SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ____)
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Soliciting Material Pursuant to Section 240.14a-11 or Section
240.14a-12
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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[X] No fee required
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and 0-11.
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applies:
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computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined):
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the offsetting fee was paid previously. Identify the previous
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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
offices of the Corporation, 1120 North Main Street, Elkhart, Indiana, on
Thursday, April 17, 1997 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 consider and act upon a proposal to approve the
Excel Industries, Inc. 1997 Long Term Incentive Plan.
3. To ratify the appointment of Price Waterhouse LLP as
independent auditors for the current fiscal year
ending December 27, 1997.
4. To transact such other business as may properly come
before the meeting.
The shareholders of record at the close of business on
February 21, 1997, 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.
/s/ Joseph A. Robinson
Joseph A. Robinson
Secretary
Elkhart, Indiana
March 11, 1997
1997 PROXY STATEMENT
Annual Meeting of Shareholders
All shareholders of record on February 21, 1997, are entitled to
vote at the Annual Meeting to be held at the offices of the
Corporation, 1120 North Main Street, Elkhart, Indiana, on the
seventeenth day of April, 1997 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, the approval of the Excel
Industries, Inc. 1997 Long-Term Incentive Plan, 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 11, 1997.
Outstanding Shares
As of February 14, 1997, the Corporation had outstanding
10,722,454 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 21, 1997.
Principal Shareholders
Set forth below is certain information concerning the only
persons known to the Corporation, as of February 14, 1997, 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) 10,722,454 common shares outstanding on February 14, 1997 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 common shares 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 1,142,180 shares1 10.65%
60 Wall Street
New York, NY 10015
Dimensional Fund Advisors, Inc. 601,259 shares2 5.61%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Convertible Note Holders
CIGNA Corporation 1,111,272 shares3 9.39%
One Liberty Place
Philadelphia, PA 19101
</TABLE>
1In 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 1,142,180 common shares. Morgan has the sole
power to dispose of all such shares and sole power to vote 661,300 of
such shares.
2In a Schedule 13G dated February 5, 1997 and delivered to the
Corporation, Dimensional Fund Advisors, Inc. ("DFA") disclosed that
an aggregate of 601,259 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 418,759 of such shares, and certain officers of DFA, in
their capacities as officers of the Fund and the Trust, vote an
additional aggregate of 182,500 shares. DFA has sole dispositive power
with respect to all 601,259 shares. DFA disclaims beneficial
ownership of all of such shares.
3Represents (i) 601,508 common shares which may be acquired on
conversion of the convertible notes of the Corporation owned by
Connecticut General Life Insurance Company ("CGLIC") (515,578 shares)
and Life Insurance Company of North America (85,930 shares), two
subsidiaries of CIGNA Corporation (collectively "CIGNA"), (ii) 1,338
common shares indirectly owned by CGLIC and (iii) 508,426 common
shares owned by CIGNA Mezzanine Partners II, L.P., for which CIGNA
Investment, Inc., a subsidiary of CIGNA. 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.
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 who receive the largest number of votes cast are elected.
Abstentions, broker non-votes and instructions to withhold authority
to vote on the enclosed proxy do not affect the total of votes
otherwise cast for any person. 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., 50, 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. Mr. Futterknecht
is also a director of Control Devices, Inc.
Joseph A. Robinson, 58, joined the Company as Secretary,
Treasurer and Chief Financial Officer in December 1991, and was
appointed as a director in 1992. He was elected Senior Vice President
and Chief Financial Officer in 1996. Prior to December 1991, 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, 66, 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, 62, 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, 64, 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., 62, 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., Control
Devices, Inc., IFR Systems, Inc., Selas Corporation of America and
Baldwin Technologies, Inc.
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 1996. 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. The Corporation
paid a total of $702,515.00 in legal fees to Sommer & Barnard, PC,
during 1996.
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 twice in 1996.
Security Ownership of Management
The following table sets forth, as of February 14, 1997,
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 Beneficial Ownership Percent of Class
- ------------------------ ----------------------- -----------------
<S> <C> <C>
James O. Futterknecht, Jr. 38,454 (1) *
Joseph A. Robinson 6,289 (2) *
John G. Keane 5,000 (3) *
Richard A. Place 4,000 (4) *
James K. Sommer 7,501 (5) *
Ralph R. Whitney, Jr. 23,000 (6) *
Louis R. Csokasy 13,218 (7) *
James E. Crawford 8,647 (8) *
Robert A. Pickering -0- *
All Executive Officers and
Directors as a Group (13 persons) 118,406 (9) 1.1%
*Less than one percent
(1) Includes 5,000 shares subject to an option held by Mr.
Futterknecht.
(2) Includes 1,039 shares held for Mr. Robinson's account in the
Corporation's Employee Stock Purchase Plan.
(3) Includes 3,000 shares subject to options held by Dr. Keane.
(4) 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
3,000 shares subject to options held by Mr. Place.
(5) Includes 3,000 shares subject to options held by Mr. Sommer.
(6) Includes 3,000 shares subject to options held by Mr. Whitney.
(7) Includes 2,750 shares subject to an option held by Mr. Csokasy.
(8) Includes 457 shares owned by Mr. Crawford's wife, as to which
Mr. Crawford disclaims beneficial ownership. Also includes 300 shares
held for Mr. Crawford's account in the Corporation's Employee Stock
Purchase Plan, and 2,750 shares subject to an option held by Mr.
