<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
McCLAIN INDUSTRIES, INC.
(Name of registrant as specified in its charter)
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:___
(2) Aggregate number of securities to which transaction applies:______
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:_______________________________
(4) Proposed maximum aggregate value of transaction:__________________
(5) Total fee Paid:___________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:___________________________________________
(2) Form, schedule or registration statement no.:_____________________
(3) Filing party:_____________________________________________________
(4) Date filed: ______________________________________________________
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<PAGE> 2
MCCLAIN
INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1998
<PAGE> 3
MCCLAIN INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 8, 1998
To the Shareholders:
Notice is hereby given that the annual meeting (the "Meeting") of
shareholders of McClain Industries, Inc., a Michigan corporation (the
"Company"), will be held at the Sterling Inn, Concord Room, 34911 Van Dyke Road,
Sterling Heights, Michigan, on Friday, May 8, 1998, at 10:00 a.m., local time,
for the following purposes:
(1) To elect a Board of four Directors to serve until the next annual
meeting of shareholders or until their successors shall have been duly elected
and qualified; and
(2) To transact such other business as may properly come before the
Meeting.
A Proxy Statement containing information relevant to the Meeting
appears on the following pages. Only holders of record of the Company's common
stock at the close of business on March 27, 1998, are entitled to notice of, and
to vote at, the Meeting or any adjournment.
All shareholders are cordially invited to attend the Meeting in person.
Whether or not you expect to attend the Meeting, please sign, date, and mark the
enclosed Proxy which is being solicited by the Board of Directors and return it
as soon as possible in the postage-paid envelope provided. If you wish to vote
in accordance with the Board of Director's recommendations, you need only sign,
date and return the Proxy. If you attend the Meeting, you may withdraw your
Proxy and vote your own shares.
By Order of the Board of Directors
CARL JAWORSKI
Secretary
Dated: April 3, 1998
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE ENCOURAGED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PAID ENVELOPE PROVIDED FOR THAT PURPOSE.
<PAGE> 4
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 8, 1998
PROXIES AND SOLICITATIONS
This Proxy Statement is furnished to shareholders in connection with
the solicitation of proxies by the Board of Directors (the "Board") of McClain
Industries, Inc., a Michigan corporation (the "Company"), to be used at the
annual meeting of shareholders (the "Meeting") or at any adjournment. If
received in time for the Meeting, the shares represented by a valid proxy will
be voted in accordance with the instructions, if any, contained in such executed
proxy. If no instructions are given, proxies will be voted for all nominees for
the Board. A proxy executed in the enclosed form may be revoked by the person
signing it at any time before it is exercised. Proxies may be revoked by filing
with the Company's Secretary, any time prior to the time set for commencement of
the Meeting, a written notice of revocation bearing a later date than the proxy,
or by attending the Meeting and voting in person (although attendance at the
Meeting will not in and of itself constitute revocation of a proxy).
In addition to the use of mails, proxies may be solicited by personal
interview, telephone and telegram, by directors, officers and employees of the
Company. Arrangements may also be made with brokerage houses or other
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of shares of the Company's common stock, no par value (the
"Common Stock"), held of record by such persons, and the Company may reimburse
such persons for reasonable out-of-pocket expenses incurred in forwarding such
material, which the Company anticipates will not exceed $1,000. The Company will
bear the cost of all proxy solicitation.
The executive offices of the Company are located at 6200 Elmridge Road,
Sterling Heights, Michigan 48310. The approximate date of mailing of this Proxy
Statement and the enclosed Proxy materials to the Company's shareholders is
April 4, 1997.
TIME AND PLACE OF MEETING
The Meeting will be held at the Sterling Inn, Concord Room, 34911 Van
Dyke Road, Sterling Heights, Michigan, on Friday, May 8, 1998, at 10:00 a.m.,
local time.
