UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 2
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended February 29, 2000
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from __________________ to _______________________
Commission File No. 1-8862
MARK IV INDUSTRIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 23-1733979
(State or other jurisdiction of (IRS employer Identification number)
incorporation or organization)
501 John James Audubon Pkwy., P.O. Box 810, Amherst, NY 14226-0810
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 689-4972
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of Class which registered
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
The aggregate market value of the voting stock of the Registrant held by
non-affiliates of the Registrant based on the closing price of the Common
Stock on May 10, 2000 on the New York Stock Exchange was $817,792,919.
As of May 10, 2000, the number of outstanding shares of Registrant's
Common Stock, $.01 par value, was 44,354,507 shares.
Documents Incorporated By Reference
None
<PAGE>2
Part III
ITEM 10. Directors, Executive Officers, Promoters and Control Persons of the
Registrant
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The Directors and executive officers of the Company are as follows:
Term as
Positions and Offices Director
Name Age with the Company Expires
Sal H. Alfiero.......... 62 Chairman of the Board
and Chief Executive Officer 2002
William P. Montague .... 53 President and Director 2000
Gerald S. Lippes........ 60 Secretary and Director 2001
Clement R. Arrison...... 70 Director 2002
Joseph G. Donohoo....... 81 Director 2000
Herbert Roth, Jr........ 71 Director 2001
Kurt J. Johansson....... 58 Senior Vice President --
Giuliano Zucco.......... 52 Vice President --
Richard F. Bing......... 53 Vice President --
John J. Byrne........... 51 Vice President and
Chief Financial Officer --
Frederic L. Cook........ 53 Senior Vice President-
Administration --
Richard L. Grenolds..... 50 Vice President and Chief
Accounting Officer --
Douglas J. Fiegel....... 52 Vice President, Financial
Control & Reporting --
Patricia A. Richert..... 49 Vice President and Chief
Information Officer --
Mark G. Barberio........ 38 Treasurer --
Recent business experience and other information concerning the
Directors and executive officers is as follows:
SAL H. ALFIERO has been Chairman of the Board and Chief Executive
Officer of the Company since its incorporation. Mr. Alfiero serves as a
Director of Phoenix Home Life Mutual Insurance Company, HSBC Bank USA and
Niagara Mohawk Holdings Corporation. He holds a B.S. degree in Aeronautical
Engineering from Rensselaer Polytechnic Institute and holds an M.B.A. degree
from the Harvard Graduate School of Business Administration.
WILLIAM P. MONTAGUE has been employed by the Company since April 1972
and was elected President and a Director effective March 1, 1996. He was
previously a Vice President of the Company since May 1974 and was elected
Executive Vice President and Chief Financial Officer in March 1986. He holds
both a B.S. degree in accounting and an M.B.A. degree from Wilkes University
and is a certified public accountant. He is also a Director of Gibraltar
Steel Corporation.
<PAGE>3
GERALD S. LIPPES has been general counsel, Secretary and a Director of
the Company since its incorporation. He has been engaged in the private
practice of law in Buffalo, New York, since 1965 and is a partner of the firm
of Lippes, Silverstein, Mathias & Wexler LLP, Buffalo, New York. Mr. Lippes
is also a Director of Gibraltar Steel Corporation.
CLEMENT R. ARRISON has been a Director of the Company since November
1976. He was President of the Company from 1976 until his retirement
effective March 1, 1996. Mr. Arrison holds a B.S. degree in engineering from
the University of Michigan and holds a professional engineering license.
JOSEPH G. DONOHOO has been a Director of the Company since its
incorporation. He is Chairman of the Board of HPE, Inc., a marketer of paper
board.
HERBERT ROTH, JR. has been a Director of the Company since September
1985, having been Chairman of the Board and Chief Executive Officer of LFE
Corporation prior to its acquisition by Mark IV in July 1985. Mr.
Roth also serves as a Director of Boston Edison Company; Tech/Ops Sevcon,
Inc.; and Phoenix Total Return Fund, Inc., and is a Trustee of Phoenix Series
Fund, Phoenix Multi Portfolio Fund, and The Big Edge Series Fund.
KURT J. JOHANSSON was elected Senior Vice President of the Company in
December 1994 and is President of the Company's Mark IV Automotive business
segment, headquartered in Solvesborg, Sweden, with responsibility for its
worldwide operations. Mr. Johansson has been employed by the Company since
October 1990. Mr. Johansson studied at the School of Economics and Business
Administration in Stockholm, Sweden, as well as at the Technical University in
Gothenburg, Sweden.
GIULIANO ZUCCO was elected Vice President of the Company in March 1997,
and is Executive Vice President of the Company's Mark IV Automotive business
segment. Mr. Zucco has been employed by the Company since January 1991 and is
based in Turin, Italy. Mr. Zucco holds an Engineering degree and an M.B.A.
degree from the University in Turin, Italy.
RICHARD F. BING was elected Vice President of the Company in May 1997,
and is President of Mark IV Industrial's Dayco Industrial Division, based in
Miamisburg, Ohio. Mr. Bing has been employed by the Company since 1976,
serving in various roles from Plant Manager of successively larger
manufacturing facilities, to Director of Manufacturing, and Vice President -
Materials Management and Procurement. He holds a B.S. degree in physical
science from Rutgers University and is certified in production and inventory
management.
JOHN J. BYRNE has been employed by the Company since September 1973 and
was elected Vice President and Chief Financial Officer in March 1996. He has
been a Vice President since March 1986 and was elected Vice President -
Finance of the Company in March 1988. He holds a B.S. degree in accounting
from Pennsylvania State University and an M.B.A. degree from Canisius College.
