<PAGE> 1
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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
DANA CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
____________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________
(5) Total fee paid:
____________________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_____________________________________________
(2) Form, Schedule or Registration Statement No.:_______________________
(3) Filing Party:_______________________________________________________
(4) Date Filed:_________________________________________________________
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<PAGE> 2
[logo] DANA CORPORATION
P.O. BOX 1000
TOLEDO, OHIO 43697
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 3, 1996
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 3, 1996, at 10
o'clock A.M. (EST), for the following purposes:
1. To elect a Board of Directors consisting of eight members;
2. To ratify the selection of Price Waterhouse LLP as auditors for 1996;
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 15, 1996, 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, 1995,
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, 1996
------------------------
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> 3
DANA CORPORATION
P.O. BOX 1000
TOLEDO, OHIO 43697
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 3, 1996
------------------------
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 3, 1996, 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 15, 1996, are entitled to receive notice of
and to vote at the Annual Meeting or any adjournment. There were 101,602,414
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, 1996.
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. Mr. Fridholm, who has served as a director
of Dana since 1989, is not standing for re-election at the upcoming Annual
Meeting. The Board recommends the following nominees, each of whom is now a
director of Dana.
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 61 School of Administration, Rice University, since 1987. Director
of Dana since 1980. Also a director of First Interstate Bank of
Texas, Smith International, Inc., and U.S. Can Corporation.
Edmund M. Carpenter Chairman and Chief Executive Officer of General Signal
Age 54 Corporation (a manufacturer of capital equipment and
instruments for the process control, electrical,
semi-conductor, and telecommunications industries) from 1988-
1995. Director of Dana since 1991. Also a director of Campbell
Soup Company and Texaco, Inc.
Eric Clark Director of BICC plc (a United Kingdom company serving the
Age 61 international market for infrastructure development) since
1985, and Chairman of BICC Cables Limited since 1986. Director
of Dana since 1994, and a member of the Dana Europe Advisory
Board since 1991. Also a director of United Utilities plc and
Merseyside Development Corporation.
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
NOMINEE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE IN PAST 5 YEARS
------- ------------------------------------------------------------
<S> <C>
Glen H. Hiner Chairman and Chief Executive Officer of Owens Corning (a
Age 61 manufacturer of advanced glass and composite materials) since
1992. Senior Vice President of General Electric Company,
1983-1991. Director of Dana since 1993.
Marilyn R. Marks Chairman, President, and Chief Executive Officer of Dorsey
Age 43 Trailers, Inc. (a manufacturer of truck trailers) since 1987.
Director of Dana since 1994. Also a director of the Eastman
Chemical Company.
Southwood J. Morcott Chairman of the Board of Dana since 1990 and a director since
Age 57 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 wholly-owned Canadian subsidiary,
1987-1995. 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 66 Mayer since 1962. Director of Dana since 1993 and of Hayes-Dana
Inc., 1963-1995. Member of the Dana Canada Advisory Board since
July 1995. Also a Director of Canada Trust Company and George
Weston Limited.
Theodore B. Sumner, Jr. Chairman of Madison Financial Group (a financial consulting
Age 67 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 for more than five 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
of at least a majority of the number of shares of common stock outstanding 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 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 1995. All incumbent directors attended at
least 75% of the combined number of meetings of the Board and the Committees on
which they served in 1995.
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 nominee is to be proposed
for election. The current members of the Committee are Messrs. Sumner
(Chairman), Bailar, Carpenter and Stevenson. The Committee met twice in 1995.
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
2
<PAGE> 5
Committee may be an employee of Dana. The current members of the Committee are
Messrs. Bailar (Chairman), Clark, and Hiner and Ms. Marks. The Committee met
twice in 1995.
The COMPENSATION COMMITTEE recommends compensation programs for Dana's
executive officers and reviews the Company's compensation plans for other
management personnel. The Committee approves 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. Fridholm
(Chairman), Hiner, Stevenson and Sumner. The Committee met 4 times in 1995.
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, Fridholm, Hiner, Stevenson, and Sumner and Ms. Marks.
The Committee met 5 times in 1995.
The FUNDS COMMITTEE reviews the allocation of assets and the performance 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. Carpenter
(Chairman), Clark, Fridholm, and Morcott and Ms. Marks. The Committee met twice
in 1995.
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. Mr. Stevenson also
received a total of $38,662 in fees for service on the Hayes-Dana Inc. Board of
Directors and the Dana Canada Advisory Board. Mr. Clark also received $15,000 in
fees for service on the Dana Europe Advisory Board.
