SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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Excel Industries, Inc.
(Name of Registrant as Specified in Its Charter)
Excel Industries, Inc.
(Name of Person(s) Filing Proxy Statement)
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Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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NOTICE AND PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
EXCEL INDUSTRIES, INC.
Notice of Annual Meeting
To the Shareholders of Excel Industries, Inc.:
You are hereby notified that the Annual Meeting of
Shareholders of Excel Industries, Inc., an Indiana corporation,
will be held at the Quality Hotel City Centre, 300 South Main
Street, Elkhart, Indiana, on Thursday, April 18, 1996 at 10:00 a.m.
(Eastern Standard Time) for the following purposes:
1. To elect six (6) directors for a term of one year.
2. To ratify the appointment of Price Waterhouse LLP as
independent auditors for the current fiscal year ending December
28, 1996.
3. To transact such other business as may properly come
before the meeting.
The shareholders of record at the close of business on
February 23, 1996, are entitled to notice of and to vote at the
meeting in person. PLEASE MARK, SIGN AND DATE THE ACCOMPANYING
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
If you attend the meeting, you may, if you so desire, withdraw your
proxy and vote in person.
Joseph A. Robinson
Secretary
Elkhart, Indiana
March 12, 1996
<PAGE>
1996 PROXY STATEMENT
Annual Meeting of Shareholders
All shareholders of record on February 23, 1996, are entitled
to vote at the Annual Meeting to be held at the Quality Hotel City
Centre, 300 South Main Street, Elkhart, Indiana, on the eighteenth
day of April, 1996 at 10:00 a.m. (Eastern Standard Time). All
shareholders unable to attend such meeting who wish to vote their
shares upon the business to be transacted at such meeting are
requested to mark, sign and date the accompanying form of proxy and
return it in the addressed, postage-paid envelope enclosed for your
convenience. The proxy is revocable by you at any time before it
is voted, and the signing of such proxy will not affect your right
to vote in person if you attend the meeting. All proxies returned,
and not so revoked, will be voted in accordance with their terms.
As stated in the Notice, the matters to be considered at the
meeting are the election of six directors, ratification of the
appointment of independent auditors, and the transaction of such
other business as may properly come before the meeting.
The solicitation of the accompanying form of proxy is made on
behalf of the Board of Directors of the Corporation. The expense
of the solicitation of the proxies for this meeting will
be borne by the Corporation. The solicitation will be made through
the use of the mails and by personal solicitation through regular
employees of the Corporation who will not be additionally
compensated therefor.
The mailing address of the principal executive offices of the
Corporation is Excel Industries, Inc., 1120 North Main Street,
Elkhart, Indiana 46514. This Proxy Statement and the enclosed form
of proxy were first sent or given to shareholders on approximately
March 12, 1996.
Outstanding Shares
As of February 15, 1996, the Corporation had outstanding
10,708,320 common shares, without par value. Each shareholder is
entitled to one vote upon any proposal submitted to the meeting for
each share standing of record in his name on February 23, 1996.
Principal Shareholders
Set forth below is certain information concerning the only
persons known to the Corporation, as of February 15, 1996, to
beneficially own 5% or more of the Corporation's outstanding common
shares. The percentages set forth for the Convertible Note Holders
in the column entitled "Percent of Class" are calculated by
dividing the number of common shares listed for each Convertible
Note Holder in the "Amount and Nature of Beneficial Ownership"
column by the sum of (i) 10,708,320 common shares outstanding on
February 15, 1996, and (ii) the number of common shares which the
particular Convertible Note Holder has a right to acquire. The
percentages therefore represent the maximum percentage of
outstanding commonshares that a particular Convertible Note Holder
would own if only that Convertible Note Holder, and no other, had
converted the convertible notes held by it. The percentages set
forth for the Common Shareholders are calculated assuming no
conversion of any of the Convertible Notes. Accordingly, all of the
percentages in this column, including in particular the percentages
applicable to shareholders which do not hold any convertible notes,
are higher than they would be if some or all of the outstanding
convertible notes of the Corporation had been converted.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
<S> <C> <C>
Common Shareholders
J.P. Morgan & Co.,
Incorporated 1,014,430 shares<F1> 9.5%
60 Wall Street
New York, NY 10015
Farmers Group, Inc. 912,600 shares<F2> 8.5%
4680 Wilshire Boulevard
Los Angeles, CA 90010
First Chicago 870,803 shares<F3> 8.1%
NBD Corporation
One First National Plaza
Chicago, IL 60607
Dimensional Fund Advisors,
Inc. 600,259 shares<F4> 5.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
The Capital Group
Companies, Inc. 536,000 shares<F5> 5.0%
333 South Hope Street
Los Angeles, CA 90071
Convertible Note Holders
CIGNA Corporation 821,535 shares<F6> 7.1%
One Liberty Place
Philadelphia, PA 19101
CIGNA Mezzanine Partners
II, L.P. 693,308 shares<F7> 6.1%
900 Cottage Grove Road
Bloomfield, CT 06002
Paul Revere Investment
Management Company 756,773 shares<F8> 6.6%
40 Westminster Street
Providence, RI 02903
<FN>
<F1>In a Schedule 13G filed with the Securities and Exchange
Commission (the"Commission"), J.P. Morgan & Co., Incorporated
("Morgan") disclosed that it and its subsidiaries had acquired
beneficial ownership of 1,014,430 common shares. Morgan has the
sole power to dispose of all such shares and sole power to vote
594,200 of such shares.
