Term Performance Cash Plan
The following table sets forth information, with respect to the Named
Executive Officers, concerning the grant of long-term performance cash awards
under the Company's 1998 Incentive Compensation Plan during the 1999 fiscal
year.
<TABLE>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<CAPTION>
Performance or
Other Periods Until Target
Name Maturation or Payout 1 Payouts 2
- ------------------- --------------------------- ---------
<S> <C> <C>
Patrick W. Rooney 1/1/1999 through 12/31/2001 $285,000
Thomas A. Dattilo 1/1/1999 through 12/31/2001 150,000
John Fahl 1/1/1999 through 12/31/2001 85,000
William S. Klein 1/1/1999 through 12/31/2001 75,000
Roderick F. Millhof 1/1/1999 through 12/31/2001 70,000
<FN>
(1) A participant must be an employee at the end of the Performance Period
to receive the proceeds of the grant; except that if such participant dies,
retires or becomes disabled prior to the end of the Performance Period, he
will receive a prorated award earned based on the portion of the Performance
Period during which he was an employee.
<continued>
16
<PAGE>
(2) Payouts of awards are tied to the achievement of specified levels of ROE
or ROAM for the three-year Performance Period and will be made during the
first quarter of 2002. The target payouts will be earned if 100% of the
targeted ROE or ROAM is achieved. No payouts of awards will be made if the
ROE or ROAM results achieved fall below a "minimum" level. The "minimum" for
the Performance Period is 3% ROE for Messrs. Rooney, Dattilo and Fahl, 7%
ROAM for Mr. Millhof, and 5% ROAM for Mr. Klein. Amounts earned in excess of
targeted ROE or ROAM are not capped, with awards accruing at rates of 16-2/3%
of the target payout for each additional 1% ROE or ROAM achieved over the
"minimum" level until a "superior" ROE or ROAM is achieved, and 15% for each
additional 1% ROE or ROAM achieved beyond the "superior" level.
</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 Code limitations on qualified plan benefits.
<TABLE>
PENSION PLAN TABLE
Years Of Service
<CAPTION>
Remuner-
ation 15 20 25 30 35 40 45 50
- ---------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 300,000$ 67,500$ 90,000$112,500$135,000$157,500$180,000$202,500$225,000
350,000 78,750 105,000 131,250 157,500 183,750 210,000 236,250 262,500
400,000 90,000 120,000 150,000 180,000 210,000 240,000 270,000 300,000
450,000 101,250 135,000 168,750 202,500 236,250 270,000 303,750 337,500
500,000 112,500 150,000 187,500 225,000 262,500 300,000 337,500 375,000
550,000 123,750 165,000 206,250 247,500 288,750 330,000 371,250 412,500
600,000 135,000 180,000 225,000 270,000 315,000 360,000 405,000 450,000
650,000 146,250 195,000 243,750 292,500 341,250 390,000 438,750 487,500
700,000 157,500 210,000 262,500 315,000 367,500 420,000 472,500 525,000
750,000 168,750 225,000 281,250 337,500 393,750 450,000 506,250 562,500
800,000 180,000 240,000 300,000 360,000 420,000 480,000 540,000 600,000
850,000 191,250 255,000 318,750 382,500 446,250 510,000 573,750 637,500
900,000 202,500 270,000 337,500 405,000 472,500 540,000 607,500 675,000
950,000 213,750 285,000 356,250 427,500 498,750 570,000 641,250 712,500
1,000,000 225,000 300,000 375,000 450,000 525,000 600,000 675,000 750,000
1,050,000 236,250 315,000 393,750 472,500 551,250 630,000 708,750 787,500
1,100,000 247,500 330,000 412,500 494,000 577,500 660,000 742,500 825,000
</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. Any benefits shown in the table which exceed the level of
benefits permitted to be paid from a tax-qualified pension plan under the
Internal Revenue Code are payable from an unfunded, non-qualified
supplemental pension plan.
