SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) 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)
Payment of Filing Fee (Check the appropriate box:)
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies: ________________________________________________________
2) Aggregate number of securities to which transaction
applies: ______________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and
state how it was determined): _________________________
_______________________________________________________
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_______________________________________________________
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Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form of
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1) Amount Previously Paid: ________________________________
_______________________________________________________
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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 16, 1998 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 accountants for the current fiscal
year ending January 2, 1999.
3. To transact such other business as may properly
come before the meeting.
The shareholders of record at the close of business on
February 20, 1998, 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 10, 1998
1998 PROXY STATEMENT
Annual Meeting of Shareholders
All shareholders of record on February 20, 1998, 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
sixteenth day of April, 1998 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 accountants, 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 10, 1998.
Outstanding Shares
As of February 13, 1998, the Corporation had outstanding
12,424,765 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 20, 1998.
Principal Shareholders
Set forth below is certain information concerning the only
persons known to the Corporation, as of February 13, 1998, to
beneficially own 5% or more of the Corporation's outstanding common
shares.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
------------------ --------------------- ----------
Common Shareholders
<S> <C> <C>
CIGNA Corporation 1,109,932 shares1 8.93%
One Liberty Place
Philadelphia, PA 19101
Mellon Bank Corporation 708,509 shares2 5.70%
One Mellon Bank Center
Pittsburgh, PA 15258
Dimensional Fund Advisors, 645,859 shares3 5.19%
Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
1In a Schedule 13G dated February 12, 1998 and delivered to
the Corporation, CIGNA Corporation disclosed that its subsidiaries
had acquired beneficial ownership of (i) 601,507 common shares
owned by Connecticut General Life Insurance Company ("CGLIC")
(515,578 shares) and Life Insurance Company of North America
(85,929 shares), two subsidiaries of CIGNA Corporation
(collectively "CIGNA") and (ii) 508,425 common shares owned by
CIGNA Mezzanine Partners II, L.P., for which CIGNA Investment,
Inc., a subsidiary of CIGNA, is the investment adviser.
2In a Schedule 13G dated January 27, 1998 and delivered to the
Corporation, Mellon Bank Corporation ("Mellon") disclosed that it
and its subsidiaries had acquired beneficial ownership of an
aggregate of 708,509 common shares in their fiduciary capacities.
Of such shares, Mellon has sole voting power with respect to
627,009 common shares, sole dispositive power with respect to
663,409 common shares and shared dispositive power with respect to
45,100 shares.
3In a Schedule 13G dated February 6, 1998 and delivered to the
Corporation, Dimensional Fund Advisors, Inc. ("DFA") disclosed that
an aggregate of 645,859 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 serves as investment manager. DFA has sole voting power
with respect to 421,859 of such shares, and certain officers of
DFA, in their capacities as officers of the Fund and the Trust,
vote an additional aggregate of 124,000 shares. DFA has sole
dispositive power with respect to all 645,859 shares. DFA
disclaims beneficial ownership of all of 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., 51, 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, 59, 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, 67, has been a director since 1992. He has
been Professor of Strategic Management of the College of Business
Administration of the University of Notre Dame since 1989. From
1989 to 1997, Dr. Keane was Dean of the College of Business
Administration of the University of Notre Dame.
Richard A. Place, 63, 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, 65, 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., 63, 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 $1,250 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 1997. 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 accountants;
to review year-end financial statements prior to issuance; to
review the services from time to time being performed by the
independent accountants, 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 and 1997 Long-Term Incentive Plan.
The compensation committee met three times in 1997.
Security Ownership of Management
The following table sets forth, as of February 13, 1998,
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>
Name of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- ---------
<S> <C> <C>
James O. Futterknecht, Jr. 43,4541 *
Joseph A. Robinson 9,7082 *
John G. Keane 6,0003 *
Richard A. Place 5,0004 *
James K. Sommer 8,5015 *
Ralph R. Whitney, Jr. 24,0006 *
Louis R. Csokasy 16,2187 *
Robert A. Pickering -0- *
Terrance L. Lindberg 8,115 8 *
All Executive Officers
and Directors as a Group
(12 persons) 145,0109 1.2%
*Less than one percent
</TABLE>
1Includes 10,000 shares subject to an option held by Mr.
Futterknecht.
2Includes 1,208 shares held for Mr. Robinson's account in the
Corporation's Employee Stock Purchase Plan and 3,250 shares subject
to an option held by Mr. Robinson.
3Includes 4,000 shares subject to options held by Dr. Keane.
