<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrant (x)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential for Use of the
Commission Only (as Permitted
by Rule 14a-6(e)(2))
(x) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Invacare Corporation
--------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the Appropriate box):
( ) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
( ) $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:
-----------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------
5) Total fee Paid:
-----------------------------------------------------------------
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
One Invacare Way
Elyria, OH 44035
April 16, 1999
To the Shareholders of
INVACARE CORPORATION:
This year's Annual Meeting of Shareholders will be held at 10:00 A.M.
(EDT), on Wednesday, May 26, 1999, at the Lorain County Community College,
Spitzer Conference Center, Grand Room, 1005 North Abbe Road, Elyria, 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 and Chief
Executive Officer
<PAGE>
INVACARE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 26, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Invacare Corporation (the "Company") will be held at the Lorain County Community
College, Spitzer Conference Center, Grand Room, 1005 North Abbe Road, Elyria,
Ohio on Wednesday, May 26, 1999, at 10:00 A.M. (EDT), for the following
purposes:
1. To elect four Directors, to the class whose three-year term of office
will expire in 2002;
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 Thursday, April 1, 1999 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 Proxy and vote in person.
By order of the Board of Directors,
/S/ Thomas R. Miklich
--------------------------
Thomas R. Miklich
Secretary
April 16, 1999
<PAGE>
1
INVACARE CORPORATION
PROXY STATEMENT
Mailed on or About April 16, 1999
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 26, 1999
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") for use at the Annual Meeting of Shareholders of
the Company to be held on May 26, 1999 and any adjournments or postponement
thereof. The time, place and purposes 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 by the Company's Directors, officers or employees, without additional
compensation, 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 four nominees listed in the Proxy.
VOTING RIGHTS
At the close of business on April 1, 1999, the Company had 28,563,572
Common Shares, without par value ("Common Shares"), and 1,433,007 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 1, 1999 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 1, 1999 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 1, 1999 are entitled to
notice of and to vote at the Annual Meeting.
<PAGE>
2
SHARE OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
Share ownership of certain beneficial owners. The following table sets forth, as
of February 26, 1999, the share ownership of each person or group known by the
Company to beneficially own more than 5% of either class of shares of the
Company:
<TABLE>
<CAPTION>
Class B
Common Shares Common Shares
beneficially owned beneficially owned*
--------------------- ---------------------
Number Number Percentage
Name and business address of of of total
of beneficial owner shares Percentage shares Percentage voting power
------ ---------- ------ ---------- ------------
<S> <C> <C> <C> <C> <C>
A. Malachi Mixon, III (1).................. 941,739 3.2% 703,912 49.1% 17.6%
One Invacare Way, Elyria, Ohio 44035
Joseph B. Richey, II (2)................... 760,366 2.6% 376,262 26.3% 10.0%
One Invacare Way, Elyria, Ohio 44035
Invacare Corporation Employees'
Stock Bonus Trust and Plan (3)............. 603,451 2.1% 259,386 18.1% 7.1%
One Invacare Way, Elyria, Ohio 44035
AXA Assurances I.A.R.D. Mutuelle (4)(5).... 2,863,772 9.8% - - 6.3%
21, rue de Chateaudun 75009 Paris France
</TABLE>
* 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) Mr. Mixon is Chairman of the Board of Directors and Chief Executive Officer
of the Company. The Common Shares beneficially owned by Mr. Mixon include
496,720 Common Shares which may be acquired upon the exercise of stock
options during the 60 days following February 26, 1999. 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. The number of shares shown as
beneficially owned by Mr. Mixon include 14,966 Common Shares held in the
name of Roundwood Capital L.L.P., which represent his ownership interest in
Roundwood Capital L.L.P. The number of shares shown as beneficially owned
by Mr. Mixon does not include 398,399 Common Shares which have been
transferred into two family trusts. The number of shares shown as
beneficially owned by Mr. Mixon does not include 251,376 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) Mr. Richey is President-Invacare Technologies and Senior Vice
President-Total Quality Management and is a Director of the Company. The
Common Shares beneficially owned by Mr. Richey include 254,940 Common
Shares which may be acquired upon the exercise of stock options during the
60 days following February 26, 1999. 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.
(3) 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. The Charles Schwab Trust Company is 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.
(4) The number of Common Shares beneficially owned is based upon a Schedule 13G
filed for share ownership as of January 31, 1999.