Non-employee directors may elect to defer payment of the foregoing fees
under the Company's Director Deferred Fee Plan (other than Mr. Stevenson's fees
for service on the Hayes-Dana or the Dana Canada Advisory Boards or Mr. Clark's
fees for service on the Dana Europe Advisory Board). Deferred fees may be
credited to a Stock Account or an Interest Equivalent Account or both. Units are
"purchased" in a Stock Account based upon the amount of fees deferred and the
market price of Dana's Common Stock. 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, 1995 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 at that time. 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
service 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 or her 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 the director's spouse after his or her death.
Benefits are paid in cash. Payments continue until the earlier of the director's
death or until
3
<PAGE> 6
the director has received a number of monthly payments equal to the number of
months he or she served on the Board. If a director dies while serving on the
Board, the director's spouse receives a number of monthly payments equal to the
number of months the director 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 3,000 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 presents the beneficial ownership of the only persons
known by the Company to beneficially own more than 5% of its Common Stock, based
upon a statement on Schedule 13G filed by each such person with the Securities
and Exchange Commission. The Capital Group Companies, Inc., and its operating
subsidiary, Capital Research and Management Company, reported jointly that
Capital Research and Management Company was the owner of 6,278,300 shares of the
Company's shares, with sole dispositive power and no voting power for such
shares. FMR Corp., a holding company for Fidelity Investments (a large mutual
fund company), reported sole voting power with respect to 180,566 shares, and
sole dispositive power with respect to 11,213,462 such shares, including shares
that are beneficially owned by Fidelity Management and Research Company, a
wholly-owned subsidiary of FMR Corp.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED CLASS
- ----------------------- ------------------ ----------
<S> <C> <C>
The Capital Group, Inc. 6,278,300 6.2%
333 South Hope Street
Los Angeles, CA 90071
FMR Corp. 11,213,462 11.06%
82 Devonshire Street
Boston, MA 02109
</TABLE>
The following table shows shares of Dana Common Stock and Units with a
value tied to the Common Stock that were beneficially owned on December 31,
1995, 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. Mr. Fridholm's stockholdings are also shown in the table, even though
he is not standing for re-election as a director. At that date, the group owned
2.0%, 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 2,100 shares which were held in a retirement plan account and 900 shares
that were held in a trust of which he and his spouse were co-trustees; Mr.
Fridholm indirectly owned 2,000 shares that were held in a revocable trust; and
Mr. Hirsch indirectly owned 10,200 shares which were held by his spouse.
4
<PAGE> 7
<TABLE>
<CAPTION>
STOCK OWNERSHIP,
INCLUDING RESTRICTED UNITS REPRESENTING
STOCK AND DEFERRED
BENEFICIAL OWNER EXERCISABLE OPTIONS(1) COMPENSATION(2)
---------------- ---------------------- ------------------
<S> <C> <C>
James E. Ayers 186,731 shares 49,713 Units
Benjamin F. Bailar 9,000 shares 0 Units
Edmund M. Carpenter 9,328 shares 4,035 Units
Eric Clark 4,000 shares 0 Units
Roger T. Fridholm 8,000 shares 7,111 Units
Glen H. Hiner 4,000 shares 3,648 Units
Carl H. Hirsch 187,876 shares 26,823 Units
Joseph M. Magliochetti 149,572 shares 804 Units
Marilyn R. Marks 1,500 shares 552 Units
Southwood J. Morcott 478,764 shares 55,398 Units
Borge R. Reimer 180,241 shares 8,722 Units
John D. Stevenson 6,012 shares 0 Units
Theodore B. Sumner, Jr. 7,000 shares 29,280 Units
Director-Nominees and Executive
Officers as a Group (28 persons) 2,060,765 shares 302,168 Units
</TABLE>
- ---------------
(1) The shares reported for the named 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, 108,350 shares; Mr. Hirsch, 138,750 shares; Mr.
Magliochetti, 100,800 shares; Mr. Morcott, 355,500 shares; Mr. Reimer,
124,750 shares; the director-nominees and executive officers as a group,
1,452,627 shares.
(2) The Units reported for the non-employee directors (Messrs. Carpenter,
Fridholm, Hiner and Sumner, and Ms. Marks) represent fees deferred to the
director's Stock Account under the Company's Director Deferred Fee Plan,
which is described under the caption "The Board and Its Committees". The
Units reported for the executive officers (Messrs. Ayers, Hirsch,
Magliochetti, 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. Units are
"purchased" in a Stock Account based on the amount of the deferred bonus and
the market price of Dana's Common Stock. 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
Corporation'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.
