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
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Not Applicable
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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
1999
of shareholders
M O D I N E
<PAGE>
- ----------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
- ----------------------------------------------------------------------------
Date: Wednesday, July 21, 1999
Time: 9:30 a.m.
Place: 1500 DeKoven Ave.
Racine, WI 53403
Record Date: May 28, 1999
Matters to be voted on:
1. Election of three directors;
2. Re-approval of the 1994 Incentive Compensation Plan; and
3. Any other matters properly brought before the shareholders at
the meeting.
By orders of the Board of Directors,
W. E. PAVLICK
W. E. PAVLICK, Secretary
June 10, 1999
Contents
Page
----
General Information About Voting 2
Proposal No. 1: Election of Directors 3
Proposal No. 2: Re-approval of 1994
Incentive Compensation Plan 17
PROXY STATEMENT
Your vote at the annual meeting is important to us. Please vote
your shares of Common Stock by completing the enclosed proxy card
and returning it to us in the enclosed envelope. This proxy
statement has information about the annual meeting and was
prepared by the Company's management for the Board of Directors.
This proxy statement was first mailed to shareholders on June 10,
1999.
<PAGE>
PROXY STATEMENT
Annual Shareholders' Meeting of Modine Manufacturing Company--1999
- -----------------------------------------------------------------------
GENERAL INFORMATION ABOUT VOTING
Who can vote?
- ------------
You can vote your shares of common stock if our records show that you
owned the shares on May 28, 1999. A total of 29,528,785 shares of common
stock can vote at the annual meeting. You get one vote for each share of
common stock. The holders of common stock do not have cumulative voting
rights. The enclosed proxy card shows the number of shares you can vote.
How do I vote by proxy?
- ----------------------
Follow the instructions on the enclosed proxy card to vote on each
proposal to be considered at the annual meeting. Sign and date the proxy
card and mail it back in the enclosed envelope. The proxyholders named
on the proxy card will vote your shares as you instruct. If you sign and
return the proxy card but do not vote on a proposal, the proxyholders
will vote for you on that proposal. Unless you instruct otherwise, the
proxyholders will vote for each of the three director nominees and for
the re-approval of the 1994 Incentive Compensation Plan.
What if other matters come up at the annual meeting?
- ---------------------------------------------------
The matters described in this proxy statement are the only matters
we know will be voted on at the annual meeting. If other matters are
properly presented at the meeting, the proxyholders will vote your
shares as they see fit.
Can I change my vote after I return my proxy card?
- -------------------------------------------------
Yes. At any time before the vote on a proposal, you can change
your vote either by giving the Company's secretary a written notice
revoking your proxy card or by signing, dating, and returning to us a
new proxy card. We will honor the proxy card with the latest date.
Can I vote in person at the annual meeting rather than by completing
- --------------------------------------------------------------------
the proxy card?
- --------------
Although we encourage you to complete and return the proxy card to
ensure that your vote is counted, you can attend the annual meeting and
vote your shares in person.
What do I do if my shares are held in "street name"?
- ---------------------------------------------------
If your shares are held in the name of your broker, or other
nominee, that party should give you instructions for voting your shares.
<PAGE>
How are votes counted?
- ---------------------
We will hold the annual meeting if holders of a majority of the
shares of common stock entitled to vote either sign and return their
proxy cards or attend the meeting. If you sign and return your proxy
card, your shares will be counted to determine whether we have a quorum
even if you abstain or fail to vote on any of the proposals listed on
the proxy card.
If your shares are held in the name of a nominee, and you do not
tell the nominee how to vote your shares (so-called "broker nonvotes"),
the nominee can vote them as it sees fit only on matters that are
determined to be routine, and not on any other proposal. Broker
nonvotes will be counted as present to determine if a quorum exists
but will not be counted as present and entitled to vote on any
nonroutine proposal.
Who pays for this proxy solicitation?
- ------------------------------------
We do. In addition to sending you these materials, some of our
employees may contact you by telephone, by mail, or in person. None of
these employees will receive any extra compensation for doing this.
1. ELECTION OF DIRECTORS
The Board of Directors currently consists of ten members.
Stuart W. Tisdale is retiring from the Board and is not a nominee
for election in 1999.
By Board of Directors' action in March, 1999, effective as of
July 21, 1999, the authorized number of directors will be fixed at nine.
The Restated By-Laws of the Company, as amended in March, 1999, effective
as of July 21, 1999, will classify the Board of Directors into three
classes: one class consisting of two directors; one class consisting of
four directors; and one class 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 Vincent L. Martin, Richard T. Savage, and
Marsha C. Williams (who was elected for the first time to the Board of
Directors in January 1999) expire at the 1999 Annual Meeting of
Shareholders. Mr. Martin and Ms. Williams have been nominated for a
new three-year term expiring at the Annual Meeting in 2002. Mr. Savage
has requested that he serve as a board member only one more year.
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.
<PAGE>
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 as follows:
Nominees to be Elected
- ----------------------
VINCENT L. MARTIN Director since 1992
Mr. Martin, 59, is Chairman, Chief Executive Officer (through
June 30, 1999), 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 2002.
MARSHA C. WILLIAMS Director since 1999
Ms. Williams, 49, is Chief Administrative Officer of Crate &
Barrel, a privately held retailer of home furnishings and
accessories headquartered in Northbrook, Illinois. Previously,
Ms. Williams had been Vice President and Treasurer of Amoco
Corporation and Carson Pirie Scott & Company, and Vice President
of The First National Bank of Chicago. Term to expire in 2002.
RICHARD T. SAVAGE Director since 1989
Mr. Savage, 60, is Chairman of the Board of the Company. Prior to
April 1, 1998, Mr. Savage was Chairman and Chief Executive Officer
of the Company. He is also a director of Twin Disc, Inc. Term to
expire in 2000.
Directors Continuing in Service
- -------------------------------
DONALD R. JOHNSON Director since 1997
Mr. Johnson, 57, is President and Chief Executive Officer of the
Company. He is also a director of Grede Foundries, Inc. and the
M&I Bank of Racine. Term to expire in 2001.
GARY L. NEALE Director since 1977
Mr. Neale, 59, is Chairman, President, Chief Executive Officer,
and a director of NiSource, 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, 67, 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
<PAGE>
Chief Executive Officer of Borg-Warner Automotive, Inc., Troy,
Michigan, a subsidiary of Borg-Warner Corporation. Term to expire
in 2001.
FRANK W. JONES Director since 1982
Mr. Jones, 59, is an independent management consultant, Tucson,
Arizona. He is also a director of Jason Incorporated, D. T.
Industries, Inc., 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
Mr. Kuester, 57, 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, 56, is retired. Prior to June 15, 1998, he was
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.
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE
OFFICERS
Principal Shareholders
- ----------------------
The following table shows the number of shares of common stock
beneficially owned by each person who we know beneficially owns more
than 5% of the common stock.
<PAGE>
Title Name and Address of Amount and Nature of Percent
of Class Beneficial Ownership Beneficial Ownership of Class
- -------- ---------------------------- ---------------------------- --------
Common Administrative Committee of 5,004,868** Power to vote 16.95%
Modine Contributory Employee Plans' stock
Stock Ownership & Investment not voted by
Plans, 1500 DeKoven Avenue, employees
Racine, Wisconsin 53403-2552 owning it
Members: A. D. Reid, R. L.
Hetrick and D. R. Zakos*
Common Gabelli Funds, Inc. and 4,932,220*** Sole or shared 16.71%
affiliates voting and/or
One Corporate Center power to dispose
Rye, New York 10580-1434 of stock
- ------------------------------------------------------------------------------
* M&I Marshall and Ilsley Trust Company is trustee and holder
of record of the Modine Contributory Employee Stock Ownership
and Investment Plans, Employees Retirement Trusts and 401(k)
Retirement Plans stock, and is the escrow agent for participants
stock under the 1994 through 1998 Stock Award Plans. The Marshall
& Ilsley Trust Company, as custodian, may be viewed as having
voting or dispositive authority in certain situations pursuant
to Department of Labor regulations or interpretations or federal
case law. Pursuant to SEC Rule 13d-4, inclusion of such shares
in this statement shall not be construed as an admission that the
Reporting Person or its subsidiaries are, for purposes of Sections
13(d) or 13(g) of the Act, the beneficial owners of such securities.
