<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
International Comfort Products 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
<PAGE> 2
[ICP LOGO]
INTERNATIONAL COMFORT PRODUCTS CORPORATION
NOTICE OF ANNUAL AND SPECIAL MEETING
OF SHAREHOLDERS
AND
MANAGEMENT PROXY CIRCULAR
MEETING TO BE HELD AT 10:00 A.M. (LOCAL TIME)
WEDNESDAY, MAY 19, 1999
AT
METRO TORONTO CONVENTION CENTRE
NORTH BUILDING, ROOM 101
255 FRONT STREET WEST
TORONTO, ONTARIO, CANADA
<PAGE> 3
NOTICE OF ANNUAL AND SPECIAL MEETING
OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the annual and special meeting of the
shareholders of International Comfort Products Corporation (the "Company") will
be held at the Metro Toronto Convention Centre, North Building, Room 101, 255
Front Street West, Toronto, Ontario, Canada on Wednesday, May 19, 1999 at 10:00
a.m. (local time) (the "Meeting") for the following purposes:
1. To receive the Company's annual report, including the consolidated
financial statements of the Company for the year ended December 31, 1998,
together with the auditors' report on such financial statements;
2. To elect a Board of twelve directors to serve until the 2000 annual
meeting of shareholders or until their respective successors shall have
been duly appointed;
3. To reappoint Arthur Andersen LLP as auditors of the Company;
4. To consider and, if thought advisable, to pass a resolution
authorizing and approving the Company's Annual and Long-Term Incentive Plan
as set forth and described in the attached Proxy Circular; and
5. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
All shareholders are cordially invited to attend the Meeting. TO ENSURE
YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE AND PROMPTLY MAIL YOUR PROXY
IN THE RETURN ENVELOPE PROVIDED. This will not prevent you from voting in
person, should you so desire, but will help to secure a quorum and avoid added
solicitation costs. In order for proxies to be used at the Meeting, proxies must
be deposited with Montreal Trust Company of Canada not later than the close of
business on May 17, 1999, or if the Meeting is adjourned, 48 hours (excluding
Saturdays and holidays) before any adjournment of the Meeting.
DATED at Toronto, Ontario, Canada this 16th day of April, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ DAVID P. CAIN
DAVID P. CAIN
Senior Vice President,
General Counsel and Secretary
<PAGE> 4
MANAGEMENT PROXY CIRCULAR
SOLICITATION OF PROXIES
GENERAL, COSTS AND REVOCABILITY
The enclosed proxy is solicited by and on behalf of management of
International Comfort Products Corporation (the "Company" or "ICP") from holders
of the Company's ordinary shares (the "Shares") to be voted at the Company's
annual and special meeting of shareholders to be held at the Metro Toronto
Convention Centre, North Building, Room 101, 255 Front Street West, Toronto,
Ontario, Canada on Wednesday, May 19, 1999, at 10:00 a.m. (local time), and at
all adjournments thereof (the "Meeting"). The Board of Directors of the Company
(the "Board") has fixed the close of business on March 31, 1999, as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of and to attend and vote at the Meeting, except to the extent that (a) a
person has transferred ownership of any Shares after the Record Date; and (b)
the transferee of those Shares (i) produces properly endorsed share
certificates, or (ii) otherwise establishes that the transferee owns the Shares,
and demands, not later than ten days prior to the Meeting, that the transferee's
name be included in the list of persons entitled to vote at the Meeting, in
which case the transferee will be entitled to vote the transferred Shares at the
Meeting. On the Record Date, 40,720,334 Shares were outstanding. The Company has
no other voting securities issued and outstanding.
The approximate date on which this Proxy Circular and the accompanying
proxy are first being sent to shareholders is April 16, 1999.
ALL EXPENSES OF THIS SOLICITATION, INCLUDING THE COST OF PREPARING AND
MAILING THIS PROXY CIRCULAR, WILL BE BORNE BY THE COMPANY. In addition to
solicitation by mail, proxies may be solicited by directors, officers, and
employees of the Company in person or by telephone or other means of
communication. Such directors, officers, and employees will not be additionally
compensated, but may be reimbursed for out-of-pocket expenses in connection with
such solicitation. Arrangements will also be made with custodians, nominees, and
fiduciaries for forwarding of proxy solicitation material to beneficial owners
of Shares held of record by such persons, and the Company will reimburse such
custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith.
As a shareholder, you can revoke your proxy for the Meeting or any
adjournment of the Meeting in any manner permitted by law. This includes
depositing a written statement signed by you (or signed by your attorney,
authorized in writing) either (i) at the registered office of the Company, c/o
Osler, Hoskin & Harcourt, 66th Floor, P.O. Box 50, 1 First Canadian Place,
Toronto, Ontario, Canada, M5X 1B8 Attention: Mr. John H. Macfarlane, at any time
up to and including the last business day before the Meeting, or any adjournment
thereof, at which the proxy is to be used, or (ii) with the Chairman of the
Meeting prior to the commencement of the Meeting on the day of the Meeting, or
any adjournment thereof.
The Company's principal executive offices are located at 501 Corporate
Centre Drive, Suite 200, Franklin, Tennessee, USA 37067.
Except as otherwise stated, all dollar amounts are expressed in United
States dollars.
VOTING, QUORUM, USE
Each shareholder is entitled to one vote per Share held of record on the
Record Date, except to the extent that the shareholder has transferred any of
such Shares after the Record Date and the transferee has both established the
transferee's ownership of the transferred Shares and demanded, not later than
ten days prior to the Meeting, that the Company recognize the transferee as the
person entitled to vote the transferred Shares at the Meeting.
The holders of at least 33 1/3 percent of the Shares issued and outstanding
on the Record Date are required to be present in person or by properly executed
proxies to constitute a quorum in order to transact business at the Meeting.
<PAGE> 5
ALL SHARES REPRESENTED AT THE MEETING BY PROPERLY EXECUTED PROXIES RECEIVED
BY MONTREAL TRUST COMPANY OF CANADA NOT LATER THAN THE CLOSE OF BUSINESS ON MAY
17, 1999, OR IF THE MEETING IS ADJOURNED, 48 HOURS (EXCLUDING SATURDAYS AND
HOLIDAYS) BEFORE ANY ADJOURNMENT OF THE MEETING AND NOT PROPERLY REVOKED WILL BE
VOTED AT THE MEETING IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED IN SUCH
PROXIES.
The persons named in the enclosed form of proxy are representatives of
management of the Company and are directors and/or officers of the Company. ANY
SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A SHAREHOLDER)
OTHER THAN THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY TO ATTEND, ACT OR
VOTE FOR SUCH SHAREHOLDER AND ON SUCH SHAREHOLDER'S BEHALF AT THE MEETING. TO
EXERCISE SUCH RIGHT, A SHAREHOLDER SHOULD INSERT SUCH OTHER PERSON'S NAME IN THE
BLANK SPACE PROVIDED IN THE PROXY OR SUBSTITUTE ANOTHER PROPER FORM OF PROXY.
In voting by proxy in regard to the election of directors to serve until
the 2000 annual meeting of shareholders or until their respective successors are
duly appointed, shareholders may vote in favor of all nominees, or withhold
their votes as to all nominees, or withhold their votes as to specific nominees.
In voting by proxy in regard to all other items, shareholders may vote in favor
of the proposal, against (or in the case of the proposed reappointment of Arthur
Andersen LLP, withhold their votes with respect to) the proposal or may abstain
from voting. IF NO INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE VOTED FOR
THE ELECTION OF ALL NOMINEES AS DIRECTORS, FOR THE REAPPOINTMENT OF ARTHUR
ANDERSEN LLP AS THE COMPANY'S AUDITORS AND FOR THE RESOLUTION CONFIRMING THE
ADOPTION OF THE COMPANY'S ANNUAL AND LONG-TERM INCENTIVE PLAN. The accompanying
proxy gives the persons named in it the discretionary authority to act on
amendments to matters identified in the Notice of Annual and Special Meeting or
any additional matters that may properly be brought before the Meeting or any
adjournment thereof. At the date of this Proxy Circular, management of the
Company is not aware of any such amendments or additional matters to be
presented for action at the Meeting.
All items to be submitted at the Meeting for shareholder approval will
require the affirmative vote of a majority of those Shares present and voting on
that item.
NO SPECIFIC PROVISIONS OF THE CANADA BUSINESS CORPORATIONS ACT, THE
COMPANY'S ARTICLES OR THE COMPANY'S BY-LAWS ADDRESS THE ISSUE OF ABSTENTIONS OR
BROKER NON-VOTES. ABSTENTIONS AND BROKER NON-VOTES WILL BE TREATED AS SHARES
THAT ARE PRESENT AND ENTITLED TO VOTE FOR PURPOSES OF DETERMINING THE PRESENCE
OF A QUORUM FOR THE TRANSACTION OF BUSINESS. ABSTENTIONS AND BROKER NON-VOTES,
HOWEVER, WILL NOT BE COUNTED AS VOTES EITHER IN FAVOR OF OR AGAINST A PARTICULAR
PROPOSAL. FOR PURPOSES OF DETERMINING THE NUMBER OF SHARES VOTING ON A
PARTICULAR PROPOSAL, ABSTENTIONS ARE COUNTED AS SHARES VOTING, WHEREAS BROKER
NON-VOTES ARE NOT COUNTED AS SHARES VOTING. MONTREAL TRUST COMPANY OF CANADA
WILL ACT AS SCRUTINEERS AND TABULATE THE VOTES.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Except as set forth in the following table, the Company is not aware of any
person who, as of the Record Date, was the beneficial owner of 5% or more of the
Shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
------------------------------------ -------------------- ----------------
<S> <C> <C>
Ravine Partners, Ltd................................... 8,304,111(1) 20.39%
3219 McKinney Avenue
Dallas, Texas 75204
Ontario Teachers' Pension Plan Board................... 7,919,638 19.45%
5650 Yonge Street, 5th Floor
North York, Ontario M2M 4H5
</TABLE>
- - ---------------
(1) Includes 414,241 Shares owned by Richard W. Snyder, a director of the
Company, who is a general partner of Ravine Partners, Ltd.