FREDERIC L. COOK was elected Senior Vice President - Administration in
March 1988, and prior thereto, he had been Vice President - Finance of the
Company since May 1986. Prior to joining the Company in 1986, Mr. Cook was a
tax partner with the accounting firm of Coopers & Lybrand L.L.P., where he was
employed for 19 years. He holds a B.S. degree in accounting from the
Rochester Institute of Technology and is a certified public accountant.
<PAGE>4
RICHARD L. GRENOLDS was elected Vice President and Chief Accounting
Officer in July 1989. Prior to joining the Company in 1989, Mr. Grenolds was
a general practice partner with the accounting firm of Coopers & Lybrand
L.L.P., where he was employed for 17 years. He holds a B.S. degree in
accounting from the Rochester Institute of Technology and is a certified
public accountant.
DOUGLAS J. FIEGEL was elected Vice President, Financial Control and
Reporting in 1990. Prior to that he was the Company's Controller since
joining the Company in 1986. He holds a B.B.A. degree in accounting from
Niagara University and is a certified public accountant.
PATRICIA A. RICHERT has been employed by the Company since 1973, and has
been Vice President and Chief Information Officer since 1990. From August
1994 to August 1996, she was also Dayco's Vice President of Information
Technology. She holds a B.S. degree in accounting from the University of
Buffalo.
MARK G. BARBERIO was elected Treasurer of the Company in August 1997.
Mr. Barberio has been employed by the Company since 1985 serving in various
accounting and finance roles, and in August 1995 was appointed Director-Global
Treasury. He holds a B.S. degree in accounting from the Rochester Institute
of Technology and an M.B.A. degree from the State University of New York at
Buffalo.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The By-laws of the Company provide that the Board of Directors shall
consist of not less than three nor more than six Directors who shall be
divided into three classes, with the term of one class expiring each year.
The Board of Directors is presently comprised of six members: William P.
Montague and Joseph G. Donohoo, Class I Directors whose terms expire in 2000;
Gerald S. Lippes and Herbert Roth, Jr., Class II Directors whose terms expire
in 2001; and Sal H. Alfiero and Clement R. Arrison, Class III Directors whose
terms expire in 2002.
During the fiscal year ended February 29, 2000, the Board of Directors
held a total of 12 meetings. With the exception of Mr. Roth, who is
convalescing from an illness, each Director attended at least 75% of the
aggregate number of meetings of the Board of Directors and meetings held by
all committees of the Board of Directors on which he served.
<PAGE>5
Audit Committee
The Board of Directors has a standing Audit Committee comprised of
Messrs. Donohoo and Roth. In accordance with the recently established rules
of the SEC and the New York Stock Exchange (NYSE), Mr. Lippes is no longer a
member of the Audit Committee, and a third independent director will be
appointed to the Audit Committee prior to June 2001. The duties of the Audit
Committee consist of reviewing with the Company's independent auditors and its
management, the scope and results of the annual audit, the scope of other
services provided by the Company's auditors, proposed changes in the Company's
financial and accounting standards and principles, the Company's policies and
procedures with respect to its internal accounting, auditing and financial
controls, and making recommendations to the Board of Directors on the
engagement of the independent auditors, all as provided for in the Committee's
Charter adopted in June 2000. The Audit Committee held 1 meeting during
fiscal 2000.
Compensation Committee
The Compensation Committee, which consists of Messrs. Donohoo and Roth,
held 4 meetings during fiscal 2000. The Compensation Committee reviews and
recommends the compensation arrangements for the Company's executive officers
and other senior management personnel.
Other Committees
The Board of Directors does not have a standing executive or nominating
committee.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10%
of a registered class of the Company's equity securities, to file with the SEC
and the New York Stock Exchange initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the
Company. Officers, directors and greater than 10% shareholders are required
by SEC regulations to furnish the Company with copies of all Section 16(a)
forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with
during the fiscal year ended February 29, 2000.