<F2>In a Schedule 13G dated February 6, 1996, and delivered to
the Corporation, B.A.T. Industries p.l.c. ("BAT") disclosed that
Farmers Group, Inc. ("FGI") had acquired beneficial ownership of
912,600 common shares through subsidiaries of FGI, by insurance
exchanges for which FGI acts as attorney-in-fact or by benefit
plans for employees of FGI and its subsidiaries for which FGI has
investment discretion. FGI, which is an insurance company and an
indirect, wholly owned subsidiary of BAT, has shared voting and
shared dispositive power with respect to all of such shares.
<F3>In a Schedule 13G dated February 9, 1996 and filed with
the Commission, First Chicago NBD Corporation ("NBD") disclosed
that it had acquired beneficial ownership of 870,803 common shares.
NBD has sole voting power with respect to 852,653 of such shares,
sole investment power with respect to 844,803 of such shares, and
shared investment power with respect to 25,000 of such shares.
<F4>In a Schedule 13G dated February 7, 1996 and delivered to
the Corporation, Dimensional Fund Advisors, Inc. ("DFA") disclosed
that an aggregate of 600,259 common shares had been acquired by DFA
Investments Dimensions Group Inc., an investment company (the
"Fund"), DFA Investment Trust Company, a Delaware business trust,
investment vehicles for qualified employee benefit plans all of
which DFA services as investment manager. DFA has sole voting
power with respect to 427,759 of such shares, and certain officers
of DFA, in their capacities as officers of the Fund and the Trust,
vote an additional aggregate of 172,500 shares. DFA has sole
dispositive power with respect to all 600,259 shares. DFA
disclaims beneficial ownership of all of such shares.
<F5>In a Schedule 13G dated February 9, 1996 and delivered to
the Corporation, The Capital Group Companies, Inc. ("CGC")
disclosed that Capital Guardian Trust Company ("CGTC"), a
subsidiary of CGC, had acquired beneficial ownership of 536,000
common shares. CGTC has sole investment power with respect to all
of such shares, and sole voting power with respect to 501,000 of
such shares.
<F6>Represents (i) 820,238 common shares which may be acquired
on conversion of the convertible notes of the Corporation owned by
Connecticut General Life Insurance Company ("CGLIC") (703,061
shares) and Life Insurance Company of North America (117,177
shares), two subsidiaries of CIGNA Corporation (collectively
"CIGNA") and (ii) 1,297 common shares indirectly owned by CGLIC.
CIGNA will have sole voting and investment power over any
shares acquired upon conversion of such convertible notes. CIGNA
disclaims beneficial ownership of the shares indirectly owned by
CGLIC, but may be deemed to have shared voting and investment power
with respect to such shares.
<F7>Represents common shares which may be acquired on
conversion of convertible notes owned by CIGNA Mezzanine Partners
II, L.P. ("CMP"). CIGNA is the ultimate parent of the
general partner of CMP. CMP will have sole voting and investment
power over any shares acquired upon conversion of such convertible
notes.
<F8>Represents common shares which may be acquired on
conversion of convertible notes owned by The Paul Revere Life
Insurance Company (227,032 shares), The Paul Revere
Protective Life Insurance Company (90,812 shares), Balboa Insurance
Company (60,542 shares) and the Textron Collective Inv. Trust Fund
B (378,387 shares), all of which are affiliates of Textron, Inc.,
the parent company of The Paul Revere Investment Management Company
("PRIMCO"). PRIMCO is an investment adviser and will have sole
voting and investment power over any shares acquired upon
conversion of such convertible notes.
</FN>
</TABLE>
ELECTION OF DIRECTORS
Six persons, all of whom are members of the present Board, are
nominees for election at the Annual Meeting as directors to hold
office until the next Annual Meeting or until their successors have
been elected. If the enclosed proxy is duly executed and received
in time for the meeting and if no contrary specification is made as
provided therein, it is the intention of the persons named therein
to vote the shares represented thereby for those six persons. The
six persons elected will comprise the entire membership of the
Board of Directors of the Corporation. There will not be
cumulative voting for the election of directors. If any nominee
shall be unable to serve, an event which the Board of Directors
does not anticipate, the proxy shall be voted for the person
designated by the Board to replace such nominee.
