<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
INVACARE CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INVACARE CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
[INVACARE LOGO]
899 Cleveland Street
Elyria, Ohio 44035
April 17, 1995
To the Shareholders of
INVACARE CORPORATION:
This year's Annual Meeting of Shareholders will be held at 10:00 A.M.
(EDT), on Monday, May 22, 1995, at the Radisson Inn Cleveland Airport, North
Olmsted, Ohio. We will be reporting on your Company's activities and you will
have an opportunity to ask questions about our operations.
We hope that you are planning to attend the Annual Meeting personally and
we look forward to seeing you. WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON,
THE RETURN OF THE ENCLOSED PROXY AS SOON AS POSSIBLE WOULD BE GREATLY
APPRECIATED AND WILL ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE ANNUAL
MEETING. IF YOU DO ATTEND THE ANNUAL MEETING, YOU MAY, OF COURSE, WITHDRAW YOUR
PROXY SHOULD YOU WISH TO VOTE IN PERSON.
On behalf of the Board of Directors and management of Invacare Corporation,
I would like to thank you for your continued support and confidence.
Sincerely yours,
/s/ A. MALACHI MIXON, III
---------------------------------
A. MALACHI MIXON, III
Chairman of the Board,
President and Chief
Executive Officer
<PAGE> 3
INVACARE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 1995.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Invacare
Corporation (the "Company") will be held at the Radisson Inn Cleveland Airport,
25070 Country Club Boulevard, North Olmsted, Ohio on Monday, May 22, 1995, at
10:00 A.M. (EDT), for the following purposes:
1. To elect three Directors to the class whose three-year term of office
will expire in 1998;
2. To transact such other business as may properly come before the
Annual Meeting and any adjournments thereof.
Holders of Common Shares and Class B Common Shares of record as of the
close of business on Monday, April 3, 1995 are entitled to receive notice of and
vote at the Annual Meeting. It is important that your shares be represented at
the Annual Meeting. For that reason, we ask that you promptly sign, date and
mail the enclosed Proxy card in the return envelope provided. Shareholders who
attend the Annual Meeting may revoke their Proxies and vote in person.
By order of the Board of Directors,
THOMAS R. MIKLICH
Secretary
April 17, 1995
<PAGE> 4
INVACARE CORPORATION
PROXY STATEMENT
MAILED ON OR ABOUT APRIL 17, 1995
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 22, 1995
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Invacare Corporation (hereinafter called
"Invacare" or the "Company") to be used at the Annual Meeting of Shareholders of
the Company to be held on May 22, 1995 and any adjournments thereof. The time,
place and purpose of the Annual Meeting are stated in the Notice of Annual
Meeting of Shareholders which accompanies this Proxy Statement. The expense of
soliciting Proxies, including the cost of preparing, assembling and mailing the
Notice, Proxy Statement and Proxy, will be borne by the Company. In addition to
solicitation of Proxies by mail, solicitation may be made personally and by
telephone, and the Company may pay persons holding shares for others their
expenses for sending proxy materials to their principals. No solicitation will
be made other than by Directors, officers and employees of the Company.
Any person giving a Proxy pursuant to this solicitation may revoke it. The
General Corporation Law of Ohio provides that, unless otherwise provided in the
Proxy, a shareholder, without affecting any vote previously taken, may revoke a
Proxy not otherwise revoked by giving notice to the Company in writing or in
open meeting. All validly executed Proxies received by the Board of Directors of
the Company pursuant to this solicitation will be voted at the Annual Meeting,
and the directions contained in such Proxies will be followed in each instance.
If no directions are given, the Proxy will be voted "FOR" the election of the
three nominees listed in the Proxy.
VOTING RIGHTS
At the close of business on April 3, 1995, the Company had 11,959,060
Common Shares, without par value ("Common Shares"), and 2,584,525 Class B Common
Shares, without par value ("Class B Common Shares"), outstanding and entitled to
vote. The holders of the outstanding Common Shares as of April 3, 1995 will be
entitled to one vote for each share held by them and the holders of the
outstanding Class B Common Shares as of April 3, 1995 will be entitled to ten
votes for each share held by them. Except as otherwise provided by the Company's
Amended and Restated Articles of Incorporation or required by law, holders of
Common Shares and Class B Common Shares will at all times vote on all matters
(including the election of Directors) together as one class. Pursuant to the
Company's Amended and Restated Articles of Incorporation, no holder of shares of
any class has cumulative voting rights in the election of Directors. Only
shareholders of record at the close of business on April 3, 1995 are entitled to
notice of and to vote at the Annual Meeting.
1
<PAGE> 5
SHARE OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
Share ownership of certain beneficial owners. The following table sets
forth, as of February 28, 1995, the share ownership of each person or group
known by the Company to beneficially own more than 5% of the total voting power
of either class of shares of the Company:
<TABLE>
<CAPTION>
CLASS B
COMMON SHARES COMMON SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED*
-------------------- --------------------
PERCENTAGE
NUMBER NUMBER OF TOTAL
NAME AND BUSINESS ADDRESS OF OF VOTING
OF BENEFICIAL OWNER SHARES PERCENTAGE SHARES PERCENTAGE POWER
--------------------------- -------- ---------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
A. Malachi Mixon, III (1)............................... 648,369 5.4% 508,975 19.1% 14.8%
899 Cleveland Street, Elyria, Ohio 44035
Joseph B. Richey, II (2)................................ 513,480 4.2% 336,711 12.6% 10.0%
899 Cleveland Street, Elyria, Ohio 44035
Dan T. Moore, III (3)................................... -- -- 296,760 11.1% 7.7%
820 W. Superior Avenue, Suite 800
Cleveland, Ohio 44113
Invacare Corporation Employees'
Stock Bonus Trust and Plan (4).......................... 278,531 2.3% 235,573 8.8% 6.8%
899 Cleveland Street, Elyria, Ohio 44035
John W. Wilhelm, Jr. (5)................................ -- -- 240,380 9.0% 6.2%
80 Riverside Drive, Moreland Hills, Ohio 44022
Stanley C. Pace (5)..................................... -- -- 151,430 5.7% 3.9%
National City Bank, Custodian
P.O. Box 5756, Cleveland, Ohio 44101
</TABLE>
- - ---------------
* Pursuant to the Company's Amended and Restated Articles of Incorporation, (i)
all holders of Class B Common Shares are entitled to convert to any or all of
their Class B Common Shares to Common Shares at any time, on a share-for-share
basis, and (ii) the Company may not issue any additional Class B Common Shares
unless such issuance is in connection with share dividends on or share splits
of Class B Common Shares.