<PAGE>6
<TABLE>
<CAPTION>
Item 11. Executive Compensation
The following Summary Compensation Table sets forth all compensation earned by the Company's Chief Executive Officer,
and each of the Company's other four most highly compensated executive officers (the "Named Executive Officers"), for the
Company's fiscal year ended February 29, 2000. Comparable information has been presented for each of the Company's two
preceding fiscal years.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Awards Payouts
Other Annual Restricted Securities All Other
Name and Principal Fiscal Compensation Stock Underlying LTIP Compensation
Position Year Salary (A) Bonus(A) (A)(B)(C) Awards (D) Options Payouts (E)(F)(G)(H)
------------------ ------ --------- -------- ----------- ----------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sal H. Alfiero - 2000 $850,000 $850,000 $679,833 - 50,000 - $462,556
Chairman of the Board 1999 $750,000 $375,000 $182,309 - 100,000 - $419,227
and Chief Executive 1998 $750,000 $375,000 $ 94,061 - 42,000 - $502,710
Officer
William P. Montague - 2000 $600,000 $600,000 $350,611 - 45,000 - $175,100
President and Director 1999 $500,000 $250,000 $ 47,315 - 70,000 - $117,222
1998 $500,000 $250,000 $ 3,195 - 26,250 - $180,741
Kurt J. Johansson - 2000 $525,000 $525,000 $ 66,259 - 25,000 - $111,213
Senior Vice President 1999 $450,000 $225,000 - - 50,000 - $ 44,167
1998 $400,000 $200,000 - - 21,000 - $ 40,000
Giuliano Zucco - 2000 $525,000 $525,000 $ 75,724 - 25,000 - $111,213
Vice President 1999 $450,000 $225,000 - - 50,000 - $ 44,167
1998 $375,000 $187,500 - - 21,000 - $ 37,500
Richard F. Bing - 2000 $350,000 $350,000 $ 43,532 - 7,500 - $ 85,623
Vice President 1999 $300,000 $150,000 - - 50,000 - $ 37,825
Vice President 1998 $225,000 $112,500 - - 21,000 - $ 31,900
<PAGE>7
<FN>
Notes To Summary Compensation Table
(A) The Company's Non-Qualified Deferred Compensation Arrangements (as defined in Note F below) enable
participants to defer up to 100% of their current salary and/or bonus to be hypothetically invested
for a pre-determined fixed period of time. All such deferred salary and/or bonus amounts are included
in the amounts shown for "Annual Compensation" in the Summary Compensation Table for each of the years
in which the compensation was earned. During calendar year 1999, participants' optional account
balances were capped at their December 1998 level, and new optional deferrals were allowed only to the
extent they replaced earlier optional deferrals which were scheduled to be distributed to such
participants. Effective January 2000, such limitations were eliminated. All deferrals in the
calendar year are hypothetically invested in the Company's Common Stock at the value of the closing
market price as of the end of the preceding calendar year. The difference between the stock-based
cost of the deferrals and the market value at the time of the deferral amounted to $424,815; $269,016;
$66,259; $75,724; and $43,532 for Messrs. Alfiero, Montague, Johansson, Zucco and Bing, respectively,
and such amounts have been included in the Other Annual Compensation column.
(B) Amounts for fiscal 2000 include tax reimbursements of $111,938 and $6,135 paid to Messrs. Alfiero and
Montague, respectively, to offset the tax effects of the Company's life insurance program and related
compensation element under the rules of the Internal Revenue Code ("IRC").
(C) The Company made temporary advances to certain of the Named Executive Officers during fiscal 2000 in
accordance with its Executive Loan Program. All such advances were repaid by the Named Executive
Officers as of the end of the fiscal year. The maximum amount of advances outstanding during fiscal
2000 amounted to $2,000,000 and $1,100,000 for Messrs. Alfiero and Montague, respectively. During
fiscal 2000, interest on the executive loans was forgiven by the Company. The amounts of interest
forgiven for Messrs. Alfiero and Montague amounted to $143,080 and $75,460, respectively, and such
amounts have been included in the Other Annual Compensation column.
(D) Dividends on the Company's Common Stock are paid currently to holders of restricted shares. During
fiscal 2000, restrictions lapsed on all outstanding restricted shares. The number of shares, and
related fair market value, for which restrictions lapsed in fiscal 2000, were 8,408 shares - $126,646
for Mr. Montague and 2,026 shares - $30,517 for Mr. Johansson.
(E) The Company's contributions to its tax-qualified retirement and 401(k) savings plan in fiscal 2000
were $953; $6,400 and $11,482 for Messrs. Alfiero, Montague and Bing, respectively. All such amounts
have been included in the "All Other Compensation" column.
<PAGE>8
(F) As a supplement to the Company's tax-qualified retirement and 401(k) savings plan, the Named Executive
Officers participate in one of the Company's non-qualified deferred compensation plans ("Deferred
Compensation Arrangements"). Amounts allocated in fiscal 2000 under the terms of the Deferred
Compensation Arrangements amounted to $193,140; $129,569; $111,213; $111,213 and $74,142 for Messrs.
Alfiero, Montague, Johansson, Zucco and Bing, respectively. All such amounts have been included in
the "All Other Compensation" column. The earnings on amounts allocated under the terms of the
Deferred Compensation Arrangements are equal to the greater of the cumulative investment returns which
would be realized if the executive officer's account was 100% invested in the Company's Common Stock
("equity based earnings") or in an interest bearing account ("interest based earnings"). The earnings
amounts are not deemed to be compensation under the rules of the SEC, and therefore are not included
in the Summary Compensation Table.
(G) As a citizen/resident of Sweden, Mr. Johansson participates in a defined benefit pension plan which
requires the Company to make annual payments to an insured retirement account on his behalf. The cost
to the Company for this defined benefit retirement plan is not included in the Summary Compensation
Table. The annual pension benefit to be paid to Mr Johansson under this plan would be in the range of
$100,000 if he were to retire at age 60 (2 years out).
(H) Includes amounts deemed to be compensation under the rules of the SEC related to the present value of
the premium payments made by the Company for the benefit of certain of the Named Executive Officers
under the Company's split-dollar life insurance program. Such amounts in fiscal 2000 amounted to
$268,463 and $39,131 for Messrs. Alfiero and Montague, respectively. The premium payments will
ultimately be recovered by the Company to the extent of the cash surrender value of the policies.
</FN>
</TABLE>
<PAGE>9
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
The following table sets forth information with respect to the Named Executive Officers concerning
options granted to each of them during fiscal 2000.