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.
** As of March 31, 1999.
*** Based on a Schedule 13D dated April 15, 1999, by Gabelli
Funds, Inc. and affiliates.
We know 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 following table shows the number of shares of common stock
beneficially owned as of March 31, 1999 by:
- each director;
- each executive officer named in the Summary Compensation Table on
page 9; and
- the directors and executive officers as a group.
<PAGE>
Title Name of Amount and Nature of Percent
of Class Beneficial Owner Beneficial Ownership of Class
- -------- ---------------- -------------------- --------
Common R. J. Doyle* 52,000(a) **
Common F. W. Jones* 86,050(a) **
Common D. J. Kuester* 36,000(b) **
Common V. L. Martin* 37,200(c) **
Common G. L. Neale* 63,917(a) **
Common S. W. Tisdale* 42,604(a) **
Common M. C. Williams* 5,000(a) **
Common M. T. Yonker* 37,000(a) **
Common R. T. Savage 315,835(d) 1.07%
Common D. R. Johnson 266,401(d) **
Common V. S. Frangopoulos 304,690(d) 1.03%
Common M. G. Baker 244,835(d) **
Common D. B. Rayburn 132,863(d) **
Common L. D. Howard 234,520(d) **
Common All executive
officers and
directors as a
group (25 persons) 2,726,743(e) 9.24%
* 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.
(a) The 52,000 shares listed for Mr. Doyle include options to acquire
45,000 shares; the 86,050 shares listed for Mr. Jones include options
to acquire 45,000 shares; the 63,917 shares listed for Mr. Neale
include options to acquire 45,000 shares; the 42,604 shares listed
for Mr. Tisdale include options to acquire 30,000 shares; the 5,000
shares listed for Ms. Williams include options to acquire 5,000 shares
and the 37,000 shares listed for Mr. Yonker include options to acquire
35,000 shares.
(b) 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. This number includes options to acquire 35,000 shares.
<PAGE>
(c) The 37,200 shares listed for Mr. Martin include options to acquire
35,000 shares and include 200 shares held in trusts for his
children with Mr. Martin as trustee.
(d) The 315,835 shares listed for Mr. Savage include options to acquire
139,126 shares; the 266,401 shares listed for Mr. Johnson include
2,288 shares held by Mr. Johnson's wife, options to acquire 175,000
shares, and 23,200 restricted shares awarded to Mr. Johnson; the
304,690 shares listed for Mr. Frangopoulos include options to
acquire 101,166 shares, and 11,600 restricted shares awarded to
Mr. Frangopoulos; the 244,835 shares listed for Mr. Baker include
options to acquire 137,024 shares, and 10,340 restricted shares
awarded to Mr. Baker; the 132,863 shares listed for Mr. Rayburn
include options to acquire 106,375 shares, and 13,240 restricted
shares awarded to Mr. Rayburn; the 234,520 shares listed for Mr.
Howard include options to acquire 118,000 shares, and 14,100
restricted shares ward to Mr. Howard.
All awards listed are pursuant to the 1994 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.
(e) This number includes 867,829 shares held by officers (other than the
five named executive officers) as a group (11 persons) and includes
options to acquire 445,550 shares, and 11,040 shares awarded pursuant
to the 1994 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-four percent (44%) of all outstanding shares
are owned or controlled by or for directors, officers, employees,
retired employees, and their families.
BOARD MEETINGS, COMMITTEES AND COMPENSATION
The Board of Directors held eight regular meetings during the fiscal
year. An additional eight meetings were held by standing Committees of
the board. the following chart described the function and membership of
each committee and the number of times it met in 1998-1999:
Audit Committee - 3 meetings
Function
- --------
- recommends engagement of auditors;
- meets with independent auditors to:
- discuss plan and scope of audit;
- review results of audit;
- evaluates internal audit procedures and accounting controls;
- approves budget for non-audit services;
- reviews and approves audit and non-audit fees.
<PAGE>
Members
- -------
R. J. Doyle, Chair
F. W. Jones
V. L. Martin
G. L. Neale
S. W. Tisdale
Officer Nomination and Compensation Committee - 3 meetings
Function
- --------
- reviews candidates for positions as Company officers;
- makes recommendations to Board on candidates;
- makes recommendations to Board on compensation for officers;
- administers the 1985 Incentive Stock Plan;
- administers the 1994 Incentive Compensation Plan.
Members
- -------
G. L. Neale, Chair
D. J. Kuester
V. L. Martin
S. W. Tisdale
M. T. Yonker
Pension Committee - 2 meetings
Function
- --------
- provides oversight for pension trust investments.
Members
- -------
F. W. Jones, Chair
R. J. Doyle
D. J. Kuester
M. T. Yonker
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 1999 Annual Meeting of Shareholders was
February 6, 1999.
<PAGE>
Compensation of Directors
- -------------------------
Directors of the Company who are not employees were paid a
retainer fee of $6,000 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 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 or her 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 or her spouse or other beneficiary entitled
to receive a retirement benefit through him or her, 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
<PAGE>
fraud or felony is determined by disinterested members of the Board of
Directors to have damaged Modine.
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, 1999 for services rendered
to the Company and its subsidiaries during fiscal 1998-1999. Also included
is salary, bonus, restricted common stock awards, and stock option
information for fiscal years ended March 31, 1998, and March 31, 1997.
<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>
1998/99 D. R. Johnson President and Chief $452,500 $321,275 $ 0 30,000 $34,734
1997/98 Executive Officer 326,250 219,240 254,531 30,000 24,160
1996/97 President and Chief 282,500 174,020 252,500 25,000 20,969
Operating Officer
1998/99 D. B. Rayburn Executive Vice President, $262,000 $155,017 $ 0 20,000 $20,100
1997/98 Original Equipment 205,000 120,540 152,719 15,000 15,277
1996/97 Group Vice President, 192,500 103,758 126,250 15,000 14,370
Highway Products
1998/99 M. G. Baker Group Vice President, $237,500 $118,037 $ 0 15,000 $18,299
1997/98 Distributed Products 200,500 117,894 101,813 15,000 14,955
1996/97 192,500 103,758 101,000 15,000 14,392
1998/99 L. D. Howard Group Vice President, $237,000 $117,789 $ 0 15,000 $18,260
1997/98 Europe 200,000 114,800 135,760 15,000 14,895
1996/97 185,000 99,715 151,500 15,000 13,802
1998/99 V. S. Frangopoulos Group Vice President, $225,000 $111,825 $ 0 10,000 $17,405
1997/98 Off-Highway Products 210,000 123,480 101,813 15,000 15,664
1996/97 202,000 124,432 101,000 15,000 15,128
<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, 1999, were: Mr. Johnson - 23,200 shares valued
at $651,050; Mr. Rayburn - 13,240 shares valued at $371,548; Mr.
Baker - 10,340 shares valued at $290,166; Mr. Howard - 14,100
shares valued at $395,681; and Mr. Frangopoulos - 11,600 shares
valued at $325,505. Dividends are paid on the restricted shares
<PAGE>
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 $28.0625 at March 31, 1999.
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. For fiscal 1998-1999, restricted stock
awards contained an incentive component so that awards are made
contingent on meeting specified performance targets. In the event of
retirement, the shares may, if authorized by the Officer Nomination
and Compensation Committee of the Board, be released at an earlier
date. In the event of a change-in-control, the share restrictions
will lapse.