(5) The Schedule 13G was filed by the Equitable Companies Incorporated
(Equitable Companies); AXA, which beneficially owns a majority interest in
Equitable Companies; and the Mutuelles AXA, as a group which beneficially
owns a majority interest in AXA. The Common Shares reported are held by
Equitable Companies acting as a parent holding company with respect to the
holdings by its following subsidiaries: Alliance Capital Management L.P.,
an Investment Adviser, has sole voting power with respect to 954,495 shares
of the 1,522,941 Common Shares held, and sole dispositive power with
respect to all 1,522,941 of the Common Shares held. AXA Rosenberg (U.S.), a
holding company, has sole voting power with respect to 610,300 of the
Common Share held, and shared dispositive power with respect to 796,500 of
the Common Share held. Donaldson, Lufkin & Jenrette Securities Corporation,
an Investment Adviser and Broker-Dealer, has sole voting power with respect
to 10,246 of the Commons shares held and shared dispositive power with
respect to 56,870 of the Common Shares held. Wood, Struthers & Winthrop
Management Corp., an Investment Adviser, has sole voting power with respect
to 385,400 shares of the 477,215 Common Shares held and sole dispositive
power with respect to all 477,215 Common Shares held.
<PAGE>
3
Share ownership of management. The following table sets forth as of February 26,
1999, 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
Number Number of total
Name of beneficial owner of shares Percentage of shares Percentage voting power
------------------------ --------- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Gerald B. Blouch (4)....................... 241,740 * - - *
Francis J.Callahan......................... 258,966 * - - *
Frank B.Carr............................... 99,700 * - - *
Michael F. Delaney......................... 11,000 * - - *
Whitney Evans.............................. 42,005 * - - *
Bernadine P. Healy ....................... 8,922 * - - *
Thomas R. Miklich(4)....................... 79,296 * - - *
A. Malachi Mixon, III(1)................... 941,739 3.2% 703,912 49.1% 17.6%
Dan T. Moore, III.......................... 450,684 1.5% - - 1.0%
E. P. Nalley(3)............................ 206,054 * - - *
Joseph B. Richey, II(2).................... 760,366 2.6% 376,262 26.3% 10.0%
Louis F.J. Slangen(4)...................... 162,335 * - - *
William M.Weber............................ 275,806 * - - *
All executive officers and Directors
as a group(20 persons)(4)..................3,851,161 12.6% 1,080,174 75.4% 32.3%
</TABLE>
* Less than 1% of 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 2 to the preceding table.
(3) Mr. Nalley is a Director of the Company. All of the Common Shares
listed as beneficially owned by Mr. Nalley are owned by trusts for the
benefit of Mr. Nalley.
(4) The Common Shares beneficially owned by the Company's executive
officers and Directors as a group include 1,411,437 Common Shares which
may be acquired upon the exercise of stock options during the 60
days following February 26, 1999. 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 said 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, 219,740 shares; Mr. Miklich,
72,600 shares; and Mr. Slangen, 137,415 shares.
<PAGE>
4
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's executive officers and Directors and persons who
own 10% or more of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission (the "Commission"). Executive officers,
Directors and beneficial holders of more than 10% of the Company's Common Stock
are required by the Commission regulations to furnish the Company with copies of
all Forms 3, 4 and 5 that they file.
Based solely upon the Company's review of the copies of such forms it
has received, the Company believes that all of its executive officers, Directors
and beneficial holders of more than 10% of the Company's Common Stock complied
with all filing requirements applicable to them with respect to transactions
during the fiscal year ended December 31, 1998, except for the inadvertent
failure to file a Form 3 within ten days of becoming an executive officer by
Steve S. Clark, Neal J. Curran, David A.Johnson and Mike Perry. This information
was included in their respective year-end Form 5.
ELECTION OF DIRECTORS
Under the Company's Code of Regulations, as amended, the authorized
number of Directors of the Company shall be not less than five, nor more than
fifteen. At a meeting of the Board of Directors on [November 1], 1999, the
Directors (i) decided to increase the number of Directors from eleven to twelve
and (ii) elected James C. Boland to fill the newly created vacancy. 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, four Directors will be elected to serve a three-year term until
the Annual Meeting in 2002 or 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. Holders of shares entitling them to exercise a
majority of the voting power of the Company, present in person or by proxy at
the Annual Meeting, will constitute a quorum for such meetings.
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 four nominees for Director as named below, unless the
shareholder provides instruction by marking the appropriate space on the Proxy,
that authority to vote is withheld. Each of the nominees, is presently a
Director of the Company and has indicated their 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 four nominees or for persons other than those named below
and any such substitute nominee for any of them.