4Includes 1,000 shares held by a trust with respect to which
Mr. Place has the power to vote and to direct the disposition, and
4,000 shares subject to options held by Mr. Place.
5Includes 4,000 shares subject to options held by Mr. Sommer.
6Includes 4,000 shares subject to options held by Mr. Whitney.
7Includes 5,500 shares subject to an option held by Mr.
Csokasy.
8Includes 5,500 shares subject to an option held by Mr.
Lindberg.
9Includes shares owned by spouses, whether or not beneficial
ownership is disclaimed, and 58,000 shares subject to options held
by executive officers and directors.
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>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compen-
--------------------------------------- sation
Other Awards
Name and Annual Securities All Other
Principal Compen- Underlying Compen-
Position Year Salary($) Bonus($) sation($)1 Options sation
---------- -------- -------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
James O. 1997 502,500 228,244 0 0 4,800
Futterknect, Jr. 1996 385,000 262,763 0 0 4,500
President, Chairman 1995 315,000 149,546 1,965 20,000 4,500
of the Board and CEO
Jospeh A. Robinson 1997 252,500 77,125 0 0 4,800
Senior Vice President, 1996 210,000 95,550 0 0 4,500
Secretary and CFO 1995 185,500 58,553 3,025 13,000 4,500
Louis R. Csokasy 1997 252,500 34,375 0 0 4,800
Vice President 1996 195,000 88,725 0 0 4,500
and President, Auto- 1995 155,000 49,058 2,606 11,000 4,500
motive Systems
Robert A. Pickering3 1997 230,040 44,690 0 0 2,660
Vice President and 1996 161,694 102,406 0 11,000 2,390
President, Atwood
Mobile Products
Terrance L. Lindberg 1997 153,000 98,838 0 0 4,800
Vice President-Pres- 1996 146,000 65,397 0 0 4,500
ident Mass Transit/RV 1995 140,000 44,310 3,981 11,000 4,500
/Heavy Truck Windows
& Door Systems
</TABLE>
(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.
Options
There were no options granted to named executives in 1997.
The following table shows the number and value of options held
by the named executive officers as of December 27, 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of
Securities
Underlying Value of Unexercised
Unexercised in the Money Options
Shares Options at Fiscal at Fiscal Year-
Acquired Year-End(#) End(#)1
On Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
------------- ----------- ----------- -------------- ------------------
<S> <C> <C> <C> <C>
James O. Futterknecht, Jr. ___ ___ 10,000/10,000 53,475/53,475
Joseph A. Robinson ___ ___ 3,250/6,500 17,379/34,758
Louis R. Csokasy ___ ___ 5,500/5,500 29,411/29,411
Robert A. Pickering ___ ___ 2,750/8,250 14,705/44,117
Terrance L. Lindberg ___ ___ 5,500/5,500 29,411/29,411
1Based on the closing price of the Corporation's common shares on December 26, 1997.
</TABLE>
Long-Term Incentive Plans
The following table shows the number, value and maturation
date of Performance Share Awards made to named executive officers
in 1997 under the Corporation's 1997 Long-Term Incentive Plan.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
Performance
Number of or Other Estimated Future Payouts
Shares Period Under Non-Stock Price-
Units or Unitl Based Plans
Other Maturation -------------------------------
Name Rights(#) or Payment Minimum(#) Target(#) Maximum(#)
----------------- ----------- ------------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
James O. Futterknecht, Jr. 15,000 12/31/99 2,500 10,000 15,000
Joseph A. Robinson 7,500 12/31/99 1,250 5,000 7,500
Louis R. Csokasy 7,500 12/31/99 1,250 5,000 7,500
Robert A. Pickering 7,500 12/31/99 1,250 5,000 7,500
Terrance L. Lindberg 7,500 12/31/99 1,250 5,000 7,500
</TABLE>
Performance Share Awards consist of the right to receive a
share of Common Stock based upon the attainment of pre-established
target, minimum and maximum performance levels of total shareholder
return over a three-year period. The performance level is based on
the Company's percentile rank in three-year compound total
shareholder return relative to a specified set of peer group
companies in the US automotive supply industry determined by the
Compensation Committee. To receive the minimum Performance Share
Award, the Company's shareholder return has to be at or above the
25th percentile, for the target award the Company's shareholder
return has to be at or above the 65th percentile, and for the
maximum award for the Company's shareholder return has to be at or
above the 75th percentile.
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 $68,400 remains unchanged.
<TABLE>
<CAPTION>
EXCEL PLAN
Credited Years of Service
Final Avg.