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; Thomas A. Dattilo - 17.5; John Fahl -
46.2; William S. Klein - 32.3; and Roderick F. Millhof - 15.5.
17
<PAGE>
Employment Agreements
The Company has entered into employment agreements with Messrs. Rooney,
Dattilo, Fahl, and Millhof. The agreements provide for the payment of an
annual base salary and for participation in all employee benefit plans
applicable generally to executives of the Company. The current base salaries
payable to Messrs. Rooney, Dattilo, Fahl and Millhof under the agreements are
$670,000, $600,000, $392,000, and $320,000, 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
executive officer's 65th birthday.
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, by the executive officer for Good Reason, or by the
executive officer for any reason within 365 days after the date of a "change
in control of the Company," 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 in
most circumstances 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 paid each Director who was not a Company officer an annual
retainer in 1999 of $16,000, together with a $2,750 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. During 1999, Board meetings
<continued>
18
<PAGE>
were held on nine days, the Audit and Compensation Committee met once on a
day other than a Board Meeting day, the Audit Committee met two times on days
other than on a Board meeting day, and the Compensation Committee met two
times on days other than 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. 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 and options for 1,000 shares each
were exercised during 1996 and 1997. Information regarding unexercised
options for each Director is indicated in the table on pages 22 and 23 of
this proxy statement.
In 1998, stockholders approved the 1998 Non-Employee Directors
Compensation Deferral Plan. This plan permits Non-Employee Directors of the
Company to defer some or all the fees payable to them for service on the
Board. Only Directors who are not, and have not been, employees of the
Company or any of its subsidiaries may participate in the Deferral Plan.
Amounts deferred and dividend equivalents are converted into phantom stock
units and credited to a bookkeeping account established for this purpose.
The number of phantom stock units credited is determined by dividing the
amount of the deferred Director's fees by the fair market value of a share of
Company Common Stock as of the date of crediting. A Director's account will
be settled through the delivery of a corresponding number of shares of Common
Stock to the Director on the payment date or dates selected by the Director
in connection with the Director's initial deferral election. Payment must
commence on the date specified in the deferral election form (or earlier if
the Director ceases to be a member of the Board) and be made in either a lump
sum or through no more than five annual installments.
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
1999. 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 revised name is
Auto Parts & Equipment, and that index deleted two stocks from the former
<continued>
19
<PAGE>
index and added four new stocks. The Company reviewed the appropriateness of
continuing to use this index following the acquisition of The Standard
Products Company, and determined that it remains the most appropriate index
with which to compare the Company's stock performance.
The following chart assumes three hypothetical $100 investments on
December 31, 1994, 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>
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
$100.00 $105.34 $ 85.64 $107.38 $ 91.73 $ 72.33
100.00 137.58 169.17 225.60 290.08 351.12
100.00 123.63 138.72 173.49 196.43 151.01
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
On July 19, 1999, the Board of Directors restructured its Audit and
Compensation Committee into two Committees, an Audit Committee and a
Compensation Committee, and revised the membership of those Committees and
the Nominating Committee. During 1999 the Company's Board of Directors held
five Board meetings, three meetings of the Audit and Compensation Committee,
four meetings of the Audit Committee, three meetings of the Compensation
Committee and three meetings of the Nominating Committee. Each Director
other than Mr. Meier 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. Due to travel commitments, Mr.
Meier was unable to attend one Board meeting and meetings of the Compensation
and Nominating Committees which were held on the same day.
The Company's Audit Committee consists of Directors Aronson, Fretz,
Gormley and Shuey. 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.
The Compensation Committee consists of Directors Dunford, Meier, and
Pond. This Committee recommends the remuneration arrangements for the
Company's officers, the adoption of compensation plans in which officers are
eligible to participate, and the granting of options or other benefits as
designated under any of such plans.