(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, Executive Supplemental Stock
Plan, and since January 1, 1999, the Modine 401(k) Retirement Plan
and the Modine Non-Qualified Deferred Compensation Plan. The
Company has a program (the Executive Supplemental Stock Plan and,
after January 1, 1999, the Modine Non-Qualified Deferred
Compensation 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. Because the Company's
contributions to the Executive Supplemental Retirement Plan and the
Modine Non-Qualified Deferred Compensation 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 15 herein regarding the Pension Plan Table for additional
information.
</TABLE>
<PAGE>
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 on the
financial performance of the Company, and a long-term incentive
component, currently consisting of stock awards and stock options.
For fiscal 1998-99, the Company continued to use a formula bonus
program that does not commence payout until a pre-tax return of 15
percent on shareholders' investment is earned. 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 120% of his base salary
<PAGE>
(the maximum payout under the program) in fiscal 1998-99. 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, 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. In fiscal 1998-99
revised individual stock awards were 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.
For the plan prior to 1998/99, 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.
Beginning with the 1998-99 fiscal year, stock awards were 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
<PAGE>
pay. The target stock award is set at the stock equivalent of a
designated percentage (50% in 1998-99) 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.
While the Company achieved record sales and earnings for the 1998-99
fiscal year, the sales and earnings growth did not reach minimum
achievement of the goals, and accordingly, no restricted stock was
awarded. A similar stock award program has been set for fiscal year
1999-2000.
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
1998-99 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,
the Compensation Committee reviewed several major compensation consultant
data bases with respect to compensation. The compensation consultant
data bases are 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.
<PAGE>
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 Committee currently intends to structure its executive-compensation
packages to meet these requirements.
Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------
None of the Committee members is or has been a Company officer or
employee. No Company executive officer currently serves on the
compensation committee or any similar committee of another public company.
G. L. Neale, Chair S. W. Tisdale
D. J. Kuester M. T. Yonker
V. L. Martin
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, 1994, 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. 4/1/94 100 100 100
FYE 95 133 110 116
FYE 96 107 148 153
FYE 97 102 160 184
FYE 98 147 239 272
FYE 99 122 332 323
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.
<PAGE>
<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>
D. R. Johnson 30,000 10.42% $33.25 1/20/2009 $0 $ 628,425 $ 1,586,025
D. B. Rayburn 20,000 6.94% $33.25 1/20/2009 $0 418,950 1,057,350
M. G. Baker 15,000 5.21% $33.25 1/20/2009 $0 314,213 793,013
L. D. Howard 15,000 5.21% $33.25 1/20/2009 $0 314,213 793,013
V. S. Frangopoulos 10,000 3.47% $33.25 1/20/2009 $0 209,475 528,675
All Optionees 288,000 100% $33.25 1/20/2009 $0 6,032,880 15,225,840
All Shareholders N/A N/A N/A N/A $0 $618,307,965 $1,560,491,531
<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>
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.
<PAGE>
<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>
D. R. Johnson 0 $ 0 175,000 $458,250
D. B. Rayburn 0 $ 0 106,375 $346,961
M. G. Baker 16,674 $ 442,404 137,024 $945,929
L. D. Howard 0 $ 0 118,000 $643,750
V. S. Frangopoulos 41,960 $1,031,648 101,166 $288,751
<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 $28.0625 as of March 31, 1999.
</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 $ 29,051 $ 38,734 $ 48,418 $ 58,101 $ 67,785
200,000 47,894 63,859 79,824 95,789 111,754
275,000 66,738 88,984 111,230 133,476 155,723
350,000 85,582 114,109 142,637 171,164 199,691
425,000 104,426 139,234 174,043 208,851 243,660
500,000 123,269 164,359 205,449 246,539 287,629
- ----------------------------------------------------------------------------
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.
<PAGE>
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 or,
since January 1, 1999, the Modine 401(k) Retirement 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, Rayburn,
Baker, Howard, and Frangopoulos are twenty-eight, twenty-two, twenty-
five, thirty-nine, and twenty-eight 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 $15,000 per month, if they become disabled.
Employment Agreements, Termination
and Change-of-Control Arrangements
- ----------------------------------
The Company entered into an employment contract effective October 16,
1996, with Mr. D. R. Johnson covering his employment for a two-year term;
the change-of-control provisions were amended May 20, 1999. 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 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 a "Change-in-Control," as defined in the
Agreement, as amended, at any time during the 24 months after a change
in control occurs, if Mr. Johnson is terminated without "Good Cause" or
if Mr. Johnson terminates the Agreement, a 36-month "Severance Period"
<PAGE>
is triggered during which Mr. Johnson is entitled to receive an amount
equal to three times the greater of (a) the sum of his base salary and
target bonus or (b) the sum of his five-year average base salary and
five-year average actual bonus payable in a lump sum within 60 days
after the date of termination of employment. Mr. Johnson will also
receive an amount equal to the pro-rata portion of the target bonus for
the calendar year in which his employment terminated, plus applicable
benefits and credited service for pension purposes for the 36-month
period. In the event of Mr. Johnson's death, such amounts will be
payable to his estate. Any stock options or stock awards will
immediately vest, or restrictions lapse, as the case may be, on the
date of termination. In the event a change in control occurs, and if
payments made to Mr. Johnson are subject to the excise tax provisions
of Section 4999 of the Internal Revenue Code, Mr. Johnson will be
entitled to receive a lump-sum payment (the "Gross-up Payment"),
sufficient to cover the full cost of such excise taxes and his federal,
state and local income and employment taxes on the additional payment.
Mr. D. B. Rayburn has a similar Change-in-Control Agreement on
substantially the same terms and conditions as stated for Mr. Johnson.
Mr. Rayburn's Agreement was entered into on May 20, 1999.
As of February 26, 1997, the Company entered into change-in-
control agreements (the "Change-in-Control Agreements") with the named
executive officers (except Mr. Johnson and Mr. Rayburn) and certain
other key employees.
The Change-in-Control Agreements were amended and restated May 20,
1999. In the event of a "Change-in-Control," as defined in the
Agreements, as amended and restated, certain key executives (including
the named executive officers other than Mr. Johnson and Mr. Rayburn),
if terminated by the Company for any reason other than "Good Cause," or
if terminated by the executive for "Good Reason" within 24-months after
the change in control occurs, or if terminated by the executive for any
reason during the 13th month after the change in control, will trigger
a 24-month "Severance Period" during which the executive is entitled to
receive an amount equal to two times the greater of (a) the sum of his
base salary and target bonus or (b) the sum of his five-year average
base salary and five-year average actual bonus payable in a lump sum
within 60 days after the date of termination of employment. The
executive will also receive an amount equal to the pro-rata portion of
the target bonus for the calendar year in which his employment
terminated, plus applicable benefits and credited service for pension
purposes for the 24-month period. In the event of the executive's
death, such amounts will be payable to his estate. Any stock option or
stock awards will immediately vest, or restrictions lapse, as the case
may be, on the date of termination. In the event a change in control
occurs, and if payments made to the executive are subject to the excise
tax provisions of Section 4999 of the Internal Revenue Code, the
executive will be entitled to receive a lump-sum payment (the "Gross-up
Payment"), sufficient to cover the full cost of such excise taxes and
the executive's federal, state and local income and employment taxes on
the additional payment.
One other key executive also has a Change-in-Control Agreement
that was amended and restated on May 20, 1999. This agreement is
substantially identical to the change-in-control agreements previously
described for Mr. Johnson and Mr. Rayburn.
<PAGE>
2. 1994 INCENTIVE COMPENSATION PLAN
In January, 1994 the Board adopted, and the shareholders
subsequently approved on July 20, 1994, the Company's 1994 Incentive
Compensation Plan (the "Plan"). There are presently 1,517,100 shares
of the Company's common stock authorized for issuance under the Plan.