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price Appreciation
Individual Grants For Option Term
------------------------------------------------------ -------------------------
Number of % of Total
Securities Options
Underlying Granted to
Options Employees in Exercise Price Expiration
Name Granted Fiscal Year (A) (Share) Date 5% (B) 10% (B)
------------- -------- --------------- -------------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Sal H. Alfiero 50,000 12.21% $17.375 1/03/10 $ 546,352 $ 1,384,564
William P. Montague 45,000 10.99% $17.375 1/03/10 $ 491,717 $ 1,246,107
Kurt J. Johansson 25,000 6.10% $17.375 1/03/10 $ 273,176 $ 692,282
Giuliano Zucco 25,000 6.10% $17.375 1/03/10 $ 273,176 $ 692,282
Richard F. Bing 7,500 1.83% $17.375 1/03/10 $ 81,953 $ 207,685
All Shareholders (C) N/A N/A N/A N/A $558,500,000 $1,415,500,000
<FN>
(A) Options become exercisable in cumulative annual increments of 25% beginning one year from the date of
grant; however, options become immediately exercisable in full upon the optionee's disability, retirement
or death, or upon a Change in Control of the Company.
(B) Represents the potential appreciation of the options, determined by assuming an annual compounded rate of
appreciation of 5% and 10% per year over the ten-year term of the grants. Such assumed annual rates of
appreciation of 5% and 10% would result in the price of the Company's stock increasing 62.9% and 159.4%,
respectively, over a ten-year time frame. The amounts set forth are not intended to forecast future
appreciation, if any, of the stock price.
(C) Represents the potential appreciation for all shareholders over a ten-year period, assuming 44.4 million
shares outstanding and a closing market price of $20.00 per share at February 29, 2000, and assuming the
same annual rates of appreciation of 5% and 10% over the subsequent ten-year period.
</FN>
</TABLE>
<PAGE>10
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table sets forth information with respect to the Named Executive Officers concerning the
exercise of options during fiscal 2000 and unexercised options held at the end of fiscal 2000.
Value of Securities
Number of Securities Underlying
Underlying Unexercised In
Shares Unexercised Options The Money Options
Acquired At Fiscal Year-End At Fiscal Year-End (A)
On Value ---------------------- ----------------------
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
----------------- ----------- -------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sal H. Alfiero -- -- 219,778 146,000 $741,451 $405,469
William P. Montague -- -- 142,208 110,625 $619,073 $310,078
Kurt J. Johansson -- -- 110,664 73,000 $364,882 $202,734
Giuliano Zucco -- -- 62,486 73,000 $185,532 $202,734
Richard F. Bing -- -- 46,566 55,500 $143,373 $156,797
<FN>
(A) Represents the difference between the closing market value of the Company's Common Stock on February
29, 2000 ($20.00) and the exercise price of such options.
</FN>
</TABLE>
<PAGE>11
EMPLOYMENT AGREEMENTS
The Company has employment agreements ("Employment Agreements") with
each of the Named Executive Officers. The Employment Agreements for Messrs.
Alfiero and Montague are dated March 1, 1995 and provide for an initial term
of five years, which is automatically extended for an additional 12-month
period on each annual anniversary date, until the executive reaches age 61.
At such date, the remaining term is reduced by 20% per year, so that at the
date the executive reaches age 65, it is renewed on a 12-month basis. The
Employment Agreements for Mr. Johansson (dated January 1, 1995), and Mr. Bing
(dated May 1, 1997) provide for an initial term of three years, which is
automatically extended annually for an additional 12-month term after the
initial term. The Employment Agreement for Mr. Zucco is verbal, and provides
benefits in substantially the same manner as provided to Mr. Johansson. An
executive officer who is a party to an Employment Agreement is eligible to
receive cash bonuses as part of the Company's Executive Bonus Plan (the "Bonus
Plan"), and participate in the Company's various other benefit and incentive
plans. The Employment Agreements do not provide for a minimum bonus amount.
The Employment Agreements for Messrs. Alfiero and Montague provide that
in the event the Company terminates the executive prior to age 61 for any
reason other than Cause (as defined), such executive shall be entitled to
receive a lump sum severance benefit equal to the greater of two and one-half
times the sum of such executive's base salary plus bonus earned for the
12-month period immediately preceding the date of his termination, or five
times the executive's then current base salary, in each case including amounts
deferred at the option of the executive. In the event of termination after
the executive attains age 61, such severance benefit is reduced by 20% per
year, beginning at age 61, so that no severance benefit is paid if the
executive is terminated at age 65. The Employment Agreements for Messrs.
Johansson, Zucco and Bing provide that in the event of termination, they shall
be entitled to receive a benefit equal to one and one-half times their base
salary, payable over an 18-month period, plus a pro rata allocation of the
bonus they would have been entitled to receive for the fiscal year had they
not been terminated.
In addition, upon a termination other than for Cause, or upon retirement
and eligibility to receive benefits under the Company's tax-qualified defined
contribution plan (the "Retirement Plan"), Messrs. Alfiero and Montague will
be entitled to receive from the Company an additional benefit computed as if
the Retirement Plan was not subject to limits imposed on tax-qualified plans
by the IRC or ERISA. Such amounts are included in the amounts accrued for
such executive officers under the Deferred Compensation Arrangements, and
included under the column entitled "All Other Compensation" in the Summary
Compensation Table.
Messrs. Johansson and Zucco do not participate in the Company's tax-
qualified defined contribution plan; however, as provided for in their
Employment Agreements, they, as well as Mr. Bing, are participants in the
Company's Deferred Compensation Arrangements. The annual allocation to their
accounts is equal to a maximum of 20% of their base salary. The allocation
in any given year is made only to the extent that the Company's performance is
sufficient to allow a bonus award under the terms of the Company's Bonus Plan.
