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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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MCCLAIN
INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 7, 1999
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MCCLAIN INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 7, 1999
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 7, 1999, 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;
(2) To approve the McClain Industries, Inc. 1999 Incentive Stock
Plan;
(3) To approve the McClain Industries, Inc. 1999 Retainer Stock
Plan for Non-Employee Directors; and
(4) 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 19, 1999, 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 9, 1999
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.
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 7, 1999
-------------------------
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: (a) for all nominees
for the Board; (b) in favor of approval of the McClain Industries, Inc. 1999
Incentive Stock Plan (the "1999 Plan"); and (c) in favor of approval of the
McClain Industries, Inc. 1999 Retainer Stock Plan for Non-Employee Directors
(the "1999 Retainer Plan"). 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 9, 1999.
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 7, 1999, 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 19, 1999 are entitled to notice of, and to vote at, the
Meeting or at any adjournment. As of that date, the Company had 4,676,431 shares
of Common Stock issued, outstanding and entitled to vote held by 223 holders of
record. Each outstanding share of Common Stock entitles the record holder to one
vote. Shares cannot be voted 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."
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MATTERS TO COME BEFORE THE MEETING
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ELECTION OF DIRECTORS
The first matter expected to be considered at the Annual meeting will
be the 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 will 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 or her 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 57, is Chairman of the Board, Chief Executive
Officer 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 62, 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.
RAYMOND ELLIOTT, age 64, has been a director of the Company since
August 1990. He is currently President of Hartland Insurance Group, Inc. From
January 1, 1997 to October 2, 1998, he was Vice President of First of America
Insurance Group (now National City). 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 64, 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.
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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 five times during the Company's fiscal year ended
September 30, 1998 ("Fiscal 1998"). All of the directors on the Board attended
each meeting during Fiscal 1998.
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 $3,500
($4,000 beginning January 1, 1999), 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 "1989 Retainer Plan") or the 1999 Retainer Plan, if approved by
the shareholders. To participate in the 1989 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.
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 1998, 6,698 shares of Common Stock were issued under the 1989 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 one meeting during Fiscal
1998.
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
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J. Kirchberger. The Compensation Committee held one meeting during Fiscal 1998.
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 Messrs. Kenneth
D. McClain and Robert W. McClain. The Executive Committee did not hold any
formal meetings during Fiscal 1998.
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.
PROPOSAL TO APPROVE THE MCCLAIN INDUSTRIES, INC. 1999 INCENTIVE STOCK PLAN
The second matter to be considered at the Annual Meeting will be the
proposal to approve the 1999 Plan to provide awards to officers, directors and
other key personnel of the Company, and its subsidiaries, consisting of options
of the Company's stock, restricted share awards, and appreciation rights in
respect of the Common Stock.
The following is intended to summarize and highlight certain important
provisions of the 1999 Plan, and is qualified in its entirety by the more
detailed information contained in the 1999 Plan itself. Shareholders are urged
to carefully review the 1999 Plan, a copy of which will be provided on written
request.
GENERAL
The 1999 Plan was approved by the Board on February 8, 1999 and will
become effective on approval of the holders of a majority of the shares of the
Company's Common Stock. The 1999 Plan will remain in effect until all shares
authorized under the terms of the 1999 Plan have been issued, unless terminated
or abandoned by action of the Board; provided, however, that no Incentive Stock
Option may be granted after February 7, 2009. The 1999 Plan was adopted to
provide certain employees, directors, consultants and advisors of the Company
with an additional incentive to promote the Company's financial success and to
provide an incentive which the Company may use to induce able persons to enter
into or remain in the employment of the Company or a subsidiary.
There are three types of awards authorized by the 1999 Plan: stock
options (including Incentive Stock Options, Performance Based Options, and
Non-Qualified Options); Stock Appreciation Rights; and Restricted
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Share Awards. The stock options or rights granted to any participant, and to all
participants in the aggregate, which may be issued under the 1999 Plan are
limited to one million (1,000,000) shares of Common Stock. The shares may be
newly issued by the Company or shares reacquired by the Company. If any award
granted under the 1999 Plan is surrendered or forfeited to the Company,
terminates or expires before having been fully exercised, or an award of stock
appreciation rights is exercised for cash, then all shares formerly subject to
that award as to which such award has not been exercised will be available for
any award subsequently granted in accordance with the 1999 Plan. Shares of
Common Stock subject to options, which have been surrendered in connection with
the exercise of tandem stock appreciation rights will be charged against the
number of shares of Common Stock available for the grant of awards. The number
of shares authorized is subject to adjustment to reflect certain
recapitalizations, reorganizations, mergers or consolidations.
