SCHEDULE 14A INFORMATION
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the Securities Exchange Act of 1934
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Check the appropriate box:
/ / Preliminary Proxy Statement
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by Rule 14a-6(e)(2))
/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
-----------------------------------------------
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
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1) Title of each class of securities to which transaction
applies:
Not Applicable
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applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the 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
1998
of shareholders
M O D I N E
<PAGE>
M O D I N E
- -------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, JULY 15, 1998
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 15, 1998, at 9:30 a.m. for the following
purposes:
1. To elect three directors to serve until the Annual Meeting
in 2001.
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 26, 1998, 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
W. E. PAVLICK, Secretary
June 5, 1998
YOUR VOTE IS IMPORTANT!
Please date, sign, and return
the enclosed Proxy immediately.
PROXY STATEMENT
<PAGE>
Annual Shareholders' Meeting of Modine Manufacturing Company--1998
- ---------------------------------------------------------------------
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 15, 1998, 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 26, 1998, 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 5,
1998. The total number of shares of Common Stock outstanding and
entitled to vote at the meeting is 29,669,543 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 ten members.
Pursuant to the By-Laws, Thomas J. Guendel is retiring from
the Board and is not a nominee for election in 1998.
By Board of Directors' action in March, 1998, effective as
of July 15, 1998, the authorized number of directors will be
fixed at nine. The Restated By-Laws of the Company, as amended
in March, 1998, effective as of July 15, 1998, will classify the
Board of Directors into three classes each consisting of three
directors, with each class of directors serving three-year terms
of office. Each class of directors is staggered so that each
expires in succeeding years. This year, the terms of Gary L.
Neale, Richard J. Doyle, and Donald R. Johnson (who was elected
for the first time to the Board of Directors in December, 1997)
expire at the 1998 Annual Meeting of Shareholders and each of
them has been nominated for a new three-year term expiring at the
Annual Meeting in 2001.
Each of these nominees has indicated his willingness to
serve if elected. While it is not anticipated that any of the
<PAGE>
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:
Nominees to be Elected
- ----------------------
DONALD R. JOHNSON Director since 1997
Mr. Johnson, 56, is President and Chief Executive Officer of
the Company. He is also a director of Grede Foundaries,
Inc. Term to expire in 2001.
GARY L. NEALE Director since 1977
Mr. Neale, 58, 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. He is also
a director of Chicago Bridge & Iron. Term to expire in 2001.
RICHARD J. DOYLE Director since 1987
Mr. Doyle, 66, is retired. Prior to April 30, 1998, he was
Chief Executive Officer and a director of three private
electrical contracting corporations. Prior to 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 2001.
Directors Continuing in Service
- -------------------------------
FRANK W. JONES Director since 1982
Mr. Jones, 58, is an independent management consultant,
Tucson, Arizona. He is also a director of Jason
Incorporated, D. T. Industries, Inc., Ingersoll Milling
<PAGE>
Machine Co., Star Cutter Co., Gardner Publications, Inc.,
and General Tool Co. Term to expire in 2000.
DENNIS J. KUESTER Director since 1993
Mr. Kuester, 56, is President of Marshall & Ilsley Corporation
and of M&I Marshall & Ilsley Bank, and Chairman 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,
Marshall & Ilsley Corporation, Super Steel Products Corp., TYME
Corporation, and Krueger International. Term to expire in 2000.
MICHAEL T. YONKER Director since 1993
Mr. Yonker, 55, is President and Chief Executive Officer of
Portec, Inc., Lake Forest, Illinois, a manufacturer of
material handling equipment. He is also a director of
Woodward Governor Company. Term to expire in 2000.
STUART W. TISDALE Director since 1987
Mr. Tisdale, 69, 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.
VINCENT L. MARTIN Director since 1992
Mr. Martin, 58, 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
Mr. Savage, 59, is Chairman of the Board of the Company. He
is also a director of Twin Disc, Inc. and M&I Marshall &
Ilsley Bank. Term to expire in 1999.
<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, 1998, 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 5,639,249 Power to vote 19.01%
Modine Contributory Employee Plans' stock
Stock Ownership & Investment not voted by
Plans, 1500 DeKoven Avenue, employees
Racine, Wisconsin 53403-2552 owning it
Members: R. L. Hetrick and
D. R. Zakos*
Common Investment Committee of 1,624,021 Power to vote 5.47%
Modine Manufacturing Company and dispose of
Employees' Retirement Trusts, Trusts' stock
1500 DeKoven Avenue, Racine,
Wisconsin 53403-2552.
