SCHEDULE 14A INFORMATION
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the Securities Exchange Act of 1934
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/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12.
Modine Manufacturing Company
-----------------------------------------------
(Name of Registrant as Specified In Its Charter
Not Applicable
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(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
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applies:
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applies:
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computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
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<PAGE>
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<PAGE>
notice
of meeting
and proxy
statement
annual meeting
1997
of shareholders
M O D I N E
<PAGE>
M O D I N E
- ------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, JULY 16, 1997
TO THE SHAREHOLDERS:
The Annual Meeting of the Shareholders of Modine Manufacturing Company
will be held at the offices of the Company, 1500 DeKoven Avenue, Racine,
Wisconsin, on Wednesday, July 16, 1997, at 9:30 a.m. for the following
purposes:
1. To elect three directors to serve until the Annual
Meeting in 2000.
2. To transact any other business that may properly
come before the meeting or any adjournment thereof.
The transfer books of the Company will not be closed, but
only shareholders of record at the close of business on May 27,
1997, are entitled to notice of and to vote at this meeting.
In order that your stock may be represented at the meeting,
in case you are not personally present, PLEASE SIGN THE ENCLOSED
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
By order of the Board of Directors
W. E. PAVLICK, Secretary
June 6, 1997
YOUR VOTE IS IMPORTANT!
Please date, sign, and return
the enclosed Proxy immediately.
<PAGE>
PROXY STATEMENT
Annual Shareholders' Meeting of Modine Manufacturing Company--1997
- -------------------------------------------------------------------
GENERAL INFORMATION
The solicitation of the enclosed proxy is made by and on
behalf of the Board of Directors of Modine Manufacturing Company,
1500 DeKoven Avenue, Racine, Wisconsin 53403 (hereinafter called
the "Company") for use at the Annual Meeting of Shareholders of
the Company to be held on July 16, 1997, or at any adjournment
thereof.
A person giving the proxy has the power to revoke it at any
time prior to the exercise thereof by giving notice in writing to
the Secretary of the shareholders' meeting or by oral notice to
the presiding officer during the meeting. Unless revoked,
properly executed proxies will be voted in accordance with the
instructions of the shareholder. If no specific instructions are
given, the shares represented by the proxy will be voted FOR the
election of directors.
With regard to the election of directors, votes may be cast
in favor or withheld; votes that are withheld will be excluded
entirely from the vote and will have no effect.
In their discretion, the proxies are authorized to vote upon
such other business as may come before the meeting. Holders of
record at the close of business on May 27, 1997, are entitled to
one vote for each share of stock held. It is intended that these
proxy materials will be sent to shareholders on or about June 6,
1997. The total number of shares of Common Stock outstanding and
entitled to vote at the meeting is 29,784,295 shares; no
Preferred Stock is currently outstanding. The holders of Common
Stock of the Company do not have cumulative voting rights.
1. ELECTION OF DIRECTORS
The Board of Directors currently consists of nine members.
Each of these nominees has indicated his willingness to
serve if elected. While it is not anticipated that any of the
nominees will be unable to take office, if such is the case,
proxies will be voted in favor of such other person or persons as
the Board of Directors may propose to fill the three
directorships. In accordance with the Restated By-Laws, a
director shall hold office until the Annual Meeting for the year
in which his term expires and until his successor shall be
elected and qualify; subject, however, to prior death,
resignation, retirement, disqualification, or removal from
office. Vacancies may be filled by the remaining directors.
The nominees for the Board of Directors, the directors whose
terms will continue, their ages, other directorships, and their
tenure and expiration dates of their terms are set forth on the
following pages:
<PAGE>
Nominees to be Elected
- ----------------------
FRANK W. JONES Director since 1982
Age 57
Mr. Jones is an independent management consultant, Tucson,
Arizona. He is also a director of Jason Incorporated,
Ingersoll Milling Machine Co., Star Cutter Co., Gardner
Publications, Inc., and General Tool Co. Term to expire
in 2000.
DENNIS J. KUESTER Director since 1993
Age 55
Mr. Kuester is President of Marshall & Ilsley Corporation
and of M&I Marshall & Ilsley Bank, and Chairman and Chief
Executive Officer of M&I Data Services, Inc., a Milwaukee,
Wisconsin, bank holding company, bank, and banking services
company, respectively. He is also a director of M&I Data
Services, Inc., M&I Marshall & Ilsley Bank, M&I Corporation,
Super Steel Products Corp., TYME Corporation, and Krueger
International. Term to expire in 2000.
MICHAEL T. YONKER Director since 1993
Age 54
Mr. Yonker is President and Chief Executive Officer of
Portec, Inc., Lake Forest, Illinois, a manufacturer of
railroad, construction, and material handling equipment. He
is also a director of Woodward Governor Company. Term to
expire in 2000.
Directors Continuing in Service
- -------------------------------
STUART W. TISDALE Director since 1987
Age 68
Mr. Tisdale is the retired Chairman, Chief Executive
Officer, and a director of WICOR, Inc., Milwaukee,
Wisconsin, a holding company whose primary subsidiaries are
Wisconsin Gas Company, a public utility, Sta-Rite
Industries, a manufacturer of pumps and fluid handling
systems, and SHURflow Pump Manufacturing Company, a
manufacturer of small high-performance pumps, valves, motors
and systems. He is also a director of M&I Marshall & Ilsley
Bank, Marshall & Ilsley Corporation, and Twin Disc, Inc.
Term to expire in 1999.