The Board is re-submitting the Plan for shareholder approval so
that the award of stock-based and cash incentives to covered employees
may continue to be structured so as to comply with the requirements of
Section 162(m) of the Internal Revenue Code of 1986. Under Section
162(m) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated thereunder (together, "Section 162(m)"),
compensation paid to certain executive officers ("covered employees")
in excess of $1 million is not deductible by the Company unless such
compensation is performance-based, as defined by Section 162(m), and
certain other requirements are met. If the Plan is not approved by the
shareholders, the Compensation Committee will consider whether it is
appropriate to take any alternate action or actions that would allow
the Company to award annual incentives to covered employees that are
fully deductible by the Company under the Internal Revenue Code.
Because executive officers (who may also be members of the Board)
are eligible to be designated as participants and to receive awards under
the Plan, each of them has an interest in the adoption of this proposal.
Summary
The following is a general description of the principal features
of the Plan. It is qualified in its entirety by reference to the
complete text of the Plan, which is attached to the proxy statement as
Exhibit A and is incorporated herein by reference.
Term. The Plan was effective as of July 20, 1994. The Plan has
----
no fixed expiration date; however, no stock options or other benefits
included in the Plan may be granted after July 19, 2004. However,
because the Committee will have discretion under the Plan to fix
performance goals annually, current applicable law requires that the
Plan be submitted to shareholders for approval every five years in
order to continue to permit payment of incentives that qualify as
performance-based compensation under Section 162(m).
Administration. The Plan is administered by a committee
--------------
("Committee") of at least two outside directors (as defined under
federal securities laws and Section 162(m)). The Committee has the
exclusive authority to interpret, administer, and make determinations
under the Plan, including the exclusive authority to select
participants and approve incentive awards under the Plan.
Eligible Participants. Participation in the Plan is limited to
---------------------
key executives of the Company and/or its subsidiaries who are
designated by the Committee as participants for a given performance
period (a calendar year or other period designated by the Committee).
As the participants in the Plan will be selected by the Committee
and management in their discretion, it is not possible to indicate the
<PAGE>
number or names of positions or participants who may be eligible for
awards or benefits under the Plan and no allocation or other
determination has been made prospectively as to the types or amounts of
awards or benefits that may be made. During 1998-1999, options to
purchase 288,000 shares were granted to employees as a group, including
90,000 shares granted to current named executive officers as a group.
In 1998-1999, no restricted stock awards were granted to current named
executive officers or other employees. For additional information on
cash bonuses, restricted stock awards, and stock options provided to
the named executive officers, refer to the Summary Compensation Table
on page 9 of this Proxy Statement, Footnote 3 on page 10, and the
Option Grants in Last Fiscal Year Table on page 14.
Approximately 90 executives are currently eligible to be selected
by the Committee.
Performance Criteria. Under the Plan, the Committee may establish
--------------------
one or more objective performance goals for each year (or other
performance period), based on one or more of the following criteria as
applied to the relevant business unit or units or to the Company as a
whole, or to any combination thereof: Earnings before interest, taxes,
depreciation and amortization ("EBITDA"); earnings before interest and
taxes ("EBIT"); free cash flow; return on assets (ROA); return on
investment (ROI); return on sales (ROS); economic profit/economic value
added (EP/EVA); earnings growth; sales growth; earnings per share
growth; and stock price. The formulas may include or exclude items to
measure the specific objectives, such as losses from discontinued
operations, extraordinary gains and losses, the cumulative effect of
accounting changes, acquisitions or divestitures, foreign exchange
impacts and any unusual, nonrecurring gain or loss.
The Committee may also establish target and maximum incentive
award opportunities for the performance period for each participant and
will establish the objective formula or standard that the Committee
will use to determine the amount of incentive compensation that may be
payable, to the extent that the performance goals are achieved.
Appropriate adjustments may be made by the Committee in the foregoing
to reflect the impact of acquisitions, divestitures, changes in
accounting standards, or unusual or extraordinary events. These
criteria apply to "covered employees" as defined in Section 162(m),
which includes the Company's Chief Executive Officer and the four other
most highly compensated executive officers of the Company.
After the close of the performance period, the Committee will
determine the extent to which the performance goal or goals have been
achieved and incentive compensation that may be payable. The Committee
then has discretion to approve awards as it deems appropriate up to
these amounts; that is, the Committee may exercise its discretion to
reduce, but not to increase, the incentive award or awards that would
be payable on the basis of the level of performance achieved.
The Plan provides that any one participant may receive no more
than 150,000 shares in any one year. As discussed above, awards or
benefits under these terms will be based on the Company's future
performance. Accordingly, the amount of long-term incentive
compensation to be paid in the future to the Company's current and
future covered executives under these terms cannot be determined at
<PAGE>
this time, as actual amounts will depend on the size of such awards and
on actual performance. For an understanding of the size and structure
of these awards and benefits in the past, see the Summary Compensation
Table on page 9 of this Proxy Statement, Footnote 3 on page 10, and the
Option Grants in Last Fiscal Year Table on page 14. Additionally, the
Officer Nomination and Compensation Committee Report on Executive
Compensation on page 10 explains the Committee's current compensation
philosophy and the current performance criteria used for establishing
bonus, stock option, and restricted stock award compensation.
Benefits.
--------
Stock-based or cash benefits ("Benefits") under the Plan may be
granted, awarded, or paid in any one or a combination of Stock Purchase
Agreements, Stock Awards, Stock Options (incentive stock options and
non-qualified stock options), Stock Appreciation Rights, Restricted
Stock, Performance Unit Plans, Performance Share Plans, Book Value
Stock Plans, and annual Stock or Cash Incentive Plans.
The Company may enter into agreements with employees for the
present or future sale of shares to them at such prices as the
Committee may determine. The shares subject to any such agreement may
not be transferred to the employee (and the employee will have no
ownership right therein) until payment has been received in full.
Agreement may contain performance goals and restrictions on
transferability for stated periods and/or provisions obligating the
employee to resell his shares to the Company under stated
circumstances. Such restrictions and obligations will normally lapse
at stated intervals.
Stock awards will consist of shares to employees as a bonus for
services rendered and without other payment. It is anticipated that
such awards will be subject to performance goals and restrictions on
transferability for stated periods and/or forfeiture if the employee's
employment with the Company terminates. Such restrictions and risk of
forfeiture will normally lapse at stated intervals.
Stock options will consist of options (either incentive stock
options or non-qualified stock options) to purchase shares of common
stock. The Compensation Committee will establish the time or times at
which options may be exercised and whether all of the options may be
exercisable at one time or in increments over time. The option price
or procedure for setting the option price shall be set by the
Compensation Committee at the time of the granting of an option. For
incentive stock options, the option price may not be less than the fair
market value of the Company's stock on the date of grant. For non-
qualified stock options, the option price may be less than, equal to,
or greater than the fair market value of the Company's stock on the
date of grant. However, options granted at less than fair market value
may not qualify as performance-based compensation under Section 162(m)
and might be partially or wholly non-deductible if exercised by
individuals who are named executive officers in the Company's proxy
statement for the taxable year of exercise. The Committee also has the
authority to reset the price of any stock option after the original
grant and before exercise. In the event of stock dividends, splits,
and similar capital changes, the 1994 Plan provides for appropriate
adjustments in the number of shares available for options and the
number and option prices of shares subject to outstanding options. The
<PAGE>
term of a stock option will be determined by the Committee; however, an
incentive stock option will have a term of no more than ten years from
the date of the grant. Under certain circumstances, extensions or
other modifications to outstanding options might result in
disqualification of an option as performance-based compensation and
loss of deductions if the individual is a named executive officer in
the year in which the option is exercised. The purchase price of
option shares may be paid in cash, Company stock, a combination of
Company stock and cash, or such other legal and appropriate forms or
means that the Committee may determine. For non-qualified options, the
option holder must also pay the Company, at the time of purchase, the
amount of federal, state and local withholding taxes required to be
withheld by the Company. These taxes may be settled in cash or with
Company stock, including stock that is part of the award or that is
received upon exercise of the stock option that gives rise to the
withholding requirement. Shares of the Company's common stock also may
be used by participants for payment of the option price or satisfaction
of withholding tax obligations. The Plan also permits other forms of
payment if authorized by the Board and consistent with applicable law
and regulations.