(1) Mr. Mixon is Chairman of the Board of Directors, President and Chief
Executive Officer of the Company. 188,345 Common Shares beneficially owned
by Mr. Mixon consist of Common Shares which may be acquired upon the
exercise of stock options during the 60 days following February 28, 1995.
For purposes of calculating the percentage of outstanding Common Shares
beneficially owned by Mr. Mixon and his percentage of total voting power,
the Common Shares which he had the right to acquire during that period by
exercise of stock options are deemed to be outstanding. 4,800 of the Common
Shares and 2,643 of the Class B Common Shares beneficially owned by Mr.
Mixon are owned by his son. In addition, included in the number of shares
beneficially owned by Mr. Mixon are 386,474 of Common Shares owned by a
Charitable Remainder Unitrust. The number of shares shown as beneficially
owned by Mr. Mixon does not include 140,765 Class B Common Shares which have
been transferred into two trusts for the benefit of his two children. Mr.
Mixon disclaims beneficial ownership of such shares.
(2) Joseph B. Richey, II is President-Invacare Technologies, Senior Vice
President-Total Quality Management and is a Director of the Company. The
Common Shares beneficially owned by Mr. Richey include 140,765 Common Shares
which may be acquired upon the exercise of stock options during the 60 days
following February 28, 1995. For purposes of calculating the percentage of
outstanding Common Shares beneficially owned by Mr. Richey and his
percentage of total voting power, the Common Shares which he had the right
to acquire during that period by exercise of stock options are deemed to be
outstanding. In addition, included in the number of shares beneficially
owned by Mr. Richey are 349,480 of Common Shares owned by a Charitable
Remainder Unitrust.
(3) Mr. Moore is a Director of the Company. The Class B Common Shares
beneficially owned by Mr. Moore include 169,380 Class B Common Shares held
of record by a local bank as trustee for Mr. Moore's Individual Retirement
Account Trust.
2
<PAGE> 6
(4) The Invacare Corporation Stock Bonus Trust and Plan is an employee benefit
plan established and operated as a trust for the benefit of the Company's
employees. During 1994, Charles Schwab Trust Company became the trustee of
the Invacare Corporation Stock Bonus Plan, with Invacare Corporation as
Administrator of the Plan. As such, the shares held by the Plan are voted at
the Company's direction.
(5) Pursuant to a review of the Company's stock transfer agent listing.
Share ownership of management. The following table sets forth as of
February 28, 1995, the share ownership of all Directors, each of the Named
Executive Officers (as defined below) and of all Directors and executive
officers as a group:
<TABLE>
<CAPTION>
CLASS B
COMMON SHARES COMMON SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED** PERCENTAGE
------------------------ ------------------------- OF TOTAL
NUMBER NUMBER VOTING
NAME OF BENEFICIAL OWNER OF SHARES PERCENTAGE OF SHARES PERCENTAGE POWER
- - ------------------------------ --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Gerald B. Blouch (5).......... 80,942 * -- -- *
Francis J. Callahan, Jr....... 30,000 * 90,000 3.4% 2.4%
Frank B. Carr................. 29,800 * 20,050 * *
Michael F. Delaney............ 5,500 * -- -- *
Whitney Evans................. -- -- 30,000 1.1% *
Thomas R. Miklich (5)......... 14,700 -- -- -- *
A. Malachi Mixon, III (1)..... 648,369 5.4% 508,975 19.1% 14.8%
Dan T. Moore, III (2)......... -- -- 296,760 11.1% 7.7%
E. P. Nalley (3).............. 78,872 * 24,155 * *
Joseph B. Richey, II (4)...... 513,480 4.2% 336,711 12.6% 10.0%
Louis F.J. Slangen (5)........ 88,839 * -- -- *
William M. Weber.............. 142,300 1.2% -- -- *
All executive officers and
Directors as a group
(15 persons) (5)............ 2,288,839 19.0% 1,321,775 49.5% 40.1%
</TABLE>
- - ---------------
* Less than 1% of the outstanding shares of such class.
** Pursuant to the Company's Amended and Restated Articles of Incorporation,
(i) all holders of Class B Common Shares are entitled to convert any or all
of their Class B Common Shares to Common Shares at any time, on a
share-for-share basis, and (ii) the Company may not issue any additional
Class B Common Shares unless such issuance is in connection with share
dividends on or share splits of Class B Common Shares.
(1) See Footnote 1 to the preceding table.
(2) See Footnote 3 to the preceding table.
(3) Mr. Nalley is a Director of the Company. All of the Class B Common Shares
listed as beneficially owned by Mr. Nalley are owned by trusts for the
benefit of Mr. Nalley.
