<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [x]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Dana Corporation
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Bowne of Cleveland
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate Box):
[x ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
__________________________________________________________________
2) Aggregate number of securities to which transaction applies:
__________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
__________________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________________
1 Set forth the amount on which the filing fee is calculated
and state how it was determined.
<PAGE> 2
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
______________________________________________________________________
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______________________________________________________________________
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______________________________________________________________________
4) Date Filed:
______________________________________________________________________
<PAGE> 3
[logo]
DANA CORPORATION
P.O. BOX 1000
TOLEDO, OHIO 43697
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 6, 1994
The Annual Meeting of Stockholders of Dana Corporation ("Dana" or the
"Company"), a Virginia corporation, will be held at Riverfront Plaza, East Tower
(20th Floor), 951 East Byrd Street, Richmond, Virginia on April 6, 1994, at 11
o'clock A.M. (EDT), for the following purposes:
1. To elect a Board of Directors consisting of eight members;
2. To approve and adopt the Dana Corporation Employees' Stock Purchase Plan
that is described in the attached Proxy Statement; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment.
The Company's Board of Directors has fixed February 17, 1994, as the record
date for the Annual Meeting. Holders of record of the Company's Common Stock at
the close of business on that date are entitled to receive notice of and to vote
at the Annual Meeting or any adjournment. The stock transfer books will not be
closed.
Copies of Dana's Annual Report for the fiscal year ended December 31, 1993,
either accompany this Notice of Meeting and Proxy Statement or have been mailed
previously to the Company's stockholders.
By Order of the Board of Directors,
Martin J. Strobel
Secretary
March 4, 1994
------------------------
PLEASE VOTE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE
PROVIDED. YOUR PROMPT RESPONSE WILL ASSURE A QUORUM AT THE ANNUAL MEETING AND
SAVE DANA THE EXPENSE OF FURTHER SOLICITATION OF PROXIES.
<PAGE> 4
DANA CORPORATION
P.O. BOX 1000
TOLEDO, OHIO 43697
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 6, 1994
------------------------
This Proxy Statement is furnished by the Board of Directors (the "Board")
of Dana Corporation ("Dana" or the "Company") in connection with the
solicitation of proxies for use at the Annual Meeting of Stockholders to be held
on April 6, 1994, and at any and all adjournments.
Holders of record of Dana's Common Stock, $1 par value ("Common Stock") at
the close of business on February 17, 1994, are entitled to receive notice of
and to vote at the Annual Meeting or any adjournment. There were 49,292,389
shares of Common Stock outstanding on that date.
Each stockholder is entitled to one vote per share held on all matters to
be voted on. Any stockholder who executes and delivers a proxy may revoke it by
giving written notice to the Company's Secretary at any time prior to its use or
by voting in person at the Annual Meeting.
This Proxy Statement and the enclosed proxy were first sent to stockholders
on March 4, 1994.
ITEM 1 -- ELECTION OF DIRECTORS
A Board of Directors consisting of eight members will be elected at the
Annual Meeting, to hold office until the next annual meeting of stockholders or
until their successors are elected. The Board recommends the following nominees,
each of whom is now a director of Dana. Messrs. DiFederico and Singletary, who
are also currently directors of the Company, are not standing for re-election.
They will retire on the date of this year's Annual Meeting. The By-Laws have
been amended to reduce the number of directors to eight upon their retirements.
The following information was furnished to the Company by the nominees.
<TABLE>
<CAPTION>
NOMINEE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE IN PAST 5 YEARS
- ------- -------------------------------------------------------------
<S> <C>
Benjamin F. Bailar Dean and Professor of Administration, Jesse H. Jones Graduate
Age 59 School of Administration, Rice University since 1987.
Director of Dana since 1980. Also a director of First
Interstate Bank of Texas, Smith International, Inc., Transco
Energy Co., and U.S. Can Corporation.
Edmund M. Carpenter Chairman and Chief Executive Officer of General Signal
Age 52 Corporation (a manufacturer of capital equipment and
instruments for the process control, electrical,
semi-conductor and telecommunications industries) since 1988.
Director of Dana since 1991. Also a director of Campbell Soup
Company, Electroglas, Inc., and Texaco, Inc.
Eric Clark Director of BICC plc (a United Kingdom company serving the
Age 59 international market for infrastructure development) since
1985. Chairman and Managing Director of BICC Cables Limited
(a manufacturer of cables for the transmission of energy and
information) since 1986. Director of Dana since February
1994, and a member of the Dana Europe Advisory Board since
1991. Also a director of North West Water Group plc and of
Merseyside Development Corporation.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
NOMINEE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE IN PAST 5 YEARS
- ------- -------------------------------------------------------------
<S> <C>
Roger T. Fridholm President, Chief Executive Officer and a director of Of
Age 52 Counsel Enterprises, Inc. (a legal staffing support company)
since February 1994. Senior Vice President of Kelly Services,
Inc., 1992-94. Chairman of St. Clair Group, Inc., 1991-92.
President (1991-92), Chief Operating Officer (1979-91) and a
director (since 1980) of The Stroh Brewery Company. Director
of Dana since 1989. Also a director of Comerica Bank-Detroit
and MCN, Inc.
Glen H. Hiner Chairman and Chief Executive Officer of Owens-Corning
Age 59 Fiberglas Corporation (a manufacturer of glass fiber
materials and polyester resins) since January 1992. Senior
Vice President of General Electric Company, 1983-91. Director
of Dana since July 1993.
Southwood J. Morcott Chairman of the Board of Dana since 1990 and a director since
Age 55 1985. Chief Executive Officer of Dana since 1989, and
President and Chief Operating Officer since 1986, having
served the Company in various capacities since 1963. Chairman
of the Board of Hayes-Dana Inc., Dana's majority-owned
Canadian subsidiary, since 1987. Also a director of CSX
Corporation, Johnson Controls, Inc., and Phelps Dodge
Corporation.
John D. Stevenson Partner in the law firm of Smith, Lyons, Torrance, Stevenson
Age 64 & Mayer since 1962. Director of Dana since October 1993 and
of Hayes-Dana Inc. since 1963. Also a director of Canada
Trust Company and George Weston Limited.
Theodore B. Sumner, Jr. Chairman of Madison Financial Group (a financial consulting
Age 65 firm) since 1990. Retired as Chairman of the Board of First
Union National Bank of Charlotte, North Carolina and as Vice
Chairman of First Union Corporation more than 5 years prior
to 1990. Director of Dana since 1984.
</TABLE>
THE BOARD RECOMMENDS A VOTE FOR ALL OF THE FOREGOING DIRECTOR-NOMINEES.
Under Virginia law, directors are elected by a plurality of the votes cast by
shares entitled to vote in the election at the Annual Meeting, assuming a quorum
is present. In determining a quorum, shares that are voted on any matter
presented for vote will be counted. In determining the number of votes cast FOR
any director-nominee, votes that are withheld will be not be counted. Under New
York Stock Exchange rules, the election of directors is a "routine" item and
brokers may vote the shares they hold on behalf of the beneficial owners with
respect to this item without instructions from the beneficial owners. Therefore,
there will be no "broker nonvotes" on this item.
THE BOARD AND ITS COMMITTEES
BOARD MEETINGS
The Board held 6 meetings in 1993. All incumbent directors attended at
least 75% of the combined number of meetings of the Board and the Committees on
which they served in 1993.
COMMITTEES
The ADVISORY COMMITTEE advises the Chairman and the Board on the selection
and compensation of directors and on matters relating to Board and Committee
meetings, agenda and schedules. The Committee also functions as the Board's
nominating committee for directors and will consider written proposals for
nominations from stockholders containing the information set out in Article II,
Section 4 of Dana's By-Laws and submitted to the Company's Secretary not less
than 70 days before the annual meeting at which the
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<PAGE> 6
nominee is to be proposed for election. The current members of the Committee are
Messrs. Singletary (Chairman), Bailar, DiFederico and Sumner. The Committee met
3 times in 1993.
The AUDIT COMMITTEE maintains contact with Dana's independent auditors to
assure that appropriate audit programs and procedures are maintained and that
the independent auditors discharge their appropriate responsibilities. The
Committee also reviews internal auditing and controls. No member of the Audit
Committee may be an employee of Dana. The current members of the Committee are
Messrs. Bailar (Chairman), Carpenter, Singletary and Stevenson. The Committee
met twice in 1993.
The COMPENSATION COMMITTEE recommends compensation programs for Dana's
executive officers and reviews the Company's compensation plans for other
management personnel. The Committee recommends the salaries for the executive
officers and determines or reviews cash and non-cash compensation awarded or
granted under Dana's Additional Compensation Plan, 1982 Amended Stock Option
Plan and Restricted Stock Plan. No member of the Compensation Committee may be
an employee of Dana. The current members of the Committee are Messrs. Sumner
(Chairman), Carpenter, DiFederico and Fridholm. The Committee met 4 times in
1993.
The FINANCE COMMITTEE reviews Dana's long-range worldwide needs for capital
and the Company's financial condition, and approves courses of action to assure
Dana's continued liquidity. The Committee also reviews acquisitions and other
major corporate expenditures and Dana's fixed capital and working capital
positions. The current members of the Committee are Messrs. Morcott (Chairman),
Bailar, Carpenter, Clark, DiFederico, Fridholm, Hiner, Singletary, Stevenson and
Sumner. The Committee met 5 times in 1993.
The FUNDS COMMITTEE reviews the allocation of assets and the performances
of the investment managers for the Company's pension and other employee benefit
funds to assure compliance with applicable funds management rules and
regulations. The current members of the Committee are Messrs. Fridholm
(Chairman), DiFederico, Hiner and Morcott. The Committee met twice in 1993.
COMPENSATION
Non-employee directors are paid the following fees for their services, in
addition to reimbursement for expenses incurred: a $20,000 annual stipend for
service on the Board, a $2,500 annual stipend for service on each Committee
($5,000 for Committee Chairmen), a fee of $1,000 for each Board or Committee
meeting attended, and a fee of $1,000 per half day for any special services
performed at the request of the Chairman of the Board.
Non-employee directors may elect to defer payment of the foregoing fees
under the Company's Director Deferred Fee Plan. Deferred fees may be credited to
a Stock Account or an Interest Equivalent Account or both. Whenever cash
dividends are paid on Dana's Common Stock, each Stock Account is credited with
additional Units equal to the number of shares that could have been purchased if
a cash dividend had been paid on the number of Units currently in the Account.
For those directors who have elected to participate in this Plan and to defer
payment into a Stock Account, the number of Units in the director's Stock
Account as of December 31, 1993, is shown in the table that appears under the
caption, "Stock Ownership." The value of the Stock Account Units at the time of
distribution will be based on the market value of the Common Stock. Interest
Equivalent Accounts accrue interest quarterly at the rate for prime commercial
loans. Distribution of the deferred fees, whether held in a Stock Account or an
Interest Equivalent Account, is made only in cash when the director retires,
dies or terminates his services with Dana. Benefits payable under this Plan are
protected in the event of a merger, consolidation, change in control or sale of
substantially all of the assets of Dana.
All non-employee directors participate in the Company's Directors
Retirement Plan. This Plan provides for the payment of retirement benefits to
non-employee directors who retire from service with Dana after age 65 or who
retire due to illness or disability, and to the spouses of eligible directors
who die while serving on the Board. The monthly benefit paid under this Plan is
equal to 1/12 of one-half of the annual average of the fees payable to the
director during his last 3 full calendar years of Board service. A director may
elect to receive a reduced benefit after retirement in order to provide a
survivor's benefit to his spouse after his death. Benefits
3
<PAGE> 7
are paid in cash. Payments continue until the earlier of the director's death or
until he has received a number of monthly payments equal to the number of months
he served on the Board. If a director dies while serving on the Board, his
spouse receives a number of monthly payments equal to the number of months he
served on the Board. Benefits payable under this Plan are protected in the event
of a merger, consolidation, change in control or sale of substantially all of
the assets of Dana.