The 1999 Plan is intended to replace the existing 1989 Incentive Stock
Plan (the "1989 Plan"). Effective on shareholder approval of the 1999 Plan, the
Board will terminate the 1989 Plan so that no further grants will be made under
it. The 1999 Plan and any awards granted under it will automatically terminate
and expire on February 7, 2000, unless the plan is approved by the Company's
shareholders. Under the 1989 Plan, thirty (30) employees of the Company received
awards, pursuant to which 681,319 shares of Common Stock have been issued. Of
the awards issued under the 1989 Plan, 31,109 expired, terminated or otherwise
have been forfeited.
ADMINISTRATION
The 1999 Plan is to be administered by the Board, or to the extent
determined by the Board, the Compensation Committee (the "Administrator")
provided it consists of not fewer than two non-employee members of the Board who
meet the "disinterested person" requirements of Rule 16b-3(c)(2)(i) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Additionally,
with respect to Performance Based Options, all members of the Compensation
Committee also must be "outside directors" as defined in Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
Each award may be granted on terms established by the Administrator,
and in compliance with the 1999 Plan, and will be set forth in a written award
agreement. Notwithstanding the terms for exercise of an award under the terms of
the award agreement, the Administrator has the right to permit the exercise of
any award prior to the time such award would otherwise be exercisable, or to
permit the exercise of any award more than 90 days after termination of the
participant's employment or after its expiration date. Also, the Administrator
may modify an award, other than an award to an Officer, after the date it is
granted by express written agreement between the participant and the Company
provided that such modification is not inconsistent with the terms of the 1999
Plan.
ELIGIBILITY
The Administrator may grant awards under the 1999 Plan to employees,
directors, consultants, and advisors of the Company or its subsidiaries, as
determined and selected from time to time by the Administrator in its sole and
absolute discretion. The Administrator will determine for each grant of an award
the type or amount of the respective award. It is currently estimated that forty
(40) people will be eligible to receive awards under the 1999 Plan.
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STOCK OPTION AWARDS
Under the 1999 Plan, the Administrator may grant to such participants
as the Administrator may select, stock options entitling the participant to
purchase shares of Common Stock from the Company in such quantity, at such
price, and on such terms and subject to such vesting periods, termination dates
and other conditions not inconsistent with the terms of the 1999 Plan, as may
be established by the Administrator on or prior to the date such option is
granted. The exercise price for all options, other than for Incentive Stock
Options ("ISOs"), must not be less than 50% the fair market value of the Common
Stock on the date of grant.
No person may be granted an ISO, as defined under Section 422 of the
Code, which would result in stock with an aggregate fair market value as
measured on the date of the grant of more than $100,000 first becoming
exercisable in any one calendar year, or which would entitle such participant to
purchase a number of shares greater than the maximum number permitted by Section
422 of the Code as in effect on the date of grant. The purchase price of an ISO
must be equal to or greater than the fair market value of the Common Stock on
the date of grant. The purchase price of a Performance Based Option ("PBO"), as
designated by the Administrator on the date the option is granted, must be equal
to or greater than the fair market value of the Common Stock on the date of
grant, and the PBO must contain such other terms and conditions as are deemed
necessary to prevent limitation of the Company's compensation deduction in
connection with the exercise of the option. See "Federal Income Tax
Consequences" 1999 Plan below.
In order to exercise an option a participant must pay the purchase
price in full in cash at the time of exercise. However, the Administrator may
(but is not obligated to) permit payment to be made by delivery to the Company
of either (i) shares of Common Stock (including shares issuable to the
participant pursuant to the exercise of the option, so long as Officers electing
to pay with such shares do so within the "window period" required by Rule
16b-3(e) under the Exchange Act); (ii) any combination of cash and shares of
Common Stock; or (iii) such other consideration as the Administrator deems
appropriate and in compliance with applicable law.
