<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NEWCOR, INC.
(Name of Registrant as Specified In Its Charter)
----------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- ---------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------
3) Filing Party:
- ----------------------------------------------------------
4) Date Filed:
- ------------------------------------------------------------
<PAGE> 2
NEWCOR, INC.
1825 S. Woodward, Suite 240
Bloomfield Hills, Michigan 48302
------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1999
To the Shareholders of
NEWCOR, INC.
Notice is hereby given that the Annual Meeting of Shareholders of
Newcor, Inc. will be held at the Troy Marriott, 200 W. Big Beaver Road, Troy,
Michigan, on Wednesday, April 21, 1999, at nine thirty o'clock in the morning,
for the following purposes:
1. To elect two Directors to serve until the 2002 Annual Meeting of
Shareholders or until their successors have been duly elected and
qualified.
2. To transact such other business as may properly come before the
meeting, or any adjournment thereof.
The close of business on February 11, 1999 has been fixed by the Board
of Directors as the record date for the determination of shareholders entitled
to notice of, and to vote at, the Annual Meeting.
You are cordially invited to attend the meeting in person. If you do
not expect to be present, please mark, sign and date the enclosed proxy and mail
it in the return envelope, which requires no postage if mailed in the United
States. It will assist us in preparing for the meeting if shareholders will
return their signed proxies promptly regardless of whether they expect to attend
in person and whether they own few or many shares. The proxy may be withdrawn at
any time prior to being voted.
By Order of the Board of Directors
/s/ Thomas D. Parker
----------------------------------
Thomas D. Parker, Secretary
Bloomfield Hills, Michigan
March 4, 1999
<PAGE> 3
NEWCOR, INC.
1825 S. WOODWARD, SUITE 240
BLOOMFIELD HILLS, MICHIGAN 48302
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 21, 1999
This Proxy Statement is furnished to the holders of Newcor,
Inc. common stock in connection with the solicitation of proxies by
Newcor's Board of Directors for the annual meeting of shareholders to
be held April 21, 1999 at 9:30 a.m., local time, at the Troy Marriott
Hotel, 200 W. Big Beaver Road, Troy, Michigan. This Proxy Statement and
the accompanying notice of the meeting, proxy card, and annual report
to shareholders will first be sent or given to shareholders on March 4,
1999.
The record date for the annual meeting (or any adjournments of
the meeting) is the close of business on February 11, 1999. At the
record date, 4,942,034 shares of Newcor common stock were outstanding
and entitled to vote. Each of those shares is entitled to one vote on
each matter presented at the meeting. The only persons entitled to
notice of and to vote at the meeting are the persons who were record
holders of those shares at the record date.
Management is not aware of any business that may be presented
for action at the annual meeting other than the election of directors
and matters incident to the conduct of the meeting. If any other
business should properly come before the meeting, the persons named in
the enclosed proxy card will vote the shares for which they hold
proxies in accordance with their judgment. Matters incident to the
conduct of the meeting also may be voted upon by the proxy holders in
accordance with their judgment.
In addition to solicitation by mail, this proxy solicitation
may be conducted by telephone, electronic media, or in person by Newcor
personnel (who will not receive any separate compensation for such
activities). Newcor will pay the costs of this proxy solicitation and
also will reimburse banks or brokers holding shares in the names of
nominees for their reasonable out-of-pocket expense of sending
soliciting material to the beneficial owners of the shares and
obtaining their proxies.
<PAGE> 4
PRINCIPAL SHAREHOLDERS
The table below identifies each person known to Newcor that is
or may be a beneficial owner (within the meaning of SEC Rule 13d-3) of
over 5% of Newcor's common stock. Percentages are as of the record date
for the annual meeting. Additional information concerning the table is
provided after the table.
<TABLE>
<S> <C> <C>
David L. Babson & Co., Inc. - 584,733.5 shares 11.83%
One Memorial Drive
Cambridge, MA 02142-1300
Dimensional Fund Advisors Inc. - 368,606.0 shares 7.46%
1299 Ocean Avenue
Santa Monica, California 90401
Shirley E. Gofrank - 278,217.0 shares 5.63%
3001 W. Big Beaver
Troy, MI 48084
Catherine A. Gofrank - 283,375 shares 5.73%
26555 Evergreen Rd.
Southfield, MI 48076-4285
</TABLE>
The information above about David L. Babson & Co., Inc. is
based on its Schedule 13G, as amended through January 25, 1999.
Holdings reported in that schedule are as of December 31, 1998. The
schedule states that Babson is a registered investment adviser, that
the shares reported for it are owned by numerous of its investment
counseling clients, but that it has the sole right to vote and the sole
right to dispose of those shares.
The information about Dimensional Fund Advisors Inc. is based
on its Schedule 13G, as amended through February 11, 1999. Holdings
reported in that schedule are as of December 31, 1998. According to the
schedule, Dimensional is a registered investment adviser and an
investment manager, the shares reported for it are held in portfolios
of mutual funds and other investment vehicles it advises or manages,
and it has sole voting and dispositive power over all of those shares
in those capacities. It has disclaimed beneficial ownership of any of
the shares.
The information about Shirley Gofrank is based on her July 10,
1996 Schedule 13D and updating information she recently provided to
Newcor in her capacity as a Newcor director. The shares reported for
her include 41,609 shares over which she has sole voting and
dispositive power, 1,562 shares subject to options currently
exercisable or that will become exercisable within 60 days, and 235,046
shares over which she shares voting and dispositive power with her
sister, Catherine A. Gofrank, in their capacities as successor
co-trustees of a trust established by their father during his lifetime.
The shares
<PAGE> 5
reported for Shirley Gofrank do not include 381 shares owned by her
husband, over which she has no voting or dispositive power.
The information about Catherine Gofrank is based on her July
8, 1996 Schedule 13D and the supplementary information provided by her
sister, Shirley, concerning her holdings as a co-trustee of the trust
referred to above. Based on this information and her Schedule 13D,
Catherine Gofrank has sole voting and dispositive power over 48,329 of
the shares reported for her, and she and her sister share voting and
dispositive power over the rest of the reported shares.
ELECTION OF DIRECTORS
NOMINEES AND VOTING PROCESS
The directors on Newcor's Board are divided into three
classes. Each director serves for a three-year term or until his or her
successor is elected and qualified, but the terms of office of
directors in the three classes are staggered so that at each annual
meeting the terms of the directors in a different class are scheduled
to expire. This year, the terms of the two directors serving in the
class elected in 1996 are scheduled to expire, and two directors are to
be elected, for terms scheduled to expire in 2002.
Assuming the presence of a quorum, directors will be elected
at the annual meeting, from among all persons duly nominated, by a
plurality of the votes actually cast by holders of Newcor common stock
present in person or by proxy and entitled to vote at the meeting.
Thus, the nominees who receive the highest and second-highest numbers
of votes for their election as directors will be elected, regardless of
the number of votes that for any reason, including abstention, broker
non-vote, or withholding of authority to vote, are not cast for the
election of those nominees.