Earnings 10 15 20 25 30 35
----------- ---- ---- ----- ----- ----- -----
<C> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 5,400 $ 8,100 $10,800 $13,500 $16,200 $18,900
$100,000 $12,400 $18,600 $24,800 $31,000 $37,200 $43,400
$150,000 $19,400 $29,100 $38,800 $48,500 $58,200 $67,900
$160,000(1) $20,800 $31,200 $41,600 $52,000 $62,400 $72,800
</TABLE>
<TABLE>
<CAPTION>
ATWOOD SALARIED PENSION PLAN
Credited Years of Service(2)
<C> <C> <C> <C> <C>
Final Avg.
Earnings 10 15 20 25
--------- ----- ----- ----- -----
$ 50,000 $ 5,400 $ 8,100 $10,800 $18,900
$100,000 $12,400 $18,600 $24,800 $43,400
$150,000 $19,400 $29,100 $38,800 $67,900
$160,000(1) $20,800 $31,200 $41,600 $72,800
</TABLE>
(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.
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 - 27; Mr. Robinson - 5; Mr. Csokasy
- - 25; and Mr. Lindberg - 13.
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 eight 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, Lindberg, and Pickering 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 Lindberg 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 1997
executive compensation, the following broad compensation policies
were followed:
1. Executive compensation must be competitive. This policy
is considered to be critical in order for the Corporation to
attract and retain qualified management personnel.
2. Executive compensation should be based upon corporate
performance with emphasis on the efficient use of assets and
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 corporate 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
total corporate performance and, as to an executive whose
responsibilities relate to a particular strategic business unit
("SBU"), the performance of that SBU.
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 was
established in 1992 in accordance with the second and fourth policy
considerations listed above and provides for relatively high
potential bonuses taken as a percentage of total compensation. The
long-term components of the Corporation's executive compensation
programs consist of the 1994 Stock Compensation Plan (the "Stock
Incentive Plan") under which equity interests, generally in the
form of stock options, may be granted, and the 1997 Long-Term
Incentive Plan ("LTIP") under which awards are granted based on
total shareholder return over a multiple-year period. These plans
are in accordance with the second and fifth compensation policies
described above.
Base Salary. In determining 1997 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 has determined that
compensation surveys will only be conducted every other year. 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 performance of the
Corporation and the SBUs as compared to financial objectives also
were considered.
Cash Incentive Compensation. Under the Cash Incentive Plan,
bonus opportunities as a percentage of gross salary were
established based on targeted returns on net assets ("RONA") for
the Corporation and each of the SBU's. RONA is a percentage
determined by dividing earnings before interest and taxes by the
average amount of net assets employed, with net assets being
defined as total assets excluding excess cash minus current
liabilities. Use of RONA as a basis for determining bonuses
reflected a shift from prior years when bonuses were based on the
Corporation's return on equity ("ROE"). The change was made to
reflect the restructuring of the Corporation into SBU's. One of
the goals of the revised plan was to motivate key leadership people
in the SBU's to meet specific financial targets for their
respective business units. For those assigned to an SBU, the
weighting of measures in determining bonus awards was one-half
business unit performance, one-quarter corporate performance and
one-quarter individual performance. For those not assigned to an
SBU, the weights were three-quarters corporate performance and
one-quarter individual performance. The change from ROE to RONA as a
measurement of performance was deemed advisable because RONA is
easier to identify for an SBU since it does not require the
problematic task of allocating the Corporation's equity among the
SBU's. Also, RONA is more consistent with the concept of economic
value added, or EVA, which is used in evaluating business
opportunities based on economic income in excess of the cost of
capital. The change from ROE to RONA, however, did not represent
a departure from the policy of emphasizing shareholder return.
Thresholds sufficient to cover both current interest and dividend
requirements were kept in place. Further, the earnings required to
achieve the targeted RONA, on a consolidated basis, were equated to
the earnings required to attain the ROE target from the previous
plan. Also, the targeted RONA level was confirmed by two studies
of other parts suppliers, one of which was compiled by the outside
compensation consulting firm engaged by the Corporation to advise
it in connection with the establishment of the LTIP and the
revision of the Cash Incentive Plan. Another measurement of the
reasonableness of the targeted RONA on a consolidated basis was
based on the Corporation's "cost of capital."
In the event an applicable RONA in excess of the targeted
return is achieved, an executive can earn a bonus, up to a maximum
of 150 percent of his bonus opportunity. 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.