STOCK APPRECIATION RIGHTS
The Administrator may grant Stock Appreciation Rights ("SAR")
permitting the participants to receive payment from the Company of an amount
equal to the difference between the exercise price for the right established by
the Administrator and the per share market value of the Common Stock on the date
the right is exercised by the participant (the "Incremental Value"). Any payment
of Incremental Value due from the Company by reason of a participant's exercise
of a SAR may be paid, as determined by the Administrator, all in cash, all in
Common Stock, or any Combination of cash and Common Stock. Payment of
Incremental Value may be made to Officers in cash only if the SAR is exercised
in accordance with Rule 16b-3(e) under the Exchange Act. A SAR may be granted in
tandem with the grant of an option at an exercise price not less than the
purchase price of the related option. In such event, any exercise of the
related option would extinguish the SAR, and any exercise of the SAR would
extinguish the related option. In no event may a SAR be exercised prior to six
months from the grant date.
Unless extended by the Administrator, or as otherwise provided in the
award agreement, the right to exercise any option or SAR granted under the 1999
Plan terminates at whichever of the following times first occurs: (i) 90 days
after the participant's termination of employment for any reason other than
death or "for cause" (as defined in the 1999 Plan); (ii) immediately upon
termination of the participant's employment for cause; (iii) in the case of a
tandem SAR, upon the expiration date of the related option; (iv) in the case of
an ISO, ten years from the date of grant; or (v) as of the expiration date of
the award as provided in the award agreement. If a participant dies while in the
Company's service, the right to exercise all unexpired awards is
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accelerated and the participant's beneficiary may exercise the award with
respect to any or all of the shares subject to the award until one year after
the participant's death.
RESTRICTED STOCK AWARDS
The Administrator may grant to any participant an award of restricted
share rights entitling the holder to receive shares of Common Stock in such
quantity, and on such terms, conditions and restrictions (whether based on
performance standards, periods of service or otherwise) as the Administrator
determines on or prior to the date of grant ("Restricted Share Rights"). The
holder of Restricted Share Rights is not entitled to receive Common Stock free
of all restrictions on transfer prior to the expiration of two years from the
date of grant and each award agreement must provide that the participant remain
employed by the Company or a Subsidiary for that two year period (subject to the
Company's or Subsidiaries' right to terminate such employment). Restricted Share
Rights will terminate if the participant fails to continue in the service of the
Company until expiration of two years from the grant date, unless the award is
modified or this requirement waived by the Administrator.
NEW PLAN BENEFITS
The grant of awards under the 1999 Plan is subject to the discretion of
the Administrator. The Administrator has not granted any awards under the 1999
Plan since the Board approved the plan on February 8, 1999. Accordingly, the
Company cannot currently determine the number of shares of Common Stock that may
be subject to awards under the 1999 Plan in the future.
AMENDMENT
The Board has the complete power and authority to amend or terminate
the 1999 Plan; provided, however, that the Board may not amend the 1999 Plan
without shareholder approval if: (i) shareholder approval is required under Rule
16b-3 of the Exchange Act or the Code, unless compliance, if discretionary, is
no longer desired; or (ii) approval by the requisite affirmative notes of the
stockholders of the Company would cause, result or give rise to "applicable
employee renumeration" as defined in Section 162(m) of the Code with respect to
any PBO.
FEDERAL INCOME TAX CONSEQUENCES
The following summary of certain Federal income tax consequences with
respect to the awards is for general information only and is based on tax laws
in effect on the date of the Proxy Statement. The 1999 Plan is not qualified
under Code Section 401(a) and is not subject to the Employee Retirement Income
Security Act of 1974.
Incentive Stock Options
The grant of an ISO will have no income tax consequences for either the
Company or the participant. Subject to the discussion below, on exercise of an
ISO, the excess of the fair market value of the Common Stock purchased over the
exercise price will be an item of tax preference of the participant for purposes
of the application of the alternative minimum tax. If payment of the purchase
price of an ISO consists of shares of Common Stock, the participant's basis for
an equal number of shares of the Common Stock received will be equal to his
basis for the shares exchanged. Any additional shares received will have a basis
of zero.
