<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MASCOTECH, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
MASCOTECH, INC.
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: May 18, 1999
Time: 2:00 p.m.
Place: MascoTech, Inc.
21001 Van Born Road
Taylor, Michigan 48180
The purposes of the Annual Meeting are:
1. To elect three Class II Directors;
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors for the Company for the year 1999; and
3. To transact such other business, including a stockholder proposal, as
may properly come before the meeting.
Stockholders of record at the close of business on March 26, 1999 are
entitled to vote at the Meeting or any adjournment thereof.
Your attention is called to the accompanying Proxy Statement and Proxy.
Whether or not you plan to attend the Meeting, you can be sure your shares are
represented at the Meeting by promptly voting and submitting your proxy by
telephone, by Internet, or by completing, signing, dating and returning your
proxy card in the enclosed postage prepaid envelope. Prior to being voted, the
Proxy may be withdrawn in the manner specified in the Proxy Statement.
By Order of the Board of Directors
/s/ EUGENE A. GARGARO, JR.
EUGENE A. GARGARO, JR.
Secretary
April 20, 1999
<PAGE> 3
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS OF
MASCOTECH, INC.
May 18, 1999
GENERAL INFORMATION
The solicitation of the enclosed Proxy is made by the Board of Directors of
MascoTech, Inc. (the "Company") for use at the Annual Meeting of Stockholders of
the Company to be held at its offices at 21001 Van Born Road, Taylor, Michigan
48180, on Tuesday, May 18, 1999 at 2:00 P.M., and at any adjournment. This Proxy
Statement and the enclosed Proxy are being mailed or given to stockholders on or
about April 20, 1999.
The expense of this solicitation will be borne by the Company. Solicitation
will be by mail, and executive officers and other employees of the Company may
solicit Proxies, without extra compensation, personally and by telephone and
other means of communication. In addition, the Company has retained Morrow &
Company, Inc. to assist in the solicitation of Proxies for a fee of $6,000, plus
expenses. The Company will also reimburse brokers and other persons holding
Company Common Stock in their names or in the names of their nominees for their
reasonable expenses in forwarding Proxies and Proxy materials to beneficial
owners.
Stockholders of record at the close of business on March 26, 1999 will be
entitled to vote at the Meeting. On that date, there were 44,493,766 shares of
Company Common Stock, $1 par value, outstanding and entitled to vote. Each share
of outstanding Company Common Stock entitles the holder to one vote. The Meeting
will be held if a quorum, consisting of a majority of the outstanding shares of
common stock entitled to vote, is represented in person or by proxy. When
nominees, such as banks and brokers, holding shares on behalf of beneficial
owners, do not receive voting instructions from the beneficial owners by a
specified date, the nominees may vote those shares only on matters deemed
routine by the New York Stock Exchange, such as the election of Directors and
ratification of the selection of independent auditors. On non-routine matters,
such as the stockholder's proposal, nominees cannot cast a vote on that matter
(a so-called "broker non-vote"). Because the ratification of the selection of
PricewaterhouseCoopers LLP and the stockholder's proposal must be approved by a
majority of the votes cast, broker non-votes and abstentions have no effect on
the outcome of these matters.
Assuming a quorum is present, Directors are elected by a plurality of the
votes cast. The three nominees for Class II Directors who receive the largest
number of votes cast will be elected as Class II Directors; therefore, shares
not voted (whether due to abstention or broker non-vote) do not affect the
election of Directors. The Company has been advised that Masco Corporation and
Directors and officers of the Company hold in the aggregate approximately 33
percent of the voting power of the Company and
<PAGE> 4
intend to vote their shares in favor of the nominees, for the ratification of
the selection of PricewaterhouseCoopers LLP, against the stockholder proposal
and in accordance with the recommendations of the Company's Board of Directors
on any other matters.
Stockholders can ensure that their shares are voted at the Meeting by
submitting proxy instructions by telephone, by Internet, or by completing,
signing, dating and returning the enclosed proxy card in the envelope provided.
Submitting instructions by any of these methods will not affect the right to
attend the Meeting and vote. A stockholder who gives a proxy may revoke it at
any time before it is exercised by voting in person at the Meeting, by
delivering a subsequent proxy, or by notifying the Company in writing
(Attention: Eugene A. Gargaro, Jr., Secretary at its executive offices at 21001
Van Born Road, Taylor, Michigan 48180) of such revocation.
2
<PAGE> 5
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. The term of office of
the Class II Directors expires at this meeting and the Board of Directors
proposes the re-election of Peter A. Dow, Roger T. Fridholm and Frank M.
Hennessey for election to the Board as Class II Directors.
The Class I, Class II and Class III Directors will serve for terms expiring
at the Annual Meeting of Stockholders in 2001, 2002 and 2000, respectively, or
until their respective successors are elected and qualified. The Board of
Directors expects that the persons named as proxies in the Proxy will vote the
shares represented by each Proxy for the election as Directors of the above
nominees unless a contrary direction is indicated. If prior to the Meeting any
nominee is unable or unwilling to serve as a Director, which the Board of
Directors does not expect, the persons named as proxies will vote for such
alternate nominee, if any, as may be recommended by the Board of Directors.