Members: D. R. Johnson, V. S.
Frangopoulos, A. D. Reid and
W. E. Pavlick*
Common Gabelli Funds, Inc. and 3,118,720 Sole or shared 10.50%
affiliates voting and/or
One Corporate Center power to
Rye, New York 10580-1434** dispose of
stock
- ------------------------------------------------------------------------------
* 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 1993 through 1998 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 March 12, 1998, by
Gabelli Funds, Inc. and affiliates.
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.
<PAGE>
Securities Owned by Management
- ------------------------------
The table below reflects, as of March 31, 1998, 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* 37,000(a) **
Common T. J. Guendel* 78,808(b) **
Common F. W. Jones* 86,050(a) **
Common D. J. Kuester* 36,000(c) **
Common V. L. Martin* 37,500(d) **
Common G. L. Neale* 48,153(a) **
Common S. W. Tisdale* 51,252(a) **
Common M. T. Yonker* 36,000(a) **
Common R. T. Savage 354,325(e) 1.19%
Common D. R. Johnson 242,959(e)(f) **
Common V. S. Frangopoulos 330,229(e)(f) 1.11%
Common M. G. Baker 244,004(e) **
Common D. B. Rayburn 116,009(e) **
Common All executive officers
and directors as a
group (23 persons) 2,815,095(g) 9.49%
* 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 9.
** Denotes less than one percent of shares outstanding.
(a) The 37,000 shares listed for Mr. Doyle include options to
acquire 30,000 shares; the 86,050 shares listed for Mr.
Jones include options to acquire 45,000 shares; the 48,153
<PAGE>
shares listed for Mr. Neale include options to acquire
30,000 shares; the 51,252 shares listed for Mr. Tisdale
include options to acquire 45,000 shares; and the 36,000
shares listed for Mr. Yonker include options to acquire
35,000 shares.
(b) The 78,808 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 36,000 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 6. This
number includes options to acquire 35,000 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 354,325 shares listed for Mr. Savage include options to
acquire 139,126 shares; the 242,959 shares listed for Mr.
Johnson include 2,288 shares held by Mr. Johnson's wife,
options to acquire 145,000 shares, and 31,000 restricted
shares awarded to Mr. Johnson; the 330,229 shares listed for
Mr. Frangopoulos include options to acquire 133,126 shares,
and 17,400 restricted shares awarded to Mr. Frangopoulos;
the 244,004 shares listed for Mr. Baker include options to
acquire 138,698 shares, and 14,280 restricted shares awarded
to Mr. Baker; the 116,009 shares listed for Mr. Rayburn
include options to acquire 86,375 shares, and 17,580
restricted shares awarded to Mr. Rayburn.
All awards listed are pursuant to the 1993 through 1998
Stock Award Plan grants but subject to restrictions that
lapse annually in fifths over a period commencing at the end
of the second year from the date of grant.
(f) In addition to the beneficial ownership listed, D. R.
Johnson, V. S. Frangopoulos, A. D. Reid, 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 1,116,806 shares held by officers
(other than the five named executive officers) as a group
(10 persons) and includes options to acquire 529,850 shares,
and 34,580 shares awarded pursuant to the 1993 through 1998
Stock Award Plan grants but subject to restrictions that
lapse annually in fifths over a period commencing at the end
of the second year from the date of grant.
Approximately forty-six percent (46%) 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 eight regular meetings during the
fiscal year ended March 31, 1998. 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, 1998.
The Officer Nomination and Compensation Committee consists of
five outside directors. Current members of this Committee re 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 1998 Annual
Meeting of Shareholders was February 7, 1998.
Compensation of Directors
- -------------------------
Directors of the Company who are not employees were paid a
retainer fee of $6,000 per quarter. In addition, directors
<PAGE>
received a fee of $1,000 for each Board meeting attended and
$1,000 for each Committee meeting attended with the Chairman of
the Audit Committee eligible for a fee of $2,000. Commencing
April 1, 1998, in lieu of all other Board compensation, the
Chairman of the Board receives a retainer fee of $12,000 per
quarter. 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.