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If the Common Stock acquired pursuant to an ISO is sold, exchanged
(except in certain tax-free exchanges) or otherwise disposed of (even if
pursuant to the exercise of another ISO) within either one year of the exercise
of such ISO or two years of the granting of such ISO, the participant will
recognize ordinary income at that time and the Company will be entitled to a
deduction at that time in an amount equal to the excess of the fair market value
of such Common Stock at the time of exercise over the purchase price. The
participant will also recognize capital gain or loss to the extent the amount
realized from a sale or exchange differs from the fair market value of such
Common Stock at the time of exercise.
If the Common Stock acquired pursuant to an ISO is sold or exchanged
after one year after the exercise of such ISO and two years after the granting
of such ISO, the participant will recognize long-term capital gain or loss
measured by the difference between the amount realized on such sale or exchange
and the exercise price, and the Company will not be entitled to any deduction.
Nonqualified Options and Performance Based Options
The grant of a nonqualified purchase option ("NQO") or a PBO will have
no income tax consequences for either the Company or the participant (unless the
NQO or PBO is freely transferable and has a readily ascertainable market value).
Upon the exercise of an NQO or PBO by a participant, the participant will
recognize ordinary income and the Company will be entitled to a deduction in an
amount equal to the excess of the fair market value of the Common Stock
purchased over the purchase price. Such ordinary income is subject to
withholding of tax by the Company. The basis of the Common Stock received upon
exercise will equal the sum of the exercise price plus the amount included in
income by the participant. If payment of the purchase price of an NQO or PBO is
made by delivering shares of Common Stock, no additional gain or loss will be
recognized by the participant by reason of that exchange, and the participant's
basis for an equal number of shares of the Common Stock received will be equal
to his basis for the shares exchanged. Any additional shares received will have
a basis equal to the amount of ordinary income includable with respect to such
purchase. The subsequent sale or exchange of the Common Stock generally will
give rise to capital gain or loss.
Stock Appreciation Rights
A grant of SARs will have no income tax consequences for either the
Company or the participant. On exercise of a SAR by a participant who receives
cash, the participant will recognize ordinary income and the Company will be
entitled to a deduction in an amount equal to the amount of cash received. On
exercise of a SAR by a participant who receives Common Stock, the participant
will recognize ordinary income and the Company will be entitled to a deduction
in an amount equal to the fair market value of such Common Stock received. The
ordinary income described in the two preceding sentences is subject to
withholding of tax by the Company. The subsequent sale or exchange of the Common
Stock acquired pursuant to the exercise of a SAR generally will give rise to
capital gain or loss.
Restricted Stock Awards
In the absence of an election by a participant, as explained below, the
grant of shares pursuant to an award will not result in taxable income to the
participant or a deduction to the Company in the year of the grant. The value of
the shares will be taxable to a participant in the year in which the
restrictions lapse. Alternatively, (under Code Section 83(b)) a participant may
elect to treat as income in the year of grant the fair market value of the
shares on the date of grant, provided the participant makes the election within
30 days after the date of such grant. If such an election is made, the
participant will not be allowed to deduct at a later date the amount included as
taxable income if he or she forfeits the shares to the Company. The amount of
ordinary income recognized by a participant is deductible by the Company in the
year the income is recognized by the participant,
8
<PAGE> 12
provided such amount constitute reasonable compensation to the participant. In
the absence of a Code Section 83(b) election, prior to the lapse of
restrictions, distributions paid on the shares subject to such restrictions will
be taxable to the participant as additional compensation, and the Company will
be allowed a corresponding deduction. Where a Code Section 83(b) election has
been made, such distributions will be treated as dividend income to the
participant.