All non-employee directors also participate in the Company's
stockholder-approved Directors' Stock Option Plan. This Plan provides for the
automatic grant of options for 1,500 shares of Common Stock to each non-employee
director annually on the date of the Board's organizational meeting which is
held after the annual meeting of stockholders. Options are priced at the fair
market value of the Common Stock on the date of grant and have a term of 10
years, except in the case of the director's earlier death or retirement, when
they become exercisable within specified periods following the date of such
event.
STOCK OWNERSHIP
DANA COMMON STOCK
The following table shows shares of Dana Common Stock and Units with a
value tied to the Common Stock which were beneficially owned on December 31,
1993, by the Company's director-nominees, the executive officers named in the
Summary Compensation Table, and all director-nominees and executive officers as
a group. At that date, the group owned 1.32%, and each person owned less than
1%, of the outstanding Common Stock. All reported shares were owned directly
except as follows: Mr. Bailar indirectly owned 1,050 shares which were held in a
retirement plan account and 450 shares which were held in a trust of which he
and his spouse were co-trustees; Mr. Fridholm indirectly owned 1,000 shares
which were held in a revocable trust; and Mr. Hirsch indirectly owned 5,100
shares which were held by his spouse.
<TABLE>
<CAPTION>
STOCK OWNERSHIP,
INCLUDING RESTRICTED UNITS REPRESENTING
STOCK AND DEFERRED
BENEFICIAL OWNER EXERCISABLE OPTIONS(1) COMPENSATION(2)
----------------------------------- ---------------------- ------------------
<S> <C> <C>
James E. Ayers 61,959 shares 13,109 Units
Benjamin F. Bailar 1,500 shares 0 Units
Edmund M. Carpenter 1,562 shares 833 Units
Eric Clark 0 shares(3) 0 Units(3)
Roger T. Fridholm 1,000 shares 3,309 Units
Glen H. Hiner 500 shares 0 Units
Carl H. Hirsch 61,661 shares 11,259 Units
Joseph M. Magliochetti 47,668 shares 0 Units
Southwood J. Morcott 163,405 shares 7,363 Units
Borge R. Reimer 63,597 shares 7,278 Units
John D. Stevenson 756 shares 0 Units
Theodore B. Sumner, Jr. 500 shares 11,093 Units
Director-Nominees and Executive
Officers as a Group (25 persons) 649,822 shares 72,926 Units
</TABLE>
- ---------------
(1) The shares reported for the executive officers (Messrs. Ayers, Hirsch,
Magliochetti, Morcott and Reimer) include restricted stock which the
officers were entitled to vote under the Company's 1989 Restricted Stock
Plan and shares subject to options exercisable within 60 days. Details of
the officers' restricted stock ownership appear at Note 4 to the Summary
Compensation Table. Shares subject to options exercisable within 60 days
include: Mr. Ayers, 29,425 shares; Mr. Hirsch, 37,970 shares; Mr.
Magliochetti, 26,025 shares; Mr. Morcott, 108,250 shares; Mr. Reimer, 37,625
shares; the director-nominees and executive officers as a group, 374,570
shares.
(2) The Units reported for the non-employee directors (Messrs. Carpenter,
Fridholm and Sumner) represent fees deferred to the director's Stock Account
under the Company's Director Deferred Fee Plan, which is
4
<PAGE> 8
described under the caption "The Board and Its Committees." The Units
reported for the executive officers (Messrs. Ayers, Hirsch, Morcott and
Reimer) represent annual bonuses earned under the Company's Additional
Compensation Plan and deferred to the officer's Stock Account. Under this
Plan, the Compensation Committee may defer payment of all or a portion of a
participant's bonus and credit the deferred amounts to a Stock Account, an
Interest Equivalent Account, or both. Whenever cash dividends are paid on
Dana's Common Stock, each Stock Account is credited with additional Units
equal to the number of shares that could have been purchased if a cash
dividend had been paid on the number of Units currently in the Account. For
both the non-employee directors and the executive officers, the value of the
Units at the time of distribution will be based on the market value of the
Company's Common Stock at that time, but the deferred amounts will be paid
in cash. Units will not be distributed in the form of Common Stock.
(3) Mr. Clark was elected as a director in February 1994, after the reporting
date for this table. He owned 500 shares when he took office.
HAYES-DANA COMMON STOCK
At December 31, 1993, Dana's majority-owned Canadian subsidiary, Hayes-Dana
Inc., had 15,181,706 shares of common stock outstanding. Of these, Mr. Ayers
owned 2,000 shares; Mr. Morcott owned 8,154 shares; Mr. Stevenson owned 2,856
shares; and Dana's director-nominees and executive officers as a group owned
13,136 shares (including options exercisable within the next 60 days), in all
cases less than 1% of the Hayes-Dana shares outstanding at that date.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains information about the compensation from Dana
and its subsidiaries paid or awarded to, or earned by, the Company's Chief
Executive Officer and the four other highest compensated persons who were
serving as executive officers of the Company at the end of 1993.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
AWARDS
ANNUAL COMPENSATION -----------------------
----------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS/ COMPENSATION
POSITION YEAR ($)(1) ($)(2) ($)(3) ($)(4) SARS(#) ($)(5)
- -------------------------------------- ----- --------- --------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Southwood J. Morcott 1993 $ 761,898 $ 412,500 $ 79,118 $264,662 47,000 $6,550
Chief Executive Officer 1992 643,666 375,000 63,502 0 65,000 6,051
1991 568,155 0 -- 0 20,000 --
Borge R. Reimer 1993 375,000 206,300 56,461 33,915 17,000 6,550
Executive Vice President 1992 350,000 192,500 -- 0 23,500 6,051
1991 330,000 0 -- 0 10,000 --
Carl H. Hirsch 1993 375,000 206,300 72,161 63,547 17,000 6,550
Executive Vice President 1992 350,000 192,500 55,547 0 23,500 6,051
1991 315,083 0 -- 0 10,000 --
James E. Ayers 1993 340,000 187,000 -- 34,957 17,000 6,550
Chief Financial Officer 1992 300,000 165,000 -- 77,500 23,500 5,768
1991 283,840 0 -- 0 9,000 --
Joseph M. Magliochetti 1993 324,655 185,200 -- 76,221 22,000 6,423
President -- Dana North American 1992 260,000 160,000 -- 0 17,000 3,183
Operations 1991 228,000 0 -- 0 7,000 --
</TABLE>
- ---------------
(1) For Mr. Morcott, the amounts reported include, in addition to base salary
paid by Dana, the following compensation for services as Chairman of the
Board of Hayes-Dana Inc.: $11,898 in 1993, $31,166 in 1992, and $68,155 in
1991. For Mr. Magliochetti, the amount reported for 1993 includes $14,655
for services as a Director of Hayes-Dana Inc. These amounts are valued at
the currency rate in effect on December 31 of the applicable year.
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<PAGE> 9
(2) Annual bonuses received under the Company's Additional Compensation Plan are
reported in the year earned, whether paid in that year or in the following
year.
(3) "Other Annual Compensation" includes perquisites and personal benefits where
such perquisites and benefits exceed the lesser of $50,000 or 10% of the
officer's annual salary and bonus for the year. Information for 1991 is not
required by the proxy rules. Of the amounts reported, the following items
exceeded 25% of the total perquisites and benefits reported for the officer:
Mr. Morcott, professional services valued at $41,872 in 1993 and $38,684 in
1992; Mr. Reimer, professional services valued at $39,489 in 1993; and Mr.
Hirsch, professional services valued at $42,861 in 1993 and $33,936 in 1992.
Professional services include financial, tax, and estate planning services.
(4) Restricted stock is granted under the Company's 1989 Restricted Stock Plan.
Restricted stock awards were granted to all of the officers in 1989, and
additional awards were granted to Messrs. Ayers and Magliochetti in 1992 and
in April 1993, respectively. All of these awards were subject to a 5-year
restriction period during which the grantee must remain a full-time employee
of Dana or its subsidiaries. In November 1993, the executive officers
elected to extend the restriction periods for the restricted stock awarded
to them in 1989. The extension periods elected by the officers vary from,
approximately, 2.5 to 6.5 years. Additional shares of restricted stock were
granted to the officers as consideration for these extensions. In each case,
the restriction period for the additional shares matched the length of the
extension period for the 1989 awards. The Compensation Committee, which
administers the Plan, has the discretion to shorten any restriction periods
or to waive the restrictions. Dividends on the granted shares are paid in
additional restricted shares, in lieu of cash, at the same times and rates
as cash dividends are paid to the Company's stockholders. The value of the
1993 restricted stock grants shown in the Summary Compensation Table was
calculated by multiplying the number of shares awarded by the difference
between the closing price of the Company's Common Stock on the date of grant
(as reported in the New York Stock Exchange Composite Transactions published
in The Wall Street Journal) and the purchase price, if any, paid by the
officer.
At December 31, 1993, Mr. Morcott held a total of 35,308 shares of
restricted stock valued at $2,014,067; Mr. Reimer held 10,414 shares of
restricted stock valued at $591,538; Mr. Hirsch held 10,930 shares of
restricted stock valued at $622,434; Mr. Ayers held 10,097 shares of
restricted stock valued at $572,058; and Mr. Magliochetti held 12,783
shares of restricted stock valued at $741,382. The value of these aggregate
restricted stock holdings was calculated by multiplying the number of
shares held by the difference between the closing price of the Company's
Common Stock on December 31, 1993 ($59.875 per share, as reported in the
New York Stock Exchange Composite Transactions published in The Wall Street
Journal) and the purchase price, if any, paid by the executive officer.
(5) "All Other Compensation" consists of contributions made by Dana under the
Company's Savings and Investment Plan to match contributions made by the
officers to their accounts. Information for 1991 is not required by the
proxy rules.
OTHER ADDITIONAL COMPENSATION
Key employees of the Company other than the executive officers named in the
Summary Compensation Table are eligible to receive annual bonuses under the
Company's Additional Compensation Plan. The Company also has various incentive
compensation plans for other employees (such as individual incentive, group
incentive and Scanlon-type plans) that are designed to reward their commitment
to the Company's philosophy of total quality, increased productivity and
improved performance. In 1993, Dana employees other than the named executive
officers earned a total of over $81 million in additional compensation.
OPTION GRANTS IN 1993
The following table contains information about the stock options granted in
1993 to the executive officers named in the Summary Compensation Table. No stock
appreciation rights were granted in 1993. In calculating the "Grant Date Present
Value," the Company used a variation of the Black-Scholes option
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<PAGE> 10
pricing model, as described in Note 3. The value shown is a hypothetical value
only; over their lives, the options could have a greater or a lesser value than
that shown in the table, and under some circumstances they could have zero
value.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
% OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED EXERCISE GRANT
UNDERLYING TO OR BASE DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED(#) IN 1993 ($/SHARE)(1) DATE(2) VALUE($)(3)
----------------- ---------- --------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Mr. Morcott 47,000 13.25% $ 55.125 7/18/03 $ 794,770
Mr. Reimer 17,000 4.79% $ 55.125 7/18/03 $ 287,470
Mr. Hirsch 17,000 4.79% $ 55.125 7/18/03 $ 287,470
Mr. Ayers 17,000 4.79% $ 55.125 7/18/03 $ 287,470
Mr. Magliochetti 22,000 6.20% $ 55.125 7/18/03 $ 372,020
</TABLE>
- ---------------
(1) The exercise price (the price that the officer must pay to purchase each
share of stock that is subject to option) is equal to the fair market value
of the stock on the date of grant of the option. All options shown were
granted on July 19, 1993.