The Board's nominees for election to the 2002 class are the
two incumbent directors whose current terms are ending, Jerry D.
Campbell and William A. Lawson. If a proxy in the form enclosed is
properly signed and returned in time for the vote and no instruction to
the contrary is given on the proxy card, the shares covered by that
proxy will be voted FOR the election of those nominees (or if either of
them should become unable to serve, which is not expected, for a
substitute nominated by the Board).
<PAGE> 6
SHARE OWNERSHIP AND OTHER INFORMATION
ABOUT DIRECTORS AND EXECUTIVE OFFICERS
The table that follows provides biographical information and
information about the beneficial ownership of Newcor common stock at
the record date for the annual meeting for each of the Board's
director-nominees, each other current Newcor director, and each current
Newcor executive officer who is not also a director, in each case based
on data he or she has provided. It also provides record date share
ownership information for all directors and current executive officers
as a group.
For purposes of this table, if no starting date for an
employment position shown for an individual is given, he or she has
held that position for at least five years. The director positions
listed are current positions only. Additional information concerning
items in the table is provided after the table.
NOMINEES FOR TERMS EXPIRING IN 2002
<TABLE>
<CAPTION>
SHARES OWNED PERCENTAGE
<S> <C> <C>
JERRY D. CAMPBELL (age 58; director since 1987)
Mr. Campbell is Chairman and CEO of Republic
Bancorp, Inc. He is a director of Professionals
Insurance Company Group, Chairman and a director
of Great Lakes Downs, Inc., a thoroughbred horse
racing facility and a director of Bernal International, Inc.,
a manufacturer of parts and equipment for the packaging
industry. Mr. Campbell serves on the Finance
Committee and the Compensation/Stock Option Committee of
Newcor's Board. 171,569 3.47%
WILLIAM A. LAWSON (age 65; director since 1988)
Mr. Lawson is the Chairman of the Board of Directors
of Newcor. He also is Chairman and CEO of Bernal
International, Inc. (since October 1995) and Chairman
of W. A. Lawson Associates (investments and
consulting). He is a director of Energy Research
Corp. Mr. Lawson serves on the Board's Executive
Committee and its Finance Committee. He also is
entitled to attend all meetings of all other Board
committees, by virtue of his position as Chairman,
but he has no right to vote on any matter coming
before any of those other committees. 128,234 2.58%
</TABLE>
<PAGE> 7
DIRECTORS WHOSE TERMS EXPIRE IN 2000
<TABLE>
<CAPTION>
SHARES OWNED PERCENTAGE
<S> <C> <C>
JACK R. LOUSMA (age 62; director since 1991)
Mr. Lousma has been President and CEO of
Diamond General Development Corp., a developer
and manufacturer of products for the dental industry,
since November 1998 and previously held other
Diamond General management positions, including President
and COO from 1996 until becoming CEO. In 1993 and
1994, he was Vice President Marketing and Sales of
Aero Sport, Inc., a manufacturer of analyzers for
the medical Industry. Mr. Lousma also is President
of Michigan Columbia Corp. (aerospace engineering and
consulting) and a director of Republic Bank. He
serves on the Compensation/Stock Option Committee
and the Audit Committee of Newcor's Board. 12,444 0.25%
RICHARD A. SMITH (age 59; director since 1987)
Prior to his retirement in December 1990, Mr. Smith
was President and CEO of Newcor. He is a director
of Kettering University (formerly GMI Engineering
and Management Institute). He serves on the Board's
Executive and Audit Committees. 68,672 1.39%
KURT O. TECH (age 77; Newcor director since 1981)
Prior to his retirement in 1980, Mr. Tech was
President of the Cross Company. He serves
on the Compensation/Stock Option Committee
and the Executive Committee of the Board. 13,055 0.26%
</TABLE>
<PAGE> 8
DIRECTORS WHOSE TERMS EXPIRE IN 2001
<TABLE>
<CAPTION>
SHARES OWNED PERCENTAGE
<S> <C> <C>
SHIRLEY E. GOFRANK (age 50; Newcor director since 1995)
Ms. Gofrank is President and Managing Director
of Gofrank & Mattina, P.C., a public accounting
firm. She is a member of the Board's Audit and
Finance Committees. 278,217 5.63%
KEITH F. HALE (age 58; director since 1998)
Mr. Hale has been Newcor's President and CEO
since November 1998. Before Newcor's
acquisition of the companies now comprising
its Deco operations, Mr. Hale was Vice President
and General Manager of those companies. From
the March 1998 acquisition of the Deco companies
until early July 1998, he continued with Newcor as
Executive Vice President and General Manager of
the Deco Group. Mr. Hale is a member of the Board's
Executive Committee. 12,500 0.25%
W. JOHN WEINHARDT (age 48; director since 1995)
Mr. Weinhardt was Newcor's
President and CEO from March 1995 to
November 1998. Previously, he served as
Vice President and Group Executive of Danaher
Corp., a diversified manufacturer of automotive
products, process-environmental controls, and
hand tools, and as President and CEO of Fayette
Tubular Products, Inc., a Danaher subsidiary. 23,717 0.48%
</TABLE>
<PAGE> 9
NON-DIRECTOR EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES OWNED PERCENTAGE
<S> <C> <C>
MICHAEL J. BRODY (age 29)
Newcor's Interim Principal Accounting Officer
since February 15, 1999, and Manager of
Financial Reporting since August 1998.
Previously he served as Audit Manager for
PricewaterhouseCoopers LLP, a public accounting
firm. By virtue of his current positions with
Newcor, Mr. Brody is entitled to attend all
meetings of the Board's Finance Committee.
However, he has no right to vote upon any
matter coming before that committee.
THOMAS D. PARKER (age 52)
Mr. Parker is Newcor's Vice President
Human Resources and since June 1994
also its Secretary. 9,798 0.20%
WILLIAM J. FARIS (age 48)
Mr. Faris has been Group Vice President of
Newcor Rubber and Plastic since July 1998.
This has been an executive officer position
since February 1999. He was the Vice President
of Operations of the Newcor Rubber and Plastic
Group from January 1998 to July 1998. Previously
he served in various managerial positions for
Hutchinson, S.A. 3,184 0.06%
ROBERT E. DALLAIRE (age 49)
Mr. Dallaire has been Vice President and
General Manager of the Deco Group since June 1998. This
has been an executive officer position since February
1999. Previously he was Manager of Materials for the
Deco companies. 600 0.01%
ALL DIRECTORS AND CURRENT EXECUTIVE OFFICERS
AS A GROUP (12 persons) 721,991 14.50%
</TABLE>
<PAGE> 10
The shares reported in the table above include shares that may
be acquired under stock options currently or within 60 days
exercisable, as follows: Jerry Campbell, 1562; William Lawson, 19,930;
Jack Lousma, 1,562; Richard Smith, 1,562; Kurt Tech, 1,562; Shirley
Gofrank, 1,562; Robert Dallaire, 500; Thomas Parker, 7,117; William
Faris, 2,500, all directors and current executive officers as a group,
38,648. For purposes of calculating the group percentage, all optioned
shares are treated as outstanding. For purposes of calculating
individual percentages, only the shares optioned to the named
individual are treated as outstanding.