Information concerning the nominees and continuing Directors is set forth
below.
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION AGE, BUSINESS EXPERIENCE,
AND PERIOD OF SERVICE AS A DIRECTOR DIRECTORSHIPS AND OTHER INFORMATION
----------------------------------- -----------------------------------
<S> <C>
CLASS I (TERM TO EXPIRE AT THE ANNUAL MEETING IN 2001)
Richard A. Manoogian................. Mr. Manoogian, 62, has served as Chairman and
Chairman of the Board of the Director of the Company since its formation in 1984
Company and Chairman of the Board and as Chief Executive Officer until January 1998.
and Chief Executive Officer of He joined Masco Corporation in 1958, was elected
Masco Corporation. Vice President and a Director in 1964, President in
Director since 1984. 1968 and Chairman and Chief Executive Officer in
1985. He served as Chairman of the Board of TriMas
Corporation from 1989 until it was acquired by the
Company in January 1998. He is also a director of
Bank One Corporation, MSX International, Inc., an
affiliate of the Company, Detroit Renaissance and
The American Business Conference, president of the
Board of Directors of the Detroit Institute of Arts
and a trustee of the Archives of American Art
(Smithsonian Institute), Center for Creative
Studies, The Fine Arts Committee of the State
Department, Trustees Council of the National
Gallery of Art, Armenian General Benevolent Union
and Detroit Investment Fund.
Helmut F. Stern...................... Mr. Stern, 79, has served as President of Arcanum
President of Arcanum Corporation, Corporation since 1970. He is the former President
a private research and development of Industrial Tectonics, Inc., manufacturer of
company. precision balls and ball and roller bearings, from
Director since 1998. 1946 to 1983, and of its parent company, ITI
Holding Corp. from 1949 to 1983. Mr. Stern served
as a director of TriMas Corporation from 1989 until
it was acquired by the Company in January 1998.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION AGE, BUSINESS EXPERIENCE,
AND PERIOD OF SERVICE AS A DIRECTOR DIRECTORSHIPS AND OTHER INFORMATION
----------------------------------- -----------------------------------
<S> <C>
CLASS II (NOMINEES FOR TERM TO EXPIRE AT THE ANNUAL MEETING IN 2002)
Frank M. Hennessey................... Mr. Hennessey, 60, became Vice Chairman and Chief
Vice Chairman and Chief Executive Executive Officer of the Company in January 1998.
Officer of the Company. Prior to joining the Company, he served as Masco
Director since 1998. Corporation's Executive Vice President from
September 1995 and as its Vice President of
Strategic Planning from 1990 to 1995. He also
served as Emco Limited's President and Chief
Executive Officer from 1990 until 1995, as its
Chief Executive Officer from 1995 until 1997 and
has been its Chairman since 1995. In 1981 he became
President of the Handleman Company and assumed the
additional responsibilities of Chief Executive
Officer in 1988. Previously, he was the Group
Managing Partner of PricewaterhouseCoopers' Detroit
Group Office from 1977 to 1981. He is a director of
MCN Energy Group Inc. and Emco Limited. He is also
a director of New Detroit, Inc., and the Detroit
Regional Chamber, a director at large of the
National Council of Northeastern University,
director and treasurer of the United Way Community
Services, trustee of the Citizen's Research Council
of Michigan, trustee of the Hudson-Webber
Foundation and director and past Chairman of the
Japan America Society of Greater Detroit and
Windsor.
Peter A. Dow......................... Mr. Dow, 65, initially joined Campbell-Ewald
Private investor; Retired Vice Company in 1958 and returned in 1979 to serve as
Chairman, Chief Operating Officer Executive Vice President and Director of General
and Chairman of the Executive Accounts. Beginning in 1982, he became President,
Committee of Campbell-Ewald, an Chief Operating Officer and Chairman of the
advertising and marketing Executive Committee, and then served as Vice
communications company. Chairman from 1993 until his retirement in 1995. He
Director since 1992. was named Director of Advertising for the Chrysler-
Plymouth Division of Chrysler Corporation in 1968.
Subsequently, he became responsible for the
advertising and merchandising for Chrysler
Corporation and all of its divisions. In 1978 he
was named Director of Marketing for Chrysler
Corporation. Mr. Dow is currently a director of The
Stroh Brewery Company, The Stroh Companies, Inc.
and Comtrad Industries, Inc. He is also Trustee
Emeritus of The Lawrenceville School, a trustee of
the Alice Kales Hartwick Foundation and a member of
the Board of Directors of the Detroit Institute of
Arts.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION AGE, BUSINESS EXPERIENCE,
AND PERIOD OF SERVICE AS A DIRECTOR DIRECTORSHIPS AND OTHER INFORMATION
----------------------------------- -----------------------------------
<S> <C>
Roger T. Fridholm.................... Mr. Fridholm, 58, has been President -- Business,
President -- Business, Technology Technology and Staffing Services Group of MSX
and Staffing Services Group of MSX International, Inc., an engineering and business
International, Inc., an engineering services company and an affiliate of the Company,
and business services company. since May 1998. He has been President of St. Clair
Director since 1996. Group, Inc. since 1991. He also has served as
Chairman of Ad Hoc Legal Resources LLC since 1995,
as President of IPG Services Corporation since 1996
and President of Ad Hoc, Inc. since 1997, all of
which are staffing service companies. He is the
past President and Chief Executive Officer of Of
Counsel Enterprises, Inc. and past Senior Vice
President of Corporate Development of Kelly
Services, Inc. He served as President and Chief
Operating Officer of The Stroh Brewery Company from
1979 to 1991. He is currently a director of The
Stroh Brewery Company, The Stroh Companies, Inc.,
MCN Energy Group Inc. and Comerica Bank.