5
<PAGE> 8
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 1995.
<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) ($)(4) SARS(#)(5) ($)(6)
------------------ ----- -------- ----------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Southwood J. Morcott 1995 $911,548 $ 1,638,000 $ 81,850 $ 0 125,000 $ 3,388
Chief Executive Officer 1994 846,230 1,077,200 93,461 0 100,000 5,046
1993 761,898 412,500 79,718 264,662 94,000 6,550
Joseph M. Magliochetti 1995 424,081 700,000 51,084 0 45,000 2,407
President -- Dana North 1994 368,300 469,000 50,820 0 39,000 2,408
American Operations 1993 324,655 185,200 -- 76,221 44,000 6,423
Carl H. Hirsch 1995 420,000 672,000 77,704 0 34,000 3,388
Executive Vice President 1994 397,000 512,100 75,901 0 34,000 4,743
1993 375,000 206,300 72,161 63,547 34,000 6,550
Borge R. Reimer 1995 412,000 659,000 73,414 0 34,000 3,388
Executive Vice President 1994 392,000 505,700 76,348 0 34,000 4,717
1993 375,000 206,300 56,461 33,915 34,000 6,550
James E. Ayers 1995 380,000 690,000 -- 0 34,000 3,388
Chief Financial Officer 1994 360,000 464,400 -- 0 34,000 4,359
1993 340,000 187,000 -- 34,957 34,000 6,550
</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. for the period before it became a wholly-owned
subsidiary of Dana: $11,548 in 1995, $11,230 in 1994, and $11,898 in 1993.
For Mr. Magliochetti, the amounts reported include, in addition to base
salary paid by Dana, the following compensation for services as a director
of Hayes-Dana Inc.: $34,081 in 1995, $18,300 in 1994, and $14,655 in 1993.
These amounts were set by the Hayes-Dana Board (and not the Dana
Compensation Committee), and are valued at the currency exchange rate in
effect on December 31 of the applicable year.
(2) Annual bonuses received (or deferred) under the Company's Additional
Compensation Plan are reported in the year earned, whether deferred or 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. Of the amounts reported, the
following items exceeded 25% of the total perquisites and benefits reported
for the officer: for Mr. Morcott, professional services valued at $44,156 in
1995, $61,363 in 1994, and $41,872 in 1993; for Mr. Magliochetti,
professional services valued at $29,660 in 1995 and $28,147 in 1994, and
vehicles at $12,851 in 1994; for Mr. Hirsch, professional services valued at
$47,829 in 1995, $46,356 in 1994, and $42,861 in 1993; and for Mr. Reimer,
professional services valued at $47,228 in 1995, $54,990 in 1994, and
$39,489 in 1993. Professional services include financial, tax, and estate
planning services received by the officer. Of the amounts reported, the
following represent insurance premiums (after tax gross-up) paid on behalf
of the named executive for split dollar life insurance coverages: for Mr.
Morcott, $10,443 in 1995, $8,569 in 1994, and $6,720 in 1993; for Mr.
Magliochetti, $2,758 in 1995, $2,315 in 1994, and $1,863 in 1993; for Mr.
Hirsch, $7,028 in 1995, $5,926 in 1994, and $4,827 in 1993; for Mr. Reimer,
$10,185 in 1995, $8,869 in 1994, and $7,507 in 1993; and for Mr. Ayers,
$8,597 in 1995, $7,410 in 1994, and $6,150 in 1993.
(4) Restricted stock is granted under the Company's 1989 Restricted Stock Plan.
Awards of restricted stock granted prior to 1993 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
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<PAGE> 9
the officers varied from, approximately, 2.5 to 6.5 years. Additional shares
of restricted stock were granted to the officers as consideration for these
extensions, and it is the value of these shares that appears in the Summary
Compensation Table. 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. The
restrictions lapse in the event of a change in control (as defined in the
restricted stock agreements). 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
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, 1995, Mr. Morcott held a total of 75,207 shares of
restricted stock valued at $2,099,805; Mr. Magliochetti held 27,228 shares
of restricted stock valued at $753,019; Mr. Hirsch held 23,282 shares of
restricted stock valued at $648,999; Mr. Reimer held 22,183 shares of
restricted stock valued at $616,853; and Mr. Ayers held 21,507 shares of
restricted stock valued at $596,580. 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 29, 1995 ($29.25 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 officer.
(5) Represents shares of Dana Common Stock underlying options granted in 1993
through 1995.
(6) "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.
OTHER ADDITIONAL COMPENSATION
Approximately 60 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 1995, Dana employees other than the
named executive officers earned a total of over $112 million in additional
compensation.