The shares reported also include shares held in accounts under
the Newcor Savings Plan (a 401(k) plan), as follows: John Weinhardt,
4,232; Thomas Parker, 791; William Faris, 684. These individuals have
sole dispositive power but no voting power over those shares. In
addition, the shares reported for Shirley Gofrank also include the
235,046 shares held as co-trustee the trust discussed above under
"Principal Shareholders."
Except as noted above, each person named in the table has the
sole power to vote and dispose of all shares shown for him or her.
The reported shares do not include shares held by a person's
spouse over which the person has no voting or dispositive power, as
follows: Richard Smith, 395 shares; Shirley Gofrank, 381 shares.
CHANGES IN EXECUTIVES SINCE YEAR END
Since the close of the fiscal year ended October 31, 1998
("fiscal 1998"), there have been several changes in Newcor's executive
officers. First, as indicated above, John Weinhardt, who was Newcor's
President and Chief Executive Officer throughout fiscal 1998, vacated
those positions in November 1998 and was succeeded by Newcor's current
President and CEO, Keith Hale.
In addition, three other changes in executive officers have
occurred since fiscal year end. Robert C. Ballou, formerly Group Vice
President Precision Machined Products, left Newcor in mid-November
1998, Dennis H. Reckinger, formerly Senior Vice President, retired on
the first of that month, and John J. Garber, formerly Vice President
Finance, Treasurer, and Chief Financial Officer, left Newcor on
February 12, 1999. Newcor understands from these former executives that
as of the record date for the upcoming annual meeting, Mr. Ballou was
beneficial owner of 6,614 shares of Newcor common stock including 1,364
shares held in the Newcor Savings Plan, Mr. Reckinger owned 13,058
shares beneficially including 6,324 shares subject to currently
exercisable options and 782 shares held in the Newcor Savings Plan, and
Mr. Garber owned 22,842 shares beneficially including 11,372 shares
subject to currently exercisable options and 905 shares held in the
Newcor Savings Plan.
<PAGE> 11
As a result of the above departures, the Board reevaluated the
organization of the executive officer group at its February, 1999
meeting and determined that Mr. Faris and Mr. Dallaire had now assumed
significant responsibilities and elevated them to the level of
executive officers of the company for the Rubber and Plastic Group and
the Deco Group respectively. Mr. Hale is directly overseeing the
operations of the Precision Machined Products Group. Mr. Garber's
responsibilities as principal financial officer and principal
accounting officer have been taken over by Mr. Brody on an interim
basis, pending the results of a more extensive executive search.
BOARD COMMITTEES AND MEETINGS
The Executive Committee of the Board acts on behalf of the
Board between board meetings. The Audit Committee assists the Board in
fulfilling its fiduciary responsibility relating to corporate
accounting and reporting practices and maintains a direct and separate
line of communication between the Board and Newcor's independent
auditors. The functions of the Compensation/Stock Option Committee
include reviewing current compensation practices, making
recommendations to the Board for compensation of directors and
officers, making recommendations in relation to the Newcor's 401(k)
plans, and administering its stock-based plans. (For more information
concerning this committee, see "Compensation Committee Report" below).
The Finance Committee's responsibilities include recommending dividend
action to the Board after consultation with management and providing
the Board with such advice and recommendations as it may from time to
time request concerning borrowings, issuance of securities, investment
of cash balances, and other investments. The Finance Committee also
recommends persons to the Board for nomination as directors. The
Finance Committee does not solicit director nominations from
shareholders.
During fiscal 1998, the Board of Directors held four meetings,
the Executive Committee held five meetings, the Audit Committee met
twice, and the Finance Committee held three meetings. Each director
attended at least 90% of all meetings of the Board of Directors and of
the committees on which he or she served.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Newcor directors and executive officers and certain beneficial
owners of more than 10% of its common stock are required by Section
16(a) of the Securities Exchange Act of 1934 to file initial reports of
ownership and reports of changes in ownership of Newcor equity
securities with the SEC. They also are required by Section 16(a) to
provide Newcor with copies of whatever reports they may file. Newcor
has reviewed all copies of Section 16(a) reports it has received from
persons known to Newcor to be (or during fiscal 1998 to have been)
subject to these reporting requirements and also has received and
reviewed written representations from some of them to the effect that
other reports were not required. Based solely on that review, Newcor
believes that all required reports for fiscal 1998 were timely filed.
<PAGE> 12
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION INFORMATION
The table that follows provides summary information, for
fiscal 1998 and each of the preceding two fiscal years in which they
were Newcor executive officers, concerning the compensation of John
Weinhardt (who served as Newcor's CEO throughout fiscal 1998), of Keith
Hale (who did not become the new CEO until after fiscal year end but
did serve as an executive officer in another capacity for a portion of
fiscal 1998), and of each other current or former Newcor executive
officer who served as such during fiscal 1998 and whose salary and
bonus for the year exceeded $100,000. When the position shown for an
executive in the table is identified there as a "former" position, this
means he held the position for some or all of fiscal 1998 but no longer
holds it. Additional information about items in the table is provided
after the table.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION ALL OTHER
ANNUAL COMPENSATION COMPENSATION
OTHER RESTRICTED STOCK
NAME AND FISCAL ANNUAL STOCK UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS
<S> <C> <C> <C> <C> <C> <C> <C>
K. F. Hale 1998 $ 49,138 $ 15,000 -0- $ 93,750 0 shares -0-
Former VP &
General Mgr.
Deco Group
(now CEO)
W. J. Weinhardt 1998 $300,000 -0- $ 20,071 -0- 42,000 shares $ 31,461
Former President 1997 $290,000 $221,444 $ 20,071 $ 72,863 18,270 shares $ 28,836
& CEO 1996 $256,667 $176,000 $ 20,071 -0- 0 shares $ 26,461
T.D. Parker 1998 $107,000 -0- -0- -0- 8,000 shares $ 3,411
VP Human 1997 $100,000 $ 35,742 -0- $ 10,888 2,730 shares $ 1,920
Resources & Sec 1996 $ 92,600 $ 21,988 -0- $ 4,125 2,100 shares -0-
J. J. Garber 1998 $139,000 -0- -0- -0- 9,000 shares $ 3,557
Former VP Finance, 1997 $133,100 $ 61,226 -0- $ 16,750 4,200 shares $ 1,684
Treasurer & CFO 1996 $126,735 $ 51,315 -0- $ 8,250 2,100 shares -0-
R.C. Ballou 1998 $160,000 -0- -0- -0- 12,000 shares $ 4,393
Former Group VP 1997 $145,000 $127,984 -0- $ 25,125 6,300 shares $ 1,917
Precision Machine 1996 $135,000 $ 51,000 -0- $ 16,500 6,300 shares -0-
Products
D. H. Reckinger 1998 $139,000 -0- -0- -0- 6,000 shares $ 3,476
Former Senior VP 1997 $135,700 $ 10,747 -0- $ 20,100 5,040 shares $ 1,586
1996 $129,200 $ 46,784 -0- $ 6,188 2,625 shares -0-
</TABLE>
<PAGE> 13
SALARY AND BONUS. The "Salary" and "Bonus" columns in the
table above include, where applicable, amounts deferred into the Newcor
Savings Plan at a named executive's election. 1996 bonus amounts do not
include the amount of any bonus exchanged by a named executive for
restricted shares of common stock pursuant to the Voluntary Program of
Newcor's 1996 Employee Incentive Stock Plan. Instead, the "Restricted
Stock Awards" column of the table provides information concerning the
shares acquired.