(2) Options may be exercised during a period that begins 1 year after the date
of grant and ends 10 years after the date of the grant. During the exercise
period, except as otherwise limited by Internal Revenue Code provisions with
respect to incentive stock options, an optionee may exercise 25% of the
total options granted within 2 years after the date of grant, 50% within 3
years after the date of grant, 75% within 4 years after the date of grant,
and all of the options after 4 years from the date of grant.
(3) A variant of the Black-Scholes option pricing model was used to determine
the hypothetical grant date value for these options. In applying the model,
the Company assumed a 12-month volatility of 24.33%, a 5.96% risk-free rate
of return, a dividend yield at the date of grant of 2.9%, and a 10-year
option term. The model did not assume any forfeitures or exercises prior to
the end of the 10-year term, which assumptions could have reduced the
reported grant date values. Since this model is assumption-based, it may not
accurately determine the options' present value. The true value of the
options, when and if exercised, will depend on the actual market price of
the Company's Common Stock on the date of exercise.
AGGREGATED OPTION/SAR EXERCISES IN 1993 AND 1993 YEAR-END OPTION VALUES
The following table contains information about the options and stock
appreciation rights ("SARs") for the Company's Common Stock which were exercised
in 1993 by the executive officers named in the Summary Compensation Table and
the aggregate value of these officers' unexercised options at the end of 1993.
In March 1993, all outstanding SARs held by the officers were cancelled.
Consequently, none of the officers held any SARs at December 31, 1993.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 12/31/93(#) AT 12/31/93($)(3)
SHARES ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE(#)(1) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------- ----------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Morcott 3,000 $ 83,375 108,250 110,750 $ 2,288,890 $ 1,565,046
Mr. Reimer 16,000 272,500 37,625 41,875 757,835 613,757
Mr. Hirsch 17,655 418,785 37,970 41,875 767,603 613,757
Mr. Ayers 3,000 63,624 29,425 40,875 698,985 588,507
Mr. Magliochetti 3,000 82,500 26,025 39,625 569,798 479,570
</TABLE>
- ---------------
(1) Also includes shares with respect to which SARs were exercised for cash.
7
<PAGE> 11
(2) The value realized on the exercise of options or SARs was calculated by
multiplying the number of underlying shares by the difference between the
closing price of the Company's Common Stock on the date of exercise (as
reported in the New York Stock Exchange Composite Transactions published in
The Wall Street Journal) and the option or SAR exercise price.
(3) The value of unexercised options was calculated by multiplying the number of
underlying shares held by the difference between the closing price of the
Company's Common Stock on 12/31/93 ($59.875 per share, as reported in the
New York Stock Exchange Composite Transactions published in The Wall Street
Journal) and the option exercise price.
PENSION PLANS
The executive officers named in the Summary Compensation Table are eligible
to receive retirement benefits under their employment agreements, which are
described under "Employment Agreements." Each employment agreement provides that
if the officer retires from Dana at or after age 55 with 15 years of service, he
will receive a lifetime monthly pension calculated at 50% (or, if higher, the
percentage which is the product of 1.6% multiplied by his credited service at
retirement) of his highest average monthly compensation (defined as salary
received during the month preceding his termination of service plus 1/12th of
the average of the highest bonuses payable to him during any 3 consecutive
years) reduced by benefits payable to him by Dana under the pension plans
described below, pension or disability benefits payable to him by other
organizations, and 50% of the primary Social Security benefit. The types of
compensation that are reported in the Summary Compensation Table under "Salary"
(excluding, for Messrs. Morcott and Magliochetti, compensation paid for services
to Hayes-Dana Inc., as described in Note 1) and "Bonus" (and also including, if
applicable, long-term incentive awards earned prior to 1992 under a
now-discontinued provision of the Additional Compensation Plan) will be used to
calculate the retirement benefits payable to the officers under their employment
agreements. The maximum monthly pensions that the officers would receive under
their employment agreements if they had retired on January 1, 1994, before
taking into account the reductions described above, would be as follows: Mr.
Morcott, $45,694; Mr. Reimer, $29,039; Mr. Hirsch, $25,124; Mr. Ayers, $20,275;
and Mr. Magliochetti, $19,654. In lieu of receiving these benefits in the form
of a monthly pension, the officer may elect to receive the distribution of the
benefits in any form permitted under the Dana Corporation Retirement Plan. Mr.
Magliochetti is eligible to receive this lifetime monthly pension if his
employment with Dana terminates prior to age 55 for a reason other than death or
"cause" (as defined in his agreement), provided that his employment terminates
after a change in control of the Company. Under such circumstances, his monthly
pension would be as described above, less 1/12 of 1.6% for each full month
between the date of such termination and age 55.
The Dana Corporation Retirement Plan is a cash balance plan (a type of
non-contributory defined benefit pension plan in which participants' benefits
are expressed as individual accounts). Benefits are computed as follows. During
each year of participation in the Plan, a participant earns a service credit
equal to a specified percentage of his earnings (as defined in the Plan) up to
one quarter of the Social Security taxable wage base, plus a specified
percentage of his earnings above one quarter of the taxable wage base. The
percentages increase with the length of Dana service. A participant with 30 or
more years of service receives the maximum credit (6.4% of earnings up to one
quarter of the taxable wage base, plus 12.8% of earnings over one quarter of the
taxable wage base). A participant employed by Dana on July 1, 1988 (when the
Plan was converted to a cash balance plan) also earns a transition benefit
designed to assure that his retirement benefit under the current Plan will not
be less than the benefit he would have received under the predecessor plan. A
participant earns this transition benefit ratably over the period from July 1,
1988, to his 62nd birthday, except that in the event of a change in control of
Dana, he will be entitled to the entire transition benefit. The accumulated
service credits and the transition benefit are credited with interest annually,
in an amount (not less than 5%) established by the Board. A participant employed
by Dana on July 1, 1988, who was eligible to retire on July 1, 1993, but who
elects to retire after that date, will receive the greater of the benefit
provided by the current Plan or the benefit provided under the predecessor plan
with interest credits. The normal retirement age under the Plan is 65.
8
<PAGE> 12
Federal tax law imposes maximum payment limitations on tax qualified plans.
Dana has adopted an Excess Benefits Plan which covers all employees eligible to
receive retirement benefits under a funded Dana defined benefit plan. Under this
Excess Benefits Plan, the Company will pay any amounts which exceed the federal
limitations from its general funds. In addition, Dana has adopted a Supplemental
Benefits Plan which covers U.S.-based employees who were eligible to receive
long-term awards under the Additional Compensation Plan as of September 1, 1988.
Under this Supplemental Benefits Plan, Dana will pay the participant the
difference between the aggregate benefits that he will receive under the Dana
Corporation Retirement Plan and the Excess Benefits Plan and the benefit that he
would have been entitled to receive under the predecessor plan to the Dana
Corporation Retirement Plan in effect prior to July 1, 1988. In the event of a
change in control of Dana, the participant will receive a lump sum payment of
all benefits previously accrued under the Excess Benefits and Supplemental
Benefits Plans and will be entitled to continue to accrue benefits thereunder.
The following table shows the estimated annual benefits payable in the
aggregate under the Dana Corporation Retirement Plan, Excess Benefits Plan and
Supplemental Benefits Plan to employees retiring at normal retirement age on
January 1, 1994, assuming normal reduction for Social Security benefits. At that
date, Mr. Morcott had 30 full years of credited service under the foregoing
plans; Mr. Reimer, 37 years; Mr. Hirsch, 33 years; Mr. Ayers, 29 years; and Mr.
Magliochetti, 27 years. As noted above, the Dana Corporation Retirement Plan
provides that certain Plan participants will receive benefits which are the
greater of those calculated under that Plan or under the predecessor plan. Since
it is currently more advantageous to these executive officers to receive
benefits calculated under the predecessor plan, the following table assumes that
calculation. Benefits payable under the predecessor plan are based on the
participant's "final monthly earnings," defined as his base salary (before
reduction for salary deferrals under the Company's Savings and Investment Plan),
plus bonuses paid during his 3 highest of his last 10 years of employment prior
to retirement, divided by 36. The types of compensation that are reported in the
Summary Compensation Table under "Salary" (excluding, for Messrs. Morcott and
Magliochetti, compensation paid for services to Hayes-Dana Inc., as described in
Note 1 to the Table) and "Bonus" (and also including, if applicable, long-term
incentive awards earned prior to 1992 under a now-discontinued provision of the
Additional Compensation Plan) will be used to calculate the retirement benefits
payable to these officers under the predecessor plan. As described above, the
benefits shown in the following table will reduce the retirement benefits
payable to the named executive officers under their employment agreements.
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------
REMUNERATION 20 25 30 35 40
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 250,000.... $ 75,476 $ 94,344 $114,344 $134,344 $154,344
500,000.... 155,476 194,344 234,344 274,344 314,344
750,000.... 235,476 294,344 354,344 414,344 474,344
1,000,000.... 315,476 394,344 474,344 554,344 634,344
1,250,000.... 395,476 494,344 594,344 694,344 794,344
1,500,000.... 475,476 594,344 714,344 834,344 954,344
</TABLE>
EMPLOYMENT AGREEMENTS
The executive officers named in the Summary Compensation Table have
employment agreements with Dana. The term of each agreement is 3 years, with an
automatic 1-year extension at the end of each year to maintain the full 3-year
term unless either party gives notice not to extend the termination date or
unless the agreement is terminated earlier by the death or disability of the
officer or for "cause" (as defined in the agreement). The employment agreements
provide that while the officers are employed by the Company, they will be paid
their base salaries, at a minimum. The Compensation Committee recommends the
officers' base salaries annually, as described in the "Compensation Committee
Report on Executive Compensation." Their employment agreements currently provide
for the payment of 1994 base salaries to the officers as follows: Mr. Morcott,
$835,000; Mr. Reimer, $392,000; Mr. Hirsch, $397,000; Mr. Ayers, $360,000; and
Mr. Magliochetti, $350,000.
9
<PAGE> 13
Under each agreement, the officer agrees not to disclose any confidential
information about Dana to others while employed by the Company or thereafter and
not to engage in competition with Dana during any period when he is receiving
payments or benefits under the agreement.
During his period of employment, the officer is entitled to participate in
Dana's Additional Compensation Plan, if designated by the Compensation
Committee, and in Dana's various employee benefit plans. In the event of a
change in control of Dana, the officer will be entitled to continue as a
participant in the Additional Compensation Plan during the remainder of the term
of his employment agreement, the award opportunities to which he will be
entitled will be equal to the highest award opportunities that were provided
prior to the change in control, and his awards will be payable in cash (not
deferrable). If the officer's employment is terminated following a change in
control, any previously deferred awards under the Additional Compensation Plan
will be paid on an accelerated basis. The Committee designates participants in
the Additional Compensation Plan based on its determination that the participant
is a key employee of the Company who is in a position to have a direct and
significant impact on the growth and success of the Company and who is, either
individually or as a member of a group of employees, contributing in a
substantial degree to the success of the Company.
If the officer is terminated by Dana "without cause" (as defined in the
agreement) or, after a change in control of the Company, Dana terminates his
employment for "good reason" (as defined in the agreement), he will be entitled,
for the remainder of the term of the agreement, to receive monthly compensation
equal to his highest average monthly compensation and to continue participation
in Dana's employee benefit plans. If the termination follows a change in
control, he will immediately receive such monthly compensation (discounted and
paid in a lump sum) and any awards previously deferred under the Additional
Compensation Plan (paid in full for any completed performance periods and
performance periods to be completed during the term of the agreement, and pro
rata for any performance periods to be completed after such term).
If any excise tax is imposed under Section 4999 of the Internal Revenue
Code, as amended, on payments received by the officer as a result of a change in
control of Dana, Dana will pay the officer a sum that will net him the amount he
would have received if the excise tax had not been imposed.