OPTION GRANTS IN 1995
The following table contains information about the stock options granted in
1995 to the executive officers named in the Summary Compensation Table. No stock
appreciation rights were granted in 1995. In calculating the "Grant Date Present
Value," the Company used a variation of the Black-Scholes option pricing model,
as described in Note 3. The value shown is a hypothetical value only; over their
lives, the
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<PAGE> 10
options could have a greater or a lesser value than that shown in the table, and
under some circumstances they could have zero value.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
--------------------------------------------------------
% OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED EXERCISE GRANT
UNDERLYING TO OR BASE DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED(#) IN 1995 ($/SHARE)(1) DATE(2) VALUE($)(3)
---- ---------- --------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
Mr. Morcott 125,000 12.63% $ 31.063 7/16/05 $1,342,500
Mr. Magliochetti 45,000 4.55% $ 31.063 7/16/05 483,300
Mr. Hirsch 34,000 3.43% $ 31.063 7/16/05 365,160
Mr. Reimer 34,000 3.43% $ 31.063 7/16/05 365,160
Mr. Ayers 34,000 3.43% $ 31.063 7/16/05 365,160
</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 17, 1995.
(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 after one year from the date of grant, 50% after 2 years from
the date of grant, 75% after 3 years from the date of grant, and all of the
options after 4 years from the date of grant. An optionee's exercise rights
are accelerated in the event of a third party tender or exchange offer for
20% or more of the Company's Common Stock which has not been approved by the
Board of Directors.
(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 29.12%, a 6.28% risk-free rate
of return, a dividend yield at the date of grant of 2.96%, 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 EXERCISES IN 1995 AND 1995 YEAR-END OPTION VALUES
The following table contains information about the options for the
Company's Common Stock which were exercised in 1995 by the executive officers
named in the Summary Compensation Table and the aggregate value of these
officers' unexercised options at the end of 1995. In 1993, all outstanding SARs
held by the officers were cancelled. Consequently, none of the officers held any
SARs at December 31, 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT 12/31/95(#) AT 12/31/95($)(2)
ACQUIRED VALUE -------------------------- --------------------------
NAME ON EXERCISE(#) REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Morcott 17,000 $207,718 355,500 279,500 $ 2,805,511 $ 388,920
Mr. Magliochetti 2,000 24,437 100,800 105,000 712,013 122,179
Mr. Hirsch 690 9,211 138,750 88,250 1,128,334 140,320
Mr. Reimer 14,000 91,875 124,750 88,250 1,046,959 140,320
Mr. Ayers 8,000 97,645 108,350 88,250 865,009 140,320
</TABLE>
- ---------------
(1) The value realized on the exercise of options 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
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<PAGE> 11
exercise (as reported in the New York Stock Exchange Composite Transactions
published in The Wall Street Journal) and the option exercise price.
(2) The value of unexercised in-the-money 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 December 29, 1995 ($29.25 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 executive 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 to the Table) and "Bonus" (and also
including deferred bonuses, and, 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, 1996, before taking into account the reductions described
above, would be as follows: Mr. Morcott, $76,285; Mr. Magliochetti, $30,403; Mr.
Hirsch, $39,709; Mr. Reimer, $42,601; and Mr. Ayers, $31,445. 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 provide that his retirement benefit under the current Plan will be
comparable to 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
(determined as of July 1, 1993) with interest credits. The normal retirement age
under the Plan is 65.
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<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. Benefits payable
under the predecessor plan are based on the participant's credited service and
"final monthly earnings", defined as base salary (before reduction for salary
deferrals under the Company's Savings and Investment Plan), plus bonuses paid
(or that would have been paid, but for a deferral arrangement) during the three
highest of his last ten 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. In addition, the maximum level of bonus
award that is includable under the Supplemental Benefits Plan, as well as under
the Dana Corporation Retirement Plan, the Excess Benefits Plan and the pension
portion of the officers' employment agreements, is 125% of base salary. 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 estimated monthly annuity benefits payable, starting at age 65, as
accrued through December 31, 1995, in the aggregate under the Dana Corporation
Retirement Plan, Excess Benefits Plan, and Supplemental Benefits Plan for the
executives named in the Summary Compensation Table, are as follows: Mr. Morcott,
$72,680; Mr. Magliochetti, $27,744; Mr. Hirsch, $38,124; Mr. Reimer, $41,199;
and Mr. Ayers, $30,108. The benefits shown above will reduce the retirement
benefits payable to the named executive officers under their employment
agreements.
