<PAGE>
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 (AMENDMENT NO. )
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
[ ] Confidential, For Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
SPARTAN MOTORS, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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<PAGE>
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE>
[SPARTAN MOTORS LOGO]
-------------------------------------------------------
P.O. Box 440 - 1000 Reynolds Rd. - Charlotte, MI 48813
April 30, 1999
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Spartan Motors, Inc. on May 25, 1999, at 5:30 p.m., local time. The
annual meeting will be held at the corporate headquarters of Quality
Manufacturing, Inc., the wholly owned subsidiary of Spartan Motors, Inc.,
located at 1420 Nimitz Avenue, Talladega, Alabama.
On the following pages you will find the Notice of Annual Meeting of
Shareholders and the Proxy Statement. The Proxy Statement and enclosed
form of proxy are being furnished to shareholders on or about April 30,
1999. At the annual meeting, in addition to voting on the election of
directors, approval of the Stock Option and Restricted Stock Plan of 1998
and ratification of the Board of Directors' appointment of Ernst & Young
LLP as independent auditors for the current fiscal year, you will hear a
report on Spartan Motors' activities and outlook for the future.
It is important that your shares be represented at the annual meeting,
regardless of the size of your holdings. Whether or not you plan to attend
the annual meeting, please SIGN, DATE and RETURN AS SOON AS POSSIBLE the
enclosed form of proxy. Sending a proxy will not affect your right to vote
in person in the event you attend the meeting.
Sincerely,
/s/ George W. Sztykiel
George W. Sztykiel
Chairman of the Board of Directors
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YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
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<PAGE>
[SPARTAN MOTORS LOGO]
-------------------------------------------------------
P.O. Box 440 - 1000 Reynolds Rd. - Charlotte, MI 48813
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
The Annual Meeting of Shareholders of Spartan Motors, Inc. will be
held on May 25, 1999, at 5:30 p.m., local time, at the corporate
headquarters of Quality Manufacturing, Inc., the wholly owned subsidiary of
Spartan Motors, Inc., located at 1420 Nimitz Avenue, Talladega, Alabama,
for the following purposes:
(1) To elect two directors for three year terms expiring in 2002.
(2) To approve the Spartan Motors, Inc. Stock Option and Restricted
Stock Plan of 1998.
(3) To ratify the Board of Directors' appointment of Ernst & Young
LLP as independent auditors for the current fiscal year.
(4) To transact such other business as may properly come before the
annual meeting.
Shareholders of record at the close of business on April 5, 1999, are
entitled to notice of and to vote at the annual meeting or any adjournment
of the meeting.
A copy of the Annual Report to Shareholders for the year ended
December 31, 1998, is enclosed with this Notice. The following Proxy
Statement and enclosed form of proxy are being furnished to shareholders on
or about April 30, 1999.
By Order of the Board of Directors
/s/ Richard J. Schalter
Richard J. Schalter
Secretary, Treasurer and
Chief Financial Officer
Charlotte, Michigan
April 30, 1999
<PAGE>
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YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
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<PAGE>
SPARTAN MOTORS, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 1999
PROXY STATEMENT
This Proxy Statement and the enclosed form of proxy are being
furnished to holders of common stock, $.01 par value, ("Common Stock") of
Spartan Motors, Inc. ("Spartan" or the "Company") on and after April 30,
1999, in connection with the solicitation of proxies by the Board of
Directors to be voted at the Annual Meeting of Shareholders to be held on
May 25, 1999, and any adjournment of that meeting. The annual meeting will
be held at the corporate headquarters of Quality Manufacturing, Inc., the
wholly owned subsidiary of Spartan Motors, Inc., located at 1420 Nimitz
Avenue, Talladega, Alabama, at 5:30 p.m., local time.
The purposes of the annual meeting are to consider and vote upon the
election of two directors for three-year terms expiring in 2002, approval
of the Spartan Motors, Inc. Stock Option and Restricted Stock Plan of 1998
and ratification of the Board of Directors' appointment of Ernst & Young
LLP as independent auditors for the current fiscal year. Proxies in the
accompanying form, if properly executed, duly returned to the Company and
not revoked, will be voted at the annual meeting. If a shareholder
specifies a choice, the shares represented by proxy will be voted as
specified. If no choice is specified, the shares represented by proxy will
be voted for the election of all nominees for director named in this Proxy
Statement, for approval of the Spartan Motors, Inc. Stock Option and
Restricted Stock Plan of 1998, for ratification of the Board of Directors'
appointment of Ernst & Young LLP as independent auditors for the current
fiscal year and in accordance with the discretion of the persons named as
proxies on any other matters that may come before the meeting or any
adjournment. For purposes of determining the presence or absence of a
quorum for the transaction of business at the annual meeting, all shares
for which a proxy or vote is received, including abstentions and shares
represented by a broker vote on any matter, will be counted as present and
represented at the meeting.
A proxy may be revoked at any time before it is exercised by written
notice delivered to the Secretary of the Company at 1000 Reynolds Road,
Charlotte, Michigan 48813 or by attending and voting at the annual meeting.
The Company's management does not know of any matter to be presented
for consideration at the annual meeting other than the matters stated in
the Notice of Annual Meeting of Shareholders. If any other matters are
presented, the persons named as proxies will have discretionary authority
to vote in accordance with their judgment.
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors proposes that the following two individuals be
elected as directors for three-year terms expiring at the annual meeting of
shareholders to be held in 2002:
George W. Sztykiel
William F. Foster
Each nominee is presently a director of the Company whose term will
expire at the annual meeting. The persons named as proxies intend to vote
for the election of each of the named nominees. The proposed nominees are
willing to be elected and to serve. In the event that a nominee is unable
to serve or is otherwise unavailable for election, which is not
contemplated, the incumbent Board of Directors may or may not select a
substitute nominee. If a substitute nominee is selected, all proxies will
be voted for the election of the substitute nominee designated by the Board
of Directors. If a substitute is not selected, all proxies will be voted
for the election of the remaining nominees. Proxies will not be voted for
a greater number of persons than the number of nominees named above.
A plurality of the shares present in person or represented by proxy
and voting on the election of directors is required to elect directors.
For the purpose of counting votes on the election of directors,
abstentions, broker non-votes and other shares not voted will not be
counted as shares voted, and the number of shares of which a plurality is
required will be reduced by the number of shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
APPROVAL OF SPARTAN MOTORS, INC. STOCK OPTION
AND RESTRICTED STOCK PLAN OF 1998
INTRODUCTION AND PURPOSE OF THE PLAN
The Board of Directors firmly believes that the Company's long-term
interests are best advanced by aligning the interests of its key leaders
and employees with the interests of its shareholders. Therefore, to
attract and retain directors, officers and other key employees of
exceptional abilities, and in recognition of the significant and
extraordinary contributions to the long-term performance and growth of the
Company made by these individuals, on June 30, 1998, the Board of Directors
adopted, subject to shareholder approval, the Spartan Motors, Inc. Stock
Option and Restricted Stock Plan of 1998 (the "Plan"). The Plan is
intended to replace the Company's Nonqualified Stock Option Plan which
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<PAGE>
INTRODUCTION AND PURPOSE OF THE PLAN (CONTINUED)
expired by its terms in 1998. The Board of Directors believes that the
approval and implementation of the Plan is in the best interests of the
Company and its shareholders and is advisable to make additional shares
available for stock option grants and restricted stock awards.
A maximum of 1,000,000 shares of Common Stock (subject to certain
antidilution adjustments) would be available for stock options and
restricted stock under the Plan. Shares to be issued under the Plan are
expected to be authorized but unissued shares. Because the specific
participants and the market value of Common Stock on the grant date
presently cannot be determined, the benefits or amounts that would be
received by participants under the Plan in the future are not determinable.
Similarly, the benefits or amounts that would have been received by
participants had the Plan been in effect during the last completed fiscal
year are not determinable.
The Plan would not be qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and would not be subject to
the Employee Retirement Income Security Act of 1974. The Company intends
to register shares covered by the Plan under the Securities Act of 1933, as
amended.
The following is a summary of the principal features of the Plan. The
summary is qualified in its entirety by reference to the terms of the Plan,
the complete text of which is attached as Appendix A to this Proxy
Statement.
PARTICIPANTS IN THE PLAN
Under the Plan (with certain limitations discussed below), corporate
directors (currently eight individuals), executive officers, including
those listed in the summary compensation table presented in this Proxy
Statement (currently five individuals) and other full time employees
(currently approximately 830 individuals) of the Company would be eligible
to receive stock options and restricted stock. Other individuals eligible
to participate in the Plan may join the Company in the future. Directors,
officers and key employees of the Company may be deemed to have an interest
in the Plan because they may receive stock options and restricted stock
under the Plan.
ADMINISTRATION OF THE PLAN
The Plan would be administered by the Compensation Committee of the
Board of Directors (the "Compensation Committee") or such other committee
as the Board of Directors may designate. The Compensation Committee is
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<PAGE>
ADMINISTRATION OF THE PLAN (CONTINUED)
intended to consist of two or more directors who are "non-employee
directors," as that term is defined in Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. In addition, at least two of the
directors on the Compensation Committee are intended to be "outside
directors," as that term is defined in the regulations issued pursuant to
Section 162(m) of the Code.
The Compensation Committee would make determinations, subject to the
terms of the Plan, as to the persons to receive stock options and
restricted stock, the amount of stock options and restricted stock to be
granted to each person, the terms of each grant and all other
determinations necessary or advisable for administration of the Plan. The
Compensation Committee may amend the terms of stock options and restricted
stock granted under the Plan from time to time in a manner consistent with
the Plan; provided, that no amendment may be effective relating to a
particular stock option or award of restricted stock without the consent of
the participant, except to the extent the amendment operates solely to the
benefit of the participant. The Compensation Committee would have full
authority and discretion to interpret the Plan.
The Board of Directors may terminate the Plan at any time and may from
time to time amend the Plan as it deems proper and in the best interests of
the Company, provided that no such amendment may impair any outstanding
stock option or award of restricted stock without the consent of the
participant, except according to the terms of the stock option or award of
restricted stock. Subject to shareholder approval, the Plan is effective
as of June 30, 1998, and, unless earlier terminated by the Board of
Directors, the Plan would terminate on June 29, 2008. No award may be made
under the Plan after that date.
The Compensation Committee may provide that upon the occurrence of a
"change in control" of the Company (as defined in the Plan), any or all
stock options or awards of restricted stock would become fully vested
immediately, nonforfeitable or otherwise no longer subject to any
restriction.