OTHER ANNUAL COMPENSATION. For each named executive in each
fiscal year, the incremental cost to Newcor of providing perquisites or
other non-cash benefits to him did not exceed 10% of the executive's
aggregate salary and bonus for the year. Consequently, as permitted by
SEC rules, no information concerning perquisites or other non-cash
benefits is provided in the "Other Annual Compensation" column of the
table. The amounts reported for Mr. Weinhardt are "gross up" amounts
for taxes payable by him due to reimbursement of life insurance
premiums. The reimbursement amounts themselves are reported in the "All
Other Compensation" column.
RESTRICTED STOCK AWARDS. The dollar amounts reported for 1996
in the "Restricted Stock Awards" column relate to awards of
transfer-restricted but nonforfeitable shares of common stock received
by named executives in 1997 under the Voluntary Program of Newcor's
1996 Employee Incentive Stock Plan in exchange for portions of the cash
bonuses awarded to them for fiscal 1996 performance under Newcor's cash
incentive bonus plan. The dollar amounts reported in the column for
1997 and 1998 relate to awards of transfer-restricted and forfeitable
shares of Newcor common stock made to named executives in those fiscal
years under the Discretionary Program of the Employee Incentive Stock
Plan. (Additional information concerning the Employee Incentive Stock
Plan is provided below under "--Shares Underlying Options" and
elsewhere in this Proxy Statement under "Options Granted During Fiscal
1998" and in the Compensation Committee Report.) In each case, dollars
reported have been calculated by multiplying the number of shares
received under the plan by the NASDAQ National Market closing price for
an unrestricted share of Newcor common stock on the pertinent award
date.
The transfer restrictions imposed on shares awarded under the
Voluntary Program lapse on the first anniversary of the award date.
Subject to earlier vesting upon death, disability, or as otherwise
provided in the plan, the transfer restrictions and risk of forfeiture
imposed on shares awarded under the Discretionary Program lapse on the
third anniversary of the award date. Holders of shares received under
either program possess all of the normal rights of a holder of common
stock with respect to those shares, including voting and dividend
rights.
The restricted shares reported in the table for Mr. Hale were
forfeited when he left Newcor's employ in July 1998. As of the last
business day of fiscal 1998, the other named executives, respectively,
held the following aggregate numbers of shares received under the
Employee Incentive Stock Plan that were then still subject to transfer
restrictions: Mr. Weinhardt, 9,135 (all forfeitable); Mr. Parker, 1,890
(1,365 forfeitable); Mr. Garber, 3,150 (2,100 forfeitable); Mr. Ballou,
5,250 (3,150 forfeitable); Mr.
<PAGE> 14
Reckinger, 3,307 (2,520 forfeitable). In connection with leaving Newcor
employment after fiscal year end, each of Messrs. Weinhardt, Garber,
Ballou, and Reckinger forfeited all of his forfeitable shares.
SHARES UNDERLYING STOCK OPTIONS. The shares reported for 1998
and 1997 in the "Shares Underlying Options" column of the table all
relate to shares of Newcor common stock underlying options granted to
named executives under the Discretionary Program of the Employee
Incentive Stock Plan. The shares reported for 1996 include 1,050
subject to options acquired by Mr. Parker, 2,100 subject to options
acquired by Mr. Garber, 4,200 shares subject to options acquired by Mr.
Ballou, and 1,575 subject to options acquired by Mr. Reckinger as a
result of participation in the Voluntary Program of that plan during
the year. The other shares reported for 1996 relate to options granted
under the Discretionary Program of Newcor's 1993 Management Stock
Incentive Plan, the provisions of which are similar to those of the
Employee Incentive Stock Plan.
Under the terms of these plans, option grants generally become
exercisable in 25% increments on each of the first through fourth
anniversaries of the date they were granted, and options that are not
exercisable when a grantee leaves employment are forfeited. All of the
1998 options and many of the other options reported in the table for
Messrs. Weinhardt, Garber, Ballou, and Reckinger were forfeited at
employment termination because they were not yet exercisable. In
addition, pursuant to the plans under which they were granted, all of
Mr.Weinhardt's and Mr. Ballou's other options were canceled 30 days
after their respective employment terminations, and Mr. Garber's other
options are due to be canceled on March 12, 1999.
ALL OTHER COMPENSATION. For each year, $26,461 of the total
amount reported for Mr. Weinhardt in the "All Other Compensation"
column of the table represents reimbursement of premiums paid by Mr.
Weinhardt on a $1,500,000 insurance policy on his life. (Mr. Weinhardt
is the owner of this policy; Newcor is not a beneficiary.) Except for
these reimbursement amounts, all amounts reported in this column
represent the dollar value of matching contributions made by Newcor for
the accounts of named executives under the Newcor Savings Plan.
AGREEMENTS WITH EXECUTIVES NAMED
IN THE SUMMARY COMPENSATION TABLE
HALE AGREEMENTS. In connection with his engagement as Newcor's
President and CEO, Keith Hale and Newcor have entered into an
employment agreement. Under this agreement, Mr. Hale is entitled to
salary at the rate of $275,000 per year (subject to annual review by
the Board), to use of an automobile provided at Newcor's expense
(except for a $50 per month personal use charge), to term insurance on
his life with a death benefit of at least $800,000 (subject to his
insurability), to participate in employee benefit plans on the terms
generally applicable to executive officers, and to eligibility for an
incentive bonus (if earned) of up to 100% of his salary, based on
performance criteria developed by the Compensation/Stock Option
Committee. The agreement also
<PAGE> 15
contemplated that he would be granted a nonqualified stock option on
50,000 shares of Newcor common stock under the 1996 Employee Incentive
Stock Plan, which occurred on November 4, 1998, and contemplates that
if the average market price for the stock for the last five business
days of 1999 is at least $6.00 per share, he will receive another grant
covering 50,000 additional shares.