The retirement benefits payable to the officers under their employment
agreements are described under "Pension Plans."
The officers also have related agreements with Dana which provide that
under certain circumstances the Company will pay legal expenses they may incur
to enforce their employment agreements.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
TO DANA'S SHAREHOLDERS:
We, the members of the Compensation Committee, are independent, nonemployee
directors who have no "interlocking" relationships as defined by the Securities
and Exchange Commission.
Our goal, as a Committee, is to develop executive compensation policies
that are consistent with and linked to the Company's strategic business
objectives. Beyond that, our priorities are to fill the positions within Dana's
senior management team with qualified individuals and to compensate those
individuals fairly and commensurately with their contributions to furthering the
Company's strategic direction and objectives.
We have developed the following policies to meet these objectives:
- Emphasize variable at-risk compensation which is dependent upon the
Company's level of success in meeting specified corporate performance
goals;
10
<PAGE> 14
- Comprise a significant amount of compensation for executive officers as
non-cash equity, to create an at-risk element which focuses management on
the long-term interests of the Company's shareholders and balances
short-term and long-term business and financial strategic goals;
- Encourage the accumulation of personal stockholdings to further
strengthen the executive officers' identification with the shareholders;
- Create compensation opportunities which enhance the Company's ability to
retain and encourage the development of knowledgeable and experienced
executive officers;
- Establish compensation levels which reflect current market practices to
maintain a stable, successful management team.
We establish, administer, and assess the effectiveness of the Company's
executive compensation programs in support of these compensation policies. We
also review and approve all salary arrangements and other remuneration for the
Company's executive officers and evaluate their individual performances.
In making our determinations, we consider competitive market data which is
provided to the Company by an independent compensation consultant. This data is
reviewed by another independent compensation consultant whom we retain
separately. This data compares Dana's compensation practices to those of a group
of comparable companies. The comparison group, which we select in advance and
which may change from time to time, currently consists of 23 companies which
have national and international business operations and comparable (on average)
sales volumes, market capitalizations, employment levels, and lines of business.
The companies chosen for the comparison group are not necessarily those
represented in the stock performance graph which follows this Report. We believe
Dana's competitors for executive talent are a broader group of companies and not
limited to the companies included in the groups established for comparing
industry-specific shareholder returns.
The key elements of Dana's executive compensation program are base salary,
annual incentives, and long-term compensation, as described below. In
determining an executive officer's compensation, we consider all elements of his
compensation package, including severance plans, insurance, and other benefits.
BASE SALARIES
We recommend base salaries for each of Dana's executive officers on an
individual basis, taking into consideration the following factors, without
weighing them: the individual's performance, contributions to the Company's
success, and tenure in the job; pay practices for comparable positions in the
comparison group; and internal equities among positions. Since we believe that a
relatively high portion of cash compensation should be "at risk" as incentive
compensation, we tend to recommend base salaries for the Company's executive
officers which are lower than the median (size-adjusted) in the comparison group
and annual incentive opportunities which are larger. In cases of long tenure and
strong individual performance factors or other factors, as we determine on a
subjective basis, an individual's base salary may exceed the median of the
comparison group practice. Conversely, shorter tenure and developing performance
may yield base salary below the median. In 1993, the base salaries of the
executive officers named in the Summary Compensation Table, as a group, were
approximately at the median of the comparison group.
ANNUAL INCENTIVES
Dana's executive officers have an opportunity to earn annual bonuses under
the Company's Additional Compensation Plan. Award opportunities under the Plan
vary based on the individual's position and base salary. We may adjust an
individual's bonus upward or downward by as much as 20% based on consideration
of such individual performance factors and other factors as we determine to be
relevant, on a subjective basis. Bonuses are paid based on the Company's success
in achieving performance objectives which we establish in advance, taking into
account the Company's cyclical markets. These objectives are set annually, based
on Dana's short-term strategic direction and the current economic climate. The
objectives may vary from year to year, and we may adjust them during the year if
necessary, in our discretion, to preserve the incentive feature of the Plan if
events occur which alter the basis on which they were selected. The performance
measures
11
<PAGE> 15
which are considered in setting the objective for any given year may include,
for example, profit after taxes, return on equity, return on average assets, and
earnings per share. In addition to establishing the annual performance measure
in advance, we also establish the corporate performance levels and the
percentages of the officers' base salaries at the different performance levels
which will be used to calculate the amounts of the bonuses. The performance
levels consist of a target (the performance level that we expect the Company to
achieve), a hurdle (the minimum level of corporate performance below the target
that must be achieved for bonuses to be paid), and a goal (the corporate
performance level at which bonuses at 100% of base salary will be paid).
Corporate profit after taxes was the performance measure chosen for 1993. In
1993, the target performance level was exceeded and the annual bonuses shown in
the Summary Compensation Table were earned by the executive officers.
The Omnibus Budget Reconciliation Act of 1993 ("OBRA '93") established
certain criteria for the tax deductibility of compensation in excess of $1
million paid to the Company's executive officers. To meet the criteria
applicable to performance based compensation (as defined in OBRA '93), the
Company's Additional Compensation Plan would have to be amended to limit our
discretion to make adjustments to individuals' bonuses based on such individual
performance factors and other factors as we may determine, from time to time, to
be relevant. We believe that the flexibility to adjust annual bonuses upward, as
well as downward, is an important feature of the Plan and one which serves the
best interests of the Company by allowing us to recognize and motivate
individual executive officers as circumstances warrant (for example, in response
to conditions or events not anticipated at the time the year's annual
performance goals were set). Consequently we do not propose to amend the Plan to
comply with the OBRA '93 requirements. Amounts paid under the Plan to the
executive officers will count toward the $1 million cap which is provided in
Section 162(m) of the Internal Revenue Code, as amended by OBRA '93, and, those
portions of the officers' compensation which are not performance based (as
defined in OBRA '93) and which exceed the cap, will not be tax deductible to the
Company.
LONG-TERM INCENTIVES
Long-term incentives are provided to the executive officers under the
Company's 1982 Amended Stock Option Plan. In keeping with the Company's
commitment to provide a total compensation package which favors at-risk
components of pay, long-term incentives comprise a substantial portion of each
executive officer's total compensation. We believe significant stock option
grants encourage the executive officers to own and hold the Company's stock and
tie their long-term economic interests directly to those of the shareholders. In
determining the option grant sizes, we consider the following factors, without
weighing them: the executive officer's relative position, years of service,
current stock ownership level, past option grants, and current stock ownership
objectives. The value of the options granted to the executive officers in 1993
was intended to approximate the value of their grants in 1992. Fewer option
shares were granted in 1993 because the option exercise price in both years was
equal to the market price of the shares on the grant date and the Company's
stock price had appreciated since 1992. The gain on the exercise of options
granted under the 1982 Amended Stock Option Plan will be subject to the $1
million cap on deductibility under OBRA '93 unless it qualifies as performance
based compensation. Under the Internal Revenue Service's transition rules, the
gain on options granted under the Plan prior to the Company's annual meeting in
1997 will qualify as performance based compensation and will therefore be exempt
from the application of Section 162(m). Before the 1997 annual meeting, we will
determine whether to recommend amendments to the Plan to comply with OBRA '93
thereafter.
From time to time, we also recommend grants of restricted stock to
individual executive officers under the Company's 1989 Restricted Stock Plan.
Such grants may be used, for example, to recognize an individual's promotion to
the Company's senior management group or exceptional contributions to the
Company. The majority of the outstanding awards of restricted stock were granted
prior to February 17, 1993, the effective date of the applicable provisions of
OBRA '93, and should not be subject to the $1 million cap on deductibility of
compensation. However, one executive officer received a grant of restricted
stock in April 1993, in recognition of his promotion to a new position. Also, in
November 1993, we granted additional shares of restricted stock to the executive
officers in consideration for their election to extend the restriction periods
12
<PAGE> 16
for the restricted stock awarded to them in 1989. Those shares of restricted
stock, and future awards of restricted stock, will likely be subject to the $1
million cap. At the time any future awards are contemplated, we will evaluate
the impact of the OBRA '93 requirements.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Mr. Morcott earned a base salary of $750,000 for 1993. We recommended this
base salary in December 1992, based on our consideration of the following
corporate and individual performance factors, without weighing them. We
considered the Company's 1992 sales, profits, debt reduction, and stock price
performance compared to the performance of other companies in the comparison
group, which we reviewed without reference to pre-set target performance levels.
We also considered Mr. Morcott's base salary compared to the salary practices
within the Company's comparison group, his tenure as the Company's Chief
Executive Officer and total years of service to the Company, and his
contributions to the success of the Company's 1992 public stock offering and
implementation of Company-wide quality improvement programs and corporate
restructuring activities designed to reduce or contain operating costs. Mr.
Morcott's 1993 base salary was approximately at the median for comparable
positions within the comparison group. In addition, Mr. Morcott earned an annual
bonus of $412,500 for 1993 (55% of his base salary), which was calculated in
accordance with the provisions of the Additional Compensation Plan, without any
adjustment.
Mr. Morcott was granted options for 47,000 shares of Company stock in 1993.
We determined the value of his option grant by taking into consideration the
factors described above under "Long-Term Incentives." The value of Mr. Morcott's
1993 option grant was intended to approximate that of his 1992 grant. Fewer
option shares were granted to him in 1993 because the exercise price of the
options was equal to the market price of the shares on the grant date and the
Company's stock price had appreciated since 1992.
SUMMARY
The Compensation Committee will continue to evaluate Dana's executive
compensation programs on an ongoing basis to assure that the Company's
compensation philosophies and practices are consistent with the objective of
enhancing shareholder value.
Submitted by,
Theodore B. Sumner, Chairman
Edmund M. Carpenter
Mario A. DiFederico
Roger T. Fridholm
13
<PAGE> 17
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following graph shows the yearly percentage change in cumulative total
shareholder return on Dana Common Stock (assuming a $100 investment on 12/31/88
and reinvestment of dividends during the period) compared to the cumulative
total return on the Standard & Poor's 500 Stock Index, Standard & Poor's Heavy
Duty Trucks & Parts Index, and Standard and Poor's Auto Parts-After Market Index
for the past 5 fiscal years.
<TABLE>
<CAPTION>
S&P Heavy S&P Auto
Measurement Period Dana Corpo- Duty Trucks & Parts - After
(Fiscal Year Covered) ration S&P 500 Parts Market
<S> <C> <C> <C> <C>
12/31/88 100 100 100 100
12/31/89 93 132 95 107
12/31/90 84 127 78 79
12/31/91 83 166 101 145
12/31/92 146 179 135 182
12/31/93 191 197 167 212
</TABLE>
(Returns shown are rounded to the nearest dollar.)
OTHER TRANSACTIONS
John D. Stevenson is a partner in the Toronto law firm of Smith, Lyons,
Torrance, Stevenson & Mayer. This firm provided legal services to the Company
and its Canadian subsidiaries in 1993, as it has for many years previously, and
is expected to continue to provide such services in 1994.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers and persons who own more than 10%
of Dana's Common Stock to file initial stock ownership reports and reports of
changes in ownership with the Securities and Exchange Commission (the "SEC") and
the New York Stock Exchange. SEC regulations require the Company to be furnished
with copies of these reports. Based on its review of these reports and on
written representations from the reporting persons that no other reports were
required, the Company believes that, with the following exception, the
transactions that occurred in 1993 were reported on a timely basis: an amended
Form 4 report for July 1993 was filed for Carl H. Hirsch to report the sale of
5,000 shares of Common Stock simultaneously with their acquisition upon the
exercise of options granted under the Company's 1982 Amended Stock Option Plan,
which sale was inadvertently omitted from the original filing due to an
administrative oversight.