<PAGE>
One former director (who retired prior to April 1, 1992) has
an agreement with the Company whereby, as a Director Emeritus, he
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,
1998, for services rendered to the Company and its subsidiaries during
fiscal 1997-1998. Also included is salary, bonus, restricted Common
Stock awards, and stock option information for fiscal years ended
March 31, 1997, and March 31, 1996.
<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>
1997/98* R. T. Savage* Chairman $364,000 $305,760 N/A* N/A* $27,146
1996/97 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
Executive Officer
1997/98* D. R. Johnson* President and Chief $326,250 $219,240 $254,531 30,000 $24,160
Executive Officer
1996/97 President and Chief 282,500 174,020 252,500 25,000 20,969
Operating Officer
1995/96 Executive Vice 236,000 171,808 170,625 25,000 17,298
President, Operations
1997/98* D. B. Rayburn* Executive Vice President, $205,000 $120,540 $152,719 15,000 $15,277
Original Equipment
1996/97 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
1997/98 V. S. Frangopoulos Group Vice President, $210,000 $123,480 $101,813 15,000 $15,664
1996/97 Off-Highway Products 202,000 124,432 101,000 15,000 15,128
1995/96 195,000 141,960 91,000 15,000 14,549
1997/98 M. G. Baker Group Vice President, $200,500 $117,894 $101,813 15,000 $14,955
1996/97 Distributed Products 192,500 103,758 101,000 15,000 14,392
1995/96 178,000 113,386 91,000 15,000 13,279
* Prior to March 31 and April 1, 1998: R. T. Savage was
Chairman, President and Chief Executive Officer (now
<PAGE>
retired); D. R. Johnson was President and Chief Operating
Officer; and D. B. Rayburn was Group Vice President, Highway
Products.
<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, 1998, were: Mr. Johnson - 31,000
shares valued at $1,077,250; Mr. Rayburn - 17,580 shares
valued at $610,905; Mr. Frangopoulos - 17,400 shares valued
at $604,650; and Mr. Baker - 14,280 shares valued at
$496,230. 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 $34.75 at March 31, 1998.
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) Includes employer matching contributions to the Company Tax
Saver (401(k)) Plan, Stock Purchase Plan, and Supplemental
Stock 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
<PAGE>
and appreciation thereon is deferred until termination of
service or retirement. Because the Company's contributions
to the Supplemental Executive Retirement Plan are actuarially
based and are not allocated to the individual named executive
officers' accounts until retirement, such contributions are
not readily ascertainable and are not included in this
column. See Page 13 herein regarding the Pension Plan Table
for additional information.
</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.
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 first factor is 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
<PAGE>
on the financial performance of the Company, and a long-term
incentive component, currently consisting of stock awards and
stock options.
For fiscal 1997-98, 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
1997-98. All other incentive awards are calculated as a job-slotted
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 1998-99, the Committee determined that several
changes were appropriate, including base pay adjustments for
certain named executive officers to industry medians, revisions
to the formula bonus plan to provide for more up-side potential
if exceptional performance is attained with an increase in the
maximum payout under the plan to 120%, and the introduction of an
incentive feature for the restricted stock awards so that such
awards are made contingent upon earnings per share growth and
sales growth in the fiscal year over the prior fiscal year.
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. Individual stock option grants are determined based on a
subjective assessment of individual performance, contribution,
and potential. Beginning in fiscal 1998-99 revised individual
stock awards will be provided to the named executives and certain
other officers. The Committee may consider previous stock option
and stock award grants when determining annual stock option and
stock award grants under these 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.
Currently, stock awards are grants of Company stock to a
limited number of top executives as indicated above, at no cost.
These awards vest only at the rate of 20 percent per year commencing
at the end of the second 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.
<PAGE>
Beginning with the 1998-99 fiscal year, stock awards will be
provided on the basis of meeting specified targets and will vest
20 percent per year commencing at the end of the first year.
Achievement is measured based on the fiscal year's performance of
specified percentages of sales growth and earnings per share
growth over the prior year's results. The sales growth and
earnings per share growth achievements are calculated separately
and carry equal weight. Target achievement for each element will
earn half of the target awards so that full target awards are
earned if both goals are achieved. Each element has a minimum,
target, and maximum goal.
For the 1998-99 fiscal year, the determination of the CEO's
target shares was based on compensation data used to determine
the CEO's base pay. The target stock award is set at the stock
equivalent of a designated percentage of the CEO comparator group
base pay. This amount is then divided by the stock price and
rounded up to the nearest 500 share equivalent.
