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:
______________________________________________________________________
[ ] 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: ___________________________________________________________
NEWCOR, INC.
1825 S. Woodward, Suite 240
Bloomfield Hills, Michigan 48302
------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 3, 2000
To the Shareholders of
NEWCOR, INC.
Notice is hereby given that the Annual Meeting of Shareholders of
Newcor, Inc. will be held at the Michigan State University Management
Education Center, 811 W. Square Lake Road, Troy, Michigan, on Wednesday, May
3, 2000, at nine thirty o'clock in the morning, for the following purposes:
1. To elect three Directors to serve until the 2003 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 March 9, 2000 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 29, 2000
NEWCOR, INC.
1825 S. Woodward, Suite 240
Bloomfield Hills, Michigan 48302
PROXY STATEMENT
Annual Meeting of Shareholders
to be held on May 3, 2000
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 May 3, 2000 at
9:30 a.m., local time, at the Michigan State University Management Education
Center, 811 W. Square Lake 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 29, 2000.
The record date for the annual meeting (or any adjournments thereof) is
the close of business on March 9, 2000. On the record date, 4,910,987 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 on 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.
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.
EXX Inc. -- 676,200 shares 13.77%
1350 East Flamingo Road, Ste. 689
Las Vegas, NV 89119
Dimensional Fund Advisors Inc. -- 431,817 shares 8.79%
1299 Ocean Avenue
Santa Monica, California 90401
Shirley E. Gofrank -- 284,042 shares 5.78%
3001 W. Big Beaver
Troy, MI 48084
Catherine A. Gofrank -- 283,375 shares 5.77%
26555 Evergreen Rd.
Southfield, MI 48076-4285
The information about EXX Inc. is based on its Schedule 13D as amended
through December 17, 1999. Holdings reported in that schedule are as of
December 20, 1999. According to the schedule, EXX may be deemed to be the
beneficial owner of 652,200 shares. The controlling shareholder of EXX may be
deemed to share indirect beneficial ownership of the shares reported by EXX.
The controlling shareholder disclaims all
1
such beneficial ownership to such shares owned by EXX. The controlling
shareholder owns 24,000 shares in his own name. EXX and the controlling
shareholder may be deemed to have shared voting and dispositive power with
respect to 652,200 shares and the controlling shareholder has sole voting and
dispositive power with respect to 24,000 shares.
The information about Dimensional Fund Advisors Inc. is based on its
Schedule 13G, as amended through December 31, 1999. Holdings reported in that
schedule are as of February 11, 2000. 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 46,409
shares over which she has sole voting and dispositive power, 2,587 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 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. Kurt Tech, who was a
member of the class whose term is to expire in 2000, retired from the Board
of Directors on December 31, 1999. James D. Cirar was duly elected by the
Board of Directors to fill the unexpired term of Mr. Tech in the class of
2000. The terms of the three current directors serving in the class of 2000
are scheduled to expire, and are nominated for election, for terms scheduled
to expire in 2003.
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, second, and third-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 2003 class are the three
incumbent directors whose current terms are ending, James D. Cirar, Jack R.
Lousma, and Richard A. Smith. 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 any of them should become unable to
serve, which is not expected, for a substitute nominated by the Board).