Also, consistent with the policy that the Corporation's
compensation plan should provide long-term as well as short term
incentives, the Cash Incentive Plan was revised to provide that a
portion of the executive officer awards, 30% as to the Chairman,
President and CEO and 20 % as to all others, should be paid in the
form of stock of the Corporation. Bonuses paid to the named
executives for 1997 were approximately 60% of target at the
corporate level and ranged from 28% to 129% at the SBU levels.
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.
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 considers the recommendations of the
Chief Executive Officer.
1997 Long-Term Incentive Plan. The LTIP is a performance
based, long-term incentive plan providing for the award of shares
of the Corporation's common stock to participating executives for
the achievement of a specified total shareholder return ("TSR")
goal over a multi-year Performance Period. The compensation policy
goal is to link management compensation to shareholder return and
to give management a stake in the long-term performance of the
Corporation. The LTIP awards for 1997 will vest over a three-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 Peer
Group listed under "Performance Graph", below and the following
additional companies: Borg Warner Automotive, Inc., 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., Tower Automotive and Tower Automotive, Inc.
These additional companies were excluded from the Peer Group for
purposes of the Performance Graph because they did not have a
five-year history on which to base a comparison.
For purposes of the plan, TSR 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. Executives of the Corporation are recommended for
participation in the plan by the Chief Executive Officer and
approved by the Committee. Prior to the beginning of each
Performance Period, the Committee also reviews and approves the
aggregate number of shares that could be awarded at minimum, target
and maximum performance levels and advises the executives selected
for participation in the plan of their selection and of the
performance levels which have been established. Any share awards
earned for a Performance Period will be paid out in the form of
common stock of the Corporation, less applicable withholding
requirements, as soon as practicable following the end of the
Performance Period.
For the three-year Performance Period beginning January 1,
1997, the Committee, with Board approval, set three levels of
awards 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 TSR, the target award if the
Corporation reaches the 65th percentile and the maximum award for
performing in the top 25% 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. In
determining Mr. Futterknecht's base salary for 1997, the Committee
and the Board took into consideration the above referenced survey
data, with an objective to match market, his handling of a major
acquisition during the first part of 1996, his performance of
operating duties in the management of a company which was
significantly larger as a result of such acquisition and his
demonstrated ability to supervise and implement continuous planning
for improvement in the Corporation's existing and new operations.
Mr. Futterknecht's 1997 LTIP award was designed to offer him a
long-term performance incentive commensurate with his
responsibilities as Chief Executive Officer. The amounts of the
minimum, target and maximum awards for Mr. Futterknecht were fixed
at levels intended to provide him with an increasing incentive to
improve the Corporation's performance as compared to the LTIP Peer
Group. As set forth above, the bonus component of Mr.
Futterknecht's compensation was primarily based on the RONA
achieved by the Corporation, on a consolidated basis, as compared
to the targeted RONA. Mr. Futterknecht achieved approximately 61%
of his target bonus based on the Corporation's RONA for 1997.
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 (with respect to
any options granted under such plan) and the LTIP have been
structured to 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 a peer group
of automotive parts manufacturers. The companies included in the
peer groups are listed following the graph information. The
performance of the companies in the 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.
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Excel $100.00 109.13 84.41 87.17 106.82 119.89
S&P500 $100.00 110.03 111.53 153.30 188.40 251.17
Peer Group $100.00 132.32 126.61 151.91 189.12 232.42
</TABLE>
ASSUMES $100 INVESTED ON DECEMBER 31, 1992
TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
NOTE: TOTAL RETURNS BASED ON MARKET CAPITALIZATION
Peer Group
The Peer Group includes the following companies: Amcast
Industrial Corp., Arvin Industries, Autocam, Breed Technologies,
Dana Corporation, Defiance, Inc., Donnelly Corp., Eaton Corp.,
Federal Screw Works, Gentex Corp., Hickok Inc., Howell Industries,
Inc., Intermet Corp., ITT Industries, Johnson Controls, Mark IV
Industries, Inc., Mascotech, Inc., National-Standard Co., Newcor,
Inc., Simpson Industries, Inc., Special Devices, Standard Products
Co., Superior Industries International, Timken Co., Top Source, TRW
Inc., Walbro Corp., and Williams Controls, Inc.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Corporation has appointed Price
Waterhouse LLP as independent accountants to examine the financial
statements of the Corporation and its subsidiaries for the current
fiscal year ending January 2, 1999. 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
accountants for the current fiscal year.
Price Waterhouse LLP has served as independent accountants 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, 1998 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.
PROXY EXCEL INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
April 16, 1998
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 16, 1998, 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 January 2, 1999.
( ) 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.