2
<PAGE> 6
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of Shares, as of the Record Date, by all directors, by each of the
executive officers named in the Summary Compensation Table beginning on page 7
and by all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS(2)
------------------------ ----------------------- ----------
<S> <C> <C>
Richard C. Barnett........................................ 3,389 *
Stanley M. Beck, Q.C...................................... 2,723 *
W. Michael Clevy.......................................... 456,772(3) *
The Honourable William G. Davis, P.C., C.C., Q.C.......... 2,337 *
John F. Fraser, O.C....................................... 5,171 *
Roy T. Graydon............................................ 7,919,638(4) 19.45%
Marvin G. Marshall........................................ 18,126 *
Ernest C. Mercier......................................... 9,800 *
David H. Morris........................................... 3,585 *
David A. Rattee........................................... 21,568(5) *
Richard W. Snyder......................................... 8,304,111(6) 20.39%
William A. Wilson......................................... 11,634 *
David P. Cain............................................. 118,929(3) *
Stephen L. Clanton........................................ 87,921(3) *
Augusto H. Millan......................................... 119,615(3) *
James R. Wiese............................................ 152,044(3) *
All directors and executive officers as a group (22
persons)................................................ 17,657,138(3) 43.36%
</TABLE>
- - ---------------
(1) Includes Shares that any person has the right to acquire within 60 days of
the Record Date. Ownership is direct unless otherwise noted.
(2) An asterisk (*) in this column denotes ownership of less than one percent of
the outstanding Shares as of the Record Date.
(3) Includes Shares subject to options that currently are exercisable as
follows: Mr. Clevy (425,000); Mr. Cain (91,000); Mr. Clanton (74,333); Mr.
Millan (91,000); Mr. Wiese (91,000); all executive officers as a group
(1,120,083).
(4) Includes 7,916,638 Shares owned by the Ontario Teachers' Pension Plan Board,
of which Mr. Graydon is an employee. Mr. Graydon disclaims any beneficial
interest in these Shares.
(5) Includes 6,125 Shares owned by Mr. Rattee's spouse.
(6) Includes 7,889,870 Shares owned by Ravine Partners, Ltd., of which Mr.
Snyder is a general partner.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding more than ten percent of the Shares
are required to report their ownership of the Shares and any changes in that
ownership to the United States Securities and Exchange Commission ("SEC") and
the American Stock Exchange ("AMEX"). These persons also are required by SEC
regulations to furnish the Company with copies of these reports. Specific due
dates for these reports have been established and the Company is required to
report in this Proxy Circular any failure to file such reports by these dates
during the Company's 1998 fiscal year. Based solely on a review of the reports
furnished to the Company and written representations from the Company's
directors and executive officers, the Company believes that all of these filing
requirements were satisfied by the Company's directors, executive officers, and
ten percent holders during 1998 except as follows: Mr. Graydon, pursuant to the
Company's Share Compensation Arrangement for Non-Employee Directors, receives a
portion of his directors' fees in Shares. Mr. Graydon, however, as a
representative of the Ontario Teachers' Pension Plan Board ("Teachers"), assigns
all Shares so received to Teachers. Mr. Graydon's receipt and assignment of all
such Shares to Teachers during 1998 were timely reported by Mr. Graydon;
however, their receipt was not reported by Teachers until it filed a Form 5 on
February 17, 1999, which was one (1) day late.
3
<PAGE> 7
ELECTION OF DIRECTORS
INFORMATION REGARDING NOMINEES
The Company's Articles provide that the Board shall consist of not less
than three nor more than 13 directors. The Board has determined that the Board
shall consist of 12 directors. The terms of all current directors will expire
upon the election of new directors at the Meeting. The Board proposes the
election of the nominees listed below to serve until the 2000 annual meeting of
shareholders or until their respective successors are duly appointed. All of the
nominees listed below currently are directors of the Company and were elected at
the 1998 meeting of shareholders. Unless contrary written instructions are
received, it is intended that the Shares represented by proxies solicited by
management of the Company will be voted in favor of the election of all named
nominees as directors. If for any reason any nominee is unable to serve, the
persons named in the proxy have advised that they will vote for a substitute
nominee as proposed by the Board. Each nominee has consented to act as a
director, if elected, and the Board has no reason to expect that any nominee
will fail to be a candidate at the Meeting. Therefore, it does not at this time
have any substitute nominees under consideration. The information relating to
the 12 nominees set forth below has been furnished to the Company by the named
individuals.
The 12 nominees, their principal occupations,(1) their period(s) of service
as a director of the Company, and their ages are as follows:
<TABLE>
<C> <S> <C> <C>
PHOTO RICHARD C. BARNETT PHOTO STANLEY M. BECK, Q.C.
Retired Arbitrator
Age -- 60 Age --64
Director since June 1991
Director since May 1998
PHOTO W. MICHAEL CLEVY PHOTO THE HONOURABLE WILLIAM G.
DAVIS, P.C., C.C., Q.C.
President and Chief
Executive Counsel for Tory Tory
Officer of the Company DesLauriers & Binnington,
Barristers & Solicitors(2)
Age -- 50
Age -- 69
Director since September
1995 Director from August 1985
to April 1990 and since
June 1992
PHOTO JOHN F. FRASER, O.C. PHOTO ROY T. GRAYDON
Chairman of Air Canada Portfolio Manager, Ontario
(airline company)(3) Teachers' Pension Plan
Board
Age -- 68 (pension administrator)
Director from May 1985 to Age -- 38
April 1990 and since June
1992 Director since June 1997
</TABLE>
4
<PAGE> 8
<TABLE>
<C> <S> <C> <C>
PHOTO MARVIN G. MARSHALL PHOTO ERNEST C. MERCIER
President and Chief Corporate Director(4)
Executive Officer of
Remington Capital Age -- 66
Investments Limited (real
estate and related Director since August 1994
ventures)
Age -- 61
Director since August 1994
PHOTO DAVID H. MORRIS PHOTO DAVID A. RATTEE
Corporate Director(5) President and Chief
Executive Officer of CIGL
Age -- 57 Holdings Limited (insurance
and financial services
Director since August 1994 holding company)(6)
Age -- 56
Director since June 1993
PHOTO RICHARD W. SNYDER PHOTO WILLIAM A. WILSON
Chairman, SnyderCapital President and Chief
Corporation (investment Executive Officer, Fresh
company) Air Solutions (developer of
air conditioning
Age -- 60 technology)
Director since June 1996 Age -- 65
Director since June 1996
</TABLE>
- - ---------------
(1) All of the directors and nominees have had the principal occupation listed
above for the previous five years except as follows: Mr. Barnett was Vice
President and General Manager of Tyler Pipe Company (valve and fitting
manufacturer) until his retirement in 1998; Mr. Clevy joined the Company as
President and Chief Operating Officer of the Company's U.S. operating
subsidiary, International Comfort Products Corporation (USA) ("ICP USA"), in
September 1994. He was appointed President and Chief Executive Officer of
the Company in December 1995. Prior to joining the Company, he was Vice
President of Manufacturing and Technology of Carrier Corporation (HVAC
manufacturer); Mr. Fraser, from 1995 to 1997, was Vice Chairman of Russel
Metals Inc. (metals distribution and processing company). Prior to that
time, Mr. Fraser had served as Chairman of Federal Industries Ltd.
(transportation and distribution company) from May 1992 to May 1995; Mr.
Graydon was Vice President and Director, Mergers & Acquisitions and
Corporate Finance with Toronto-Dominion Securities Inc. (investment bank)
from 1989 until June 1995; Mr. Marshall served as Chairman of the Board of
the Company from December 1995 to June 1997. He also previously served as
President and Chief Executive Officer of Bramalea Inc. (real estate
developer); Mr. Morris, until his retirement in 1995, served as President
and Chief Operating Officer of The Toro Company (outdoor power equipment
manufacturer), a position he had held since 1988; Mr. Rattee also is
Chairman, President and Chief Executive Officer of MICC Investments Ltd.
(insurance and financial services holding company).
(2) Also serves as a director of Corel Corporation, The First American Financial
Corporation, First American Title Insurance Company, Magna International
Inc, and The Seagram Company Ltd.
(3) Also serves as a director of Air Canada, the Bank of Montreal, and The
Thomson Corporation.
(4) Also serves as a director of Cascade Corporation and Golden Star Resources
Ltd.
(5) Also serves as a director of Alamo Group Inc.
(6) Also serves as a director of Aluma Enterprises Inc. and Derlan Industries
Limited.
5
<PAGE> 9
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
Compensation of Directors -- Standard Arrangements. Each director who is
not either the Chairman or a full-time employee of the Company is paid a fee of
$1,000 per Board meeting attended and $1,000 per committee meeting attended, as
well as an annual retainer of $20,000. In addition, the Chairman of each
committee is paid an additional annual retainer of $4,000. Directors also are
reimbursed for any out-of-pocket expenses incurred in attending meetings of the
Board or committees of the Board. Pursuant to the Company's Share Compensation
Arrangement for Non-Employee Directors, at least 20 percent, or at an individual
director's election, up to 100 percent of a director's fees, less taxes, is to
be paid in Shares, rather than cash. The number of Shares that a director
receives is determined at the end of each calendar quarter by dividing the
aggregate fees to which the director is entitled by the average closing price of
the Shares during the last five trading days of the quarter, multiplied by 20%
to 100% based upon the election of the director described above.
Compensation of Directors -- Other Arrangements. Upon Mr. Snyder becoming
Chairman in 1997, he assisted Mr. Clevy and handled various matters of corporate
business. Mr. Snyder is an ex-officio member of all committees of the Board and
attends all meetings of all Board committees. Mr. Snyder also actively assists
management in the day-to-day identification and evaluation of strategic
alternatives for the Company. Since becoming Chairman, Mr. Snyder has received
$10,000 per month for serving as Chairman. During his period of service as
Chairman, Mr. Snyder has not received any other fees (excluding expenses) for
serving as a director.