STOCK OPTION AWARDS
INTRODUCTION. A stock option is the right to purchase a specified
number of shares of Common Stock for a stated price at specified times.
Certain stock options that may be granted to officers and employees under
the Plan may qualify as incentive stock options as defined in Section
422(b) of the Code ("Incentive Stock Options"). Other stock options would
not qualify as Incentive Stock Options within the meaning of Section 422(b)
of the Code ("Nonqualified Options"). The Company has granted both
Incentive Stock Options and Nonqualified Options to its officers and key
employees as the primary form of long-term, equity-based incentive awards.
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<PAGE>
STOCK OPTION AWARDS (CONTINUED)
STOCK OPTION GRANTS. The Compensation Committee would grant stock
options at any time before termination of the Plan according to its terms.
The Compensation Committee may grant options for any amount of
consideration, or no consideration, as may be determined by the
Compensation Committee. In general, the Compensation Committee expects
that the Company would receive no consideration upon the award of options
other than the services of the recipient. The Compensation Committee would
set forth the terms of individual grants of stock options in stock option
agreements. These stock option agreements would contain such terms,
conditions and restrictions consistent with the provisions of the Plan, as
the Compensation Committee determines to be appropriate. The restrictions
may include vesting requirements to encourage long-term contribution to the
Company.
In addition to the discretionary grants to executive officers and
other key employees, the Plan would provide for automatic grants of stock
options to non-employee directors. Except in limited circumstances, a
stock option to purchase 3,500 shares of stock would be granted
automatically on June 30 and December 31 of each year to each director of
the Company who is, at the time of such grant, a non-employee director.
Stock options granted to non-employee directors would be at an option price
determined by the Compensation Committee subject to the condition that such
price would be equal to or greater than 85% of the fair market value of the
stock at the date of grant of the option. Stock options granted to non-
employee directors would be treated as Nonqualified Options.
A stock option granted to a participant who, at the time of such
grant, owns, together with stock attributed to the participant under
Section 424(d) of the Code, more than 10% of the total combined voting
power of all classes of stock of the Company or any of its subsidiaries
would not be designated as an Incentive Stock Option unless the stock
option agreement provides (i) an exercise price equal to at least 110% of
the market value of the stock, and (ii) that the stock option may not be
exercised after five years from the date of grant.
The Company would not grant any participant in the Plan, with respect
to any calendar year, awards representing more than 50% of the total number
of shares of Common Stock available for awards under the Plan.
A participant may not transfer a stock option except by will or the
laws of descent and distribution, unless the Compensation Committee
otherwise consents or the terms of the option agreement otherwise provide.
EXERCISE PRICE AND PAYMENT. The per share price at which the
participant may exercise his or her option and purchase the underlying
shares would be determined by the Compensation Committee and, in the case
of an Incentive Stock Option, would be a price at least equal to or greater
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<PAGE>
STOCK OPTION AWARDS (CONTINUED)
than the "Market Value" of the Company's stock on the date of grant.
"Market Value" is defined in the Plan to be the average of the highest and
lowest sales prices of the Company's Common Stock on The Nasdaq Stock
Market (or any successor exchange that is the primary stock exchange for
trading of Common Stock) on the date of grant, or if The Nasdaq Stock
Market (or any such successor) is closed on that date, the last preceding
date on which The Nasdaq Stock Market (or any such successor) was open for
trading and on which shares were traded. On April 5, 1999, the Market
Value of the Company's Common Stock was $5.8125 per share. The
Compensation Committee presently does not anticipate granting stock options
at a price less than Market Value.
When exercising all or a portion of a stock option, a participant
could pay the exercise price with cash or, with the consent of the
Compensation Committee, shares of the Company's Common Stock. If shares of
stock are used to pay the exercise price and the Compensation Committee
consents, a participant could use the value of shares received upon
exercise for further exercises in a single transaction. The Compensation
Committee also may authorize payment of all or a portion of the option
price in the form of a promissory note or installments on such terms as the
Compensation Committee may approve. The Board of Directors may restrict or
suspend the power of the Compensation Committee to permit such loans and
require that such loans be adequately secured.
TERM OF STOCK OPTIONS. The time period in which a participant is
permitted to exercise his or her stock option would be determined by the
Compensation Committee. However, the term of an Incentive Stock Option
would not exceed 10 years from the date of the grant and the term of a
Nonqualified Option would not exceed 15 years from the date of the grant.
In general, a stock option would no longer be exercisable at the end
of its stated term. However, if the participant ceases to be employed by
or a director of the Company or any of its subsidiaries for any reason
other than death, total disability, termination for cause or other reason
determined by the Compensation Committee, the participant may exercise the
option for a period of 90 days after such termination of employment or
directorship, but only to the extent the participant was entitled to
exercise the option if employed (or serving as a director) at the date of
exercise, unless the Compensation Committee otherwise consents or the terms
of the option agreement provide otherwise. The Compensation Committee may,
in its sole discretion, provide by resolution or by including provisions in
any option agreement entered into with a participant that the participant
may exercise any outstanding options upon termination due to Early
Retirement, Normal Retirement or Consensual Severance for a period of time
after such termination as may be determined by the Compensation Committee,
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<PAGE>
STOCK OPTION AWARDS (CONTINUED)
provided that (i) such period may not extend beyond the earlier of three
years after the date of termination or the date on which the options expire
by their terms, (ii) the participant may exercise the option only to the
extent the participant was entitled to exercise the option on the date of
termination, and (iii) the participant shall have no further right to
exercise any options after termination due to Early Retirement, Normal
Retirement or Consensual Severance if the Committee determines the
participant has entered into Competition with the Company.
A participant's ability to exercise a stock option would differ upon
the death, disability or termination for cause of the participant. If the
participant dies, the stock option would expire in one year. If the
participant becomes totally disabled (as defined in the Plan), the stock
option would expire in one year from the date of termination due to the
disability. Finally, if the participant is terminated for cause, the stock
option would terminate and the holder would forfeit all rights to exercise
any outstanding options.
For federal income tax purposes, a participant would not recognize
income and the Company would not receive a deduction at the time an
Incentive Stock Option is granted. A participant exercising an Incentive
Stock Option would not recognize income at the time of the exercise. The
difference between the Market Value and the exercise price, however, would
be a tax preference item for purposes of calculating alternative minimum
tax. Upon sale of the stock, as long as the participant held the stock for
at least one year after the exercise of the stock option and at least two
years after the grant of the stock option, the participant's basis would
equal the exercise price and the participant would pay tax on the
difference between the sale proceeds and the exercise price as capital
gain. The Company would receive no deduction for federal income tax
purposes. If, before the expiration of either of the above holding
periods, the participant sold shares acquired under an Incentive Stock
Option, the tax deferral would be lost and the participant generally would
recognize compensation income equal to the difference between the exercise
price and the fair market value at the time of exercise. The Company would
then receive a corresponding deduction for federal income tax purposes.
Additional gains, if any, recognized by the participant would result in the
recognition of short- or long-term capital gain.
Federal income tax laws provide different rules for Nonqualified
Options. Under current federal income tax laws, a participant would not
recognize any income and the Company would not receive a deduction at the
time a Nonqualified Option is granted. If a Nonqualified Option is
exercised, the participant would recognize compensation income in the year
of exercise equal to the difference between the exercise price and the fair
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<PAGE>
STOCK OPTION AWARDS (CONTINUED)
market value on the date of exercise. The Company would receive a
corresponding deduction for federal income tax purposes. The participant's
tax basis in the shares acquired would be increased by the amount of
compensation income recognized. Sale of the stock after exercise would
result in recognition of short- or long-term capital gain or loss.
TAX BENEFIT RIGHTS
In addition to the authority to grant stock options under the Plan,
the Compensation Committee also could grant tax benefit rights, which would
be subject to such terms and conditions as the Committee determined
appropriate. The Company currently has no intention to grant such rights.
A tax benefit right is a cash payment received by a participant upon
exercise of a stock option. The amount of the payment would not exceed the
amount determined by multiplying the ordinary income realized by the
participant (and deductible by the Company) upon exercise of a Nonqualified
Option, or upon a disqualifying disposition of an Incentive Stock Option,
by the maximum federal income tax rate (including any surtax or similar
charge or assessment) for corporations plus the applicable state and local
tax against which the Company is entitled to a deduction or credit by
reason of exercise of the stock option or disqualifying disposition.
Unless the Compensation Committee provides otherwise, the net amount of a
tax benefit right, subject to withholding, could be used to pay a portion
of the exercise price. Tax benefit rights could be issued under the Plan
with respect to stock options granted not only under the Plan but also with
respect to existing or future stock options awarded under any other plan of
the Company that has been approved by the shareholders as of the date of
the Plan.
RESTRICTED STOCK AWARDS
Finally, the Plan would allow the Compensation Committee to award
restricted stock, subject to such terms and conditions that the
Compensation Committee from time to time determined. As with stock option
grants, the Compensation Committee would set forth the terms of individual
awards of restricted stock in restricted stock agreements. Restricted
stock granted by the Compensation Committee would vest in accordance with
restricted stock agreements. Unless the Compensation Committee provides
otherwise in a restricted stock agreement, if a participant's employment is
terminated during the restricted period set by the Compensation Committee
for any reason other than death, total disability, retirement ("Early" or
"Normal" as defined in the Plan) or termination for cause, the
participant's restricted stock would be entirely forfeited. If the
participant's employment terminates during the restricted period by reason
of death or total disability, the restrictions on the participant's shares
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<PAGE>
RESTRICTED STOCK AWARDS (CONTINUED)
would terminate automatically and the restricted stock would vest as of the
date of termination. Additionally, the Compensation Committee may, in its
sole discretion, provide provisions in any restricted stock agreement
permitting, or by resolution approve, vesting of all or part of any
restricted stock awarded to a participant upon termination due to Early
Retirement, Normal Retirement, Consensual Severance or a Change in Control.
Without Compensation Committee authorization, a recipient of
restricted stock would not be allowed to sell, exchange, transfer, pledge,
assign or otherwise dispose of the stock other than to the Company or by
will or the laws of descent and distribution. In addition, the
Compensation Committee could impose other restrictions on shares of
restricted stock. Holders of restricted stock would enjoy all other rights
of a shareholder with respect to restricted stock, including the right to
vote restricted shares at shareholders' meetings and the right to receive
all dividends paid with respect to shares of Common Stock. Any securities
received by a holder of restricted stock pursuant to a stock dividend,
stock split, recapitalization, merger, consolidation, combination or
exchange of shares would be subject to the same terms, conditions and
restrictions that are applicable to the restricted stock for which the
shares are received.