Stock appreciation rights may be granted under the Plan with
respect to options granted concurrently or previously under the Plan.
Each stock appreciation right will permit the holder thereof to receive
up to 100%, or such lesser amount as set by the Committee, of the
difference between the market price (on the date of exercise) of the
shares to which it relates and the option price thereof. A stock
appreciation right will be exercisable at the time and to the extent
the option to which it relates is exercisable. Holders of stock
appreciation rights will be permitted to exercise the right or the
related option, but not both. Upon exercise, rights will be paid in
common stock of the Company or cash, or a combination thereof, as
determined by the Committee. Any exercise will reduce the shares
issuable under the Plan under which the related option was granted by
the number of shares with respect to which the right is exercised, even
if payment is made partly or wholly in cash.
Restricted stock may be subject to performance goals and becomes
vested in approximately equal installments over a period of time
specified from the date of grant thereof, with each such installment to
mature annually. Each installment becomes vested only if earned out by
the recipient by meeting the specified goals and remaining in the
employment of the Company, subject to certain exceptions.
A Performance Unit Plan will provide for units, contingently
granted, which entitle the employee to cash payments or their
equivalent in shares of stock valued at the time of the grant (i.e.,
the unit value remains constant and does not fluctuate with changes in
the market value of the stock), if predetermined objectives are met.
A Performance Share Plan will provide for artificial shares,
contingently granted, which entitle the employee to actual shares of
common stock or their cash equivalent at the time of payment (i.e., the
unit value may appreciate or decline depending on future market value
of the stock), if predetermined objectives are achieved.
A Book Value Stock Plan will permit the employee to purchase
shares of common stock at book value. Such "book value" stock may be
required to be resold to the Company upon termination of the employment
<PAGE>
relationship, or at other specified times at the then-book value of the
stock. On March 31, 1999, the book value of the Company's common stock
was $15.35 per share.
An annual Stock or Cash Incentive Plan will allow the employee to
receive, in addition to the employee's base salary, annual stock or
cash bonuses (portions of which may be paid quarterly over the course
of the fiscal year) based upon objective performance goals and the
financial performance of the Company.
As of March 31, 1999, the closing price of the Company's common
stock as reported on NASDAQ was $28.0625 per share.
Federal Income Tax Consequences Relating to the Plan
----------------------------------------------------
The federal income tax consequences of an employee's participation
in the Plan are complex and subject to change. The following
discussion is only a summary of the general rules applicable to stock
based compensation.
Incentive Stock Options
-----------------------
If an option granted under the Plan is treated as an incentive
stock option, the optionee will not recognize any income upon either
the grant or the exercise of the option and the Company will not be
allowed a deduction for federal tax purposes. Upon a sale of the
shares, the tax treatment to the optionee and the Company will depend
primarily upon whether the optionee has met certain holding period
requirements at the time he or she sells the shares. In addition, as
discussed below, the exercise of an incentive stock option may subject
the optionee to alternative minimum tax liability.
If an optionee exercises an incentive stock option and does not
dispose of the shares received within two years after the date of the
grant of such option or within one year after transfer of the shares to
him or her, any gain realized upon disposition will be characterized as
long-term capital gain, and in such case, the Company will not be
entitled to a federal tax deduction. If the optionee disposes of the
shares either within two years after the date the option is granted or
within one year after the transfer of the shares to him or her, such
disposition will be treated as a disqualifying disposition and an
amount equal to the lesser of (1) the fair market value of the shares
on the date of exercise minus the purchase price, or (2) the amount
realized on the disposition minus the purchase price, will be taxed as
ordinary income to the optionee in the taxable year in which the
disposition occurs. The excess, if any, of the amount realized upon
disposition over the fair market value at the time of the exercise of
the option will be treated as long-term capital gain if the shares have
been held for more than one year following the exercise of the option.
In the event of a disqualifying disposition, the Company may withhold
income taxes from the optionee's compensation with respect to the
ordinary income realized by the optionee as a result of the
disqualifying disposition.
The exercise of an incentive stock option may subject an optionee
to alternative minimum tax liability because the excess of the fair
market value of the shares at the time an incentive stock option is
<PAGE>
exercised over the purchase price of the shares is included in income
for purposes of the alternative minimum tax. Consequently, an optionee
may be obligated to pay alternative minimum tax in the year he or she
exercises an incentive stock option.
In general, there will be no federal tax consequences to the
Company upon the grant, exercise or termination of an incentive stock
option. However, in the event an optionee sells or disposes of stock
received upon the exercise of an incentive stock option in a
disqualifying disposition, the Company will be entitled to a deduction
for federal income tax purposes in an amount equal to the ordinary
income, if any, recognized by the optionee upon disposition of the
shares, provided that the deduction is now allowed under the Code.
Non-qualified Stock Options
---------------------------
Non-qualified stock options granted under the Plan do not qualify
as "incentive stock options" and will not qualify for any special tax
benefits to the optionee. An optionee generally will not recognize any
taxable income at the time he or she is granted a non-qualified option.
However, upon its exercise, the optionee will recognize ordinary income
for federal tax purposes measured by the excess of the then fair market
value of the shares over the option price. The income realized by the
optionee will be subject to income tax withholding.
The optionee's basis for determination of gain or loss upon the
subsequent disposition of shares acquired upon the exercise of a non-
qualified stock option will be the amount paid for such shares plus any
ordinary income recognized as a result of the exercise of such option.
Upon disposition of any shares acquired pursuant to the exercise of a
non-qualified stock option, the difference between the sale price and
the optionee's basis in the shares will be treated as a capital gain or
loss and will be characterized as long-term capital gain or loss if the
shares have been held for more than one year at the date of their
disposition.
In general, there will be no federal tax consequences to the
Company upon the grant or termination of a non-qualified stock option
or a sale or disposition of the shares acquired upon the exercise of a
non-qualified stock option. However, upon the exercise of a non-
qualified stock option, the Company will be entitled to a deduction for
federal income tax purposes equal to the amount of ordinary income that
an optionee is required to recognize as a result of the exercise,
provided that the deduction is not disallowed under the Code.
Stock Appreciation Rights
-------------------------
No income will be recognized by the recipient of a stock
appreciation right until shares representing the amount of the
appreciation or the cash equivalent, if so elected, are transferred to
the recipient pursuant to the exercise of the right. The amount of
such income will be equal to the fair market value of such shares on
the exercise date (or the cash equivalent), and will be ordinary
income. Subject to the applicable provisions of the Code, the Company
will be entitled to a deduction at the same time and in the same amount
as the employee realizes ordinary income as a result of the exercise of
the right.
<PAGE>
Stock Awards
------------
Generally, at the time the substantial risk of forfeiture
terminates with respect to a stock award, the then fair market value of
the stock will constitute ordinary income to the employee. Subject to
the applicable provisions of the Code, a deduction for federal income
tax purposes will be allowable to the Company in any amount equal to
the compensation realized by the employee.
Performance Unit Awards
-----------------------
The grant of a performance unit award generally will result in
taxable income to the employee on the earlier of actual receipt of
compensation pursuant to the award or when such compensation is
credited to the employee's account, or set apart, or otherwise made
available. Subject to the applicable provisions of the Code, a
deduction for federal income tax purposes will be allowable to the
Company in an amount equal to the compensation realized by the
employee.