Limitation on Compensation Deductions
In general, the Company will be entitled to a compensation deduction
equal to the income recognized by the participant with respect to a NQO, PBO,
SAR or Restricted Stock Award at the time that the participant recognizes such
income, subject to a maximum deduction of $1,000,000 for compensation paid to
"covered employees." Generally, the Chief Executive Officer of the corporation
and its four highest compensated officers (excluding the Chief Executive
Officer) will be considered to be covered employees. However, this rule limiting
the deduction does not apply to performance-based compensation. In general,
compensation resulting from the exercise of a stock option is treated as
performance-based compensation if the option price was equal to or in excess of
the fair market value of stock subject to the option at the time of the grant of
the option and if certain other requirements are met. PBOs granted by the
Company are intended to meet these rules so that the compensation resulting from
exercising PBOs will be treated as performance-based compensation. In addition,
income resulting from the exercise of NQOs and SARs where the exercise price is
equal to or in excess of the fair market value of the stock subject to the
option at the time of the grant of the option may also be treated as
performance-based compensation. Income resulting from Restricted Share Rights
will probably not be treated as performance-based compensation and so the
deduction limitation described above may become applicable.
WITHHOLDING OF TAX
The Company is entitled to withhold, or secure payment from the
participant in lieu of withholding, the amount of any tax required by law to be
withheld or paid by the Company with respect to any amount payable or shares
issuable under a participant's award. At the election of the participant, with
respect to the exercise of NQO, PBO or an SAR where shares of Common Stock are
to be delivered to the participant, the Company may also withhold shares of
Common Stock sufficient to meet those requirements. Unless otherwise provided by
the Administrator, with respect to Officers, the Company will withhold shares
sufficient to meet withholding requirements.
APPROVAL OF THE 1999 PLAN REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS
OF A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT, OR REPRESENTED, AND
ENTITLED TO VOTE AT THE ANNUAL MEETING. ABSTENTIONS ARE TREATED AS SHARES
PRESENT, OR REPRESENTED AT THE ANNUAL MEETING, AND HAVE THE PRACTICAL EFFECT OF
A "NO" VOTE. BROKER NON-VOTES ARE CONSIDERED TO BE SHARES NOT PRESENT AT THE
ANNUAL MEETING FOR THIS PURPOSE, AND ARE NEITHER COUNTED TOWARDS THE BASE NUMBER
(A MAJORITY OF WHICH IS REQUIRED FOR PASSAGE) NOR AS A VOTE EITHER AFFIRMATIVELY
OR NEGATIVELY. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE MCCLAIN INDUSTRIES, INC. 1999 INCENTIVE STOCK PLAN.
PROPOSAL TO APPROVE THE MCCLAIN INDUSTRIES, INC. 1999 RETAINER STOCK PLAN FOR
NON-EMPLOYEE DIRECTORS
The third matter to be considered at the Annual Meeting will be the
approval of the 1999 Retainer Plan to provide for the issuance of the Company's
Common Stock to non-employee directors as full or partial payment of their
retainer fee paid for serving as a director of the Company or any of its
subsidiaries and fees paid to them for attending
9
<PAGE> 13
Board and committee meetings (the "Fees"). The following discussion is intended
to summarize and highlight certain important provisions of the 1999 Retainer
Plan and is qualified in its entirety by the more detailed information contained
in the 1999 Retainer Plan itself. Shareholders are urged to carefully review the
1999 Retainer Plan, a copy of which will be provided upon written request.
GENERAL
On February 8, 1999, the Board of Directors adopted the 1999 Retainer
Plan subject to approval of the holders of the majority of shares of the
Company's Common Stock. The Retainer Plan was adopted to permit non-employee
directors the right to receive payment of the Fees in Common Stock rather than
cash, thereby increasing non-employee directors' proprietary interest in the
Company. The 1999 Retainer Plan will automatically terminate and expire on
December 31, 1999, unless it is approved by the Company's shareholders by
December 30, 1999. The total number of shares of Common Stock issuable under the
1999 Retainer Plan may not exceed 100,000.
The 1999 Retainer Plan is intended to replace the existing 1989
Retainer Plan. Effective on shareholder approval of the 1999 Retainer Plan, the
Board will terminate the 1989 Retainer Plan. Through December 31, 1998, 22,104
shares have been issued out of the 100,000 shares of Common Stock reserved for
issuance under the 1989 Retainer Plan. Additional shares of Common Stock will be
issued under the 1989 Retainer Plan for compensation earned during fiscal
quarter ending March 31, 1999.