<PAGE>
VINCENT L. MARTIN Director since 1992
Age 57
Mr. Martin is Chairman, Chief Executive Officer, and a
director of Jason Incorporated, a diversified manufacturing
company based in Milwaukee, Wisconsin. He is also a
director of Crane Manufacturing & Service. Term to expire
in 1999.
RICHARD T. SAVAGE Director since 1989
Age 58
Mr. Savage is Chairman of the Board and Chief Executive
Officer of the Company. He is also a director of Twin Disc,
Inc. and M&I Marshall & Ilsley Bank. Term to expire in 1999.
THOMAS J. GUENDEL Director since 1980
Age 69
Mr. Guendel is the retired Chairman of the Board and Chief
Executive Officer of Portec, Inc., Lake Forest, Illinois, a
manufacturer of railroad, construction, and material
handling equipment. He is an Adjunct Professor, Lake Forest
Graduate School of Management. Term to expire in 1998.
GARY L. NEALE Director since 1977
Age 57
Mr. Neale is Chairman, President, Chief Executive Officer,
and a director of NIPSCO Industries, Inc., Hammond, Indiana,
a holding company for gas and electric utilities and other
energy related subsidiaries. Term to expire in 1998.
RICHARD J. DOYLE Director since 1987
Age 65
Mr. Doyle is Chairman, Chief Executive Officer, and a
director of three private electrical contracting
corporations. Prior to his retirement January 1, 1989,
Mr. Doyle was a Vice President of Borg-Warner Corporation,
Chicago, Illinois, a diversified manufacturing and services
company and President and Chief Executive Officer of Borg-
Warner Automotive, Inc., Troy, Michigan, a subsidiary of
Borg-Warner Corporation. Term to expire in 1998.
<PAGE>
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Principal Shareholders
- ----------------------
The following table sets forth information based upon the records of
the Company and filings with the Securities and Exchange Commission ("SEC")
as of March 31, 1997*, with respect to each person known to be the beneficial
owner of more than five percent (5%) of any class of the Company's voting
securities.
Title Name and Address of Amount and Nature of Percent
of Class Beneficial Ownership Beneficial Ownership of Class
- -------- -------------------- -------------------- --------
Common Administrative Committee of 5,647,871 Power to vote 18.93%
Modine Contributory Employee Plans' stock
Stock Ownership & Investment not voted by
Plans, 1500 DeKoven Avenue, employees
Racine, WI. Members: R. M. owning it
Gunnerson, R. L. Hetrick,
and D. R. Zakos**
Common Investment Committee of 1,869,673 Power to vote 6.27%
Modine Manufacturing Company and dispose of
Employees' Retirement Trusts, Trusts' stock
1500 DeKoven Avenue, Racine,
WI. Members: R. T. Savage,
A. D. Reid, V. S.
Frangopoulos, D. R. Johnson,
and W. E. Pavlick**
Common J. P. Morgan & Co., 2,012,040 Sole or shared 6.70%
Incorporated voting and/or
60 Wall Street power to dispose
New York, NY 10260*** of stock
Common FMR Corp. 1,664,500 Sole or shared 5.58%
82 Devonshire St. voting and/or
Boston, MA 02109**** power to dispose
of stock
- ------------------------------------------------------------------------------
* Based on a joint Schedule 13D filed April 1, 1997, by Mario T.
Gabelli, GAMCO Investors, Inc., Gabelli & Company, Inc., and
Gabelli Funds, Inc., as of that date, these persons no longer
are known to be the beneficial owner of more than five percent
(5%) of any class of the Company's voting securities.
** M&I Marshall and Ilsley Bank is trustee and holder of record of
the Modine Contributory Employee Stock Ownership and Investment
Plans' and Retirement Trusts' stock and is the escrow agent for
participants' stock under the 1992 through 1997 Stock Award Plans.
D. J. Kuester is president of Marshall & Ilsley Corporation and of
M&I Marshall & Ilsley Bank. M&I Marshall & Ilsley Corporation and
its subsidiaries specifically disclaim beneficial ownership of stock
held by these plans and trusts.
*** Based on a Schedule 13G filed as of January 31, 1997, by
J. P. Morgan & Co., Incorporated.
<PAGE>
**** Based on a Schedule 13G filed as of February 14, 1997, by
FMR Corp.
The Company knows of no other person or group which is a beneficial
owner of five percent (5%) or more of the Company's Common Stock.
Securities Owned by Management
- ------------------------------
The table below reflects, as of March 31, 1997, the number
of shares of Common Stock beneficially owned by each of the
directors of the Company, each of the executive officers named in
the Summary Compensation Table, and the number of shares
beneficially owned by all directors and executive officers of the
Company as a group.
Title Name of Amount and Nature of Percent
of Class Beneficial Owner Beneficial Ownership of Class
- -------- ---------------- -------------------- --------
Common R. J. Doyle* 37,500(a) **
Common T. J. Guendel* 85,508(b) **
Common F. W. Jones* 79,934(a) **
Common D. J. Kuester* 21,000(c) **
Common V. L. Martin* 37,500(d) **
Common G. L. Neale* 54,215(a) **
Common S. W. Tisdale* 61,082(a) **
Common M. T. Yonker* 21,000(a) **
Common R. T. Savage 483,008(e)(f) 1.62%
Common D. R. Johnson 246,859(e)(f) **
Common V. S. Frangopoulos 343,578(e)(f) 1.15%
Common M. G. Baker 237,697(e) **
Common D. B. Rayburn 105,246(e) **
Common All executive officers
and directors as a
group (24 persons) 2,925,701(g) 9.81%
* Non-employee directors have the right to acquire additional
shares of Common Stock (not listed in the above table) through
the exercise of options automatically granted upon re-election
pursuant to the 1994 Stock Option Plan for Non-Employee Directors
discussed on Page 8.