With respect to each of such nominees, the following
information is furnished:
James O. Futterknecht, Jr., 49, joined the Company in 1970,
was Vice President-Corporate Sales from 1976 until 1984, was Vice
President-Automotive Products from 1984 until 1987, was Vice
President-Automotive Sales and Engineering from 1987 to 1990 and
was Executive Vice President from 1990 to 1992. He was elected as
President and Chief Operating Officer and was appointed as a
director in 1992. In 1995, he was elected to the additional
offices of Chairman of the Board and Chief Executive Officer.
Joseph A. Robinson, 57, joined the Company as Secretary,
Treasurer and Chief Financial Officer in December 1991, and was
appointed as a director in 1992. Prior to that time, he was
employed by The Standard Products Co., a manufacturer of automotive
parts, as Vice President from 1990 to 1991 and as Vice President-
Finance from 1976 to 1990.
Dr. John G. Keane, 65, has been a director since 1992. He has
been Dean and Professor of Strategic Management of the College of
Business Administration of the University of Notre Dame since 1989.
From 1984 to 1989, Dr. Keane was the director of the United States
Census Bureau.
Richard A. Place, 61, has been a director since 1994, and
previously served as a director from 1989 to 1991. Mr. Place is
retired. From 1960 to 1991 Mr. Place was an executive of Ford
Motor Company. From 1991 to 1994 he was an executive adviser to
Mazda Research & Development of North America, Inc.
James K. Sommer, 63, has been a director since 1989. Mr.
Sommer has been a member of the law firm of Sommer & Barnard, PC,
Indianapolis, Indiana, since 1969.
Ralph R. Whitney, Jr., 61, has been a director since 1983 and
was Chairman of the Board from 1983 to 1985. Mr. Whitney has been
a principal of Hammond, Kennedy, Whitney & Company, Inc., a New
York, New York financial intermediary and private investment
banking firm, since 1971. Mr. Whitney is also a director of Adage,
Inc., IFR Systems, Inc., Selas Corporation of America, Baldwin
Technologies, Inc. and Keene Corporation.
Compensation of Directors
Directors of the Corporation who are not officers receive
$20,000 per year payable quarterly plus $1,000 per board and $750
per committee meeting attended. In addition, such directors
receive $500 per day while working on special assignments. Non-
employee directors are also granted options to purchase 1,000
common shares, at the fair market value on the date of
grant, upon their initial election or appointment and annually upon
reelection. The options expire at the earlier of one year after
termination of the director's Board membership or ten years after
the date of grant. Directors who are officers of the Corporation
receive no fees for serving as directors.
Board Meetings and Committees
The Board of Directors met seven times in 1995. The Board has
an audit committee and a compensation committee but does not have
a nominating committee.
The purpose and functions of the audit committee are to
recommend the engagement or discharge of independent auditors; to
review year-end financial statements prior to issuance; to
review the services from time to time being performed by the
independent auditors, including non-audit services; and to make
appropriate reports and recommendations to the Board of
Directors. Messrs. Whitney, Sommer and Keane are the members of
the audit committee. The audit committee met three times during
the year.
The law firm of Sommer & Barnard, PC, of which Mr. Sommer is
a member, serves as legal counsel for the Corporation.
Messrs. Place and Keane are the members of the compensation
committee. The compensation committee formulates executive
compensation policy for the Company, and determines, subject to
Board review and approval, the compensation of all executive
officers. The compensation committee administers the Corporation's
1994 Stock Compensation Plan. The compensation committee met two
times in 1995.
Security Ownership of Management
The following table sets forth, as of February 15, 1996,
information regarding the beneficial ownership of common shares of
the Corporation by each director of the Corporation, each of the
executive officers named in the Summary Compensation Table below,
and by all directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner of Beneficial Ownership<F1>
<S> <C>
James O. Futterknecht, Jr. 33,454
Joseph A. Robinson 2,773<F2>
John G. Keane 2,500<F3>
Richard A. Place 3,000<F4>
James K. Sommer 6,501<F5>
Ralph R. Whitney, Jr. 22,000<F6>
Louis R. Csokasy 10,718
James E. Crawford 5,887<F7>
Terrance L. Lindberg 9,365<F8>
All Executive Officers and Directors
as a Group (eleven persons) 96,534<F9>
<FN>
<F1>All amounts are less than one percent of the outstanding
shares of the class.
<F2>Includes 693 shares held for Mr. Robinson's account in the
Corporation's Employee Stock Purchase Plan.
<F3>Includes 2,000 shares subject to an option held by Dr.
Keane.
<F4>Includes 1,000 shares held by a trust with respect to
which Mr. Place has the power to vote and to direct the
disposition, and 2,000 shares subject to an option held by Mr.
Place.
<F5>Includes 2,000 shares subject to an option held by Mr.
Sommer.
<F6>Includes 2,000 shares subject to an option held by Mr.
Whitney.
<F7>Includes 457 shares owned by Mr. Crawford's wife, as to
which Mr. Crawford disclaims beneficial ownership. Also includes
280 shares held for Mr. Crawford's account in the Corporation's
Employee Stock Purchase Plan.
<F8>Includes 8,250 shares subject to an option held by Mr.