(4) See Footnote 2 to the preceding table.
(5) The Common Shares beneficially owned by the Company's executive officers and
Directors as a group include 568,935 Common Shares which may be acquired
upon the exercise of stock options during the 60 days following February 28,
1995. For purposes of calculating the percentage of outstanding Common
Shares beneficially owned by the Company's executive officers and Directors
as a group and their percentage of total voting power, Common Shares which
they had the right to acquire during that period by exercise of stock
options are deemed to be outstanding. The number of Common Shares that may
be acquired during such period by the exercise of stock options for the
noted individuals is as follows: Mr. Blouch, 63,370 shares; Mr. Miklich,
7,100 shares; and Mr. Slangen, 75,325 shares.
3
<PAGE> 7
Based solely upon a review of the Forms 3, 4 and 5, and amendments thereto,
submitted to the Company during and with respect to its most recent fiscal year,
the Company is not aware of any person that is subject to Section 16 of the
Securities Exchange Act of 1934 (the "Exchange Act") with respect to the
Company, that has failed to file, on a timely basis (as disclosed in the
aforementioned Forms), reports required by Section 16(a) of the Exchange Act
during fiscal 1994.
ELECTION OF DIRECTORS
The number of Directors of the Company is currently fixed at nine. The
members of the Company's Board of Directors are divided into three classes with
a term of office of three years, with the term of one class expiring each year.
At the Annual Meeting, three Directors will be elected to serve a three-year
term until the Annual Meeting in 1998 and until their successors have been
elected and qualified. Under Ohio law and the Company's Amended and Restated
Articles of Incorporation, the individuals receiving the greatest number of
votes cast at the Annual Meeting will be elected as Directors of the Company.
Accordingly, assuming a quorum exists, abstentions and broker non-votes will
have no effect on the election of Directors.
The Proxy holders named in the accompanying Proxy or their substitutes will
vote such Proxy at the Annual Meeting or any adjournments thereof "FOR" the
election of the three nominees for Director as named below, unless the
shareholder instructs by marking the appropriate space in the Proxy that
authority to vote is withheld. Each nominee is presently a Director of the
Company and has indicated his willingness to serve as a Director if elected. If
any nominee should become unavailable for election (which contingency is not now
contemplated or foreseen), it is intended that the shares represented by the
Proxy will be voted for such substitute nominee as may be named by the Board of
Directors. In no event will the accompanying Proxy be voted for more than three
nominees or for persons other than those named below and any such substitute
nominee for any of them.
<TABLE>
<CAPTION>
NOMINEES FOR ELECTION
NAME AGE POSITION WITH THE COMPANY
- - ------------------------------------- --- -------------------------------------------
<S> <C> <C>
Francis J. Callahan, Jr. (2)(3) 71 Director
Dan T. Moore, III (1)(3) 55 Director
Joseph B. Richey, II 58 President - Invacare Technologies,
Senior Vice President - Total Quality
Management and a Director
DIRECTORS CONTINUING IN OFFICE
A. Malachi Mixon, III (3)(4)(5) 54 Chairman of the Board, President and Chief
Executive Officer
Frank B. Carr (1)(4)(5) 67 Director
Michael F. Delaney (2)(4)(5) 46 Director
Whitney Evans (2)(4)(6) 58 Director
E. P. Nalley (1)(4)(6) 75 Director
William M. Weber (1)(2)(6) 55 Director
- - ---------------
<FN>
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Nominating Committee.
(4) Member of the Investment Committee.
(5) Term as Director expires in 1996.
(6) Term as Director expires in 1997.
</TABLE>
4
<PAGE> 8
Francis J. Callahan, Jr. has been a Director since 1980. From 1980 to the
present, Mr. Callahan has been President of Crawford Fitting Company, Cleveland,
Ohio, a manufacturer of tube fittings and valves. Mr. Callahan also serves as a
Trustee of The Cleveland Clinic Foundation, Cleveland, Ohio, one of the world's
leading teaching and health care institutions.
Dan T. Moore, III has been a Director since 1980. Since March 1993, Mr.
Moore has been Chairman and Treasurer of Advanced Ceramics Corporation, a
closely-held manufacturer of industrial ceramic products. From 1979 to the
present, Mr. Moore has been President of Dan T. Moore Co., Cleveland, Ohio.
Since 1988, Mr. Moore has also served as President of Soundwich, Inc.,
Cleveland, Ohio, a closely-held company that produces polymers for damping sheet
metal engine components, and since 1985 has served as President of Flow
Polymers, Inc., a manufacturer of homogenizing aids for rubber tire compounds.
Joseph B. Richey, II has been a Director since 1980. In 1992 he was named
President - Invacare Technologies and Senior Vice President - Total Quality
Management. From 1989 to 1992, he was Senior Vice President and General Manager
- - - North American Operations and was Senior Vice President - Product Development
from 1984 to 1992. Mr. Richey also serves as a Director of Steris Corporation,
Cleveland, Ohio, a NASDAQ listed manufacturer and distributor of medical
sterilizing equipment, and as a Director of Royal Appliance Manufacturing
Company, Cleveland, Ohio, a New York Stock Exchange listed manufacturer of
vacuum cleaners.
A. Malachi Mixon, III has been President and Chief Executive Officer and a
Director of the Company since 1979 and Chairman of the Board since 1983. Mr.
Mixon also serves as a Director of The Lamson & Sessions Co., Cleveland, Ohio, a
New York Stock Exchange listed company and a supplier of engineered
thermoplastic products, and The Sherwin-Williams Company, Cleveland, Ohio, a New
York Stock Exchange listed company and a manufacturer and distributor of
coatings and related products. Mr. Mixon also serves as a Trustee of The
Cleveland Clinic Foundation, Cleveland, Ohio, one of the world's leading
teaching and health care institutions.