Crawford.
(9) Includes shares owned by spouses, whether or not beneficial
ownership is disclaimed, and 31,250 shares subject to options held by
executive officers and directors.
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table shows the compensation for the past three
years of the Corporation's Chief Executive Officer and the
Corporation's next four most highly compensated executive officers.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary($) Bonus($) Compensation($)1 Options Compnsation($)2
<S> <C> <C> <C> <C> <C> <C>
James O. Futterknecht, Jr. 1996 385,000 262,763 0 0 4,500
President, Chairman of the 1995 315,000 149,546 1,965 20,000 4,500
Board and CEO 1994 286,000 235,950 1,823 20,000 4,500
Joseph A. Robinson, 1996 210,000 95,550 0 0 4,500
Senior Vice President, 1995 185,000 58,553 3,025 13,000 4,500
Secretary and CFO 1994 169,000 95,950 3,097 13,000 4,500
Louis R. Csokasy, Vice 1996 195,000 88,725 0 0 4,500
President and President, 1995 155,000 49,058 2,606 11,000 4,500
Automotive Systems 1994 142,000 79,875 2,675 11,000 4,500
Robert A. Pickering3, 1996 161,694 102,406 0 11,000 2,390
Vice President and
President, Atwood Mobile
Products
James E. Crawford, 1996 156,000 70,980 0 0 4,500
Vice President and 1995 146,000 46,209 3,056 11,000 4,500
Managing Director, 1994 139,000 78,188 3,246 11,000 4,500
Value Management and
Product Research and
Development
(1)Represents reimbursements to the named executive officers for payment of income taxes.
(2)Represents contributions by the Corporation to the accounts of each of the named
executive officers in the Corporation's deferred compensation and savings plan.
(3)Represents amounts earned subsequent to the acquisition of Anderson Industries, Inc. by
the Corporation on April 3, 1996.<PAGE>
Options
</TABLE>
The following table shows the options to purchase common shares
granted to Robert A. Pickering in 1996 pursuant to the Corporation's
1994 Stock Compensation Plan. No Options were granted to any other
named executive officer in 1996.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
---------------------------------- ------------------------------
Number of
Securities % of Total Options
Underlying Granted to
Options Employtees in Exercise Expiration
Name Granted # Fiscal Year(%) Price($) Date 5%($) 10%($)
---------- ----------- ---------------- --------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
Robert A. Pickering 11,0001 100.00 12.25 4-17-2006 85,000 215,000
1Options become exercisable in 25% increments on April 18, 1997; April 18, 1998; April
18, 1999; April 18, 2000. Options are Incentive Stock Options under Section 422 of the
Internal Revenue Code.
</TABLE>
The following table shows the number and value of options held by the
named executive officers as of December 28, 1996.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of
Securities
Underlying
Unexecercised Value of Unexercised
Options at Fiscal in the Moneu Options
Year-End(#) at Fiscal Year
Shares Acquired Value Exercisable/ End($)1 Exercisable/
Name On Exercisable(3) Realized($) Unexercisable Unexercisable
-------------- ------------------- ------------- ---------------- --------------------
<S> <C> <C> <C> <C>
James O. Futterknect, ---- ---- 5,000/15,000 19,375/58,125
Jr.
Joseph A. Robinson 3,250 13,000 0/9,750 0/37,781
Louis R. Csokasy ---- ---- 2,750/8,250 10,656/31,968
Robert A. Pickering ---- ---- 0/11,000 0/44,000
James E. Crawford ---- ---- 2,750/8,250 10,656/31,968
1Based on the closing price of the Corporation's common shares on December 27, 1996.
</TABLE>
Pension Plans
Set forth below are tables showing the estimated annual benefits
payable upon normal retirement under the Corporation's pension plan
(the "Excel Plan") and the Atwood Industries, Inc. Salaried Pension
Plan (the "Atwood Salaried Pension Plan") for various compensation and
years-of-service classifications, assuming the current maximum FICA
wage base of $65,400 remains unchanged.
<TABLE>
EXCEL PLAN
<CAPTION>
Credited Years of Service
Final Avg. ----------------------------------
Earnings 15 20 25 30 35
------------ ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 8,204 $10,939 $13,674 $16,409 $19,144
$100,000 $18,704 $24,939 $31,174 $37,409 $43,644
$150,000 $29,204 $38,939 $48,674 $58,409 $68,144
$160,000(1) $31,304 $41,739 $52,174 $62,609 $73,046
</TABLE>
<TABLE>
ATWOOD SALARIED PENSION PLAN
<CAPTION>
Credited Years of Service(2)
------------------------------
Final Avg. Earnings 15 20 25
--------------------- --------- -------- --------
<S> <C> <C> <C>
$ 50,000 $ 8,522 $11,363 $14,203
$100,000 $19,022 $25,363 $31,703
$150,000 $29,522 $39,363 $49,203
$160,000(1) $31,622 $42,163 $52,703
(1) Effective January 1, 1997, 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 $160,000 as the maximum
final annual average earnings and his credited years of service
at retirement.
(2) The maximum credited years of service under the Atwood Salaried
Pension Plan is 25.
</TABLE>
Excel Plan. Benefits under the Excel 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 Excel Plan for the individuals listed in the Summary
Compensation Table are as follows: Mr. Futterknecht - 26; Mr.
Robinson - 4; Mr. Csokasy - 24; and Mr. Crawford - 18.