EMPLOYMENT AGREEMENTS
The executive officers named in the Summary Compensation Table have
employment agreements with Dana. The term of each agreement is three years, with
an automatic one-year extension at the end of each year to maintain the full
three-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
reviews and approves the officers' base salaries annually, as described in the
"Compensation Committee Report on Executive Compensation". Their employment
agreements currently provide for the payment of 1996 base salaries to the
officers, as follows: Mr. Morcott, $945,000; Mr. Magliochetti, $450,000; Mr.
Hirsch, $440,000; Mr. Reimer, $412,000; and Mr. Ayers, $400,000.
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 (as defined in the agreements), 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
10
<PAGE> 13
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, the officer 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
in participation under 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 for 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, in
the event of a dispute related to their employment agreements, 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 highly qualified individuals and to compensate those
individuals fairly and commensurate with their contributions to furthering the
Company's strategic direction and objectives.
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
further reviewed by another independent compensation consultant whom we, the
independent Board committee, 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 only to the
companies included in the groups established for comparing industry-specific
shareholder returns.
11
<PAGE> 14
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 review and approve base salaries for each of Dana's executive officers
on an individual basis, taking into consideration the following factors on a
subjective basis: 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. We believe that a
relatively high portion of cash compensation should be "at risk" as incentive
compensation. We also tend to recommend that base salaries for the Company's
executive officers be set at approximately the median (size-adjusted) for the
comparison group companies. In cases of long tenure and exceptional individual
performance (determined 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 a base salary below the median. In 1995,
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 any
individual's bonus upward (other than a covered employee within the meaning of
Section 162(m) of the Internal Revenue Code), and may adjust any individual's
bonus 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. For 1995, the bonuses for the officers named in the Summary
Compensation Table were less than the amounts that would have been paid based
upon the performance payout formula under the Plan. 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 subject to the
terms of the Plan, we may adjust them during the year if necessary, in our
discretion, to preserve the incentive feature of the Plan if events occur that
alter the basis on which they were selected. The performance objectives were not
adjusted during 1995. The performance measures which are considered in setting
the objective for any given year may include, for example, corporate profits
after taxes, return on stockholders' beginning equity, return on average assets,
earnings per share and return on sales.
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
hurdle (the minimum level of corporate performance 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 profits after taxes was
the performance measure chosen for 1995. In 1995, the Company earned record
profits that exceeded the 1994 profit level by 26%. This profit level is
equivalent to a 31% return on stockholders' beginning equity (a measurement
calculation utilizing corporate profits after taxes), and represents a record
high for return on stockholders' beginning equity for the Corporation. As a
result of these profits, the goal performance level was exceeded, and the annual
bonuses shown in the Summary Compensation Table were earned by the executive
officers based upon the performance payout formula established in advance by the
Committee, and the adjustments described above. Dana's plan is designed to
satisfy the requirements of Section 162(m) of the Internal Revenue Code
("Code").
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
12
<PAGE> 15
/X/ PLEASE MARK
EACH VOTE
LIKE THIS
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>
<CAPTION>
FOR WITHHELD
ALL FOR ALL FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS: B. F. BAILAR, E. M. CARPENTER, / / / / 2. TO RATIFY PRICE / / / / / /
E. CLARK, G. H. HINER, M. R. MARKS, WATERHOUSE AS
S. J. MORCOTT, J. D. STEVENSON, THE COMPANY'S
T. B. SUMNER, JR. AUDITORS
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, WRITE HIS OR HER NAME ON THIS LINE:
----------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE / /
Please mark this box if you have
written comments/address change
on the reverse side.
</TABLE>
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
[LOGO] DANA CORPORATION
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
<PAGE> 16
DANA CORPORATION
ANNUAL MEETING OF STOCKHOLDERS ON APRIL 3, 1996
PROXY SOLICITED BY THE BOARD OF DIRECTORS
Martin J. Strobel, Pamela W. Fletcher, Mark A. Smith,
P Jr., Sue A. Griffin, Allen C. Goolsby, III and Louanna O.
Heuhsen, or any of them, the action of a majority of them
R voting to be controlling, are appointed attorneys, agents and
proxies of the undersigned, with full power of substitution,
O to vote as indicated on the reverse side hereof and in their
discretion upon such other business as may properly come
X before the Annual Meeting, all the shares of Common Stock of
the undersigned in Dana Corporation at the Annual Meeting of
Y Stockholders, to be held at Riverfront Plaza, East Tower (20th
Floor), 951 East Byrd Street, Richmond, Virginia on April 3,
1996, at 10:00 a.m. (EST), 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)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