CLASS III (TERM TO EXPIRE AT THE ANNUAL MEETING IN 2000)
William K. Howenstein................ Mr. Howenstein, 65, held various positions at
Retired President of TMX Division Copper and Brass Sales, Inc., including Chairman
of Thyssen, Inc., N.A., a materials and Chief Executive Officer, from 1965 until its
management and logistic service acquisition in 1997 by Thyssen, Inc., N.A. He
company. served as President of TMX Division of Thyssen,
Director since 1997. Inc., N.A., until his retirement in 1998, and
remains a consultant. He is a director of Thyssen,
Inc., N.A., The Stroh Brewery Company and The Stroh
Companies, Inc. He serves as director of the
Detroit Regional Chamber, The Economic Club of
Detroit, advisory board member of the Boys & Girls
Club of Metro Detroit and director of United Way
Community Services for Southeastern Michigan.
John A. Morgan....................... Mr. Morgan, 68, has been Managing Director of
Managing Director, Morgan Lewis Morgan Lewis Githens & Ahn, Inc. since founding
Githens & Ahn, Inc., investment that firm in 1982. From 1977 to 1982, he was Vice
bankers. Chairman of Smith Barney, Harris Upham & Co., Inc.,
Director since 1984. in charge of the firm's merger and acquisition
activities, a member of the executive committee and
a director of Smith Barney International Inc. Prior
to becoming Vice Chairman of Smith Barney, Mr.
Morgan had been Senior Vice President in charge of
the Corporate Finance Department. He was a director
of TriMas Corporation from 1989 until it was
acquired by the Company in January 1998. He is
currently a director of Furnishings International
Inc. and Masco Corporation. He also serves as a
trustee of the Provident Loan Society of New York.
</TABLE>
5
<PAGE> 8
Further information concerning Masco Corporation is set forth in "Certain
Relationships and Related Transactions."
The Board of Directors held four meetings during 1998. The Audit Committee
of the Board of Directors, consisting of Messrs. Dow, Howenstein and Stern, held
two meetings during 1998. It reviews and acts on or reports to the Board with
respect to various auditing and accounting matters, including the selection and
fees of the Company's independent auditors, the scope of audit procedures, the
Company's internal audit program and results, the nature of services to be
performed by the independent auditors and the Company's accounting practices.
The Compensation Committee of the Board of Directors held four meetings during
1998. The Committee currently consists of Messrs. Dow, Howenstein, Morgan and
Stern. This Committee establishes and monitors executive compensation and
administers and determines awards and options granted under the Company's
restricted stock incentive and stock option plans. The Nominating Committee of
the Board of Directors, consisting of Messrs. Dow, Fridholm, Howenstein and
Morgan, was established to identify and consider candidates to serve as
Directors of the Company. During 1998, the Committee members conferred on
various occasions regarding possible candidates. The Nominating Committee will
consider candidates for nominees for election as Directors of the Company
submitted by stockholders. Any stockholder who wishes to have the Committee
consider a candidate should submit the name of the candidate, along with any
biographical or other relevant information the stockholder wishes the Committee
to consider, to the Secretary of the Company at the address appearing on the
first page of this Proxy Statement.
COMPENSATION OF DIRECTORS
In 1997, the Company implemented a compensation program to more closely
align the compensation of Directors with long-term interests of stockholders. As
Company employees, Mr. Manoogian and Mr. Hennessey are not eligible for
compensation as Directors. Under the 1997 Non-Employee Directors Stock Plan (the
"Directors Stock Plan") which was previously approved by stockholders, one half
of the cash compensation formerly paid to Directors has been replaced with an
annual vesting of shares of restricted stock. Under the Directors Stock Plan,
each Director received an award of Company Common Stock in 1997 to vest over a
five-year period in 20 percent annual installments. The value of the stock
awards was based on the market price of Company Common Stock on the date of
grant and equaled five years of the replaced cash compensation. All Directors,
except Messrs. Howenstein and Stern, received awards of 5,790 shares in 1997.
Mr. Howenstein was awarded 5,100 shares following his election at the 1997
Annual Meeting, and Mr. Stern was awarded 4,220 shares following his election at
the 1998 Annual Meeting, reflecting proration for their partial first years of
service. For 1998, Directors received a cash fee of $22,000 and $1,000 for each
Board of Directors meeting attended (and committee meeting attended, if not held
on a date on which the entire Board met). The Directors Stock Plan also provides
for the grant to each non-employee Director on the date of each annual meeting
of a non-qualified option to purchase 5,000 shares of Company Common Stock at
the then current market price. These options become exercisable in 20 percent
installments on the first five anniversaries of the grant date. Each option has
a ten-year term from the date of grant, except that options may be exercised for
only a limited period of time following termination of service as a non-employee
Director.