Atwood Salaried Pension Plan. Benefits under the Atwood
Salaried Pension Plan are, subject to certain limitations, equal to
the number of years of credited service (maximum 25 years) times the
sum of .95% of final average earnings and .45% of final average
earnings in excess of the "breakpoint". The "breakpoint" is the IRS
Covered Compensation breakpoint which is equal to the average of the
social security taxable wage bases for the 35-year period ending at
the employee's social security normal retirement age. Final average
earnings are generally defined as a participant's average base
salaries for the four consecutive calendar years of highest earnings
during the ten years prior to the earlier of retirement or
termination. The benefits are not subject to any deduction for Social
Security or other offset amounts. Mr. Pickering has seven years of
credited service under the Atwood Salaried Pension Plan.
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 and Crawford 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 Messrs. Futterknecht, Robinson,
Csokasy and Crawford and three 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 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 1996
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 Cash Incentive Plan, which was
established by the Board of Directors of the Corporation in 1992, was
designed to help implement the second and fourth goals listed above
with bonuses thereunder calculated based on a targeted after-tax
return on shareholders' equity and with relatively high potential
bonuses taken as a percentage of total compensation. 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. The Committee has also recommended
and the Board has recently adopted the 1997 Long-Term Incentive Plan
("LTIP"), subject to shareholder approval, which grants awards based
on total shareholder return over a multiple-year period, to further
the second and fifth goals described above.
Base Salary. In determining 1996 base salaries for executives,
consideration was given to a comparison of each individual's salary
to the salaries received by individuals in similar positions in other
manufacturing companies of comparable size based upon available salary
survey information furnished by an outside compensation consulting
firm. Such survey data is pertinent to the above listed policy
consideration that executive compensation needs to be competitive in
order to attract and retain qualified personnel. Accordingly, the
Committee did not limit the companies considered to companies which
are deemed to be peer group companies for purposes of the Performance
Graph set forth below and did not take into account the performance
of the companies included in the survey data, as compared to the
performance of the Corporation, or otherwise. The Committee also
considered the recommendations of the Chief Executive Officer as to
salaries other than his own. Individual responsibilities and
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 five 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 awarded to employees covered by the Plan.
In addition to return on equity, the Committee proposed for 1996
to take into consideration individual employee performance and, if
applicable, the operating income performance of the particular
strategic business unit in which the individual was employed in making
bonus determinations. However, in the opinion of the Committee and
the Board, a major acquisition in the second quarter of 1996 rendered
this proposed change in making bonus determinations inappropriate for
1996 and therefor, except as to one business unit and except with
regard to employees of the acquired entities (as to whom, their
existing incentive compensation plans were applied), bonuses were
calculated in the same manner as pre-1996 bonuses. 1996 bonuses for
the named executives were approximately 91% of target, or
approximately 60% of the maximum potential bonuses.
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 an appropriate way in which to add
a long-term incentive element to the Corporation's executive
compensation programs.
The stock option authorized and granted by the Committee to Mr.
Pickering in 1996 was a ten-year option which is to vest in equal
parts over a four-year period commencing on the first anniversary date
of the option grant. Executive officer stock option awards are
primarily based on the respective levels of position and
responsibility of the individuals to whom the options are awarded.
As with the determination of base salaries, the Committee also
considered the recommendations of the Chief Executive Officer.
1997 Long-Term Incentive Plan. The LTIP also rewards management
in the form of stock and contributes to the Corporation's goals of
linking management compensation to shareholder return, and giving
management a stake in the long-term performance of the Corporation.
The LTIP awards generally vest over a multiple-year period and are
based on a comparison of the Corporation's performance with a peer
group of U.S. auto suppliers (the "LTIP Peer Group"). The LTIP Peer
Group includes the members of the 1997 Peer Group listed under
"Performance Graph", below and the following additional companies:
Borg-Warner Automotive, Citation Corp., Collings & Aikman Corp.,
Electric Fuel Corp., Harvard Industries, Inc., Hilite Industries,
Inc., JPE Inc., Lear Corp., Safety Components, Shiloh Industries,
Inc., Sinter Metals, Inc., Stant Corp., Sudbury, Inc., and Tower
Automotive. These additional companies were excluded from the 1997
Peer Group for purposes of the Performance Graph because they did not
have a five-year history on which to base a comparison.
The Board has set three levels of rewards for corporate
performance in relation to the companies in the LTIP Peer Group.
Eligible participants in the LTIP will receive the minimum reward if
the Corporation performs at or above the 25th percentile with respect
to total shareholder return, the target reward if the Corporation
reaches the 65th percentile, and the maximum reward for outperforming
75% of the companies within the LTIP Peer Group.
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.
Mr. Futterknecht's base salary for 1996 was significantly increased
because of the added responsibilities he assumed when he became
Chairman of the Board and Chief Executive Officer following the death
of his predecessor in September 1995. The outstanding job he did in
effectuating the transition, his performance of operating duties while
continuing to examine and analyze acquisition possibilities and the
above referenced survey data were also taken into account in
establishing his base salary. As set forth above, the bonus component
of Mr. Futterknecht's compensation was based on the Corporation's
after-tax return on equity as compared to the targeted return. Mr.
Futterknecht achieved approximately 91% of his target bonus based on
the Corporation's ROE for 1996.
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. The Committee believes that
the LTIP, if approved by the shareholders, will also meet that goal.