Tax Deduction. The Company will be entitled to a deduction for
-------------
federal income tax purposes at the same time the participant recognizes
ordinary income under the rules described above. Under Section 162(m)
of the Code, there is a one million dollar cap on the amount of
compensation paid to certain executives ("covered employees") and that
may be deducted by the Company. However, excluded from the one million
dollar deduction limitation are certain shareholder approved
performance-based compensation plans, provided certain conditions are
met. Tax deductions resulting from the receipt of benefits granted by
the Committee under the Plan are intended to qualify for the exclusion.
Other Provisions. In the event of a change in control, as defined
----------------
and determined by the Committee, the Committee may deem all or part of
any incentive award opportunities to have been earned and/or may waive
or modify all or any part of any restrictions or conditions, all on
such basis as the Committee determines, and incentive awards may then
be paid, all on such basis, at such time, in such form, and subject to
such terms and conditions as the Committee may prescribe. During the
participant's lifetime, payments or distributions under the Plan may be
received only by the participant or his or her legal representative.
Shares of Restricted Stock during the applicable restriction period,
other derivative securities, rights to receive deferral payments and
any other rights or benefits under the Plan are not transferable or
assignable other than certain limited transfers on the participant's
death. The shares available under the Plan and the terms of incentive
award opportunities, are subject to adjustment to reflect certain
changes in the Company's Stock. The Plan also provides for tax
withholdings and for non-uniform determinations by the Committee, and
also permits the Committee to accelerate the time at which all or any
part of cash bonus or stock awards may be exercised or the time when
all or any part of deferrals and/or derivative securities will be paid
and permits the Company and its subsidiaries to compensate any key
executives and/or employees under separate bonus or incentive plans or
other compensation arrangements outside of the Plan.
<PAGE>
The Board of Directors or the Committee can amend the Plan from time
to time; however, certain amendments to the material terms of the Plan
would require shareholder approval for purposes of qualifying payments
under the Plan under Section 162(m) of the Code. The Plan can be terminated
or suspended at any time by the Board of Directors or the Committee.
The Board of Directors recommends that shareholders vote FOR re-
approval of the 1994 Incentive Compensation Plan.
The affirmative vote of a majority of the votes cast by the
shareholders is required for re-approval of the Plan.
TRANSACTIONS
In the regular course of business since April 1, 1998, 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 year 1999-2000.
OTHER INFORMATION
Independent Accountants
- -----------------------
PricewaterhouseCoopers LLP have been the independent certified
public accountants since 1935 and were selected as the Company's
auditors for the fiscal year ended March 31, 1999. They are appointed
by the Board of Directors of the Company and report to the Audit
Committee. A representative of PricewaterhouseCoopers LLP will not be
attending the 1999 Annual Meeting of Shareholders.
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, 1998, to
March 31, 1999, 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 1999 annual meeting. Should any
<PAGE>
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 2000
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 5, 2000.
ANNUAL REPORT
The Annual Report of the Company, including financial statements
for the fiscal year ended March 31, 1999, is enclosed.
W. E. PAVLICK, Secretary
<PAGE>
EXHIBIT A
MODINE MANUFACTURING COMPANY
1994 INCENTIVE COMPENSATION PLAN
(as amended January 15, 1997)
(as amended January 21, 1998)
1. PURPOSE. The Modine Manufacturing Company 1994 Incentive
Compensation Plan (the "Plan") is intended to provide incentives which
will attract and retain highly competent persons as officers and key
employees of Modine Manufacturing Company (the "Company") and its
majority owned subsidiaries by providing them with opportunities to
acquire Common Stock of the Company ("Common Stock") , receive monetary
payments based on the value of such shares pursuant to the stock-based
benefits ("Benefits") described herein, or receive cash or Common Stock
bonuses upon attainment of specified financial goals of the Company.
2. ADMINISTRATION.
(a) Procedure. The Board of Directors of the Company shall
---------
supervise and administer the Plan. Any questions of interpretation of
the Plan or of any Benefits issued under it shall be determined by the
Board and such determination shall be final and binding upon all
persons.
(b) Committee. Any or all powers and discretion vested in the
---------
Board under this Plan may be exercised by a committee of at least two
directors (the "Committee") authorized by the Board to do so.
Composition of the Committee is intended to satisfy the requirements of
Rule 16 b-3 of the Securities and Exchange Act of 1934 (the "Exchange
Act") and Section 162(m) of the Internal Revenue Code. A majority of
members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made
without notice or meeting of the Committee, by a writing signed by a
majority of the Committee members.
(c) Powers of the Board. Subject to the provisions of the
-------------------
Plan, the Board shall have the authority, in its discretion: (i) to
grant or award Benefits under the Plan; (ii) to determine, in
accordance with the provisions of the Plan, the fair market value of
the Common Stock; (iii) to determine, in accordance with the provisions
of the Plan, the exercise price per share of options to be granted;
(iv) to determine the employees to whom, and the time or times at
which, options or other Benefits shall be granted and the number of
shares to be represented by each option or other Benefit; (v) to
interpret the Plan; (vi) to prescribe, amend, and rescind rules and
regulations relating to the Plan; (vii) to determine the terms and
provisions of each option or other Benefit granted or awarded (which
need not be identical) and, with the consent of the holder thereof,
modify or amend each option or other Benefit; (viii) to reduce the
exercise price per share of outstanding and unexercised options; (ix)
to accelerate or defer (with the consent of the optionee) the exercise
date of any option; (x) to authorize any person to execute on behalf of
<PAGE>
the Company any instrument required to effectuate the grant or award of
an option or other Benefit; and (xi) to make all other determinations
deemed necessary or advisable for the administration of the Plan.
(d) Effect of Decisions. All decisions, determinations, and
-------------------
interpretations of the Board, or the Committee, as the case may be,
shall be final and binding on all participants and any other holders of
any Benefits granted or awarded under the Plan.
(e) Section 16 Compliance. With respect to persons subject to
---------------------
Section 16 of the Exchange Act, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by
the Committee. In addition, to the extent a participant (who is also a
Reporting Person under Rule 16b-3 or its successors) engages in an
opposite-way transaction within six months that jeopardizes the
exemption, it shall be deemed null and void.
3. PARTICIPANTS; GENERAL TERMS AND CONDITIONS.
(a) Employees. Participants will consist of such key employees
---------
(including officers) of the Company or any or all of its present or
future majority owned subsidiaries as the Board of Directors in its sole
discretion determines to be mainly responsible for the success and future
growth and profitability of the Company and whom the Board of Directors
may designate from time to time to receive Benefits under the Plan.
Benefits may be granted under this Plan to persons who have received
options or other Benefits under this or other plans of the Company.
(b) Maximum Number. The maximum number of shares with respect
--------------
to which a Benefit may be granted or awarded to any participant in any
one year of the Company shall not exceed one hundred fifty thousand
(150,000) shares.
(c) General Terms and Conditions. The Committee shall
----------------------------
determine the time or times at which Benefits shall be granted or
awarded, the number of Benefits granted or awarded (subject to the
limitation of this Section 3(b) above), and such other terms and
conditions of the Benefits in addition to those set forth in this Plan
which comply with applicable Internal Revenue Service, Securities and
Exchange Commission, or other laws and regulations, all as the
Committee deems appropriate.
4. BENEFITS.
(a) Types. Benefits under the Plan may be granted in any one
-----
or a combination of:
(1) Stock Purchase Agreements. Stock Purchase Agreements
-------------------------
will consist of agreements for the present or future sale of Common
<PAGE>
Stock by the Company to a participant at such prices and on such terms
and conditions as the Board or Committee deems appropriate.
(2) Stock Awards or Bonuses. Stock Awards or Bonuses will
-----------------------
consist of shares of Common Stock transferred to participants with or
without other payment therefor as a bonus for services rendered or to
be rendered to the Company and its majority owned subsidiaries.