VOTING RIGHTS AND
PRINCIPAL HOLDERS OF VOTING SECURITIES
Only holders of record of shares of Common Stock at the close of
business on March 27, 1998 are entitled to notice of, and to vote at, the
Meeting or at any adjournment. As of that date, the Company had 4,753,327 shares
of Common Stock issued, outstanding and entitled to vote held by 243 holders of
record. Each outstanding share of Common Stock entitles the record holder to one
vote. Shares cannot be voted
<PAGE> 5
at the Meeting unless the holder is present in person or represented by proxy.
The presence, in person or by proxy, of shareholders entitled to vote a majority
of the voting shares that are outstanding and entitled to vote will constitute a
quorum.
Information concerning principal holders of the Common Stock is
discussed under "Security Ownership of Certain Beneficial Owners and
Management."
MATTERS TO COME BEFORE THE MEETING
ELECTION OF DIRECTORS
The Company's Bylaws provide for seven positions on the Board. It is
proposed that only four of these positions be filled by persons nominated to the
Board at the Meeting. Management has determined that the functions of the Board
can be served adequately by four directors. It is anticipated that the remaining
three positions will remain vacant; however, shareholders attending the Meeting
may nominate and elect persons to fill the three vacancies. In no event may
proxies be voted for more than four persons. Each director shall be elected by a
plurality of the votes cast at the Meeting. Therefore, abstentions and broker
non-votes will have no effect on the election of directors. Proxies will be
tabulated by the Company's transfer agent. The Inspector of Elections appointed
at the Meeting will then combine the proxy votes with the votes cast at the
Meeting. Each director elected at the Meeting will serve for a term commencing
on the date of the Meeting and continuing until the next annual meeting of
shareholders or until his successor is duly elected and qualified. In the
absence of instructions to the contrary, proxies will be voted in favor of the
election of the four nominees listed below.
If any of the persons nominated are unavailable to serve for any
reason, then a valid proxy may be voted for the election of such other persons
as the person or persons voting the proxy may deem advisable in accordance with
their best judgment. Management has no present knowledge that any of the persons
nominated will be unavailable to serve. In any event, the enclosed proxy can be
voted for only the four persons named in this Proxy Statement or their
substitutes.
The following list identifies each person nominated for election to the
Board at the Meeting and describes each person's principal occupation for the
past five years. Each such person is presently a director of the Company and has
served continuously from the date of his election to the present time.
KENNETH D. MCCLAIN, age 56, is Chairman of the Board and President of
the Company. He has been a director and officer of the Company since its
inception in March 1968. He also serves as an officer and a director of the
Company's subsidiaries.
ROBERT W. MCCLAIN, age 61, is Senior Vice President and Assistant
Secretary of the Company. He has been a director and officer of the Company
since its inception in March 1968. He also serves as an officer of several of
the Company's subsidiaries. Mr. Robert McClain and Mr. Kenneth McClain are
brothers.
2
<PAGE> 6
RAYMOND ELLIOTT, age 63, has been a director of the Company since
August 1990. He has been a Vice President of First of America Insurance Group
since October 1996. Prior to that he was President of Elliott & Sons Insurance
Agency, Inc. and Michigan Benefit Plans Insurance Agency, Inc. since 1967, and
was a director of both such companies through December 1996. Mr. Elliott also
serves on the Board of Governors of the Michigan automobile Insurance Placement
Facility and as an advisory director of the Boys and Girls Club of Troy, a
charitable organization located in Troy, Michigan.
WALTER J. KIRCHBERGER, age 63, has been a director of the Company since
November 3, 1995. Mr. Kirchberger is First Vice President - Research of
PaineWebber Incorporated, and has served in such capacity for more than 25
years. He also serves as a director of Simpson Industries, Inc.
To the best of the Company's knowledge, there are no material
proceedings to which any nominee is a party, or has a material interest, adverse
to the Company. To the best of the Company's knowledge, there have been no
events under any bankruptcy act, no criminal proceedings and no judgments or
injunctions that are material to the evaluation of the ability or integrity of
any nominee during the past five years.
BOARD OF DIRECTORS AND COMMITTEES
The Board met seven times during the Company's fiscal year ended
September 30, 1997 ("Fiscal 1997"). All of the directors on the Board attended
each meeting during Fiscal 1997.