Board of Directors. The Board held eight regular meetings during 1998.
Audit Committee. The Audit Committee, which currently is comprised of
Messrs. Fraser, Graydon and Rattee, reviews the Company's financial statements,
accounting practices and business and financial controls. It also recommends to
the Board the external auditors to be appointed by the shareholders at each
annual meeting of shareholders, reviews their audit work plan and approves their
fees. The Audit Committee met five times in 1998.
Compensation and Pension Committee. The Compensation and Pension
Committee, which currently is comprised of Messrs. Beck, Davis, Morris and
Wilson, reviews and makes recommendations to the Board in respect of the overall
compensation philosophy of the Company and specific compensation policies,
programs and plans. The Compensation and Pension Committee met four times in
1998.
Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee, which currently is comprised of Messrs. Beck,
Marshall, and Rattee, recommends to the Board nominees for election as directors
of the Company and makes recommendations on other matters relating to corporate
governance policy. Although the Committee does not solicit suggestions for
nominees for the Board, suggestions for nominees accompanied by biographical
data will be considered if sent to the Company's Secretary. The Nominating and
Corporate Governance Committee met two times in 1998.
Strategic Planning Committee. The Strategic Planning Committee, which
currently is comprised of Messrs. Barnett, Clevy, Mercier, Morris, and Wilson,
assists in the development and updating of strategic plans for the Company's
existing businesses and reviews and considers alternative plans for growth and
diversification opportunities. The Strategic Planning Committee met two times in
1998.
During 1998, all directors attended at least seventy-five percent of the
meetings of the Board and the committees of the Board of which they were
members.
6
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table discloses compensation paid or accrued in 1998 and the
two prior financial years by (i) the Chief Executive Officer of the Company, and
(ii) each of the Company's four most highly compensated executive officers,
other than the Chief Executive Officer, who continued to serve as at December
31, 1998 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION(1)
----------------------
AWARDS
------------ PAYOUTS
ANNUAL -------
COMPENSATION(2) SECURITIES
------------------- UNDER LTIP ALL OTHER
SALARY BONUS OPTIONS/SARS PAYOUTS COMPENSATION
NAME AND OCCUPATION YEAR ($) ($) GRANTED(#) ($) $
- - ------------------- ---- -------- -------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
W. Michael Clevy.................... 1998 $433,500 $200,000 -- -- --
President and Chief Executive
Officer 1997 425,000 405,500 200,000 -- --
1996 385,000 250,101 200,000 -- $206,038
David P. Cain....................... 1998 $178,512 $ 45,217 -- -- --
Senior Vice President, 1997 175,008 70,000 50,000 -- --
General Counsel and Secretary 1996 150,000 60,101 45,000 -- --
Stephen L. Clanton(3)............... 1998 $188,712 $ 46,654 25,000 -- --
Senior Vice President, Chief
Financial 1997 178,754 75,000 50,000 -- --
Officer and Treasurer 1996 81,843 60,101 45,000 -- 63,416
Augusto H. Millan................... 1998 $178,512 $ 50,000 -- -- 10,000(4)
Senior Vice President and General
Manager, 1997 175,008 70,000 50,000 -- --
International Sales and General
Manager, 1996 150,000 60,101 45,000 -- --
Aftermarket Sales
James R. Wiese...................... 1998 $178,512 $ 40,000 -- 41,418 --
Senior Vice President and General
Manager, 1997 175,008 70,000 50,000 -- --
Residential Products Group 1996 145,000 60,101 45,000 -- --
</TABLE>
- - ---------------
(1) During the periods indicated, the Company has made no Restricted Stock
Awards to the Named Executive Officers.
(2) For 1998, 1997, and 1996, perquisites and other personal benefits did not
exceed the lesser of $50,000 and 10 percent of the total salary and bonus
for each of the Named Executive Officers.
(3) Mr. Clanton joined the Company on July 19, 1996.
(4) Represents reimbursement for moving expenses.
7
<PAGE> 11
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets out the particulars of all grants of stock
options(1) to any of the Named Executive Officers during the Company's fiscal
year ended December 31, 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PERCENT OF PRICE APPRECIATION
NUMBER OF TOTAL EXERCISE FOR OPTION TERM
SECURITIES UNDER OPTIONS GRANTED OR BASE PRICE (CDN. $)(2)
OPTIONS GRANTED TO EMPLOYEES (CDN. EXPIRATION ----------------------
NAME (#) IN FISCAL YEAR $/SHARE) DATE 5% 10%
---- ---------------- --------------- ------------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mr. Clanton................. 25,000 6.9% $15.30 12/19/01 $74,434 $158,814
</TABLE>
- - ---------------
(1) The exercise price of each option is equal to 100% of the fair market value
of the Shares on the date of the grant. Fair market value for the purposes
of option grants means the closing market price of the Shares on The Toronto
Stock Exchange (the "TSE") on the last trading day preceding the date of the
grant. Each option is exercisable after one year from the date of grant as
to 33 1/3% of the Shares and in cumulative increments of 33 1/3% per year
thereafter.
(2) The dollar amounts under these columns are the result of calculations at 5%
and 10% rates set by the SEC and, therefore, are not intended to forecast
possible future appreciation, if any, in the price of the Shares. No benefit
to the option holder is possible without an increase in the price of the
Shares. In order to realize the values set forth in the 5% and 10% columns,
the per share price would be Cdn. $18.28 and Cdn. $21.65, respectively.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information regarding outstanding
stock options held by each of the Named Executive Officers as at December 31,
1998. No options were exercised by any of the Named Executive Officers during
the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END (#) FISCAL YEAR-END (CDN. $)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Mr. Clevy................................. 345,000 200,000 $2,764,500 $1,330,000
Mr. Cain.................................. 72,000 48,000 569,900 314,100
Mr. Clanton............................... 47,000 73,000 317,700 294,300
Mr. Millan................................ 72,000 48,000 569,900 314,100
Mr. Wiese................................. 72,000 48,000 569,900 314,100
</TABLE>
8
<PAGE> 12
PENSION PLANS
The Named Executive Officers participate in the salaried pension plan of
ICP USA (the "Pension Plan"). Pension benefits are not reduced by a
participant's social security benefits. Earnings for the purposes of the Pension
Plan benefit formula consist of the participant's average monthly base rate of
pay.
The following table sets forth the estimated annual benefits payable upon
retirement at age 65 to participants, based upon the 60 consecutive months of
highest average earnings within 120 months of the date of determining benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30+
- - ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000........................... $ 10,000 $ 20,000 $ 30,000 $ 40,000 $ 50,000 $ 60,000
125,000........................... 12,500 25,000 37,500 50,000 62,500 75,000
160,000+.......................... 16,000 32,000 48,000 64,000 80,000 96,000
</TABLE>
The maximum amount of a participant's earnings that may be taken into
account in any year is limited to an amount specified in the United States
Internal Revenue Code of 1986, as amended (the "Code"), as adjusted annually for
cost-of-living increases (such amount is $160,000 for 1998).
As at December 31, 1998, Messrs. Clevy, Cain, Clanton, Millan and Wiese had
4.3, 22.0, 2.5, 4.2 and 10.4 years of credited service, respectively, under the
Pension Plan.
In addition, Mr. Clevy has a supplemental pension plan with ICP USA which
will provide a maximum pension on retirement equal to 3 1/3% of Mr. Clevy's
average annual earnings (salary and bonus), based on three consecutive years of
highest earnings, for each year of service up to a maximum of 15 such years,
plus an additional 1% for each additional year of service up to a maximum of 20
such additional years, less the amount payable under the Pension Plan. Sixty
percent of Mr. Clevy's pension will continue to his spouse on his death.
The following table sets forth estimated annual amounts payable under a
supplemental pension plan before reduction for amounts payable under the Pension
Plan, if applicable.
SUPPLEMENTAL PENSION PLAN TABLE (CLEVY)
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------------
REMUNERATION 5 10 15 20 25 30 35
- - ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$400,000................. $ 66,667 $133,333 $200,000 $220,000 $240,000 $260,000 $280,000
500,000................. 83,333 166,667 250,000 275,000 300,000 325,000 350,000
600,000................. 100,000 200,000 300,000 330,000 360,000 390,000 420,000
700,000................. 116,667 233,333 350,000 385,000 420,000 455,000 490,000
800,000................. 133,333 266,667 400,000 440,000 480,000 520,000 560,000
900,000................. 150,000 300,000 450,000 495,000 540,000 585,000 630,000
</TABLE>
As at December 31, 1998, Mr. Clevy had 4.3 years of credited service under
his supplemental pension plan.
TERMINATION AND CHANGE IN CONTROL AGREEMENTS
Mr. Clevy has an agreement with ICP USA which provides that upon
termination of his employment with the Company (as defined therein), he will
continue to be entitled to receive his annual salary and other benefits he was
receiving at the time of termination for 24 months (or, at his option, he may
receive a lump sum payment equal to the aggregate face value of these amounts).
Mr. Clanton has an agreement with ICP USA which provides that upon
termination of his employment with the Company (as defined therein), he will
continue to be entitled to receive his annual salary and other
9
<PAGE> 13
benefits he was receiving at the time of termination for 12 months (or, at his
option, he may receive a lump sum payment equal to the aggregate face value of
these amounts).