At its meeting on February 8, 2000, the Board of Directors reconstituted
the Nominating Committee as the Governance and Nominating Committee to add
the review of corporate governance issues to the Committee's
responsibilities. The Committee was specifically requested to begin its
consideration of governance topics by developing a statement of governance
principles for consideration by the Board of Directors. The nominating
<continued>
20
<PAGE>
functions of this Committee, which is composed of Directors Dunford, Meier,
and Shuey, includes conducting the search for, evaluation of, and proposal to
the Board for nomination of qualified, competent and worthy candidates. The
Committee will consider candidates proposed by stockholders of the 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 Governance
and 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 2000. 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 1999, Ernst & Young LLP rendered
audit and related services to the Company, including an audit of the
Company's annual financial statements. 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 the
Audit 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 6, 2000, 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 on December 31, 1999.
<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 1 9,701,126 shs 2 12.8%
P.O. Box 5756
Cleveland, OH 44101-0756
Common Stock Sanford C. Bernstein 8,803,801 shs 3 11.6%
& Co., Inc.
767 Fifth Avenue
New York, NY 10153
Common Stock Amvescap PLC 4,097,350 shs 4 5.4%
11 Devonshire Square
London EC2M4YR2
England
<continued>
21
<PAGE>
<FN>
(1) Trustee for the Company's Thrift and Profit Sharing Plan and the Pre-Tax
Savings Plans at the Auburn, Bowling Green, Clarksdale, Findlay, El Dorado,
and Texarkana Plants.
(2) National City, 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.
(3) According to a filing on Schedule 13G with the SEC dated February 8,
2000, Sanford C. Bernstein & Co., Inc., an investment advisor, the indicated
shares are held for the accounts of discretionary clients who have the right
to receive dividends from and the proceeds of the sale of such shares. The
nature of the beneficial ownership consists of sole voting power with respect
to 4,930,569 shares, shared voting power with respect to 905,471 shares, sole
dispositive power with respect to 8,803,801 shares, and shared dispositive
power with respect to no shares.
(4) According to a filing on Schedule 13G with the SEC dated February 4,
2000, subsidiaries of Amvescap 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.
</TABLE>
The information which follows is furnished as of March 6, 2000, 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 and 1,007,510 shs 1 1.3%
Directors as a group
Common Stock Arthur H. Aronson 2,070 shs 2,3 *
Common Stock Thomas A. Dattilo 63,500 shs 2,4 *
Common Stock Edsel D. Dunford 12,914 shs 2 *
Common Stock John Fahl 122,209 shs 2 *
Common Stock Deborah M. Fretz 2,039 shs 2,3 *
Common Stock Dennis J. Gormley 3,588 shs 2 *
Common Stock William S. Klein 219,356 shs 2 *
Common Stock John F. Meier 1,727 shs 2,3 *
Common Stock Roderick F. Millhof 25,178 shs 2,4 *
Common Stock Byron O. Pond 1,355 shs 2,3 *
<continued>
22
<PAGE>
Common Stock Patrick W. Rooney 366,516 shs 2 *
Common Stock Ronald L. Roudebush 20,000 shs *
Common Stock John H. Shuey 1,544 shs 2,3 *
*Less than 1%
<FN>
(1) Includes 306,837 shares obtainable on exercise of stock options within
60 days following March 6, 2000, which options have not been exercised. The
nature of the beneficial ownership consists of 218,439 shares subject to sole
voting and investment power, and 400 shares subject to shared voting and
investment power. Of the shares shown as beneficially owned, 481,834, or
.63%, of the shares outstanding are shares held in the Company's Thrift and
Profit Sharing Plan for the account of the various executive officers and
Directors.