Directors who are employees of the Company do not receive compensation
for serving on the Board or on the Board's committees. Directors who are not
employees of the Company are entitled to a quarterly retainer fee of $3,250
($3,500 beginning January 1, 1998), a $1,000 fee for each regular or special
meeting of the Board and a $1,000 fee for each committee meeting attended on a
day other than a regular or special Board meeting date (collectively, the
"Fees"). A director may elect to receive payment of the Fees in shares of Common
Stock pursuant to the Company's 1989 Retainer Stock Plan for Non-Employee
Directors (the "Retainer Plan"). To participate in the Retainer Plan, an
eligible director must elect prior to December 31 of each year the percentage,
if any, of Fees he desires to receive in the form of shares of Common Stock. The
Common Stock is issued quarterly during the following calendar year. The number
of shares of Common Stock to be issued to an eligible director is determined by
dividing the dollar amount of the percentage of Fees such director elects to
receive in Common Stock by the "fair market value" of Common Stock on the day
prior to the date of issuance of the Common Stock to such director. The term
"fair market value" means the average of the highest and lowest selling price
for the Common Stock as quoted on Nasdaq National Market for the day prior to
the date of issuance or for the first date prior to the date of issuance for
which shares of Common Stock are quoted, if not quoted on the day prior to the
date of issuance. Any fractional share of Common Stock derived from such
calculation is paid in cash.
3
<PAGE> 7
The aggregate fair market value of the shares of Common Stock issued to
any eligible director in a given year cannot exceed 100% of such eligible
director's Fees. Fees may not be increased more often than annually. During
Fiscal 1997, 5,466 shares of Common Stock were issued under the Retainer Plan.
Several important functions of the Board may be performed by committees
that are comprised of members of the Board. The Company's Bylaws authorize the
formation of these committees and grant the Board the authority to prescribe the
functions of each committee and the standards for membership of each committee.
In addition, the Board appoints the members of each committee. The Board has
three standing committees: the Audit Committee, the Compensation Committee, and
the Executive Committee.
The Audit Committee was established to: (i) annually recommend a firm
of independent public accountants to the Board to act as auditors of the
Company; (ii) review the scope of the annual audit with the auditors in advance
of the audit; (iii) generally review the results of the audit and the adequacy
of the Company's accounting, financial and operating controls; (iv) review the
Company's accounting and reporting principles, policies and practices; and (v)
perform such other duties as may be delegated to it by the Board. The current
members of the Audit Committee are Messrs. Raymond Elliott, Kenneth D. McClain
and Walter J. Kirchberger. The Audit Committee held two meetings during Fiscal
1997.
The Compensation Committee was established to: (i) review the
compensation (including salaries, bonuses and stock options) of the Company's
officers; and (ii) perform such other duties as may be delegated to it by the
Board. The current members of the Compensation Committee are Messrs. Raymond
Elliott and Walter J. Kirchberger. The Compensation Committee held one meeting
during Fiscal 1997. See "Report of the Compensation Committee on Executive
Compensation".
The Executive Committee was established to manage generally the
day-to-day business and affairs of the Company between regular Board meetings.
In no event may the Executive Committee, without the prior approval of the Board
acting as a whole: (i) amend the Company's Articles of Incorporation; (ii) amend
the Company's Bylaws; (iii) adopt an agreement of merger or consolidation; (iv)
recommend to the shareholders the sale, lease or exchange of all or
substantially all of the Company's property and assets; (v) recommend to the
shareholders a dissolution of the Company or a revocation of a dissolution; (vi)
fill vacancies on the Board; (vii) fix compensation of the directors for serving
on the Board or on a committee of the Board; (viii) declare dividends or
authorize the issuance of the Company's stock; or (ix) approve or take any
action with respect to any related party transaction involving the Company. All
actions taken by the Executive Committee must be promptly reported to the Board
as a whole and are subject to ratification, revision and alteration by the
Board, except that no rights of third persons created in reliance on authorized
acts of the Executive Committee can be affected by any such revision or
alteration. The current members of the Executive Committee are
4
<PAGE> 8
Messrs. Kenneth D. McClain and Robert W. McClain. The Executive Committee did
not hold any formal meetings during Fiscal 1997.