Under the agreement, both Newcor and Mr. Hale have the right
unilaterally to terminate his employment upon 30 days' prior written
notice to the other party, and his employment would terminate
immediately if he becomes permanently disabled or dies. If Newcor
terminates Mr. Hale's employment not for Cause (as defined in the
agreement), he would be entitled to continuation of his salary and life
insurance for one year after his termination, to outplacement services
and continued use of his automobile for as long as one year, continued
medical plan benefits for up to 24 months, to any bonus earned through
his termination date, and to one year's continued participation in
other employee benefit plans. If his employment terminates due to
permanent disability, he would be entitled to substantially similar
benefits, reduced by any payments made under Newcor's long-term
disability policy. If his employment ends for any other reason,
Newcor's obligations to him under the agreement would extend only to
his termination date.
This agreement prohibits Mr. Hale from making any attempt to
induce or encourage any employee of Newcor or an affiliate to leave for
employment with a competitor until two years after his employment
terminates, and it imposes confidentiality obligations on him for the
same time period. It also provides that any intellectual property
developed or invented by him during his employment will be Newcor's
sole and exclusive property. In addition, Mr. Hale has promised in the
agreement that if his employment terminates and he then is still a
Newcor director he will resign from the Board if it so requests.
The compensation that is reported for Mr. Hale in the Summary
Compensation Table was paid to him under a prior agreement he had with
Newcor for his services as Vice President and General Manager of the
Deco Group. That agreement called for salary at the rate of $160,000
per year, a $15,000 "signing bonus" provided he remained in Newcor's
employ for at least 30 days, participation in Newcor's cash incentive
bonus plan, and a grant of 10,000 restricted shares. The restricted
shares were forfeited upon his separation from employment in July 1998.
PARKER "CHANGE IN CONTROL" AGREEMENT. Thomas Parker has an
agreement with Newcor providing for payments to him in some cases if he
or Newcor terminates his employment within eighteen months after a
"change in control" (as defined in the agreement). Under the agreement,
the maximum cash amount that would be payable if his employment
terminated after a change in control is 1.5 times the sum of his annual
base salary in effect on the termination date (or, if higher,
immediately preceding the change in control) plus his average annual
bonus for the three full fiscal years immediately preceding the
termination date or change in control. The agreement also provides for
continuance of health, life, and similar insurance coverage for
specified time
<PAGE> 16
periods following employment termination after a change in control and,
under some circumstances, for outplacement services.
In addition, the agreement provides that upon the occurrence
of a change in control all of Mr. Parker's then outstanding but
unexercisable options to acquire Newcor common stock will become
immediately exercisable in full, and that each option held by him would
continue to be exercisable for six months following any termination of
his employment within eighteen months after a change in control or such
shorter period as the option would have been exercisable if his
employment had not terminated.
WEINHARDT AGREEMENTS. At the time he left employment as
Newcor's President and CEO, John Weinhardt had an employment agreement
with Newcor for a term ending on February 28, 1999. The agreement
entitled him to receive salary at a specified annual rate (subject to
periodic review by the Board), to cash bonuses under Newcor's cash
incentive bonus plan if and as earned, to participate in other employee
benefit plans available to Newcor executives, to a $1,500,000 insurance
policy on his life paid for by Newcor, and to specified health
insurance coverage for him and his family and other non-cash fringe
benefits while he remained in Newcor's employ. The agreement also
provided that in some cases he would be entitled to salary continuation
and other benefits if his employment ended before the end of the
agreement's term, the particulars of which depended on the
circumstances of his employment termination.
Under the provisions of the agreement applicable to Mr.
Weinhardt's employment termination, he is entitled until December 5,
1999 to continued payment of the premiums on his life insurance policy
and of his salary at the rate in effect at his termination $300,000 per
year. He also is entitled to continuation of health insurance
outplacement services and some other fringe benefits for that one year
period.
Mr. Weinhardt is prohibited by this agreement from making any
attempt to induce or encourage any employee of Newcor or an affiliate
to leave for employment with a competitor for five years. The agreement
also imposes confidentiality obligations upon him, which continue
indefinitely, and provides that any intellectual property developed or
invented by him during the term of his employment will be Newcor's sole
and exclusive property.
While he was CEO, Mr. Weinhardt also had a "change in control"
agreement with Newcor. However, since he left employment before any
change in control occurred, he no longer is entitled to any potential
benefits under that agreement.
OTHER AGREEMENTS. At the time his employment terminated,
Robert Ballou had a severance agreement with Newcor. Under that
agreement, he is entitled for six months from his November 13, 1998
termination date to continuation of his salary at the $160,000 per year
rate in effect at the time of his termination and to continuation of
some employee benefits. Dennis Reckinger also had a severance
arrangement with Newcor before his retirement, but its terms became
inoperative when he retired.
<PAGE> 17
OPTIONS GRANTED DURING FISCAL 1998
The table below provides information concerning grants of
options to purchase Newcor common stock made during fiscal 1998 to the
executive officers named in the Summary Compensation Table. Additional
information about items in the table is provided after the table.
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
- ----------------------------------------------------------------------------------------------------------
Shares % of Total
Underlying Options Exercise
Options Granted to Price Expiration
Name Granted (#) Employees ($/Sh) Date 5% ($) 10% ($)
----------------------------------------------------------------------------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
K. F. Hale -0- -0- -0- -0- -0- -0-
T. D. Parker 8,000 4.7% $9.375 03/04/2008 $ 47,167 $119,531
W. J. Weinhardt 42,000 24.7% $9.375 03/04/2008 $247,627 $627,536
J. J. Garber 9,000 5.3% $9.375 03/04/2008 $ 53,063 $134,472
R. C. Ballou 12,000 7.1% $9.375 03/04/2008 $ 70,751 $179,296
D. H. Reckinger 6,000 3.5% $9.375 03/04/2008 $ 35,375 $ 89,648
</TABLE>
TYPES OF GRANTS. All grants reported in the table above were
made under the Discretionary Program of Newcor's 1996 Employee
Incentive Stock Plan. Both nonqualified and incentive stock options may
be granted under this program, at the discretion of the
Compensation/Stock Option Committee, but all grants under the program
to date have been of nonqualified stock options. Discretionary grants
of freestanding stock appreciation rights also may be made under the
program, but none have been made.
Generally, all options granted under the Employee Incentive
Stock Plan, including the options reported in the table, first become
exercisable with respect to one-quarter of the shares covered by the
option on each of the first, second, third, and fourth anniversaries of
the date of grant. However, pursuant to his change in control
agreement, the exercisability of options granted to Mr. Parker would
accelerate upon a change in control. In addition, the plan also permits
the Compensation/Stock Option Committee to accelerate the
exercisability of other options upon a change in control. Exercisable
options under the plan may be exercised for cash, by delivery of shares
of Newcor common stock, or (for a nonqualified stock option) by
directing retention of shares otherwise issuable upon exercise of the
option.