Nominees for Election
Name Age Position with the Company
- ---- --- -----------------------------------
A. Malachi Mixon, III (3)(4) 58 Chairman and Chief Executive Officer
Frank B. Carr (1)(4) 71 Director
Michael F. Delaney (4) 50 Director
Dr. Bernadine P. Healy (2) 54 Director
<PAGE>
5
Directors Continuing in Office
Gerald B. Blouch (6) 52 President, Chief Operating Officer
and a Director
James C. Boland(5) 59 Director
Francis J. Callahan (2)(3)(6) 75 Director
Dan T. Moore, III (1)(3)(6) 59 Director
Joseph B. Richey, II (6) 62 President - Invacare Technologies,
Senior Vice President - Total Quality
Management and a Director
Whitney Evans (2)(4)(5) 62 Director
E.P. Nalley (1)(4)(5) 79 Director
William M. Weber (1)(2)(5) 59 Director
- ----------
(1) Member of the Audit Committee. (5) Term as Director expires in 2000.
(2) Member of the Compensation Committee. (6) Term as Director expires in 2001.
(3) Member of the Nominating Committee.
(4) Member of the Investment Committee.
A. Malachi Mixon, III has been Chief Executive Officer since 1979 and
Chairman of the Board since 1983. Mr. Mixon has been a Director of the Company
since 1979 and also served as President until 1996, when Gerald B. Blouch, the
Company's Chief Operating Officer was elected President by the Company's Board
of Directors. Mr. Mixon 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, The Sherwin-Williams Company, Cleveland,
Ohio, a New York Stock Exchange listed company and a manufacturer and
distributor of coatings and related products, and NCS HealthCare, Inc., a NASDAQ
listed company and a provider of pharmacy services to long term care
institutions. Mr. Mixon also serves as Chairman of the Board of Trustees of The
Cleveland Clinic Foundation, Cleveland, Ohio, one of the world's leading
academic medical centers.
Frank B. Carr has been a Director since 1982. From 1983 to 1996, Mr.
Carr was a Managing Director 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
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.
Dr. Bernadine P. Healy has been a Director since 1996. From 1995 to the
present, Dr. Healy has been the Dean and Professor of Medicine of the College of
Medicine and Public Health of The Ohio State University, Columbus, Ohio. From
1994 to 1995, Dr. Healy served as Director of Health and Science Policy at The
Cleveland Clinic Foundation, Cleveland, Ohio; and from 1991 to 1993, she served
as Director of the National Institutes of Health in Bethesda, Maryland. From
1985 to 1991, Dr. Healy served as the Chairman of the Research Institute of The
Cleveland Clinic Foundation, Cleveland, Ohio. Dr. Healy is a Trustee of the
Battelle Memorial Institute in Columbus, Ohio. Dr. Healy also serves as a
Director of Medtronic, Inc., a New York Stock Exchange listed company and
producer of cardiac pacemakers, National City Corporation, Cleveland, Ohio,
since 1997, a New York Stock Exchange listed company and a bank holding company
and Ashland, Inc., Covington, Kentucky also a New York Stock Exchange listed
company in oil and gas operations. Dr. Healy has been a Medical Contributor for
CBS News.
<PAGE>
6
Gerald B. Blouch has been President and a Director of the Company since
November 1996. Mr. Blouch has been Chief Operating Officer since December 1994
and Chairman - Invacare International since December 1993. Previously Mr. Blouch
was President - Homecare Division from March 1994 to December 1994 and Senior
Vice President - Homecare Division from September 1992 to March 1994. Mr. Blouch
served as Chief Financial Officer of the Company from May 1990 to May 1993 and
Treasurer of the Company from March 1991 to May 1993.
James C. Boland was elected as a Director of the Company by the Board
of Directors, pursuant to Article III, Section 2(a) of the Company's Amended
Code of Regulations, in November 1998. Mr. Boland has served as President and
Chief Executive Officer of CAVS/Gund Arena Company (the Cleveland Cavaliers and
the Cleveland Rockers professional teams and Gund Arena) since January 1998.