The Board has adopted a policy requiring review of related party
transactions by disinterested directors on a transaction by transaction basis.
The Board does not have a standing committee responsible for nominating
individuals to become directors.
MANAGEMENT AND COMPENSATION
EXECUTIVE OFFICERS
The persons listed below are the current executive officers of the
Company. Each is annually appointed by, and serves at the pleasure of, the
Board.
APPROXIMATE
DATE
SERVICE
NAME AGE OFFICE BEGAN
---- --- ------ -----
Kenneth D. McClain(1) 56 Chairman of the Board, Chief 03/68
Executive Officer and President
Robert W. McClain(1) 61 Senior Vice President 03/68
Carl Jaworski 54 Secretary and Assistant Treasurer 10/72
Mark Mikelait 37 Treasurer and Assistant Secretary 5/97
Other than Mark Mikelait, each of the executive officers has been
continuously employed by the Company for more than five (5) years serving in the
capacities and since the date reflected above. Mr. Mikelait, a CPA, joined the
Company in September 1994. From November 1985 until he joined the Company, he
was employed as a senior manager by Rehmann Robson, the Company's independent
auditors.
To the best of the Company's knowledge, there are no material
proceedings to which any officer is a party, or has a material interest, adverse
to the Company. To the best of the Company's knowledge, there have been no
events under any bankruptcy act, no criminal proceedings and no judgments or
injunctions that are material to the evaluation of the ability or integrity of
any executive officer during the past five years.
- --------------
(1) Kenneth D. McClain and Robert W. McClain are brothers.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following tables set forth all cash compensation paid to the Chief
Executive Officer of the Company and the only other executive officers whose
total annual salary and bonus from the Company exceeded $100,000 during Fiscal
1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term
Compensation
- --------------------------------------------------------------------------------
Name and Fiscal Salary Options/
Principal Position Year Amount($) SARs(#)
------------------ ---- --------- -------
<S> <C> <C> <C>
Kenneth D. McClain, 1997 $226,885 ---
President/ CEO 1996 275,000 ---
1995 219,675 13,333
Robert W. McClain, 1997 $183,335 ---
Senior Vice President 1996 246,832 ---
1995 216,582 6,666
Carl Jaworski, Secretary 1997 $107,207 ---
1996 --- ---
1995 --- ---
</TABLE>
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
<TABLE>
<CAPTION>
Value of Unexercised
No. of Unexercised Options/SARs at In-The-Money Options/SARs at
Shares Fiscal Year-End Fiscal Year-End(2)
Acquired ---------------------------------- ----------------------------
on Exercise Value Not Not
in 1997 Realized Exercisable Exercisable(1) Exercisable Exercisable
----------- -------- ---------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth D. McClain -0- -0- 26,975 8,879 $ -0- $ -0-
Robert W. McClain -0- -0- 22,824 4,444 $ -0- $ -0-
</TABLE>
(1) Stock options granted November 16, 1995 pursuant to the Company's 1989
Incentive Stock Plan (the "Incentive Plan"). Options must be exercised
by November 15, 2000. Exercise price is $7.31 per share.
(2) Value based on the average of the September 30, 1997 closing bid high
and low price which was $4.63 per share.
6
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The executive compensation program is administered by the Compensation
Committee of the Board (the "Committee") which is comprised of independent
directors, Messrs. Raymond Elliott and Walter J. Kirchberger. The program
supports the Company's commitment to providing superior shareholder value. It is
designed to attract and retain high-quality executives, to encourage them to
make career commitments to the Company, and to accomplish the Company's short
and long term objectives. The Committee attempts to structure a compensation
program for the Company that will reward its top executives with bonuses and
stock and option awards upon attainment of specified goals and objectives while
striving to maintain salaries at reasonably competitive levels. The Committee
reviews the compensation (including salaries, bonuses and stock options) of the
Company's key executive officers and performs such other duties as may be
delegated to it by the Board. The Committee held one formal meeting during
Fiscal 1997.