6
<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
Set forth below is information concerning beneficial ownership of Company
Common Stock as of March 15, 1999 by (i) all persons known by the Company to be
the beneficial owners of five percent or more of Company Common Stock, (ii) each
of the nominees and Directors, (iii) each of the named executive officers, and
(iv) all Directors and executive officers of the Company as a group (excluding
Mr. Campbell, who resigned in September, 1998). Except as indicated below, each
person exercises sole voting and investment power with respect to the shares
listed.
<TABLE>
<CAPTION>
SHARES OF COMPANY PERCENTAGE OF COMPANY
COMMON STOCK COMMON STOCK
NAME BENEFICIALLY OWNED BENEFICIALLY OWNED
---- ------------------ ---------------------
<S> <C> <C>
Masco Corporation
21001 Van Born Road
Taylor, Michigan 48180............................ 7,824,690 17.5%
Peter A. Dow(1)..................................... 49,140 *
Roger T. Fridholm(1)(2)............................. 15,840 *
Frank M. Hennessey(3)(4)............................ 476,677 1.1%
William K. Howenstein(1)............................ 11,100 *
Richard A. Manoogian(3)(5).......................... 6,286,229 13.9%
John A. Morgan(1)................................... 30,790 *
Helmut F. Stern(1).................................. 10,220 *
William T. Anderson(3).............................. 69,940 *
Lee M. Gardner(3)................................... 425,301 *
David B. Liner(3)................................... 29,384 *
Timothy Wadhams(2)(3)............................... 347,508 *
Brian P. Campbell................................... 61,700 *
All 13 Directors and executive officers of the
Company as a group (excluding subsidiary,
divisional and group
executives)(1)(2)(3)(4)(5)(6)..................... 7,915,756 17.4%
Cramer Rosenthal McGlynn, LLC
707 Westchester Avenue
White Plains, New York 10604(7)................... 3,619,077 8.1%
</TABLE>
- -------------------------
* Less than one percent.
(1) Includes unvested restricted stock award shares held under the Company's
1997 Non-Employee Directors Stock Plan (3,474 shares for each of Messrs.
Dow, Fridholm and Morgan; 3,225 shares for Mr. Howenstein; 3,552 shares for
Mr. Stern and 17,199 shares for all Directors and executive officers of the
Company as a group) and shares which may be acquired before May 15, 1999
upon exercise of stock options under such Plan (1,000 for Messrs. Dow,
Fridholm, Howenstein and Morgan; and 4,000 for all Directors and executive
officers of the Company as a group). Holders have sole voting but no
investment power over unvested restricted shares and have neither voting nor
investment power over unexercised options.
7
<PAGE> 10
(2) Includes 250 shares owned by a relative of Mr. Fridholm and 1,500 shares
owned by a relative of Mr. Wadhams (1,750 for all Directors and executive
officers of the Company as a group), as to which beneficial ownership is
disclaimed.
(3) Includes unvested restricted stock award shares held under the Company's
restricted stock incentive plans (46,380 shares for Mr. Anderson, 121,700
shares for Mr. Gardner, 249,600 shares for Mr. Hennessey, 21,300 shares for
Mr. Liner, 213,990 shares for Mr. Manoogian, 102,220 shares for Mr. Wadhams
and 810,737 shares for all Directors and executive officers as a group) and
shares which may be acquired before May 15, 1999 upon exercise of stock
options (8,000 shares for Mr. Anderson, 258,061 shares for Mr. Gardner,
108,000 shares for Mr. Manoogian, 131,769 shares for Mr. Wadhams and 509,830
shares for all Directors and executive officers as a group). Holders have
sole voting but no investment power over unvested restricted shares and
exercise neither voting nor investment power over unexercised option shares.
(4) Includes 9,677 which could be acquired upon conversion of convertible
securities owned by Mr. Hennessey.
(5) Includes 1,640,960 shares owned by charitable foundations for which Mr.
Manoogian serves as director, and 334,193 shares which could be acquired
upon conversion of convertible securities owned by such charitable
foundations. The directors of the foundations share voting and investment
power with respect to the securities owned by the foundation, but Mr.
Manoogian disclaims beneficial ownership of such securities.
(6) Includes 2,000 shares held by a charitable foundation for which one
executive officer serves as a director, 27,000 shares held by trusts for
which such executive officer serves as a trustee and 4,354 shares which can
be acquired upon conversion of convertible debt securities owned by such
trusts. The directors of foundation and trustees share voting and investment
power with respect to the securities owned by the such entities, but such
executive officer disclaims beneficial ownership of such securities.
(7) Based on a Schedule 13G dated March 11, 1999 and filed with the Securities
and Exchange Commission, at December 31, 1998 Cramer Rosenthal McGlynn, LLC
beneficially owned 3,619,077 shares of Company Common Stock and shares
voting and investment power over these shares.
Masco Corporation and Mr. Manoogian may each be deemed a controlling person
of the Company by reason of their respective significant ownership of Company
Common Stock and, in the case of Mr. Manoogian, his positions as a Director and
Chairman of the Board of the Company and the other matters described under
"Certain Relationships and Related Transactions."