Lindberg.
<F9>Includes shares owned by spouses, whether or not
beneficial ownership is disclaimed, and 16,250 shares subject to
options held by an executive officer and directors.
</FN>
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table shows the compensation for the past three
years of each person who served the Corporation as Chief Executive
Officer during 1995, and the Corporation's next four most highly
compensated executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary($) Bonus($) Compensation($)<F1> Options Compensation($)<F3>
<S> <C) <C> <C> <C> <C> <C>
James J. Lohman<F4> 1995 282,750 120,270 0 20,000 4,500
Chairmn of the 1994 345,000 284,625 4,806 20,000 4,500
Board and CEO 1993 328,000 307,500 4,730 0 5,396
James O. 1995 315,000 149,546 1,965 20,000 4,500
Futterknecht, Jr. 1994 286,000 235,950 1,823 20,000 4,500
Chairman of the 1993 270,000 258,125 2,455 0 5,396
Board and CEO
Joseph A. Robinson 1995 185,000 58,553 3,025 13,000 4,500
Secretary, Treasuer 1994 169,000 92,950 3,097 13,000 4,500
and CFO 1993 160,000 100,000 2,462 0 5,302
Louis R. Csokasy 1995 155,000 49,058 2,606 11,000 4,500
Vice President and 1994 142,000 79,875 2,675 11,000 4,500
and Managing 1993 133,000 83,125 2,217 0 4,440
Director, Automotive
Window and Door Systems
James E. Crawford 1995 146,000 46,209 3,056 11,000 4,500
Vice President and 1994 139,000 78,188 3,240 11,000 4,500
Managing Director, 1993 131,000 81,875 2,497 0 4,380
Value Management and
Product Research and
Development
Terrance L. Lindberg 1995 140,000 44,310 3,931 11,000 4,500
Vice President and 1994 134,000 73,700 3,518 11,000 4,500
Director, Mass 1993 126,000 78,750 2,989 0 4,300
Transit/RV/Heavy
Truck Window & Door
Systems
<FN>
<F1>Represents reimbursements to the named executive officers
for payment of income taxes.
<F2>All options granted in 1994 were terminated in 1995 and
replaced by new options. See "Ten-Year Option Repricings" and the
accompanying table below.
<F3>Represents contributions by the Corporation to the accounts
of each of the named executive officers in the Corporation's
deferred compensation and savings plan.
<F4>James J. Lohman died September 27, 1995.
</FN>
</TABLE>
Options
The following table shows the options to purchase common
shares granted to the named executive officers in 1995 pursuant to
the Corporation's 1994 Stock Compensation Plan.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term
Number of
Securities % of Total
Underlying Options Granted
Options to Employees in Exercise Expiration
Name Granted(#) Fiscal year(%) Price($) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
James J. Lohman 20,000<FN1> 7.26 12.375 -<FN2> - -
James O.
Futterknecht, Jr. 20,000<FN1> 7.26 12.375 4-19-2005 156,000 394,000
Joseph A.
Robinson 13,000<FN1> 4.71 12.375 4-19-2005 101,000 256,000
Louis R. Csokasy 11,000<FN1> 3.99 12.375 4-19-2005 86,000 217,000
James E. Crawford 11,000<FN1> 3.99 12.375 4-19-2005 86,000 217,000
Terrance L.
Lindberg 11,000<FN1> 3.99 12.375 4-19-2005 86,000 217,000
<FN>
<F1>Options become exercisable in 25% increments on April 20,
1996; April 20, 1997; April 20, 1998; April 20, 1999. Options
are Incentive Stock Options under Section 422 of the Internal
Revenue Code.
<F2>Options granted to Mr. Lohman in 1995 expired December 27,
1995, as a result of his death.
</FN>
</TABLE>
The following table shows the number and value of options held
by the named executive officers as of December 31, 1995.
<TABLE>
<CAPTION> FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised in
Options at Fiscal the Money Options at
Year-End($) Fiscal Year-End ($)<FN1>
Name Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C>
James O.
Futterknecht, Jr. 0/20,000 0/32,500
Joseph A. Robinson 0/13,000 0/21,100
Louis R. Csokasy 0/11,000 0/17,900
James E. Crawford 0/11,000 0/17,900
Terrance L. Lindberg 0/11,000 0/17,900
<FN>
<F1>Based on the closing price of the Corporation's common
shares on December 29, 1995.
</FN>
</TABLE>
Ten-Year Option Repricing
The following table sets forth the information with respect to
certain options granted to the named executive officers which were
terminated and replaced with new options in 1995.
<TABLE>
<CAPTION>
TEN-YEAR OPTION REPRICING
Length of
Number of Original
Securities Market Price Option Term
Underlying of Stock at Exercise Price New Remaining
Options Time of at Time of Exercise at Date of
Name Date Reported Repricing Repricing Price Repricing
<S> <C> <C> <C> <C> <C> <C>
James O. 4-20-95 20,000 $12.375 $18.125 $12.375 Nine Years
Futterknecht, Jr.
