<PAGE>
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] 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
HASTINGS MANUFACTURING COMPANY
(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 file fee is calculated and state how it was determined):
-----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------
<PAGE>
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number or the form or schedule
and the date of its filing.
(1) Amount previously paid:
-----------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------
(3) Filing party:
-----------------------------------------------------------------
(4) Date filed:
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<PAGE>
HASTINGS MANUFACTURING COMPANY
325 North Hanover
Hastings, Michigan 49058
Telephone No. (616) 945-2491
Facsimile No. (616) 945-4667
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 4, 1999
- ---------------------------------------------------------------------------
You are cordially invited to attend the annual shareholder meeting of
Hastings Manufacturing Company, a Michigan corporation ("Hastings"), to be
held at its principal office located at 325 North Hanover, Hastings,
Michigan, on Tuesday, May 4, 1999, at 9:00 a.m., local time, for the
following purposes:
1. To elect three directors to three-year terms expiring
in 2002 and one director to a two-year term expiring in
2001.
2. To amend Hastings' Bylaws as described in the enclosed Proxy
Statement.
3. To transact any other business that may properly come
before the meeting and any adjournment thereof.
Only shareholders of record at the close of business on March 22,
1999, are entitled to notice of and to vote at the Annual Meeting of
Shareholders and any adjournments thereof.
Your attention is directed to the enclosed Proxy Statement and Proxy.
The Annual Report of Hastings for the year ended December 31, 1998 is also
enclosed.
ALL SHAREHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND RETURN PROMPTLY
THE ENCLOSED PROXY IN THE POSTAGE-PAID ENVELOPE. IF YOU ATTEND THE MEETING
AND VOTE IN PERSON, THIS PROXY WILL NOT BE USED.
By Order of the Board of Directors
/S/MONTY C. BENNETT
MONTY C. BENNETT
Secretary
April 13, 1999
<PAGE>
HASTINGS MANUFACTURING COMPANY
325 North Hanover
Hastings, Michigan 49058
Telephone No. (616) 945-2491
Facsimile No. (616) 945-4667
ANNUAL MEETING OF SHAREHOLDERS
MAY 4, 1999
PROXY STATEMENT
INTRODUCTION
This Proxy Statement and the enclosed Proxy are being furnished to
holders of Common Stock, $2 par value per share ("Common Stock"), of
Hastings Manufacturing Company ("Hastings" or the "Company") in connection
with the solicitation of proxies by the Board of Directors of Hastings for
use at the Annual Meeting of Shareholders and any adjournment thereof. The
Annual Meeting will be held at 9:00 a.m., local time, on May 4, 1999, at
the principal office of Hastings, which is located at 325 North Hanover,
Hastings, Michigan, for the purposes set forth in the accompanying "Notice
of Annual Meeting of Shareholders."
If a Proxy in the enclosed form is properly executed and returned to
Hastings, the shares of Common Stock represented by the Proxy will be voted
in accordance with the wishes specified on the Proxy. If no choice is
specified, the designated proxies will vote the shares represented by the
Proxy (i) for the election of the director nominees named in this Proxy
Statement and (ii) in accordance with their best judgment with respect to
any other matter that may properly come before the meeting and any
adjournment thereof.
Any shareholder who executes and delivers a Proxy may revoke it at any
time before it is voted at the Annual Meeting by giving notice in writing
directed to the Secretary of Hastings at the address set forth above, by
submitting a Proxy bearing a later date or by attending the meeting and
voting in person. A shareholder's attendance at the Annual Meeting will
not, by itself, revoke that shareholder's Proxy.
This Proxy Statement is being mailed to shareholders of Hastings on or
about April 13, 1999.
ELECTION OF DIRECTORS
The Board of Directors has nominated the following four persons for
election to the Board of Directors for three-year terms expiring at the
Annual Meeting of Shareholders in 2002 (except in the case of Mr. Foster,
who will serve a two-year term expiring in 2001) or until their respective
successors are elected and qualified:
<PAGE>
Andrew F. Johnson
William R. Cook
Monty C. Bennett
Richard L. Foster
Four other directors are serving terms that will expire in 2000 and
2001. The designated proxies intend to vote for the election of the
nominees named above. The nominees have consented to being named in this
Proxy Statement and to serve as directors if elected. If any one or more
of the nominees should become unable or unwilling to serve, which is not
contemplated, the incumbent Board of Directors may or may not select
substitute nominees. If one or more substitute nominees are selected, the
shares represented by a Proxy will be voted for the election of the
substitute nominee(s). Proxies will not be voted for more than the number
of nominees named in this Proxy Statement.
A plurality of votes cast by the holders of shares of Common Stock
present in person or by proxy at the Annual Meeting and voting on the
election of directors is required to elect directors. For the purpose of
counting votes on the election of directors, abstentions, broker non-votes
and other shares not voted will not be counted as shares voted on the
election and the number of votes of which a plurality is required will be
reduced by the number of shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR ALL THE NOMINEES AS DIRECTORS
PROPOSAL TO AMEND THE COMPANY'S BYLAWS
The Board of Directors proposes to amend Article X of the Company's
Bylaws to delete provisions specifying that the Board of Directors may not
make or alter any bylaws fixing the number, qualifications, classifications
or terms of office of directors. Currently, Article X reads as follows:
These Bylaws may be altered or repealed at any regular or special
meeting of the shareholders or of the Board of Directors,
PROVIDED THAT THE BOARD OF DIRECTORS SHALL NOT MAKE OR ALTER ANY
BYLAWS FIXING THEIR NUMBER, QUALIFICATIONS, CLASSIFICATIONS, OR
TERMS OF OFFICE. Except as otherwise required by law or the
Articles of Incorporation, the vote of a majority of the shares
present or represented by proxy and entitled to vote at a meeting
of shareholders or the vote of not less than a majority of the
members of the Board of Directors then in office shall be
required to amend or repeal the Bylaws or to adopt new Bylaws.