The Company has also entered into contracts with each of the Named
Executive Officers that provide generally for continuation of the executive's
salary for a stated number of months following a Change in Control (the
"Severance Period") in the event of a termination of the officer's employment by
the Company other than "for cause" or as a result of death or disability. In
addition, the executive will receive, in such event, on an annual basis, during
the Severance Period, an amount equal to the average of the executive's bonus
during the three years prior to termination. For Mr. Clevy, the Severance Period
is 36 months; for Messrs. Cain, Clanton, Millan and Wiese, the Severance Period
is 24 months. Additionally, the contracts provide that the officers shall be
paid such amounts if the officer voluntarily terminates his employment with the
Company if, after a Change in Control: (a) a material change in the executive's
duties and responsibilities for the Company from those duties and
responsibilities for the Company in effect at the time a Change in Control
occurs, which change results in the assignment of duties and responsibilities
inferior to the executive's duties and responsibilities at the time such Change
in Control occurs; (b) a reduction in the executive's salary and benefits
(excluding discretionary bonuses), from the salary and benefits in effect at the
time a Change in Control occurs; (c) a change in the location of the executive's
work assignment from the location at the time a Change in Control occurs to any
other city or geographical location that is located further than one hundred
(100) miles from that location; or (d) the Company terminates or amends any
incentive plan so that, when considered in the aggregate with any substitute
plan or other substitute compensation, the incentive plan in which the executive
is participating fails to provide the executive with a level of benefits
equivalent to at least 85% of the value of the level of benefits provided in the
aggregate by the terminated or amended incentive plan at the date of such
termination or amendment. These contracts generally provide for an excise tax
gross-up with respect to any taxes incurred under Section 4999 of the Code after
a Change in Control. Additionally, these contracts provide for an extension of
life insurance, medical insurance, and other employment benefits throughout the
executive's applicable Severance Period. A "Change in Control" occurs when a
person (other than the executive or a group of which the executive is a member
or participant) becomes the beneficial owner, directly or indirectly, of 50% or
more of the then outstanding Shares. Any executive who is a party to both a
termination agreement and a change in control agreement may not receive benefits
under both agreements.
COMPENSATION AND PENSION COMMITTEE INTERLOCKS AND INSIDE PARTICIPATION
The following individuals served as members of the Compensation and Pension
Committee during 1998: Prior to May 13, 1998, the Hon. William G. Davis, P.C.,
C.C., Q.C., Stanley M. Beck, Q.C., and David H. Morris; after May 13, 1998, the
Hon. William G. Davis, P.C., C.C., Q.C., Stanley M. Beck, Q.C., David H. Morris,
and William A. Wilson. None of the directors who served as members of the
Committee during 1998 is, or has ever been, an officer or an employee of the
Company or any of its subsidiaries.
REPORT OF THE COMPENSATION AND PENSION COMMITTEE
The Compensation and Pension Committee of the Board of Directors (the
"Committee") reviews and makes recommendations to the Board in respect of the
overall compensation philosophy of the Company and specific compensation
policies, programs and plans. The Committee also reviews and makes
recommendations to the Board in respect of the compensation to be paid to the
Chief Executive Officer and, after considering the recommendations of the Chief
Executive Officer, to the other officers of the Company and its principal
operating subsidiaries, ICP USA and International Comfort Products Corporation
(Canada). The Committee retains the services of independent consultants to
advise it on such matters as the structuring of compensation arrangements,
design of compensation and benefit plans and competitive benchmarking. The
Committee retained the services of a consultant from Deloitte & Touche to advise
it with respect to executive compensation matters in 1998.
When determining the appropriate levels of executive compensation to be
recommended to the Board for approval, the Committee utilizes various
information sources, including data prepared by independent
10
<PAGE> 14
consultants. The Committee also considers the Company's performance, viability,
the integrity of its assets, future outlook, ethical standards related to its
role as a worldwide corporate citizen and applicable tax, securities and other
regulations affecting the Company. As the Company's business is carried on
principally in the United States, pay levels and practices for executives
resident in the United States or with significant North American
responsibilities are established with reference to those of U.S. industrial
companies of similar size and complexity but are paid in the currency of the
country in which the executive is resident without taking currency exchange
rates into account. Pay levels and practices in respect of executives resident
in Canada who do not have broader geographical responsibilities are established
with reference to a similar sample of Canadian organizations. In each case, the
comparator groups were selected by the Committee as they are considered to be
the prime sources of management resources for the Company as well as the
principal competitors for management talent.
GENERAL STRATEGY
The executive compensation strategy is a guideline for policy formulation
and decision-making that aligns the Company's human resources and business
strategies. The Company believes that effective compensation plans must be
performance-based, cost-effective and must maximize long-term shareholder value.
The Committee reviews ICP's compensation strategy, market-competitiveness and
plan effectiveness annually at minimum.
BASE SALARY
ICP base salaries are generally competitive with the market median,
relative to similar job scope and company size. The relative significance of ICP
base salaries is subordinate to variable, performance-based compensation
components. Therefore, when base salary increases are granted, they typically
consist of competitive market and internal equity adjustments. Adjustments are
not necessarily made at set intervals, but are made when significant variance
from the market exists.
ICP may also award lump sum base salary increases based on the achievement
of previously determined corporate and individual Performance Management Program
goals. Lump-sum increases, when awarded, do not change the individual's rate of
base salary.
INCENTIVE COMPENSATION
ICP pays total cash compensation levels (base salaries plus annual
incentives) and total direct compensation levels (total cash plus long-term
incentives) which are market competitive when budgeted expectations are met, and
highly competitive when expectations are exceeded. No incentive compensation is
paid when performance results fall below a pre-established threshold level.
The Committee recommends to the Board target, threshold and maximum
incentive performance and award levels for all participants. Once approved by
the Board, these levels are communicated for each position, level or group. ICP
may also recognize extraordinary achievement through discretionary incentive
awards.
Annual Incentive Compensation
ICP's short-term incentive plan for executives is a simple formula-based
design that rewards executives for the achievement of short-term goals, which
create growth and profitability. Short-term incentives for other managers and
salaried employees take the form of annual incentive plans, lump-sum salary
increases, sales commissions and the like, that best reflect and motivate each
position's contribution to the achievement of short-term goals and objectives.
Long-Term Incentives
ICP's long-term incentive plans reward the achievement of long-term growth,
profitability, shareholder value and stock price appreciation; reward team
effort; and serve to closely align shareholder interests and organizational
success with the executive's personal, financial and career interests. ICP
provides long-term
11
<PAGE> 15
compensation opportunities in the form of stock options or stock grants and
deferred cash compensation. Plan designs enhance the retention of executive
talent and discourage behavior that does not further the overall long-term good
of the organization. As such, long-term awards are subject to vesting or other
long-term capital accumulation restrictions.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation program has the same components
as those described for the other members of the executive officer group: base
salary, annual incentive and long-term incentive. The Chief Executive Officer's
compensation program is established with reference to the comparator groups
described above. The Committee makes recommendations to the Board regarding the
Chief Executive Officer's compensation on the same performance-related basis as
for the other executive officers.
Section 162(m) of the Code limits to $1 million per year the compensation
expense deduction the Company may take under United States federal tax laws for
non-performance-based compensation paid to a person who is "highly-compensated"
for purposes of the Code (generally, the CEO and other Named Executive
Officers). In making its decisions about compensation for Mr. Clevy and other
officers likely to be named executive officers, the Committee considers Section
162(m). Although the Company's compensation levels have not historically
resulted in total compensation in excess of $1 million (excluding the spread on
stock option exercises which generally should qualify for deductibility under
Section 162(m)) for Named Executive Officers other than Mr. Clevy, it is
generally the policy of the Company that the components of executive
compensation that are inherently performance-based should qualify for exclusion
from the deduction limitation under Section 162(m).
The Committee believes, however, that while tax deductibility is an
important factor, it is not the sole factor to be considered in setting
executive compensation policy, and accordingly reserves the right, in
appropriate circumstances, to pay amounts, in addition to base salary, that
might not be deductible. If non-performance-based compensation in excess of $1
million should become payable to a person who is "highly-compensated" for
purposes of the Code and regulations, the Committee will consider requiring that
individual to defer any amounts earned in excess of the cap to a tax year
following the year in which the individual leaves the employment of the Company.
Submitted by the Compensation and Pension
Committee of the Board:
The Hon. William G. Davis, P.C., C.C., Q.C.
(Chairman)
Stanley M. Beck, Q.C.
David H. Morris
William A. Wilson
12
<PAGE> 16
PERFORMANCE GRAPHS
The following graph provides a five year comparison of cumulative total
return performance of an initial investment in Shares on December 31, 1993, of
Cdn. $100, versus the cumulative total return of the TSE 300 Composite Index.
The year-end values of each investment shown on the graph are based on share
price appreciation or depreciation plus, in the case of the TSE 300 Composite
Index, dividend re-investment.
<TABLE>
<CAPTION>
International TSE 300
Measurement Period Comfort Composite
(Fiscal Year Covered) Products Index
<S> <C> <C>
12/31/93 100 100
12/31/94 075 100
12/31/95 036 114
12/31/96 091 147
12/31/97 267 169
12/31/98 273 166
</TABLE>
The following graph provides a five year comparison of cumulative total
return performance of an initial investment in Shares on December 31, 1993, of
U.S. $100, versus the cumulative total return of the Standard and Poor's (the
"S&P") Midcap 400 Index, and the Industrial Component of the S&P Midcap 400
Index. The year-end values of each investment shown on the graph are based on
share price appreciation or depreciation plus, in the case of each index,
dividend re-investment.
<TABLE>
<CAPTION>
Industrial
Component
International of S&P
Measurement Period Comfort S&P Midcap Midcap 400
(Fiscal Year Covered) Products 400 Index Index
<S> <C> <C> <C>
12/31/93 100 100 100
12/31/94 69 96 99
12/31/95 37 126 125
12/31/96 88 150 148
12/31/97 258 199 184
12/31/98 246 237 225
</TABLE>
13
<PAGE> 17
REAPPOINTMENT OF AUDITORS
The Board recommends that the shareholders vote FOR the reappointment of
Arthur Andersen LLP as the Company's auditors to hold office until the close of
the next annual meeting of shareholders. Arthur Andersen LLP have served as
auditors of the Company since June 1997. Representatives of Arthur Andersen LLP
have been requested to attend the Meeting. Such representatives will have the
opportunity to make a statement if they so desire and are expected to be
available to respond to appropriate questions.
APPROVAL OF ANNUAL AND LONG TERM INCENTIVE PLAN
INTRODUCTION
On October 26, 1998, the Board adopted the International Comfort Products
Corporation Annual and Long-Term Incentive Plan (the "Incentive Plan"), subject
to shareholder approval. A copy of the Incentive Plan appears as Exhibit A to
this Proxy Circular.