(3) Stock Options (incentive stock options and
------------------------------------------
non-qualified stock options with or without tax offset
------------------------------------------------------
bonuses and discounted stock options):
-------------------------------------
(i) Exercise Price. Stock Options will consist of
--------------
options to purchase shares of Common Stock at purchase prices
determined by the Board or Committee at the date such option is
granted. Except regarding Incentive Stock Options, such option price
may be less than the fair market value of Common Stock on the date of
grant, but in no event shall the option price be less than the par
value of the shares. The fair market value shall be the closing price
per share of Common Stock on the National Association of Securities
Dealers Automated Quotation ("NASDAQ") National Market System on the date
of grant. If the Common Stock ceases to be listed on the NASDAQ National
Market System, the Board or Committee shall designate an alternative
method of determining the fair market value of the Common Stock.
(ii) Term. Such options will be exercisable not later
----
than ten years after the date they are granted and will terminate not
later than three years after termination of employment for any reason
other than death.
(4) Stock Appreciation Rights: Stock Appreciation Rights,
-------------------------
granted in conjunction with a stock option, will consist of rights to
receive an amount equal to the appreciation in fair market value since
the date of grant in lieu of exercising the corresponding stock option.
(5) Restricted Stock: Restricted Stock will consist of
----------------
shares of Common Stock which are transferred to the participant but
which carry restrictions such as a prohibition against disposition or
an option to repurchase in the event of employment termination, and may
be subject to a substantial risk of forfeiture. Shares of Restricted
Stock may be granted to the participant at no charge, or they may be
sold to the participant. Restrictions on the shares of stock may lapse
over a period of time. As the restrictions lapse, the participant has
unrestricted shares which then may be sold or transferred. If,
however, the restrictions are violated prior to their lapse, those
shares still subject to such restrictions are forfeited by the
participant, and must be returned to the Company.
(6) Performance Unit Plans: A Performance Unit Plan will
----------------------
provide for units, contingently granted, which entitle the participant
<PAGE>
to cash payments or their equivalent in shares of stock valued at the
time of the grant (i.e., the unit value remains constant and does not
fluctuate with changes in the market value of the stock), if
predetermined objectives are met.
(7) Performance Share Plans: A Performance Share Plan will
-----------------------
provide for artificial shares, contingently granted, which entitle the
participant to actual shares of Common Stock or their cash equivalent
at the time of payment (i.e., the unit value may appreciate or decline
depending on future market value of the stock), if predetermined
objectives are achieved.
(8) Book Value Stock Plans: A Book Value Stock Plan will
----------------------
permit the participant to purchase shares of Common Stock at book
value. Such "book value" stock may be required to be resold to the
Company upon termination of the employment relationship, or at other
specified times at the then book value of the stock.
(9) Annual Stock or Cash Incentive Plans. An annual Stock
------------------------------------
or Cash Incentive Plan will allow the participant to receive, in
addition to the participant's base salary, annual stock or cash bonuses
(portions of which may be paid quarterly over the course of the fiscal
year) based upon the financial performance of the Company. The
performance measurement for the stock or cash bonus will be determined
by the Board or Committee. The maximum annual formula award may be
fixed at up to one hundred twenty percent of the participant's base
salary with the Board or Committee designating the percentage level of
participation and maximum bonus for each officer of the Company while
management designates the percentage level of participation and maximum
bonus for other participants. The Board or Committee will determine
whether the bonuses will be payable to participants in stock or cash or
a combination of stock and cash.
(b) Written Agreement. Each grant or award of a Benefit shall
-----------------
be evidenced by an appropriate written agreement, the form of which
shall be consistent with the terms and conditions of the Plan and
applicable law and shall be signed by an officer of the Company and the
participant.
5. SHARES RESERVED UNDER THE PLAN. There is hereby reserved for
issuance under the Plan an aggregate of three million (3,000,000)
shares of Common Stock (except as supplemented hereinafter provided in
Section 8), $0.625 par value, which may be newly-issued shares,
authorized but heretofore unissued shares or shares reacquired by the
Company, including shares purchased on the open market. Any shares
subject to the options, rights, agreements, plans, or awards as
described hereinafter or issued under such options, rights, agreements,
plans, or awards may thereafter be subject to new options, rights,
agreements, plans or awards under this Plan if there is a lapse,
expiration or termination of any such options, rights, agreements,
plans or awards prior to issuance of the shares or payment of the
equivalent or if shares are issued under such options, rights,
agreements, plans, or awards, and thereafter are reacquired by the
Company pursuant to rights reserved by the Company upon issuance
thereof; provided, however, issued shares reacquired by the Company may
<PAGE>
only be subject to new options, rights, agreements, plans, or awards if
the participant received no benefit of ownership from the shares.
6. FORM OF PAYMENT. Payments required, if any, upon a
participant's exercise of Benefits under the Plan may be made in the
form of: (a) cash; (b) Company stock; (c) a combination of Company
stock and cash; or (d) such other forms or means which the Committee
shall determine in its discretion and in such manner as is consistent
with the Plan's purpose and applicable Internal Revenue Service,
Securities and Exchange Commission, or other laws or regulations.
7. WITHHOLDING TAXES. No later than the date as of which an
amount first becomes includible in the gross income of the participant
for federal income tax purposes with respect to any Benefit under the
Plan or with respect to any exercise of any stock option granted under
the Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any
federal, state, local or foreign taxes of any kind required by law to
be withheld. Such withholding obligations may be settled with Common
Stock, including Common Stock that is part of the award or that is
received upon the exercise of the stock option that gives rise to the
withholding requirement. The obligations of the Company under the Plan
shall be conditional upon such payment or arrangements, and the Company
shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment otherwise due to the participant. The
Company may establish such procedures as it deems appropriate,
including the making of irrevocable elections or the timing of the use
of Common Stock, for the settlement of its withholding obligations.
8. ADJUSTMENT PROVISIONS.
(a) Changes in Capitalization. If the Company shall at any time
-------------------------
change the number of issued shares of Common Stock without new
consideration to the Company (by stock dividends, stock splits, or
similar transactions), the total number of shares reserved for issuance
under this Plan and the number of shares covered by each outstanding
Benefit shall be adjusted so that the aggregate consideration payable
to the Company, if any, and the value of each such Benefit shall not be
changed.
(b) Reorganization, Sale, etc. Benefits may also contain
--------------------------
provisions for their continuation, acceleration, immediate vesting, or
for other equitable adjustments after changes in the Common Stock
resulting from reorganization, sale, merger, consolidation,
dissolution, liquidation, or similar occurrences.
(1) Substitutions and Assumptions. If the Company acquires
-----------------------------
an entity which has issued and outstanding stock options or other
rights, the Company may substitute stock options or rights for options
or rights of such entity, including options or other rights to acquire
stock at less than 100% of the fair market price of the stock at grant.
The number and kind of such stock options and other rights shall be
determined by the Committee and the total number of shares reserved for
issuance under this Plan shall be appropriately adjusted consistent
with such determination and in such manner as the Committee may deem
equitable to prevent substantial dilution or enlargement of the
<PAGE>
Benefits granted to, or available for, present or future participants
of this Plan. The number of shares reserved for issuance pursuant to
Section 5 may be increased by the corresponding number of options or
other benefits assumed and, in the case of a substitution, by the net
increase in the number of shares subject to options or other benefits
before and after the substitution.
9. NONTRANSFERABILITY. Benefits (other than non-qualified stock
options) granted under the Plan to an employee shall not be
transferable by the participant otherwise than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations
order, and shall be exercisable, during the participant's lifetime,
only by the participant; non-qualified stock options granted under the
Plan to a participant may be assignable or transferable by the
participant to or for the benefit of a member of the participant's
family. In the event of the death of a participant during employment
or prior to the termination of any Benefit held by the participant
hereunder, each Benefit theretofore granted to the participant shall be
exercisable or payable to the extent provided therein but not later than
one year after the participant's death (and not beyond the stated duration
of the Benefit). Any such exercise or payment shall be made only:
(a) By or to the executor or administrator of the estate of the
deceased participant or the person or persons to whom the deceased
participant's rights under the Benefit shall pass by will or the laws
of descent and distribution; and
(b) To the extent, if any, that the deceased participant was
entitled at the date of the participant's death.