<PAGE> 18
EXPIRATION DATE. The date shown in the "Expiration Date"
column of the table is (or was) the latest possible expiration date for
a reported option. As indicated above under "Summary Executive
Compensation Information--Shares Underlying Stock Options," all of the
options reported in the table that were granted to Mr. Weinhardt, Mr.
Garber, Mr. Ballou, or Mr. Reckinger were forfeited after the end of
fiscal 1998 in connection with employment termination. The reported
options for Mr. Parker also may expire or be forfeited earlier than the
date shown above if his employment terminates before that date.
OPTION VALUES. The "potential realizable value" columns in the
table report the potential gain for the granted options (net of
exercise price, but without any present value discount), assuming
annual compound price appreciation of the underlying common stock at 5%
or 10%, as applicable, through the full option term. Since Messrs.
Weinhardt, Garber, Ballou, and Reckinger have forfeited all the options
reported for them, they cannot realize any value from those options.
The actual value, if any, which Mr. Parker may realize from his options
will depend on the future performance of Newcor and its common stock
and overall market conditions. There can be no assurance that any value
actually realized in the future will approximate the amount reflected
in either of these columns in the table.
OPTION EXERCISES AND YEAR END HOLDINGS
During fiscal 1998, none of the executives named in the
Summary Compensation Table exercised any stock options granted by
Newcor. The table below reports on their holdings of such options at
the end of fiscal 1998. Additional information about items in the table
is provided after the table.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
<S> <C> <C>
K. F. Hale 0/0 0/0
W. J. Weinhardt 83,317/81,953 0/0
T. D. Parker 3,909/11,361 0/0
J. J. Garber 7,547/13,725 0/0
R. C. Ballou 3,675/8,925 0/0
D. H. Reckinger 6,324/12,748 0/0
</TABLE>
THE REPORTED OPTIONS. Unexercised options reported in the
table above include the options reported in the table that precedes it.
All options reported in the table for Mr. Weinhardt or Mr. Ballou were
forfeited after year end due to employment termination. Mr. Garber's
unexercisable options were forfeited in February when his employment
ended; the rest are due to be forfeited on March 12,1999. As a result
of Mr. Reckinger's retirement on November 1, 1998, all of his options
that were not exercisable on that date were forfeited.
<PAGE> 19
DETERMINING VALUE. For purposes of the "value" columns of the
table, value is determined by subtracting the aggregate exercise price
for the optioned shares from the product of that number of shares and
the Nasdaq National Market closing price for Newcor common stock as of
the last business day of fiscal 1998.
NEWCOR, INC. RETIREMENT PLAN
This plan provides vested participants a monthly retirement
benefit equal to years of credited service times 1.1% of the
participant's average monthly salary and bonus for the highest
consecutive 60-month period preceding retirement or other employment
termination, subject to a limit imposed under the Internal Revenue Code
upon the maximum annual compensation amount that may be taken into
account for purposes of calculating benefits and to another Code limit
upon the maximum annual pension amount that may be paid. Currently, the
maximum annual compensation amount limit under the Code is $160,000,
subject to future adjustment in $10,000 increments as and when
justified by increases in the cost-of-living, and the Code limit on the
maximum annual pension amount that may be paid is $130,000 per year,
also subject to adjustment for future cost-of-living increases.
The plan covers substantially all corporate salaried employees
of Newcor. Participants are vested after five years of employment. Mr.
Weinhardt had less than five years of credited service when his
employment terminated, and so did Mr. Ballou. The estimated credited
years of service for the other executives named in the Summary
Compensation Table are, respectively, as follows: Mr. Hale no years;
Mr. Garber, seven years; Mr. Parker, fifteen years; Mr. Reckinger, six
years.
The table that follows shows the estimated annual benefits
(which are not subject to deduction for Social Security benefits or
other amounts) payable under the plan upon retirement at age 63 to
persons in the compensation and years of service classifications
indicated, with benefits computed on the basis of straight life
annuities and without taking into account the Internal Revenue Code
compensation limits discussed above. Please note that due to the
current Code limits the benefits payable under the plan for average
annual compensation above $160,000 would be the same as in the $160,000
row of the table, rather than as presented in the table, except to the
extent that a higher benefit amount may be required in order to
preserve the benefit accrued for a given participant at December 31,
1993, and except to the extent that higher benefits become permissible
in the future due to cost-of-living adjustments.
<PAGE> 20
<TABLE>
<CAPTION>
AVERAGE RETIREMENT PLAN TABLE
----------------------------------------------------------------------------------------------
ANNUAL YEARS OF SERVICE
----------------------------------------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35 40
- ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $11,000 $16,500 $ 22,000 $ 27,500 $ 33,000 $ 38,500 $ 44,000
$125,000 $13,750 $20,625 $ 27,500 $ 34,375 $ 41,250 $ 48,125 $ 55,000
$150,000 $16,500 $24,750 $ 33,000 $ 41,250 $ 49,500 $ 57,750 $ 66,000
$160,000 $17,600 $26,400 $ 35,200 $ 44,000 $ 52,800 $ 61,600 $ 70,400
$175,000 $19,250 $28,875 $ 38,500 $ 48,125 $ 57,750 $ 67,375 $ 77,000
$200,000 $22,000 $33,000 $ 44,000 $ 55,000 $ 66,000 $ 77,000 $ 88,000
$225,000 $24,750 $37,125 $ 49,500 $ 61,875 $ 74,250 $ 86,625 $ 99,000
$250,000 $27,500 $41,250 $ 55,000 $ 68,750 $ 82,500 $ 96,250 $110,000
$300,000 $33,000 $49,500 $ 66,000 $ 82,500 $ 99,000 $115,500 $132,000
$350,000 $38,500 $57,750 $ 77,000 $ 96,250 $115,500 $134,750 $154,000
$400,000 $44,000 $66,000 $ 88,000 $110,000 $132,000 $154,000 $176,000
$450,000 $49,500 $74,250 $ 99,000 $123,750 $148,500 $173,250 $198,000
$500,000 $55,000 $82,500 $110,000 $137,500 $165,000 $192,500 $220,000
</TABLE>
COMPENSATION COMMITTEE REPORT
INTRODUCTION. We are the members of the Compensation/Stock
Option Committee of Newcor's Board of Directors, a standing committee
of the Board since 1978. Among its other duties, our Committee is
charged with the responsibilities, subject to full Board approval, of
establishing, periodically reevaluating and (as appropriate) adjusting,
and administering Newcor policies concerning the compensation of
management personnel, including the CEO and all other executive
officers. In discharging those duties, we are responsible for annually
determining and recommending to the full Board the annual salary for
each executive officer and for establishing the criteria under which
cash incentive bonuses may be paid to executives. We also are
responsible for administering Newcor's stock option and similar plans
for employees, including the 1996 Employee Incentive Stock Plan.
For many years, including fiscal 1998, a basic tenet of our
compensation policy has been that a substantial portion of the annual
compensation of executive officers, as well as other higher-level
personnel, should be directly linked to operating performance for the
year. This policy is implemented through a management incentive cash
bonus plan.