Under the proposed Incentive Plan, the Company may grant to key employees
cash-based annual and long-term incentive awards. The Board believes that the
Incentive Plan will form an important part of the Company's overall compensation
program. The Incentive Plan will support the Company's ongoing efforts to
develop and retain outstanding leaders and will give the Company the ability to
provide those employees with incentives that are directly linked to the
performance of the Company's businesses and increases in shareholder value.
The Incentive Plan is not required to be submitted to shareholders;
however, it is being submitted to shareholders for their approval in order that
awards thereunder will be considered "qualified performance-based compensation"
within the meaning of Section 162(m) of the Code (see discussion below under the
heading United States Federal Income Tax Consequences). Approval of the
Incentive Plan requires the affirmative vote of the holders of a majority of the
Shares present, in person or by proxy, at the Meeting and entitled to vote. The
Board recommends that the shareholders vote FOR the approval of the Incentive
Plan.
SUMMARY OF INCENTIVE PLAN
The following general description of certain features of the Incentive Plan
is qualified in its entirety by reference to Exhibit A.
Eligibility. Senior executives and key management personnel of the Company
and its subsidiaries who are responsible for or contribute to the management,
growth and profitability of the Company will be eligible to receive awards under
the Incentive Plan. No determination has been made as to which of the Company's
eligible employees (currently, approximately 8) will receive grants under the
Incentive Plan, and therefore, the benefits to be allocated to any individual or
to various groups of employees are not presently determinable.
Administration. It is currently anticipated that the Incentive Plan will
be administered by the Compensation and Pension Committee. This Committee will
select the individuals to whom awards will be granted and will set the terms of
such awards. The Committee may delegate its authority under the Incentive Plan
to officers of the Company, subject to Board-approved guidelines, with respect
to employees who are not "executive officers" of the Company.
Cash-based Annual Awards and Performance Units. The Incentive Plan
provides both for Annual Incentive Awards and Performance Units, each of which
are cash based. Annual Incentive Awards have a performance cycle of one year or
less while Performance Units have performance cycles of more than one year. Such
awards will be earned only if corporate, business area or individual performance
objectives over performance cycles established by or under the direction of the
Committee are met. The performance objectives may vary from participant to
participant, group to group and period to period. The performance objectives for
awards that are intended to constitute "qualified performance-based
compensation" (see discussion below under the heading United States Federal
Income Tax Consequences) will be based upon one or more of the following:
revenue, net income, operating income, stock price, market share, earnings per
share, cash flow, return on equity, return on assets, return on capital,
decrease in costs, total shareholder return or
14
<PAGE> 18
Corporate Value Added (net after-tax operating profit less the cost of capital).
Any Award will be evidenced by a written agreement between the Company and the
employee.
Maximum Awards. The Incentive Plan provides that any one employee may not
receive more than $2 million under an Annual Incentive Award. With respect to
Performance Units, an employee cannot receive more than $2.5 million multiplied
by the number of years in the performance cycle.
Death or Disability. The Incentive Plan provides that in the event of an
employee's death or disability, Awards fully vest unless the applicable
agreement provides otherwise.
Change in Control Provisions. The Incentive Plan provides that in the
event of a "Change in Control" (as defined in the plan), all Awards fully vest
unless the applicable agreement provides otherwise or if, in the judgment of the
Committee, provision is made by a surviving corporation to provide an
appropriate substitute award. The Incentive Plan also provides for the Committee
to provide relief (e.g., tax gross-ups) in the event any compensation payable
upon a change in control is deemed an "excess parachute payment" that is subject
to the excise tax under Section 4999 of the Code.
Termination of Employment. The Incentive Plan provides that in the event
the Company terminates the employee's employment without cause, the Award vests
as provided in the applicable agreement. If the Company terminates the
employee's employment with cause, the employee forfeits all unvested portions of
any Award. If an employee terminates his/her employment, the employee forfeits
all unvested portions of any Award; provided, however, the agreement may provide
that the Committee may pro-rate the unvested portion of any Award.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
Any cash payments that an employee receives in connection with awards under
the Incentive Plan are includible in income in the year received or made
available to the employee without substantial limitations or restrictions.
Generally, the Company will be entitled to deduct the amount the employee
includes in income as a business expense in the year of payment.
Section 162(m) of the Code places a $1 million annual limit on the
deductible compensation of certain executives of publicly traded corporations.
The limit, however, does not apply to "qualified performance-based
compensation." The Company believes that awards under the Incentive Plan will
qualify for the performance-based compensation exception to the deductibility
limit, assuming that the Incentive Plan is approved by shareholders.
State tax consequences may in some cases differ from those described above.
Awards under the Incentive Plan will in some instances be made to employees who
are subject to tax in jurisdictions other than the United States and may result
in tax consequences differing from those described above.
OTHER INFORMATION
If approved by shareholders, the Incentive Plan will be effective on
January 1, 1999, and will expire on December 31, 2008, unless terminated
earlier, or extended, by the Board. Any awards granted before the Incentive Plan
expires or is terminated may extend beyond the expiration or termination date.
The Board may amend the Incentive Plan at any time, provided that no such
amendment will be made without shareholder approval if such approval is required
under applicable law.
The Incentive Plan provides that awards are not transferable except in the
event of the participant's death or unless otherwise required by law. Other
terms and conditions of each award will be set forth in award agreements, which
can be amended by the Committee.
It is presently intended that the Incentive Plan constitutes an "unfunded"
plan for incentive compensation. The plan authorizes the creation of trusts and
other arrangements to facilitate or ensure payment of the Company's obligations.
15
<PAGE> 19
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
Strong corporate governance practices are essential to the Company's
success and its ability to create shareholder value. This statement of corporate
governance practices is made pursuant to the requirements of the TSE relating to
the disclosure of corporate governance practices. As a public company whose
Shares trade on the TSE, the Company complies with the corporate governance
guidelines issued by the TSE in the December 1994, Report of the TSE Committee
on Corporate Governance in Canada.
BOARD MANDATE
In December 1995, the Board separated the functions of chairman and chief
executive officer. This separation articulates the Board's view that the
chairman should represent the interests of shareholders and the chief executive
officer should represent the views of management, which is accountable to the
Board. The directors provide oversight and a policy framework that ensure
management acts in the best interests of the shareholders.
In 1996 and 1997, governance practices and expectations of management were
improved through several initiatives that included:
- a strengthening of the Board and its committees through the addition of
independent directors;
- a new long-term strategic planning process, resulting in a three-year
strategic plan;
- the appointment of internal auditors;
- the linking of management compensation to measurable operational and
profit performance targets;
- the partial or, at a director's option, entire payment of director's fees
(less applicable taxes) in Shares of the Company; and
- a new communications policy to provide shareholders and other
stakeholders with comprehensive and timely information.
BOARD MEMBERSHIP
The Board currently has 12 members, of whom one is a related director (the
Company's Chief Executive Officer) and 11 are directors unrelated to either the
management or the business of the Company. The Company does not have a
controlling shareholder, although the current Chairman, Richard W. Snyder,
controls 20.39% of the Company's outstanding Shares and another director, Roy T.
Graydon, is a portfolio manager of the Merchant Banking Group of Ontario
Teachers' Pension Plan Board, the holder of 19.45% of the Company's outstanding
Shares.
In 1996, the Company's shareholders approved a substantial change in the
composition of the Board to include American residents with specific knowledge
of the U.S. heating, ventilation and air conditioning industry and the markets
in which the Company competes. In 1998, the Company derived approximately 81
percent of its revenue from U.S. sales. The corporate head office and corporate
management functions are located in Franklin, Tennessee and most of the
Company's manufacturing operations are located in Lewisburg, Tennessee.
The composition of the Board has been influenced by the need to ensure that
the Company has the appropriate complement of skills, knowledge and experience
required to implement the Company's long-term strategic plan.
The current Board was elected in May 1998.
BOARD COMMITTEES
The Board has four standing committees, each of which is comprised of a
majority of independent directors. The functions and current membership of each
of the Company's Audit Committee, Compensation
16
<PAGE> 20
and Pension Committee, Nominating and Corporate Governance Committee, and
Strategic Planning Committee are described elsewhere in this Proxy Circular.
DECISIONS REQUIRING BOARD APPROVAL
In addition to those matters which must by law be approved by the Board,
management is also required to seek the approval of the Board for:
- acquisitions of, or investments in, new businesses above $3 million;
- changes in the nature of the Company's existing business;
- hiring of senior management;
- annual business plan and budgets; and
- any other matter considered "material" to the business and affairs of the
Company.
BOARD PERFORMANCE
It is the responsibility of the Chairman of the Board of Directors to
ensure the effective operation of the Board. The Chairman consults on an ongoing
basis with the independent directors to discuss the effectiveness of the process
the Board follows to receive information from management. The Chairman also
consults on an ongoing basis with individual members of the Board to discuss
each director's contribution to the Board and committee meetings and any other
matters that the individual directors wish to raise with the Chairman.
SHAREHOLDER FEEDBACK
The Company's shareholder communications policy is one of timely public
dissemination of material information. At the Company's annual meeting, a full
opportunity is afforded for shareholders to ask questions concerning the
Company's activities. In addition, Stephen L. Clanton, Senior Vice President,
Chief Financial Officer and Treasurer is responsible for investor relations and
Karla G. Smith, Vice President, Corporate Communications is responsible for
communications and public relations. Investor concerns are reviewed to ensure
that every inquiry receives a full and timely response from the appropriate
officer.
EXPECTATIONS OF MANAGEMENT
The information which management provides to the Board is critical.
Directors must have confidence in the analysis, operational and reporting
functions of management. The Company's Strategic Planning Committee and the
Nominating and Corporate Governance Committee work closely with management to
ensure that management is effective in identifying problems and opportunities
for the Company.
CERTAIN TRANSACTIONS
During the 1998 fiscal year, except as disclosed above under "Compensation
of Executive Officers," and except as set forth below, the Company's executive
officers and directors did not have significant business relations with the
Company requiring disclosure under applicable regulations and no such
transactions are anticipated during fiscal year 1999.