<PAGE>12
The Employment Agreements further provide for alternative severance
benefits if the executive's employment is terminated within three years of a
Change in Control, other than for Cause, in which case they would be entitled
to receive a lump sum severance payment equal to three times the average of
their total cash compensation during the three-year period immediately
preceding the termination date, plus medical and life insurance benefits for
the rest of their life. The Employment Agreements define such total cash
compensation to include amounts deferred at the option of the executive. The
payments and benefits payable in the event of a Change in Control are not
subject to any limitations that would prevent them from being considered
"excess parachute payments" subject to excise tax payments or corporate
deduction disallowance under the IRC. Therefore, such severance payments
could require excise tax payments on the part of the executive, and deduction
disallowance on the part of the Company. In such instance, the impact of the
excise tax payments on the executive would be reimbursed to the executive by
the Company, including taxes the executive would incur on the reimbursement
itself.
In connection with the Merger Agreement between the Company and MIV
Acquisition Corporation dated May 26, 2000 (the "Merger Agreement"), the
Company and its executive officers agreed to restructure their existing
Employment Agreements (the "Amended Employment Agreements"). The Amended
Employment Agreements have not been finalized and are in various stages of
completion. With respect to the Named Executive Officers, it is expected that
the Amended Employment Agreements will provide for, among other things, the
following changes to the requirements of and benefits provided by their
existing Employment Agreements:
- Each Named Executive Officer will be subject to an expanded three-
year non-compete/non-solicitation agreement.
- The Change in Control severance payments for Messrs. Montague and
Bing will be reduced to the extent of amounts allocated to stay-
incentive arrangements to facilitate the transition process
following the Change in Control.
- The Change in Control severance payments and other reallocated
lump sum amounts for Messrs. Montague and Bing will be paid on the
date a Change in Control occurs without the need for termination
of the executive's employment.
- The Change in Control severance payments for Messrs. Johansson and
Zucco have been replaced by stay-incentive payments in the amount
of $5.0 million (each). Such amounts will be paid 50% on the date
a Change in Control occurs and the remaining 50% on the first
anniversary of the Change in Control, as long as the executive
does not voluntarily terminate his employment with the Company
during that period.
- Mr. Bing's Amended Employment Agreement will also include an
incremental Change in Control severance payment of $200,000.
In general, for the Amended Employment Agreements of the executive
officers other than the Named Executive Officers, modifications similar to
those identified above for Mr. Montague will be made.
The Plans related to the Company's Deferred Compensation Arrangements
were amended at the end of fiscal 2000 to eliminate the "rabbi-trust" funding
requirements of the Plans following a Change in Control. The Plans were also
amended to allow the direct payout of all account balances following the
signing of a merger agreement, and prior to the formal completion of the
merger contemplated thereby, at the direction of the Company's Board of
Directors.
<PAGE>13
In addition, the existing requirements of the Company's split-dollar
life insurance program for 100% lump-sum funding of all future premium
payments in the event of termination within two years following a Change in
Control will be eliminated through an amendment of the existing agreements
related to such benefits. As a result, the Company would continue to fund
such premium payments only as billed by the insurance companies following a
Change in Control.
The events that trigger a Change in Control under the Employment
Agreements include (i) certain consolidations or mergers, (ii) certain sales
or transfers of substantially all of the Company's assets, (iii) the approval
of the Company's shareholders of a plan of dissolution or liquidation of the
Company, (iv) the acquisition of 20% or more of the Company's outstanding
Common Stock by certain persons (other than the Company's executive officers
and directors, whether individually or as a group) and (v) certain changes in
the membership of the Company's Board of Directors.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is designed to attract and
retain top quality executives and to provide them with both an incentive and a
reward for superior performance. The program includes three principal
components - base salary, annual bonus opportunities and long-term incentives.
The program is administered by the Compensation Committee of the Board of
Directors, the members of which are outside Directors who are not employees of
the Company.
The Compensation Committee generally reviews base salary levels for
executive officers each year. Salaries are adjusted to the extent the
Compensation Committee believes is appropriate, taking into account the
executives' and the Company's performance, and other factors the Compensation
Committee deems relevant each year. During fiscal 2000, the Compensation
Committee reviewed Mr. Alfiero's annual base salary, giving consideration to
the period of time since his previous increase (March 1996), their assessment
of his commitment to the Company to date, the Company's consolidated earnings
and stock market performance, and comparisons of the Company's performance to
that of companies within its Peer Group (as hereinafter defined). As a
result, his annual base compensation was increased $100,000 reflecting a 13.3%
increase from fiscal 1999's base rate, and an annualized increase of
approximately 4.0% per year from the date it was previously increased.
Annual bonus awards are determined according to the terms of the
Company's Bonus Plan, which has been approved by shareholders as "performance-
based" in accordance with the rules of the IRC. All of the Company's
executive officers participate in this Bonus Plan, which allows them the
opportunity to earn a bonus of up to 200% of their base salary if the
Company's performance meets specified targets, as established by the
Compensation Committee. No bonus is payable unless the Company achieves its
specified targets. Further, no bonus is payable if the targets are projected
to be less than the comparable amounts for the prior fiscal year. Under the
terms of the Bonus Plan, the Compensation Committee does not have any
authority to modify the bonus amounts as computed by the bonus plan formulas.
<PAGE>14
The Company exceeded its established targets for fiscal 2000 and, as a result,
the Compensation Committee granted a bonus award for fiscal 2000 equal to 100%
of the executives' base salary. As a result of the bonus component of these
compensation arrangements, a significant portion of the executive officers'
annual cash compensation is directly linked to the operating performance of
the Company, which the Compensation Committee believes helps to maximize the
individual effort of all executive officers on a consistent basis.