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 two peer groups of
automotive parts manufacturers. The companies included in each of the
peer groups are listed following the graph information. The 1996 Peer
Group was included in the Corporation's proxy statement for the 1996
annual meeting of shareholders. In future proxy statements, the
Corporation intends to present information with respect to the 1997
Peer Group. The performance of the companies in the 1997 Peer Group
(with the additional companies included in the LTIP Peer Group) will
be compared to the Corporation's performance in determining benefits
payable under the LTIP, and they are among the companies the Committee
considers in establishing base salaries and targets under the Cash
Incentive Plan. The Corporation believes information with respect to
the 1997 Peer Group will better inform shareholders of the
relationship between the Corporation's performance and compensation
of the Corporation's executives.
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
<CAPTION>
1991 1992 1993 1994 1995 1996
--------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Excel $100.00 232.38 253.60 196.15 202.57 248.23
S&P500 $100.00 107.61 118.41 120.01 164.95 202.73
1996 Peer
Group $100.00 136.10 177.72 157.81 200.23 229.54
1997 Peer
Group $100.00 143.12 198.32 197.90 246.16 315.08
</TABLE>
ASSUMES $100 INVESTED ON DECEMBER 31, 1991
TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
NOTE: TOTAL RETURNS BASED ON MARKET CAPITALIZATION
1996 Peer Group
The 1996 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, Inc., Modine Manufacturing Company, Snap-on Tools, The
Standard Products Co., and Timken Co.
1997 Peer Group
The 1997 Peer Group includes the following companies: Amcast
Industrial Corp., Arvin Industries, Autocam, Borg-Warner Automotive,
Breed Technologies, Dana Corporation, Defiance, Inc., Donnelly Corp.,
Eaton Corp., Federal Screw Works, Gentex Corp., Hayes Wheels
International, Inc., Hickok Inc., Intermet Corp., ITT Industries,
Johnson Controls, Mark IV Industries, Inc., Mascotech, Inc.,
National-Standard Co., Newcor, Inc., A. O. Smith, Special Devices, Standard
Products Co., Superior Industries International, Timken Co., Top
Source, TRW Inc., Walbro Corp., and Williams Controls, Inc.
APPROVAL OF THE 1997 LONG-TERM INCENTIVE PLAN
Purpose
The Board of Directors has adopted, subject to shareholder
approval, the Excel Industries, Inc. 1997 Long-Term Incentive Plan
(the "LTIP"). Under the LTIP, performance shares are awarded to key
executives of the Corporation based on the attainment of one or more
preestablished performance goals over a specified performance period.
The purpose of the Plan is to attract and retain highly competent
executives, to recognize, motivate and reward key employees for
development and execution of strategies and policies that result in
long-term return to shareholders of the Corporation, and to provide
key employees with a stake in the Corporation and identification with
the interests of shareholders. The full text of the LTIP is set forth
as an appendix to this proxy statement.
Administration
The Plan is administered by a committee or committees appointed
by the Board from among its members (the "Committee"). With respect
to establishing, administering and certifying performance share
awards, the composition of the Committee is intended to comply with
Internal Revenue Code ("Code") Section 162(m) to prevent the application of
the $1 million annual deduction limit on executive compensation to
certain awards under the Plan.
The Committee is generally authorized to construe and interpret
the Plan, to establish appropriate rules and regulations, to select
employees of the Corporation and its subsidiaries for participation
and to specify the terms and number of awards granted under the Plan.
Members of the Committee may be removed by the Board. In determining
the terms, conditions and amount of each award, the Committee may take
into account various criteria, including, among others, salary grade
and individual and Corporation performance. The Corporation will pay
all the costs of administering the Plan.
Shares and Term
The stock subject to awards granted under the Plan is the
Corporation's authorized but unissued or reacquired common shares
("Common Stock"). The Corporation may repurchase shares in the open
market or otherwise.
The Plan authorizes a maximum issuance of 500,000 shares of
Common Stock, subject to shareholder approval. Performance share
awards and any agreements evidencing such awards will be subject to
adjustment by the Committee whose determination will be conclusive as
to the number and, if applicable, the price of shares of Common Stock
in the event of changes in the outstanding Common Stock due to a
change in the corporate or capital structure of the Corporation. In
the event of any such change in the outstanding Common Stock, the
aggregate number of shares available under the Plan shall be
appropriately adjusted by the Committee. To the extent that a
performance share expires or is terminated, is canceled or forfeited
for any reason without being paid in cash or shares of Common Stock,
any remaining shares allocable to the unpaid portion of such
performance share award shall become available again for subsequent
grants under the Plan.
Eligibility
Each year, the Chief Executive Officer recommends, and the
Committee approves, the grant of performance share awards to eligible
individuals. Key employees, including officers, of the Corporation
and its subsidiaries who are in a position to make significant
contributions to the growth and long-term success of the Corporation
are eligible to receive these awards. Currently, approximately 8
individuals are eligible to receive awards under the LTIP.
Performance Share Awards
A performance share consists of the right, subject to terms and
conditions determined by the Committee, to receive shares of Common
Stock, and if determined by the Committee, cash dividend equivalents.
Generally, the award will become payable in Common Stock, after a
specified performance period if certain preset Corporation performance
goals are attained. The Committee may provide for different levels
of payouts based on relative performance toward a performance goal.
Final payouts are subject to the approval of the Committee and the
Committee has the absolute discretion to reduce or cancel, but not
increase, any payout.