** Denotes less than one percent of shares outstanding.
<PAGE>
(a) The 37,500 shares listed for Mr. Doyle include options to
acquire 30,000 shares; the 79,934 shares listed for Mr. Jones
include options to acquire 45,000 shares; the 54,215 shares
listed for Mr. Neale include options to acquire 30,000 shares;
the 61,082 shares listed for Mr. Tisdale include options to
acquire 60,000 shares; and the 21,000 shares listed for
Mr. Yonker include options to acquire 20,000 shares.
(b) The 85,508 shares listed for Mr. Guendel include options to
acquire 45,000 shares. This number includes 15,308 shares
held by Mr. Guendel's wife.
(c) The 21,000 shares listed for Mr. Kuester exclude shares held
of record by M&I Marshall & Ilsley Bank. See footnote to
the Five Percent Stock Ownership table on Page 5. This
number includes options to acquire 20,000 shares.
(d) The 37,500 shares listed for Mr. Martin include options to
acquire 35,000 shares and include 500 shares held in trusts
for his children with Mr. Martin as trustee.
(e) The 483,008 shares listed for Mr. Savage include options to
acquire 219,000 shares, and 52,300 restricted shares awarded
to Mr. Savage; the 246,859 shares listed for Mr. Johnson
include 2,288 shares held by Mr. Johnson's wife, options to
acquire 163,000 shares, and 32,100 restricted shares awarded
to Mr. Johnson; the 343,578 shares listed for Mr. Frangopoulos
include 5,533 shares owned by one of his children, options to
acquire 138,000 shares, and 22,200 restricted shares awarded to
Mr. Frangopoulos; the 237,697 shares listed for Mr. Baker include
options to acquire 133,000 shares, and 16,020 restricted shares
awarded to Mr. Baker; the 105,246 shares listed for Mr. Rayburn
include options to acquire 79,000 shares, and 17,620 restricted
shares awarded to Mr. Rayburn.
All awards listed are pursuant to the 1992 through 1997
Stock Award Plan grants but subject to restrictions that
lapse annually in fifths over a period commencing at the
beginning of the third year from the date of grant.
(f) In addition to the beneficial ownership listed, R. T. Savage,
A. D. Reid, V. S. Frangopoulos, D. R. Johnson, and W. E. Pavlick
comprise the Investment Committee of the Modine Pension Plans
appointed by the Board of Directors. The Committee exercises
investment and voting control over the assets, including Modine
Common Stock, held of record by the Modine Pension Trusts of
which M&I Marshall & Ilsley Bank is trustee as described above.
(g) This number includes 1,111,574 shares held by officers
(other than the five named executive officers) as a group
(11 persons) and includes options to acquire 501,550 shares,
and 41,620 shares awarded pursuant to the 1992 through 1997
Stock Award Plan grants but subject to restrictions that
lapse annually in fifths over a period commencing at the
beginning of the third year from the date of grant.
Approximately forty-seven percent (47%) of all outstanding
shares are owned or controlled by or for directors, officers,
employees, retired employees, and their families.
<PAGE>
BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors held nine regular meetings during the
fiscal year ended March 31, 1997. An additional eight meetings
were held by the standing Committees of the Board to assist the
Board in carrying out its responsibilities. A description of
these committees and their functions is set forth below.
The Audit Committee consists of six outside directors. Current
members are R. J. Doyle, Chairman, F. W. Jones, D. J. Kuester, V. L.
Martin, G. L. Neale, and S. W. Tisdale. The Audit Committee recommends
to the Board of Directors the engagement of the independent auditors.
Before the audit, the Committee meets with the independent auditors to
discuss the plan and scope of the audit engagement. At the completion
of the audit, the Committee meets with the independent auditors to
review the results of the audit, the effectiveness of the Company's
internal auditing procedures, and the adequacy of the Company's internal
accounting controls. The Committee also reviews and approves the budget
for each non-audit service, the audit and non-audit fees, and their effect
on the independence of the auditors. The Audit Committee met a total of
three times during the fiscal year ended March 31, 1997.
The Officer Nomination and Compensation Committee consists of five
outside directors. Current members of this Committee are G. L. Neale,
Chairman, T. J. Guendel, V. L. Martin, S. W. Tisdale, and M. T. Yonker.
This Committee reviews candidates for positions as Company officers
and makes recommendations to the Board on such candidates, makes
recommendations to the Board on compensation for the Company's officers,
and administers the Company's 1994 Incentive Compensation Plan. The
Officer Nomination and Compensation Committee met three times during
the last fiscal year.
The Pension Committee consists of five outside directors. Current
members of this Committee are T. J. Guendel, Chairman, R. J. Doyle,
F. W. Jones, D. J. Kuester, and M. T. Yonker. This Committee provides
oversight with respect to the investments of the Company's Pension Plan.
The Pension Committee met two times during the last fiscal year.
The Board of Directors does not have a committee that nominates
directors since nomination and review of director candidates is a
function of the full Board. In addition, shareholders who wish to
nominate candidates for election to the Board may do so.