Generally, a participant would not recognize income upon the award of
restricted stock. However, a participant would be required to recognize
compensation income on the value of restricted stock at the time the
restricted stock vests (when the restrictions lapse). At the time the
participant recognizes compensation income, the Company would be entitled
to a corresponding deduction for federal income tax purposes. If
restricted stock is forfeited by a participant, the participant would not
recognize income and the Company would not receive a deduction. Before the
lapse of restrictions, dividends paid on restricted stock would be reported
as compensation income to the participant and the Company would receive a
corresponding deduction.
A participant could, within 30 days after the date of an award of
restricted stock, elect to report compensation income for the tax year in
which the award of restricted stock occurs. If the participant makes such
an election, the amount of compensation income would be the value of the
restricted stock at the time of the award. Any later appreciation in the
value of the restricted stock would be treated as capital gain and realized
only upon the sale of the restricted stock. Dividends received after such
an election would be taxable as dividends and not treated as additional
compensation income. If, however, restricted stock is forfeited after the
participant makes such an election, the participant would not be allowed
any deduction for the amount earlier taken into income. Upon the sale of
restricted stock, a participant would realize capital gain (or loss) in the
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RESTRICTED STOCK AWARDS (CONTINUED)
amount of the difference between the sale price and the value of the stock
previously reported by the participant as compensation income.
Section 162(m) of the Code, which was adopted in 1993 and implemented
in phases through 1997, limits to $1 million the annual income tax
deduction that may be claimed by a publicly held corporation for
compensation paid to its chief executive officer and to the four most
highly compensated officers other than the chief executive officer.
Qualified "performance-based" compensation is exempt from the $1 million
limit and may be deducted even if other compensation exceeds $1 million.
The Plan is intended to provide performance-based compensation under
Section 162(m) to permit compensation associated with stock options and
restricted stock awarded under the Plan to be tax deductible while
allowing, as nearly as practicable, the continuation of the Company's
preexisting practices with respect to the award and taxation of stock
options and restricted stock.
Whenever stock options are issued or exercised under the Plan or upon
a disqualifying disposition of an Incentive Stock Option, the Company may,
if appropriate, withhold from any cash otherwise payable to the participant
or require the participant to remit to the Company an amount sufficient to
satisfy all applicable federal, state and local withholding taxes.
Withholding may be satisfied by withholding Common Stock to be received
upon exercise of a stock option or by delivery to the Company of shares of
previously owned Common Stock.
The affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy and voting on this
proposal is required to approve the Plan. For purposes of counting votes
on this proposal, abstentions, broker non-votes and other shares not voted
will not be counted as shares voted on the proposal, and the number of
shares of which a majority is required will be reduced by the number of
shares not voted.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE STOCK OPTION AND RESTRICTED STOCK PLAN OF 1998
VOTING SECURITIES
Holders of record of Common Stock, at the close of business on
April 5, 1999, are entitled to notice of and to vote at the Annual Meeting
of Shareholders and any adjournment of the meeting. As of April 5, 1999,
there were 12,577,165 shares of Common Stock outstanding, each having one
vote on each matter presented for shareholder action. Shares cannot be
voted unless the shareholder is present at the meeting or represented by
proxy.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to each person known to
the Company to have been the beneficial owner of more than 5% of the
Company's outstanding shares of Common Stock as of April 5, 1999:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
--------------------------------------
SOLE VOTING SHARED VOTING OR
NAME AND ADDRESS OF AND DISPOSITIVE DISPOSITIVE PERCENT OF
BENEFICIAL OWNER POWER<F1> POWER<F2> CLASS
- -------------------------- --------------- ---------------- ----------
<S> <C> <C> <C>
George W. Sztykiel 516,327 442,968 7.6%
1000 Reynolds Road
Charlotte, Michigan 48813<F3>
William F. Foster 1,018,067 -- 8.1%
1000 Reynolds Road
Charlotte, Michigan 48813<F3>
David L. Babson and Company
Incorporated 1,298,100 -- 10.3%
One Memorial Drive
Cambridge, Massachusetts 02142-1300<F4>
Dimensional Fund Advisors, Inc. 1,012,750 -- 8.1%
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401<F5>
<FN>
- --------------------
<F1> These numbers include shares subject to options that are exercisable
within 60 days after April 5, 1999, granted under the Company's 1984
and 1994 Incentive Stock Options Plans and the 1988 Nonqualified Stock
Option Plan.
<F2> These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint
ownership, trust or other contract or property right, and shares held
by spouses, children or other relatives over whom the listed person
may have substantial influence by reason of relationship.
<F3> Based on information provided by each individual listed.
-11-
<PAGE>
<F4> Based on information set forth in Schedule 13G dated February 1, 1999.
The Schedule 13G indicates that David L. Babson and Company
Incorporated ("DLB") is considered the beneficial owner of
1,298,100 shares of the Company's Common Stock as a result of acting
as investment adviser to various clients. The Schedule 13G indicates
that DLB has sole voting power over an aggregate of 1,298,100 shares
of Common Stock and sole dispositive power over 1,298,100 shares of
Common Stock.
<F5> Based on information set forth in Schedule 13G dated February 11,
1999. The Schedule 13G indicates that Dimensional Fund Advisors, Inc.
("DFA") is considered the beneficial owner of 1,012,750 shares of the
Company's Common Stock as a result of acting as investment adviser to
various clients. The Schedule 13G indicates that DFA has sole voting
power over an aggregate of 1,012,750 shares of Common Stock and sole
dispositive power over 1,012,750 shares of Common Stock.
</FN>
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common
Stock beneficially owned as of April 5, 1999, by each of the Company's
directors and nominees for director, each of the named executive officers
and all directors and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP <F1>
-------------------------------------------------------
SOLE VOTING AND SHARED VOTING PERCENT
NAME OF DISPOSITIVE OR DISPOSITIVE TOTAL BENEFICIAL OF
BENEFICIAL OWNER POWER<F2> POWER<F3> OWNERSHIP<F2> CLASS
--------------------- --------------- ------------- ---------------- -------
<S> <C> <C> <C> <C> <C>
George W. Sztykiel 516,327 442,968 959,295 7.6%
John E. Sztykiel 158,837 121,113 279,950 2.2%
Anthony G. Sommer 105,500 -- 105,500 <F*>
William F. Foster 1,018,067 -- 1,018,067 8.1%
Roger B. Burrows 41,800 -- 41,800 <F*>
George Tesseris 64,000 1,000 65,000 <F*>
Charles E. Nihart 49,750 -- 49,750 <F*>
David R. Wilson 18,500 -- 18,500 <F*>
James C. Penman 14,000 -- 14,000 <F*>
Richard J. Schalter 20,900 -- 20,900 <F*>
All directors and executive 2,007,681 565,081 2,572,762 20.5%
officers as a group
-12-
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT (CONTINUED)
<FN>
- -------------------------
<F*>Less than 1%.
<F1> The number of shares stated is based on information provided by each
person listed and includes shares personally owned of record by the
person and shares which, under applicable regulations, are considered
to be otherwise beneficially owned by the person.
<F2> These numbers include shares held directly and shares subject to
options which are exercisable within 60 days after April 5, 1999, that
were awarded under the Company's 1984 and 1994 Incentive Stock Option
Plans and the 1988 Nonqualified Stock Option Plan. The number of
shares subject to stock options for each listed person is shown below:
George W. Sztykiel 77,500
John E. Sztykiel 110,895
Anthony G. Sommer 92,500
William F. Foster 103,250
Roger B. Burrows 41,500
George Tesseris 46,000
Charles E. Nihart 46,000
David R. Wilson 17,500
James C. Penman 14,000
Richard J. Schalter 20,000
All directors and officers
as a group 569,145
<F3> These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint
ownership, trust or other contract or property right, and shares held
by spouses, children or other relatives over whom the listed person
may have substantial influence by reason of relationship.
</FN>
</TABLE>
BOARD OF DIRECTORS
The Company's Board of Directors currently consists of eight
directors, two of whom are standing for reelection. The Board of Directors
is divided into three classes, with each class as nearly equal in number as
possible. Each class of directors serves a successive three-year term.
Biographical information concerning the Company's directors and
nominees who are nominated for election to the Board of Directors is
-13-
<PAGE>
BOARD OF DIRECTORS (CONTINUED)
presented below. Except as otherwise indicated, all directors and nominees
for director have had the same principal employment for over five years.
NOMINEES FOR ELECTION AS DIRECTORS TO TERMS EXPIRING IN 2002
GEORGE W. SZTYKIEL (age 69) has been a director since 1975.
Mr. George Sztykiel is a founder of the Company and has served as Chairman
of the Board and Chief Executive Officer of the Company since December
1992. Mr. George Sztykiel served as President of the Company from
September 1975 to December 1992. Mr. George Sztykiel is the father of
Mr. John Sztykiel, President, Chief Operating Officer and a director of the
Company.
WILLIAM F. FOSTER (age 57) has been a director since 1978.
Mr. Foster, a firefighter for over 34 years, is a founder of the Company
and has served as Staff Engineer and Vice President since 1976. From 1965
to 1975, Mr. Foster served as a designer draftsman for Diamond Reo Trucks,
Inc.
DIRECTORS WITH TERMS EXPIRING IN 2000
JOHN E. SZTYKIEL (age 42) has been a director since 1988. Mr. John
Sztykiel has been President and Chief Operating Officer of the Company
since December 1992. Mr. John Sztykiel previously served as the Executive
Vice President and Vice President of Sales of the Company from 1989 to
1990. From 1985 to 1989, Mr. John Sztykiel was the Director of Marketing-
Diversified Products Group of the Company. Mr. John Sztykiel is the son of
George W. Sztykiel, Chairman of the Board, Chief Executive Officer and a
director of the Company.
CHARLES E. NIHART (age 62) has been a director since 1984.
Mr. Nihart, a certified public accountant consultant, established the
certified public accounting firm of Nihart and Nihart, P.C., in 1972. The
Lansing offices of Nihart and Nihart merged with Maner, Costerison and
Ellis, P.C., C.P.A. on January 1, 1989. Mr. Nihart is currently affiliated
with the firm on a consulting basis. Mr. Nihart also is the owner and
President of AARO Rentals, Inc., in Lansing, Michigan, a rental company of
heavy duty equipment in Lansing, Michigan.
JAMES C. PENMAN (age 41) has been a director since March 1997.