Frank B. Carr has been a Director since 1982. From 1983 to the present, Mr.
Carr has been a Managing Director (Investment Banking) of McDonald & Company
Securities, Inc., Cleveland, Ohio, an investment banking and brokerage firm, and
a partner in its predecessor firm (McDonald & Company) since 1968. Mr. Carr also
serves as a Director of Brush Wellman Inc., Cleveland, Ohio, a New York Stock
Exchange listed company and a producer of engineered materials containing
beryllium, and Preformed Line Products Company, Cleveland, Ohio, a supplier of
supports and connectors for electric power and communications lines.
Michael F. Delaney has been a Director since 1986. From 1983 to the
present, Mr. Delaney has been the Associate Director of Development of the
Paralyzed Veterans of America, Washington, D.C. Prior thereto, Mr. Delaney was a
self-employed Development Consultant.
Whitney Evans has been a Director since 1980. From 1980 to the present, Mr.
Evans has been a private investor. From 1983 to present, Mr. Evans has been an
officer and a Director of Pine Tree Investments, Inc., Cleveland, Ohio, a
business and a real estate investment firm. From 1989 to the present, Mr. Evans
has been the President of Harmony Group, Sonoma, California, a consultant to
non-profit organizations.
E. P. Nalley has been a Director since 1983. From 1987 to 1991, when he
retired, Mr. Nalley was the Company's Senior Vice President - Sales and
Assistant to the President. Mr. Nalley is now a private investor. From 1984 to
1987, Mr. Nalley was President of Invacare International Corporation, a
subsidiary of the Company, and from 1982 to 1984, Mr. Nalley was Senior Vice
President - Sales and Marketing. Mr. Nalley also serves as a Director of Royal
Appliance Manufacturing Company, Cleveland, Ohio, a New York Stock Exchange
listed manufacturer of vacuum cleaners.
William M. Weber has been a Director since 1988. From 1968 to 1994, Mr.
Weber was President of Weber, Wood, Medinger, Inc., Cleveland, Ohio, a
commercial real estate brokerage and consulting firm. In 1994, Mr. Weber became
President of Roundcap L.L.C. and a principal of Roundwood Capital, a partnership
that invests in public and private companies.
5
<PAGE> 9
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the fiscal year ended
December 31, 1994. The Board of Directors has an Audit Committee, a Compensation
Committee, a Nominating Committee and an Investment Committee. The Audit
Committee reviews the activities of the Company's independent and internal
auditors and various company policies and practices. The Audit Committee met one
time during the last fiscal year. The Compensation Committee approves the grant
of stock options and reviews and determines the compensation of certain key
executives. The Compensation Committee met one time during the last fiscal year.
The Nominating Committee recommends candidates for election as Directors of the
Company and will consider all qualified nominees recommended by shareholders.
Such recommendations should be sent to Francis J. Callahan, Jr., Chairman of the
Nominating Committee, Invacare Corporation, P.O. Box 4028, 899 Cleveland Street,
Elyria, Ohio 44036. The Nominating Committee did not meet during 1994. The
Investment Committee, which met one time during 1994, monitors the status of
investments by the Company's profit-sharing plan and investments made by the
Company's captive insurance subsidiary. During the last fiscal year, each
Director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors held during the period he served as a
Director and (ii) the total number of meetings held by Committees of the Board
on which he served.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for reviewing the Company's existing and proposed executive
compensation plans and making determinations regarding the contents of these
plans and the awards to be made thereunder. The current members of the Committee
are Whitney Evans, Francis J. Callahan, Jr., Michael F. Delaney and William M.
Weber, all of whom are non-employee Directors of the Company.
Set forth below is a discussion of the Company's compensation philosophy,
together with a discussion of the factors considered by the Committee in
determining the 1994 compensation of the Company's executive officers named in
this Proxy Statement.
The Committee has determined, as a performance driven business, the Company
should reward outstanding financial results with commensurate compensation. The
Committee's strategy for carrying out this philosophy is to link both annual and
long-term executive compensation with the Company's financial and operating
performance. The Committee also recognizes the importance of maintaining
compensation at competitive levels in order to attract and retain talented
executives.
In order to gauge the competitiveness of the Company's executive
compensation levels, the Committee receives market data from an independent
consulting firm regarding executive compensation paid by other companies having
similar annual revenues ("Comparable Employers"). The Committee believes that
the Company must compete for executive talent with a diverse group of businesses
and relies on its independent consultant to identify a representative group of
potentially competitive employers. In determining the group of Comparable
Employers, the independent consultant assembled market data on companies having
similar projected revenues, with particular emphasis on durable goods
manufacturers. The Committee and its independent consultant believe the
Company's most direct competitors for executive talent are not necessarily the
companies that would be included in a peer group established to compare
shareholder returns. Thus, the Comparable Employers are not necessarily the same
as the peer group utilized in the Comparison of Five Year Cumulative Total
Return graph included in this Proxy Statement.
The Committee also utilizes recommendations from the consulting firm on
various facets of the Company's executive compensation program. In general, base
salaries are established at median levels for comparable positions but an
opportunity for significantly higher compensation is provided through annual
cash bonuses. These opportunities are dependent upon material year-to-year
improvement in pre-tax income. In addition, long-term compensation is awarded
exclusively in the
6
<PAGE> 10
form of stock options in order to provide key executives with significant
financial benefits to the extent that shareholder value is similarly enhanced.