Generally, if a shareholder intends to propose business or make a
nomination for the election of directors at an annual meeting, or make
a nomination for the election of directors at a special meeting of
shareholders, the Company must receive written notice of such intention.
The deadline for shareholder nominations for directors and proposals at
the 1997 Annual Meeting of Shareholders was February 8, 1997.
Compensation of Directors
- -------------------------
Directors of the Company who are not employees were paid a
retainer fee of $5,250 per quarter. In addition, directors
received a fee of $1,000 for each Board meeting attended and
$1,000 for each Committee meeting attended with the Chairman of
<PAGE>
the Audit Committee eligible for a fee of $2,000. Directors who
are officers do not receive any fees in addition to their
remuneration as officers. The Company also reimburses its
directors for travel, lodging, and related expenses incurred in
attending Board and Committee meetings, and it provides each
director with travel-accident and director and officer liability
insurance.
Directors of the Company who are not employees are eligible
to participate in the 1994 Stock Option Plan for Non-Employee
Directors (the "Directors' Plan") which is authorized to grant
non-qualified stock options through July 20, 2004, on up to
500,000 shares of the Company's Common Stock. These options are
granted at one hundred percent of the fair market value on the
date of the grant and will expire no later than ten years after
the date they are granted and will terminate no later than three
years after termination of director status for any reason other
than death. Within 30 days after election or re-election to the
Board, each director so elected or re-elected is automatically
granted an option for that number of shares equal to the multiple
of 5,000 and the number of years in the term to which such
director has been so elected or re-elected. The Directors' Plan
may be administered by the Board or by a committee of two or more
directors of the Company if deemed necessary or advisable in
order to comply with the exemptive rules promulgated pursuant to
Section 16(b) of the Securities Exchange Act of 1934, as amended.
The Board or any such committee shall have no authority to
administer the Directors' Plan with respect to the selection of
participants under the plan or the timing, pricing, or amounts of
any grants.
The Board of Directors has adopted the Modine Manufacturing
Company Director Emeritus Retirement Plan (the "Director Emeritus
Retirement Plan") whereby any person (employee or non-employee)
who is or becomes a director of Modine on or after April 1, 1992,
and who retires from the Board will be paid a retirement benefit
equal to the annualized rate at which directors are being paid
for their services to the Company as directors (including Board
meeting attendance fees but excluding any applicable committee
attendance fees) as in effect at the time such director ceases
his service as a director. The retirement benefit will continue
until the period of time the retirement benefit paid equals the
period of time of the director's Board services. If a director
dies before or after retirement, his spouse or other beneficiary
will receive the applicable retirement benefit. In the event of
a change in control (as defined in the Plan) of Modine, each
eligible director, or his spouse or other beneficiary entitled to
receive a retirement benefit through him, would be entitled to
receive a lump-sum payment equal to the present value of the
total of all benefit payments which would otherwise be payable
under the Director Emeritus Retirement Plan. The retirement
benefit is not payable if the director directly or indirectly
competes with the Company or if the director is convicted of
fraud or a felony and such fraud or felony is determined by
disinterested members of the Board of Directors to have damaged
Modine.
One former director (who retired prior to April 1, 1992) has
an agreement with the Company whereby, as a Director Emeritus, he
<PAGE>
is entitled to receive retainer fees and monthly meeting fees
equal to the fees paid at the time he retired from the Board for
a period continuing until his death.
EXECUTIVE COMPENSATION
Summary Compensation Table
- --------------------------
The following table sets forth compensation awarded to,
earned by, or paid to the Company's Chief Executive Officer and
the four most highly compensated executive officers other than
the Chief Executive Officer who were serving as executive
officers at March 31, 1997, for services rendered to the Company
and its subsidiaries during fiscal 1996-1997. Also included is
salary, bonus, restricted Common Stock awards, and stock option
information for fiscal years ended March 31, 1996, and March 31, 1995.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation (1) Long-Term Compensation
----------------------- -------------------------------------
Restricted Stock All Other
Year Name Principal Position Salary Bonus Stock(2) Options(3) Comp. (4)
- ------- ----------------- ------------------ ------ ----- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1996/97 R. T. Savage Chairman & Chief $348,500 $268,345 $378,750 30,000 $26,138
Executive Officer
1995/96 President & Chief 348,500 317,135 398,125 32,000 25,997
1994/95 Executive Officer 334,500 334,500 199,500 25,000 24,958
1996/97 D. R. Johnson President and Chief $282,500 $174,020 $252,500 25,000 $20,969
Operating Officer
1995/96 Executive Vice President, 236,000 171,808 170,625 25,000 17,298
1994/95 Operations 214,000 171,200 156,750 20,000 15,891
1996/97 V. S. Frangopoulos Group Vice President, $202,000 $124,432 $101,000 15,000 $15,128
1995/96 Off-Highway Products 195,000 141,960 91,000 15,000 14,549
1994/95 188,000 150,400 142,500 15,000 14,027
1996/97 M. G. Baker Group Vice President, $192,500 $103,758 $101,000 15,000 $14,392
1995/96 Distributed Products 178,000 113,386 91,000 15,000 13,279
1994/95 166,000 116,200 85,500 11,000 12,357
1996/97 D. B. Rayburn Group Vice President, $192,500 $103,758 $126,250 15,000 $14,370
1995/96 Highway Products 171,000 108,927 113,750 15,000 13,025
1994/95 156,000 93,600 85,500 11,000 11,607
<FN>
(1) Excludes "Other Annual Compensation" under Securities and Exchange
Commission regulations since such does not exceed the lesser of
$50,000 or 10% of each individual's combined salary and bonus.