14
<PAGE> 18
ITEM 2 -- PROPOSAL TO APPROVE AND ADOPT
THE EMPLOYEES' STOCK PURCHASE PLAN
The Board of Directors has believed for many years that encouraging
employees and management of the Company and its subsidiaries to own the
Company's Common Stock benefits the Company and its stockholders. The
opportunity to acquire a proprietary interest in the Company helps attract,
retain and motivate employees of exceptional ability. Accordingly, the Board
established the Employees' Stock Purchase Plan (the "Plan") in 1970 to afford
eligible employees of the Company and its subsidiaries an opportunity to buy
Common Stock on a systematic and cost-effective basis through payroll
deductions. As a further incentive, the Company matches those deductions, in
part, and the longer the employees hold the shares purchased with their
deductions, the greater the matching Company contributions.
The shares which the Plan participants receive are currently purchased on
the open market. Each participant elects a level of payroll deduction, the
Company matches his deductions as provided in the Plan, and an independent
Custodian uses his deductions and the Company's contributions to purchase shares
for his account at current market prices, generally before the end of the next
payroll period. Under the current Plan format, which was adopted in 1989, a
participant may elect to have up to 15% of his earnings deducted during a
payroll period and the Company matches that deduction at the rate of 5% in the
first year, 7% in the second year, 10% in the third year, 13% in the fourth
year, and 15% in the fifth year (for a maximum match of 50%). During the past
four years, on average, 6,900 employees (out of 27,800 eligible employees) have
participated in the Plan annually, the Plan Custodian has purchased a total of
428,900 shares annually for the participants' accounts, and the Company's
matching contributions have been $2,787,000 per year. Although shares have
historically been purchased on the open market, the Board authorized the Company
in 1992 to issue up to 2,250,000 shares of Common Stock for sale to the
Custodian at market prices, from time to time at the Company's discretion, in
lieu of open market purchases. None of these shares have been issued to date and
the Company currently has no plans to issue them.
Although the Plan, as subsequently amended and restated by the Board, has
provided most of the Company's employees with a program through which to acquire
Common Stock since 1970, it currently prohibits participation by those employees
of the Company and its subsidiaries who are subject to the provisions of Section
16(a) of the U.S. Securities Exchange Act of 1934 ("Reporting Persons"),
primarily the Company's executive officers. Rule changes adopted by the
Securities and Exchange Commission in 1991 now make it practical for such
"Reporting Persons" to participate, if the Plan is amended to delete the
prohibition and the amended Plan is approved by the Company's stockholders.
The Board believes that it is in the Company's best interests to amend the
Plan to allow participation by the presently ineligible officers who are, in
large part, responsible for the Company's future growth, thereby even more
closely aligning their financial interests with those of the Company, its
stockholders and the other employees. Accordingly, the Board recommends approval
of the amended Plan, as described below and set forth in Exhibit A to this Proxy
Statement.
PRINCIPAL FEATURES OF THE PLAN
The following summary of the principal features of the Plan is qualified in
its entirety by reference to Exhibit A.
ADMINISTRATION OF THE PLAN. The Board administers and interprets the Plan
and has the discretion to adopt such rules and regulations as it deems necessary
in carrying out the Plan. The Board may amend the Plan as described below or, at
its sole discretion, terminate the Plan at any time.
ELIGIBILITY TO PARTICIPATE IN THE PLAN. All full-time employees of the
Company and its wholly-owned, direct or indirect, domestic and foreign
subsidiaries which have authorized participation in the Plan (the "Participating
Companies") are eligible to participate. At December 31, 1993, there were
approximately 27,500 individuals eligible to participate in the Plan, of whom
approximately 6,700 were participating.
15
<PAGE> 19
PAYROLL DEDUCTIONS. To participate in the Plan, employees authorize
regular weekly, semi-monthly or monthly payroll deductions. A participant's
deductions can be no greater than 15% of his earnings for each pay period and no
less than certain nominal amounts based on the currency in his country of
employment. For example, the minimum contribution for U.S. employees is $5.00
(if paid weekly), $10.00 (if paid semi-monthly), or $20.00 (if paid monthly).
A participant may change the amount of his payroll deductions at any time
by giving the Participating Company notice of such change, except that a
participant may not change the amount more than twice between January 1 and June
30 or between July 1 and December 31 of any year.
MATCHING CONTRIBUTIONS. Subject to the conditions described below, the
Participating Company will contribute, over a period of 5 years, a cash amount
equal to 50% of a participant's payroll deductions for each year of his
participation. Shares purchased for a given calendar year ("Class Year") with
contributions from the participant and from the Company are identified as "Class
Shares" of such year, e.g., "Class of '94 Shares." Payroll deductions for each
year of participation are matched by the Participating Company when deducted in
the first year and are matched monthly in succeeding years on a gradually
increasing scale depending on the length such Class Shares are held. To get the
full 50% aggregate contributions from the Participating Company, shares for any
given Class Year must remain in the participant's Plan account for 5 Class
Years. However, in certain circumstances related to retirement, some of the
Participating Company contributions may be accelerated.
DISCONTINUING AND REINSTATING DEDUCTIONS; DISTRIBUTION OF SHARES. A
participant may change or discontinue his payroll deductions at any time by
giving the Participating Company notice of such change or discontinuance. After
discontinuance, a participant remains eligible for the Participating Company
matching contributions except to the extent his discontinuance is a result of
his termination of employment for a reason other than long-term disability. In
addition, a participant who discontinues payroll deductions because of
retirement may be eligible for a special one-time Participating Company matching
contribution. If a participant's eligibility in the Plan is discontinued as a
result of his termination of employment for a reason other than retirement or
long-term disability, all matching contributions by the Participating Company
will cease as of the effective date of the discontinuance and the number of
whole shares of stock credited to his account as of that date will be delivered
to him as soon thereafter as practicable. Fractional shares will be repurchased
by the Custodian and the purchase price will be paid to the participant.
Participants may resume payroll deductions during the regular sign-up
periods, except that a Reporting Person who discontinues payroll deductions for
any reason other than retirement or long-term disability must withdraw all the
shares credited to his account and may not resume payroll deductions until the
sign-up period that first follows the date which is 6 months following the date
the certificate for the withdrawn shares is issued. In addition, a Reporting
Person cannot dispose of any Common Stock withdrawn from his Plan account until
at least 6 months following the date the certificate for the withdrawn shares is
issued, unless the withdrawal is due to death, retirement, disability,
termination of employment or a qualified domestic relations order.
PURCHASE OF SHARES. Society Bank, which currently serves as Custodian of
the Plan, purchases shares of Common Stock on the open market at current market
prices, using payroll deductions and applicable matching Company contributions.
The timing and amounts of stock purchased and the choice of brokers for such
open market purchases are in the control of the Custodian. If so directed by the
Company, the Custodian may, in addition or in the alternative, purchase shares
of Common Stock directly from the Company at a price equal to the average of the
high and low sales prices of the Common Stock on the day of purchase as reported
in the New York Stock Exchange Composite Transactions Index published in The
Wall Street Journal.
Dividends paid on shares in a participant's account are applied to the
purchase of additional shares through the Plan.
RIGHT TO WITHDRAW SHARES. Shares credited to the accounts of participants
are held by the Custodian. A participant may at any time request delivery of
some or all of the shares credited to his account. If a participant chooses to
withdraw shares, he must start with the earliest Class Year credited to his
account and
16
<PAGE> 20
must withdraw all of the shares for each Class Year withdrawn. Participants will
receive the cash equivalent of any fractional shares remaining in their
accounts.
If a participant withdraws shares purchased with the current year's payroll
deductions, all that year's shares, as well as any prior years' shares, must be
withdrawn and his payroll deductions will be discontinued. Thereafter, a
participant may resume Plan participation no earlier than the first
participation period of the next calendar year by submitting an authorization
form during the December sign-up period. However, a Reporting Person may not
resume payroll deductions until the first sign up period at least 6 months after
the withdrawn shares were issued to him. In addition, a Reporting Person cannot
dispose of any withdrawn shares until at least 6 months after the shares were
issued to him, unless the withdrawal was due to death, retirement, disability,
termination of employment or a qualified domestic relations order.
RIGHTS OF PARTICIPANTS; TRANSFERABILITY. The Plan and its benefits are
provided and continued solely at the discretion of the Company and the
Participating Companies. The Plan and its benefits do not form part of any
eligible employee's or participant's contract of employment and do not give
participating employees acquired rights to such benefits. Therefore, the Plan
and its benefits do not give a participant any additional right to compensation
on the termination of his employment and neither the Company nor a participant's
employing company will be under any liability if the Plan is terminated or
amended for any reason or a participant's employing company leaves the Plan and
as a result any benefits referred to in the Plan are not provided.
Participants may not assign or pledge any funds, securities or other
property held for their accounts under the Plan.
PAYMENT OF COSTS. The Company assumes all costs of brokerage fees and
administrative charges in connection with the purchase of shares for the
accounts of participants under the Plan, but not any costs participants may
incur in selling any of their shares.
AMENDMENTS TO THE PLAN. The Board has the right to amend the Plan at any
time, except that stockholder approval is required for any amendment that will
materially modify the Plan's eligibility requirements or otherwise materially
increase the benefits accruing to participants under the Plan.
TAX ASPECTS OF PARTICIPATION IN THE PLAN. The tax aspects of participating
in the Plan vary based on the jurisdiction of employment of the participant.
However, in general, participants will derive no special tax benefits by virtue
of participation in the Plan. The Participating Company contributions on behalf
of participants are taxable in the year made as income to each participant, are
subject to withholding for various jurisdiction specific taxes, including social
security, and are deductible by the Participating Company. Dividends earned on
the Common Stock purchased are taxable to the participants. In most instances,
taxes on Participating Company contributions will be withheld from the
participant's regular salary. Furthermore, if the Company pays more than a de
minimis amount of brokerage fees on behalf of a participant in connection with
the purchase of shares for his account, such fees will be taxable to the
participant and subject to withholding taxes.
The Plan is not qualified under Section 401(a) of the Internal Revenue
Code, nor is it subject to the provisions of the Employee Retirement Income
Security Act of 1974.
BENEFITS UNDER THE PLAN. The following table sets forth (i) the maximum
contributions which the executive officers named in the Summary Compensation
Table and all current executive officers of the Company as group could have made
to the Plan in 1993 if they had been eligible to participate and if they had
elected to contribute the maximum amounts which they could have contributed
under the Plan, (ii) the Company's matching contributions for 1993 for such
persons had they commenced participation in 1993 and
17
<PAGE> 21
made the foregoing contributions, and (iii) the total contributions made by all
participants in the Plan and all Participating Companies' matching contributions
made in 1993.
<TABLE>
<CAPTION>
PAYROLL MATCHING
NAME AND PRINCIPAL POSITION DEDUCTIONS CONTRIBUTION
----------------------------------------------------------- ----------- ------------
<S> <C> <C>
Mr. Morcott, Chief Executive Officer $ 112,500 $ 5,625
Mr. Reimer, Executive Vice President 56,250 2,812
Mr. Hirsch, Executive Vice President 56,250 2,812
Mr. Ayers, Chief Financial Officer 51,000 2,550
Mr. Magliochetti, President -- Dana North American
Operations 46,500 2,325
Current Executive Officers as a Group (18 persons) 722,700 36,135
All Participating Employees in 1993
(Excluding Current Executive Officers) 11,800,200 3,996,100
</TABLE>
APPROVAL AND ADOPTION OF THE PLAN
THE BOARD RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE AMENDED AND
RESTATED EMPLOYEES' STOCK PURCHASE PLAN. Under the rules of the Securities and
Exchange Commission, approval of the Plan requires the affirmative vote of the
holders of a majority of the shares of Common Stock present, or represented, and
entitled to vote at the Annual Meeting, assuming a quorum is present. In
determining a quorum, shares that are voted on any matter presented for vote
(including abstentions) will be counted. In determining the number of
affirmative votes cast FOR approval of the Plan, abstentions will not be
counted. Abstentions will, therefore, have the effect of votes AGAINST approval
of the Plan. Broker nonvotes are not considered to be shares entitled to vote
and will not affect the outcome of the vote on the Plan. If the proposed amended
Plan is not approved and adopted by the stockholders, the current version of the
Plan will remain in effect and the Reporting Persons will not be eligible to
participate.