-2-
<PAGE>
(Emphasis added.) If the shareholders approve the proposal to amend
Article X, the italicized language would be removed, such that Article X
would read as follows:
These Bylaws may be altered or repealed at any regular or special
meeting of the shareholders or of the Board of Directors. Except
as otherwise required by law or the Articles of Incorporation,
the vote of a majority of the shares present or represented by
proxy and entitled to vote at a meeting of shareholders or the
vote of not less than a majority of the members of the Board of
Directors then in office shall be required to amend or repeal the
Bylaws or to adopt new Bylaws.
The Board of Directors believes that it is advisable to amend the
Company's Bylaws in the manner described above to allow the Board of
Directors more flexibility in responding to changes in circumstances. The
Board also believes that the proposal would make the Company's Bylaws more
similar to the bylaws of most publicly traded companies. If this proposal
is approved, both the Board of Directors and the shareholders would be able
to amend any Bylaw. The Board of Directors does not believe that reserving
to the Company's shareholders the sole right to determine the number,
qualifications, classifications or terms of office of the directors results
in any meaningful benefit to the shareholders or makes the Company more or
less vulnerable to an acquisition by a third party. Other than reducing
the required number of directors to eight, the Board of Directors does not
have any intention to amend any Bylaws concerning the number,
qualifications, classifications or terms of office of directors.
The affirmative vote of holders of a majority of the shares present in
person or by proxy and entitled to vote at the Annual Meeting is required
to approve the proposed amendment to the Company's Bylaws. For the purpose
of counting votes on this proposal, abstentions, broker non-votes and other
shares not voted are not counted and the number of shares of which a
majority is required will be correspondingly reduced.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE AMENDMENT TO THE COMPANY'S BYLAWS
VOTING SECURITIES
The Board of Directors fixed the close of business on Monday, March
22, 1999, as the record date for determining the shareholders entitled to
notice of and to vote at the Annual Meeting of Shareholders to be held May
4, 1999, and any adjournments thereof.
-3-
<PAGE>
At the close of business on March 22, 1999, there were 789,526 issued
and outstanding shares of Common Stock. Each share of Common Stock issued
and outstanding on the record date entitles its holder to one vote in
person or by proxy on each matter presented for shareholder action.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons beneficially owned more than five percent of the
outstanding shares of Hastings Common Stock as of March 22, 1999:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF NATURE OF PERCENT OF
OF BENEFICIAL BENEFICIAL BENEFICIAL OUTSTANDING
OWNER OF COMMON STOCK OWNERSHIP OWNERSHIP SHARES <F1>
- --------------------- --------- --------- -----------
<S> <C> <C> <C>
Stephen I. Johnson 0 shares Sole voting and investment power <F*>
907 West Madison 227,218 shares <F2> Shared voting and investment power 28.38%
Hastings, MI 49058
The Stephen I. Johnson 0 shares Sole voting and investment power <F*>
Family Group <F3> 372,097 shares Shared voting and investment power 46.47%
c/o Stephen I. Johnson
907 West Madison
Hastings, MI 49058
Dimensional Fund 51,900 shares Sole voting and investment power 6.48%
Advisors Inc. <F4> 0 shares Shared voting and investment power <F*>
1299 Ocean Ave.
11th Floor
Santa Monica, CA 90401
Amici Associates and 71,200 shares Sole voting and investment power 8.89%
The Collectors' Fund <F5> 0 shares Shared voting and investment power <F*>
100 Park Avenue
New York, NY 10017
Mark R. S. Johnson <F6> 62,495 shares Sole voting and investment power 7.81%
c/o Hastings Mfg. Co. 1,350 shares Shared voting and investment power <F*>
325 North Hanover
Hastings, MI 49058
_______________________________________
<FN>
<F*> = less than 1%.
-4-
<PAGE>
<F1> The percentages set forth in this column were calculated on the
basis of (i) 789,526 shares of Common Stock outstanding as of March 22,
1999 plus (ii) 11,150 shares of Common Stock subject to options that were
exercisable on March 22, 1999 or that will become exercisable within 60
days after March 22, 1999. Shares subject to such options are considered
to be outstanding for purposes of this chart.
<F2> This number includes shares held by the Stephen I. Johnson Trust,
the Isabel Sage Johnson Trust, the Anna M. Johnson Trust and the Aben E.
Johnson Trust, for each of which Mr. Johnson is a trustee, and shares held
by SAMCO, Inc., of which Mr. Johnson is the majority shareholder.
<F3> On October 26, 1982, the Stephen I. Johnson Family Group ("Family
Group") filed a report on Schedule 13D (the "Schedule 13D") with the
Securities and Exchange Commission and the American Stock Exchange in
connection with a tender offer that terminated in January of 1983.
Amendment No. 2 to the Schedule 13D was filed with the Securities and
Exchange Commission on or about April 1, 1993, reaffirming the Family
Group's mutual belief that it is in the best interests of Hastings and its
shareholders that Hastings remain an independently owned corporation. The
Family Group consists primarily of family members and close relatives of
Stephen I. Johnson. The Schedule 13D, as amended, contains a Shareholder
Letter of Intent signed by all Family Group members. The Shareholder
Letter of Intent states that Family Group members believe it is in the best
interests of Hastings, its shareholders, its employees and the local
community that Hastings remain an independently owned corporation and
further states that Family Group members intend to oppose any takeover
attempt that would result in Hastings no longer remaining an independently
owned corporation and which is not in the best interest of Hastings, its
shareholders, its employees or the local community.