(2) The total number of restricted shares and the aggregate market
value at March 31, 1997, were: Mr. Savage - 52,300 shares valued
at $1,281,350; Mr. Johnson - 32,100 shares valued at $786,450; Mr.
Frangopoulos - 22,200 shares valued at $543,900; Mr. Baker - 16,020
shares valued at $392,490; and Mr. Rayburn - 17,620 shares valued
<PAGE>
at $431,690. Dividends are paid on the restricted shares at the
same time and the same rate as dividends paid to shareholders of
unrestricted shares. Aggregate market value is based on a fair
market value of $24.50 at March 31, 1997.
Restricted stock is awarded to an employee at no cost and
placed in escrow until the beginning of the third, fourth,
fifth, sixth, and seventh years, respectively, at which time
one-fifth of the shares are released to the employee. In the
event of retirement or a takeover of the Company, the shares
may, if authorized by the Officer Nomination and Compensation
Committee of the Board, be released at an earlier date.
(3) The 1994 Incentive Compensation Plan authorized the Officer
Nomination and Compensation Committee of the Board to grant
stock options (incentive stock options and non-qualified
stock options) and other stock-based rights through July 20,
2004, on up to 3,000,000 shares of the Company's Common
Stock. Incentive stock options and non-qualified stock
options granted are at one hundred percent of the fair market
value on the date of the grant and will expire no later than
ten years after the date of the grant. Grants pursuant to
the Plan may be made to such officers or certain other
employees as shall be determined by the Committee.
Upon the exercise of the option, the optionee may pay the
purchase price in cash, stock, optioned stock, or a
combination thereof. The optionee may also satisfy any tax
withholding obligation by using optioned stock. In the event
of a sale, merger, consolidation, or other specified
transaction involving the Company, the optionee will have the
right to receive (regardless of whether or to what extent the
option would then have been exercisable) the difference between
the exercise price and the fair market value of the stock.
(4) Employer matching contributions to the Company Tax Saver
(401(k)) Plan, Stock Purchase Plan, and Supplemental Executive
Retirement Plan. The Company has a program (the "Executive
Supplemental Stock Plan") to pay, out of general assets, an
amount substantially equal to the difference between the amount
that would have been allocated to a participant's account as
Company matching contributions, in the absence of legislation
limiting such allocations, and the amount actually allocated
under the plans. Payment of this amount and appreciation
thereon is deferred until termination of service or retirement.
</TABLE>
Officer Nomination and Compensation Committee Report on Executive Compensation
- ------------------------------------------------------------------------------
The Officer Nomination and Compensation Committee has provided the
following report on Executive Compensation:
Compensation Philosophy
-----------------------
The Company's executive compensation philosophy is designed to
address the needs of the Company, its executives, and its shareholders.
<PAGE>
The specific factors underlying the Committee's decision with
respect to compensation for each of the named executives for the
last fiscal year are two-fold:
1. The ability to accomplish the Company's goal of preserving
and enhancing the shareholders' investment over the long-
term without bearing undue risk in the process. The
Committee recognizes that there will be short-term
fluctuations in the Company's business and is of the
opinion that incentive compensation should be based
primarily upon attainment of the Company's goals over a
longer period of time. It is the Committee's intention
to compensate its executive officers appropriately for
superior performance; however, inherent in attaining the
Company's goal is the premise that shareholder assets
will not be wasted by the payment of excessive
compensation.
2. The second factor underlying the Committee's compensation
decision is that achieving the foregoing Company goals
can only be accomplished by the retention of competent,
highly skilled people. Accordingly, the design of the
compensation package must include sufficient tools to
assure retention of key individuals.
Numerous other criteria are considered in the compensation
decision, including high ethical standards, concern for employees,
regard for the environment, and commitment to the highest levels
of product quality and customer service. Each of these criteria
is an intrinsic part of attaining the Company's long-term goals.
Total Annual Compensation
-------------------------
The Company's executive compensation program is composed of
an annual cash component, consisting of salary and a bonus based
on the financial performance of the Company, and a long-term
incentive component, currently consisting of stock awards and
stock options.
The compensation package design reflects the Committee's
belief that a larger than typical portion of compensation should
be based upon incentives. This results in the base salary of
Company executives being lower than those executives in
comparable companies and industries and with incentive
compensation being higher. Incentive compensation is established
at a level designed to ensure that, when such payouts are added
to a participant's base salary, the resultant compensation for
above average performance will exceed the average compensation
level for comparable companies. For fiscal 1996-97, the Company
used a formula bonus program that does not commence payout until
a pre-tax return of 15 percent on shareholders' investment is
earned for the shareholders. Thereafter, Company executives can
earn a cash bonus that increases at a linear rate with Company
earnings and is proportional with the executive's level of
management responsibility, including the Chief Executive Officer
("CEO"), who could earn a cash bonus of up to 100% of his base
salary (the maximum payout under the program) in fiscal 1996-97.
All other incentive awards are calculated as a job-slotted
<PAGE>
percentage of the CEO's percent of earned award. By so doing,
the entire management team shares the risks and rewards of
overall Company performance. For fiscal 1996-97, the total
annual compensation provided was in accordance with this
philosophy.