Annual Base Salary. Because the Company has determined to link overall
compensation with financial performance, the base salary ranges for its
executives are targeted on an annual basis at approximately the 50th percentile
of ranges established by Comparable Employers for executives having similar
responsibilities. The Committee receives annual survey information from the
independent consultant and also reviews annual recommendations from the Chief
Executive Officer ("CEO") and from the Vice President - Human Resources in order
to establish appropriate salary levels for each of the executive officers (other
than the CEO). The Committee takes into account whether each executive met key
objectives in both financial and operating categories, as well as potential
future contributions, and whether the base salary provides an appropriate reward
and incentive for the executive to sustain and enhance the Company's long-term
superior performance. Important financial performance objectives (some of which
may not be applicable to all executives) include sales, operating profit, cost
controls, pre-tax income and return on assets. Operating objectives vary for
each executive and may change from year-to-year. Financial and operating
objectives are considered subjectively in the aggregate and are not specifically
weighted in assessing performance. Increases in 1994 base salaries were based on
the subjective judgment of the Committee taking into account the CEO's comments
regarding each executive's achievement of applicable 1993 financial and
operating objectives and the targeted salary ranges. Resulting base salaries for
the Company's executives (including the CEO) were at or near the targeted range.
In determining the CEO's base salary for 1994, the Committee took into
account the survey results regarding a 50th percentile salary range of chief
executive officers at Comparable Employers and the financial performance
objectives described above. In particular, the Committee noted that the Company
had achieved its earnings objectives during 1993. The CEO had successfully
implemented a reorganization of the Company's senior executive team, including
recruitment and hiring of a new Chief Financial Officer. This planned evolution
has placed top talent in the most critical leadership positions and strengthened
the overall management team. He also led management's effort to respond to a
difficult government reimbursement environment driven by the Durable Medical
Equipment Regional Carriers restructuring and to take corrective actions in
connection with problems at a key international operation. It was also noted
that the CEO continued to be the leading industry spokesperson on behalf of home
health care and presented input to Congress and other government representatives
relative to health care legislation. Key acquisition activity also occurred in
1993 under the CEO's leadership which allowed the Company to enter new markets.
Annual Cash Bonus. Consistent with its philosophy that executive
compensation should be linked with the Company's financial performance, the
Committee has determined that annual total cash compensation (salary plus bonus)
should be targeted at the 75th market percentile of Comparable Employers when
the Company meets commensurately challenging financial goals.
With the assistance of the Vice President - Human Resources and the
independent consultant, the Committee has determined (and annually reviews) the
appropriate bonus targets for each executive officer (as a percentage of his or
her salary) so that annual total cash compensation for such executive officer
will reach the 75th market percentile if targeted pre-tax income objectives are
achieved, but with unlimited potential. During this process, the Committee may
also determine that an executive's performance (taking into account the same
factors discussed above with respect to base salary) and level of
responsibilities warrant a change in the bonus target percentage from the market
norm.
Each year, the Committee considers the recommendation from the CEO
regarding the appropriate target for that year's pre-tax income at which target
bonuses will be earned. Under normal conditions, no bonuses are payable if
pre-tax income does not improve over the prior year and bonuses increase on a
linear basis if pre-tax income exceeds the targeted level. Targeted pre-tax
income is generally set at a level which the Committee believes is challenging
but achievable.
7
<PAGE> 11
The CEO's annual cash bonus was targeted to approximate the 75th percentile
of total cash compensation paid to chief executive officers by Comparable
Employers if the Committee's pre-tax income objective is achieved. In
determining the level of total cash compensation to be targeted for the CEO in
1994, the Committee took into account the same factors and events described
above under the Annual Base Salary. Actual pre-tax income was in excess of the
targeted objective, thereby resulting in 1994 cash bonuses to all executive
officers above targeted levels.
Survey data from the independent consultant shows annual executive bonuses
as a percent of net income at target levels remain competitive with companies of
similar size.
Long-Term Compensation Program. The Company's long-term compensation plan
is based exclusively on the award of stock options. Total long-term compensation
is targeted at approximately the 75th percentile for long-term compensation by
Comparable Employers but with unlimited potential. Stock options generally are
issued as non-qualified options under the Invacare Employee Stock Option Plan,
are granted at market price, vest in accordance with a schedule established by
the Committee and expire after ten (10) years.
Each year, the Committee determines the appropriate percentage of each
executive's salary which should be targeted as long-term compensation. The
targeted percentage of salary and the number of options proposed for each
executive officer may also be affected by the factors previously described in
establishing base salaries. The number of options granted to each executive
officer is determined based upon the previously agreed upon target level for
long-term compensation and upon the projected value of options as reflected by a
valuation formula recommended by the independent consultant. The number of
options granted to each executive in 1994 was based on the subjective judgment
of the Committee, taking into account the CEO's comments regarding the
executive's achievement of the applicable 1993 financial and operating
objectives (as described above under Annual Base Salary) and the targeted range
for long-term compensation. No particular weight was assigned to any one
financial or operating objective. Outstanding options held by an executive
officer are generally not considered when the Committee determines the number of
new options to be granted. Utilizing the valuation formula recommended by the
Company's independent consultant, options granted to the Company's executives
(including the CEO) resulted in a value of long-term compensation at or near the
targeted range for each executive.
The Committee awarded options to the CEO in 1994 based upon the foregoing
targets and formula and taking into account the same factors and events utilized
in establishing the CEO's base salary for the year.
Other Matters. The Committee believes that all long-term compensation
awarded to the Named Executive Officers in 1994 is "performance-based" and,
therefore, will be deductible notwithstanding Section 162(m) of the Internal
Revenue Code of 1986. However, the Committee has not adopted a policy with
respect to whether all future long-term or other compensation will satisfy the
requirements of Section 162(m). The Committee intends to make a determination
with respect to this issue on an annual basis.