The LTIP establishes a three-year performance period over which
the Corporation's performance will be measured. Initially,
performance share awards will be based on the Corporation's percentile
rank in three-year compound total shareholder return relative to a
specified set of peer group companies in the U.S. automotive supply
industry determined by the Committee. The Committee may recommend,
and the Board of Directors may approve, adjustment of the performance
measures during a performance period to reflect significant,
unanticipated changes which materially impact the Corporation's
operating environment.
The Committee may require or permit an award holder to elect to
receive a portion of the total fair market value of the payout in
cash, to satisfy any federal, state and local income and employment
tax obligations that arise as a result of the award.
The Chairman, President and Chief Executive Officer of the
Corporation is eligible to receive a maximum of 15,000 shares at the
end of the first three-year performance period. Other participants
are eligible to receive a maximum of 7,500 shares.
Corporate Transactions
In the event of a disposition of all or substantially all of the
assets or outstanding capital stock of the Corporation by means of a
sale, merger, reorganization, or liquidation, each performance share
under the LTIP will terminate unless assumed pursuant to a written
agreement by the successor corporation or a parent or subsidiary
thereof. The grant of awards under the LTIP will in no way affect the
Corporation's right to adjust, reclassify, reorganize, or otherwise
change its capital or business structure or to merge, consolidate,
dissolve, liquidate, sell or transfer all or any part of its business
or assets.
New Plan Benefits
The following table shows the target, minimum and maximum number
of shares that would be awarded to the named executive officers and
directors and groups indicated at the end of the initial performance
period from 1996 through 1999. If the minimum performance level is
not attained, no participant will receive a payout at the end of the
performance period. The Dollar Value column reflects the dollar value
of awards that would have been paid to the groups and individuals
indicated had the LTIP been in place over the period 1993 through
1996, and had the groups and individuals received the maximum payout.
The Maximum Dollar Value is based on the December 27, 1996 stock
price of $16.25.
<TABLE>
<CAPTION>
Maximum
Name and Position Minimum Target Maximum Dollar Value
------------------- -------- -------- -------- -------------
<S> <C> <C> <C> <C>
James O. Futterknecht, 2,500 10,000 15,000 $243,750
Jr., Chairman of the
Board, President and
Chief Executive Officer
Joseph A. Robinson 1,250 5,000 7,500 $121,875
Senior Vice President,
Secretary and Chief
Financial Officer
Louis R. Csokasy
Vice President and
President, Automotive
Systems 1,250 5,000 7,500 $121,875
Robert A. Pickering 1,250 5,000 7,500 $121,875
Vice President and
President, Atwood
Mobile Products
James E. Crawford 1,250 5,000 7,500 $121,875
Vice President and
Managing Director
Value Management and
Product Research and
Development
Current Executive 11,250 45,000 67,500 $1,096,875
Officer Group (9 persons)
Non-Executive Director ___ ___ ___ ___
Group (4 persons)
All Employees, including ___ ___ ___ ___
Officers who are not
Executive Officers as
a Group (approx. 6,800
persons)
</TABLE>
Amendment and Termination
The Board may amend, suspend or discontinue the LTIP at any time.
However, the performance goals established for performance share
awards may not be modified except in unusual circumstances, as
described above. Without shareholder approval, the Board may not (1)
materially modify the requirements for eligibility, (2) materially
increase the number of shares issuable under the LTIP (except as
provided above), or (3) make any other change with respect to which
the board determines that shareholder approval is required by
applicable law or regulatory standards.
To the extent not inconsistent with the LTIP, the Committee may
modify or waive the terms of any outstanding award.
Federal Income Tax Consequences
The following is a general description of certain federal income
tax consequences of the Plan. This description does not purport to
be complete.
A recipient of performance share awards recognizes no taxable
income at the time of grant. However, when the conditions precedent
to the issuance of shares pursuant to such performance share award are
satisfied, the award holder will recognize ordinary income equal to
the fair market value on the date of issuance of the shares. Any cash
dividend equivalent paid to a holder of performance shares is ordinary
income. The Corporation will be entitled to a deduction equal to the
award holder's ordinary income recognized pursuant to the issuance of
the shares underlying the award in the year recognized by the award
holder.
If an award is accelerated as a result of a corporate
transaction, all or a portion of the value of the award at that time
may be a parachute payment for purposes of the Code's excess parachute
provisions. Those provisions generally provide that if parachute
payments exceed three times an award holder's average compensation for
the five tax years preceding the corporate transaction, the
Corporation loses its deduction and the recipient is subject to a 20%
excise tax for the amount of the parachute payments in excess of such
average compensation.
Accounting Treatment
The following is a summary of the certain accounting consequences
of awards under generally accepted accounting principles. Generally,
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based compensation," ("FAS 123") defines a fair value based
method of accounting for stock-based employee compensation plans.
However, it also allows an entity to continue to measure compensation
cost for those plans using the provisions of APB Opinion No. 25,
"Accounting for Stock Issued to Employees" ("Opinion 25"). Under FAS
123, compensation cost is measured at the grant date based on the fair
value of the award and is recognized over the service period, which
is usually the vesting period. Under Opinion 25, compensation cost
is recognized based on the difference, if any, between the market
price of the stock and the amount an employee must pay to acquire the
stock (the Corporation has elected to continue accounting for
compensation cost arising from its stock-based compensation plans
under Opinion 25).