At minimum achievement of the goal, the plan pays 50% of the
target awards for that goal. At maximum achievement, the plan
will pay 150% of the target awards for that goal. Participants
other than the CEO receive awards based on a specified percentage
of the CEO's awards.
Consequently, each of the named executive officers is
compensated over the long-term, through both the stock option and
stock award programs as the Company sales and earnings per share
and the Company stock price increases, which will also benefit
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
the ability 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 decisions were not based solely on fiscal 1997-98
annual financial results but were based on the compensation
policies referenced above and on the Company's favorable return on
shareholders' investment over the longer term and on the Committee's
subjective assessment of the performance of the management team.
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 and plans referenced above,
compensation decisions were made. As a background for such decisions,
<PAGE>
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 this broader index is appropriate. The
graph assumes $100 was invested on March 31, 1993, 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. 4/1/93 100 100 100
FYE 94 133 110 101
FYE 95 176 120 117
FYE 96 142 162 155
FYE 97 135 175 185
FYE 98 196 263 273
<PAGE>
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* N/A* N/A* N/A* N/A* N/A* N/A* N/A*
D. R. Johnson 30,000 10.99% $33.9375 1/21/2008 $0 $ 641,419 $ 1,618,819
V. S. Frangopoulos 15,000 5.49% $33.9375 1/21/2008 $0 320,709 809,409
M. G. Baker 15,000 5.49% $33.9375 1/21/2008 $0 320,709 809,409
D. B. Rayburn 15,000 5.49% $33.9375 1/21/2008 $0 320,709 809,409
All Optionees 273,000 100% $33.9375 1/21/2008 $0 5,836,911 14,731,251
All Shareholders N/A N/A N/A N/A $0 $634,237,917 $1,600,695,696
* Mr. Savage retired as the Chief Executive Officer effective March 31, 1998.
<FN>
(1) All options granted are immediately exercisable. Holders may use
shares previously owned or received upon exercise of options to
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 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>
<PAGE>
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>
R. T. Savage 79,874 $1,543,238 139,126 $1,399,607
D. R. Johnson 48,000 $1,118,250 145,000 $1,206,125
V. S. Frangopoulos 19,874 $ 323,303 133,126 $1,687,544
M. G. Baker 9,302 $ 257,549 138,698 $2,018,446
D. B. Rayburn 7,625 $ 171,469 86,375 $ 812,281
<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 $34.75 as of March 31, 1998.
</TABLE>
Pension Plan Table
- ------------------
The following table sets forth the estimated annual benefits
payable upon retirement at normal retirement age for the years of
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 $ 29,188 $ 38,918 $ 48,647 $ 58,377 $ 68,106
200,000 48,032 64,043 80,054 96,064 112,075
275,000 66,876 89,168 111,460 133,752 156,044
350,000 85,720 114,293 142,866 171,439 200,012
425,000 104,563 139,418 174,272 209,127 243,981
500,000 123,407 164,543 205,679 246,814 287,950
- ----------------------------------------------------------------------------
<PAGE>
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. Johnson, Frangopoulos,
Baker, and Rayburn are 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, Termination and Change of Control Arrangements
- ---------------------------------------------------------------------
On January 21, 1998, the Company and Richard T. Savage entered
into an agreement related to Mr. Savage's retirement as the Chief
Executive Officer of the Company effective as of March 31, 1998.
Mr. Savage remains as the Chairman of the Board of Directors of the
Company. Mr. Savage received, in accordance with the Management
Incentive Plan, the final payment due him for the 1997-1998 fiscal
year of $101,010; immediate vesting of all unvested stock awards under
the Company's stock award plan which the Company purchased from Mr.
Savage at their fair market value on March 31, 1998; continuation for
calendar year 1998 of certain legal, financial, estate planning and
tax consulting services; the sum of $498,044, which amount was equal
to the fair market value on March 31, 1998, of the phantom shares
held by Mr. Savage pursuant to the Company's Executive Supplemental
Stock Plan; and the sum of $1.625 million, which was a one-time
lump-sum payment of the benefit due him under the Company's Executive
Supplemental Retirement Plan. Mr. Savage may continue to exercise,
at his discretion, stock options granted to him under the 1985
Incentive Stock Plan and the 1994 Incentive Compensation Plan
according to the provisions of those plans. Mr. Savage may also
request distribution, in accordance with the provisions of the Modine
Contributory Stock Ownership and Investment Plan, of the shares of
stock in his accounts on or before November 1, 1999. He is eligible
to participate on the same basis as other retired salaried employees
in the Modine Pension and Disability Plan for Salaried Employees.