Mr. Snyder is a general partner of Ravine Partners, Ltd. ("Ravine"), a
Texas limited partnership. On April 30, 1996, Mr. Snyder, Ravine and Roberta W.
Snyder, a general partner of Ravine, (collectively, the "Snyder Group") entered
into an agreement (the "Snyder Group Agreement") with the Company relating to
the Snyder Group's shareholdings which provides for, among other things, a
prohibition on the acquisition by the Snyder Group of in excess of 20 percent of
the outstanding Shares or the sale by the Snyder Group of any Shares to a buyer
who after such sale would own in excess of 20 percent of the outstanding Shares,
without first having offered the Shares to the Company or a third party buyer
arranged by the Company. The Snyder Group Agreement was amended in July 1997 to
provide for an exception to the prohibition of the acquisition by the Snyder
Group of more than 20 percent of the outstanding Shares in the circumstances of
the issuance
17
<PAGE> 21
of Shares to Mr. Snyder in his capacity as a director or Chairman of the Company
pursuant to the Company's Share Compensation Arrangement for Non-Employee
Directors.
SHAREHOLDER PROPOSALS FOR 2000 PROXY MATERIALS
To be considered for inclusion in the Company's proxy materials relating to
the 2000 annual meeting of shareholders, such proposals must be submitted by
eligible shareholders who have complied with the relevant requirements of the
SEC and the Canada Business Corporations Act and must be received no later than
February 18, 2000, under the Canada Business Corporations Act and not later than
December 20, 1999, under the Exchange Act. In addition, if the Company is not
notified of a shareholder proposal by March 3, 2000, then the proxies held by
management may provide the discretion to vote against such shareholder proposal,
even though such proposal is not discussed in the proxy materials sent in
connection with the 2000 annual meeting of shareholders. Shareholder proposals
should be mailed to David P. Cain, Senior Vice President, General Counsel and
Secretary, International Comfort Products Corporation, 501 Corporate Centre
Drive, Suite 200, Franklin, Tennessee, USA 37067.
APPROVAL OF DIRECTORS
The Board has approved the contents of this Circular and the sending
thereof to the shareholders of the Company.
/s/ DAVID P. CAIN
DAVID P. CAIN
Senior Vice President,
General Counsel and Secretary
Toronto, Ontario, Canada
April 16, 1999
10-K AVAILABLE
UPON THE WRITTEN REQUEST OF ANY RECORD HOLDER OR BENEFICIAL OWNER OF THE
SHARES ENTITLED TO VOTE AT THE MEETING, THE COMPANY, WITHOUT CHARGE, WILL
PROVIDE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998, TOGETHER WITH FINANCIAL STATEMENTS AND SCHEDULES, AS FILED
WITH THE SEC. REQUESTS SHOULD BE MAILED TO DAVID P. CAIN, SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY, INTERNATIONAL COMFORT PRODUCTS CORPORATION, 501
CORPORATE CENTRE DRIVE, SUITE 200, FRANKLIN, TENNESSEE, USA 37067.
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EXHIBIT A
INTERNATIONAL COMFORT PRODUCTS CORPORATION
ANNUAL AND LONG-TERM INCENTIVE PLAN
ARTICLE ONE
PURPOSE
The purpose of the Plan is to support the Corporation's ongoing efforts to
develop and retain the highest quality leadership and to provide the Corporation
with the ability to provide incentives more directly linked to the performance
of the Corporation's businesses and increases in stockholder value. The Plan is
intended to conform with Section 162(m) of the United States Internal Revenue
Code of 1986, as amended, by providing "performance based" compensation within
the meaning of that Code section.
ARTICLE TWO
DEFINITIONS
For purposes of the Plan, the following terms shall have the meanings set
forth below:
"Affiliate" of the Corporation means any corporation, partnership, or other
business association that, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with the
Corporation.
"Agreement" means an agreement evidencing one or more Awards under this
Plan, as specified in Section 6.5, as any such Agreement may be supplemented or
amended from time to time.
"Annual Incentive Award" means an Award made pursuant to Section 5 with a
Performance Cycle of one year or less.
"Approved Transaction" means any transaction in which the Board (or, if
approval of the Board is not required as a matter of law, the stockholders of
the Corporation) shall approve (i) any consolidation or merger of the
Corporation, or binding share exchange, pursuant to which Ordinary Shares of the
Corporation would be changed or converted into or exchanged for cash, securities
or other property, other than any such transaction in which the stockholders of
the Corporation immediately prior to such transaction have at least eighty
percent (80%) of the common stock of, and voting power with respect to, the
surviving corporation immediately after such transaction, (ii) any merger,
consolidation or binding share exchange to which the Corporation is a party as a
result of which the persons who are stockholders of the Corporation immediately
prior thereto have less than a majority of the combined voting power of the
outstanding capital stock of the Corporation ordinarily (and apart from the
rights accruing under special circumstances) having the right to vote in the
election of directors immediately following such merger, consolidation or
binding share exchange, (iii) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or (iv) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Corporation.
"Awards" mean grants under this Plan of Annual Incentive Awards or
Performance Units.
"Board" means the Board of Directors of the Corporation.
"Board Change" means, during any period of two consecutive years,
individuals who at the beginning of such period constituted the entire Board
cease for any reason to constitute a majority thereof unless the election, or
the nomination for election, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period.
"Code" means the United States Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
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"Committee" means the Compensation and Pension Committee of the Board or a
subcommittee thereof, any successor thereto or such other committee or
subcommittee as may be designated by the Board to administer the Plan.
"Control Purchase" means any transaction (or series of related
transactions) in which (i) any person (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other
than the Corporation, any Subsidiary or any employee benefit plan sponsored by
the Corporation or any Subsidiary) shall purchase any Ordinary Shares of the
Corporation (or securities convertible into Ordinary Shares of the Corporation)
for cash, securities or any other consideration pursuant to a tender offer or
exchange offer, without the prior consent of the Board, or (ii) any person (as
such term is so defined), corporation or other entity (other than the
Corporation, any Subsidiary, any employee benefit plan sponsored by the
Corporation or any Subsidiary, or any Controlling Person (as defined below))
shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Corporation
representing 50% or more of the combined voting power of the then outstanding
securities of the Corporation ordinarily (and apart from the rights accruing
under special circumstances) having the right to vote in the election of
directors (calculated as provided in Rule 13d-3(d) under the Exchange Act in the
case of rights to acquire the Corporation's securities), other than in a
transaction (or series of related transactions) approved by the Board. For
purposes of this definition, "Controlling Person" means each of (a) the Chairman
of the Board, the President and each of the directors of the Corporation as of
the Effective Date of this Plan, and (b) the respective family members, estates
and heirs of each of the persons referred to in clause (a) above and any trust
or other investment vehicle for the primary benefit of any of such persons or
their respective family members or heirs. As used with respect to any person,
the term "family member" means the spouse, siblings and lineal descendants of
such person.
"Corporation" means International Comfort Products Corporation, a
corporation organized under the laws of Canada, or any successor thereto.
"Corporate Value Added" means net after-tax operating profit less the cost
of capital.
"Disability" means the inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than the lesser of: (1) the
exclusionary period then existing under the Corporation's long term disability
plan for senior managers; or (2) twelve (12) months.
"Effective Date" has the meaning ascribed thereto in Section 6.7(a).
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
"Ordinary Shares" or "Shares" means the Ordinary Shares of the Corporation.
"Performance Cycle" means the period selected by the Committee during which
the performance of the Corporation or any subsidiary, affiliate or unit thereof
or any individual is measured for the purpose of determining the extent to which
an Award subject to Performance Goals has been earned.
"Performance Goals" mean the objectives for the Corporation or any
subsidiary or affiliate or any unit thereof or any individual that may be
established by the Committee for a Performance Cycle with respect to any
Performance Units contingently awarded under the Plan, to determine in whole or
in part whether a Performance Unit shall be earned.
"Performance Unit" means an Award made pursuant to Section 5 with a
Performance Cycle of more than one year.
"Plan" means this Annual and Long Term Incentive Plan, as amended from time
to time.
"Subsidiary" of the Corporation means any present or future subsidiary (as
defined in Section 424(f) of the Code) of the Corporation or any business entity
in which the Corporation owns directly or indirectly, 50% or more of the voting,
capital or profits interests. An entity shall be deemed a subsidiary of the
Corporation for
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purposes of this definition only for such periods as the requisite ownership or
control relationship is maintained.
ARTICLE THREE
ADMINISTRATION
The Plan shall be administered by the Committee, which shall have the power
to interpret the Plan and to adopt such rules and guidelines for carrying out
the Plan as it may deem appropriate. The Committee shall have the authority to
adopt such modifications, procedures and subplans as may be necessary or
desirable to comply with the laws, regulations, compensation practices and tax
and accounting principles of the countries in which the Corporation, a
subsidiary or an affiliate may operate to assure the viability of the benefits
of Awards made to individuals employed in such countries and to meet the
objectives of the Plan. Subject to the terms of the Plan, the Committee shall
have the authority to determine those employees eligible to receive Awards and
the amount, type and terms of each Award and to establish and administer any
Performance Goals applicable to such Awards. The Committee may delegate its
authority and power under the Plan to one or more officers of the Corporation,
subject to guidelines prescribed by the Committee and approved by the Board,
with respect to participants who are not subject to Section 16 of the Exchange
Act. Any determination made by the Committee or pursuant to delegated authority
in accordance with the provisions of the Plan with respect to any Award shall be
made in the sole discretion of the Committee or such delegate, and all decisions
made by the Committee or any appropriately designated officer pursuant to the
provisions of the Plan shall be final and binding on all persons, including the
Corporation and Plan participants.
ARTICLE FOUR
ELIGIBILITY
The persons who shall be eligible to participate in the Plan and to receive
Awards under the Plan shall be such senior executives and key management
personnel of the Corporation and its Subsidiaries as the Committee shall select.
Awards may be made to employees who hold or have held Awards under this Plan or
any similar or other awards under any other plan of the Corporation or any of
its Affiliates. No member of the Board shall be eligible to receive an Award.