The Compensation Committee of the
Board of Directors of Invacare
Corporation
Whitney Evans, Chairman
Francis J. Callahan, Jr.
Michael F. Delaney
William M. Weber
8
<PAGE> 12
SHAREHOLDER RETURN PERFORMANCE GRAPHS
The following graph compares the yearly cumulative total return on the
Company's Common Shares against the yearly cumulative total return of the
companies listed on the Standard & Poor's 500 Stock Index and a Peer Group of
companies selected on a line-of-business basis.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG INVACARE CORPORATION, S&P 500 INDEX AND
LINE-OF-BUSINESS PEER GROUP*
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) INVACARE S&P 500 PEER GROUP
<S> <C> <C> <C>
1989 100 100 100
1990 189 097 084
1991 507 126 129
1992 441 136 161
1993 500 149 120
1994 624 150 131
</TABLE>
*Sunrise Medical Inc.; Lumex, Inc.; Everest & Jennings International Ltd.;
Puritan-Bennett Corporation.
The above graph assumes $100 invested on December 31, 1989 in the Common Shares
of Invacare Corporation, S&P 500 Index and the respective Line-of-Business Peer
Group, including reinvestment of dividends through December 31, 1994.
9
<PAGE> 13
COMPENSATION OF EXECUTIVE OFFICERS
The table below shows information for the three years ended December 31,
1994 concerning the annual and long-term compensation for services in all
capacities to the Company of the Chief Executive Officer and the four other most
highly compensated executive officers of the Company (the "Named Executive
Officers") for the year ended December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ----------------------------
OTHER ALL OTHER
ANNUAL SECURITIES LTIP COMPEN-
BONUS(1) COMPEN- UNDERLYING PAYOUTS(2) SATION(3)
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($) SATION($) OPTIONS(#) ($) ($)
- - -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A. Malachi Mixon, III 1994 420,875 604,890 -- 24,300 214,000 54,506
Chairman of the Board, 1993 390,000 409,500 -- 24,300 217,334 15,776
President and Chief 1992 350,000 286,650 -- 91,043 220,170 11,635
Executive Officer
Joseph B. Richey, II 1994 243,000 238,140 -- 10,900 104,000 25,221
President-Invacare 1993 227,000 165,483 -- 11,200 124,742 15,245
Technologies & 1992 216,000 122,850 -- 62,408 42,960 11,974
Senior Vice President-Total
Quality Management
Gerald B. Blouch 1994 240,000 235,200 -- 10,700 -- 19,594
Chief Operating Officer 1993 200,000 145,800 -- 9,800 27,006 12,131
1992 182,000 103,513 -- 21,300 -- 10,792
Thomas R. Miklich, (4) 1994 187,000 183,260 -- 8,400 -- 7,536
Chief Financial Officer, 1993 113,333 66,438 -- 10,000 -- 713
Treasurer and 1992 -- -- -- -- -- --
Corporate Secretary
Louis F.J. Slangen 1994 187,000 183,260 -- 8,400 -- 13,761
Senior Vice President- 1993 170,000 123,930 -- 8,400 20,576 11,523
Sales & Marketing 1992 150,000 85,313 -- 17,070 14,320 9,478
- - ---------------
<FN>
(1) Salary and Bonus amounts for 1994 may include amounts deferred under the
401(k) feature of the Company's Profit Sharing Plan or the non-qualified
401(k) Plus Benefit Equalization Plan.
(2) LTIP payouts reflect cash payments for awards previously made under a
three-year cumulative formula that was included as a component of the
Company's long-term compensation plan. The Company now makes awards under
its long-term compensation plan exclusively in stock options.
(3) Included in "All Other Compensation" are amounts contributed or paid by the
Company on behalf of the above Named Executive Officers (i) for the
Company's discretionary and matching contributions under the Profit Sharing
Plan, (ii) for the Company's discretionary and matching contributions under
the non-qualified 401(k) Plus Benefit Equalization Plan and (iii) for the
payment of premiums on group term life insurance policies. Amounts
contributed for each Named Executive Officer are as follows: Mr. Mixon (i)
$12,232, (ii) $39,682, (iii) $2,592; Mr. Richey (i) $11,462, (ii) $10,609,
(iii) $3,150; Mr. Blouch (i) $10,799, (ii) $7,647, (iii) $1,148; Mr. Miklich
(i) $3,698, (ii) $3,034, (iii) $804; and Mr. Slangen (i) $7,651, (ii)
$5,237, (iii) $873.
(4) Mr. Miklich joined the Company in May 1993. His annualized salary was
$170,000.
</TABLE>
COMPENSATION OF DIRECTORS
The Company paid all Directors who were not employees ("Non-employee
Directors") a $10,000 annual retainer plus $2,000 per Board meeting attended.