Mr. Savage agreed to refrain from competition with the Company for
a period of three years after the conclusion of his service as a
Director of the Company.
The Company entered into an employment contract effective
October 16, 1996, with Mr. Johnson covering his employment for a
two-year term. The contract is automatically extended annually
for an additional year so that the remaining contract term is
between one and two years, unless notice is given by either party
to the contrary. This contract provides for a minimum annual
<PAGE>
salary equal to that paid the past fiscal year to Mr. Johnson
plus bonus participation. Mr. Johnson 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.
Johnson 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. Johnson 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. Johnson 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.
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 11.
Mr. Johnson's severance benefits are set forth in his employment
agreement 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.
TRANSACTIONS
In the regular course of business since April 1, 1997, 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 1998-99.
<PAGE>
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, 1998. 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 1998 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, 1997, to March 31, 1998, 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 does not know of any other business
that may be presented for consideration at the Annual Meeting
other than a shareholder proposal relating to the establishment
of a Board Committee to develop a corporate code of conduct
guaranteeing the right of employees to organize and maintain
unions and affirming the principles of collective bargaining that
has been omitted from this Proxy Statement in accordance with the
rules of the Securities and Exchange Commission. If this
shareholder proposal or any other business should properly come
before the Meeting, the shares represented by the proxies and
<PAGE>
voting instructions solicited thereby may be discretionarily
voted on such business in accordance with the best judgment of
the proxy holders.
SHAREHOLDER PROPOSALS FOR 1999
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 6, 1999.
ANNUAL REPORT
The Annual Report of the Company, including financial
statements for the fiscal year ended March 31, 1998, is enclosed.
W. E. PAVLICK, Secretary
<PAGE>
APPENDIX
<TABLE>
<CAPTION>
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, SIGN, DATE AND RETURN THE PROXY CARD USING THE
ENCLOSED ENVELOPE.
<S> <C> <C> <C>
1. Election of Directors: Richard J. Doyle / / FOR all nominees listed (except / / WITHHOLD
Gary L. Neale as marked to the contrary below) AUTHORITY
Donald R. Johnson
-----------------------------
(INSTRUCTION: To withhold authority to vote for any indicated nominee, / /
write the name(s) of the nominee(s) in the box provided to the right.) / /
-----------------------------
2. To consider and act upon such other matters as may properly come before the meeting
or any adjournments thereof.
Address Change? Mark Box / / Plan to Attend the Meeting / /
Indicate changes below:
Date , 1998
------------------
----------------------------------
/ /
/ /
----------------------------------
Signature(s) in Box
This Proxy Card must be Signed Exactly
as Name Appears Thereon. When shares
are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. 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.
</TABLE>
<PAGE>
MODINE MANUFACTURING COMPANY PROXY
1500 DeKoven Avenue
Racine, WI 53403
- -----------------------------------------------------------------------------
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints D. R. Johnson and W. E. Pavlick, or either of
them, with full power of substitution to each, as attorneys and proxies to
represent the undersigned at the Annual Meeting of Stockholders of Modine
Manufacturing Company to be held at the corporate offices of Modine
Manufacturing Company, 1500 DeKoven Avenue, Racine, Wisconsin 53403-2252 on
the 15th day of July, 1998 at 9:30 a.m. CDT, and at any adjournment(s) thereof,
and to vote all shares of Common Stock which the undersigned may be entitled
to vote at said meeting as directed below with respect to the proposals as
set forth in the Proxy Statement. The Board of Directors does not know of
any other business that may be presented for consideration at the Annual
Meeting. If any other business should properly come before the Meeting,
the shares represented by the proxies and voting instructions solicited
thereby may be discretionarily voted on such business in accordance with
the best judgment of the proxy holders.
You are encouraged to specify your choices by marking the appropriate boxes
on the reverse side, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations except that shares
held in employee benefit plans for which a proxy is not received will be
voted by the trustee in the same proportion as votes actually cast by plan
participants. The tabulator cannot vote your shares unless you sign, date
and return this proxy card.
<PAGE>