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 on 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
2
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 2003
-----------------------------------
Shares Owned Percentage
------------ ----------
James D. Cirar (age 53; director since 2000)
Mr. Cirar has been President, CEO and
Principal of the Gunite Corporation, a
supplier to the medium and heavy duty
truck industry, since 2000. In 1999, he
served as Managing Director of TMB
Industries, a leverage buyout firm in
Chicago, Illinois. He is a Director and
Principal of Johnstown America Corp.,
which he had previously served as
President and CEO from 1995-1998. He is a
member of the Executive and
Compensation/Stock Option Committees of
Newcor's Board.............................. 3,827 .08%
Jack R. Lousma (age 63; 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. 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. ............................ 18,269 .37%
Richard A. Smith (age 60; director since 1987)
Prior to his retirement in March 1995, 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, Audit
and Compensation/Stock Option Committees.... 74,497 1.52%
Directors Whose Terms Expire in 2001
------------------------------------
Shares Owned Percentage
------------ ----------
Shirley E. Gofrank (age 51; 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.................................. 284,042 5.78%
Keith F. Hale (age 59; 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................. 53,332 1.08%
W. John Weinhardt (age 49; director since 1995)
Mr. Weinhardt is President and COO of
Digitron Packaging, Inc., an automotive
packaging supply company, since October
1999. Mr. Weinhardt was Newcor's President
and CEO from March 1995 to November 1998.... 17,989 .37%
3
Directors Whose Terms Expire in 2002
------------------------------------
Shares Owned Percentage
------------ ----------
Jerry D. Campbell (age 59; director since 1987)
Mr. Campbell is Chairman 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 Chairman of the Board of
Trustees of Central Michigan University,
Mt. Pleasant, Michigan. Mr. Campbell serves
on the Finance Committee and the
Compensation/Stock Option Committee of
Newcor's Board.............................. 198,994 4.05%
William A. Lawson (age 66; director since 1988)
Mr. Lawson is the Chairman of the Board of
Directors of Newcor. He is a director of
Fuel Cell Energy, Inc. and a director of
Evercel, Inc. 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.................................. 145,659 2.95%
Non-Director Executive Officers
-------------------------------
Shares Owned Percentage
------------ ----------
James J. Connor (age 48)
Mr. Connor has been Newcor's Vice President
Finance, Treasurer, and Chief Financial
Officer since April 1999. From 1997 to
1999, he was CFO of Rockwell Medical
Technologies, Inc., a manufacturer and
distributor of dialysis solutions and
chemical powders for the renal dialysis
markets. He was Principal of Connor &
Connor, a management consulting firm, from
1995 to 1997. By virtue of his current
positions with Newcor, Mr. Connor 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....................... 5,212 .11%
Thomas D. Parker (age 53)
Mr. Parker is Newcor's Vice President Human
Resources and since June 1994 also its
Secretary. ................................. 13,894 .28%
Robert E. Dallaire (age 50)
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.......................... 12,331 .25%
Shaun W. Hill (age 38)
Mr. Hill is Newcor's Group Vice President
of Newcor Rubber and Plastic since February
2000 and from January 1996 to February 2000
was Director Corporate Quality. He was
Quality Management Director of Solvay
Automotive, Inc., an automotive supplier,
from June 1994 to January 1996.............. 6,921 .14%
All directors and current executive
officers as a group (12 persons)............ 834,967 16.79%
The shares reported in the table above include shares that may be
acquired under stock options currently or within 60 days exercisable, as
follows: Jack Lousma, 2,587; Richard Smith, 2,587; Shirley Gofrank, 2,587;
Keith Hale, 12,500; John Weinhardt, 250; Jerry Campbell, 2,587; William
Lawson, 20,955; Thomas Parker, 10,324; Robert Dallaire, 3,000; Shaun Hill,
3,537; all directors and current executive officers as a group, 60,914. 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.
4
The shares reported also include shares held in accounts under the
Newcor Savings Plan (a 401(k) plan), as follows: Keith Hale, 2,932; John
Weinhardt, 7,389; James Connor, 412; Thomas Parker, 1,680; Shaun Hill, 1,284.
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 of 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 December 31, 1999 ("fiscal
1999"), there has been a change in Newcor's executive officers. William J.
Faris, formerly Group Vice President Newcor Rubber and Plastic Group, left
Newcor in mid-February 2000. Newcor understands from this former executive
that as of the record date for the upcoming annual meeting, Mr. Faris held
2,210 shares in the Newcor Savings Plan.
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 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 1999, the Board of Directors held four regularly
scheduled meetings, the Board also held four Special Board meetings, the
Executive Committee held five meetings, the Audit Committee met three times,
the Finance Committee held two meetings and the Compensation/Stock Option
Committee met once. Each director attended at least 80% 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 1999 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 1999 were filed timely
with the exception of a Form 3 that was late for Mr. Connor in registering
his initial report of ownership as an executive officer.