OTHER INFORMATION
EXPENSES OF PROXY SOLICITATION
Dana will pay the cost of soliciting proxies for the Annual Meeting. The
Company's directors, officers and employees may solicit proxies by telephone,
telegram or personal interview. Dana has also engaged D. F. King & Co., Inc., a
professional proxy solicitation firm, to provide customary solicitation services
for a fee of $8,500, plus expenses. Upon request, Dana will pay the reasonable
expenses of brokers, dealers, banks, voting trustees, and their nominees who are
holders of record of Common Stock on the record date, for completing the mailing
of the Annual Report, this Notice of Meeting and Proxy Statement, and the
enclosed proxy to the beneficial owners of such shares.
VOTING OF PROXIES
All shares of Common Stock represented by properly executed and delivered
proxies will be voted in accordance with the directions of the stockholders
giving the proxies. If no directions are given, such proxies will be voted FOR
the election of the director-nominees named in this proxy statement and FOR the
proposal to approve and adopt the Employees' Stock Purchase Plan. If any named
director-nominee becomes unavailable for election for any presently unforeseen
reason, the proxies will be voted for any substitute nominee who is recommended
by the Board.
As of the date of this Proxy Statement, the Board does not know of any
matter other than those set out in this Proxy Statement that will come before
the Annual Meeting. If any other matter properly comes before the Annual
Meeting, the persons named in the proxy will vote the shares represented in
accordance with their best judgment on such matter.
APPOINTMENT OF AUDITORS
At the recommendation of the Audit Committee, the Board has reappointed the
firm of Price Waterhouse as the Company's independent auditors for the 1994
fiscal year. Price Waterhouse has been
18
<PAGE> 22
Dana's independent public accountant since 1916. Representatives of Price
Waterhouse are not expected to be present at the Annual Meeting.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1995 annual meeting
of stockholders must be received by Dana on or before November 4, 1994, for
inclusion in Dana's proxy statement and proxy for that meeting.
By Order of the Board of Directors,
Martin J. Strobel
Secretary
March 4, 1994
PLEASE VOTE, SIGN AND RETURN THE ENCLOSED PROXY TODAY TO SAVE DANA THE EXPENSE
OF ADDITIONAL SOLICITATION.
19
<PAGE> 23
EXHIBIT A
DANA CORPORATION AMENDED AND RESTATED
EMPLOYEES' STOCK PURCHASE PLAN
1. ESTABLISHMENT, RESTATEMENT, AND PURPOSE. Dana Corporation (the
"Company") established, effective as of January 1, 1970, the Dana Corporation
Employees' Stock Purchase Plan (the "Plan").
The Company hereby amends and restates the Plan effective as of January 1,
1994, except that persons (called "Reporting Employees" in the Plan) who are
subject to the provisions of Section 16(a) of the U.S. Securities Exchange Act
of 1934 (the "Act") may not participate in the Plan, and the provisions in the
Plan that relate to them shall not be effective, until the Sign-up Period first
following approval of the Plan by the shareholders of the Company. The purpose
of the Plan, which is sponsored by the Company, is to promote identity with the
Company and to afford eligible employees of the Participating Companies (as
defined in paragraph 17 hereof) and certain other employees as described in
paragraph 3 below an opportunity (subject to the provisions of paragraphs 2, 6b,
16 and 19) to build equity and to participate in the success of their company
through the purchase and long-term holding of shares of Common Stock of the
Company.
2. AMENDMENT AND ADMINISTRATION OF THE PLAN. The Board of Directors of the
Company may make rules and regulations for carrying out the Plan and reserves
the right to amend the Plan in writing from time to time in such manner as it
may deem advisable in its sole discretion, including in response to the rules or
regulations of any applicable governmental authority, provided, that approval of
the Plan by the shareholders of the Company is required for any amendment that
will materially modify the Plan's eligibility requirements or otherwise
materially increase the benefits accruing to participants under the Plan. The
interpretation and construction of any provision of the Plan by the Company
shall be final and conclusive. The masculine gender, where appearing in the
Plan, shall be deemed to include the feminine gender, unless the context clearly
indicates to the contrary.
3. ELIGIBLE EMPLOYEES. Except as provided elsewhere in this paragraph 3,
all full-time employees of a Participating Company shall be eligible to
participate in the Plan. Subject to approval of the Plan by the shareholders of
the Company, such employees may include Reporting Employees. Employees of a
Participating Company may, at the discretion of the Participating Company,
participate in the Plan while assigned to duty outside their country of
employment if it is intended that they will resume full-time employment with a
Participating Company within their country of employment at a future date.
Any authorized temporary absence from active employment without pay by
reason of short-term disability, layoff, vacation, military leave or other
authorized leave of absence will not affect employee eligibility, and in the
event of such an absence while an employee is participating in the Plan he may,
at his option, deposit currently a sum or sums equal to the amount which would
have been deducted during such temporary absence. In such event, any required
federal, state, local, social security or other withholding taxes on applicable
Participating Company contributions normally withheld from a participant's
regular salary or wages as described in paragraph 6, will, in the absence of
such participant's regular salary or wages, be withheld from such applicable
Participating Company contributions.
4. PARTICIPATION PERIODS. Each period for which employees may authorize
deductions and for which Participating Company matching contributions may be
made shall be of six (6) months duration commencing on each January 1st and July
1st and shall be referred to as a "Participation Period," except that the "First
Participation Period" for a Participating Company shall be the first
Participation Period that begins with a January 1 or July 1, or for a
Participating Company that enters the Plan on a date other than January 1 or
July 1, it shall run from the date the Participating Company first begins
accepting employee payroll deductions until the June 30th or December 31st which
first follows such initial payroll deduction date. The December 15 through
December 31 period and the June 15 through June 30 period preceding each
Participation Period shall be referred to as a "Sign-up Period." The period that
precedes a Participating Company's First Participation Period shall be referred
to as the "Initial Sign-up Period." Notwithstanding anything to the
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<PAGE> 24
contrary in this paragraph 4 or elsewhere in the Plan, newly hired full-time
employees are eligible to begin participating in the Plan effective as of their
date of hire.
5. PROCEDURE FOR PARTICIPATING EMPLOYEE PAYROLL DEDUCTIONS. Any employee
who is eligible to participate in this Plan may become a participant under the
Plan by submitting to his employer during a Sign-up or Initial Sign-up Period an
Employees' Stock Purchase Plan Form (the "Authorization Form") satisfactory to
the Participating Company for the deduction of a portion of his salary or wages
for each pay period during subsequent Participation Periods, and the payment
thereof to the Custodian as described in paragraph 7. Deductions thus authorized
for each pay period may be stated as a percentage of the employee's pay period
earnings or as a fixed currency amount, and may not exceed fifteen percent (15%)
of the employee's pay period earnings. In any event, authorized deductions for
employees of U.S., Puerto Rican or Canadian Participating Companies shall not be
less than the following amounts per pay period:
<TABLE>
<S> <C>
Weekly paid employees....................................... $ 5.00
Semi-monthly paid employees................................. 10.00
Monthly paid employees...................................... 20.00
</TABLE>
Authorized deductions for employees of European Participating Companies
shall not be less than the following amounts per pay period:
<TABLE>
<S> <C>
United Kingdom Participating Companies.......... 10 Pounds
French Participating Companies.................. 100 French Francs
Swiss Participating Companies................... 25 Swiss Francs
German Participating Companies.................. 30 Deutschemarks
Dutch Participating Companies................... 30 Guilders
</TABLE>
The amount of an employee's payroll deductions, upon which the applicable
percentage of Participating Company contributions under the Plan is based, shall
continue to be that specified by him in the Authorization Form submitted by him
under the Plan until he elects to increase or decrease the amount of his payroll
deductions by submitting a new Authorization Form to his employer. Such a new
election may be made no more often than twice every Participation Period.
Subject to paragraph 11 hereof, a participant's payroll deductions under
the Plan will continue so long as the Plan continues in effect or until his
death, termination of employment or ineligibility to participate in the Plan, or
until discontinuance of his payroll deductions pursuant to notice given as
specified in paragraph 12 hereof.
"Earnings" means the employee's regular salary or wages, including locally
paid incentive remuneration from any Scanlon-type plan, overtime and vacation
pay (before deductions required by law and deductions authorized by the
employee), but does not include any payments or contributions by the
Participating Company under this or any other employee benefit or pension plan,
including bonuses under the Company's Additional Compensation Plan and
comparable incentive-type bonuses.
6. PARTICIPATING COMPANY CONTRIBUTIONS. (a) Effective with a Participating
Company's First Participation Period, and subject to the restrictions discussed
below in sub-paragraphs (b) and (d), the Participating Company will contribute
in cash on behalf of each participant, over a period of five years, a total of
50% of such participant's payroll deductions for a given calendar year. Shares
of Company stock purchased for a given calendar year shall be identified as
"Class Shares" from such year (e.g., shares purchased with 1994 payroll
deductions would be identified as "1994 Class Shares") and each calendar year
for which shares are purchased shall be identified as a "Class Year."
The Participating Company's matching contributions with respect to a
participant's payroll deductions used to purchase shares for a given Class Year
will be calculated and contributed as follows:
-- With respect to a participant's payroll deductions used to purchase
Class Shares in and for the year deducted (the "first year" or "Year
1"), the Participating Company will contribute during Year 1
A-2
<PAGE> 25
(semi-monthly or coincident with a participant's payroll period, if
longer), on behalf of such participant, 5% of each of the participant's
payroll deductions used to purchase Company stock for that year.
-- In the next year ("Year 2"), the Participating Company will contribute
each month, on behalf of the participant, 7% of 1/12 of the
participant's total payroll deductions used to purchase Company stock
for the first year.
-- In the third year ("Year 3"), the Participating Company will contribute
each month, on behalf of the participant, 10% of 1/12 of the
participant's total payroll deductions used to purchase Company stock
for the first year.
-- In the fourth year ("Year 4"), the Participating Company will contribute
each month, on behalf of the participant, 13% of 1/12 of the
participant's total payroll deductions used to purchase Company stock
for the first year.
-- In the fifth year ("Year 5"), the Participating Company will contribute
each month, on behalf of the participant, 15% of 1/12 of the
participant's total payroll deductions used to purchase Company stock
for the first year.
This Participating Company contribution formula can be illustrated as
follows:
<TABLE>
<CAPTION>
PARTICIPATING COMPANY
MATCHING CONTRIBUTION
PERCENTAGE BASED ON
PARTICIPANT'S PAYROLL
YEAR DEDUCTIONS IN YEAR 1
---- -----------------------
<S> <C>
1................................................ 5%
2................................................ 7%
3................................................ 10%
4................................................ 13%
5................................................ 15%
-----
Total.................................. 50%
-----
-----
</TABLE>
The total amount of Participating Company matching contributions made on
behalf of a participant in a given year and used to purchase Company stock is
determined by the amount of the participant's payroll deductions made in respect
of such year and in earlier years, if any, in accordance with the formula
described above. Shares of Company stock purchased with Participating Company
matching contributions for a given year in respect of a participant's payroll
deductions made in an earlier Class Year shall be treated as shares of such
earlier Class Year. For example, if $100 out of $300 contributed by the
Participating Company on behalf of a participant in 1996 represented the
Participating Company's 10% matching contribution of Year 3 (i.e., based on the
participant's $1,000 contribution in 1994), then the shares purchased on behalf
of the participant with such $100 contributed in 1996 would be added to the
group of shares identified as 1994 Class Shares.