Mr. Penman has served as Director of Corporate Finance with Roney & Co., a
regional investment banking firm, since April 1993. From April 1993 until
April 1995, Mr. Penman was a Senior Vice President of Investment Banking
with First of Michigan Corporation.
-14-
<PAGE>
BOARD OF DIRECTORS (CONTINUED)
DIRECTORS WITH TERMS EXPIRING IN 2001
ANTHONY G. SOMMER (age 40) has been a director since 1988. Mr. Sommer
has been the Executive Vice President of the Company since December 1992.
Mr. Sommer previously served as Chief Financial Officer of the Company from
December 1992 until October 1996. From 1987 to December 1992 Mr. Sommer
served as Corporate Secretary/Treasurer of the Company and, from 1982 to
1987, as Controller of the Company.
GEORGE TESSERIS (age 67) has been a director since 1984. Mr. Tesseris
has been a practicing partner with the law firm of Tesseris and Crown,
P.C., since 1981. From 1972 to 1981, Mr. Tesseris was a partner in the law
firm of Church, Wyble, Kritselis and Tesseris.
DAVID R. WILSON (age 63) has been a director since 1996. Mr. Wilson
is an independent consultant to the automotive and commercial vehicle
industry. From 1982 to 1993, Mr. Wilson was Vice President of Volvo GM
Heavy Duty Truck Corporation and from 1979 to 1982, Mr. Wilson served as
general manager of field operations for Mercedes Benz of North America.
BOARD MEETINGS AND COMMITTEES
The Company's Board of Directors held 10 meetings during 1998. Each
director attended at least 75% of the aggregate of (i) the total number of
Board of Directors meetings and (ii) the total number of meetings held by
all committees of the Board of Directors on which each served (during the
periods that each served).
The Board of Directors has the following standing committees:
AUDIT COMMITTEE. The Audit Committee is responsible for the following
activities: (i) recommending to the Board of Directors the selection of
independent auditors; (ii) reviewing and approving the scope of the yearly
audit plan and proposed budget for audit fees; (iii) reviewing the results
of the annual audit with the independent auditors; (iv) reviewing the
Company's internal controls with the independent auditors; (v) reviewing
non-audit services and special engagements to be performed by independent
auditors; and (vi) reporting to the Board of Directors on the Audit
Committee's activities and findings and making recommendations to the Board
of Directors on these findings. Messrs. Nihart (Chairman), Tesseris and
Penman presently are members of the Audit Committee. The Audit Committee
met once during 1998.
-15-
<PAGE>
BOARD MEETINGS AND COMMITTEES (CONTINUED)
COMPENSATION COMMITTEE. The responsibilities of the Compensation
Committee include: (i) recommending the cash and other incentive
compensation, if any, to be paid to the Company's executive officers;
(ii) reviewing and making recommendations to the Board of Directors
regarding stock options awarded under the 1994 Incentive Stock Option Plan
and the 1988 Nonqualified Stock Option Plan; and (iii) reviewing all
material proposed option plan changes. The Compensation Committee
determines the key employees to whom options will be granted, the number of
shares covered by each option, the exercise price of each option and other
matters associated with option awards. Messrs. Tesseris (Chairman), Nihart
and Penman are presently members of the Compensation Committee. The
Compensation Committee met once during 1998.
The Board of Directors does not have a standing nominating committee.
The Company will consider nominees for election to the Board of Directors
submitted by shareholders. The Company's Bylaws provide that any
shareholder entitled to vote generally in the election of directors may
nominate one or more persons for election as directors at a meeting only if
written notice of such shareholder's intent to make such nomination or
nominations has been given to the Secretary of the Company not less than
120 days before the date of notice of the meeting in the case of an annual
meeting, and not more than seven days following the date of notice of the
meeting in the case of a special meeting. Each such notice to the
Secretary shall set forth: (i) the name, age, business address and
residence address of each nominee proposed in the notice; (ii) the
principal occupation or employment of each nominee; (iii) the number of
shares of capital stock of the Company which are beneficially owned by each
nominee; (iv) a statement that the nominee is willing to be nominated; and
(v) such other information concerning each nominee as would be required
under the rules of the Securities and Exchange Commission in a proxy
statement soliciting proxies for the election of such nominees.
COMPENSATION OF DIRECTORS
Directors receive a $1,000 quarterly retainer fee plus an expense
reimbursement of $100 for each meeting of the Board of Directors that the
director attends.
EXECUTIVE OFFICERS
The Company's executive officers are appointed annually by, and serve
at the pleasure of, the Board of Directors. Biographical information
concerning executive officers as of December 31, 1998, who were not
-16-
<PAGE>
EXECUTIVE OFFICERS (CONTINUED)
directors or nominated for election to the Board of Directors is presented
below.
ROGER B. BURROWS (age 51) has been Vice President of Sales and
Marketing since January 1995, and previously served as Director of
Marketing, Sales and Service from August 1993 to January 1995. Mr. Burrows
served as National Accounts Sales Manager at General Motors Corporation for
23 years before joining the Company. Mr. Burrows also has been with the
Michigan Army National Guard since 1969 and currently holds the position of
General.
RICHARD J. SCHALTER (age 45), a certified public accountant, has
served as Secretary, Treasurer and Chief Financial Officer since November
1996. From June 1989 until November 1996, Mr. Schalter served as Treasurer
and Director of Finance and Administration of Great Lakes Hybrids, an
international distributor and subsidiary of KWS a.g. From March 1986 to
June 1989, Mr. Schalter served as Treasurer and financial administrator for
Martin Systems, Inc., a worldwide supplier of electrical controls and
machine operating systems.
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table shows certain information concerning the
compensation earned during each of the last three fiscal years in the
period ended December 31, 1998, by the Chief Executive Officer and each of
the Company's four most highly compensated executive officers who served in
positions other than the Chief Executive Officer at the end of the last
completed fiscal year:
-17-
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------------------ ------------
NUMBER OF
SECURITIES
NAME AND UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY<F1> BONUS <F2> OPTIONS COMPENSATION<F3>
---------------------- ---- ---------- ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
George W. Sztykiel
Chairman of the 1998 $117,507 $ 77,692 12,500 $ 2,349
Board, Chief Executive 1997 107,061 47,216 12,500 2,205
Officer and Director 1996 100,490 61,662 12,500 2,185
John E. Sztykiel 1998 $143,750 $111,178 15,000 $ 2,896
President, Chief 1997 131,787 67,461 15,000 2,726
Operating Officer 1996 122,502 88,172 15,000 2,683
and Director
Anthony G. Sommer 1998 $129,685 $ 79,831 12,500 $ 2,600
Executive Vice 1997 118,309 47,811 12,500 2,441
President 1996 95,657 61,226 12,500 2,073
Roger B. Burrows 1998 $ 85,911 $ 66,727 7,500 $ 1,777
Vice President Sales 1997 81,718 30,896 7,500 1,716
and Marketing 1996 74,171 40,014 7,500 1,677
Richard J. Schalter 1998 $116,352 $ 68,813 7,500 $ 2,325
Secretary, Treasurer and 1997 104,869 33,528 7,500 1,739
Chief Financial Officer<F4> 1996 9,126 -- 5,000 --
<FN>
- -------------------
<F1> Includes director fees paid by the Company.
<F2> Includes payments under the Company's Quarterly Bonus Program in which
all employees of the Company participate.
<F3> Consists solely of the Company's contribution to its profit-sharing
plans.
<F4> Mr. Schalter began his employment with the Company on November 18,
1996.
</FN>
</TABLE>
-18-
<PAGE>
The Company's stock option plans are administered by the Compensation
Committee of the Board of Directors which has authority to determine the
individuals to whom and the terms upon which options will be granted, the
number of shares to be subject to each option and the form of consideration
that may be paid upon the exercise of an option.
The following table sets forth information regarding stock options
granted to the Chief Executive Officer and the named executive officers
during the fiscal year ended December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS IN FISCAL PRICE PER EXPIRATION ----------------------
NAME GRANTED<F1> YEAR SHARE DATE 0% 5% 10%
- -------------------- ----------- ----------- --------- ---------- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
George W. Sztykiel 12,500 2.4% $6.188 August 12, 2008 $0 $48,645 $123,276
John E. Sztykiel 15,000 2.9% $6.188 August 12, 2008 $0 $58,374 $147,931
Anthony G. Sommer 12,500 2.4% $6.188 August 12, 2008 $0 $48,645 $123,276
Roger B. Burrows 7,500 1.4% $6.188 August 12, 2008 $0 $29,187 $ 73,966
Richard J. Schalter 7,500 1.4% $6.188 August 12, 2008 $0 $29,187 $ 73,966
<FN>
- -------------------
<F1> On August 12, 1998, the Company granted options to purchase shares of
the Company's Common Stock over a 10 year period. Executive officers
of the Company are entitled to exercise their options at a price
determined by the Compensation Committee, which was at least 85% of
the fair market value of Common Stock on August 12, 1998. Options
terminate, subject to certain limited exercise provisions, in the
event of death or termination of employment or directorship.
</FN>
</TABLE>
The following table summarizes the total number of options held by the
Chief Executive Officer and the named executive officers as of December 31,
1998:
-19-
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR<F1>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL YEAR-END
---------------------------
NAME EXERCISABLE UNEXERCISABLE
- ------------------- ----------- -------------
<S> <C> <C>
George W. Sztykiel 77,500 --
John E. Sztykiel 110,895 --
Anthony G. Sommer 92,500 --
Roger B. Burrows 41,500 --
Richard J. Schalter 20,000 --
<FN>
- -------------------
<F1> No named executive officer exercised any stock options in 1998.
<F2> On April 5, 1999, the closing market price of the Company's Common
Stock was $5.8125. The numbers shown reflect the value of options at
April 5, 1999.
</FN>
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
develops and recommends to the Board of Directors the executive
compensation policies of the Company. The Committee also administers the
Company's executive compensation program and recommends for approval to the
Board of Directors the compensation to be paid to the Chief Executive
Officer and other named executive officers. The Committee consists of
three directors, none of whom is a current or former employee of the
Company.
COMPENSATION PHILOSOPHY
The Committee's executive compensation philosophy is to provide
competitive levels of compensation as well as incentives to achieve
superior financial performance. The Committee's policies are designed to
achieve the following five primary objectives: (i) integration of
management's compensation with the achievement of the Company's annual and
long-term performance goals; (ii) reward above-average corporate
performance; (iii) recognition of individual initiative and achievement;
(iv) attracting and retaining qualified management; and (v) alignment of
-20-
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION (CONTINUED)
the interests of management with those of shareholders to encourage
achievement of continuing increases in shareholder value. The Committee
sets management compensation at levels which the Committee believes are
consistent with other companies in the Company's industry.