ADMINISTRATION
The 1999 Retainer Plan will be administered by either the entire Board,
or at the discretion of the Board, by a committee consisting of at least two
members of the Board. The Administrator of the 1999 Retainer Plan has the power
to devise and implement rules and provide for the operation of the 1999 Retainer
Plan, and to interpret and otherwise implement the 1999 Retainer Plan in all
respects.
The 1999 Retainer Plan may be amended by the Board at any time without
the approval of the Company's shareholders or any other person, committee or
entity of any kind, except as required under any applicable law, rule or
regulation. Also, the Board has the power to suspend or terminate the 1999
Retainer Plan at any time, and during such times no shares may be issued.
ELIGIBILITY
Under the 1999 Retainer Plan, eligible directors may elect to receive
payment of all or any portion of the Fees if the election is made no later than
thirty (30) days prior to a payment date for Fees. Elections under the 1999
Retainer Plan continue in force until rescinded or modified.
SHARES ISSUABLE
The 1999 Retainer Plan authorizes the issuance of up to 100,000 shares
of Common Stock. 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. Currently, the Board has authorized that each
non-employee director is to receive a quarterly retainer fee of $4,000, 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. Under the 1999 Retainer Plan, Fees may not be increased more often
than annually. The number of shares of Common Stock to be issued to an eligible
director will be determined by dividing the dollar amount
10
<PAGE> 14
of the Fees such director elected 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.
APPROVAL OF THE MCCLAIN INDUSTRIES, INC. 1999 RETAINER STOCK PLAN FOR
NON-EMPLOYEE DIRECTORS REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF A
MAJORITY OF THE COMMON STOCK PRESENT IN PERSON OR BY PROXY AT THE ANNUAL
MEETING. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE
THE MCCLAIN INDUSTRIES, INC. 1999 RETAINER STOCK PLAN FOR NON-EMPLOYEE
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.
<TABLE>
<CAPTION>
APPROXIMATE DATE
NAME AGE OFFICE SERVICE BEGAN
---- --- ------ -------------
<S> <C> <C> <C>
Kenneth D. McClain(1) 57 Chairman of the Board, Chief 3/68
Executive Officer and President
Robert W. McClain(1) 62 Senior Vice President, Assistant 3/68
Secretary
Carl Jaworski 55 Secretary 10/72
Mark Mikelait 37 Treasurer 5/97
</TABLE>
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.
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 $100,000 during Fiscal
1998.
- -------------------------------
(1)Kenneth D. McClain and Robert W. McClaim are brothers.
11
<PAGE> 15
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
================================================================================
Annual Compensation Long Term Compensation
- --------------------------------------------------------------------------------
Name and Fiscal Salary Options/
Principal Position Year Amount($) SARs(#)
- ------------------ ---- --------- -------
<S> <C> <C> <C>
Kenneth D. McClain, 1998 $ 263,031 ---
President/CEO 1997 226,885 ---
1996 275,000 ---
Robert W. McClain, 1998 $ 125,004 ---
Senior Vice President 1997 183,335 ---
1996 246,832 ---
Carl Jaworski, 1998 $ 104,631 5,000
Secretary 1997 $ 102,894 ---
1996 --- ---
Mark S. Mikelait, 1998 $ 101,250 10,000
Treasurer 1997 --- ---
1996 --- ---
================================================================================
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
==================================================================================================================================
Shares Value of Unexercised
Acquired on No. of Unexercised Options/SARs at In-The-Money Options/SARs at
Exercise Value Fiscal Year-End Fiscal Year-End(2)
in 1998 Realized
- ----------------------------------------------------------------------------------------------------------------------------------
Not Not
Exercisable Exercisable(1) Exercisable Exercisable
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth D. -0- -0- 35,864 -0- $0 $0
McClain
- ----------------------------------------------------------------------------------------------------------------------------------
Robert W. -0- -0- 27,268 -0- $0 $0
McClain
==================================================================================================================================
</TABLE>
(1) Stock options granted April 18, 1994 and November 16, 1995 pursuant to
the Company's 1989 Incentive Stock Plan. Options must be exercised by
April 17, 1999 and November 15, 2000. Exercise price is $6.56 and $7.31
per share.
(2) Value based on the average of the September 30, 1998 closing bid
high and low price which was $3.50 per share.