<F4> Based on information set forth in a report on Schedule 13G dated
February 12, 1999. Dimensional Fund Advisors Inc. ("Dimensional"), a
registered investment advisor, has informed Hastings that it is deemed to
have beneficial ownership of 51,900 shares of Common Stock as of December
31, 1998, all of which shares are held in portfolios of four registered
investment companies to which Dimensional provides investment advice, or in
certain other investment vehicles for which Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
<F5> Based on information set forth in a report on Schedule 13D dated
February 21, 1991, as amended by amendments dated April 8, 1991 and
December 6, 1995.
-5-
<PAGE>
<F6> This number does not include shares held by SAMCO, Inc., of which
Mr. Johnson is a vice president, secretary and minority shareholder. The
shares set forth in the row entitled "Shared voting and investment power"
are shares owned by Mr. Johnson's spouse individually.
</FN>
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of shares of Common
Stock, held as of March 22, 1999, by each director, each nominee for
election as director, each of the named executive officers (as defined in
the Summary Compensation Table) and by all directors and executive officers
of the Company as a group:
<TABLE>
<CAPTION>
AMOUNT OF PERCENT OF
NAME OF BENEFICIAL NATURE OF OUTSTANDING
BENEFICIAL OWNER OWNERSHIP BENEFICIAL OWNERSHIP SHARES <F1>
- ---------------- --------- -------------------- -----------
<S> <C> <C> <C>
Mark R. S. Johnson 62,495 shares <F2> Sole voting and investment power 7.81%
1,350 shares <F2> Shared voting and investment power <F*>
Andrew F. Johnson 21,804 shares Sole voting and investment power 2.74%
8,459 shares <F3> Shared voting and investment 1.06%
William R. Cook 2,050 shares Sole voting and investment power <F*>
0 shares Shared voting and investment power <F*>
Richard L. Foster 450 shares Sole voting and investment power <F*>
200 shares Shared voting and investment power <F*>
Monty C. Bennett 3,720 shares Sole voting and investment power <F*>
0 shares Shared voting and investment power <F*>
Dale W. Koop 3,720 shares Sole voting and investment power <F*>
0 shares Shared voting and investment power <F*>
Neil A. Gardner 450 shares Sole voting and investment power <F*>
20 shares Shared voting and investment power <F*>
Douglas A. DeCamp 2,450 shares Sole voting and investment power <F*>
0 shares Shared voting and investment power <F*>
Thomas J. Bellgraph 3,520 shares Sole voting and investment power <F*>
0 shares Shared voting and investment power <F*>
-6-
<PAGE>
All directors and 104,789 shares Sole voting and investment power 13.09%
executive officers 10,029 shares Shared voting and investment power 1.25%
as group (11 persons)
_____________________
<FN>
<F*> = less than 1%.
<F1> The percentages set forth in this column were calculated on the
basis of (i) 789,526 shares of Common Stock outstanding as of March 22,
1999 plus (ii) 11,150 shares of Common Stock subject to options that were
exercisable on March 22, 1999 or that will become exercisable within 60
days after March 22, 1999. Shares subject to such options are considered
to be outstanding for purposes of this chart.
<F2> This number does not include shares held by SAMCO, Inc., of which
Mr. Johnson is a vice president, secretary and minority shareholder. The
shares set forth in the row entitled "Shared voting and investment power"
are shares owned by Mr. Johnson's spouse individually.
<F3> This number includes 4,034 shares held by Mr. Johnson's spouse in
trust for the benefit of their daughter, as well as 4,425 shares held by
Mr. Johnson's spouse individually. Mr. Johnson disclaims beneficial
ownership of those shares. This number does not include shares held by
SAMCO, Inc., of which Mr. Johnson is a vice president, treasurer and a
minority shareholder.
</FN>
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table shows certain information concerning each
director, nominee for director and executive officer, supplied by them as
of December 31, 1998:
<TABLE>
<CAPTION>
NOMINEES TO BE ELECTED FOR THREE-YEAR
TERMS EXPIRING IN 2002
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE OR EMPLOYMENT <F1> SINCE
- ------------ ------------------ -----
<S> <C> <C>
Andrew F. Johnson Co-CEO/President-Operations 1977
Age 49 (since 1994) and
Executive Vice President-Operations
(1986-1994) of Hastings
-7-
<PAGE>
William R. Cook President of Pidgas, Inc. 1977
Age 57 Hastings, Michigan
(since 1975)
Monty C. Bennett Vice President-Employee Relations 1982
Age 61 (since 1986) and Secretary
(since 1982) of Hastings
</TABLE>
<TABLE>
<CAPTION>
NOMINEE TO BE ELECTED FOR TWO-YEAR
TERM EXPIRING IN 2001
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE OR EMPLOYMENT <F1> SINCE
- ------------ ------------------ -----
<S> <C> <C>
Richard L. Foster Retired; Production Control Manager of 1984
Age 71 Hastings (1987-1988)
</TABLE>
<TABLE>
<CAPTION>
INCUMBENT DIRECTORS
TERMS EXPIRING IN 2000
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE OR EMPLOYMENT <F1> SINCE
- ------------ ------------------ -----
<S> <C> <C>
Mark R. S. Johnson Co-CEO/President-Marketing (since 1994) 1977
Age 51 and Executive Vice President-Marketing
(1986-1994) of Hastings
Dale W. Koop Vice President-Engineering of Hastings 1982
Age 60 (since 1982)
Douglas A. DeCamp President/CEO FHI, Inc. (formerly Flexfab, Inc.), 1984
Age 61 a producer of aircraft hosing and
fiberglass products (since 1984)
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
INCUMBENT DIRECTOR
TERM EXPIRING IN 2001
PRINCIPAL OCCUPATION DIRECTOR
NAME AND AGE OR EMPLOYMENT <F1> SINCE
- ------------ ------------------ -----
<S> <C> <C>
Neil A. Gardner Executive Vice President of Hastings City Bank, 1983
Age 52 Hastings, Michigan (since 1976)
</TABLE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS
WHO ARE NOT DIRECTORS
NAME AND AGE POSITIONS WITH HASTINGS
- ------------ -----------------------
<S> <C>
Thomas J. Bellgraph Vice President - Finance
Age 47 (since January 1996) and Treasurer (since 1986)
Stephen G. Uhen (2) Vice President of Information
Age 50 Services (since December 1997)
Jeffrey P. Guenther (3) Vice President of Marketing (since June 1998)
Age 37
- --------------------
<FN>
<F1> Except as noted, each person listed above has been engaged in the
same principal occupation for more than five years. No director or nominee
for director is the director of any company that has a class of equity
securities registered pursuant to Section 12 of the Securities Exchange Act
of 1934 or is subject to Section 15(d) of that Act or any company
registered as an investment company under the Investment Company Act of
1940.