(2) Includes shares obtainable on exercise of stock options within 60 days
following March 6, 2000, which options have not been exercised, as follows:
Arthur H. Aronson - 1,570; Thomas A. Dattilo - 62,500; Edsel D. Dunford -
1,914; John Fahl - 37,250; Deborah M. Fretz - 1,389; Dennis J. Gormley -
3,588; William S. Klein - 26,800; John F. Meier - 727; Roderick F. Millhof -
15,400; Byron O. Pond - 355; Patrick W. Rooney - 114,050; and John H. Shuey -
1,044.
(3) In addition, pursuant to the 1998 Non-Employee Directors Compensation
Deferral Plan explained on page 19 of this proxy statement, the following
Directors deferred fees for service on the Board and were credited with the
following number of phantom stock units: Arthur H. Aronson - 3,909; Deborah
M. Fretz - 1,637; John F. Meier - 1,497; Byron O. Pond - 2,446; and John H.
Shuey - 4,076.
(4) In addition, pursuant to the 1998 Incentive Compensation Plan, this
officer holds the number of restricted stock units disclosed in Footnote 6 to
the Summary Compensation Table on pages 13 and 14.
</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 SEC 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, 1999, its Directors and executive officers complied with
all applicable Section 16(a) filing requirements.
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING IN 2001
Any stockholder who intends to present a proposal at the Annual Meeting
in 2001 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 21, 2000.
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.
<continued>
23
<PAGE>
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 21, 2000
IMPORTANT: All stockholders are earnestly requested to mark, date, sign
and mail promptly the enclosed proxy for which an envelope is provided.
24
<PAGE>
<LOGO>
COOPER TIRE & RUBBER COMPANY
NOTICE
of Annual Meeting of Stockholders
and Proxy Statement
May 2, 2000
IMPORTANT:
All stockholders are earnestly requested to mark, date,
sign and mail promptly the enclosed proxy for which
an envelope is provided.
25
<PAGE>
COOPER TIRE & RUBBER COMPANY
----------------------------
March 21, 2000
Dear Stockholder:
Enclosed is a Notice of our Annual Meeting on May 2, 2000 and a Proxy
Statement describing the business to be conducted at the meeting.
Your vote is important on each of the agenda items, whatever number of shares
you hold. Whether you plan to attend the meeting or not, please remove the
proxy form below, complete it and return it in the envelope provided.
Sincerely,
/s/ Patrick W. Rooney
- --------------------------
Patrick W. Rooney
Chairman of the Board and Chief Executive Officer
- -----------------------------------------------------------------------------
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 AGENDA ITEM, THEY WILL
BE VOTED "FOR" THE ELECTION OF THE LISTED NOMINEES AS DIRECTORS, AND
"AGAINST" ON AGENDA ITEM 2.
AFTER COMPLETING THE REVERSE SIDE OF THIS PROXY FORM, PLEASE
SIGN AND DATE BELOW AND RETURN PROMPTLY IN THE ENVELOPE PROVIDED.
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.
SIGNATURE(S) DATE
------------------------------- ---------------------
SIGNATURE(S) DATE
------------------------------- ---------------------
26
<PAGE>
COOPER TIRE & RUBBER COMPANY
----------------------------
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints T. A. Dattilo, J. Fahl, S. C. Kaiman,
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 2, 2000,
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
6, 2000, upon the matters set forth in the notice of said meeting and listed
below. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting or any adjournment
thereof.
The Board of Directors recommends a vote "FOR" the nominees listed below:
- ------------------------------------------------------------------------
1. Election of Directors. ( ) FOR the nominees listed below:
( ) WITHHOLD authority to vote for the nominees listed below:
John F. Meier Ronald L. Roudebush John H. Shuey
(INSTRUCTION: To withhold authority to vote for an
individual nominee, write that nominee's name in the
space provided here.)
The Board of Directors recommends a vote "AGAINST" Agenda Item 2.
- -----------------------------------------------------------------
2. Action on a stockholder proposal.
( ) FOR ( ) AGAINST ( ) ABSTAIN
IMPORTANT: Please sign and date the Proxy on the reverse side.
27