The Compensation Committee believes periodic grants of incentive stock
options to the Company's executives to be appropriate long-term incentive
compensation to reward the executives for their efforts to date, and provide
an incentive element geared to the long-term growth in the market value of the
Company's Common Stock. In January 2000, the Compensation Committee
determined it appropriate to grant an incentive stock option to Mr. Alfiero to
acquire 50,000 shares of the Company's Common Stock at an exercise price equal
to the fair market value of the Common Stock at the date of grant. The
Compensation Committee also determined it appropriate to grant options to the
other Named Executive Officers in January 2000 to acquire a total of 102,500
shares of the Company's Common Stock, also at an exercise price equal to the
fair market value of the Common Stock at the date of grant.
The Compensation committee also allows the Company's executive officers
the opportunity to defer payment of any portion of their total compensation
into the Company's Deferred Compensation Plans at an initial phantom-stock
investment rate equal to the average closing price of the Company's stock in
the month preceding the calendar year of such deferral. The Compensation
Committee believes this provides the executives with an additional incentive
to maximize shareholder value.
The net result of the Compensation Committee's decisions is that Mr.
Alfiero's total compensation (Salary and Bonus) for fiscal 2000 is at the 85th
percentile in comparison to corresponding amounts earned by the Chief
Executive Officers of each of the companies in the Peer Group. The
Compensation Committee also reviewed the Annual Compensation in total for all
of the Named Executive Officers of the Company in comparison to the amounts
earned by the named executive officers in the Peer Group companies, and found
the Company's total of such compensation for fiscal 2000 to also be at the
85th percentile on a comparable basis. Such compensation amounts for Mr.
Alfiero individually, and in total for the Named Executive Officers as a
group, are viewed by the Compensation Committee to be appropriate.
Federal tax legislation ("IRC 162(m)") limits publicly-held companies
such as Mark IV from deducting for tax purposes certain compensation paid to
any named executive officer in excess of $1,000,000 annually. The tax
deductibility of amounts paid by the Company to its executive officers through
fiscal 2000 has not been affected by IRC 162(m), and it is anticipated that
the deduction limitations imposed by IRC 162(m) will not significantly impact
the Company for several years. Upon completion of the merger, IRC 162(m) will
no longer be applicable, as long as the Company has no class of public equity
securities outstanding and required to be reported upon to the SEC.
<PAGE>15
The changes to the various existing Employment Agreements and other
benefit plans discussed under "Employment Agreements" have been approved by
the Compensation Committee as being prudent to facilitate the process the
Company has pursued with Bear, Stearns & Co., Inc., its financial advisor,
during this past year, and the signing of the Merger Agreement.
In summary, the Compensation Committee believes that the compensation
program for the Company's executive officers is appropriate and serves the
best interests of the Company and its stockholders.
COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS OF
MARK IV INDUSTRIES, INC.
Joseph G. Donohoo
PEER GROUP COMPARISONS AND PERFORMANCE GRAPH
The following graph plots the growth in value of an initial $100
investment, with dividends reinvested, over the five-year period ended on
February 29, 2000, the end of the Company's most recent fiscal year. The
graph compares the performance of the Company's Common Stock to the
performance of the equity securities of the companies in the Peer Group (as
detailed below). The performance of each of the companies in the Peer Group
has been weighted based upon their relative market capitalization over the
same five-year period ended February 29, 2000.
The graph also compares the performance of the Company's Common Stock to
the performance of the companies included in the S&P Midcap 400 Index and the
S&P 500 Index over the same five-year period ended February 29, 2000. The S&P
Midcap 400 Index, which includes the Common Stock of the Company, is an
aggregate measure of the performance of the equity securities of 400 companies
with market capitalization in the range of $173 million to $11.7 billion. The
average market capitalization of companies in the S&P Midcap 400 Index is
approximately $2.2 billion, in comparison to the Company's market
capitalization of approximately $820 million at May 10, 2000, which makes it
an appropriate broad-based market performance comparison for the Company. The
S&P 500 Index, which does not include the Common Stock of the Company, is an
aggregate measure of the performance of the equity securities of 500 companies
chosen for market size, liquidity and industry group representation. The
companies included in the S&P 500 Index have a market capitalization in the
range of $308 million to $518 billion, and an average market capitalization of
approximately $24.3 billion. The S&P 500 Index has been included as a
comparison since it tends to be a very common overall measure of the stock
market's performance followed by institutional and individual investors.
<PAGE>16
The companies included in the Peer Group are diversified automotive and
industrial manufacturing companies with whom investment analysts have compared
or grouped the Company, and include the following:
- Arvin Industries, Inc. - The Goodyear Tire & Rubber Company
- Borg Warner Automotive, Inc. - Hayes Lemmerz International, Inc.
- Breed Technologies, Inc. - MascoTech, Inc.
- Cooper Tire & Rubber Company - Parker-Hannifin Corporation
- Dana Corporation - Simpson Industries, Inc.
- Eaton Corporation - Standard Motor Products, Inc.
- Exide Corporation
Coltec Industries, Inc. and Walbro Corporation were included in the
Company's Peer Group in its fiscal 1999 Proxy Statement. Since both of those
companies were acquired by other companies during fiscal 2000, their
performance has been excluded from the current year's Peer Group comparison.
If their performance through fiscal 1999 had been included, the overall
performance of the Peer Group for fiscal 2000 would have been less than as
presented below.