EXECUTIVE COMPENSATION
Summary Compensation Information
The table that follows provides summary information, for fiscal 1999, a
two month "transition period" caused by the change of the fiscal year
consisting of November and December 1998, and each of the preceding two
fiscal years in which they were Newcor executive officers, concerning the
compensation of Keith Hale, the
5
Company's current CEO, and of each other current or former Newcor executive
officer who served as such during fiscal 1999 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 1999 but no longer holds it. Additional
information about items in the table is provided after the table.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------------- -----------------------
Awards
-----------------------
Other Securities
Annual Restricted Underlying
Name and Fiscal Compen- Stock Stock All Other
Principal Position ....... Year Salary Bonus sation Awards Options Compensation
- --------------------------- ------ ------ ----- ------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
K. F. Hale ............... 1999 $275,000 -0- -0- -0- 0 shares $ 3,850
President & CEO 11/98-12/98 $ 45,833 -0- -0- -0- 50,000 shares -0-
1998 $ 49,138 $15,000 -0- $93,750 0 shares -0-
J. J. Connor ............. 1999 $118,120 -0- -0- -0- 0 shares $ 1,108
VP Finance, Treasurer & CFO
T. D. Parker ............. 1999 $107,000 -0- -0- -0- 0 shares $ 2,972
VP Human Resources & Sec. 11/98-12/98 $ 17,833 -0- -0- -0- 0 shares -0-
1998 $107,000 -0- -0- -0- 8,000 shares $ 3,411
1997 $100,000 $35,742 -0- $10,888 2,730 shares $ 1,920
R.E. Dallaire ............ 1999 $140,400 $91,207 -0- $22,518 0 shares -0-
VP & GM of the 11/98-12/98 $ 23,400 -0- -0- -0- 10,000 shares -0-
Deco Group
W.J. Faris ............... 1999 $128,750 -0- -0- -0- 0 shares $ 3,748
Former Grp. VP of Newcor 11/98-12/98 $ 21,458 -0- -0- -0- 10,000 shares $ 622
Rubber and Plastic Group
</TABLE>
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.
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.
Restricted Stock Awards. 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 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 dollar amounts reported in the column for 1999
relate to awards of transfer-restricted shares of Newcor common stock made to
executives as part of awards made under the Management Incentive Plan for
1999 performance. Under this program 30% of a performance bonus earned for a
given year is paid in the form of one-year transfer restricted stock. Dollars
reported for 1999 have been calculated by multiplying the number of shares
received under the plan by the American Stock Exchange 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.
6
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 1999, 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. Parker, 1,890
(1,365 forfeitable); Mr. Dallaire, 7,506 (0 forfeitable).
Shares Underlying Stock Options. The shares reported 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.
Under the terms of this plan, 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 options
reported in the table for Mr. Faris were forfeited within 30 days of
employment termination in accordance with the 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 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
contemplated that if the average market price for the stock for the last five
business days of 1999 was at least $6.00 per share, he would have received
another grant covering 50,000 additional shares. The share price was not at
the threshold level on December 31, 1999, therefore, Mr. Hale did not receive
the additional 50,000 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 of Newcor 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 for fiscal 1998 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.
7
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 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.
Options Granted During Fiscal 1999
During fiscal 1999, there were no new grants of options to purchase
Newcor common stock to the executive officers named in the Summary
Compensation Table.
Option Exercises and Year-End Holdings
During fiscal 1999, 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 1999.
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 ............... 12,500/37,500 -0-/-0-
J. J. Connor ............. -0-/-0- -0-/-0-
T. D. Parker ............. 7,642/7,628 -0-/-0-
R.E. Dallaire ............ 3,000/9,000 -0-/-0-
W.J. Faris ............... 5,000/15,000 -0-/-0-
</TABLE>
The Reported Options. All options reported in the table for Mr. Faris
were forfeited in early 2000 due to employment termination.
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 American
Stock Exchange closing price for Newcor common stock as of the last business
day of fiscal 1999.
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.
8
The plan covers all corporate office salaried employees of Newcor.
Participants are vested after five years of employment. The estimated credited
years of service for the other executives named in the Summary Compensation
Table are, respectively, as follows: Mr. Hale, one year; Mr. Connor, one year;
Mr. Parker, sixteen years. Neither Mr. Faris nor Mr. Dallaire is eligible to
participate in this plan. Mr. Dallaire does participate in a separate defined
benefit plan covering salaried employees of the Deco Group.