The grant of performance shares will generally result in
compensation expense equal to the market value of the underlying
shares of Common Stock on the date of grant. This expense will
generally be amortized over the term of the vesting in such awards,
but the expense may be subject to periodic adjustment depending on
performance criteria and other factors. In the case of certain
performance criteria, the recognition and measurement of the expense
may be delayed until the performance criteria are attained or are
likely to be attained.
The number of outstanding performance shares will be a factor in
determining earnings per share on a fully diluted basis.
For fiscal years beginning with the Corporation's 1996 fiscal
year, FAS 123 requires the Corporation to disclose, in footnotes to
the Corporation's financial statements, the impact that options and
other stock-based awards have had on the Corporation's reported
earnings were the fair value of those awards treated as compensation
expense.
Deduction Limit for Executive Compensation
Code Section 162(m) limits federal income tax deductions for
compensation paid after 1993 to the chief executive officer and the
four other most highly compensated officers of a public Corporation
to $1 million per year. The section contains an exception for
performance-based compensation that satisfies certain conditions. The
Corporation believes that the performance shares granted to its
executives under the LTIP will qualify for the performance-based
compensation exception, assuming the LTIP is approved by shareholders.
The affirmative vote of a majority of the shares of Common Stock
having voting power present in person or represented by proxy, a
quorum being present, is necessary to approve the LTIP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED 1997
LONG-TERM INCENTIVE PLAN.
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 27, 1997. 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 12, 1997 is the date by which shareholder proposals
intended to be presented at the 1998 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.
/s/ Joseph A. Robinson
______________________________
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.
APPENDIX
EXCEL INDUSTRIES, INC.
1997 LONG-TERM INCENTIVE PLAN
EXCEL INDUSTRIES, INC.
1997 LONG-TERM INCENTIVE PLAN
ARTICLE I
GENERAL PROVISIONS
1.1 PURPOSE
The purpose of this Excel Industries, Inc. 1997 Long-Term
Incentive Plan ("Plan") is to provide an additional incentive
compensation opportunity for certain key employees of Excel
Industries, Inc. ("Excel") and its subsidiaries (collectively
referred to as the "Company"). This compensation opportunity is
designed to (i) ensure that the Company has a competitive compensation
package to assist in the retention and recruitment of highly competent
executives, (ii) recognize, motivate, and reward key employees for the
development and execution of strategies and policies that result in
long-term return to shareholders of the Company, and (iii) provide
executives with an ownership interest in the Company and
identification with the interests of shareholders.
1.2 ADMINISTRATION OF THE PLAN
(a) Committee. The Compensation Committee appointed by the
Board of Directors of Excel ("Committee") will administer the Plan.
The Board may delegate responsibility for administration of the Plan
to different Committees, subject to such limitations as it deems
appropriate. Members of the Committee will serve for such term as the
Board of Directors may determine, and may be removed by the Board at
any time. If no Committee is appointed by the Board, the Board will
administer the Plan. "Committee" will refer to the entity
administering the Plan, whether it is the Board, a committee, or
various committees.
(b) Authority. The Committee has full discretionary authority
to administer the Plan within the scope of its delegated
responsibilities, including authority to interpret and construe any
relevant provision of the Plan, to adopt rules and regulations that
it deems necessary, to determine each year which of those employees
recommended for an Award in accordance with the Plan will be granted
Performance Share Awards (defined in Article II), to determine the
number of shares subject to such Awards, and to determine the terms
of each grant made under the Plan (which terms need not be identical).
Decisions of the Committee made within the discretion delegated to it
by the Board are final and binding on all persons.
(c) Internal Revenue Code Section 162(m). The composition of the
Committee responsible for establishing, administering, and certifying
performance goals for Awards granted under the Plan will comply with
the requirements of Internal Revenue Code ("IRC") Section 162(m) and the
regulations promulgated thereunder.
1.3 STOCK SUBJECT TO THE PLAN
(a) Common Stock. Common Shares of Excel ("Common Stock")
available for issuance under the Plan will be drawn from the Excel
authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased on the open
market. The number of shares of Common Stock that may be issued under
the Plan will not exceed 500,000, subject to adjustment in accordance
with the terms of the Plan.
(b) Adjustment. If any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other
change affecting the outstanding Common Stock as a class without
receipt of consideration, then appropriate adjustments will be made
to (i) the maximum number and/or class of shares issuable under the
Plan, and (ii) the number and/or class of shares and price per share
in effect under each outstanding Performance Share Award under the
Plan. The purpose of these adjustments is to preclude the enlargement
or dilution of rights and benefits under the Performance Share Awards.
1.4 EFFECTIVE DATE AND TERM
The Plan is effective January 2, 1997, subject to approval by the
Company's shareholders. The Committee may grant Awards under the Plan
at any time after the Effective Date of the Plan and before the Plan
is terminated by the Board.
ARTICLE TWO
PERFORMANCE SHARE AWARDS
2.1 TERMS AND CONDITIONS OF PERFORMANCE SHARE AWARDS
(a) Performance Periods. For purposes of determining
Performance Share Award opportunities under the Plan, the Company's
performance will be measured over a three consecutive fiscal year
period ("Performance Period"). A new Performance Period will begin,
and a new grant of Performance Share Awards will be made, annually on
the first day of the Company's fiscal year.