<PAGE>17
COMPARATIVE CUMULATIVE TOTAL RETURNS
1995 1996 1997 1998 1999 2000
Mark IV $100 $106 $131 $137 $ 90 $121
1999 Peer Group $100 $114 $132 $185 $135 $102
S&P Midcap 400 $100 $129 $151 $206 $211 $276
S&P 500 $100 $135 $170 $229 $275 $307
<PAGE>18
COMPENSATION OF DIRECTORS
Directors who are not also executive officers of the Company receive an
annual retainer for their services and participate in a bonus plan which is
separate from the Bonus Plan in which the Company's executive officers
participate. The annual retainer paid to each of Messrs. Donohoo, Roth, and
Arrison was $34,500 in fiscal 2000. The Company also made incentive awards
under its bonus plan of $34,500 each to Messrs. Donohoo, Roth and Arrison in
fiscal 2000. Directors who are also executive officers of the Company do not
receive any additional compensation for their services as Directors.
Directors do not receive any additional compensation for their services as a
member of any committee of the Board of Directors.
The Company's Non-Qualified Deferred Compensation Plan for Non-Employee
Directors of the Company (the "Directors' Deferred Compensation Plan") allows
the non-employee Directors of the Company to elect to defer receipt of up to
100% of their annual retainer and/or bonus for a pre-determined, fixed period
of time. The earnings on such deferred amounts are equal to the greater of
the cumulative investment returns which would be realized if the Director's
account was simultaneously invested in the Company's Common Stock and a
savings account bearing interest at a rate equal to 120% of the Applicable
Federal Rate. The Directors' Deferred Compensation Plan provides a similar
investment opportunity to acquire phantom-shares of the Company's Common Stock
at a discounted price, as described in Note A to the Summary Compensation
Table. As a result of their deferral of a portion of their annual retainer
and/or bonus in fiscal 2000, Messrs. Donohoo, Roth and Arrison obtained
discounts of $17,415; $4,354 and $4,354, respectively, in fiscal 2000.
<PAGE>19
Item 12. Security Ownership Of Certain Beneficial Owners and Management
The following table sets forth information as of June 16, 2000 (except
as otherwise noted) with respect to all stockholders known by the Company to
be the beneficial owners of more than 5% of its outstanding Common Stock, each
Director, each Named Executive Officer in the Summary Compensation Table, and
all Executive Officers and Directors as a group.
Number of Percent
Name Shares(1)(2) of Class
--- ------------ -------
Sal H. Alfiero ................. 4,475,893 (3) 10.0%
William P. Montague............. 841,964 (4) 1.9%
Gerald S. Lippes................ 1,648,590 (5) 3.7%
Clement R. Arrison.............. 756,360 (6) 1.7%
Joseph G. Donohoo............... 12,158 (7) *
Herbert Roth, Jr................ 25,103 (8) *
Kurt J. Johansson............... 128,865 (9) *
Giuliano Zucco.................. 73,986 (10) *
Richard F. Bing................. 66,810 (11) *
All Executive Officers and
Directors as a Group
(15 persons)................... 8,506,299 (12) 18.7%
Gabelli Related Persons......... 8,978,667 (13) 20.0%
______________
* Less than 1%
(1) Except as otherwise indicated in the following footnotes, each person
listed in the table has both sole voting and sole investment power with
respect to the number of shares of Common Stock set forth opposite his
name. Messrs. Alfiero, Montague and Lippes, each of whom is an
executive officer of the Company, have the right to direct the Trustee
of the Company's Master Defined Benefit Pension Plan (the "Plan") with
respect to the investment by the Trustee in shares of the Company's
Common Stock and voting of the shares of the Company's Common Stock
owned by such Plan. The Plan owns a total of 1,018,222 shares of the
Company's Common Stock (2.3% of the total number of shares outstanding).
Such executive officers are not participants in the Plan and disclaim
any beneficial ownership in the shares, and the shares have not been
included in the amounts listed in this table.
(2) Concurrent with the signing of a Merger Agreement between the Company
and MIV Acquisition Corporation on May 26, 2000 (the "Merger
Agreement"), Messrs Alfiero, Montague, Lippes and Arrison executed a
Stockholder Voting Agreement in which each executive agreed to vote
their shares owned of record and/or beneficially in favor of the merger
transaction provided for in the Merger Agreement. The completion of the
proposed merger would result in a Change in Control of the Company.
(3) Includes 242,777 shares of Common Stock issuable under currently
exercisable options granted under the Company's Incentive Stock Option
Plans (the "Option Plans"). Also includes 16,460 shares of Common Stock
allocated to Mr. Alfiero's self-directed accounts in the Company's
retirement and 401(k) savings plan and 7,603 shares owned by Mr.
Alfiero's wife. Does not include 77,764 shares of Common Stock owned by
the Alfiero Family Charitable Foundation, of which Mr. Alfiero is one of
four directors and for which he disclaims beneficial ownership. Also
does not include 412,872 derivative shares of the Company's Common
Stock, which represent the $9,496,059 value of Mr. Alfiero's phantom-
<PAGE>20
stock-based account balance in the Company's Deferred Compensation
Arrangements as of May 31, 2000, valued at the $23.00 share price
provided for in the Merger Agreement.