Prior to his retirement from Ernst & Young in September, 1998, Mr. Boland served
for 22 years as a partner of Ernst & Young in various roles including Vice
Chairman and Regional Managing Partner as well as a member of the firm's
Management Committee from 1988 to 1996 and as Vice Chairman of National Accounts
from 1997 to his retirement. Mr. Boland is a Director of The Sherwin-Williams
Company, Cleveland, Ohio, a New York Stock Exchange listed company and a
manufacturer and distributor of coatings and related products, and is a Trustee
of Leadership Cleveland, the Great Lakes Science Center, Bluecoats, Inc. and The
50 Club of Cleveland.
Francis J. Callahan has been a Director since 1980. Mr. Callahan is
currently Chairman of the Board of Directors of Swagelok, formerly Crawford
Fitting Company, Cleveland, Ohio a manufacturer of tube fittings and valves. He
also served as President from 1980 to 1998 of Swagelok. Mr. Callahan serves as a
Trustee of The Cleveland Clinic Foundation, Cleveland, Ohio.
Dan T. Moore, III has been a Director since 1980. Mr. Moore has been the
founder and owner of Dan T. Moore Co. since 1979; the principal owner and
Chairman of Soundwich, Inc. since 1988, Flow Polymers, Inc. since 1985, Perfect
Impression since 1984 and Advanced Ceramics since 1993, all of which are
manufacturing companies. He has been a Director of U.S. Enrichment Corporation
(NYSE) since 1998. Mr. Moore is also a Trustee of the Cleveland Clinic
Foundation, and is Chairman of Cleveland Clinic Home Care.
Joseph B. Richey, II has been a Director since 1980 and in 1992 was
named President-Invacare Technologies and Senior Vice President-Total Quality
Management. Previously Mr. Richey was Senior Vice President - Product
Development from 1984 to 1992, Senior Vice President and General Manager - North
American Operations from September 1989 to September 1992. Mr. Richey also
serves as a Director of Steris Corporation, Cleveland, Ohio, a New York Stock
Exchange listed manufacturer and distributor of medical sterilizing equipment, a
Director of Royal Appliance Manufacturing Co., Cleveland, Ohio, a New York Stock
Exchange listed manufacturer of vacuum cleaners, a Director of Unique Mobility
Inc., Golden, Colorado, an American Stock Exchange listed engineering concern
and manufacturer of high efficiency permanent magnet motors and electronic
controls, and Chairman of the Board of Directors of NeuroControl Corporation,
Cleveland, Ohio, a privately held company, which develops and markets
electromedical stimulation systems restoring function to paralyzed limbs and
muscles.
Whitney Evans has been a Director since 1980. From 1980 to the present,
Mr. Evans has been a private investor. From 1998 to the present, Mr Evans has
been a Director of Victory Technology, Inc. and is currently Co-Chairman of the
Board of Directors and Senior Executive Vice-President. Victory Technology, Inc.
is an internet based distance learning company based in Sonoma, Ca. From 1983 to
1997, Mr. Evans was an officer and a Director of Pine Tree Investments, Inc.,
Cleveland, Ohio, a business and a real estate investment firm.
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. Mr. Nalley
also serves as a Director of Royal Appliance Manufacturing Co., Cleveland, Ohio,
a New York Stock Exchange listed manufacturer of vacuum cleaners.
<PAGE>
7
William M. Weber has been a Director since 1988. In 1994, Mr. Weber
became President of Roundcap L.L.C. and a principal of Roundwood Capital L.L.P.,
a partnership that invests in public and private companies. From 1968 to 1994,
Mr. Weber was President of Weber, Wood, Medinger, Inc., Cleveland, Ohio, a
commercial real estate brokerage and consulting firm.
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the fiscal year ended
December 31, 1998. 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
twice 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, Chairman of the
Nominating Committee, Invacare Corporation, One Invacare Way, P.O. Box 4028,
Elyria, Ohio 44036-2125. The Nominating Committee met one time during the last
fiscal year. The Investment Committee, which met one time during 1998, 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., Dr. Bernadine P. Healy 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 1998 compensation of the Company's executive
officers named in this Proxy Statement.
The Committee has determined, as a performance-driven business, that
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, as well as larger employers with which the company must
compete for talent ("Comparable Employers"). The Committee 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. In
addition, larger employers are surveyed as the Committee believes they are also
significant competitors for executive talent. Thus, 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 the
peer group established to compare shareholder returns. Accordingly, 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.
<PAGE>
8
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 market 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 earnings before income tax. In addition, long-term compensation
is awarded exclusively in the 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") 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. A determination
is also made as to 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 net sales, income from
operations, cost controls, earnings before income tax 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 1998
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
1997 operating and financial objectives and the targeted salary ranges as
determined by the market study received from the independent consultant.