(b) Performance Share Awards. A Performance Share Award
consists of the right, subject to such terms, conditions and
restrictions set forth in a written agreement (the "Award Agreement"),
to receive a share of Common Stock (together with cash dividend
equivalents if so determined by the Committee) as the Committee
determines ("Performance Share Award" or "Award"). A participant will
be eligible to receive a specific number of shares of Common Stock
("Performance Shares") based on the attainment of preestablished
target, minimum and maximum performance levels measured over a
Performance Period (the "Performance Measures"). Performance Share
Award opportunities will be established at the beginning of each
Performance Period for all participants in the Plan.
(c) Selection. Before each Performance Period, or as soon
thereafter as practicable, employees of the Company will be
recommended for participation in the Plan by the Chief Executive
Officer of the Company (the "CEO") and approved by the Committee.
Participants will be selected from among those employees who are in
a position to make significant contributions to the growth and long-term
success of the Company, including senior officers and strategic
business unit heads of the Company. The Committee will notify each
Plan participant of his or her Plan participation, the Performance
Share Award, and such additional provisions as the Committee deems
necessary, at the beginning of each Performance Period, or as soon
thereafter as practicable, by a written Award Agreement. The
Committee alone will determine any Performance Share Award to be made
to the CEO.
(d) Performance Measures. Within the first 90 days of the
beginning of the Performance Period (or, if shorter, within the first
25% of the period of service remaining in the Performance Period in
the case of an employee who is granted a Performance Share Award or
a pro rata portion thereof under Section 3.2(a)), the CEO will
recommend and the Committee will review and approve the Company
Performance Measures that must be met to achieve the target, minimum
and maximum Performance Share payouts. Initially, the Performance
Measures will be based on the Company's percentile rank in three-year
compound total shareholder return ("SR") relative to a specified set
of peer group companies in the U.S. automotive supply industry
determined by the Committee. SR is defined as the annual rate of
return represented by the combination of stock price appreciation and
dividend payments, with dividends assumed to be reinvested quarterly.
The Committee will have the discretion to base Performance Share
Awards on other performance measures including, but not limited to,
the achievement of a specified closing or average closing price of
Common Stock, or an absolute or percentage increase in the closing or
average closing price of Common Stock. The Committee may adjust the
Performance Measures during a Performance Period to reflect
significant, unanticipated changes which have a material impact on the
operations of the Company.
The Committee must approve the final payout of Performance
Shares, and it has the discretion to reduce or cancel any payout.
(e) Payment of Performance Share Awards. No participant will
be paid any portion of his or her Performance Share Award before the
end of the applicable Performance Period. No participant will be
vested in any portion of his or her Performance Share Award. Except
as provided in Section 3.2, only eligible participants actively
employed by the Company on the date Performance Share Awards are paid,
and whose overall performance meets expectations, may receive a payout
under a Performance Share Award.
(f) Withholding. The Committee may require, or permit, an Award
holder to elect, that a portion of the total Fair Market Value (as
defined in Section 3.1) of the Performance Shares be paid in the form
of cash in lieu of the issuance of Common Stock and that such cash
payment be applied to the satisfaction of the federal, state and local
income and employment tax withholding obligations that arise at the
time the Performance Shares become free of all restrictions under the
Plan.
(g) Shareholder Rights. A Performance Share Award holder will
be eligible to receive any dividend payments made on Performance
Shares that have been earned, but not yet paid, and may vote any such
shares.
(h) Transferability. Performance Shares Awards will not be
assignable or transferable by the holder otherwise than by will or by
the laws of descent and distribution following the Award holder's
death.
2.2 CORPORATE TRANSACTIONS
(a) Termination. In the event of the disposition of all or
substantially all of the assets or outstanding capital stock of the
Company by means of a sale, merger, reorganization, or liquidation,
each Award under this Plan will terminate unless assumed or replaced
with a comparable instrument pursuant to a written agreement by the
successor corporation or a parent or subsidiary thereof.
(b) Corporate Structure. The grant of Performance Share Awards
under this Plan will in no way affect the right of the Company to
adjust, reclassify, reorganize, or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate, sell
or transfer all or any part of its business or assets.
ARTICLE III
MISCELLANEOUS
3.1 FAIR MARKET VALUE
Fair Market Value of a share of Common Stock on any relevant date
will be determined in accordance with the following provision:
(a) NASDAQ. If the Common Stock is not at the time listed or
admitted to trading on any stock exchange, but is traded in the over-the-
counter market, the Fair Market Value will be the average between
the reported high price and the reported low price of one share of
Common Stock on the date in question in the over-the-counter market,
as such prices are reported by the national Association of Securities
Dealers through its NASDAQ system or any successor system.
(b) Stock Exchange. If the Common Stock is at the time listed
or admitted to trading on any stock exchange, then the Fair Market
Value will be the average between the reported high price and the
reported low price of one share of Common Stock on the date in
question on the stock exchange that is the primary market for the
stock, as such prices are officially quoted on such exchange.
(c) No Listing; No Stock Exchange. If the Common stock is at
the time neither listed nor admitted to trading on any stock exchange
nor traded in the over-the-counter market, or if the Committee
determines that neither subparagraph (a) nor (b) above reflects Fair
Market Value of the stock, then the Fair Market Value will be
determined by the Committee after taking into account such factors as
the Committee deems appropriate.