<F2> Mr. Uhen served as the Company's Information Services Manager
from November 1995 through December 1997. From 1988 through 1995, Mr. Uhen
served as Systems Programs Manager of the Company.
<F3> Mr. Guenther served as the Company's Marketing and Sales Director
from July 1997 through June 1998. From 1987 through 1997, Mr. Guenther
served as the Company's Marketing Coordinator.
</FN>
</TABLE>
-9-
<PAGE>
There are no family relationships (closer than first cousin) between
any of the above-named persons, except that Mark R. S. Johnson and Andrew
F. Johnson are brothers.
ORGANIZATION OF THE BOARD OF DIRECTORS
The Hastings Board of Directors does not have a standing committee for
nominating individuals for election as directors. The Hastings Board of
Directors selects its nominees for election to the new Board of Directors
at its first meeting each year in either January or February. The Hastings
Board of Directors will consider nominees recommended by shareholders
provided that such nominations are sent to the Secretary of Hastings on or
prior to December 1 of the year preceding the Annual Meeting of
Shareholders. Any such nominations should be in writing and state the
name, age and address of the nominee, his or her educational and employment
background, his or her present employment and a full and complete statement
as to the qualifications of the nominee to serve as a director. The Board
of Directors will not consider any nomination that does not provide this
information. If a shareholder intends to make a nomination at an Annual
Meeting of Shareholders, he or she must deliver a notice to the Secretary
of the Company setting forth certain information concerning the proposed
nominee, as described in Hastings' Bylaws, at least 120 days prior to the
date of the notice of the meeting.
The Hastings Board of Directors has a standing Audit Committee
composed of William R. Cook (Chairman), Neil A. Gardner, Mark R. S.
Johnson, Douglas A. DeCamp and Richard L. Foster. The function of the
Audit Committee is to recommend independent auditors to the Board of
Directors for the annual audit of Hastings and its subsidiaries and to
discuss the results of the audit with the independent auditors. The Audit
Committee is responsible for causing suitable examinations of the financial
records and operations of Hastings and its subsidiaries to be performed by
the internal auditor and for reviewing internal controls to insure the
objectivity of Hastings' financial statements. During 1998, the Audit
Committee met two times.
The Hastings Board of Directors has a standing Compensation Committee
composed of the following outside directors: William R. Cook, Douglas A.
DeCamp and Neil A. Gardner. The function of the Compensation Committee is
to determine if director and officer compensation by Hastings is comparable
to industry standards and to make appropriate recommendations to the Board
of Directors. The Compensation Committee met one time in 1998.
In December 1995, the Board of Directors established a Strategic
Planning Committee. The function of the Strategic Planning Committee is to
consider and develop strategic policies and proposals intended to enhance
shareholder value in the long or short term and to make recommendations to
-10-
<PAGE>
the Board of Directors with respect to any such policy or proposal. The
Committee has discretionary authority to review and negotiate any sale or
merger proposal received by Hastings and to make recommendations to the
Board of Directors with respect to any such proposal. The members of the
Committee may only consist of members of the Board of Directors who are not
and have not for a five-year period been officers or employees of Hastings.
The current members of the Committee are William R. Cook, Richard L. Foster
and Neil A. Gardner. The Strategic Planning Committee met one time and had
three consultative meetings in 1998.
During 1998, there were six meetings of the Board of Directors. All
incumbent directors attended at least 75% of the aggregate number of
meetings of the Board of Directors and meetings of committees on which they
served during the year.
COMPENSATION OF DIRECTORS
All directors who are not full-time employees of Hastings are paid a
fee of $700 for each regular or special meeting of the Board of Directors
and $700 for each committee meeting attended by the director. Directors
who are full-time employees do not receive additional compensation.
EXECUTIVE COMPENSATION
Compensation on an accrual basis during 1998, 1997 and 1996 for the
Co-Chief Executive Officers of Hastings and for the four most highly
compensated executive officers, other than the Co-Chief Executive Officers,
who earned over $100,000 in salary and bonus in 1998 (the "named executive
officers") is set forth together with certain other information in the
following table. The executive officers of Hastings are appointed annually
by and serve at the pleasure of the Board of Directors.