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 1998, the Committee took into
account the survey results regarding a 50th percentile salary range of chief
executive officers at Comparable Employers and larger employers who may be
competing for executive talent and the financial performance objectives
described above. The Committee noted that key acquisition activity occurred in
the United States, Europe, and Australia, during 1996 and 1997 under the CEO's
leadership. These acquisitions allowed the Company to grow market share and
extend current product lines, complement existing businesses, utilize its
distribution strength and expand its geographic presence. The CEO is the leading
industry spokesperson on behalf of the home medical equipment industry putting
Invacare in a position to help shape public policy instead of being forced to
react to change in policy. Substantial progress was also made in meeting the
Company's long-term strategic objectives that are set by management and reviewed
by the Board each year. It is the Committee's opinion that these objectives are
a key to the ongoing success of the Company. They also reflect the CEO's strong
understanding of the industry and what is required to continue to sustain
superior financial and operating performance. The Committee also believes that
the CEO has instituted actions that keep the Company's strategic direction in
line with the ever-changing marketplace in which the company operates. This
includes his leadership role in identifying strategic initiatives that need to
be accelerated to keep this Company competitive and recognizing the costs
associated with these initiatives.
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, as previously
outlined, in addition to subjective factors as the Committee deems appropriate.
<PAGE>
9
With the assistance of 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 earnings before income tax 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 earnings before income tax at
which target bonuses will be earned. Under normal conditions, no bonuses are
payable if earnings before income tax and unusual or non-recurring charges does
not improve over the prior year and bonuses increase on a linear basis if
earnings before income tax exceeds the targeted level. Targeted earnings before
income tax and unusual items is generally set at a level which the Committee
believes is challenging but achievable.
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 earnings before income tax objective is
achieved. In determining the level of total cash compensation to be targeted for
the CEO in 1998, the Committee took into account the same factors and events
described above under the Annual Base Salary. Actual earnings before income tax
improved over 1997 levels before the effect of the non-recurring and unusual
charge taken in 1997. The total cash compensation paid for 1998, including
bonus, was slightly below the targeted 75th market percentile as determined by
the Committee as the results were not up to the targeted level set at the
beginning of the year.
Survey data from the independent consultant shows annual executive
bonuses as a percent of net income at target levels remain competitive with
Comparable Employers.
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 Corporation
1994 Performance Plan and 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 1998 was based on the subjective judgment
of the Committee, taking into account the CEO's comments regarding the
executive's achievement of the applicable 1997 operating and financial
objectives (as described above under Annual Base Salary) and the targeted range
for long-term compensation. No particular weight was assigned to any one
operating or financial 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 1998 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.
<PAGE>
10
Other Matters. The Committee believes that all long-term compensation
awarded to key executives in 1998 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
Dr. Bernadine P. Healy
William M. Weber
<PAGE>
11
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, the Russell 2000
Stock Index and a Peer Group of companies selected on a line-of-business basis.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Invacare 100 125 184 201 159 179
S&P 500 100 101 139 170 227 288
Russell 2000 100 97 122 140 169 163
Peer Group 100 90 61 61 68 51
</TABLE>
* Sunrise Medical Inc.(SMD); Everest & Jennings International Ltd. (EJ) was
acquired by Graham-Field Health Products, Inc. (GFI) in the fourth quarter of
1996. Everest & Jennings International Ltd. shareholders received .35 common
shares of Graham-Field Health Products, Inc. for each Everest & Jennings
International Ltd. common share owned. For purposes of the above graph, the
return for Everest & Jennings International Ltd. within the peer group for the
period November 27, 1996 to December 31, 1998 was calculated with the return of
Graham-Field Health Products, Inc. at the conversion rate noted above.
The above graph assumes $100 invested on December 31, 1993 in the Common Shares
of Invacare Corporation, S&P 500 Index, Russell 2000 Index and the respective
Line-of-Business Peer Group, including reinvestment of dividends through
December 31, 1998.