Joseph A. 4-20-95 13,000 $12.375 $18.125 $12.375 Nine Years
Robinson
Louis R. 4-20-95 11,000 $12.375 $18.125 $12.375 Nine Years
Csokasy
James E. 4-20-95 11,000 $12.375 $18.125 $12.375 Nine Years
Crawford
Terrance 4-20-95 11,000 $12.375 $18.125 $12.375 Nine Years
L. Lindberg
</TABLE>
Report of Compensation Committee on Option Repricing
On April 19, 1995, the Compensation Committee of the Board of
Directors (the "Committee") approved replacement of incentive stock
options granted May 5, 1994, having an exercise price of $18.125
per share, with new options having an exercise price of $12.375 and
otherwise identical terms. The Committee considered the increases
in the Corporation's net sales and earnings per share and the
decrease in selling, administrative and engineering expenses as a
percentage of net sales in fiscal 1994 as compared to fiscal 1993,
and concluded that the Corporation's performance, and that of its
key employees, was good. The Committee further considered the
general market trends affecting the price of the Corporation's
shares and concluded that the decline in such price was primarily
due to market forces beyond the control of the Corporation's key
employees. Finally, the Committee concluded that the difference
between the exercise price of the outstanding options and the
market price of the common shares was too great to provide any
meaningful incentive to the option holders.
Accordingly, each option holder was offered the choice of
retaining the outstanding option or surrendering the outstanding
option and receiving a grant of a new option for the same
number of shares. All optionees chose to receive the new options.
MEMBERS OF THE COMPENSATION COMMITTEE:
Richard A. Place
John G. Keane
Pension Plan
Set forth below is a table showing the estimated annual
benefits payable upon normal retirement under the Corporation's
pension plan (the "Pension Plan") for various compensation
and years-of-service classifications, assuming the current maximum
FICA wage base of $62,700 remains unchanged.
<TABLE>
<CAPTION>
Final Avg. Credited Years of Service
Earnings
15 20 25 30 35
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 8,299 $11,066 $13,832 $16,598 $19,365
$100,000 $18,799 $25,066 $31,332 $37,598 $43,865
$150,000<F1> $29,299 $39,066 $48,832 $58,598 $68,365
<FN>
<F1> Effective January 1, 1994, this is the maximum amount of
final average annual earnings upon which benefits may be computed
under the Employee Retirement Income Security Act of 1974, as
amended by the Omnibus Budget Reconciliation Act of 1993. As of
December 31, 1993, James O. Futterknecht had accrued benefits in
excess of those permitted to be accrued under current law. On
retirement, he will be entitled to receive benefits equal to the
greater of (i) the benefits he had accrued as of December 31, 1993,
or (ii) benefits calculated using $150,000 as the maximum final
annual average earnings and his credited years of service at
retirement.
</FN>
</TABLE>
Benefits under the Pension Plan are, subject to certain
limitations, equal to the number of years of credited service times
the sum of .75% of final average earnings and .65% of final average
earnings in excess of the "breakpoint." The term
"breakpoint" is defined as an annual amount equal to 36% of the
maximum FICA wage base in effect for the preceding year. Final
average earnings are generally defined as a participant's average
annual earnings for the five consecutive calendar years of highest
earnings during the 15 years prior to the earlier of retirement or
termination of employment. Such earnings include the salaries and
bonuses reported in the Summary Compensation Table. The benefits
are not subject to any deduction for Social Security or other
offset amounts. The credited years of service for the individuals
listed in the Summary Compensation Table are as follows: Mr.
Futterknecht -25; Mr. Robinson - 3; Mr. Csokasy - 23; Mr. Crawford
- - 17; and Mr. Lindberg - 11.
Deferred Compensation Plans
To supplement the benefits under the Pension Plan for its
senior executive officers, the Corporation has adopted its 1989
Deferred Compensation Plan (as amended, the "1989 Plan"). Messrs.
Futterknecht, Robinson, Csokasy, Crawford and Lindberg are
participants in the 1989 Plan.
A participant in the 1989 Plan retiring at age 62 or later
will receive a benefit of monthly payments for life, commencing at
retirement, with a minimum of 120 monthly payments assured. Each
monthly payment will be equal to one-twelfth of 75% (85% for all
persons who were participants prior to December 1, 1993) of the
participant's three-year final average base salary (not including
bonuses), offset by (i) the participant's Pension Plan benefits,
adjusted for commencement at age 62, payable for life, and (ii) 50%
of the participant's primary Social Security benefit payable at age
62 (whether or not commencement at age 62 is actually elected) and
(iii) with respect to individuals who first become participants on
or after December 1, 1993, by the amount of any benefits payable
from any other employer's qualified defined benefit plan or any
other plan supplementing such a plan. A participant is entitled to
elect early retirement under the 1989 Plan. Benefits for early
retirees are calculated in the same manner as for retirement at age
62, except (i) the percentage of the three-year final average base
salary is reduced by one-quarter of one percent for each month
retirement occurs prior to age 62, (ii) the offset for pension plan
benefits is adjusted downward to the amount payable to the retiree
in the event immediate commencement (payable for life) is elected
(whether or not actually elected), and (iii) there is no offset for
Social Security until the participant reaches age 62. Payments to
early retirees commence on the later of the date of retirement or
the date the participant attains age 55. If a participant dies
before retirement, his or her designated beneficiary is entitled to
120 monthly payments determined as if the participant elected
retirement on the day before death, except that payment of benefits
commences immediately regardless of the participant's age at death.