-11-
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------- -------------------------------------
AWARDS
-------------------------------------
NAME AND PRINCIPAL RESTRICTED SECURITIES UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS STOCK AWARDS<F1> OPTIONS<F2> COMPENSATION<F3>
------------------ ---- ------ ----- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Mark R. S. Johnson 1998 $ 207,360 $ 85,956 $ 18,500 1,500 $ 12,232
Co-Chief Executive Officer 1997 192,000 35,887 20,375 1,500 12,099
President-Marketing 1996 192,000 0 12,750 -- 9,266
Andrew F. Johnson 1998 $ 207,360 $ 85,956 $ 18,500 1,500 $ 12,232
Co-Chief Executive Officer 1997 192,000 35,887 20,375 1,500 12,099
President-Operations 1996 192,000 0 12,750 -- 11,010
Dale W. Koop 1998 $ 108,240 $ 28,792 $ 11,100 800 $ 8,841
Vice President- 1997 102,120 9,912 12,225 800 7,273
Engineering 1996 101,610 0 7,650 -- 7,284
Thomas J. Bellgraph 1998 $ 102,088 $ 27,140 $ 11,100 800 $ 8,479
Vice President-Finance 1997 93,600 9,143 12,225 800 4,682
1996 93,600 0 7,650 -- 5,204
Monty C. Bennett 1998 $ 100,008 $ 26,668 $ 11,100 800 $ 8,096
Vice-President 1997 94,320 9,228 12,225 800 6,615
Employee Relations 1996 93,420 0 7,650 -- 6,593
- -------------------
<FN>
(footnotes appear on the following page)
<F1> The values of restricted stock awards reported in this column are
calculated using the closing market price of Common Stock on the date
of grant. As of the end of Hastings' 1998 fiscal year, each of the
named executive officers held shares of restricted stock. Dividends
will be paid on shares of restricted stock at the same rate dividends
are paid on Common Stock. The number of shares of restricted stock
held by each named individual and the aggregate value of those shares
(as represented by the closing price of Common Stock on December 31,
1998, which was $17.50 per share) at the end of the Company's 1998
fiscal year, without giving effect to the diminution of value
attributable to the restrictions on the stock, are set forth below:
-12-
<PAGE>
NUMBER AGGREGATE
OF SHARES VALUE
--------- ---------
Mark R. S. Johnson 3,480 $ 60,900
Andrew F. Johnson 3,480 60,900
Dale W. Koop 2,120 37,100
Thomas J. Bellgraph 2,120 37,100
Monty C. Bennett 2,120 37,100
See "COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION--
Restricted Stock Plan" for information concerning the vesting of
shares awarded under the Restricted Stock Plan. Performance goals
under the Restricted Stock Plan were met in 1998.
<F2> The options reflected in this column have been adjusted to reflect the
two-for-one stock split effective March 23, 1998.
<F3> All other compensation includes: (a) Company matching contributions
under the Hastings Savings Plan and (b) Company profit-sharing
contributions to the Hastings Savings Plan. The amounts included for
each factor in 1998 are:
(A) (B)
------ ------
Mark R. S. Johnson $4,000 $8,232
Andrew F. Johnson 4,000 8,232
Dale W. Koop 2,400 6,441
Thomas J. Bellgraph 2,400 5,696
Monty C. Bennett 2,670 5,809
</FN>
</TABLE>
STOCK OPTIONS
At the 1998 annual meeting, the Company's shareholders approved the
Hastings Manufacturing Company Stock Option and Restricted Stock Plan of
1997 (the "Stock Option Plan"). The Stock Option Plan provides that stock
options, restricted stock and tax benefit rights may be granted or awarded
under the plan to corporate and subsidiary directors, officers and key
employees of the Company with respect to 38,000 shares of Common Stock.
The following table sets forth certain information concerning stock options
granted under the Stock Option Plan to the named executive officers during
1998:
-13-
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED POTENTIAL REALIZABLE VALUE AT
UNDERLYING OPTIONS TO EMPLOYEES IN EXERCISE PRICE ASSUMED ANNUAL RATES OF STOCK
NAME GRANTED FISCAL YEAR<F1> PER SHARE EXPIRATION DATE PRICE APPRECIATION FOR OPTION TERM
---- -------------------- ---------------- -------------- --------------- ----------------------------------
5% 10%
----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mark R. S. Johnson 1,500 13.6% $18.25 11/30/2008 $17,220 $43,635
Andrew F. Johnson 1,500 13.6% $18.25 11/30/2008 $17,220 $43,635
Dale W. Koop 800 7.2% $18.25 11/30/2008 $ 9,184 $23,272
Thomas J. Bellgraph 800 7.2% $18.25 11/30/2008 $ 9,184 $23,272
Monty C. Bennett 800 7.2% $18.25 11/30/2008 $ 9,184 $23,272
____________________
<FN>
<F1> The percentages in this column were based on options to purchase a
total of 11,050 shares of Common Stock, which excludes 1,800 shares
granted to non-employee directors.
</FN>
</TABLE>
<TABLE>
FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END<F1>
--------------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Mark R. S. Johnson 1,500 1,500 $0 $0
Andrew F. Johnson 1,500 1,500 $0 $0
Dale W. Koop 800 800 $0 $0
Thomas J. Bellgraph 800 800 $0 $0
Monty C. Bennett 800 800 $0 $0
- ----------------
-14-
<PAGE>
<FN>
<F1> None of the foregoing options are considered "in the money" because
their exercise prices were higher than the market value as of December
31, 1998 ($17.50 per share of Common Stock).