<PAGE>
12
COMPENSATION OF EXECUTIVE OFFICERS
The table below shows information for the three years ended December
31, 1998 concerning the annual and long-term compensation for services in all
capacities to the Company of the Chief Executive Officer and the four other most
highly compensated executive officers of the Company (the "Named Executive
Officers") for the year ended December 31, 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
--------------------------------------------- ----------------------------------
Other All Other
Annual Securities Compen-
Name and Salary (1) Bonus (1) Compen- Underlying sation (2)
Principal Position Year ($) ($) sation ($) Options (#) ($)
------------------------------------------------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
A. Malachi Mixon, III 1998 635,000 594,400 - 120,750 76,225
Chairman and Chief 1997 605,050 455,000 - 127,600 76,741
Executive Officer 1996 540,000 513,000 - 81,000 74,924
Gerald B. Blouch 1998 392,000 367,000 - 57,600 131,135
President and 1997 370,000 245,000 - 70,000 102,116
Chief Operating Officer 1996 320,000 272,000 - 38,400 103,847
Joseph B. Richey, II 1998 296,000 219,000 - 17,900 70,961
President-Invacare 1997 285,000 176,000 - 41,000 82,529
Technologies and Senior 1996 270,000 203,000 - 24,300 89,336
Vice President-Total
Quality Management
Thomas R. Miklich, 1998 281,000 263,000 - 41,300 76,597
Chief Financial Officer, 1997 265,000 159,000 - 50,000 58,773
General Counsel, 1996 240,000 180,000 - 21,600 60,583
Treasurer and Corporate
Secretary
Louis F.J. Slangen 1998 239,000 147,000 - 18,600 67,165
Senior Vice President - 1997 230,000 116,000 - 20,500 57,555
Sales & Marketing 1996 211,000 132,000 - 12,700 58,775
--------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Salary and Bonus amounts for 1996 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) The amounts disclosed in this column include: (a) Company contributions
in the amount of $3,200 for each of Messrs. Mixon, Blouch, Richey,
Miklich and Slangen under the Company's 401(k) plan, a defined
contribution plan; (b) Company contributions in the amounts of $18,282,
$9,540, $5,961, $5,414 and $3,900 for Messrs. Mixon, Blouch, Richey,
Miklich and Slangen, respectively, under the Company's 401(k) Plus
Benefit Equalization Plan, a defined contribution plan; (c) Company
contributions in the amounts of $6,400, for each of Messrs. Mixon,
Blouch, Richey, Miklich and Slangen, under the Company's Profit Sharing
Plan, a defined contribution plan; (d) Company contributions in the
amounts of $36,563, $19,080, $11,921, $10,828 and $7,800 for Messrs.
Mixon, Blouch, Richey, Miklich and Slangen, respectively, under the
Company's Profit Sharing Benefit Equalization Plan, a defined
contribution plan; (e) the payment of premiums on group term life
insurance policy of $4,050, $1,952, $3,134, $1,354, $951 for Messrs.
Mixon, Blouch, Richey, Miklich and Slangen, respectively; (f) the
dollar value of compensatory split-dollar life insurance benefits,
under the Company's Executive Life Insurance Plan, in the amounts of
$82,516, $38,317, $44,973 and $41,677 for Messrs. Blouch, Richey,
Miklich and Slangen, respectively. Mr. Mixon is not covered by a
split-dollar life insurance benefit; (g) payments by the Company,
related to premiums under the Company's Executive Disability Income
Plan, in the amounts of $8,447, $2,028, $4,428 and $3,237 for Messrs.
Blouch, Richey, Miklich and Slangen, respectively (Mr. Mixon does not
participate in the Company's Executive Disability Income Plan) and (h)
payment by the Company for the premium of a disability insurance policy
for Mr. Mixon in 1998 amounted to $7,730.
<PAGE>
13
COMPENSATION OF DIRECTORS
The Company paid all Directors who were not employees ("Non-employee
Directors") a $16,000 annual retainer plus $2,000 per Board meeting attended.