The Corporation has established the Excel Industries, Inc.
Executive Compensation Trust (the "Compensation Trust") as a
depository arrangement whereby the Corporation sets aside cash and
other assets to be accumulated and distributed to participants in
the 1989 Plan and the Supplemental Plan as benefits thereunder
become payable. The Compensation Trust is not intended to and does
not fund the 1989 Plan and the Supplemental Plan. The assets held
in the Compensation Trust are at all times subject to the claims of
the Corporation's creditors. The Compensation Trust may be revoked
by the Corporation's Board of Directors at any time prior to a
"Change in Control" (as defined below) of the Corporation. After
a Change in Control or a failure of the Corporation, after 30 days
written notice, to pay benefits under the 1989 Plan or the
Supplemental Plan, the Compensation Trust becomes irrevocable and
the Corporation generally may not recover any part of the corpus or
income of the Compensation Trust for any purpose other than
providing payments to participants in the 1989 Plan and the
Supplemental Plan and administering the Compensation Trust.
A "Change in Control" occurs under the Compensation Trust
agreement upon the happening of any of the following: (i) the
consummation of a merger or consolidation of the Corporation with
any other entity resulting in holders of the Corporation's voting
capital stock receiving less than fifty percent of the voting
capital stock of the surviving entity; (ii) the sale,
lease, exchange or transfer of all or substantially all of the
Corporation's assets; (iii) the approval by the Corporation's
shareholders of any plan or proposal for the liquidation or
dissolution of the Corporation; (iv) the acquisition by any person,
other than a Trustee of any employee benefit plan of the
Corporation, after the execution of the Compensation Trust
agreement of thirty-five percent or more of the outstanding voting
power of the Corporation's securities; or (v) a change
in a majority of the directors of the Corporation in any period of
less than two years, not counting persons elected or nominated by
a vote of two-thirds of the directors in office at the beginning of
such period or whose election or nomination was previously so
approved.
Executive Separation Agreements
The Corporation has entered into Executive Separation
Agreements (the "Separation Agreements") with the named executive
officers and two other executive officers. The Separation
Agreements provide for separation pay should a Change in Control
(as described above for the Compensation Trust, except that the
acquisition test described in item (iv) above is thirty percent
with respect to the Separation Agreements) of the Corporation
occur. The Separation Agreements were unanimously approved by the
non-employee directors.
Under the Separation Agreements, the executive's employment
must be terminated involuntarily (other than for serious
misconduct), or voluntarily by the executive officer for good
reason, i.e. if the executive officer is demoted, relocated, or has
a reduction in compensation, for separation pay to be available.
Separation pay equals 2.95 times the executive officer's average
annual compensation for the most recent five taxable years ending
before a Change in Control, and disability and medical benefits are
extended for three years after termination. The executive officer
is also entitled to continue to participate in the Corporation's
retirement plans for three years after termination, or if such
plans prohibit continued participation after termination, to
receive benefits equal to the incremental benefit the executive
officer would have received had his employment terminated three
years after the actual date of termination. The Separation
Agreements provide for adjustments to avoid, and reimbursement by
the Corporation of, excise taxes imposed on the executive officer
under the Internal Revenue Code with respect to the separation pay.
The Corporation believes that by assuring the executive
officer of some financial security, the Separation Agreements
protect the shareholders by neutralizing any bias of the
executive officers in considering proposals to acquire the
Corporation. The Corporation believes these advantages outweigh
the disadvantage of the cost of the benefits.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of the Board of Directors of the
Corporation (the "Committee") formulates executive compensation
policy for the Corporation and determines, subject to board review
and approval, the compensation of all executive officers named
above. The Committee is comprised of non-employee directors.
Broad Policy Considerations. In the determination of 1994
executive compensation, the following broad compensation policies
were followed:
1. Executive compensation must be competitive. This policy
was considered to be critical in order for the Corporation to
attract and retain qualified management personnel.
2. Executive compensation should be based upon Corporation
performance with emphasis on shareholder return.
3. The setting of executive compensation needs to be fair
and needs to take into account the business reality that there are
significant factors affecting Corporation performance which are
outside of management's control.
4. Executive compensation ought to be incentive based.
There should be opportunities for substantial bonuses based upon
Corporation performance.
5. An effective executive compensation plan requires a long-
term incentive element as well as short-term incentive elements.