</FN>
</TABLE>
DEFERRED COMPENSATION
In 1986, Hastings adopted a defined contribution 401(k) profit-sharing
plan known as the Hastings Savings Plan. This plan is administered by
Hastings and is available to all salaried employees. Individual accounts
are maintained for contributions made on behalf of each employee and each
employee has a choice of investment options as to the balance in his or her
account. There are four types of contributions to the plan: (1) an
employee can make a voluntary contribution of the employee's compensation
which is deducted by Hastings from the employee's normal compensation
(legal limitations may restrict the maximum voluntary contribution by an
employee in any year); (2) Hastings makes matching contributions equal to
40 percent of the amount of an employee's voluntary contribution, but only
on the first 6 percent of an employee's compensation; (3) annually, from
net profits, Hastings contributes for each employee an amount equal to 3
percent of the employee's compensation, plus 1 percent of the employee's
compensation in excess of 25 percent of the social security wage base, plus
2 percent of the employee's compensation in excess of 75 percent of the
social security wage base; and (4) Hastings may make discretionary
contributions, from net profits, which are allocated among the participants
based on the employee's annual compensation compared to total annual
compensation of all employees. Benefits are payable at age 65 (normal
retirement) or upon total disability, death or early employment
termination. There are vesting requirements for Hastings' profit-sharing
and discretionary contributions (but not for an employee's voluntary or
Hastings' matching contributions). For employees who became participants
prior to January 1, 1989, the vesting schedule is 40 percent vesting after
4 years of service, with 100 percent vesting after 5 years of service. For
employees who became participants on or after January 1, 1989, the vesting
schedule is 100 percent after 5 years of service.
STOCK PERFORMANCE
The following graph compares the cumulative total shareholder return
on Hastings Common Stock to the AMEX Market Index and a Peer Group Index.
The AMEX Market Index is a broad equity market index published by the
American Stock Exchange. The Peer Group Index is based upon the cumulative
total shareholder return on the common stock issued by the selected
companies in the automotive parts and accessories industry identified in
-15-
<PAGE>
Note (1) on page 13. The returns of each member of the Peer Group are
weighted according to the respective issuer stock market capitalization at
the beginning of each period for which a return is indicated. Both indices
assume dividend reinvestment. Cumulative total return is measured by
dividing (i) the sum of (a) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment, and (b) the difference
between the share price at the end and the beginning of the measurement
period, by (ii) the share price at the beginning of the measurement period.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
[STOCK PERFORMANCE CHART]
(Assumes $100 Invested on December 31, 1993 and Reinvestment of Dividends)
The table below shows dollar values for cumulative total shareholder
return plotted in the graph above as of December 31 for each of the
following years.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Hastings $100.00 $71.53 $ 69.18 $ 84.27 $137.62 $122.24
AMEX Market Index 100.00 88.33 113.86 120.15 144.57 142.61
Peer Group Index<F1> 100.00 86.30 92.14 116.12 148.25 151.27
- ----------------------
-16-
<PAGE>
<FN>
<F1> The companies used to create the Peer Group Index are as follows:
Aftermarket Technology Corp.; Amerigon Incorporated; Arrow Automotive
Industries, Inc.; Arvin Industries, Inc.; ASHA Corporation; Autocam
Corporation; Autoliv, Inc.; Barnes Group Inc.; Bonded Motors, Inc.;
Borg-Warner Automotive, Inc.; CLARCOR Inc.; Collins Industries, Inc.;
The Colonel's International, Inc.; Consulier Engineering, Inc.; Cragar
Industries, Inc.; Dana Corporation; Decoma International, Inc.; Defiance,
Inc.; Delco Remy International, Inc.; Desc, S.A. de C.V.; Detroit Diesel
Corporation; Donaldson Company, Inc.; Durakon Industries, Inc.; Eaton
Corporation; Edelbrock Corporation; Excel Industries, Inc.; Federal-Mogul
Corporation; Gentex Corporation; Glas-Aire Industries Group Ltd.;
Hastings Manufacturing Company; Hayes Lemmerz International, Inc.;
Hilite Industries, Inc.; IMPCO Technologies, Inc.; ITT Industries,
Inc.; Jason Incorporated; Johnson Controls, Inc.; The Kroll-O'Gara
Company; Lund International Holdings, Inc.; Magna International
Incorporated; MascoTech, Inc.; Meritor Automotive, Inc.; Modine
Manufacturing Company; Motorcar Parts & Accessories, Inc.; Noble
International, Ltd.; OEA, Inc.; Orbital Engine Corp. Ltd.; R&B, Inc.;
Safety Components International, Inc.; Simpson Industries, Inc.; A.O.
Smith Corporation; Smith AO Corp. CL A; SPX Corporation; Standard Motor
Products, Inc.; The Standard Products Company; Stoneridge, Inc.;
Strattec Security Corporation; Superior Industries International, Inc.;
T.J.T., Inc.; Tesma International Incorporated; Top Source Technologies,
Inc.; Transpro, Inc.; TRW Inc.; Turbodyne Technologies Inc.; U.S.
Automotive Manufacturing, Inc.; Universal Mfg. Co.; UNOVA, Inc.; Valley
Forge Corporation; Walbro Corporation; Wescast Industries, Inc.;
Westinghouse Air Brake Company; Williams Controls, Inc.; and Wynn's
International, Inc.