In reviewing the compensation to be paid to the Company's executive
officers during Fiscal 1997, the Committee sought to ensure that executive
officers were rewarded for long-term strategic management, for increasing the
Company's value for its shareholders, and for achieving internal goals
established by the Board.
The key components of executive officer compensation are salary,
bonuses and stock awards. Salary is generally based on factors such as an
individual officer's level of responsibility, prior years' compensation,
comparison to compensation of other officers in the Company, and compensation
provided at competitive companies and companies of similar size. Bonuses and
stock awards are intended to reward exceptional performances. Stock awards are
also intended to increase an officer's interest in the Company's long-term
success as measured by the market and book value of the Common Stock. Stock
awards may be granted to officers and directors of the Company and its
subsidiaries and to certain employees who have managerial or supervisory
responsibilities under the Incentive Plan. Stock awards may be stock options,
stock appreciation rights or restricted share rights. Twelve key employees,
including two executive officers, received stock options under the Incentive
Plan for their performance during Fiscal 1997.
The Committee generally reviews the Company's financial and operating
performance for the preceding fiscal year when audited financial statements for
such year become available, usually in the first or second quarter of the
following fiscal year. In line with this practice, the Committee reviewed the
Company's financial results for the fiscal year ended September 30, 1996
("Fiscal 1996") and the first quarter of Fiscal 1997. The Committee observed
that the Company sales increased approximately 2.9% over Fiscal 1995, while
gross profit as a percentage of net sales declined approximately 1.4%, and net
income per share declined slightly from Fiscal 1995 to Fiscal 1996. After
reviewing the individual performance of the Chief Executive Officer, noting the
higher levels of compensation in the industry, and considering the Company's
disappointing performance
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<PAGE> 11
during Fiscal 1996, the Committee decided to maintain the Fiscal 1997 salary of
the Chief Executive Officer at $225,000 and not to grant him any new stock
options.
Raymond Elliott Walter Kirchberger
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
Messrs. Raymond Elliott and Walter J. Kirchberger are not currently,
and have never been, officers or employees of the Company or its subsidiaries.
Mr. Elliott is a principal officer of First of America Insurance Group which
provided insurance to the Company during Fiscal 1997. Sales from this entity to
the Company aggregated approximately $1.1 million during Fiscal 1997, for which
this entity received fees and commissions in the approximate amount of $120,000.
The Board believes that Mr. Elliott's ability to make fair compensation
decisions have not and will not be compromised by the Company's relationship
with First of America Insurance Group. None of the Company's executive officers
served as a director, executive officer or compensation committee member of
another entity which had an executive officer who served as a Committee member
or director of the Company during the last fiscal year.
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Common Stock against the
cumulative total return of the NASDAQ Market Index, a group of issuers used by
the Company for comparison purposes for Fiscal 1996(1) ("1996 Peer Group"), and
the published MG Industry Group 301 (Metals Fabrication), for the period of five
(5) fiscal years commencing October 1, 1992 and ending September 30, 1997. This
line graph assumes a $100 investment on October 1, 1992 with dividend
reinvestment.
For the past several years, the Company has compared its yearly
percentage change in shareholder return against issuers with similar market
capitalizations because it did not believe a published industry or
line-of-business index existed and because financial information on the
Company's competitors is not publicly available. This has resulted in changing
peer groups each year since their market capitalizations and those of the
Company changed each year, making comparisons difficult. In order to avoid these
yearly changes, the Company this year decided to use a published industry group
even though it may not be a perfect match.
- ----------------
(1) Issuers in this group include Crown Andersen, Inc., Environmental Power
Corp., Nortech Systems, Inc., Team, Inc., and Universal Manufacturing Company.