In 1994, the Company engaged Management Resource Center, Inc., a
compensation consulting firm, to review its compensation policies and
competitive compensation levels. The Committee has and currently intends
to continue to consider the recommendations of Management Resource Center,
Inc. in developing the Company's executive compensation program and making
specific compensation decisions.
Executive compensation consists of both cash and equity, and includes:
(i) base salary; (ii) profit-sharing incentive bonus; and (iii) long-term
incentive through participation in stock option plans. In addition, the
Company provides various benefits to its employees, including the Company's
executive officers.
In 1993, Congress amended the Internal Revenue Code of 1986, as
amended, to add Section 162(m) which provides that publicly held
corporations may not deduct compensation paid to certain executive officers
in excess of $1 million annually, with certain exemptions. The Company has
examined its executive compensation policies in light of Section 162(m) and
the regulations adopted by the Internal Revenue Service to implement this
section. It is not expected that any portion of the Company's deduction
for employee remuneration will be disallowed in 1999 or in future years by
reason of awards granted in 1999.
BASE SALARY
To attract and retain well qualified executives, it is the Committee's
policy to establish base salaries at levels and provide benefit packages
that are considered to be competitive. Base salaries for executive
officers are determined initially by evaluating the responsibilities of the
position and the experience of the individual, and by reference to the
competitive marketplace for management talent, including a comparison of
base salaries for comparable positions at similar companies within the
custom chassis industry. Some of the companies used for this comparison
are included in the indices used in the Stock Price Performance Graph
presented in this Proxy Statement.
The Committee believes that base salaries should approximate the mid-
point of the range of salaries paid for similar positions by companies in
similar industries. The Committee may recommend adjustments on a periodic
basis to maintain the desired levels of base salaries for the Company's
executives.
-21-
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION (CONTINUED)
The Committee determines annual salary adjustments by evaluating the
competitive marketplace, the performance of the Company and the executive
officer, as well as any increased responsibilities assumed by the executive
officer. Salary adjustments are determined and implemented generally on a
12-month cycle.
ANNUAL INCENTIVE BONUS
The Committee selects members of management to participate in the
Company's incentive bonus program. The Committee considers several factors
in determining the annual incentive bonus, if any, paid to management,
including achievement of the Company's strategic and operating goals and an
individual's achievement of personal goals. In addition, the Company
considers factors such as net earnings per share, revenues, return on
assets and return on equity.
STOCK OPTION PLANS
The Company currently grants stock options under the 1994 Incentive
Stock Option Plan and, until its expiration in 1998, granted stock options
under the 1988 Nonqualified Stock Option Plan. The Company's stock option
plans allow officers and key employees to purchase Common Stock of the
Company at a price established on the date of grant. Options granted under
the 1988 Nonqualified Stock Option Plan were required to have an exercise
price equal to at least 85% of the fair market value of the Company's
Common Stock. Incentive Stock Options granted under the 1994 Incentive
Stock Option Plan must have an exercise price equal to at least 100% of the
fair market value. The Committee administers all aspects of the plans and
reviews, modifies (to the extent appropriate) and approves management's
recommendations for awards.
Absent unusual circumstances, the Committee historically has granted
stock options on an annual basis to officers, key employees and directors
who are employees of the Company and on a biannual basis to directors who
are not employees of the Company. The Company's stock option plans are
designed to encourage long-term investment in the Company by participating
executives and key employees, more closely align executive and shareholder
interests and reward executive officers and other key employees for
building shareholder value. The Committee believes stock ownership by
management and other key employees is beneficial.
In determining the number of options to be awarded to an officer or
key employee, the Committee takes into consideration the levels of
responsibility and compensation of the individual. The Committee also
considers the recommendations of management (other than awards to the Chief
-22-
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION (CONTINUED)
Executive Officer), the individual performance of the officer or employee
and the number of shares or other compensation awarded to the officer or
employee at other companies. Generally, both the number of shares granted
and their proportion relative to the total number of shares granted
increase corresponding to the level of a participant's responsibility.
Although the Committee also may consider the number of options already held
by an officer or employee, this factor is not considered to be particularly
important by the Committee in determining the amounts of awards.
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is based upon the policies
and objectives outlined above for all executive officers. Mr. George
Sztykiel's base salary in 1998 was approximately 9.8% above his 1997
salary. Mr. Sztykiel's annual incentive bonus award for 1998 was $77,692
which includes the Company's quarterly bonus program and his annual
incentive bonus. During 1998, Mr. Sztykiel was awarded options to purchase
12,500 shares of the Company's Common Stock.
All recommendations of the Committee attributable to 1998 compensation
were unanimous and were approved and adopted by the Board of Directors
without modification.
Respectfully submitted,
George Tesseris, Chairman
Charles E. Nihart
James C. Penman
-23-
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
on Spartan's Common Stock to the CRSP Total Return Index for The Nasdaq
Stock Market ("CRSP NASDAQ") and the CRSP Total Return Index for Trucking
and Transportation Stocks reported on The Nasdaq Stock Market ("CRSP T&T"),
over a five-year period ended December 31, 1998, using 1993 as a base
period. The CRSP NASDAQ is a broad-based equity market index developed by
the Center for Research in Security Prices at the University of Chicago.
The CRSP T&T is comprised of companies with a market capitalization similar
to that of the Company and also is developed by the Center for Research in
Security Prices. The CRSP NASDAQ index and CRSP T&T index both assume
dividend reinvestment. Cumulative total shareholder return is measured by
dividing (i) the sum of: (a) the cumulative amount of dividends for the
measurement period, assuming dividend reinvestment; and (b) the difference
between the share price at the end and the beginning of the measurement
period, by (ii) the share price at the beginning of the measurement period.
COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL SHAREHOLDER RETURN
[GRAPH]
The dollar values for total shareholder return plotted in the graph
above are shown in the table below:
<TABLE>
<CAPTION>
FISCAL
YEAR-END SPARTAN CRSP NASDAQ CRSP T&T
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
1993 $ 100.00 $ 100.00 $ 100.00
1994 $ 78.96 $ 97.75 $ 90.68
1995 $ 64.94 $ 138.26 $ 105.80
1996 $ 39.85 $ 170.01 $ 116.78
1997 $ 36.89 $ 208.58 $ 149.48
1998 $ 34.61 $ 293.21 $ 132.48
</TABLE>
-24-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
James C. Penman, a director of the Company, is the Director of
Corporate Finance at Roney & Co. Mr. Penman received a consulting retainer
fee from the Company during 1998. This fee was for services rendered as an
advisor on acquisition opportunities for the Company. More specifically,
Mr. Penman participated as a consultant with the Company on the acquisition
of Road Rescue, Inc.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Spartan's directors and
officers and persons who beneficially own more than 10% of the outstanding
shares of Common Stock to file reports of ownership and changes in
ownership of shares of Common Stock with the Securities and Exchange
Commission (the "SEC"). Directors, officers and greater than 10%
beneficial owners are required by SEC regulations to furnish the Company
with copies of all Section 16(a) reports they file with the SEC. Based
solely upon the Company's review of the copies of such reports received by
it, or written representations from certain reporting persons that no
reports on Form 5 were required for those persons for the 1998 fiscal year,
the Company believes that its directors and officers complied with all
applicable filing requirements during the Company's last fiscal year.
SELECTION OF INDEPENDENT AUDITORS
Subject to the approval of shareholders, the Company has appointed
Ernst & Young LLP as independent auditors for the Company for its 1999
fiscal year. Representatives of Ernst & Young LLP are expected to be
present at the annual meeting, will have the opportunity to make a
statement if they desire to do so and are expected to be available to
respond to appropriate questions from shareholders.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
-25-
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the annual meeting
of shareholders in the year 2000 and that a shareholder would like to have
included in the proxy statement and form of proxy relating to that meeting
must be received by the Company for consideration not later than January 1,
2000, to be considered for inclusion in the proxy statement and form of
proxy relating to that meeting. Such proposals of shareholders should be
made in accordance with Securities and Exchange Commission Rule 14a-8. All
other proposals of shareholders that are intended to be presented at the
annual meeting in the year 2000 must be received by the Company not later
than April 10, 2000 or they will be considered untimely.
SOLICITATION OF PROXIES
Solicitation of proxies will be made initially by mail. In addition,
directors, officers and employees of the Company and its subsidiaries may
solicit proxies by telephone or facsimile or in person without additional
compensation. Proxies may be solicited by nominees and other fiduciaries
who may mail materials to or otherwise communicate with the beneficial
owners of shares held by them. The Company will bear all costs of the
preparation and solicitation of proxies, including the charges and expenses
of brokerage firms, banks, trustees or other nominees for forwarding proxy
material to beneficial owners.
By Order of the Board of Directors
/s/ Richard J. Schalter
Richard J. Schalter
Secretary and Treasurer
Charlotte, Michigan
April 30, 1999
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APPENDIX A
SPARTAN MOTORS, INC.
STOCK OPTION AND RESTRICTED STOCK PLAN OF 1998
SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN
1.1 ESTABLISHMENT OF PLAN. The Company hereby establishes the Stock
Option and Restricted Stock Plan of 1998 (the "PLAN") for its directors,
corporate and Subsidiary officers and other key employees. The Plan
permits the grant or award of Options, Restricted Stock and Tax Benefit
Rights.
1.2 PURPOSE OF PLAN. The purpose of the Plan is to provide
directors, officers and key employees of the Company and its Subsidiaries
with an increased incentive to make significant contributions to the
long-term performance and growth of the Company and its Subsidiaries, to
join the interests of directors, officers and key employees with the
interests of the Company's shareholders through the opportunity for
increased stock ownership and to attract and retain directors, officers and
key employees. The Plan is further intended to provide flexibility to the
Company in structuring long-term incentive compensation to best promote the
foregoing objectives. Within that context, the Plan is intended to provide
performance-based compensation under Section 162(m) of the Code and shall
be interpreted, administered and amended if necessary to achieve that
purpose.
SECTION 2
DEFINITIONS
The following words have the following meanings unless a different
meaning is plainly required by the context:
2.1 "Act" means the Securities Exchange Act of 1934, as amended.
2.2 "Board" means the Board of Directors of the Company.