EXECUTIVE COMPENSATION COMMITTEE REPORT
1998 was a year of significant progress for MascoTech. As part of a
strategic planning process implemented in 1998, the Company established
financial goals that the Board of Directors and senior management believe will
create superior long-term value for stockholders. To promote management's
commitment to these goals, the Compensation Committee developed new compensation
programs designed to closely link executive compensation to the achievement of
significant increases in the price
8
<PAGE> 11
of Company Common Stock. The Committee believes that these new programs maintain
the Company's ability to attract, retain and motivate the highest quality
executive management team, while ensuring that executives remain firmly focused
on enhancing stockholder value. The key components of these programs are
described below.
NEW COMPENSATION PROGRAMS TO ENHANCE STOCKHOLDER VALUE
The annual salary and bonus of the Company's Chairman, Richard A.
Manoogian, of $573,000, was reduced at his request, effective January 1, 1998,
to $1 per year. Frank M. Hennessey, who became the Company's Vice Chairman and
Chief Executive Officer in early 1998, also requested that he receive annual
salary and bonus of $1 for 1998. The Compensation Committee replaced Mr.
Manoogian's and Mr. Hennessey's salary and bonus with a ten year stock option
for 245,000 and 350,000 shares of Company Common Stock, respectively. The
options, which have an exercise price of $19 (the market price on the date of
grant), generally vest in installments, with 20 percent vesting in February
2000, 10 percent vesting annually from February 2001 through February 2005 and
30 percent vesting in February 2006. In addition, Messrs. Manoogian and
Hennessey received restricted stock awards for 50,000 and 75,000 shares of
Company Common Stock, respectively, which generally vest in ten percent annual
installments over a period of ten years from the date of grant. The Committee
believes that replacing all of the cash compensation for Messrs. Manoogian and
Hennessey with compensation that is tied to the value of Company Common Stock
over an extended period of time firmly links the interests of the Company's
leaders with those of stockholders.
In order to give key employees a direct interest in the market value of
Company Common Stock, in early 1998 the Committee granted specially designed
stock options to approximately 100 senior management and operating executives,
including Messrs. Manoogian and Hennessey. Holders of these options, which have
an exercise price of $19, the grant date market price, have pledged not to
exercise the options unless the share price reaches levels of $30 and $35 per
share within a three year period. The options will vest in installments only if
these prices are met for a specified period of time before certain dates. Even
if the price targets are met, the options will then only vest over time,
retroactive to February 2000 for 20 percent of the options and thereafter at an
annual rate of 10 percent of the options through February 2005 and 30 percent in
2006. The attainment of a higher price target will also trigger the vesting of
stock options which did not occur because a lower price target was not met. In
order for the entire option to become exercisable in the installments noted
above, the price of Company Common Stock must appreciate from the date of grant
by 84 percent to $35 per share by February 2001.
In order to further align the objectives of the Company's key employees
with the long-term interests of its stockholders, special "career" restricted
stock awards were also granted in 1998 to approximately 450 corporate and
operating employees. The vesting of these awards is linked to the achievement of
either the $30 or $35 target share prices or target earnings per share levels.
Even if the targets are met, vesting generally occurs in installments over a ten
year period. If such prices or growth is not achieved, the vesting will not
commence until retirement. Messrs. Manoogian and Hennessey also participate in
this program.
For 1999, Messrs. Manoogian and Hennessey requested that their salaries
remain at $1 to demonstrate their disappointment with the Company's recent stock
price performance, and their
9
<PAGE> 12
continuing commitment to enhance stockholder value. The Compensation Committee,
in accordance with its strategy of linking compensation to the long-term
interests of stockholders, replaced their compensation with stock options for
60,000 (Mr. Manoogian) and 100,000 (Mr. Hennessey) shares of Company Common
Stock, exercisable only if the price of Company Common Stock exceeds a record
$35 per share within two years from the February 1999 date of grant, a 150
percent increase from the $14 price on the date of grant. In addition, Messrs.
Manoogian and Hennessey received restricted stock awards for 72,000 and 120,000
shares of Company Common Stock, respectively, which generally vest in ten
percent annual installments over a period of ten years from the date of grant.
Although Company Common Stock has historically been a major part of
compensation for key employees because of its inherent alignment with the
interests of stockholders, the Compensation Committee believes that by replacing
Messrs. Manoogian's and Hennessey's cash compensation with stock compensation,
and by directly linking a significant amount of other key employees'
compensation to the attainment of significant increases in the share price of
Company Common Stock, the compensation programs discussed above more directly
align officers' and other key employees' interests with those of stockholders.
The Committee's strategy includes the continued use of Company Common Stock in
the future. Because compensation strategy includes a variety of components, the
terms and conditions of future options and awards may vary from those granted in
1998. The customary terms and conditions of restricted stock awards and stock
options granted prior to 1998 are described below.
The Board established stock ownership guidelines for officers in 1998 to
formalize the Board's policy of encouraging stock ownership by officers and to
require them to remain at risk by maintaining a substantial interest in Company
Common Stock. The guidelines require that officers own stock with a value that
is not less than a specified multiple of base pay (in the case of the Chief
Executive Officer, at least five times regular base pay as determined by the
Compensation Committee). Officers are required to achieve the share ownership
(including restricted stock awards) necessary to meet the guidelines within
three years of becoming subject to them.