Further, Non-employee Directors 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 1998 compensation. In addition, the Non-employee
Directors were eligible for a bonus of $4,000 based on profit objectives for
1998 and a greater amount if the objectives were exceeded. Based on 1998
operating results, each of the Non-employee Directors have been paid $3,640 as
profit (excluding the non-recurring unusual charge) improved over 1997, but the
target level at the beginning of the year was not achieved. For 1999, the
Non-employee Directors are eligible to receive a bonus of $4,000, if certain
profit objectives are met. The bonus amount can be increased if those objectives
are exceeded.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows, as to the Named Executive Officers, the
stock options granted in 1998 under the Invacare Corporation 1994 Performance
Plan.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------------
% of
Number Total
of Options
Securities Granted Exercise
Underlying to Price Potential Realizable Value
Options Employees (3) at Assumed Annual Rates
Granted (2) in Fiscal ($ per Expiration of Share Price Appreciation
Name (#) Year Share) Date for Option Term (1)
- ------------------------------------------------------------------------------------- ---------------------------------
5% ($) 10%($)
- ------------------------------------------------------------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
A. Malachi Mixon, III 120,750 23.6% 23.63 3/5/08 1,794,000 4,546,000
Gerald B. Blouch 57,600 11.3% 23.63 3/5/08 856,000 2,169,000
Joseph B. Richey, II 17,900 3.5% 23.63 3/5/08 266,000 674,000
Thomas R. Miklich 41,300 8.1% 23.63 3/5/08 614,000 1,555,000
Louis F.J. Slangen 18,600 3.6% 23.63 3/5/08 276,000 700,000
All Shareholders (4) N/A N/A N/A N/A 425,100,000 1,105,300,000
- ------------------------------------------------------------------------------------- ----------------------------------
</TABLE>
(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. There is no assurance that the value
realized will be at or near the value estimated in the Potential Realizable
Value applied to value the stock options. Actual gains, if any, on stock
options exercised are dependent on the actual performance of the stock.
(2) Options become exercisable on March 31, over four years at a rate of 25%
per year, commencing in 1999.
(3) The exercise price is equal to the fair market value of the Company's
Common Shares on the date of grant.
(4) The potential gain realizable by all shareholders (based on 28,139,118
Common Shares and 1,433,407 Class B Common Shares outstanding at the
exercised price of $23.63 per share as of the grant date of March 5,
1998) 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 approximately $38.00 and $61.00 per share at the assumed
5% and 10% annual growth rates, respectively.
Each of the options issued under the Stock Option Plans includes a
provision which provides that the option shall become immediately exercisable
(notwithstanding any vesting schedule otherwise contained in the option) upon
the commencement of a tender for the Company's Common Shares or at any time
within 90 days prior to a dissolution, liquidation or certain mergers or
consolidations of the Company. Upon the occurrence of such a merger or
consolidation, the option shall be subject to such adjustment or amendment as
the Compensation Committee of the Board of Directors deems appropriate and
equitable. Under the terms of the Stock Option Plans, the Committee may also
grant reload options under such circumstances as it deems appropriate.
<PAGE>
14
OPTION EXERCISES AND YEAR-END VALUE TABLE
The table below shows information with respect to options exercised by, and
the value of unexercised options under the Stock Option Plans for, the Named
Executive Officers.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Aggregated Option Exercises in 1998 and Option Value at Year-End 1998
--------------------------------------------------------------------------------------------------------------------
Number of Number of Securities Value of Unexercised In-the-
Shares Value Underlying Unexercised Money Options at
Acquired on Realized Options at 12/31/98 (#) 12/31/98 (2)($)
Name Exercise (#) (1) ($) --------------------------- -------------------------------
Exercisable Unexercisable Exercisable Unexercisable
-------------------------- --------------- ------------ ---------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
A. Malachi Mixon, III 60,000 1,354,386 478,370 275,300 6,017,199 173,731
Gerald B. Blouch - - 211,190 137,850 2,456,423 81,450
Joseph B. Richey, II 50,000 1,128,661 249,090 66,650 3,676,719 47,663
Thomas R. Miklich - - 74,950 94,550 506,550 50,138
Louis F.J. Slangen - - 134,415 43,325 1,801,908 27,975
-------------------------- --------------- ------------ ---------------------------- -------------------------------
</TABLE>
(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 12/31/98" is equal to the
difference between the option exercise price and the closing price of $24.00
of a Common Share on the NASDAQ National Market System on December 31, 1998.
<PAGE>
15
PENSION PLANS
The Company has established a Supplemental Executive Retirement Plan
for all executive officers to supplement other savings plans offered by the
Company to provide a specific level of replacement compensation for retirement.
The annual benefit is a single-life annuity in an amount equal to a portion of
final earnings (maximum is 50% at 15 years of service). This annual benefit is
reduced by the annual value of the Company contributions to the qualified Profit
Sharing Plan, Company contributions to the nonqualified 401(k) Plus and Profit
Sharing Equalization Plans, and one-half of the annual Social Security benefit.
The plan is a nonqualified plan and therefore the benefits accrued under this
plan are subject to the claims of the Company's general creditors in the event
of bankruptcy. The benefits will be paid (i) from an irrevocable grantor trust
funded from the Company's general funds or (ii) be paid directly by the Company
from general funds.
The following table reflects the estimated annual single-life annuity
payment, without reductions for applicable offsets, payable to a participant
retiring in 1998 at age 65.