8
<PAGE> 12
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MCCLAIN INDUSTRIES, INC., NASDAQ MARKET INDEX,
INDUSTRY INDEX AND PEER GROUP INDEX
[GRAPH]
FISCAL YEAR
<TABLE>
<CAPTION>
COMPANY 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
MCCLAIN INDUSTRIES 100.00 189.47 231.58 192.98 161.40 138.60
NASDAQ MARKET 100.00 130.05 137.62 167.10 195.08 265.16
INDUSTRY INDEX 100.00 136.06 140.33 162.07 191.94 276.66
1996 PEER GROUP 100.00 67.72 59.18 65.38 70.13 100.19
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 2, 1998, certain
information regarding the beneficial ownership of Common Stock, of: (i) each
person known to the Company to be the beneficial owner of more than five percent
(5%) of the Common Stock; (ii) each director of the Company; (iii) each
executive officer listed in the Summary Compensation Table; and (iv) all
executive officers and directors of the Company as a group, based upon
information available to the Company.
9
<PAGE> 13
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
NAME AND ADDRESS BENEFICIAL OUTSTANDING
OF BENEFICIAL OWNER OWNERSHIP(1) SHARES(2)
------------------- ------------ ---------
<S> <C> <C>
Kenneth D. McClain 1,466,841(3) 30.73%
6200 Elmridge Road
Sterling Heights, MI 48310
Robert W. McClain 1,131,246(4) 23.74%
6200 Elmridge Road
Sterling Heights, MI 48310
June McClain 337,178 7.12%
68333 DeQuindre
Oakland, MI 48368
Robert J. Gordon, Trustee(5) 790,243 16.68%
One Woodward Ave., Ste. 2400
Detroit, MI 48226
Raymond Elliott 14,525 0.31%
290 Town Center
P.O. Box 890
Troy, Michigan 48084
Walter Kirchberger 4,241 0.09%
2301 West Big Beaver Rd., Suite 800
Troy, Michigan 48084
Carl Jaworski 114,493 2.42%
6200 Elmridge Road
Sterling Heights, MI 48310
All current executive officers and 2,753,679(6) 57.15%
directors as a group (6 persons)
</TABLE>
(1) For purposes of this table, a person is deemed to have "beneficial
ownership" of any shares that such person has a right to acquire within
60 days.
(2) Based on 4,737,963 shares of Common Stock issued and outstanding as of
March 2, 1998. In addition, for purposes of computing the percentage of
outstanding shares held by each person or group of persons named above,
any security that such person or persons has or have the right to
acquire within 60 days is also deemed to be outstanding, but is not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.
(3) Includes 2,430 shares of Common Stock owned by Kenneth D. McClain's
wife. Mr. McClain disclaims beneficial ownership of these shares.
(4) Includes 337,178 shares of Common Stock owned by Robert W. McClain's
wife. Mr. McClain disclaims beneficial ownership of these shares.
(5) These shares are held in 16 trusts of which Mr. Gordon is the trustee.
The beneficiaries of these trusts are the children, grandchildren and
other relatives of Messrs. Kenneth D. McClain and Robert W.
McClain.
(6) Includes 80,465 shares which executive officers and directors have the
right to acquire pursuant to stock options exercisable within 60 days.
10
<PAGE> 14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1994, in connection with a contemplated public offering of
Common Stock, the Company agreed to value the shares of Common Stock issued in
exchange for these facilities at a price based on the market value of shares of
Common Stock as of August 2, 1993, the date these transactions were consummated.
This revision gave effect to the fact that the shares had increased in value by
$504,000 from March 29, 1993. Messrs. Kenneth and Robert McClain have agreed to
pay this amount to the Company, with interest at the prime rate established by
Standard Federal Bank.
The Company leases one of its facilities from the mother of Messrs.
Kenneth and Robert McClain. The Company believes that the terms and conditions
of this lease are comparable to those available from an unrelated party with
respect to similar facilities.
The Company had sales of approximately $560,000 in Fiscal 1997 to
McClain Leasing Corporation and McClain Rental Corporation, entities controlled
by certain officers and directors of the Company.