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.
<TABLE>
<CAPTION>
Retirement Plan Table
---------------------
Years of Service
Average -------------------------------------------------------------------------
Annual
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 1999, 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.
9
Overall, during fiscal 1999 as in prior years, our executive officer
compensation policies have been aimed at providing executive officers with
compensation opportunities 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).
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 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 1999, after reviewing these factors for Mr. Hale, we
recommended a 0% increase in his salary. After reviewing these factors for
the other persons then serving as executive officers (Messrs. Connor, Parker,
Dallaire, and Faris), we recommended fiscal 1999 salary increases ranging
from 0% to 10%.
Cash Bonuses. All fiscal 1999 executive officers 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 1999 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 1999 performance criteria for
Mr. Hale and approved individualized criteria established by him for each of
the other fiscal 1999 executive officers. Mr. Hale's individual goals related
to returning the company to profitability and the establishment and
implementation of management control systems within the units. Goals for
other executive officers related to achieving unit financial plans and
expanding continuous improvement programs, as appropriate for their
positions.
For Mr. Hale and each of the other fiscal 1999 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.
After fiscal year end, applying the factors described above, we did not
award any cash bonus under the plan to Mr. Hale. The only executive officer
eligible to receive a cash bonus was Mr. Dallaire who was awarded a bonus on
the performance of the Deco Group.
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. During deliberations for 1999, 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 performance of the Company. After
considering these factors, we granted no options to Mr. Hale or other
executive officers during fiscal year 1999.
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 any 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. Based upon the performance of the Company in
fiscal 1999 and the limited number of cash bonus awards, the committee did
not make the Voluntary Program available for fiscal 1999 bonuses.
10
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
1999, 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.
Compensation/Stock Option Committee Members:
Richard A. Smith, Chairman
Jerry D. Campbell
James D. Cirar
Jack R. Lousma
Compensation Committee Interlocks and Insider Participation
Messrs. Campbell, Lousma, and Tech, who retired December 31, 1999,
comprised the committee throughout fiscal 1999. Mr. Smith was appointed to
replace Mr. Tech as chairman of the committee on January 1, 2000. Mr. Smith had
been an officer and employee of Newcor prior to his retirement from Newcor in
March 1995. No other member of the committee 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 is 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, 1994, and cumulation and reinvestment of all dividends paid from that
date through December 31, 1999.
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*
[ PROXY CHART OMITTED ]
<TABLE>
<CAPTION>
10/31/94 10/31/95 10/31/96 10/31/97 10/31/98 12/31/98 12/31/99
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Newcor, Inc. ............. $100.00 $115.37 $123.52 $136.00 $ 58.91 $ 58.91 $ 37.06
S&P 500 Total Return ..... $100.00 $126.44 $156.91 $207.30 $252.88 $284.29 $344.64
Weighted Average ......... $100.00 $108.18 $116.77 $155.88 $145.44 $150.43 $114.39
<FN>
* 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).
</TABLE>
11
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. Smith), $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 a 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.
OTHER MATTERS
Independent Public Accountants
The Board has reappointed PricewaterhouseCoopers, LLP, Newcor's
auditors for fiscal 1999, 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.
Proposals for the Next Annual Meeting
Shareholder proposal, intended to be included in Newcor's proxy
materials for its 2001 annual meeting of shareholders pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, as amended, must be received by
Newcor no later than November 29, 2000. Even if a proposal is received 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 2001 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 received by Newcor on or
before February 12, 2001. Management proxies for the year 2001 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 1999.
12
A complete list of the shareholders of record entitled to vote at the
2000 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
/s/ Thomas D. Parker
March 29, 2000
13
PROXY
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 May 3, 2000 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. Cirar, J.R. Lousma, R.A. Smith
FOR all WITHHELD
nominees listed AUTHORITY
above except as to vote for all
marked to the nominees
contrary. listed above.
/ / / /
(Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
- -----------------------------------------------------------------------------
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 29, 2000 and hereby revokes all Proxies heretofore given to vote at
said meeting and any adjournments.
Please mark, sign, date and return Proxy Card promptly using the enclosed
envelope.
Signature_______________________Signature if held jointly_____________________
Date_________________________
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.