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
12
<PAGE> 16
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 1998
In reviewing the compensation to be paid to the Company's executive
officers during Fiscal 1998, 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 Stock Plan. Stock awards may be stock
options, stock appreciation rights or restricted share rights. Eleven (11) key
employees, including two executive officers, received stock options under the
Incentive Stock Plan for their performance during Fiscal 1998.
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 Fiscal 1998 and the first quarter of the fiscal
year ending September 30, 1999 ("Fiscal 1999"). The Committee observed that the
Company sales increased approximately 22.4% over Fiscal 1997; gross profit as a
percentage of net sales increased approximately 1.5% from 16.32% for Fiscal 1997
to 17.82% for Fiscal 1998; and net income per share increased to $.72 for Fiscal
1998 from a $(.36) loss for Fiscal 1997. After reviewing the individual
performance of the Chief Executive Officer, noting the higher levels of
compensation in the industry, and considering the Company's improved performance
during Fiscal 1998, the Committee decided to increase the Fiscal 1999 salary of
the Chief Executive Officer to $280,000, but 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 Hartland Insurance Group, Inc. Formerly,
Mr. Elliot was a principal officer of First of America Insurance Group which
provided insurance to the Company during Fiscal 1998. Sales from this entity to
the Company aggregated approximately $1.1 million during Fiscal 1998, for which
Mr. Elliott received fees and commissions in the approximate amount of $116,280.
The Board believes that Mr. Elliott's ability to make fair compensation
decisions was not 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.
13
<PAGE> 17
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, the NASDAQ Trucking and
Transportation Index, and the published MG Industry Group 301, renumbered to
Group 626 (Metals Fabrication), for the five (5) fiscal years beginning October
1, 1993 and ending September 30, 1998. This line graph assumes a $100 investment
on October 1, 1993 with dividend reinvestment.
Last year the Company compared its yearly percentage change in
shareholder return to a published industry group for metals fabrication. This
year, in addition to the metals fabrication index, the Company has decided to
compare its percentage change in shareholder return to a trucking and
transportation index. The Company believes a comparison to both of these indexes
presents a more accurate comparison given the diverse components of the
Company's business.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MCCLAIN INDUSTRIES, INC., NASDAQ MARKET INDEX,
NASDAQ TRUCKING & TRANSPORTATION INDEX, AND INDUSTRY INDEX
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
FISCAL YEAR
COMPANY 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
MCCLAIN INDUSTRIES 100.00 122.20 101.85 85.19 73.15 51.85
NASDAQ MARKET 100.00 105.82 128.48 150.00 203.88 211.88
INDUSTRY INDEX 100.00 103.14 119.12 141.07 203.34 149.66
NASDAQ TRUCKING & TRANSPORTATION INDEX 100.00 100.11 111.78 115.33 162.56 119.98
</TABLE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 2, 1999, 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
14
<PAGE> 18
the Summary Compensation Table; and (iv) all executive officers and directors of
the Company as a group, based upon information available to the Company.
<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 1,453,934(3) 31.14%
6200 Elmridge Road
Sterling Heights, MI 48310
Robert W. McClain 1,073,246(4) 22.99%
6200 Elmridge Road
Sterling Heights, MI 48310
June McClain 337,178 7.22%
6200 Elmridge Road
Sterling Heights, MI 48310
Robert J. Gordon, Trustee(5) 819,848 17.56%
One Woodward Ave., Ste. 2400
Detroit, MI 48226
Lisa McClain Pfeil 319,510(6) 6.84%
6200 Elmridge Road
Sterling Heights, MI 48310
Raymond Elliott 19,418 0.41%
290 Town Center
P.O. Box 890
Troy, Michigan 48084
Walter Kirchberger 6,686 0.14%
2301 West Big Beaver Rd., Suite 800
Troy, Michigan 48084
Carl Jaworski 116,158 2.49%
6200 Elmridge Road
Sterling Heights, MI 48310
Mark S. Mikelait 20,666 .44%
500 Sherman Street
Galion, OH 44833
2,690,109(7) 57.62%
All current executive officers and
directors as a group (9 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 4,668,911 shares of Common Stock issued and outstanding as of
March 2, 1999. 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.