First of America Insurance Group, of which Raymond Elliott is an
officer, provided insurance to the Company during Fiscal 1997. Sales from these
entities to the Company aggregated approximately $1.1 million during Fiscal
1997, for which these entities received fees and commissions in the approximate
amount of $120,000. See "Compensation Committee Interlocks and Insider
Participation".
GENERAL INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The Board selected Rehmann Robson P.C. as the Company's independent
public accountants for Fiscal 1997. Representatives of Rehmann Robson P.C. are
expected to be present at the Meeting, and will have the opportunity to make a
statement if they desire to do so and to respond to appropriate questions. It is
expected that Rehmann Robson P.C. will also serve the Company in the same
capacity during the fiscal year ending September 30, 1998.
SHAREHOLDERS' PROPOSALS
Any and all shareholder proposals for inclusion in the proxy materials
for the Company's next annual meeting of shareholders must comply with the rules
and regulations promulgated under the Securities Exchange Act of 1934, as
amended, and must be received by the Company at its offices at 6200 Elmridge
Road, Sterling Heights, Michigan 48310, not later than December 3, 1998. Such
proposals should be addressed to the Company's Secretary.
11
<PAGE> 15
OTHER MATTERS
The Company's 1997 Annual Report has been mailed with this Proxy
Statement or delivered previously to the Company's shareholders.
Management knows of no matters which will be presented for
consideration at the Meeting other than those stated in the Notice of Annual
Meeting. However, if any other matters do properly come before the Meeting, the
person or persons named in the enclosed proxy will vote the proxy in accordance
with their best judgment regarding such matters, including the election of a
director or directors other than those named in this Proxy Statement should an
emergency or unexpected occurrence make the use of such discretionary authority
necessary, and also regarding matters incident to the conduct of the Meeting.
Shareholders are requested to date, sign and return the enclosed proxy
in the enclosed postage-paid envelope. So that the presence, in person or by
proxy, of the holders of a majority of the shares entitled to vote at the
Meeting may be assured, prompt execution and return of the proxy is requested.
By Order of the Board of Directors
CARL JAWORSKI
Secretary
Dated: April 3, 1998
12
<PAGE> 16
REVOCABLE PROXY
MCCLAIN INDUSTRIES, INC.
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 1998
The giving of this Proxy does not affect the right of the undersigned
shareholder to vote in person should the undersigned shareholder attend the
Annual Meeting. This Proxy may be revoked at any time before it is voted.
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES LISTED.
With- For All
For held Except
1. ELECTION OF DIRECTORS [ ] [ ] [ ]
The nominees are:
KENNETH D. MCCLAIN ROBERT W. MCCLAIN
WALTER J. KIRCHBERGER RAYMOND ELLIOTT
Instructions: To vote for all of the nominees, put an X in the box marked
"For". To withhold your vote for all of the nominees, put an X in the box
marked "Withheld". To vote for some but not all of the nominees, put an X in
the box marked "For All Except" and list on the line below only those nominees
for whom your vote is withheld.
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2. OTHER BUSINESS
The appointed proxies are authorized to vote upon all matters incidental to the
conduct of the Annual Meeting and such other business as may properly come
before the Annual Meeting in accordance with their best judgment.
-------------------------
Date
Please sign exactly as your name appears on this card.
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Shareholder sign above Co-holder (if any) sign above
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY IN THE
ENCLOSED ENVELOPE.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, personal representative, trustee or in some other
representative capacity, please sign name and give full title. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
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DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
MCCLAIN INDUSTRIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The shareholder appoints KENNETH D. McCLAIN, RAYMOND ELLIOTT and WALTER J.
KIRCHBERGER, or any one of them, as attorneys and proxies of the shareholder,
with full power of substitution, to vote on behalf of the shareholder and in
his or her name and stead, all shares of the common stock of McClain
Industries, Inc. which the shareholder would be entitled to vote if personally
present at the Company's Annual Meeting of Shareholders to be held at the
Sterling Inn, Concord Room, 34911 Van Dyke Road, Sterling Heights, Michigan, on
Friday, May 8, 1998, and at any adjournments.
The shareholder acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement dated April 3, 1998.