Participating Company matching contributions representing Year 1
contributions will be made semi-monthly or coincident with a participant's
payroll period, if longer. Participating Company matching contributions
representing Year 2, 3, 4 or 5 contributions will be made monthly.
Participating Company matching contributions on behalf of a participating
employee who is a U.S. citizen or resident alien are taxable as income to the
employee in the year they are contributed and are subject to withholding for
applicable U.S. federal, state and local taxes. In general, such taxes will be
withheld from a participant's regular salary or wages; however, in the case of
participating U.S. employees on authorized temporary absences from active
employment, required withholding taxes on applicable Participating Company
contributions made on behalf of such employees may be withheld from such
contributions as specified in paragraph 3. Non-U.S. participating employees will
be taxed in accordance with the laws of their country of residence and their
Participating Company's contributions will be subject to withholding of social
security and other taxes if they are required by law to be withheld.
A-3
<PAGE> 26
(b) Participating Company matching contributions with respect to shares of
each Class Year made on behalf of a participant under the Plan shall continue in
accordance with the five-year formula provided in paragraph 6(a) above until the
earlier of (i) termination of the Plan, (ii) termination of a Participating
Company's participation in the Plan, (iii) termination of the participant's
employment, for any reason other than long-term disability, or (iv) withdrawal
of the shares of Company stock of such Class Year by the participant pursuant to
paragraph 11 hereof. If a participant withdraws, pursuant to paragraph 11
hereof, the shares of a given Class Year, any Participating Company matching
contributions for that Class Year shall be discontinued as of the date of
withdrawal.
(c) The Participating Company will make a one-time matching contribution on
behalf of an employee who
(i) retires within five years after the beginning of the applicable
First Participation Period, had maintained shares in his account
continuously since the applicable First Participation Period under the Plan
and has not withdrawn any Company stock credited to his account under this
Plan after the first day of the applicable First Participation Period; or
(ii) retires more than five years after the beginning of the
applicable First Participation Period, has not withdrawn any Company stock
credited to his account during the year of his retirement and the four
calendar years immediately preceding the year in which he retires, and has
maintained shares in his account continuously for that five year period.
The one-time Participating Company matching contribution shall equal thirty-five
percent of the participant's payroll deductions made during the year of the
participant's retirement and the three calendar years immediately preceding the
year in which the participant retires (such combined period shall hereinafter be
referred to as the "Pre-retirement Period") less the Participating Company
matching contributions already made with respect to the participant's payroll
deductions made during the Pre-retirement Period.
(d) The Company shall make all contributions due under this paragraph 6
with respect to the employees of any German Participating Company, and all
references herein to any Participating Company contribution shall, in the case
of a German Participating Company, be deemed to be a contribution made by the
Company.
7. PAYMENT TO CUSTODIAN OF EMPLOYEE CONTRIBUTIONS AND APPLICABLE MATCHING
PARTICIPATING COMPANY CONTRIBUTIONS. The Participating Company will pay to the
Custodian on behalf of each participant in the Plan, as promptly as possible
after each applicable payroll period within or at the end of each month within a
Participation Period, the total of all amounts deducted from such employee's
salary or wages during the payroll period then ended and all applicable
Participating Company matching contributions made on behalf of such participant
in accordance with the provisions of paragraph 6(a) hereof. The Participating
Company will pay to the Custodian on behalf of certain participants in the Plan
as described in paragraph 6(c) hereof, within three months prior to the
effective date of their discontinuance of contributions as provided in paragraph
12 hereof, the one-time Participating Company matching contributions made on
behalf of such participants in accordance with the provisions of paragraph 6(c).
8. PLAN CUSTODIAN. The Company will designate a bank in the United States
as Plan Custodian for all Participating Company employees with the right to
change the designation in its discretion. Apart from administering the Plan as
herein otherwise provided, the Company shall not possess any control or
influence, directly or indirectly, over the timing or amount of purchases of
common stock made by the Custodian under the Plan, the price to be paid, or the
selection of the brokers or dealers through or from whom the purchases are to be
made (if applicable). The Custodian will hold as custodian all funds received by
it under the Plan, and, until delivery thereof to the participants, all shares
of the Company's stock acquired by the Custodian under the Plan. No interest
will be paid to participating employees by the Custodian on any funds held by it
thereunder.
9. PURCHASE OF STOCK. The Custodian will be delivered funds in U.S.
Dollars from the Participating Company on behalf of the participating employees
for the applicable payroll period as described above under paragraphs 5, 6 and
7. The applicable exchange rates for the conversion by non-U.S. Participating
Companies
A-4
<PAGE> 27
of foreign currencies into U.S. dollars will be the exchange rates as listed in
the Wall Street Journal for the last business day of the month.
Unless directed by the Company as provided hereinafter to apply the funds
in its custody to the purchase of shares of Common Stock from the Company, the
Custodian will thereafter promptly in such manner as it may in its sole
discretion deem advisable (except as provided in paragraph 12 hereof) apply the
funds then in its custody hereunder to the purchase at prevailing market prices
of the number of whole shares of the Company's Common Stock which can be
purchased with such funds. The Custodian will cause purchases of the Company's
Common Stock to be effected on the open market through various U.S. stock
exchanges. All purchases of stock as herein provided will be made in the name of
the Custodian or its nominee or by the Custodian as nominee for participating
employees. The stock purchased by the Custodian during each Participation Period
shall, except as provided in paragraph 12 hereof, be credited by the Company
semi-monthly or monthly to the respective accounts of the then participants in
the Plan pro rata (to the fourth decimal) on the basis of the average cost per
share of all shares being so credited and the respective interests of each such
participant in the funds used by the Custodian to purchase the shares being so
credited.
At the direction of the Company and for such periods as the Company may
designate, in lieu of purchases on the open market through U.S. stock exchanges,
the Custodian will, at such times as it may in its sole discretion deem
advisable (except as provided in paragraph 12 hereof), apply the funds then in
its custody hereunder to the purchase from the Company of the number of whole
shares of the Company's Common Stock which can be purchased with such funds. The
per share purchase price for the shares purchased from the Company shall be the
average of the high and low sales prices of the Common Stock as reported in the
New York Stock Exchange Composite Transactions Index published in The Wall
Street Journal for the date on which the shares are purchased by the Custodian.
10. DIVIDENDS. Except as provided in paragraph 12 hereof, cash dividends
and other cash distributions received by the Custodian on stock held in its
custody hereunder will be credited to the accounts of the participants in U.S.
dollars in proportion to their interests in the stock held by the Custodian and
will be applied as soon as practicable after receipt thereof by the Custodian,
to the purchase of additional shares of the Company's Common Stock and such
shares will be credited to the accounts of the respective participants, in the
manner provided in paragraph 9 hereof. Dividends paid in shares of the Company's
Common Stock which are received by the Custodian with respect to stock held in
its custody hereunder will be allocated to the participants (to the fourth
decimal) in accordance with their interests in the stock with respect to which
the dividends are paid. Where applicable, funds shall be withheld for the
payment of applicable taxes (if any) on the payment of dividends.
11. WITHDRAWAL OF STOCK BY PARTICIPANTS. Company stock purchased by the
Custodian and credited to the account of a participant will be held by the
Custodian for such participant until withdrawal of the stock by the participant.
The Custodian will hold shares of each Class Year even after the final
Participating Company matching contribution has been made in Year 5 with respect
to such shares until the participant requests a withdrawal of such shares. If a
participant chooses to withdraw a portion of the Company stock credited to his
account, he must withdraw all of the shares of a given Class Year and must first
withdraw the earliest Class Year shares credited to his account. In addition, if
a participant chooses to withdraw shares of more than one Class Year, he must
first withdraw the earliest Class Year shares credited to his account. If a
participant chooses during a calendar year to withdraw Company stock purchased
with payroll deductions made that year, he must withdraw all of the shares
credited to his account during such year as of the date of the withdrawal; if a
participant makes such a mid-year withdrawal, payroll or other deductions under
this Plan shall be discontinued effective as of the next immediate payroll
period and such participant may submit a new Authorization Form no earlier than
the Sign-up Period preceding the first Participation Period of the next calendar
year; provided, however, that notwithstanding any other provision of the Plan,
any person participating in the Plan who is a Reporting Employee and who makes
such a mid-year withdrawal, shall not be entitled to resume payroll deductions
until the Sign Up Period that first follows the date which is six months
following the date that the stock certificate for the withdrawn shares is issued
to him. Further, any shares of Company stock withdrawn from the Plan by any
person participating in the Plan who is a Reporting Employee shall not be
disposed of in any manner until at least six months following the date of issue
of the stock certificate for the
A-5
<PAGE> 28
withdrawn shares credited to his account, unless such withdrawal is due to
death, retirement, disability, termination of employment or a qualified domestic
relations order.
The withdrawal of Company stock credited to the account of a participant
must be effected by such participant submitting to his employer an Authorization
Form satisfactory to the Participating Company. Distributions of withdrawals so
requested will be made as soon as practicable after the Participating Company's
receipt of such Authorization Form. The Custodian will deliver the total number
of whole shares of Common Stock in the class(es) of Class Shares credited to the
account of a participant with respect to which a withdrawal has been requested.
Stock certificates with respect to withdrawn shares will be issued in the name
of the participant only or, in the case of employees of U.S. Participating
Companies, jointly in the name of the participant and his or her spouse as
indicated by the employee on the Authorization Form. The cash equivalent of any
fractional share credited to the account of a participant with respect to a
Class Year being withdrawn shall be paid in local currency to each participant
who withdraws such shares from the Plan.
12. DISCONTINUANCE OF PAYROLL DEDUCTIONS. A participant may discontinue
his payroll deductions at any time by giving written notice to his employer. If
an employer receives written notice that a participant has discontinued his
payroll deductions as a result of death or termination of employment, or for any
other reason, the effective date of his discontinuance of payroll deductions
shall be the first day of the next appropriate payroll period, or such earlier
date as the Participating Company in its sole discretion may determine.
If a participant discontinues payroll deductions under the Plan (a) no
purchases of stock from payroll deductions shall be made following the effective
date of such discontinuance and (b) such participant's pro-rata share (to the
fourth decimal) of any shares purchased by the Custodian prior to the effective
date of such discontinuance which have not theretofore been credited to the
respective accounts of participants in the Plan shall be credited to his account
as of such effective date on the basis of the average cost per share of all
shares so purchased by the Custodian and not theretofore so credited and the
interest of such discontinuing participant in the funds used to purchase such
shares. A participant who discontinues payroll deductions under the Plan shall
remain eligible for Participating Company matching contributions in accordance
with the provisions of paragraph 6(a) (subject to paragraph 6(b)) hereof, unless
such participant discontinues payroll deductions by reason of his termination of
employment, provided, however, that if the reason the participant terminates his
employment is because of his long-term disability, Participating Company
matching contributions will continue as described herein. A participant who
discontinues payroll deductions under the Plan as a result of his termination of
employment by reason of his retirement may be eligible for the one-time
Participating Company matching contribution in accordance with the provisions of
paragraph 6(c) hereof. With respect to a participant who discontinues payroll
deductions by reason of his termination of employment for any reason other than
retirement or long-term disability (a) all Participating Company matching
contributions made pursuant to paragraph 6(a) shall cease as of the effective
date of his discontinuance and the number of whole shares of stock credited to
the account of such participant as of the effective date of his discontinuance
of payroll deductions shall be delivered to the participant as soon as
practicable after such effective date, and (b) any fractional shares to the
credit of such participant's account as of such effective date shall be
purchased by the Custodian, as of the next succeeding first day of an applicable
payroll period (or if the New York Stock Exchange shall not be open on such day,
on the next day on which it shall be open), for the respective accounts of the
other participants at a price equal to the closing market price of the Common
Stock on such purchase day and the purchase price shall be paid to the
participant in local currency as soon as practicable thereafter; provided,
however, that notwithstanding any other provision of the Plan, any person
participating in the Plan who is a Reporting Employee and who discontinues
payroll deductions for any reason other than retirement or long-term disability,
must withdraw all of the shares credited to his account for all Class Years and
shall not be entitled to resume payroll deductions until at least six months
following the date of issue of the stock certificate for the withdrawn shares
credited to his account. Further, any shares of Company stock withdrawn from the
Plan by any person participating in the Plan who is a Reporting Employee shall
not be disposed of in any manner until at least six months following the date of
issue of the stock certificate for the withdrawn shares credited to his account,
unless such withdrawal is due to death, retirement, disability, termination of
employment or a qualified domestic relations order.