3.2 CHANGES OF EMPLOYMENT STATUS
(a) New Hire, Transfer within the Company, Promotion. A newly
hired employee or an employee transferred within the Company or
promoted to senior officer status with the Company during the
Performance Period may be granted a Performance Share Award or a pro
rata portion of a Performance Share Award, in the sole discretion of
the Committee.
(b) Demotion. No payment under a Performance Share Award will
be made to an employee who has been demoted during the Performance
Period because of performance. If the demotion is due to an
organization change, a full or a pro rata payment may be made,
provided the employee otherwise qualifies for such a payment. The
decision to make such a payment will be made in the sole discretion
of the Committee, and payment, if any, will be made at the end of the
relevant Performance Period.
(c) Separation from Service. If a holder of a Performance Share
Award terminates employment with the Company for any reason other than
death, permanent and total disability or retirement, he or she will
not be eligible to receive any payment under such Performance Share
Award. In the event of death, permanent and total disability or
retirement, the Performance Share Award holder may be considered for
a payout under such Award. The decision to make a full payment, a pro
rata payment, or no payment under such an Award will be made in the
sole discretion of the Committee, and payment, if any, will be made
at the end of the relevant Performance Period based on the full months
of employment completed by the holder before such termination. The
date of termination of employment will be determined by the Committee,
which determination will be final.
3.3 IMPACT ON BENEFIT PLANS
Except as otherwise required by law, payments pursuant to
Performance Share Awards will not be treated as compensation for
purposes of any qualified benefit Plan maintained by the Company.
Payments pursuant to Performance Share Awards will not affect the
definition of a participant's compensation under any group insurance
plan. If a participant has entered into an Executive Separation
Agreement or a similar arrangement with the Company providing for
payments to the participant upon or after termination of employment
following a change in control of the Company a Performance Share Award
payout will be included in the calculation of the Executive's average
annual compensation as provided in the Executive Separation Agreement
to the extent the Performance Share Award payout is included in the
gross income of the participant for purposes of calculating the amount
payable to the Executive under any such agreement.
<PAGE>
3.4 INDEMNIFICATION
The members of the Committee will not be personally liable for
any action, omission, decision or determination made with respect to
the Plan. The Company will indemnify and hold harmless each member
of the Committee for and against any losses, judgments, expenses
including without limitation, attorney or other professional fees or
costs of any nature arising as a result of having served as a member
of the Committee.
3.5 NO OBLIGATION
Nothing in this Plan will be construed as a guarantee of a
Performance Share Award or as an accrued right to receive a
Performance Share Award or any portion of such an Award or any payment
under such an Award. Nothing in this Plan will be construed as
creating a contract or right of employment.
ARTICLE IV
TERMINATION OR AMENDMENT
(a) Board. The Board may amend, suspend or discontinue the Plan
in whole or in part at any time; provided, however, that (i) such
action may not, without the consent of the holder of a Performance
Share Award, adversely affect the holder's rights and obligations with
respect to an Award outstanding under the Plan; (ii) the Board may
not, without the approval of the Company's shareholders (A) materially
increase the number of shares of Common Stock subject to Awards under
the Plan (other than adjustments required under Section 1.3(b)), (B)
materially modify the eligibility requirements for Awards under the
Plan, or (C) make any other change as to which shareholder approval
is required by applicable law or regulatory standards.
(b) Committee. The Committee will have full power and authority
to modify or waive any or all of the terms, conditions or restrictions
applicable to any outstanding Performance Share Award to the extent
not inconsistent with the Plan.
(c) Extraordinary Transactions. Without the consent of any
participant, the CEO may, with the agreement of the Committee, modify
the Plan and any Awards outstanding under the Plan to reflect
extraordinary transactions or occurrences relating to the Company or
any affiliate of the Company and affecting the potential for achieving
existing Performance Measures (e.g. changes to the capital structure
or other significant reorganization of the Company, divestiture of a
subsidiary, acquisition or discontinuance of a material business or
product line, or changes in accounting procedures/policies). Any such
modification will be designed to prevent the dilution or enlargement
of benefits under any such outstanding Awards.
<PAGE>
ARTICLE V
COMPLIANCE
5.1 FEDERAL AND STATE LAWS
The Company will not be obligated to make any payout of shares
of Common Stock under any Award unless, in the opinion of counsel for
the Company, the issuance of such shares is in compliance with all
applicable federal and state securities laws. As a condition to the
grant of any Award, or to the issuance of any shares of Common Stock
under any Award, the Committee may require that the Award holder agree
to comply with such provisions of federal and state securities laws
as may be applicable to such grant, or to the payment, receipt or
disposition of shares of Common Stock pursuant to the Plan, and that
the Award holder deliver to the Company a written agreement, in form
and substance satisfactory to the Company and its counsel, evidencing
such agreement.
5.2 INFORMATION
The Company will furnish to each Award holder participating in
the Plan a copy of the Company's Annual Report to Shareholders for the
most recent fiscal year, and additional copies will be furnished,
without charge, to such Award holders upon request to the Secretary
of the Company.
PROXY EXCEL INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
April 17, 1997
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 17, 1997, 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" Items 2 and 3.
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. For Approval of the Excel Industries, Inc. 1997 Long-Term
Incentive Plan.
( ) FOR ( ) AGAINST ( ) ABSTAIN
Item 3. Ratification of Price Waterhouse LLP as independent auditors
for the current fiscal year ending December 27, 1997.
( ) 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 ITEMS 2 AND 3.
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.