2.3 Unless otherwise defined in the grant or agreement applicable to
an Incentive Award, "Change in Control" means (a) the failure of the
Continuing Directors at any time to constitute at least a majority of the
members of the Board; (b) the acquisition by any Person other than an
Excluded Holder of beneficial ownership (within the meaning of Rule 13d-3
issued under the Act) of 20% or more of the outstanding Common Stock or the
combined voting power of the Company's outstanding securities entitled to
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vote generally in the election of directors; (c) the approval by the
shareholders of the Company of a reorganization, merger or consolidation,
unless with or into a Permitted Successor; or (d) the approval by the
shareholders of the Company of a complete liquidation or dissolution of the
Company or the sale or disposition of all or substantially all of the
assets of the Company other than to a Permitted Successor.
2.4 "Code" means the Internal Revenue Code of 1986, as amended.
2.5 "Committee" means the Compensation Committee of the Board or such
other committee as the Board shall designate to administer the Plan. The
Committee shall consist of at least two members of the Board who shall be
"Non-Employee Directors" as defined below and "outside directors" as
defined in the regulations issued under Section 162(m) of the Code.
2.6 "Common Stock" means the Common Stock of the Company, $.01 par
value.
2.7 "Company" means Spartan Motors, Inc., a Michigan corporation, and
its successors and assigns.
2.8 "Competition" means participation, directly or indirectly, in the
ownership, management, financing or control of any business that is the
same as or similar to the present or future businesses of the Company or
any Subsidiary. Such participation may be by way of employment, consulting
services, directorship or officership. Ownership of less than 3% of the
shares of any corporation whose shares are traded publicly on any national
or regional stock exchange or over the counter shall not be deemed
Competition.
2.9 "Consensual Severance" means the voluntary termination of all
employment by the Participant with the Company or any of its Subsidiaries
that the Committee determines to be in the best interests of the Company.
2.10 "Continuing Directors" mean the individuals constituting the
Board as of the date this Plan was adopted and any subsequent directors
whose election or nomination for election by the Company's shareholders was
approved by a vote of 3/4 of the individuals who are then Continuing
Directors, but specifically excluding any individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as the term is used in Rule 14a-11 of Regulation 14A
issued under the Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board.
2.11 "Early Retirement" means the voluntary termination of all
employment by a Participant with the written consent of the Committee after
the Participant has attained 55 years of age and completed 10 years of
service with the Company or any of its Subsidiaries.
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2.12 "Employee Benefit Plan" means any plan or program established by
the Company or a Subsidiary for the compensation or benefit of employees of
the Company or any of its Subsidiaries.
2.13 "Excluded Holder" means (a) any Person who at the time this Plan
was adopted was the beneficial owner of 10% or more of the outstanding
Common Stock; or (b) the Company, a Subsidiary or any Employee Benefit Plan
of the Company or a Subsidiary or any trust holding Common Stock or other
securities pursuant to the terms of an Employee Benefit Plan.
2.14 "Incentive Award" means the award or grant of a Option,
Restricted Stock or Tax Benefit Right to a Participant pursuant to the
Plan.
2.15 "Market Value" shall equal the mean of the highest and lowest
sales prices of shares of Common Stock on The Nasdaq Stock Market (or any
successor exchange that is the primary stock exchange for trading of Common
Stock) on the date of grant, or if The Nasdaq Stock Market (or any such
successor) is closed on that date, the last preceding date on which The
Nasdaq Stock Market (or any such successor) was open for trading and on
which shares of Common Stock were traded.
2.16 "Non-Employee Director" shall have the meaning set forth in Rule
16b-3 under the Act as in effect from time to time.
2.17 "Normal Retirement" means the voluntary termination of all
employment by a Participant after the Participant has attained 62 years of
age, or such other age as shall be determined by the Committee in its sole
discretion or as otherwise may be set forth in the Incentive Award
agreement or other grant document with respect to a Participant and a
particular Incentive Award.
2.18 "Option" means the right to purchase Common Stock at a stated
price for a specified period of time. For purposes of the Plan, an Option
may be either an incentive stock option within the meaning of Section
422(b) of the Code or a nonqualified stock option.
2.19 "Participant" means a director, corporate officer or any key
employee of the Company or its Subsidiaries who is granted an Incentive
Award under the Plan.
2.20 "Permitted Successor" means a company which, immediately
following the consummation of a transaction specified in clauses (c) and
(d) of the definition of "Change in Control" above, satisfies each of the
following criteria: (a) 50% or more of the outstanding common stock of the
company and the combined voting power of the outstanding securities of the
company entitled to vote generally in the election of directors (in each
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case determined immediately following the consummation of the applicable
transaction) is beneficially owned, directly or indirectly, by all or
substantially all of the Persons who were the beneficial owners of the
Company's outstanding Common Stock and outstanding securities entitled to
vote generally in the election of directors (respectively) immediately
before the applicable transaction; (b) no Person other than an Excluded
Holder beneficially owns, directly or indirectly, 20% or more of the
outstanding common stock of the company or the combined voting power of the
outstanding securities of the company entitled to vote generally in the
election of directors (for these purposes the term Excluded Holder shall
include the company, any subsidiary of the company and any employee benefit
plan of the company or any such subsidiary or any trust holding common
stock or other securities of the company pursuant to the terms of any such
employee benefit plan); and (c) at least a majority of the board of
directors is comprised of Continuing Directors.
2.21 "Person" has the same meaning as set forth in Sections 13(d) and
14(d)(2) of the Act.
2.22 "Restricted Period" means the period of time during which
Restricted Stock awarded under the Plan is subject to restrictions. The
Restricted Period may differ among Participants and may have different
expiration dates with respect to shares of Common Stock covered by the same
Incentive Award.
2.23 "Restricted Stock" means Common Stock awarded to a Participant
pursuant to Section 6 of the Plan.
2.24 "Subsidiary" means any company or other entity of which 50% or
more of the outstanding voting stock or voting ownership interest is
directly or indirectly owned or controlled by the Company or by one or more
Subsidiaries of the Company.
2.25 "Tax Benefit Right" means any right granted to a Participant
pursuant to Section 7 of the Plan.
2.26 "Total Disability" means that the Participant, for physical or
mental reasons, is unable to perform the essential functions of his or her
duties for the Company for 120 consecutive days, or 180 days during any 12-
month period.
SECTION 3
ADMINISTRATION
3.1 POWER AND AUTHORITY. The Committee shall administer the Plan.
Except as limited in this Plan, the Committee shall have full power and
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authority to interpret the provisions of the Plan and Incentive Awards
granted under the Plan, to supervise the administration of the Plan and the
Incentive Awards granted under the Plan and to make all other
determinations considered necessary or advisable under the Plan. All
determinations, interpretations and selections made by the Committee
regarding the Plan shall be final and conclusive. The Committee shall hold
its meetings at such times and places as it deems advisable. Action may be
taken by a written instrument signed by all of the members of the
Committee, and any action so taken shall be fully as effective as if it had
been taken at a meeting duly called and held. The Committee may delegate
recordkeeping, calculation, payment and other ministerial administrative
functions to individuals designated by the Committee, who may be employees
of the Company or its Subsidiaries.
3.2 GRANTS OR AWARDS TO PARTICIPANTS. In accordance with and subject
to the provisions of the Plan, the Committee shall have the authority to
determine all provisions of Incentive Awards as the Committee may deem
necessary or desirable and as are consistent with the terms of the Plan,
including, without limitation, the authority to: (a) determine whether and
when Incentive Awards will be granted, the persons to be granted Incentive
Awards, the amount of Incentive Awards to be granted to each person and the
terms of the Incentive Awards to be granted; (b) determine and amend
vesting schedules, if any; (c) permit delivery or withholding of stock in
payment of the exercise price or to satisfy tax withholding obligations;
and (d) waive any restrictions or conditions applicable to any Incentive
Award. Incentive Awards shall be granted or awarded by the Committee, and
Incentive Awards may be amended by the Committee consistent with the Plan,
provided that no such amendment may become effective without the consent of
the Participant, except to the extent that the amendment operates solely to
the benefit of the Participant.
3.3 INDEMNIFICATION OF COMMITTEE MEMBERS. Neither any member or
former member of the Committee nor any individual to whom authority is or
has been delegated shall be personally responsible or liable for any act or
omission in connection with the performance of powers or duties or the
exercise of discretion or judgment in the administration and implementation
of the Plan. Each person who is or shall have been a member of the
Committee shall be indemnified and held harmless by the Company from and
against any cost, liability or expense imposed or incurred in connection
with such person's or the Committee's taking or failing to take any action
under the Plan. Each such person shall be justified in relying on
information furnished in connection with the Plan's administration by any
appropriate person or persons.
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SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section
4.3 of the Plan, a maximum of 1,000,000 shares of Common Stock shall be
available for Incentive Awards under the Plan. Such shares may be
authorized but unissued shares, shares issued and reacquired by the Company
or shares bought on the market for the purpose of the Plan.
4.2 LIMITATION UPON INCENTIVE AWARDS. No Participant shall be
granted, during any calendar year, Incentive Awards with respect to more
than 50% of the total number of shares of Common Stock available for
Incentive Awards under the Plan set forth in Section 4.1 of the Plan,
subject to adjustment as provided in Section 4.3 of the Plan.
4.3 ADJUSTMENTS. If the number of shares of Common Stock outstanding
changes by reason of a stock dividend, stock split, recapitalization,
merger, consolidation, combination, exchange of shares or any other change
in the corporate structure or shares of the Company, the aggregate number
and class of shares available for grants or awards under the Plan, together
with Option prices, award limits and other appropriate terms of this Plan,
shall be appropriately adjusted. No fractional shares shall be issued
pursuant to the Plan, and any fractional shares resulting from adjustments
shall be eliminated from the respective Incentive Award, with an
appropriate cash adjustment for the value of any Incentive Awards
eliminated. If an Incentive Award is canceled, surrendered, modified,
expires or is terminated during the term of the Plan but before the
exercise or vesting of the Incentive Award in full, the shares subject to
but not purchased or retained by the Participant under such Incentive Award
shall be available for other Incentive Awards. If shares subject to and
otherwise deliverable upon the exercise of an Incentive Award are
surrendered to the Company in connection with the exercise or vesting of an
Incentive Award, the surrendered shares subject to the Incentive Award
shall be available for other Incentive Awards.