Further, Non-employee Directors
10
<PAGE> 14
are eligible to participate in a Deferred Compensation Plan adopted in 1992,
pursuant to which they may elect to defer receipt of the compensation payable by
the Company for their services as a Director, and if such compensation is
elected by the Director in the form of Common Shares, the Company will deposit
an additional 25% of such deferred compensation into the applicable trust. None
of the Non-employee Directors had an effective election to defer 1994
compensation. In addition, the Non-employee Directors are eligible for a bonus
of up to $5,000 based on operating results for the 1994 year up to $5,000 based
on 1995 operating results. Based on 1994 operating results, each of the
Non-employee Directors have been paid $5,000. For 1995, the Non-employee
Directors are eligible to receive a bonus of $4,000, if certain profit
objectives are met. The bonus amount can be increased if those objectives are
exceeded.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows, as to the Named Executive Officers, the stock
options granted in 1994 under the Stock Option Plan.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS FAIR MARKET ASSUMED ANNUAL RATES OF SHARE
SECURITIES GRANTED TO EXERCISE VALUE AT PRICE APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES PRICE DATE OF TERM(1)
OPTIONS IN FISCAL ($ PER GRANT ($ PER EXPIRATION -----------------------------
NAME GRANTED YEAR SHARE) SHARE) DATE 5%($) 10%($)
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
A. Malachi Mixon, III.... 24,300(2) 14.2% 27.75 27.75 2/25/04 424,000 1,075,000
Joseph B. Richey, II..... 10,900(2) 6.4% 27.75 27.75 2/25/04 190,000 482,000
Gerald B. Blouch......... 10,700(2) 6.3% 27.75 27.75 2/25/04 187,000 473,000
Thomas R. Miklich........ 8,400(2) 4.9% 27.75 27.75 2/25/04 147,000 372,000
Louis F.J. Slangen....... 8,400(2) 4.9% 27.75 27.75 2/25/04 147,000 372,000
All Shareholders (3)..... N/A N/A N/A N/A N/A 249,300,000 639,500,000
- - ---------------
<FN>
(1) Potential Realizable Value is based on assumed annual growth rates for the
term of the option. The assumed rates of 5% and 10% are set by the
Securities and Exchange Commission and are not intended to be a forecast of
the Company's Common Share price. Actual gains, if any, on stock options
exercised are dependent on the actual performance of the stock.
(2) Options become exercisable on March 31 of each year at 25% per year
commencing in 1995.
(3) The potential gain realizable by all shareholders based on (10,354,030
Common Shares and 4,097,586 Class B Common Shares outstanding at a base
price of $27.75 per share) at 5% and 10% assumed annual rates over a term of
10 years is provided as a comparison to the potential gain realizable by the
Named Executive Officers at the same assumed annual rates of appreciation in
share value over the same 10-year term. The value of a Common Share would
appreciate to $45.00 and $72.00 per share at the assumed 5% and 10% annual
growth rates, respectively.
</TABLE>
Each of the options issued under the Stock Option Plan includes a provision
which provides that the option shall become immediately exercisable
(notwithstanding any vesting schedule otherwise contained in the option) upon
the commencement of a tender for the Company's Common Shares or at any time
within 90 days prior to a dissolution, liquidation or certain mergers or
consolidations of the Company. Upon the occurrence of such a merger or
consolidation, the option shall be subject to such adjustment or amendment as
the Compensation Committee of the Board of Directors deems appropriate and
equitable. Under the terms of the Stock Option Plan, the Committee may also
grant reload options under such circumstances as it deems appropriate.
11
<PAGE> 15
OPTION EXERCISES AND YEAR-END VALUE TABLE
The table below shows information with respect to options exercised by, and
the value of unexercised options under the Stock Option Plan for, the Named
Executive Officers.
AGGREGATED OPTION EXERCISES IN 1994 AND OPTION VALUE AT YEAR-END 1994
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
NUMBER OF UNDERLYING UNEXERCISED MONEY OPTIONS AT
SHARES VALUE OPTIONS AT 12/31/94(#) 12/31/94(2)($)
ACQUIRED ON REALIZED ----------------------------- -----------------------------
NAME EXERCISE(#) (1) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
A. Malachi Mixon, III.... None -- 158,925 70,535 3,885,822 929,343
Joseph B. Richey, II..... 4,941 14,823 123,120 37,125 2,987,271 557,419
Gerald B. Blouch......... None -- 44,515 39,905 944,039 585,809
Thomas R. Miklich........ None -- 2,500 15,900 23,750 125,850
Louis F.J. Slangen....... None -- 63,390 28,980 1,620,743 390,690
- - ---------------
<FN>
(1) Represents the difference between the option exercise price and the closing
price of the Common Shares on the NASDAQ National Market System on the date
of exercise.
(2) The "Value of Unexercised In-the-Money Options at 12/31/94" is equal to the
difference between the option exercise price and the closing price of a
Common Share on the NASDAQ National Market System on December 30, 1994.
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors during
1994 were Whitney Evans, Francis J. Callahan, Jr., Michael F. Delaney and
William M. Weber.
In November 1983, I-M Associates Ltd., a Florida limited partnership (the
"Partnership"), was formed with Mr. Mixon as the General Partner and as one of
the Limited Partners. Invacare agreed to indemnify Mr. Mixon for any liability
incurred by him as General Partner. The following is a list of the names and
percentage interest of the executive officers and Directors who are also
partners in the Partnership: Mr. Mixon (13%); Mr. Richey (8%); Mr. Nalley (5%);
Mr. Callahan (6%); and Mr. Moore (10%). The Partnership was organized to
purchase property in Sanford, Florida and to construct an industrial building of
approximately 113,000 square feet (the "Project") to be leased by a subsidiary
of Invacare for the manufacture of home care beds. A substantial portion of the
Project's cost was financed through $2,500,000 in industrial development revenue
bonds (the "Bonds") issued by the Sanford Airport Authority (the "Authority").
All of the Bonds were sold to a Florida bank which is not an affiliate of the
Company. The Bonds are non-recourse as against the Partnership and are secured
by a mortgage on and a security interest in the land and building in favor of
the Authority. The Partnership and a subsidiary of Invacare entered into a lease
pursuant to which the subsidiary leased the Project from the Partnership,
originally for a base term ending in 1994 with an option to renew for two
additional five-year periods. The payment obligations for the base term under
the lease were guaranteed by Invacare. In 1994, the Company paid $98,000 in
aggregate lease payments. The lease also granted Invacare an option to purchase
the Project at any time during the initial or any renewal terms for its
appraised fair market value.