Compensation Programs. The short-term components of the
Corporation's executive compensation programs consist of base
salary and bonuses under the Corporation's Incentive Compensation
Plan (the "Cash Incentive Plan"). The existing Cash Incentive Plan
was formulated and established by the Board of Directors of the
Corporation in 1992 and has since been continued as a complement to
base salaries. As set forth below, the Cash Incentive Plan is
tailored to fit the second and fourth goals listed above since
bonuses thereunder are calculated based on a targeted after-tax
return on shareholders' equity and since relatively high potential
bonuses, taken as a percentage of total compensation, can be earned
under the Plan. In 1993 and 1994, the Board of Directors and
shareholders of the Corporation, respectively, approved and adopted
the 1994 Stock Compensation Plan (the "Stock Incentive Plan") as
recommended by the Committee. The Stock Incentive Plan provides
the long-term incentive component of the executive compensation
programs of the Corporation in accordance with the fifth goal
enumerated above.
Base Salary. In determining 1995 base salaries for
executives, emphasis was placed on a comparison of each
individual's salary to the salaries received by individuals in
similar positions in other companies of comparable size and line of
business based upon available salary survey information and other
published materials. The Committee also considered the
recommendations of the Chief Executive Officer as to salaries other
than his own. Individual performances as well as the Corporation's
performance compared to financial objectives also were considered.
Cash Incentive Compensation. Under the Cash Incentive Plan,
bonus opportunities as a percentage of gross salary have been
established for four levels of employees and a target
after-tax return on shareholders' equity has been established as
the return required in order for employees to achieve 100 percent
of their respective bonus opportunities. At the time the Board
established such targeted return on shareholders' equity,
consideration was given to available information regarding the
median return on equity achieved by Fortune 500 companies in the
motor vehicle and parts businesses. The Board also took into
account the average return on equity which had been achieved over
a five-year period by a leading competitor. In determining not to
revise the targeted return on equity in the Cash Incentive Plan,
the Committee has continued to review the return on average
shareholder equity achieved by other companies. In the event a
return on shareholders' equity in excess of the targeted return is
achieved, higher bonuses, up to a maximum of 150 percent of bonus
opportunities, can be earned. Thus, consistent with the policy of
emphasizing incentives/rewards based upon performance, relatively
high potential bonuses, taken as a percentage of total
compensation, can be and were awarded to employees covered by the
Plan.
Stock Incentive Compensation. The Corporation's 1994
Compensation Plan represented a departure from the Corporation's
historic practice of primarily focusing on cash compensation in the
form of salaries and bonuses, a practice which stemmed from the
equity participation of management in the acquisition company which
was merged into the Corporation in 1983. The Committee recognized
that management changes and additions had obsoleted that
restrictive focus and felt it should reactivate, as part of the
Corporation's executive compensation structure, the long-term
incentive stimulus which flows from equity participation or from an
opportunity to obtain equity participation. Since stock option
values are dependent upon the long-term growth of the Corporation's
stock price, the Committee believed that the grant of stock options
was the appropriate way in which to add a long-term incentive
element to the Corporation's executive compensation programs.
The stock options authorized and granted by the Committee in
1994 were ten-year options which were to vest in equal parts over
a four-year period commencing on the first anniversary date of the
option grants. In 1995 those options were repriced for the reasons
set forth in the Compensation Committee's Report on Option
Repricing, above. Executive officer stock option awards were
primarily based on the respective levels of position and
responsibility of the individuals to whom the options were awarded.
As with the determination of base salaries, the Committee also
considered the recommendations of the Chief Executive Officer.
Deferred Compensation. The policy which the Board has applied
with regard to deferred compensation is to have a competitive plan
designed to encourage key employees to remain with the Corporation.
Chief Executive Officer Compensation. The compensation of the
Chief Executive Officer essentially reflects consideration and
application of the same policies and factors described above. In
particular, as to Mr. Lohman, consideration was given to the
leadership skills consistently demonstrated by him; the
responsibilities imposed on him; and a comparison of his
compensation to the compensation paid to chief executive officers
of similarly situated companies. Mr. Lohman's bonus was based upon
the after tax return on equity of the Corporation during 1995 as
compared to the target return set forth in the Cash Incentive Plan.
The stock option awarded to Mr. Lohman was reflective of his
position and responsibility as the chief executive officer of the
Corporation. Mr. Futterknecht's compensation for 1995 was not
affected by his election as Chief Executive Officer on September
27, 1995.
Other. The Committee believes that, other than tax-favored
compensation such as incentive stock options, executive
compensation should be structured and limited to the extent
necessary to preserve the tax deductibility of the compensation
paid by the Corporation (except in extraordinary or unforeseen
circumstances). The 1994 Stock Compensation Plan has been
structured to meet that goal with respect to any options granted
under such plan.