SECTION 5
OPTIONS
5.1 GRANT.
(a) OFFICERS AND EMPLOYEES. Except as set forth below for Non-
Employee Directors, a Participant may be granted one or more Options
under the Plan. Options shall be subject to such terms and
conditions, consistent with the other provisions of the Plan, as shall
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be determined by the Committee in its sole discretion. The Committee
may vary, among Participants and among Options granted to the same
Participant, any and all of the terms and conditions of Options
granted under the Plan. Subject to the limitation imposed by
Section 4.2 of the Plan, the Committee shall have complete discretion
in determining the number of Options granted to each Participant. The
Committee may designate whether or not an Option is to be considered
an incentive stock option as defined in Section 422(b) of the Code.
(b) NON-EMPLOYEE DIRECTORS. Subject to the limitation imposed
by Section 4.2 and the adjustments imposed by Section 4.3, an Option
to purchase 3,500 shares of Common Stock shall be granted
automatically on June 30 and December 31 of each year, to each
director of the Company who is, at the time of such grant, a Non-
Employee Director. Options shall be granted at an option price to be
determined by the Committee, subject to the condition that such price
will be equal to or greater than 85 percent of the fair market value
of the Common Stock at the date of grant of the Option. Options
granted to Non-Employee Directors shall not be treated as incentive
stock options under Section 422(b) of the Code.
5.2 OPTION AGREEMENTS. Each Option shall be evidenced by an Option
agreement containing such terms and conditions, consistent with the
provisions of the Plan, as the Committee from time to time determines. To
the extent not covered by the Option agreement, the terms and conditions of
this Section 5 shall govern.
5.3 OPTION PRICE. The per share Option price shall be determined by
the Committee. The per share Option price of any Option intended to qualify
as an incentive stock option under Section 422(b) of the Code shall be
equal to or greater than 100% of the Market Value on the date of grant.
The date of grant of an Option shall be the date the Option is authorized
by the Committee or a future date specified by the Committee as the date
for issuing the Option.
5.4 MEDIUM AND TIME OF PAYMENT. The exercise price for each share
purchased pursuant to an Option granted under the Plan shall be payable in
cash or, if the Committee consents, in shares of Common Stock (including
Common Stock to be received upon a simultaneous exercise). The time and
terms of payment may be amended before or after exercise of an Option (a)
by the Committee in its sole discretion, if the terms of such amendment
are more favorable to the Participant, or (b) in all other cases, by the
Committee with the consent of the Participant. The Committee may from time
to time authorize payment of all or a portion of the Option price in the
form of a promissory note or installments according to such terms as the
Committee may approve. The Board may restrict or suspend the power of the
Committee to permit such loans and may require that adequate security be
provided.
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5.5 OPTIONS GRANTED TO TEN PERCENT SHAREHOLDERS. No Option granted
to any Participant who at the time of such grant owns, together with stock
attributed to such Participant under Section 424(d) of the Code, more than
10% of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries may be designated as an incentive stock
option, unless (a) such Option provides an exercise price equal to at least
110% of the Market Value of the Common Stock, and (b) the exercise of the
Option after the expiration of five years from the date of grant of the
Option is prohibited by its terms.
5.6 LIMITS ON EXERCISABILITY. Options shall be exercisable for such
periods and upon such conditions as may be fixed by the Committee. Options
intended to qualify as incentive stock options shall have terms not to
exceed 10 years from the grant date. Other options shall have terms not to
exceed 15 years from the grant date. The Committee may in its discretion
require a Participant to continue service with the Company and its
Subsidiaries for a certain length of time before an Option becoming
exercisable and may eliminate such delayed vesting provisions. The
Committee also may vary, among Participants and among Options granted to
the same Participant, any and all of the terms and conditions of Options
granted under the Plan.
5.7 TRANSFERABILITY.
(a) GENERAL. Unless the Committee otherwise consents or unless
the terms of the Option agreement provide otherwise, no Option granted
under the Plan may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated, other than by will or by the laws
of descent and distribution.
(b) OTHER RESTRICTIONS. The Committee may impose such
restrictions on any shares of Common Stock acquired pursuant to the
exercise of an Option under the Plan as it deems advisable, including,
without limitation, restrictions intended to assure compliance with
applicable federal or state securities laws.
5.8 TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.
(a) GENERAL. If a Participant ceases to be employed by or a
director of the Company or one of its Subsidiaries for any reason
other than the Participant's death, Total Disability, termination for
cause or any additional provision as determined by the Committee, the
Participant may exercise an Option for a period of 90 days after such
termination of employment or directorship, but only to the extent the
Participant was entitled to exercise the Option on the date of
termination and would be entitled to exercise the Option if employed
(or serving as a director) at the date of exercise, unless the
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Committee otherwise consents or the terms of the Option agreement
provide otherwise. For purposes of the Plan, the following shall not
be deemed a termination of employment: (i) a transfer of employment
among the Company and its Subsidiaries; (ii) a leave of absence, duly
authorized in writing by the Company, for military service or for any
other purpose approved by the Company if the period of such leave does
not exceed 90 days; (iii) a leave of absence in excess of 90 days,
duly authorized in writing by the Company, provided the employee's
right to reemployment is guaranteed either by statute or contract; or
(iv) a termination of employment with continued service as an officer
or director. For purposes of the Plan, termination of employment
shall be considered to occur on the date on which the employee is no
longer obligated to perform services for the Company or any of its
Subsidiaries and the employee's right to reemployment is not
guaranteed either by statute or contract, regardless of whether the
employee continues to receive compensation from the Company or any of
its Subsidiaries after such date.
(b) DEATH. If a Participant dies either while an employee or
director of the Company or one of its Subsidiaries, or dies after
termination of employment or directorship other than for cause and
other than as a result of voluntary termination but during the time
when the Participant could have exercised an Option under the Plan,
the Option issued to such Participant shall be exercisable by the
personal representative of such Participant or other successor to the
interest of the Participant for a period of one year after the
Participant's death, but only to the extent that the Participant was
entitled to exercise the Option on the date of death or termination of
employment or directorship, whichever first occurred, and would be
entitled to exercise the Option if employed at the date of exercise,
unless the Committee otherwise consents or the terms of the Option
agreement provide otherwise.
(c) TOTAL DISABILITY. If a Participant ceases to be an employee
or a director of the Company or one of its Subsidiaries due to the
Participant's Total Disability, the Participant may exercise an Option
for a period of one year following such termination of employment, but
only to the extent the Participant was entitled to exercise the Option
on the date of such event, unless the Committee otherwise consents or
the terms of the Option agreement provide otherwise.
(d) ADDITIONAL PROVISIONS IN OPTION AGREEMENTS. The Committee
may, in its sole discretion, provide by resolution or by including
provisions in any Option agreement entered into with a Participant
that the Participant may exercise any outstanding options upon
termination due to Early Retirement, Normal Retirement or Consensual
Severance for a period of time after such termination as may be
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determined by the Committee, PROVIDED that (i) such period may not
extend beyond the earlier of three years after the date of termination
or the date on which the Options expire by their terms, (ii) the
Participant may exercise the Option only to the extent the Participant
was entitled to exercise the Option on the date of termination, and
(iii) the Participant shall have no further right to exercise any
Options after termination due to Early Retirement, Normal Retirement
or Consensual Severance if the Committee determines the Participant
has entered into Competition with the Company.
(e) VOLUNTARY TERMINATION. Except as provided in Section
5.8(d), if a Participant voluntarily terminates employment with the
Company or one of its Subsidiaries, the Participant shall have no
further right to exercise any Option previously granted, unless the
terms of the Option Agreement provide otherwise.
(f) TERMINATION FOR CAUSE. If a Participant is terminated for
cause, the Participant shall have no further right to exercise any
outstanding unexercised Option issued under the Plan.
(g) SUSPENSION OF EXERCISABILITY. If the Participant receives
notice from the Company that the Participant may be terminated for
cause, the Participant shall have no right to exercise any Options
previously granted for a period of 60 days from the receipt of such
notice. If the Participant is terminated for cause within such 60-day
period, the Participant shall have no further right to exercise any
Option previously granted. If the Participant is not terminated for
cause within the 60-day period, the provisions of the Option agreement
and the Plan shall continue to apply to the exercisability of the
Participant's Options.
SECTION 6
RESTRICTED STOCK
6.1 GRANT. A Participant may be granted Restricted Stock under the
Plan. Restricted Stock shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as shall be determined by
the Committee in its sole discretion. Restricted Stock shall be awarded on
the condition that the Participant remain in the employ of the Company or
one of its Subsidiaries during the Restricted Period. Such condition shall
have no effect on the right of the Company or any Subsidiary to terminate
the Participant's employment at any time. No payment is required from a
Participant for an award of Restricted Stock.
6.2 RESTRICTED STOCK AGREEMENTS. Each award of Restricted Stock
shall be evidenced by a Restricted Stock agreement containing such terms
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and conditions, consistent with the provisions of the Plan, as the
Committee from time to time determines.
6.3 TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.
(a) GENERAL. If a Participant ceases to be employed by or a
director of the Company or one of its Subsidiaries for any reason
other than the Participant's death, Total Disability or any other
additional provisions as determined by the Committee pursuant to
Section 6.3(c), then any shares of Restricted Stock still subject to
restrictions on the date of such termination automatically shall be
forfeited and returned to the Company. For purposes of the Plan, the
following shall not be deemed a termination of employment: (i) a
transfer of employment among the Company and its Subsidiaries; (ii) a
leave of absence, duly authorized in writing by the Company, for
military service or for any other purpose approved by the Company if
the period of such leave does not exceed 90 days; (iii) a leave of
absence in excess of 90 days, duly authorized in writing by the
Company, provided the employee's right to reemployment is guaranteed
either by statute or contract; or (iv) a termination of employment
with continued service as an officer or director. For purposes of the
Plan, termination of employment shall be considered to occur on the
date on which the employee is no longer obligated to perform services
for the Company or any of its Subsidiaries and the employee's right to
reemployment is not guaranteed either by statute or contract,
regardless of whether the employee continues to receive compensation
from the Company or any of its Subsidiaries after such date.
(b) DEATH OR TOTAL DISABILITY. Unless the terms of the
Restricted Stock agreement or grant provide otherwise, in the event a
Participant terminates employment or directorship with the Company or
one of its Subsidiaries because of death or Total Disability during
the Restricted Period, the restrictions applicable to the shares of
Restricted Stock automatically shall terminate and the Restricted
Stock shall vest as of the date of termination.
(c) ADDITIONAL PROVISIONS AS DETERMINED BY COMMITTEE. The
Committee may, in its sole discretion, provide provisions in any
Restricted Stock agreement permitting, or by resolution approve,
vesting of all or part of any Restricted Stock awarded to a
Participant upon termination due to Early Retirement, Normal
Retirement, Consensual Severance or a Change in Control.