In March 1994, the Company, through a newly formed subsidiary, exercised
its option to acquire the entire interest in the Project from the Partnership.
The aggregate purchase price for the Project was approximately $3.8 million,
consisting of approximately $2.4 million in cash and the assumption of
approximately $1.4 million in indebtedness under the Bonds. The purchase price
was based upon an independent appraisal of the fair market value of the Project.
The following represents the applicable amount of the cash proceeds from the
sale of the Project attributable to each of the executive officers and Directors
who are also partners in the Partnership: Mr. Mixon: $319,800; Mr. Richey:
$196,800; Mr. Nalley: $123,000; Mr. Callahan: $147,600; and Mr. Moore: $246,000.
Mr. Callahan presently serves on the Compensation Committee.
12
<PAGE> 16
During 1994, the Company purchased travel services from a third party
private aircraft charter company. One of the aircraft available to be used by
the charter company is owned by Mr. Mixon, Mr. Richey and Mr. Callahan. The
Company paid approximately $544,000 to the charter company for use of the
aircraft owned by Messrs. Mixon, Richey and Callahan. Invacare believes that the
prices and terms charged are no less favorable than those which could be
obtained from unrelated parties.
CERTAIN TRANSACTIONS
During 1994, the Company purchased wheelchair tires from Dan T. Moore Co.,
of which Dan T. Moore, III is President and sole shareholder, for an aggregate
cost of approximately $325,000. Mr. Moore is a Director and shareholder of
Invacare. Invacare believes that the prices and terms of these purchases were no
less favorable than those which could have been obtained from unrelated parties.
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected the firm of Ernst &
Young LLP, independent public accountants, to examine and audit the annual
financial statements of the Company and its subsidiaries for the fiscal year
ending December 31, 1995. Representatives of Ernst & Young LLP are expected to
be present at the Annual Meeting and they will have an opportunity to make a
statement should they so desire. In addition, they will also be available to
respond to appropriate questions from shareholders.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those stated in the Notice of Annual Meeting of
Shareholders. However, if other matters properly come before the Annual Meeting,
it is the intention of the persons named in the accompanying Proxy to vote in
accordance with their best judgment on such matters in the absence of
instructions to the contrary. Any shareholder who wishes to submit a proposal
for inclusion in the proxy material to be distributed by the Company in
connection with its Annual Meeting of Shareholders to be held in 1996 must do so
no later than December 20, 1995. To be eligible for inclusion in the 1996 Proxy
material of the Company, proposals must conform to the requirements set forth in
Regulation 14A under the Exchange Act.
Upon the receipt of a written request from any shareholder, the
Company will mail, at no charge to the shareholder, a copy of the
Company's Annual Report on Form 10-K, including the financial
statements and schedules required to be filed with the Securities and
Exchange Commission pursuant to Rule 13a-1 under the Exchange Act, for
the Company's most recent fiscal year. Written requests for such
Report should be directed to:
Shareholder Relations Department
Invacare Corporation
P.O. Box 4028, 899 Cleveland Street
Elyria, Ohio 44036
You are urged to sign and return your Proxy promptly in the enclosed return
envelope to make certain your shares will be voted at the Annual Meeting.
By order of the Board of Directors
THOMAS R. MIKLICH
Secretary
13
<PAGE> 17
INVACARE CORPORATION
PROXY FOR COMMON SHARES AND CLASS B COMMON SHARES
ANNUAL MEETING OF SHAREHOLDERS -- MAY 22, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints A. MALACHI MIXON, III, WHITNEY EVANS and
JOSEPH B. RICHEY, II, and each of them, as Proxy holders and attorneys, with
full power of substitution, to appear and vote all the Common Shares and Class B
Common Shares of INVACARE CORPORATION, which the undersigned shall be entitled
to vote at the Annual Meeting of Shareholders of the Company, to be held at the
Radisson Inn Cleveland Airport, 25070 Country Club Boulevard, North Olmsted,
Ohio on Monday, May 22, 1995 at 10:00 A.M. (EDT) and at any adjournments
thereof, hereby revoking any and all Proxies heretofore given, and (ii)
authorizes and directs said Proxy holders to vote all the Common Shares and
Class B Common Shares of the Company represented by this Proxy as follows, WITH
THE UNDERSTANDING THAT IF NO DIRECTIONS ARE GIVEN BELOW, SAID SHARES WILL BE
VOTED "FOR" THE ELECTION OF THE THREE DIRECTORS NOMINATED BY THE BOARD OF
DIRECTORS.
<TABLE>
<S> <C>
(1) ELECTION OF DIRECTORS.
/ / FOR all nominees listed (except as marked to the / / WITHHOLD AUTHORITY to vote for all nominees listed
contrary below)
</TABLE>
FRANCIS J. CALLAHAN, JR., DAN T. MOORE, III, and JOSEPH B. RICHEY, II
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE FOLLOWING LINE.)
- - --------------------------------------------------------------------------------
(Continued and to be signed on other side)
- - --------------------------------------------------------------------------------
(Proxy -- continued from other side)
(2) In their discretion to act on any other matters which may properly come
before the Annual Meeting.
Dated , 1995
---------------------------
Your signature to the Proxy
form should be exactly the
same as the name imprinted
hereon. Persons signing as
executors, administrators,
trustees or in similar
capacities should so
indicate. For joint
accounts, the name of each
joint owner must be signed.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.