Long-Term Compensation
----------------------
To further align the Company executives' interests with those
of the shareholder, the Compensation Committee utilizes long-term
stock based incentives in the form of stock options and stock
awards. The number of stock options and stock awards granted to
each executive officer is established for each person considering
the survey data described below. Individual awards are
determined based on a subjective assessment of individual
performance, contribution, and potential. The Committee
generally considers previous grant and award amounts when
determining annual grants or awards under its programs.
The stock options currently granted are at market value and
are exercisable within ten years of date of grant. The options
may be rescinded at any time up until two years after exercise
should the individual be terminated for cause, compete in any way
against the Company, not fully comply with applicable laws and
government regulations, fail to maintain high ethical standards,
or breach the Company's policies such as Guidelines for Business
Conduct, Antitrust Compliance, or confidentiality of proprietary
technology and information.
Stock awards are grants of Company stock to a limited number
of top executives, at no cost. These awards vest only at the
rate of 20 percent per year commencing with the third year after
grant, acting thereby as both a retention tool and involving the
executive in a longer-term stake in the Company. Stock awards
not previously vested are terminated should the executive cease
to be employed by the Company for any reason other than
retirement or a takeover.
Consequently, the executive is compensated over the long-term,
through both the stock option and stock award programs, as the
Company stock price increases, which is for the benefit of the
shareholders.
Chief Executive Officer Compensation
------------------------------------
The Committee recognizes that effective management of the
Company is a team effort, led by the CEO. The CEO and the named
officers must possess the difficult to define qualities of
leadership, ability to instill confidence in their actions, and
to inspire others to even greater effort. These qualities can
only be determined through observation over a longer period of
time and through the ultimate results attained. Accordingly, the
CEO's and senior executive officers' team compensation decision
was not based solely on fiscal 1996-97 annual financial results
but was based on the compensation policies referenced above and
the Company's favorable return on shareholders' investment over
the longer term and the Committee's subjective assessment of the
<PAGE>
performance of the management team. In 1997, the CEO was granted
a stock award for 15,000 shares and stock options for 30,000 shares.
Total annual compensation is established by the Compensation
Committee. The CEO's employment agreement (described on page 14)
only specifies minimum termination compensation.
Other Executive Officer Compensation
------------------------------------
Since, as stated above, we believe that corporate management is
a team effort, we also believe that it is appropriate for the CEO
to select his team members and make a substantial contribution to
the compensation decision for each of such team members. Accordingly,
upon detailed consultation with the CEO, assessment of the experience,
capabilities, and performance of each of the named executives toward
attaining Company goals, and the policies referenced above,
compensation decisions were made. As a background for such decisions,
the Compensation Committee reviewed several major compensation
consultant data bases with respect to compensation. The compensation
consultant data bases and the comparator group of companies used in
the performance graph are both large data bases of industrial
companies which the Committee believes appropriately reflect the
broad labor market for Modine executives. Within a range of
acceptable total compensation for each individual, compensation is
determined as described above.
Compliance with Internal Revenue Code Section 162(m)
----------------------------------------------------
Section 162(m) of the Internal Revenue Code, enacted in 1993,
generally disallows a tax deduction to public companies for
compensation over one million dollars paid to the Company's CEO
and four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to
the deduction limit if certain requirements are met. The
compensation of the Company's CEO and the four other most highly
compensated executive officers currently does not approach the
disqualifying threshold. In the future, in the event the
disqualifying threshold becomes an issue, the Committee will
weigh all the facts and circumstances in existence at the time.
G. L. Neale, Chairman
T. J. Guendel
V. L. Martin
S. W. Tisdale
M. T. Yonker
Performance Graph
- -----------------
The following graph shows the cumulative total stockholder
return on the Company's Common Stock over the last five fiscal
years as compared with the returns of the Standard & Poor's 500
Stock Index and the NASDAQ Industrials Stock Index (non-financial
index). The NASDAQ Industrials Stock Index consists of
approximately 3,000 industrial companies (including Modine), and
includes a broad range of manufacturers. The Company believes,
because of the diversity of its business, that comparison with
<PAGE>
this broader index is appropriate. The graph assumes $100 was
invested on March 31, 1992, in the Company's Common Stock, the
S&P 500 Stock Index, and the NASDAQ Industrials Stock Index and
assumes reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Measurement Period
(Fiscal Year Covered) Modine NASDAQ S&P 500
- --------------------- ------ ------ -------
Measurement Pt. 4/1/92 100 100 100
FYE 93 116 108 115
FYE 94 154 118 117
FYE 95 204 130 135
FYE 96 164 175 178
FYE 97 156 189 214
Options Granted
- ---------------
The following table sets forth information about stock
option grants during the last fiscal year for the five executive
officers named in the Summary Compensation Table.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Appreciation -
Individual Grants Appreciation for Option Term(1)(2)(3)
-------------------------------------------- -------------------------------------
% of Total
Options
Options Granted to Exercise Expiration
Name Granted Employees Price Date 0% 5% 10%
---- ------- ---------- -------- ---------- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
R. T. Savage 30,000 10.6% $25.25 1/15/2007 $0 $ 477,225 $ 1,172,625
D. R. Johnson 25,000 8.9% $25.25 1/15/2007 $0 397,688 1,003,688
V. S. Frangopoulos 15,000 5.3% $25.25 1/15/2007 $0 238,613 602,213
M. G. Baker 15,000 5.3% $25.25 1/15/2007 $0 238,613 602,213
D. B. Rayburn 15,000 5.3% $25.25 1/15/2007 $0 238,613 602,213
All Optionees 282,000 100% $25.25 1/15/2007 $0 4,485,915 11,321,595
All Shareholders N/A N/A N/A N/A $0 $460,470,024 $1,162,138,632
<FN>
(1) All options granted are immediately exercisable. Holders may use
shares previously owned or received upon exercise of options to
<PAGE>
exercise options. The Company may accept shares to cover
withholding or other employee taxes.