A-6
<PAGE> 29
A participant who has discontinued payroll deductions but remains eligible
to participate in the Plan pursuant to paragraph 3 hereof shall be deemed to
continue his participation in the Plan and may resume payroll deductions under
the Plan effective as of the next immediate Sign-up Period. A participant whose
payroll deductions under the Plan have been discontinued by reason of an absence
or leave approved by an authorized representative of the Participating Company
shall not be considered to have withdrawn from the Plan, and his payroll
deductions, if any, shall be resumed as soon as such employee shall return to
work following such absence or leave. Participating Company matching
contributions with respect to shares of Company stock held for such a
participant by the Custodian shall not be discontinued solely by reason of such
an absence or leave.
13. BROKERAGE COMMISSIONS AND ADMINISTRATION EXPENSES. All costs and
expenses incurred in administering the Plan, including brokerage commissions
payable in connection with the purchase of stock hereunder (if applicable) and
the fees and expenses of the Custodian, will be borne by the Company.
14. STOCKHOLDER RIGHTS. Each participant shall have the right to vote or
direct the voting of the shares of Common Stock credited to his account and held
by the Custodian. The Company shall cause proxies (or, in lieu thereof, requests
for voting instructions), proxy soliciting materials and annual reports to
stockholders, if required, to be furnished, in a timely manner, to all
participants. In the event that a participant fails to vote or direct the voting
of the shares credited to his account, the Custodian in its discretion may
exercise all of the participant's voting rights on behalf of such participant,
in such manner as the Custodian shall determine.
15. ASSIGNABILITY OF INTEREST. Participants in the Plan may not assign or
pledge any funds, securities or other property held for their accounts under the
Plan. Any purported assignment or pledge of such funds, securities or other
property will be deemed void and of no force and effect against the Company or
the Custodian.
16. TERMINATION OF PLAN OR OF A PARTICIPATING COMPANY'S PARTICIPATION IN
THE PLAN. The Board of Directors of the Company may at any time, in its
absolute discretion, terminate the Plan, effective as of the first day of any
calendar month subsequent to the Board's action. In the event of termination of
the Plan, or in the event a Participating Company terminates its participation
in the Plan, each participant shall receive from the Custodian the number of
whole shares of the Company's Common Stock credited to his account and his
allocable portion of the proceeds of stock sold by the Custodian in order to pay
the cash value of fractional shares held for the accounts of the participants
(or any cash credited to his account which, in view of the termination, has not
been invested by the Custodian). Each Participating Company, through action of
its Board of Directors, may terminate such Participating Company's participation
in the Plan, subject to approval by the Company. In the event the Company
terminates the Plan or a Participating Company terminates its participation in
the Plan, Participating Companies shall not be obligated, following such
termination or termination of participation, to make Participating Company
matching contributions in respect of payroll deductions made prior to the
termination of the Plan or the Participating Company's terminating its
participation in the Plan.
17. PARTICIPATING COMPANIES. The Participating Companies in the Plan are
Dana Corporation and the present and future, direct or indirect, domestic and
foreign subsidiaries that it wholly owns (except for such minimal number of
shares which, pursuant to the laws of incorporation of certain foreign
subsidiaries, must be held by the directors and/or other persons), the Boards of
Directors of which have adopted a resolution authorizing participation in the
Plan (the "Participating Companies").
18. GOVERNMENTAL AND REGULATORY APPROVALS. Notwithstanding any other
provisions in the Plan to the contrary, no Participating Company shall be
required to offer, implement, make or continue to make contributions to the Plan
for its employees prior to (i) the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion, determine
to be necessary or advisable, and (ii) the completion of any registration or
other qualification of shares of the Company's stock under any law or ruling or
regulations of any governmental body which the Company shall, in its sole
discretion, determine to be necessary or advisable.
A-7
<PAGE> 30
19. PLAN AND BENEFITS ARE DISCRETIONARY. The Plan and the benefits
hereunder are provided solely at the discretion of the Company and the
Participating Companies and the Company may at its absolute discretion amend,
restate or terminate the Plan and each Participating Company may, at its sole
discretion subject to the approval of the Company, withdraw from the Plan and
accordingly:
(a) The Plan and the benefits provided to participants hereunder:
(i) are not (and shall not be deemed to be) part of any eligible
employee's or participant's contract of employment or right of
employment with any Participating Company;
(ii) do not give to eligible employees or participants acquired
rights to such benefits;
(iii) do not afford to an eligible employee or a participant any
additional right to compensation on the termination of his employment.
(b) None of the Participating Companies shall be under any liability
whatsoever to an eligible employee, participant or their successors in
interest in the event the Plan is terminated or amended for whatever
reason, or a Participating Company leaves the Plan, and consequently any
benefit referred to hereunder is not provided.
20. DIVIDEND REINVESTMENT PLAN. Upon retiring from the Company, all Plan
participants shall have the option to transfer their shares into Dana
Corporation's Dividend Reinvestment Plan, in lieu of receiving a stock
certificate. Non-U.S. Plan participants withdrawing from the Plan for any reason
shall also be permitted this option.
21. GOVERNING LAW. This Plan and all rights with respect thereto shall be
governed by the laws of the Commonwealth of Virginia in the United States of
America.
22. NOTICES. Any notice hereunder to a Participating Company shall be in
writing and such notice shall be deemed given or made only upon receipt thereof
by the Participating Company at its registered office, or at such other address
as the Company may designate by notice to the participants and to the
Custodians.
Any notice hereunder to the Custodian shall be given in writing and such
notice shall be deemed duly given or made only upon receipt thereof at the
Custodian's principal office or at such other address as the Custodians may
designate by notice to the Company.
Any notice to a participant hereunder shall be in writing and shall be
deemed received if mailed or delivered to the participant at such address as the
participant shall have on file with the Participating Company.
Any notice by a participant to his employer shall be addressed to the
personnel office of such employer.
A-8
<PAGE> 31
DANA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS ON APRIL 6, 1994
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Martin J. Strobel, Pamela W. Fletcher, Sue A. Griffin, Allen C. Goolsby, III and
Louanna O. Heuhsen, or any of them, the action of a majority of them voting to
be controlling, are appointed attorneys, agents and proxies of the undersigned,
with full power of substitution, to vote as indicated on the reverse side hereof
and in their discretion upon such other business as may properly come before the
Annual Meeting, all the shares of Common Stock of the undersigned in Dana
Corporation at the Annual Meeting of Stockholders, to be held at Riverfront
Plaza, East Tower (20th Floor), 951 East Byrd Street, Richmond, Virginia on
April 6, 1994, at 11:00 a.m. (EDT), and at any adjournments.
This proxy revokes all proxies previously given by the undersigned to any
persons to vote at this Annual Meeting or at any adjournment.
Dated: ______________, 1994
Signed:____________________
___________________________
Please sign as name appears
hereon. Joint owners should
each sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such.
TO FOLLOW THE BOARD OF DIRECTORS' RECOMMENDATIONS, SIGN, DATE AND MAIL THIS
PROXY IN THE ENCLOSED RETURN ENVELOPE. THE REVERSE SIDE NEED NOT BE COMPLETED.
(Over)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES LISTED IN ITEM 1 AND
"FOR" THE PROPOSAL IN ITEM 2. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS.
ITEM 1. Election of Directors
/ / FOR all nominees below (except as specified)
/ / WITHHOLD AUTHORITY to vote for all nominees below
B. F. BAILAR, E. M. CARPENTER, E. CLARK, R. T. FRIDHOLM,
G. H. HINER, S. J. MORCOTT, J. D. STEVENSON, T. B. SUMNER, JR.
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE HIS NAME ON THIS LINE:
- --------------------------------------------------------------------------------
ITEM 2. To approve and adopt the Dana Corporation Employees' Stock Purchase
Plan
/ / FOR / / AGAINST / / ABSTAIN
<PAGE> 32
<TABLE>
<S> <C> <C> <C>
X PLEASE MARK
EACH VOTE
LIKE THIS
_________________ _______________________________
Common Shares Dividend Reinvestment Shares
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES LISTED IN ITEM
1 AND "FOR" THE PROPOSAL IN ITEM 2. UNLESS OTHERWISE SPECIFIED, THIS PROXY
WILL BE VOTED IN ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
FOR WITHHELD
ALL FOR ALL FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS: B. F. BAILAR, E. M. 2. TO APPROVE AND
CARPENTER, E. CLARK, R. ADOPT THE DANA
T. FRIDHOLM, G. H. HINER, CORPORATION
S. J. MORCOTT, J. D. STEVENSON, EMPLOYEES'
T. B. SUMNER, JR. STOCK PURCHASE
PLAN
</TABLE>
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE HIS NAME ON THIS LINE:
- ---------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE
Please mark this box if you
have written comments/address
change on the reverse side.
Signature(s) Date
-------------------------------------- --------------------
NOTE: Please sign as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
-------------------------------------------------------------------------------
FOLD AND DETACH HERE
DANA CORPORATION
[LOGO HERE] P.O. BOX 1000
TOLEDO, OHIO 43697
Please vote, sign and date the above proxy and return
it in the envelope provided. Your prompt response will
assure a quorum at the Annual Meeting and save Dana the
expense of further solicitation of proxies.
Martin J. Strobel
Secretary
Proxy for participants in Dana Corporation Employees' Stock
Purchase Plan will also state: "THIS PROXY IS ONLY FOR SHARES
HELD IN YOUR DANA STOCK PUCHASE PLAN ACCOUNT. YOU WILL RECEIVE
SEPARATE PROXIES FROM CHEMICAL BANK FOR ANY SHARES ISSUED TO YOU
AND/OR ANY DIVIDEND REINVESTMENT SHARES."
<PAGE> 33
DANA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS ON APRIL 6, 1994
PROXY SOLICITED BY THE BOARD OF DIRECTORS
P
Martin J. Strobel, Pamela W. Fletcher, Sue A. Griffin, Allen C.
R Goolsby, III and Louanna O. Heuhsen, or any of them, the action of a
majority of them voting to be controlling, are appointed attorneys,
agents and proxies of the undersigned, with full power of
O substitution, to vote as indicated on the reverse side hereof and in
their discretion upon such other business as may properly come
before the Annual Meeting, all the shares of Common Stock of the
X undersigned in Dana Corporation at the Annual Meeting of
Stockholders, to be held at Riverfront Plaza, East Tower (20th
Floor), 951 East Byrd Street, Richmond, Virginia on April 6, 1994,
Y at 11:00 a.m. (EDT), and at anY adjournments.
This proxy revokes all proxies previously given by the
undersigned to any persons to vote at this Annual Meeting or
at any adjournment.
TO FOLLOW THE BOARD OF DIRECTORS' RECOMMENDATIONS, SIGN,
DATE AND MAIL THIS PROXY IN THE ENCLOSED RETURN ENVELOPE.
(This Proxy is continued on the reverse side)