GENERAL COMPENSATION INFORMATION
Executive officers currently receive a combination of base salary, annual
cash bonus and long-term (up to ten year) incentives utilizing Company Common
Stock. In making its decisions, the Compensation Committee uses a variety of
resources as it considers information concerning current compensation practices
and trends within the Company's industries including published compensation
surveys (for companies that are included in the Standard & Poor's Trucks & Parts
Index). In addition, the Compensation Committee takes into account the
compensation policies and practices of corporations in other industries which
are similar to the Company in terms of revenues and market value, since the
Committee believes that the Company competes with such companies for executive
talent. Although the Committee reviews such information for general guidance, it
does not specifically target compensation of the executive officers to
compensation levels at other companies.
Annual cash compensation consists of salary and bonus. Base salaries are
usually determined annually. A range of increases is established by management
for corporate office employees generally that reflects inflation, promotions and
merit. The Compensation Committee then establishes a similar range for the
executive officers. The salary ranges reflect changes observed in general
compensation
10
<PAGE> 13
levels of salaried employees, and in particular, within the geographic area of
the Company's corporate office and within the Company's industries. The
Company's performance for the particular year and the Company's prospects are
more significant factors in determining the range for year-end bonuses than in
determining the salary range. In connection with the payment of bonuses,
corporate performance goals are considered by the Committee in light of general
economic conditions, and include items such as comparisons of year-to-year
operating results, including value creation in excess of the Company's cost of
capital, market share performance and the achievement of budget objectives and
forecasts. However, the Committee does not identify specific goals that must be
satisfied in order for bonuses to be paid. There can be variations from the
established ranges for a variety of subjective factors such as an individual's
contribution to the performance of the Company and its affiliates in addition to
the competitive considerations noted above. In general, the potential bonus
opportunity for executive officers is up to fifty percent of base salary.
Restricted stock awards and stock options granted under the 1991 Long Term
Stock Incentive Plan (the "1991 Plan") are generally used as part of the
Company's long-term incentive arrangements, which focus the recipient on
long-term enhancement in stockholder value and help retain key employees.
Factors reviewed by the Compensation Committee in determining whether to grant
options and awards are generally the same factors considered in determining
salaries and bonuses described above. In order to provide a strong incentive and
reinforce the individual's commitment to the Company, there can be awards that
are significant in size and potential value. The history of restricted stock
awards and stock options previously granted to an executive is also a factor in
determining new awards and grants. In general, the potential opportunity for
annual restricted stock awards under the Company's restricted stock award
program is up to thirty percent of base salary. In addition, supplemental
restricted stock awards are granted periodically.
The Company has historically purchased shares of Company Common Stock in
the open market sufficient to provide for all restricted stock awards so that
the expense related to these awards is more consistent and less variable, as
well as to avoid any earnings per share dilution resulting from these awards.
This expense is amortized over the vesting period of the awards. Because the
Company's tax deduction is based on the fair market value at the time the
restrictions lapse, the after-tax cost of this program can be favorable to the
Company based on the future appreciation of Company Common Stock. The Company
believes that the extended vesting of stock awards with the opportunity for
substantial appreciation promotes retention, and also spreads compensation
expense over a longer term, which generally has resulted in a significant
reduction in the Company's after-tax cost of this stock related compensation.
Restricted stock awards granted under the 1991 Plan generally vest in ten
percent annual installments over a period of ten years from the date of grant,
except for those awards described above with vesting tied to the achievement of
share price targets. In general, vesting is contingent on continuing employment
or a post-employment consulting relationship with the Company. The 1991 Plan
provides, however, that all shares vest immediately upon death, permanent and
total disability or the occurrence of certain events constituting a change in
control of the Company. Each of the named executive officers received restricted
stock awards in early 1998 in conjunction with awards made to other key
employees based on the Company's financial performance during 1997.
11
<PAGE> 14
Original stock option grants made under the 1991 Plan generally vest in
installments beginning in the third year and extending through the eighth year
after grant and, unless otherwise provided, may be exercised until the earlier
of ten years from the date of grant or, as to the number of shares then
exercisable, the termination of the employment or consulting relationship of the
participant. Stock option grants generally do not have a financial reporting
expense associated with them since they are granted at fair market value, and in
fact, raise additional equity for the Company. The difference between the
exercise price and fair market value of Company Common Stock on the date of
exercise is, however, generally deductible by the Company for federal income tax
purposes and thereby provides tax savings to the Company. The Compensation
Committee permits Company Common Stock to be used in payment of federal, state
and local withholding tax obligations attributable to the exercise of stock
options. The 1991 Plan also permits the Compensation Committee to accept the
surrender of an exercisable stock option and to authorize payment by the Company
of an amount equal to the difference between the option exercise price of the
stock and its then fair market value.