(2) The dollar amounts under these columns are the result of calculations
at zero percent and at the five-percent and ten-percent rates set by
the Securities and Exchange Commission and, therefore, are not
intended to forecast possible future appreciation, if any, of the
Company's stock price.
(3) No gain to the optionee is possible without an increase in stock price
appreciation, which will benefit all shareholders commensurately. A
zero percent gain in stock price appreciation will result in zero
dollars for the optionee.
</TABLE>
Option Exercises and Fiscal Year-End Values
- -------------------------------------------
The following table sets forth information with respect to
the five executive officers named in the Summary Compensation
Table concerning the number of option exercises and value of
options outstanding at the end of the last fiscal year.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Total Value of
Total Number Unexercised
Number of of Unexercised In-the-Money
Shares Options Held Options Held at
Acquired on Value at Fiscal Year End (1) Fiscal Year End (1)
Name Exercise Realized Exercisable (2), Exercisable (2)
---- ----------- --------- ---------------------- -------------------
<S> <C> <C> <C> <C>
R. T. Savage 40,000 $ 712,500 219,000 $1,233,500
D. R. Johnson 6,750 119,203 163,000 857,250
V. S. Frangopoulos 17,302 305,387 138,000 839,750
M. G. Baker 29,800 578,338 133,000 1,077,250
D. B. Rayburn -0- -0- 79,000 270,250
<FN>
(1) All options granted are immediately exercisable.
(2) Granted at fair market value on the date of Grant. Total
value of outstanding options is based on a fair market value
of Company stock of $24.50 as of March 31, 1997.
</TABLE>
Pension Plan Table
- ------------------
The following table sets forth the estimated annual benefits
payable upon retirement at normal retirement age for the years of
<PAGE>
service indicated under the Company's defined pension plan at the
indicated remuneration levels (average of five years' earnings).
- --------------------------------------------------------------------------
Average Annual Representative Years of Service
Earnings 15 Years 20 Years 25 Years 30 Years 35 Years
- -------------- -------- -------- -------- -------- --------
$125,000 $ 29,318 $ 39,091 $ 48,864 $ 58,637 $ 68,409
200,000 48,162 64,216 80,270 96,324 112,378
275,000 67,006 89,341 111,676 134,012 156,347
350,000 85,850 114,466 143,083 171,699 200,316
425,000 104,693 139,591 174,489 209,387 244,284
500,000 123,537 164,716 205,895 247,074 288,253
- --------------------------------------------------------------------------
The five executive officers named in the Summary Compensation Table
participate on the same basis as other salaried employees in the non-
contributory Modine Pension and Disability Plan for Salaried Employees.
Because the Company's contributions to the plan are actuarially based on
all eligible salaried employees and are not allocated to individual employee
accounts, expenses for a specific person cannot readily be separately or
individually calculated. Retirement benefits are based on an employee's
earnings for the five highest consecutive of the last ten calendar years
preceding retirement and on years of service. Applicable earnings include
salary, bonuses, and any deferred amount under the Modine Tax Saver (401(k))
Plan. They are approximately the same as cash compensation reported in the
Summary Compensation Table, but on a calendar year rather than a fiscal year
basis. A minimum of five years of service is required for eligibility. The
principal benefit under the plan is a lifetime monthly benefit for the joint
lives of participants and their spouses based on the employee's earnings and
period of employment, and is not subject to offset by Social Security
benefits. Employees can retire with unreduced early retirement benefits at
age sixty-two or may be eligible for disability, deferred, or other early
retirement benefits depending on age and years of service upon retirement
or termination. In addition, an employee who has reached age sixty-two and
who has accumulated thirty or more years of eligible service may request that
the accrued benefit be paid immediately in a lump-sum amount, even if not
retired at the time of election.
Assuming continued employment until age sixty-five, the estimated
credited years of service under the plan for Messrs. Savage, Johnson,
Frangopoulos, Baker, and Rayburn are thirty-one, twenty-eight, twenty-eight,
twenty-five, and twenty-two years, respectively.
Pension benefits under the plan are subject to possible limitations
imposed by the Employee Retirement Income Security Act of 1974 and
subsequent amendments thereto. To the extent that an individual
employee's retirement benefit exceeds these limits, the excess will be
paid from general operating funds of the Company.
Employees, including officers, may also qualify for long-term
disability payments of approximately sixty percent of their base salary,
up to a maximum of $8,000 per month, if they become disabled.
Employment Agreements
- ---------------------
The Company entered into an employment contract effective
October 1, 1983, with Mr. Savage covering his employment for a
<PAGE>
three year term. The contract is automatically extended annually
for an additional year so that the remaining contract term is
between two and three years, unless notice is given by either
party to the contrary. This contract provides for a minimum
annual salary equal to that paid the past fiscal year to Mr.
Savage plus bonus participation. Mr. Savage will continue to
receive all employee benefits, plus supplements to his retirement
pension and 401(k) benefits designed to provide him with benefits
which otherwise are reduced by statutory limitations on qualified
benefit plans. In the event of disability, salary continuation
is provided at a level of one hundred percent for the first
twelve months and up to sixty percent thereafter with no maximum
dollar amount. In the event of termination of the contract by
the Company other than for cause, death, or disability, or by Mr.