</FN>
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation policy is formulated and
recommended to the Board by the Compensation Committee of the Board of
Directors. The Compensation Committee also administers the Company's
compensation plans. The Compensation Committee evaluates annual salaries
and incentive compensation plans for the executive officers and recommends
the salaries and compensation to the Board. The Board of Directors makes
the final decision on whether to adopt the Compensation Committee's
recommendations.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
The Compensation Committee's executive compensation philosophy is
intended to provide competitive levels of compensation, "tie" or "couple"
officers' compensation with the achievement of the Company's performance
-17-
<PAGE>
objectives, reward good corporate performance, recognize individual
achievement and allow the Company to attract and retain quality executive
officers. The Compensation Committee's compensation policy provides that a
significant portion of the annual compensation of each executive officer
must relate to, and be contingent upon, the performance of the Company.
The Compensation Committee believes that this policy enhances shareholder
value by rewarding executive officers for profitable growth of the Company.
Section 162(m) of the Internal Revenue Code includes potential
limitations on the deductibility of compensation in excess of $1 million
paid to certain executive officers. The Company has examined its executive
compensation policies in light of Section 162(m) and will continue to
assess the impact of Section 162(m) and take action to assure that
appropriate levels of deductibility are maintained. It is not expected
that any portion of the Company's deduction for employee remunerations will
be disallowed in 1999.
Compensation for executive officers, including the Co-Chief Executive
Officers, is comprised of three primary components: base salary, an annual
incentive bonus and awards of restricted stock. Executive officers also
receive various fringe benefits that are offered to other employees
including, health and life insurance benefits and Company contributions to
their Hastings Savings Plan accounts.
BASE SALARY
The Company seeks to attract and retain executives by providing base
salaries that are generally competitive with salaries paid for comparable
positions with companies of similar general type and size in the
marketplace. The Company obtains comparable salary information through
various surveys. The skill and experience required by the position, job
performance, accountability, length of service and current economic
conditions also affect what an officer earns as a base salary.
In general, the Company reviews the base salary of executive officers
on an annual basis. Annual salary adjustments are determined by evaluating
comparable salaries for executives at other companies, the job performance
of the officer and any increase in responsibilities of the officer.
ANNUAL CASH INCENTIVE BONUS
The Company's executive officers may receive an annual cash incentive
bonus which is based on the Company's operating performance and
consolidated net income before income tax expense.
-18-
<PAGE>
STOCK OPTION AND RESTRICTED STOCK PLAN OF 1997
The Company's Stock Option Plan provides that stock options,
restricted stock and tax benefit rights may be granted or awarded under the
plan to corporate and subsidiary directors, officers and key employees of
the Company with respect to 38,000 shares of Common Stock. The
Compensation Committee believes that the Stock Option Plan helps to align
the interests of the Company's executive officers and key employees with
those of the Company and its shareholders. This is because awards under
the plan become more valuable as the Company's stock price increases.
The Stock Option Plan is administered by the Compensation Committee,
which makes recommendations to the Board of Directors as to the
participants who should receive incentive awards under the plan, the number
of options or other incentive awards that should be awarded, the terms of
each grant, and other determinations necessary under the plan. Thus far,
the Compensation Committee has made these determinations twice, in December
1997 and 1998. The committee intends to continue making its determinations
on an annual basis and in making its determinations will consider, among
other things, Company performance and individual participant achievement
during the year.
RESTRICTED STOCK PLAN
The Company also provides executive officers and certain other key
employees of the Company with incentives to increase the long-term
profitability of the Company by a restricted stock plan that was
established in 1990 (the "Restricted Stock Plan"). Like the Stock Option
Plan, the Compensation Committee believes that the Restricted Stock Plan
helps to align the interests of the Company's executive officers and key
employees with those of the Company and its shareholders by encouraging and
promoting stock ownership by management. The Compensation Committee
believes that the Restricted Stock Plan will result in better long-term
performance for the Company and its shareholders. The Company currently
has no target ownership level for equity holdings by officers.
The Restricted Stock Plan is administered by a committee (the "RSP
Committee"), consisting of three outside directors who are not eligible to
participate in the Restricted Stock Plan. Every award of Common Stock
under the Restricted Stock Plan will be subject to two types of
restriction. The first restriction is based on a continuation of
employment for five years (except in the case of retirement with prior
approval, death or disability); otherwise, the recipient forfeits the
unvested portion of any restricted stock held by him or her. Second, a
portion of each award of restricted stock is also tied to achievement of
certain performance goals established by the RSP Committee. The
performance goals may be company-wide, subsidiary-wide or division-wide or
-19-
<PAGE>
tailored to the individual recipient. The performance goals have generally
been based on the annual net income per share performance of the Company or
the ratio of pre-tax income to net sales.
If the Company meets or exceeds the performance goals for a particular
year, then the recipient will become the owner of 20% of his or her
restricted stock award. If the Company (or the individual, if applicable)
fails to meet the performance goals, then the recipient will forfeit all
interest in 20% of his or her restricted stock award. In other words, as
long as the Company (or the individual, if applicable) meets the
performance goals, then the recipient may keep the shares of stock awarded
to him or her under the plan.
All recommendations of the Compensation Committee relating to 1998
compensation were unanimously approved by the Board of Directors without
modification.
Respectfully submitted,
William R. Cook
Douglas A. DeCamp
Neil A. Gardner
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors were members of the Compensation Committee
during 1998: William R. Cook, Douglas A. DeCamp and Neil A. Gardner.
During 1998, Andrew F. Johnson, Co-CEO and President-Operations of
Hastings, served as a director of Hastings City Bank, of which Neil A.
Gardner is a Executive Vice President.