Recipients of stock options are eligible to receive restoration options. A
restoration option is granted when a participant exercises a stock option and
pays the exercise price by delivering shares of Company Common Stock. The
restoration option is granted equal to the number of shares delivered by the
participant and does not increase the number of shares covered by the original
stock option. The exercise price is 100 percent of the fair market value of
Company Common Stock on the date the restoration option is granted so that the
participant benefits only from subsequent increases in the Company's stock
price. The Compensation Committee believes that restoration options help to
align more closely the interests of executives with the long-term interests of
stockholders and allow executives to maintain the level of their equity-based
interest in the Company through a combination of direct stock ownership and
stock options. The 1991 Plan also provides that, upon the occurrence of certain
events constituting a change in control of the Company, all stock options
previously granted immediately become fully exercisable, and all restricted
stock awards immediately vest. Generally, if a participant incurs an excise tax
under Section 4999 of the Internal Revenue Code of 1986 (the "Code") in
connection with a payment or distribution following a change in control, the
1991 Plan provides that the participant will receive an additional payment to
reimburse them for such excise tax.
In addition to the stock-based plans noted above, most Company salaried
employees participate in defined contribution profit sharing retirement plans,
which further link compensation to Company performance. Discretionary
contributions are made into these plans based on the Company's performance.
Historically, aggregate annual contributions and accruals for the profit sharing
plans in which executive officers participate have ranged from approximately
four percent to seven percent of participants' base salaries. See footnote (3)
to the "Summary Compensation Table."
Beginning in 1994, Section 162(m) of the Code limits deductibility of
compensation in excess of $1 million paid to the Company's chief executive
officer and to each of the other four highest paid executive officers unless
this compensation qualifies as "performance-based". In 1997 the Board approved,
and the stockholders adopted, amendments to the 1991 Plan so that stock options
granted under the 1991 Plan will continue to result in compensation fully
deductible by the Company under Section 162(m). In addition, the Compensation
Committee approved, and stockholders adopted, the 1997 Annual Incentive
Compensation Plan to continue the Committee's practice of structuring
12
<PAGE> 15
determinations for cash bonuses to make them performance-based and therefore
fully tax deductible. In order for stock options and cash bonuses to qualify as
deductible under Section 162(m), Mr. Morgan does not participate in any
Committee decisions relating to the granting of options and cash bonuses to the
named executive officers. Historically, the compensation of the Company's named
executive officers has not exceeded the $1,000,000 limit. The Compensation
Committee continues to believe it is in the Company's interest to retain
flexibility in its compensation program, and although compensation may in some
circumstances exceed the limitation of Section 162(m), the Compensation
Committee believes that any tax deduction lost on account of such excess
compensation will be insignificant for the foreseeable future.
Compensation decisions for 1998 for all executive officers, including the
Chairman of the Board and Chief Executive Officer, are generally based on the
criteria described above.
Peter A. Dow, Chairman
William K. Howenstein
John A. Morgan
Helmut F. Stern
13
<PAGE> 16
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table summarizes the annual and long-term compensation of the
Company's chief executive officer and the other four highest paid executive
officers for 1998, 1997 and 1996. Because Mr. Manoogian served as the Company's
chief executive officer prior to Mr. Hennessey becoming the Company's Vice
Chairman and Chief Executive Officer in early 1998, both Mr. Manoogian and Mr.
Hennessey are included in the table. The table also lists one former executive
officer who would have been included had he still been an executive officer of
the Company at fiscal 1998 year end. All of the individuals in the table are
referred to collectively as the "named executive officers."
Mr. Manoogian's salary and bonus of $573,000 was reduced at his request,
effective January 1998, to $1 per year. Mr. Hennessey at his request also
received salary and bonus of $1 for 1998. For further information, see
"Executive Compensation Committee Report."
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL -----------------------
COMPENSATION(1) RESTRICTED SECURITIES
------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(2) OPTIONS COMPENSATION(3)
- --------------------------- ---- ------ ----- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Manoogian........ 1998 $ 1 $ 0 $1,710,000 280,000 $ 80,000
Chairman of the Board 1997 400,000 173,000 131,000 0 38,000
1996 400,000 188,000 653,000 140,000 44,000
Frank M. Hennessey.......... 1998 $ 1 $ 0 $2,367,000 400,000 $ 0
Vice Chairman and
Chief Executive Officer(4)
Lee M. Gardner.............. 1998 $662,000 $260,000 $ 344,000 49,000(5) $106,000
President and 1997 601,000 271,000 190,000 34,550 70,000
Chief Operating Officer 1996 579,000 273,000 1,015,000 200,000 73,000
Timothy Wadhams............. 1998 $448,000 $177,000 $ 951,000 30,000(5) $ 67,000
Executive Vice 1997 336,000 203,000 106,000 20,611 40,000
President -- Finance and 1996 323,000 152,000 580,000 120,000 42,000
Administration
William T. Anderson......... 1998 $246,000 $105,000 $ 292,000 20,000 $ 38,000
Vice President --
Controller(4)
David B. Liner.............. 1998 $197,000 $ 84,000 $ 183,000 14,000 $ 20,000
Vice President and
General Counsel(4)
Brian P. Campbell........... 1998 $406,000 $208,000 $ 0 0 $ 28,000
Former President and
Co-Chief Operating
Officer(4)(6)
</TABLE>
- -------------------------
(1) Officers may receive certain perquisites and personal benefits, the dollar
amounts of which are below current Securities and Exchange Commission
thresholds for reporting requirements. For purposes of applying these
thresholds, Mr. Manoogian has been treated as if his 1998 salary and
14
<PAGE> 17
bonus equaled his 1997 salary and bonus of approximately $573,000. Mr.