10. OTHER PROVISIONS. The award of any Benefit under the Plan may
also be subject to such other provisions (whether or not applicable to
the Benefit awarded to any other participant) as the Board or Committee
determines appropriate, including without limitation, provisions for
the installment purchase of Common Stock under such Benefits,
provisions to assist the participant in financing the acquisition of
Common Stock, provisions for prepayment at the participant's election
of the purchase price of Common Stock under such Benefits, provisions
for the forfeiture of, or restrictions on resale or other disposition
of shares acquired under such Benefits, provisions giving the Company
the right to repurchase shares acquired under any form of Benefit in
the event the participant elects to dispose of such shares, provisions
to comply with federal and state tax or securities laws, or
understandings or conditions as to the participant's employment in
addition to those specifically provided for under the Plan or written
agreement.
11. TENURE. A participant's right, if any, to continue to serve
the Company and its subsidiaries as an officer, employee, or otherwise,
shall not be enlarged or otherwise affected by designation as a
participant under the Plan.
12. EMPLOYEES IN FOREIGN COUNTRIES. The Board or Committee shall
have the authority to adopt such modifications, procedures, and
subplans as may be necessary or desirable to comply with provisions of
the laws of foreign countries in which the Company or its subsidiaries
may operate to assure the viability of the Benefits granted or awarded
to employees employed in such countries and to meet the objectives of
the Plan.
<PAGE>
13. DURATION, AMENDMENT AND TERMINATION. No Benefit shall be
granted more than ten years after the date of adoption of this Plan;
provided, however, that the terms and conditions applicable to any
Benefit granted within such period may thereafter be amended or
modified by mutual agreement between the Company and the participant or
such other persons as may then have an interest therein. Also, by
mutual agreement between the Company and a participant hereunder, or
under any future plan of the Company, Benefits may be granted to such
participant in substitution and exchange for, and in cancellation of,
any Benefits previously granted such participant under this Plan, or
any benefit previously or thereafter granted to him under any future
plan of the Company. The Board or Committee may amend the Plan from
time to time or terminate the Plan at any time. However, no action
authorized by this paragraph shall reduce the amount of any existing
Benefit or change the terms and conditions thereof without the
participant's consent. No amendment of the Plan shall, without
approval of the stockholders of the Company, (i) increase the total
number of shares which may be issued under the Plan or increase the
amount or type of Benefits that may be granted under the Plan; (ii)
change the minimum purchase price, if any, of shares of Common stock
which may be made subject to Benefits under the Plan; or (iii) modify
the requirements as to eligibility for Benefits under the Plan.
14. UNFUNDED STATUS OF PLAN. It is presently intended that the
Plan constitute an "unfunded" plan for incentive compensation. The
Board or Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver
Common Stock or make payments; provided, however, that, unless the
Board or Committee otherwise determines, the existence of such trusts
or other arrangements is consistent with the "unfunded" status of the
Plan.
15. SHAREHOLDER APPROVAL. The Plan has been adopted by the Board
of Directors on March 15, 1994, and shall be effective upon approval by
the shareholders of the Company. Such adoption shall be null and void
if shareholder approval is not obtained within twelve months of the
adoption of the Plan by the Board of Directors.
<PAGE>
APPENDIX
Annual Meeting of Stockholders
Wednesday, July 21, 1999
9:30 a.m. CDT
Modine Manufacturing Company Modine shareholders can build
1500 DeKoven Avenue their investments in Modine
Racine, Wisconsin 53403 through a no-cost plan for
automatically reinvesting
dividends and making additional
cash purchases of Modine stock.
Systematic investments can be
established for your account
by authorizing direct deductions
from your bank account on a
monthly basis. To receive plan
material and enrollment
information, call 800-813-3324.
The Modine Manufacturing Company
Dividend Reinvestment and Direct
Stock Purchase Plan is
administered by the company's
transfer agent, Norwest Shareowner
Services, 800-468-9716.
Modine Manufacturing Company
1500 DeKoven Avenue, Racine, Wisconsin 53403-2552 proxy
- ------------------------------------------------------------------------------
This proxy is solicited on behalf of the 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 on the 21st day of July,
1999 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. The tabulator cannot vote your shares
unless you sign, date and return this proxy card.
See reverse side
<PAGE>
Modine Manufacturing Company 401(k) Retirement Plan
Voting Instructions to Trustee Marshall & Ilsley Trust Company for
the Annual Meeting of Shareholders
As a participant in the Modine Manufacturing Company 401(k) Plan,
you have the right to give instructions to the Plan Trustee as to
the voting of certain shares of Modine Manufacturing Company
Common Stock allocated to your account at the Annual Meeting of
Shareholders or at any and all adjournments or postponements of
the Annual Meeting. In this regard, please indicate your voting
choices on this card, sign and date it, and return this card
promptly in the enclosed postage prepaid envelope. If your card
is not received at least five days prior to the Annual Meeting, or
if you do not return this card, shares held in your account for
which a proxy is not received will be voted by the Trustee in its
own discretion and in accordance with ERISA.
Modine Manufacturing Company Contributory Employee Stock Ownership
and Investment Plan
Voting Instructions to Trustee Marshall & Ilsley Trust Company for
the Annual Meeting of Shareholders
As a participant in the Modine Manufacturing Company Contributory
Employee Stock Ownership and Investment Plan, you have the right
to vote certain shares of Modine Manufacturing Company Common
Stock allocated to your account at the Annual Meeting or at any
and all adjournments or postponements of the Annual Meeting. In
this regard, please indicate your voting choices on this card,
sign and date it, and return this card promptly in the enclosed
postage prepaid envelope. If you do not return this card, shares
held in your account for which a proxy is not received will be
voted by the Trustee in the same proportion as votes actually cast
by plan participants.
Modine Subsidiaries 401(k) Defined Contribution Plan
Voting Instructions to Trustee New York Life Trust Company for the
Annual Meeting of Shareholders
As a participant in the Modine Subsidiaries 401(k) Defined
Contribution Plan, you have the right to vote certain shares of
Modine Manufacturing Company Common Stock allocated to your
account at the Annual Meeting or at any and all adjournments or
postponements of the Annual Meeting. In this regard, please
indicate your voting choices on this card, sign and date it, and
return this card promptly in the enclosed postage prepaid
envelope. If you sign without otherwise marking the proxy, the
securities will be voted as recommended by the Board of Directors
on all matters to be considered at the meeting. For this meeting,
the extent of New York Life Trust Company's authority to vote your
securities in the absence of your instructions, as directed by the
Administrative Fiduciary, is that securities for which no voting
instructions have been given shall be voted in the same proportion
as the vote of proxies returned.
Please fold here
<PAGE>
<TABLE>
<CAPTION>
The Board of Directors Recommends a Vote FOR Items 1 and 2
<S> <C> <C> <C>
1. Election of Directors: 01 Vincent L. Martin / / Vote FOR all nominees listed / / WITHHOLD
02 Richard T. Savage (except as marked contrary below) Authority
03 Marsha C. Williams
------------------------
(Instructions: To withhold authority to vote for any indicated nominee, / /
write the number(s) of the nominee(s) in the box provided to the right.) / /
------------------------
2. Re-approval of 1994 Incentive Compensation Plan / / For / / Against / / Abstain
* NOTE * To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE BOTED AS DIRECTOR OR, IF
NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box / /
Indicate changes below: Date , 1999
---------------
------------------------------
/ /
/ /
------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear
on Proxy. If held in joint tenancy, all
persons must sign. Trustees, administrators,
etc., should include title and authority.
Corporations should provide full name of
corporation and title of authorized officer
signing the proxy.
</TABLE>
<PAGE>