INDEPENDENT AUDITORS
The Board of Directors has selected the firm of BDO Seidman, LLP,
Grand Rapids, Michigan, as independent auditors to audit the consolidated
financial statements of Hastings and its subsidiaries for the fiscal year
ending December 31, 1999. BDO Seidman has served as independent auditors
for Hastings since 1971. A representative of BDO Seidman is expected to
attend the Annual Meeting of Shareholders on May 4, 1999. The
representative will have an opportunity to make a statement if he or she so
desires and is expected to be available to respond to appropriate questions
from shareholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
Hastings' directors and officers and individuals who beneficially own more
-20-
<PAGE>
than 10 percent of the outstanding shares of Hastings Common Stock to file
reports with the Securities and Exchange Commission concerning their
beneficial ownership and changes in their ownership of shares of Hastings
Common Stock. Such persons are required by Securities and Exchange
Commission regulations to furnish to Hastings copies of all Section 16(a)
reports they file.
Based on its review of the copies of such reports received by it or
written representations from certain reporting persons that no Forms 5 were
required for those persons, Hastings believes that, from January 1 through
December 31, 1998, all Section 16 reporting and filing requirements were
fulfilled.
SHAREHOLDER PROPOSALS
To be considered timely, all shareholder proposals intended to be
presented at the annual meeting of shareholders in the year 2000 (whether or
not intended for inclusion in the Company's proxy statement and form of proxy
relating to that meeting) must be received by the Company not later than
December 15, 1999. Shareholder proposals intended for consideration for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting should be made in accordance with Securities and Exchange Commission
Rule 14a-8. All shareholder proposals should be addressed to the attention
of the Secretary of the Company, 325 North Hanover, Hastings, Michigan
49058.
OTHER BUSINESS
The Hastings Board of Directors is not aware of any other matters that
may be presented to the shareholders for formal action at the meeting. If,
however, any other matters properly come before the meeting or any
adjournment thereof, it is the intention of the persons named in the
enclosed Proxy to vote such Proxy in accordance with their best judgment on
such matters.
SOLICITATION OF PROXIES
The cost of soliciting Proxies will be borne by Hastings.
Solicitation of Proxies will be made initially by mail. Directors,
officers and employees of Hastings may solicit, without additional
compensation, Proxies in person or by telephone, telegram or oral
communication. In addition, banks, brokerage firms and other custodians,
nominees and fiduciaries may communicate with and forward soliciting
materials to beneficial owners of shares held by them to obtain
authorization for execution of Proxies and may be reimbursed by Hastings
for reasonable expenses incurred in sending proxy materials to those
beneficial holders.
-21-
<PAGE>
It is important that your shares be represented at the meeting. To
assure your representation, please complete, date, sign and return promptly
your proxy in the enclosed postage prepaid envelope.
BY ORDER OF THE BOARD OF DIRECTORS
/S/MONTY C. BENNETT
MONTY C. BENNETT
Secretary
-22-
<PAGE>
PROXY PROXY
HASTINGS MANUFACTURING COMPANY
325 NORTH HANOVER
HASTINGS, MICHIGAN 49058
TELEPHONE NO. (616) 945-2491
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder hereby appoints Monty C. Bennett and
Andrew F. Johnson, and each of them, each with full power of substitution,
proxies to represent the shareholder listed on the reverse side of this
Proxy and to vote all shares of Common Stock of Hastings Manufacturing
Company that the shareholder would be entitled to vote on all matters which
come before the Annual Meeting of Shareholders to be held at the principal
office of Hastings Manufacturing Company in the City of Hastings, Michigan,
on Tuesday, May 4, 1999, at 9 a.m. local time, and any adjournment of that
meeting.
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES
NAMED ON THIS PROXY AS DIRECTORS. THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS THAT
MAY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side)
<PAGE>
HASTINGS MANUFACTURING COMPANY
1. ELECTION OF DIRECTORS - Nominees: FOR WITHHELD FOR ALL
Andrew F. Johnson, William R. Cook, EXCEPT THOSE
Monty C. Bennett and Richard L. Foster INDICATED
(INSTRUCTION: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
THROUGH THAT NOMINEE'S NAME ABOVE) [ ] [ ] [ ]
Your Board of Directors recommends that
you vote "FOR" all Nominees
2. AMENDMENT OF BYLAWS FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Your Board of Directors recommends that
you vote "FOR" approval of this Proposal
IF ANY NOMINEE IS UNABLE OR UNWILLING TO SERVE AS A DIRECTOR AT THE
TIME OF THE ANNUAL MEETING OF SHAREHOLDERS, EACH PROXY MAY BE VOTED FOR ANY
SUBSTITUTE NOMINEE DESIGNATED BY THE PRESENT BOARD OF DIRECTORS. IF NO
SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR ELECTION OF THE NOMINEES NAMED ABOVE AND FOR APPROVAL OF THE OTHER
PROPOSAL IDENTIFIED ABOVE. FURTHER, THE PROXIES NAMED HEREIN SHALL HAVE
DISCRETIONARY AUTHORITY TO VOTE ON OTHER MATTERS, NOT PRESENTLY KNOWN, THAT
MAY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF. RECEIPT OF THE
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT DATED APRIL 13, 1999, IS
ACKNOWLEDGED.
Dated: _____________________, 1999 X_____________________________
X_____________________________
Signature of Shareholder(s)
IMPORTANT -- Please sign
exactly as your name(s)
appears on this Proxy. When
signing on behalf of a
corporation, partnership,
estate or trust, indicate
title or capacity of person
signing. IF SHARES ARE HELD
JOINTLY, EACH HOLDER SHOULD
SIGN.