(4) Includes 157,520 shares of Common Stock issuable under currently
exercisable options granted pursuant to the Option Plans. Also includes
6,890 shares of Common Stock allocated to Mr. Montague's self-directed
accounts in the Company's retirement and 401(k) savings plan. Does not
include 21,876 shares of Common Stock owned by the Montague Family
Charitable Foundation, of which Mr. Montague is one of four directors
and for which he disclaims beneficial ownership. Also does not include
215,744 derivative shares of the Company's Common Stock, which represent
the $4,962,121 value of Mr. Montague's phantom-stock-based account
balance in the Company's Deferred Compensation Arrangements as of May
31, 2000, valued at the $23.00 share price provided for in the Merger
Agreement.
(5) Includes 117,694 shares of Common Stock issuable under currently
exercisable options granted pursuant to the Option Plans. Does not
include 68,917 shares of Common Stock owned by the Lippes Family
Charitable Foundation, of which Mr. Lippes is one of four directors and
for which he disclaims beneficial ownership. Also does not include
140,906 derivative shares of the Company's Common Stock, which represent
the $3,240,848 value of Mr. Lippes' phantom-stock-based account balance
in the Company's Deferred Compensation Arrangements as of May 31, 2000,
valued at the $23.00 share price provided for in the Merger Agreement.
(6) Does not include 137,107 shares of Common Stock owned by the Arrison
Family Charitable Foundation, of which Mr. Arrison is one of four
directors and for which he disclaims beneficial ownership. Also does
not include 1,968 derivative shares of the Company's Common Stock, which
represent the $45,271 value of Mr. Arrisons' phantom-stock-based account
balance in the Company's Deferred Compensation Arrangements as of May
31, 2000, valued at the $23.00 share price provided for in the Merger
Agreement.
(7) Includes 1,658 shares of Common Stock held by The Gibson Group, Inc.
Pension Fund, of which Mr. Donohoo is a trustee and has voting power.
Does not include 8,107 derivative shares of the Company's Common Stock,
which represent the $186,470 value of Mr. Donohoo's phantom-stock-based
account balance in the Company's Deferred Compensation Arrangements as
of May 31, 2000, valued at the $23.00 share price provided for in the
Merger Agreement.
(8) Does not include 14,269 derivative shares of the Company's Common Stock,
which represent the $328,180 value of Mr. Roth's phantom-stock-based
account balance in the Company's Deferred Compensation Arrangements as
of May 31, 2000, valued at the $23.00 share price provided for in the
Merger Agreement.
(9) Includes 126,181 shares of Common Stock issuable under currently
exercisable options granted pursuant to the Option Plans. Does not
include 52,484 derivative shares of the Company's Common Stock, which
represent the $1,207,143 value of Mr. Johansson's phantom-stock-based
account balance in the Company's Deferred Compensation Arrangements as
of May 31, 2000, valued at the $23.00 share price provided for in the
Merger Agreement.
<PAGE>21
(10) Includes 73,986 shares of Common Stock issuable under currently
exercisable options granted to Mr. Zucco pursuant to the Option Plans.
Does not include 47,431 derivative shares of the Company's Common Stock,
which represent the $1,090,909 value of Mr. Zucco's phantom-stock-based
account balance in the Company's Deferred Compensation Arrangements as
of May 31, 2000, valued at the $23.00 share price provided for in the
Merger Agreement.
(11) Includes 58,066 shares of Common Stock issuable under currently
exercisable options granted pursuant to the Option Plans. Also includes
2,515 shares of Common Stock allocated to Mr. Bing's self-directed
accounts in the Company's retirement and 401(k) savings plan. Does not
include 35,380 derivative shares of the Company's Common Stock, which
represent the $813,746 value of Mr. Bing's phantom-stock-based account
balance in the Company's Deferred Compensation Arrangements as of May
31, 2000, valued at the $23.00 share price provided for in the Merger
Agreement.
(12) Includes 1,030,286 shares of Common Stock issuable under currently
exercisable options granted pursuant to the Option Plans. Also includes
38,566 shares of Common Stock allocated to the officers' self directed
accounts in the Company's retirement and 401(k) savings plan. Does not
include 1,343,282 derivative shares of the Company's Common Stock, which
represents the $30,895,521 value of the group's phantom-stock-based
account balances in the Company's Deferred Compensation Arrangements as
of May 31, 2000, valued at the $23.00 share price provided for in the
Merger Agreement.
(13) Based on information set forth in Amendment No. 11 to Schedule 13-D
filed with the SEC on May 18, 2000 by Gabelli Funds, LLC, GAMCO
Investors, Inc., Gabelli Performance Partnership L.P., Gabelli
International Limited, Gabelli Securities, Inc., Gabelli Group Capital
Partners, Inc., Gabelli Asset Management Inc., Marc J. Gabelli, and
Mario J. Gabelli (collectively, the "Gabelli Related Persons"), the
Gabelli Related Persons held shared voting and/or dispositive power for
8,978,667 shares of the Company's Common Stock. Such amount includes
495,842 shares which the Gabelli Related Persons have the right to
acquire through the conversion into Common Stock of the Company's 4-3/4%
Convertible Subordinated Notes. The stated business address of the
Gabelli Related Persons is One Corporate Center, Rye, New York 10580-
1435.
Item 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The firm of Lippes, Silverstein, Mathias & Wexler LLP, of which Mr.
Lippes, Secretary, a Director and General Counsel of the Company, is a
partner, serves as counsel to the Company. During fiscal 2000, such firm
received approximately $2.9 million for legal services rendered to the
Company.
<PAGE>22
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MARK IV INDUSTRIES, INC.
By:/s/Richard L. Grenolds
----------------------
Richard L. Grenolds
Vice President and
Chief Accounting Officer
Dated: June 28, 2000