Newcor's stock-related plans enable us to further another
basic tenet of our compensation philosophy concerning executive
officers and other management personnel: that a significant component
of potential compensation for such key employees should be tied to the
value of Newcor's common stock, in order to closely align the interests
of those employees with those of the shareholders and to provide an
incentive for increasing stock value over the long term.
Overall, during fiscal 1998 as in prior years, our executive
officer compensation policies have been aimed at providing executive
officers with compensation opportunities
<PAGE> 21
competitive with those provided executives with comparable experience
and responsibilities at other companies operating in Newcor's business
segments, while at the same time tying a substantial portion of
potential compensation to the achievement of performance goals and to
the increase in common stock values.
SALARIES. When an individual joins Newcor at the executive
officer level, starting salary normally is negotiated with the new
executive by Newcor's CEO (or its Chairman, if the new executive will
be the CEO). We followed this procedure in fiscal 1998 when the Deco
operations were acquired for Mr. Hale's salary as the head of the Deco
Group.
For other executive officers, our Committee annually
formulates recommendations for salary adjustments based on the
recommendations of management (except for CEO salary), market value
changes as evaluated by outside consultants, any changes in the scope
of the services rendered by the executive officers, adjustments in the
cost-of-living index, and our individual judgments developed through
our contacts in the industry. We also give some consideration during
our salary deliberations to the extent of Newcor's success in meeting
earnings per share goals and the performance of the common stock during
the preceding fiscal year.
For fiscal 1998, after reviewing these factors for Mr.
Weinhardt, we recommended a 3.4% increase in his salary, effective
November 1, 1997. After reviewing these factors for the other persons
then serving as executive officers (Messrs. Parker, Garber, Ballou, and
Reckinger) we recommended fiscal 1998 salary increases ranging from
2.4% to 10.3%.
CASH BONUSES. All fiscal 1998 executive officers, other than
Mr. Hale, were eligible to participate in Newcor's management incentive
cash bonus plan for that year. Under the plan, before the start of the
year we set target and minimum thresholds for fiscal 1998 profit before
tax ("PBT"), both for Newcor and its subsidiaries as a whole, and for
individual operating groups or divisions. In addition, we established
individualized fiscal 1998 performance criteria for Mr. Weinhardt and
approved individualized criteria established by him for each of the
other fiscal 1998 executive officers. Mr. Weinhardt's individual goals
related to expanding continuous improvement activities, strengthening
the technical resources and developmental programs of Newcor and its
subsidiaries, and strategically repositioning Newcor through
acquisitions. Goals for other executive officers related to achieving
unit financial plans and expanding continuous improvement programs, as
appropriate for their positions.
For Mr. Weinhardt and each of the other fiscal 1998 executive
officers the maximum cash bonus he could receive under the plan for the
year depended on the extent to which the pre-established threshold PBT
"performance points" were met or exceeded and, to a lesser extent, on
our assessment of his performance for the year in light of the
individualized criteria previously established for him. Regardless of
the strength of an executive's individual performance, no bonus was
permissible unless a threshold PBT applicable to the executive was
achieved.
<PAGE> 22
After fiscal year end, applying the factors described above,
we did not award any cash bonus under the plan to Mr. Weinhardt or any
of the other executive officers for fiscal 1998. Mr. Hale was paid a
$15,000 sign on bonus as a result of his acceptance of employment with
the company upon the purchase of the Deco companies.
OPTIONS AND STOCK AWARDS. The Employee Incentive Stock Plan
establishes a Discretionary Program under which our Committee has
discretionary authority to grant incentive stock options, nonqualified
stock options, stock appreciation rights, restricted stock, and
performance shares to key employees we judge likely to contribute
materially to Newcor's future success. Early in fiscal 1998, we
considered the grant of restricted stock or options under the
Discretionary Program to the persons who then were executive officers,
as well as to other employees. During those deliberations, we
considered the eligibility requirements of the plan, the number of
shares available for awards under the plan, the extent of discretionary
option grants previously made to these executives under Newcor plans,
and recommendations from our outside consultant. After considering
these factors, we granted a discretionary option covering 42,000 shares
of Newcor common stock to Mr. Weinhardt and also granted discretionary
options on an aggregate 35,000 shares to other executive officers.
Later in the fiscal year, we considered the same factors in connection
with the negotiation of Mr. Hale's engagement as an executive officer
and decided to grant him 10,000 shares of forfeitable restricted stock
under the Discretionary Program.
The Employee Incentive Stock Plan also establishes a Voluntary
Program under which, if afforded the opportunity to do so by our
Committee and subject to limits on available shares imposed by the plan
or which we may impose, an eligible employee awarded a cash bonus under
the cash incentive bonus plan may elect to forego or return to Newcor
some or all of that such bonus and instead receive transfer-restricted
but nonforfeitable shares of Newcor common stock having a fair market
value equal to the cash amount given up plus a nonqualified stock
option covering two additional shares for each restricted share
received. At the time cash incentive bonuses were awarded for the
fiscal year ended October 31, 1997, Newcor was engaged in confidential
negotiations concerning the Deco acquisition and the other acquisitions
that closed in mid-year. Under those circumstances, we decided that it
was not appropriate to make the Voluntary Program available for those
bonuses. The Voluntary Program also is unavailable for fiscal 1998
incentive bonuses, since we did not award any of those bonuses for
fiscal 1998.
CODE SECTION 162(M). Subject to various exceptions (including
exceptions relating to stock options and for "performance-based"
compensation if certain conditions are met), Section 162(m) of the
Internal Revenue Code prohibits the deduction by a publicly-held
corporation of compensation in excess of $1 million paid in any year
beginning with 1994 to any executive named in the company's Summary
Compensation Table for the year. For fiscal 1998, the compensation paid
to each of Newcor's executive officers was below $1 million. As members
of the Compensation/Stock Option Committee, we will continue to monitor
Newcor's compensation policies relating to Section 162(m) during the
current fiscal year to ensure compliance.
<PAGE> 23
COMPENSATION/STOCK OPTION COMMITTEE MEMBERS:
KURT O. TECH, CHAIRMAN
JERRY D. CAMPBELL
JACK R. LOUSMA
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation/Stock Option
Committee, Messrs. Tech, Campbell, and Lousma, also comprised the
committee throughout fiscal 1998. None of these directors is or ever
has been an officer or employee of Newcor or any affiliate. As
previously noted, William Lawson is entitled to attend all meetings of
this committee by virtue of his position as Chairman of the Board, but
he is not and never has been a voting member of the committee.
Mr. Lawson is an executive officer and until March 1, 1995
also was an employee of Newcor. Although he an executive officer, his
only compensation from Newcor is as a director.