Savage upon a failure to be re-elected as an officer and/or a
director, a significant change in authority, a breach of the
contract by the Company, or a liquidation or merger of the
Company where the contract is not assumed, Mr. Savage would
receive annually for the remainder of the contract term,
compensation equal to the average of the five highest of the last
ten years. Mr. Savage agrees to refrain from competition with
the Company during the length of the Agreement and for a period
of two years after such Agreement is terminated, except if such
termination occurs after a change in control of the Company.
D. R. Johnson has a similar agreement on substantially the same
terms and conditions as stated hereinabove but for a two year
term ending October 16, 1998.
Change-in-Control Arrangements
- ------------------------------
As of February 26, 1997, the Company entered into change-in-
control agreements (the "Change-in-Control Agreements") with the
named executive officers (except with Messrs. Savage and Johnson)
and certain other key employees. The Change-in-Control
Agreements provide a severance payment to the executive if the
Company terminates the executive's employment or the executive
voluntarily terminates the executive's employment within ninety
days after a "Pre-Condition" has occurred (as that term is
defined in the Change-in-Control Agreements). Each named
executive officer (except Messrs. Savage and Johnson) is eligible
to receive twenty-four months' annual base compensation and a
bonus amount as defined in the Change-in-Control Agreements, plus
applicable benefits and credited service for pension purposes for
the twenty-four month period. The actual amounts of the named
executive officers' salaries and bonuses are as set forth in the
table on page 9. Messrs. Savage's and Johnson's severance
benefits are set forth in their employment agreements described
above.
The Company's stock option and stock award plans contain
certain provisions relating to change-in-control or other
specified transactions that may, if authorized by the Officer
Nomination and Compensation Committee of the Board, accelerate or
otherwise release shares granted or awarded under those plans.
See footnotes (2) and (3) to the Summary Compensation Table
herein.
<PAGE>
TRANSACTIONS
In the regular course of business since April 1, 1996, the
Company has had transactions with corporations or other firms of
which certain non-employee directors are executive officers or
otherwise principally involved. Such transactions were in the
ordinary course of business and at competitive prices and terms.
The Company does not consider the amounts involved to be
material. The Company anticipates that similar transactions will
occur in fiscal 1997-98.
OTHER INFORMATION
Independent Auditors
- --------------------
Coopers & Lybrand have been the independent certified public
accountants since 1935 and were selected as the Company's
auditors for the fiscal year ended March 31, 1997. They are
appointed by the Board of Directors of the Company and report to
the Audit Committee. A representative of Coopers & Lybrand will
not be attending the 1997 Annual Meeting of Shareholders.
Expenses of Solicitation
- ------------------------
The cost of soliciting proxies is being borne by the
Company. In addition to solicitation by mail, arrangements have
been made with brokerage houses, nominees, and other custodians
and fiduciaries to send proxy material to their principals and
the Company will reimburse them for their expenses in doing so.
Proxies also may be solicited personally or by telephone or other
means of electronic communication by directors, officers, and a
few regular employees of the Company in addition to their usual
duties. They will not be specially compensated for these services.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. Officers,
directors, and greater than ten percent shareholders are required
by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished
to the Company, the Company believes that, during the period
April 1, 1996, to March 31, 1997, all Section 16(a) filing
requirements applicable to its officers, directors, and greater
than ten percent beneficial owners were complied with.
ADDITIONAL MATTERS
The Board of Directors is not aware of any other matters
that will be presented for action at the 1997 annual meeting.
<PAGE>
Should any additional matters come before the meeting, the
persons named in the enclosed proxy will vote on those matters in
accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR 1998
If a shareholder wishes to present a proposal for
consideration at next year's Annual Meeting of Shareholders, such
proposal must be received at Modine's offices on or before
February 7, 1998.
ANNUAL REPORT
The Annual Report of the Company, including financial
statements for the fiscal year ended March 31, 1997, is enclosed.
W. E. PAVLICK, Secretary
<PAGE>
APPENDIX
<TABLE>
<CAPTION>
Please mark your
/X/ votes as in this
example
<S> <C> <C> <C> <C>
FOR WITHHELD Nominees: Frank W. Jones 2. To consider and act upon such other matters
1. Election of Dennis J. Kuester which may properly come before the meeting
Directors / / / / Michael T. Yonker or any adjournment thereof;
For, except vote withheld from
the following nominee(s): all as more particularly described in the
Proxy Statement dated June 6, 1997, relating
_________________________________________ to such meeting, receipt of which is hereby
acknowledged.
This proxy, when properly executed, will be
voted in the manner directed herein. If no
direction is made, this proxy will be voted
FOR Item 1.
PLEASE MARK, DATE, EXECUTE AND RETURN THIS
PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
SIGNATURE(S) _______________________________________________ DATE________________ 1997
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title
as such.
</TABLE>
<PAGE>
MODINE MANUFACTURING COMPANY
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Richard T. Savage and Walter E. Pavlick,
with full power of substitution, proxies to vote at the Annual Meeting of
Shareholders of Modine Manufacturing Company (the "Company") to be held on
July 16, 1997 at 9:30 a.m., local time, and at any adjournment or adjournments
thereof, hereby revoking any proxies heretofore given, to vote all shares of
common stock of the Company held or owned by the undersigned as directed
on the reverse side of this proxy, and in their discretion upon such other
matters as may come before the meeting.
(To be Signed on Reverse Side)
<PAGE>