ARTICLE FIVE
AWARDS
5.1 Terms of Awards. An Award may be in the form of either an Annual
Incentive Award or Performance Units. Annual Incentive Awards and Performance
Units shall be paid, vested or otherwise deliverable solely on account of the
attainment of one or more pre-established, objective Performance Goals.
5.2 Performance Goal Criteria. Performance Goals may be based on one or
more business criteria that apply to the individual, one or more business units
of the Corporation, or the Corporation as a whole, and may include one or more
of the following: revenue, net income, operating income, stock price, market
share, earnings per share, cash flow, return on equity, return on assets, return
on capital, decrease in costs, total shareholder return or Corporate Value
Added. Unless otherwise stated, a Performance Goal need not be based upon an
increase or positive result under a particular business criterion and could
include, for example, maintaining the status quo or limiting economic losses
(measured, in each case, by reference to specific business criteria). In
interpreting Plan provisions applicable to Performance Goals and Performance
Units, it is the intent that the Plan conform with the standards of Section
162(m) of the Code and Treasury Regulation sec. 1.162-27(e)(2)(i), and, in
establishing such goals and interpreting the Plan, the Committee shall be guided
by such provisions. Performance Goals shall be established by the Committee in
writing not later than 90 days after the commencement of the Performance Cycle
to which the Performance Goal relates, but in no event after 25 percent of the
Performance Cycle has elapsed, and in any event while the outcome is
substantially uncertain.
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5.3 Committee Certification. Prior to the payment of any compensation
under or pursuant to an Annual Incentive Award or a Performance Unit based on
the achievement of Performance Goals, the Committee must certify in writing that
applicable Performance Goals and any of the material terms thereof were, in
fact, satisfied. Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Annual Incentive Award or Performance Units made
pursuant to this Plan shall be determined by the Committee.
5.4 Maximum Awards. An Annual Incentive Award paid to a participant with
respect to any Performance Cycle shall not exceed $2,000,000. A Performance Unit
paid to a participant with respect to any Performance Cycle shall not exceed
$2,500,000 times the number of years in the Performance Cycle.
ARTICLE SEVEN
GENERAL PROVISIONS
6.1 Acceleration of Awards.
(a) Death or Disability. Upon the termination of the employment, by reason
of death or Disability, of an employee who has been granted an Award,
notwithstanding any contrary waiting period, installment period or vesting
schedule in any Agreement or in the Plan, unless the applicable Agreement
provides otherwise, each Annual Incentive Award and each Performance Unit shall
become vested in full.
(b) Approved Transactions; Board Change; Control Purchase. In the event of
any Approved Transaction, Board Change or Control Purchase, notwithstanding any
contrary waiting period, installment period or vesting schedule in any Agreement
or in the Plan, unless the applicable Agreement provides otherwise, all
Performance Goals shall thereupon be deemed to have been achieved, and all
Annual Incentive Awards and Performance Units shall thereupon be deemed to be
fully vested and immediately payable, in each case effective upon the Board
Change or Control Purchase or immediately prior to consummation of the Approved
Transaction. Notwithstanding the foregoing, unless otherwise provided in the
applicable Agreement, the Committee may, in its discretion, determine that any
or all outstanding Awards of any or all types granted pursuant to the Plan will
not vest on an accelerated basis nor Performance Goals be deemed to have been
achieved in connection with an Approved Transaction, Board Change or Control
Purchase, if the Board or the surviving or acquiring corporation, as the case
may be, shall have taken, or made effective provision for the taking of, such
action as in the opinion of the Committee is equitable and appropriate to
substitute a new Award for such Award or to assume such Award and in order to
make such new or assumed Award, as nearly as may be practicable, equivalent to
the old Award (before giving effect to any acceleration of the vesting thereof),
taking into account, to the extent applicable, the kind and amount of
securities, cash or other assets into or for which the Ordinary Shares may be
changed, converted or exchanged in connection with an Approved Transaction.
6.2 Termination of Employment
(a) General. Upon the termination of the employment of an employee prior
to the vesting of any Annual Incentive Award or Performance Unit held by that
employee, such Award shall thereafter vest, solely to the extent provided in the
applicable Agreement; provided, however, that (i) any termination of employment
by reason of death or Disability will be treated in accordance with the
provisions of Section 6.1(a); and; (ii) any termination by the Corporation for
cause will be treated in accordance with the provisions of Section 6.2(b). In
explanation and not in derogation of the foregoing, an Agreement may provide
that if an employee voluntarily terminates his/her employment with the
Corporation, that employee shall forfeit his/her rights to any portion of an
Award that has not yet vested; provided, however, any Agreement may provide that
the Committee, in its discretion may pro-rate the unvested portion of any Award
and pay that portion to an employee.
(b) Termination by Corporation for Cause. Upon the termination of the
employment of an employee who has been granted an Award for cause (for these
purposes, cause shall have the meaning ascribed thereto in any employment
agreement to which such employee is a party or, in the absence thereof, shall
include but not be limited to, insubordination, dishonesty, incompetence, moral
turpitude, other misconduct of any kind
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and the refusal to perform his duties and responsibilities for any reason other
than illness or incapacity; provided, however, that if such termination occurs
within 12 months after an Approved Transaction, Control Purchase or Board
Change, termination for cause shall mean only a felony conviction for fraud,
misappropriation or embezzlement) prior to the vesting of any Annual Incentive
Award or Performance Unit, then such employee's interest in the unvested portion
of any Annual incentive Award or Performance Unit shall be forfeited
immediately.
(c) Miscellaneous. The Committee may determine whether any given leave of
absence constitutes a termination of employment; provided, however, that for
purposes of the Plan (i) a leave of absence, duly authorized in writing by the
Corporation for military service or sickness, or for any other purpose approved
by the Corporation if the period of such leave does not exceed 90 days, and (ii)
a leave of absence in excess of 90 days, duly authorized in writing by the
Corporation, provided the employee's right to reemployment is guaranteed either
by statute or contract, shall not be deemed a termination of employment. Awards
made under the Plan shall not be affected by any change of employment so long as
the person continues to be an employee of the Corporation or any Subsidiary.
6.3 Right of Corporation to Terminate Employment. Nothing contained in the
Plan or in any Award, and no action of the Corporation or the Committee with
respect thereto, shall confer or be construed to confer on any employee any
right to continue in the employ of the Corporation or any of its Subsidiaries or
interfere in any way with the right of the Corporation or a Subsidiary to
terminate the employment of the employee at any time, with or without cause;
subject, however, to the provisions of any employment agreement between the
employee and the Corporation or any Subsidiary.
6.4 Nonalienation of Benefits. No right or benefit under the Plan shall be
subject to anticipation, alienation, sale, assignment, hypothecation, pledge,
exchange, transfer, encumbrance or charge, and any attempt to anticipate,
alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or
charge the same shall be void. No right or benefit hereunder shall in any manner
be liable for or subject to the debts, contracts, liabilities or torts of the
person entitled to such benefits.
6.5 Written Agreement. Each Award shall be evidenced by a written
agreement, each in such form and containing such terms and provisions not
inconsistent with the provisions of the Plan as the Committee from time to time
shall approve; provided, however, that if more than one type of Award is made to
the same employee, such Awards may be evidenced by a single agreement with such
employee. Each grantee of an Award shall be notified promptly of such grant and
a written agreement shall be promptly executed and delivered by the Corporation
and the grantee, provided that, in the discretion of the Committee, such grant
of an Award shall terminate if such written agreement is not signed by such
grantee (or his attorney) and delivered to the Corporation within 60 days after
the date the Committee approved such grant. Any such written agreement may
contain (but shall not be required to contain) such provisions as the Committee
deems appropriate (i) to ensure that the penalty provisions of Section 4999 of
the Code will not apply to any payments received by the employee from the
Corporation or (ii) to provide payments (e.g., tax gross-ups) to the employee to
mitigate the impact of such penalty provisions upon the employee. Any such
agreement may be supplemented or amended from time to time as approved by the
Committee as contemplated by Section 6.7(c).
6.6 Designation of Beneficiaries. Each person who shall be granted an
Award under the Plan may designate a beneficiary or beneficiaries and may change
such designation from time to time by filing a written designation of
beneficiary or beneficiaries with the Committee on a form to be prescribed by
it, provided that no such designation shall be effective unless so filed prior
to the death of such person.
6.7 Termination and Amendment.
(a) Effective Date. If approved by stockholders, the Plan shall be
effective as of January 1, 1999 (the "Effective Date").
(b) Term and Termination. Unless the Plan shall theretofore have been
terminated as hereinafter provided, no Awards may be made under the Plan on or
after the tenth anniversary of the Effective Date,
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provided, that any Awards granted prior thereto may extend beyond that date. The
Board or the Committee may at any time prior to the tenth anniversary of the
Effective Date terminate the Plan, and may, from time to time, suspend or
discontinue the Plan or modify or amend the Plan in such respects as it shall
deem advisable; except that no such modification or amendment shall be effective
prior to approval by the Corporation's stockholders to the extent such approval
is required by applicable legal requirements.
(c) Modification. No termination, modification or amendment of the Plan
may, without the consent of the person to whom any Award shall theretofore have
been granted, adversely affect the rights of such person with respect to such
Award. No modification, extension, renewal or other change in any Award granted
under the Plan shall be made after the grant of such Award, unless the same is
consistent with the provisions of the Plan. With the consent of the employee and
subject to the terms and conditions of the Plan (including Section 6.7(a)), the
Committee may amend outstanding Agreements with any employee, including, without
limitation, any amendment which would accelerate the time or times at which the
Award may be vested. Without limiting the generality of the foregoing, the
Committee may, but solely with the employee's consent unless otherwise provided
in the Agreement, agree to cancel any Award under the Plan and issue a new Award
in substitution therefore, provided that the Award so substituted shall satisfy
all of the requirements of the Plan as of the date such new Award is made.