PERFORMANCE GRAPH
The graph below charts the yearly percentage change in
cumulative total shareholder return on an investment in Newcor common
stock against the Standard & Poor's 500 Index and against a weighted
average of the Dow Jones Automobile Parts Industry Group Index and the
Dow Jones Factory Equipment Industry Group Index, in each case,
assuming an investment of $100 on October 31, 1993, and cumulation and
reinvestment of all dividends paid from that date through October 31,
1998.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
-----------------------------------------------
Newcor, Inc. Common Stock, S&P 500 Index, and Weighted Average of Dow Jones
Automobile
Parts Industry Group Index and Dow Jones Factory Equipment Industry Group
Index*
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Newcor, Inc. .......$100.00 $ 54.89 $ 63.33 $ 67.80 $ 74.65 $ 32.34
S&P 500 ............$100.00 $103.87 $131.33 $162.98 $215.32 $262.67
Weighted Average* ..$100.00 $ 90.46 $ 97.86 $105.63 $141.01 $131.57
</TABLE>
* Weighted Average is calculated each year based on the
percentage of Newcor's sales for that year by its Precision
Machine Products and Rubber and Plastic segments (Automobile
Parts) and its Special Machines segment (Factory Equipment).
<PAGE> 24
DIRECTORS' COMPENSATION
Newcor pays a quarterly retainer of $7,125 to its Chairman,
and non-employee directors other than the Chairman are paid quarterly
retainers of $3,800, in each case reduced by the cost of any
medical/dental benefits provided to the director by Newcor.
Non-employee directors also receive a fee of $750 for each Board
meeting attended and a fee of $700 for each committee meeting attended.
Committee chairmen are paid an annual fee as follows: Executive
Committee (Mr. Lawson), none; Finance Committee (Mr. Campbell), $850;
Compensation/Stock Option Committee (Mr. Tech), $1,000; Audit Committee
(Mr. Lousma), $700. Directors may elect to defer all or a portion of
their fees, without interest, for payment in the future and are also
reimbursed for travel and other expenses relating to their attendance
at board and committee meetings.
In addition, under Newcor's 1996 Non-Employee Directors Stock
Option Plan (and subject to the share limits set forth in the plan), at
the adjournment of each organizational meeting of the Board following
an annual meeting, each person then serving as a non-employee director
automatically is granted a nonqualified stock option covering 1,000
shares of Newcor common stock at a per share exercise price equal to a
share's grant date Fair Market Value (as defined in the plan). Each
option grant has maximum term of 10 years, is exercisable only for
cash, and normally becomes exercisable in 25% increments on the first
through fourth anniversaries of grant. However, a change in control (as
defined in the plan) automatically would accelerate exercisability of
all options then outstanding. Options exercisable at the time a grantee
leaves the Board would continue to be exercisable for one year or, if
earlier, until the tenth anniversary of grant. Options not exercisable
at that time would expire.
Newcor also maintains a plan that provides retirement benefits
to a non-employee director who serves on the Board for at least 10
years and who then retires from Board service on or after age 65 or
dies while still actively serving as a director. Currently, the plan
contemplates quarterly payments equal to 70% of the maximum quarterly
retainer paid to active directors. The only director eligible for
benefits under this plan if he were to retire immediately is Mr. Tech.
OTHER MATTERS
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has reappointed PricewaterhouseCoopers LLP, Newcor's
auditors for fiscal 1998, to continue as its auditors for the current
year. A representative of PricewaterhouseCoopers LLP will be available
at the annual meeting to respond to appropriate questions by
shareholders and may make a statement if he or she desires to do so.
<PAGE> 25
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any Newcor shareholder that desires to submit a proposal for
inclusion in Newcor's proxy materials for its annual meeting of
shareholders to be held in the year 2000 must submit the proposal to
Newcor no later than November 4, 1999. Even if a proposal is submitted
before that date, Newcor will have the right to omit the proposal from
its proxy materials if the proposal does not otherwise satisfy the
requirements for inclusion of SEC Rule 14a-8.
Any shareholder proposal for the year 2000 annual meeting that
is submitted outside the processes of Rule 14a-8 will be considered
"untimely" for purposes of SEC Rule 14a-4(c)(1) if it is not submitted
to Newcor on or before January 18, 2000. Management proxies for the
year 2000 annual meeting may confer discretionary authority to vote on
any such untimely proposal without express direction from shareholders
giving the proxies.
Any proposal of either type should be sent to Newcor's
principal offices in Bloomfield Hills, Michigan, addressed to the
attention of the Secretary.
MISCELLANEOUS
The annual report that accompanies this Proxy Statement
includes the financial statements of Newcor and its subsidiaries for
fiscal 1998.
A complete list of the shareholders of record entitled to vote
at the 1999 annual meeting will be open and available for examination
by any shareholder, for any purpose germane to the meeting, between
9:00 a.m. and 5:00 p.m. at Newcor's principal offices at 1825 S.
Woodward, Suite 240, Bloomfield Hills, Michigan for ten days prior to
the meeting, and the list also will be available at the meeting.
It is important that proxy cards be returned promptly.
Therefore, even if you currently plan to attend the meeting in person,
we hope you will sign the enclosed proxy card and return it as soon as
possible to Newcor, Inc., c/o ChaseMellon Shareholder Services, Midtown
Station, Post Office Box 957, New York, New York 10138-0751. If you do
make it to the meeting, you always can revoke your proxy before it is
voted and vote in person if you prefer.
THOMAS D. PARKER, SECRETARY
March 4, 1999
<PAGE> 26
NEWCOR, INC.
Annual Meeting of Shareholders of Newcor, Inc.
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints WILLIAM A. LAWSON and KEITH F. HALE as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side, all shares of
common stock of Newcor, Inc. which the undersigned has power to vote, at the
Annual Meeting of Shareholders to be held April 21, 1999 and any adjournment
thereof (the "Annual Meeting").
(continued, and to be signed on other side)
FOLD AND DETACH HERE
This Proxy when properly executed will be voted in the manner directed. If no
direction is made, this Proxy will be voted FOR the election as Directors of the
nominees listed below, and in the discretion of the Proxies upon such other
business as may properly come before the Annual Meeting.
Please mark your votes as indicated in this example /X/
1. Election of Directors Duly Nominated: J.D. Campbell, W.A. Lawson
<TABLE>
<S> <C>
FOR all WITHHELD
nominees listed AUTHORITY
above except as to vote for all
marked to the nominees
contrary. listed above.
/ / / /
</TABLE>
(Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
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2. In the discretion of the Proxies upon such other business as may properly
come before the annual meeting.
The undersigned acknowledges receipt of the Notice and Proxy Statement dated
March 4, 1999 and hereby revokes all Proxies heretofore given to vote at said
meeting and any adjournments.
<PAGE> 27
Please mark, sign, date and return Proxy Card promptly using the enclosed
envelope.
Signature Signature if held jointly
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Date
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NOTE: Please sign exactly as name appears hereon. Executors, administrators,
trustee, etc. should give full title as such. If the shareholder is a
corporation, please give full corporation name and signature of a duly
authorized officer.