MEMBERS OF THE COMPENSATION COMMITTEE:
Richard A. Place
John G. Keane
Performance Graph
The following graph compares the cumulative total shareholder
return on the Corporation's common shares, with the cumulative
total return of companies on the Standard & Poor's 500 Stock Index
and the cumulative total return on the common stock of a peer group
of automotive parts manufacturers. The peer group includes the
following companies: Allen Group, Amcast Industrial Corporation,
Cooper Tire & Rubber, Dana Corp., Donnelly Corporation, Douglas &
Lomason Company, Echlin, Inc., Genuine Parts, Goodyear Tire &
Rubber, Johnson Controls Corporation, MascoTech, Modine
Manufacturing Company, Snap-on Tools, The Standard Products Co.,
and Timken Co.
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Excel $100.00 78.09 181.47 198.04 153.18 158.63
S&P500 $100.00 130.47 140.41 154.56 156.60 214.86
Peer
Group $100.00 155.11 201.42 252.23 218.34 266.26
ASSUMES $100 INVESTED ON DECEMBER 31, 1990
TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
NOTE: TOTAL RETURNS BASED ON MARKET CAPITALIZATION
</TABLE>
APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Corporation has appointed Price
Waterhouse LLP as independent auditors to examine the financial
statements of the Corporation and its subsidiaries for the current
fiscal year ending December 28, 1996. Although there is no
requirement that such appointment be submitted to a vote of the
shareholders, the Board of Directors feels that the shareholders
should be afforded the opportunity to ratify the appointment. If
the shareholders do not ratify the appointment, the Board of
Directors, in its discretion and without further vote of
the shareholders, will select another firm to serve as independent
auditors for the current fiscal year.
Price Waterhouse LLP has served as independent auditors for
the Corporation and its subsidiaries continuously since 1955 and is
considered by the Board of Directors to be well qualified. The
Board of Directors therefore recommends a vote FOR ratification of
the appointment of Price Waterhouse LLP, and if the enclosed proxy
is duly executed and received in time for the meeting and if no
contrary specification is made as provided therein, it is the
intention of the persons named therein to vote the shares
represented thereby for ratification of such appointment.
A representative of Price Waterhouse LLP is expected to be
present at the shareholder meeting and will have the opportunity to
make a statement if he desires to do so. Price Waterhouse LLP has
indicated that it presently does not intend to make a statement but
that its representative will be available to respond to appropriate
questions.
Shareholder Proposals
November 14, 1996 is the date by which shareholder proposals
intended to be presented at the 1997 annual meeting must be
received by the Corporation to be considered for inclusion in the
proxy materials relating to that meeting.
Other Matters
The Annual Meeting is called for the purposes set forth in the
"Notice of Annual Meeting." The Board of Directors has not been
informed of any matters other than those stated in the Notice that
are to be presented at the meeting. If any other business is
brought before the meeting, the persons named in the attached proxy
will vote according to their discretion.
BY ORDER OF THE BOARD OF DIRECTORS.
______________________________
Joseph A. Robinson
Secretary
IMPORTANT:
Please immediately mark, sign, date and return your Proxy in
the enclosed stamped, addressed envelope. If you attend the
meeting and if you so desire, you may withdraw your Proxy and vote
in person. THANK YOU FOR ACTING PROMPTLY.
PROXY EXCEL INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
April 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints James O.
Futterknecht, Jr. and Ralph R. Whitney, Jr., and each of them,
proxies with full power of substitution to vote for the undersigned
all common shares of Excel Industries, Inc. which the undersigned
would be entitled to vote if personally present at the annual
meeting of shareholders to be held on April 18, 1996, at 10:00 a.m.
(Eastern Standard Time) and at any adjournment thereof, upon the
matters described in the accompanying Proxy Statement and upon any
other business that may properly come before the meeting or any
adjournment thereof. Said proxies are directed to vote or refrain
from voting as checked below upon the matters listed below, and
otherwise in their discretion.
The Board of Directors Recommends a vote "FOR all nominees" in Item
1 and "FOR" Item 2.
Item 1. Election of Directors
Nominees:
James O. Futterknecht, Jr., John G. Keane, Richard A.
Place, Joseph A. Robinson, James K. Sommer and Ralph R.
Whitney, Jr.
( ) FOR all nominees listed above, except authority is
withheld to vote for the following nominee or
nominees, if any:
( ) WITHHOLD AUTHORITY to vote for all nominees listed
above.
Item 2. Ratification of Price Waterhouse LLP as independent
auditors for the current fiscal year ending December 28, 1996.
( ) FOR ( ) AGAINST ( ) ABSTAIN
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY
THE SHAREHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, SUCH SHARES WILL BE VOTED "FOR ALL NOMINEES" IN
ITEM 1 AND "FOR" IN ITEM 2.
Account Number: _______________ _______________________
Date
Number of Shares: _____________ ________________________
Signature
________________________
Signature
Please date this Proxy and sign exactly as your name or names
appear above and return in the enclosed envelope. If acting as
executor, administrator, trustee, guardian, etc., you should so
indicate when signing. If the signer is a corporation, please sign
the full corporate name, by duly authorized officer. If shares are
held jointly, each shareholder named should sign.