6.4 RESTRICTIONS ON TRANSFERABILITY.
(a) GENERAL. Unless the Committee otherwise consents or unless
the terms of the Restricted Stock agreement provide otherwise, shares
of Restricted Stock shall not be sold, exchanged, transferred, pledged
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or otherwise disposed of by a Participant during the Restricted Period
other than to the Company pursuant to subsection 6.3 or 6.4(b) or by
will or the laws of descent and distribution.
(b) SURRENDER TO THE COMPANY. If any sale, exchange, transfer,
pledge or other disposition, voluntary or involuntary, of Restricted
Stock that has not vested shall be made or attempted during the
Restricted Period, except as provided above in subsections 6.3 and
6.4(a), the Participant's right to the Restricted Stock immediately
shall cease and terminate, and the Participant promptly shall forfeit
and surrender to the Company all such Restricted Stock.
(c) OTHER RESTRICTIONS. The Committee may impose other
restrictions on any Restricted Stock as the Committee deems advisable.
6.5 RIGHTS AS A SHAREHOLDER. During the Restricted Period, a
Participant shall have all rights of a shareholder with respect to his
Restricted Stock, including (a) the right to vote any shares at
shareholders' meetings; (b) the right to receive, without restriction, all
cash dividends paid with respect to such Restricted Stock; and (c) the
right to participate with respect to such Restricted Stock in any stock
dividend, stock split, recapitalization or other adjustment in the Common
Stock of the Company or any merger, consolidation or other reorganization
involving an increase or decrease or adjustment in the Common Stock of the
Company. Any new, additional or different shares or other security
received by the Participant pursuant to any such stock dividend, stock
split, recapitalization or reorganization shall be subject to the same
terms, conditions and restrictions as those relating to the Restricted
Stock for which such shares were received.
6.6 DEPOSIT OF CERTIFICATES; LEGENDING OF RESTRICTED STOCK.
(a) DEPOSIT OF CERTIFICATES. Any certificates evidencing shares
of Restricted Stock awarded pursuant to the Plan shall be registered
in the name of the relevant Participant and deposited, together with a
stock power endorsed in blank, with the Company. In the discretion of
the Committee, any such certificates may be deposited in a bank
designated by the Committee or delivered to the Participant.
Certificates for shares of Restricted Stock that have vested shall be
delivered to the Participant upon request within a reasonable period
of time. The Participant shall sign all documents necessary or
appropriate to facilitate such delivery.
(b) LEGEND. Any certificates evidencing shares of Restricted
Stock awarded pursuant to the Plan shall bear the following legend:
This certificate is held subject to the terms and conditions
contained in a restricted stock agreement that includes a
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prohibition against the sale or transfer of the stock
represented by this certificate except in compliance with
that agreement, and that provides for forfeiture upon
certain events. A copy of that agreement is on file in the
office of the Corporation.
6.7 RESALE. The Participant shall agree not to resell or
redistribute such Restricted Stock after the Restricted Period except upon
such conditions as the Company reasonably may specify to ensure compliance
with federal and state securities laws.
SECTION 7
TAX BENEFIT RIGHTS
7.1 GRANT. A Participant may be granted Tax Benefit Rights under the
Plan to encourage a Participant to exercise Options and provide certain tax
benefits to the Company. A Tax Benefit Right entitles a Participant to
receive from the Company or a Subsidiary a cash payment not to exceed the
amount calculated by multiplying the ordinary income, if any, realized by
the Participant for federal tax purposes as a result of the exercise of a
non-qualified stock option, or the disqualifying disposition of shares
acquired under an incentive stock option, by the maximum federal income
tax rate (including any surtax or similar charge or assessment) for
corporations, plus any other applicable state and local tax against which
the Company is entitled to a deduction or credit by reason of exercise of
the Option or the disqualifying disposition.
7.2 RESTRICTIONS. A Tax Benefit Right may be granted only with
respect to an Option issued and outstanding or to be issued under the Plan
or any other Plan of the Company or its Subsidiaries that has been approved
by the shareholders as of the effective date of the Plan and may be granted
concurrently with or after the grant of the Option. Such rights with
respect to outstanding Options shall be issued only with the consent of the
Participant if the effect would be to disqualify an incentive stock option,
change the date of grant or the exercise price or otherwise impair the
Participant's existing Options.
7.3 TERMS AND CONDITIONS. The Committee shall determine the terms
and conditions of any Tax Benefit Rights granted and the Participants to
whom such rights will be granted with respect to Options under the Plan or
any other plan of the Company and those terms and conditions shall be set
forth in written agreements. The Committee may amend, cancel, limit the
term of, or limit the amount payable under a Tax Benefit Right at any time
before the exercise of the related stock option, unless otherwise provided
under the terms of the Tax Benefit Right. The net amount of a Tax Benefit
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Right, subject to withholding, may be used to pay a portion of the Option
price, unless otherwise provided by the Committee.
SECTION 8
CHANGE IN CONTROL
Without in any way limiting the Committee's discretion, the Committee
may include in any Incentive Award provisions for acceleration of any
vesting or other similar requirements or for the elimination of any
restrictions upon Incentive Awards upon a Change in Control of the Company.
The Committee also may include provisions for Participants to receive cash
in lieu of outstanding Options upon a Change in Control of the Company.
SECTION 9
GENERAL PROVISIONS
9.1 NO RIGHTS TO AWARDS. No Participant or other person shall have
any claim to be granted any Incentive Award, and there is no obligation of
uniformity of treatment of employees, Participants or holders or
beneficiaries of Incentive Awards. The terms and conditions of the
Incentive Awards of the same type and the determination of the Committee to
grant a waiver or modification of any Incentive Award and the terms and
conditions thereof need not be the same with respect to each Participant.
9.2 WITHHOLDING. The Company or a Subsidiary shall be entitled to
(a) withhold and deduct from future wages of a Participant (or from other
amounts that may be due and owing to a Participant from the Company or a
Subsidiary), or make other arrangements for the collection of, all amounts
deemed necessary to satisfy any and all federal, state and local
withholding and employment-related tax requirements attributable to an
Incentive Award, including, without limitation, the grant, exercise or
vesting of, or payment of dividends with respect to, an Incentive Award or
a disqualifying disposition of Common Stock received upon exercise of an
incentive stock option; or (b) require a Participant promptly to remit the
amount of such withholding to the Company before taking any action with
respect to an Incentive Award. Unless the Committee determines otherwise,
withholding may be satisfied by withholding Common Stock to be received
upon exercise or by delivery to the Company of previously owned Common
Stock.
9.3 COMPLIANCE WITH LAWS; LISTING AND REGISTRATION OF SHARES. All
Incentive Awards granted under the Plan (and all issuances of Common Stock
or other securities under the Plan) shall be subject to applicable laws,
rules and regulations, and to the requirement that if at any time the
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Committee determines, in its sole discretion, that the listing,
registration or qualification of the shares covered thereby upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as
a condition of, or in connection with, the granting of such Incentive Award
or the issue or purchase of shares thereunder, such Incentive Award may not
be exercised in whole or in part, or the restrictions on such Incentive
Award shall not lapse, unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.
9.4 NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained
in the Plan shall prevent the Company or any Subsidiary from adopting or
continuing in effect other or additional compensation arrangements,
including the grant of options and other stock-based awards, and such
arrangements may be either generally applicable or applicable only in
specific cases.
9.5 NO RIGHT TO EMPLOYMENT. The grant of an Incentive Award shall
not be construed as giving a Participant the right to be retained in the
employ or directorship of the Company or any Subsidiary. The Company or
any Subsidiary may at any time dismiss a Participant from employment, free
from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any written agreement with a Participant.
9.6 GOVERNING LAW. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Michigan and applicable federal
law.
9.7 SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed
and enforced as if the illegal or invalid provision had not been included.
SECTION 10
EFFECTIVE DATE AND DURATION OF THE PLAN
This Plan shall take effect June 30, 1998, which is the effective date
of approval by the Board of Directors, provided, that any Incentive Awards
granted before shareholder approval shall be subject to approval of the
Plan by the Company's shareholders at a regular or special meeting. Unless
earlier terminated by the Board of Directors, no Incentive Award shall be
granted under this Plan after June 29, 2008.
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SECTION 11
TERMINATION AND AMENDMENT
The Board may terminate the Plan at any time, or may from time to
time amend the Plan, provided that no such amendment may impair any
outstanding Incentive Award without the consent of the Participant,
except according to the terms of the Incentive Award. No termination,
amendment or modification of the Plan shall become effective with respect
to any Incentive Award previously granted under the Plan without the prior
written consent of the Participant holding such Incentive Award unless
such amendment or modification operates solely to the benefit of the
Participant.
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<PAGE>
PROXY SPARTAN MOTORS, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 25, 1999
The undersigned acknowledges receipt of the Notice of Annual Meeting
and Proxy Statement for the Annual Meeting of Shareholders of Spartan
Motors, Inc. to be held on May 25, 1999, and hereby appoints John E.
Sztykiel and Richard J. Schalter, or any one of them, attorneys and proxies
of the undersigned, each with full power of substitution, to vote all
shares of the undersigned in Spartan Motors, Inc. at such Annual Meeting,
and at any adjournment thereof, for the purpose of acting upon the proposal
referred to on the reverse side, and of acting in their discretion upon
such other matters as may properly come before the meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES. SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE
PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
[BACK]
SPARTAN MOTORS, INC.
[X] PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE USING
DARK INK ONLY.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ALL 3 SHAREHOLDER
PROPOSALS
1. To elect two directors For Withheld Nominees: George W. Sztykiel
for three year terms William F. Foster
expiring in 2002. [ ] [ ]
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE
THROUGH THAT NOMINEE'S NAME
IN THE LIST AT RIGHT.)
For Against Abstain
2. To approve the Spartan
Motors, Inc. Stock [ ] [ ] [ ]
Option and Restricted
Stock Plan of 1998.
3. To ratify the Board of
Directors' appointment of [ ] [ ] [ ]
Ernst & Young LLP as
independent auditors for
the current fiscal year.
SIGNATURE(S)________________________________ Date: _______________, 1999
NOTE: Please sign exactly as your name(s) appears on this Proxy. When
signing on behalf of a corporation, partnership, guardian or
trustee, indicate title or capacity of person signing. If shares
are held jointly, each holder should sign.