Nothing contained in the foregoing provisions of this Section 6.7(c) shall be
construed to prevent the Committee from providing in any Agreement that the
rights of an employee with respect to the Award evidenced thereby shall be
subject to such rules and regulations as the Committee may, subject to the
express provisions of the Plan, adopt from time to time, or impair the
enforceability of any such provision.
6.8 Government and Other Regulations. The obligation of the Corporation
with respect to Awards shall be subject to all applicable laws, rules and
regulations and such approvals by any governmental agencies as may be required,
including, without limitation, the rules and regulations of any securities
exchange or association on which the Ordinary Shares may be listed or quoted.
6.9 Withholding. The Corporation's obligation to pay cash in respect of
any Award under the Plan shall be subject to applicable federal, state and local
tax withholding requirements. If an employee shall fail to pay, or make
arrangements satisfactory to the Committee for the payment to the Corporation of
all such federal, state and local taxes required to be withheld by the
Corporation, then the Corporation shall, to the extent permitted by law, have
the right to deduct from any payment of any kind otherwise due to such employee
an amount equal to any federal, state or local taxes of any kind required to be
withheld by the Corporation with respect to such Award.
6.10 Separability. It is the intent of the Corporation that Awards under
this Plan comply with certain exemptive provisions applicable to persons subject
to Section 16 of the Exchange Act unless otherwise provided herein or in an
Award Agreement, that any ambiguities or inconsistencies in the construction of
this Plan be interpreted to give effect to such intention, and that if any
provision of this Plan is found not to be consistent with the availability of
exemptions for grants and awards or dispositions to the Corporation under
Section 16 of the Exchange Act, such provision shall be null and void to the
extent required to comply with such exemptive provisions.
6.11 Non-Exclusivity of the Plan. Neither the adoption of the Plan by the
Board nor the submission of the Plan to the stockholders of the Corporation for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options and the awarding of
stock and cash otherwise than under the Plan, and such arrangements may be
either generally applicable or applicable only in specific cases.
6.12 Exclusion from Pension and Profit-Sharing Computation. By acceptance
of an Award, unless otherwise provided in the applicable Agreement, any employee
who receives an Award shall be deemed to have agreed that such Award is special
incentive compensation that will not be taken into account, in any manner, as
salary, compensation or bonus in determining the amount of any payment under any
pension, retirement or other employee benefit plan, program or policy of the
Corporation or any Subsidiary. In addition, each beneficiary of a deceased
employee shall be deemed to have agreed that such Award will not affect the
amount of any life insurance coverage, if any, provided by the Corporation on
the life of the employee which is
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payable to such beneficiary under any life insurance plan covering employees of
the Corporation or any Subsidiary.
6.13 Unfunded Plan. Neither the Corporation nor any Subsidiary shall be
required to segregate any cash which may at any time be represented by Awards
and the Plan shall constitute an "unfunded" plan of the Corporation. Neither the
Corporation nor any Subsidiary shall, by any provisions of the Plan, be deemed
to be a trustee of any property, and the liabilities of the Corporation and any
Subsidiary to any employee pursuant to the Plan shall be those of a debtor
pursuant to such contract obligations as are created by or pursuant to the Plan,
and the rights of any employee, former employee or beneficiary under the Plan
shall be limited to those of a general creditor of the Corporation or the
applicable Subsidiary, as the case may be. In its sole discretion, the Board may
authorize the creation of trusts or other arrangements to meet the obligations
of the Corporation under the Plan, provided, however, that the existence of such
trusts or other arrangements is consistent with the unfunded status of the Plan.
6.14 Corporation's Rights. The grant of Awards pursuant to the Plan shall
not affect in any way the right or power of the Corporation to make
reclassification, reorganizations or other changes of or to its capital or
business structure or to merge, consolidate, liquidate, sell or otherwise
dispose of all or any part of its business or assets. Awards, however, shall be
proportionately adjusted, as appropriate, to reflect any stock dividend, stock
split or share combination with respect to the Ordinary Shares or any
recapitalization of the Corporation.
6.15 Defeasance of Awards. Any Awards granted hereunder are specifically
made subject to defeasance by the failure of the shareholders of the Corporation
to approve the Plan within a period of twelve months from the date the Plan is
adopted by the Board.
6.16 Indemnification and Exculpation. Each person who is or shall have
been a member of the Board or of the Committee shall be indemnified and held
harmless by the Corporation against and from any and all loss, cost, liability
or expense that may be imposed upon or reasonably incurred by him/her in
connection with or resulting from any claim, action, suit, or proceeding to
which he/she may be or become involved by reason of any action taken or failure
to act under the Plan and against and from any and all amounts paid by him/her
in satisfaction of a judgment in any such action, suit, or proceeding, except a
judgment in favor of the Corporation based upon a finding of his/her lack of
good faith; subject, however, to the condition that upon the institution of any
claim, action, suit, or proceeding against him/her, he/she shall in writing give
the Corporation an opportunity, at its expense, to handle and defend the same
before he/she undertakes to handle and defend it on his/her own behalf. The
foregoing right of indemnification shall not be exclusive of any other right to
which such person may be entitled as a matter of law or otherwise, or any power
that the Corporation may have to indemnify him/her or hold him/her harmless.
Each member of the Board or of the Committee, and each officer and employee of
the Corporation shall be fully justified in relying or acting in good faith upon
any information furnished in connection with the administration of the Plan by
any appropriate person or persons other than himself/herself. In no event shall
any person who is or shall have been a member of the Board or of the Committee,
or an officer or employee of the Corporation, be held liable for any
determination made, or other action taken, or any omission to act in reliance
upon any such information as referred to in the preceding sentence, or for any
action (including the furnishing of information) taken, or any omission to act,
when any such determination, action or omission is made in good faith. No
liability whatever shall attach to or be incurred by any past, present or future
shareholders, officers or directors, as such, of the Corporation or any of its
Subsidiaries, under or by reason of any of the terms, conditions or agreements
contained in this Plan or implied therefrom, and any and all liabilities of and
any and all rights and claims against the Corporation or any of its
Subsidiaries, or any shareholder, officer or director as such, whether arising
at common law or in equity or created by statute or constitution or otherwise,
pertaining to this Plan, are hereby expressly waived and released by every
employee who receives an Award hereunder, as a part of the consideration for any
benefits under this Plan.
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(ICP LOGO)
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Appendix A
PROXY
INTERNATIONAL COMFORT PRODUCTS CORPORATION
FOR USE AT THE ANNUAL AND SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD ON MAY 19, 1999.
THIS PROXY IS SOLICITED BY AND ON BEHALF OF MANAGEMENT OF THE COMPANY.
The undersigned holder of Ordinary Shares ("Shares") of International Comfort
Products Corporation (the "Company") hereby appoints Richard W. Snyder, or
failing him, David P. Cain, or instead of either of the foregoing,
, as proxy for the undersigned to attend, vote and
act for and on behalf of the undersigned AT THE ANNUAL AND SPECIAL MEETING OF
SHAREHOLDERS OF THE COMPANY TO BE HELD AT THE METRO TORONTO CONVENTION CENTRE,
NORTH BUILDING, ROOM 101, 255 FRONT STREET WEST, TORONTO, ONTARIO, CANADA ON
WEDNESDAY, MAY 19, 1999 (THE "MEETING") AT 10:00 A.M. (LOCAL TIME), and at any
adjournments thereof, and hereby revokes any proxy previously given by the
undersigned.
1. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON WHO NEED NOT BE A
SHAREHOLDER, TO REPRESENT HIM AND TO ATTEND AND ACT ON HIS BEHALF AT THE
MEETING, OTHER THAN THE NOMINEES DESIGNATED ABOVE, AND MAY EXERCISE SUCH
RIGHT BY INSERTING THE NAME OF HIS NOMINEE IN THE SPACE PROVIDED ABOVE FOR
THAT PURPOSE.
2. The Shares represented by this proxy will be voted in accordance with any
choice specified in this proxy. IF NO SPECIFICATION IS MADE, THE PERSONS
NAMED ABOVE WILL VOTE SUCH SHARES FOR THE ELECTION OF THE DIRECTORS NAMED
IN THIS PROXY, FOR THE REAPPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS OF
THE COMPANY AND FOR THE RESOLUTION AUTHORIZING AND APPROVING OF THE
COMPANY'S ANNUAL AND LONG-TERM INCENTIVE PLAN.
3. If this proxy is not dated, it shall be deemed to be dated on the date on
which this proxy was mailed by the Company.
Without limiting the general powers hereby conferred, the Shares represented by
this proxy are to be:
1. [ ] VOTED FOR the election as directors of all nominees listed below
(except as marked to the contrary below), or
[ ] WITHHELD FROM VOTING for all nominees listed below.
INSTRUCTIONS: To withhold authority to vote
for any individual nominee, strike a line
through the nominee's name in the list
below.
<TABLE>
<S> <C> <C>
Richard C. Barnett Stanley M. Beck W. Michael Clevy
William G. Davis John F. Fraser Roy T. Graydon
Marvin G. Marshall Ernest C. Mercier David H. Morris
David A. Rattee Richard W. Snyder William A. Wilson
</TABLE>
2. Voted FOR [ ], or WITHHELD FROM VOTING
[ ], or ABSTAIN FROM VOTING [ ] on,
the reappointment of Arthur Andersen
LLP as auditors of the Company.
3. Voted FOR [ ], or AGAINST [ ], or
ABSTAIN FROM VOTING [ ] on, the
resolution authorizing and approving
the Company's Annual and Long-Term
Incentive Plan.
4. Voted, in their discretion:
(a) on any variation of or amendments to
the foregoing matters proposed at
the Meeting or any adjournment
thereof; and
(b) on any other matters may properly
come before the Meeting or any
adjournment thereof.
Dated: ___________ day of ____________, 1999.
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Name of Shareholder (please print)
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Signature of Shareholder
This proxy must be signed by the
shareholder or such shareholder's
attorney, duly authorized in writing or,
if the shareholder is a corporation, by an
officer or attorney thereof duly
authorized. Signatures should correspond
with the name imprinted hereon. Where two
or more persons are named, all should
sign.