15
<PAGE> 19
(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 17 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) Of the shares beneficially owned by Mrs. Pfeil, 314,134 are held of
record by irrevocable trusts for her benefit. Mrs. Pfeil is the
daughter of Kenneth D. McClain.
(7) Includes 85,464 shares which executive officers and directors have the
right to acquire pursuant to stock options exercisable within 60 days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 2, 1993, the Company consummated the purchase of three
facilities which it had been leasing from three different entities controlled by
certain officers and directors of the Company, including its main Sterling
Heights, Michigan facility, its Kalamazoo, Michigan facility and its Macon,
Georgia facility. In each instance, the Company paid the purchase price by
issuing shares of Common Stock and assuming existing mortgages on the
facilities. The purchase prices were determined by the Company's Board of
Directors on the basis of independent appraisals of the facilities. The stock
issued was valued at $5.40 per share, based on the market price for shares of
Common Stock as of March 29, 1993, the date that definitive purchase agreements
for the facilities were executed. These shares are restricted within the meaning
of Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), meaning that they cannot be resold unless registered under
the Securities Act, or in a transaction which is exempt from such registration.
The seller of each facility owned the facility for more than two years before
the sale.
In November 1994, in connection with a contemplated public offering of
its Common Stock and at the insistence of staff members of the Securities and
Exchange Commission, for purposes of the public offering, the Company agreed to
value the 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. In order to
consummate the offering, Messrs. Kenneth and Robert McClain consented to pay
this amount to the Company, with interest at Standard's prime rate, in five
equal principal installments with accrued interest, commencing September 30,
1995.
The Company originally maintained pursuant to Generally Accepted
Accounting Principles in effect at the time of the transaction, that the shares
should have been valued as of March 31, 1993, but acquiesced to the position of
the staff members of the securities offering. The accounting profession
subsequently issued pronouncements supporting the Company's original position.
Accordingly, the letter agreement was rescinded during Fiscal 1998.
The Company leases one of its facilities from the estate of 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 $590,000 in Fiscal 1998 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 was formerly
an officer, provided insurance to the Company during Fiscal 1998. Sales from
these entities to the Company aggregated to
16
<PAGE> 20
approximately $1.1 million during Fiscal 1998, for which Mr. Elliott received
fees and commissions in the approximate amount of $116,280. 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 1998. 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, 1999.
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, 1999. Such
proposals should be addressed to the Company's Secretary.
OTHER MATTERS
The Company's 1998 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 9, 1999
<PAGE> 21
<TABLE>
<S><C>
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE MCCLAIN INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 7, 1999
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. With- For All
For held Except
1. ELECTION OF DIRECTORS | | | | | |
This Proxy when properly executed will be voted in the manner directed herein by The nominees are:
the undersigned shareholder. IF NO DIRECTION IS MADE WITH RESPECT TO THE NOMINEES
OR A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE KENNETH D. MCCLAIN ROBERT W. MCCLAIN
NOMINEES LISTED AND FOR SUCH PROPOSAL. 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.
---------------------------------------------
For Against Abstain
2. Approval of McClain | | | | | |
Industries, Inc. 1999
Incentive Stock Plan.
3. Approval of McClain | | | | | |
Industries, Inc. 1999
Retainer Stock Plan for
Non-Employee Directors.
4. OTHER BUSINESS
The appointed proxies are authorized to vote
------------------ upon all matters incidental to the conduct of
| Date | the Annual Meeting and such other business as
| | may properly come before the Annual Meeting
Please sign exactly as your name appears on this card. | | in accordance with their best judgment.
- --------------------------------------------------------------------------
| |
| |
| | PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
| | PROMPTLY IN THE ENCLOSED ENVELOPE.
| |
| | When shares are held by joint tenants, both
|---- Shareholder sign above ------- Co-holder (if any) sign above ------- should sign. When signing as attorney, execu-
tor, 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.
- -----------------------------------------------------------------------------------------------------------------------------------
- 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, ROBERT W. 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 7, 1999, and at any adjournments. |
| |
| The shareholder acknowledges receipt of the Notice of Annual Meeting and Proxy Statement dated April 9, 1999. |
|-------------------------------------------------------------------------------------------------------------------------------|
</TABLE>