Pension Table
---------------------------- ---------------------------------------
Years of Service (2)
------------ ------------- ------------
Remuneration (1) 5 10 15
---------------------------- ------------ ------------- ------------
200,000 33,333 66,667 100,000
300,000 50,000 100,000 150,000
400,000 66,667 133,333 200,000
500,000 83,333 166,667 250,000
600,000 100,000 200,000 300,000
700,000 116,667 233,333 350,000
800,000 133,333 266,667 400,000
900,000 150,000 300,000 450,000
1,000,000 166,667 333,333 500,000
1,100,000 183,333 366,667 550,000
1,200,000 200,000 400,000 600,000
---------------------------- ------------ ------------- ------------
(1) Remuneration for purposes of calculating pension benefit based on final
base salary and target bonus.
(2) The pension benefits represent annual single-life annuity values
subject to reduction by applicable offsets (as described above).
For purposes of estimating a pension benefit as of December 31, 1998,
the current years of service credited for the Named Executive
Officers are 18, 9, 14, 6 and 11 years for Messrs. Mixon, Blouch,
Richey, Miklich and Slangen, respectively.
TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
Severance Pay Agreements. To ensure continuity and the continued
dedication of key executives during any period of uncertainty caused by the
possible threat of a takeover, the Company has entered into severance pay
agreements with certain key executives, including each of the Named Executive
Officers. In the event there is a Change of Control (as that term is defined in
the agreements) of the Company and the employment of the contracting executive
terminates under certain conditions described in the agreements at any time
during the three year period following a Change of Control of the Company, the
executive will receive an agreed upon amount of severance pay.
<PAGE>
16
For all of the Named Executive Officers, the severance pay agreements
provide that upon termination for any reason other than death, Disability, by
the Company for Cause or by the executive for other than Good Reason (as such
terms are defined in the agreements), the executive will receive, in addition to
accrued salary, bonus and vacation pay: (a) a lump sum cash amount equal to
three times annual base salary plus the executive's target bonus; (b) continued
participation in the Company's employee welfare benefit plans and other benefit
arrangements for a period of three years following termination; and (c) 401(k),
401(k) Plus, profit sharing and retirement benefits so that the total retirement
benefits received will be equal to the retirement benefits which would have been
received had such executive's employment with the Company continued during the
three year period following termination.
The salary and other benefits provided by the severance pay agreements
will be payable from the Company's general funds. The Company has agreed to
indemnify such executives for any legal expense incurred in the enforcement of
their rights under the severance pay agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors
during 1998 were Whitney Evans, Francis J. Callahan, Jr., Dr. Bernadine P.
Healy and William M. Weber.
During 1996, the Company became an investor in Unique Mobility, Inc., a
world leader in the development of high performance DC Motors. Messr. Richey
serves on the Unique Mobility board of directors. During 1998, the Company
purchased Gearless/Brushless motors from Unique Mobility for approximately
$155,000.
During 1998, the Company purchased travel services from a third party
private aircraft charter company. One of the aircrafts available to be used by
the charter company is owned by Messrs. Mixon, Richey and Callahan. The Company
paid approximately $468,000 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.
As of February, 1999, certain executives were indebted to the company
based on loans approved by the compensation committee pursuant to its executive
compensation philosophy and the Company's overall compensation program. The
loans are for a term of four years and bear interest at the rate of 6%
compounded annually. Loans have been made to Messrs. Mixon, Blouch, Richey,
Miklich and Slangen, in the amounts of $320,000, $100,000, $125,000, $110,000
and $80,000, respectively. No loans were made in 1998.
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected the firm of Ernst &
Young L.L.P., independent public accountants, to examine and audit the annual
financial statements of the Company and its subsidiaries for the fiscal year
ending December 31, 1999. Representatives of Ernst & Young L.L.P. 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 2000 must do so
no later than December 15, 1999. To be eligible for inclusion in the 2000 Proxy
material of the Company, proposals must conform to the requirements set forth in
Regulation 14A under the Exchange Act.
<PAGE>
17
The Company may use its discretion in voting Proxies with respect to
Shareholder proposals not included in the Proxy Statement for the fiscal year
ended December 31, 1999, unless the Company receives notice of such proposals
prior to February 24, 2000.
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
1998 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
One Invacare Way, P.O. Box 4028
Elyria, Ohio 44036-2125
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
/S/ Thomas R. Miklich
----------------------------
Thomas R. Miklich,
Secretary