Hennessey has been treated as if his last salary and bonus was also equal to
$573,000.
(2) This column sets forth the dollar value, as of the date of grant, of
restricted stock awarded under the Company's 1991 Long Term Stock Incentive
Plan (the "1991 Plan"). In general, restricted stock awards shown in the
table vest over a period of ten years from the date of grant with ten
percent of each award vesting annually. Vesting is generally contingent on
continuing employment or a consulting relationship with the Company. The
following number of shares were awarded to the named executive officers in
1998: Mr. Manoogian -- 90,300 shares; Mr. Hennessey -- 125,000 shares; Mr.
Gardner -- 18,170 shares; Mr. Wadhams -- 50,230 shares; Mr.
Anderson -- 16,550 shares; Mr. Liner -- 10,240 shares; and Mr.
Campbell -- none. A portion of these 1998 awards (Mr. Manoogian -- 35,000
shares; Mr. Hennessey -- 50,000 shares; Mr. Gardner -- 9,870 shares; Mr.
Wadhams -- 5,530 shares; Mr. Anderson -- 3,550 shares; and Mr.
Liner -- 2,840 shares) provide that vesting generally occurs over a
three-year period after the recipients retire from the Company after
reaching age 65; however, annual vesting of part or all of these shares
begins earlier if Company Common Stock attains certain price targets ($30
and $35 per share) or if earnings per share targets are met, by specified
dates. Even if these goals are reached, vesting still generally occurs in
installments over a ten-year period. As of December 31, 1998, the aggregate
number and market value of unvested restricted shares of Company Common
Stock held by each of the named executive officers were: Mr.
Manoogian -- 145,390 shares valued at $2,490,000; Mr. Hennessey -- 125,000
shares valued at $2,141,000; Mr. Gardner -- 118,200 shares valued at
$2,024,000; Mr. Wadhams -- 103,070 shares valued at $1,765,000; Mr.
Anderson -- 46,980 shares valued at $805,000; Mr. Liner -- 19,240 shares
valued at $329,000; and Mr. Campbell -- none. Recipients of restricted stock
awards have the right to receive dividends on unvested shares.
(3) This column includes (a) Company contributions and allocations under the
Company's defined contribution retirement plans for 1998 for the accounts of
each of the named executive officers other than Mr. Manoogian, who does not
participate in these plans (for 1998: Mr. Hennessey -- 0; Mr.
Gardner -- $46,000; Mr. Wadhams -- $31,000; Mr. Anderson -- $17,000; Mr.
Liner -- $13,000 and Mr. Campbell -- $28,000), and (b) cash payments made
pursuant to certain tandem rights associated with the annual vesting of
certain restricted stock awards granted in 1989 (in 1998: Mr.
Manoogian -- $80,000; Mr. Hennessey -- none; Mr. Gardner -- $60,000; Mr.
Wadhams -- $36,000; Mr. Anderson -- $21,000; Mr. Liner -- $7,000 and Mr.
Campbell -- none). For further information regarding these rights, see
"Certain Relationships and Related Transactions."
(4) Messrs. Hennessey, Anderson, Liner and Campbell became executive officers in
1998. Consequently, the table does not set forth information for 1997 and
1996, but information for 1998 includes the entire year.
(5) No original stock options were granted in 1997. Options shown for 1997
consist solely of restoration options granted upon the exercise of
previously held stock options. As described in more detail under "Executive
Compensation Committee Report," a restoration option does not increase the
number of shares covered by the original option or extend the term of the
original option.
(6) Mr. Campbell resigned from the Company in September 1998.
15
<PAGE> 18
OPTION GRANT TABLE
The following table sets forth information concerning options granted to
the named executive officers in 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------
NUMBER OF % OF TOTAL EXERCISE POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS PRICE ASSUMED ANNUAL RATE OF STOCK
UNDERLYING GRANTED (SUBJECT TO PRICE APPRECIATION FOR OPTION TERM
OPTIONS TO EMPLOYEES CERTAIN EXPIRATION -----------------------------------
NAME GRANTED IN 1998 RESTRICTIONS) DATE 5% 10%
---- ---------- ------------ ------------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Richard A. Manoogian........ 245,000 16.7% $19 02/18/08 $2,928,000 $7,419,000
35,000 2.4% $19 02/17/08 $0 or $418,000 $0 or $1,060,000
Frank M. Hennessey.......... 350,000 23.8% $19 02/18/08 $4,182,000 $10,598,000
50,000 3.4% $19 02/17/08 $0 or $597,000 $0 or $1,514,000
Lee M. Gardner.............. 49,000 3.3% $19 02/17/08 $0 or $586,000 $0 or $1,484,000
Timothy Wadhams............. 30,000 2.0% $19 02/17/08 $0 or $358,000 $0 or $908,000
William T. Anderson......... 20,000 1.4% $19 02/17/08 $0 or $239,000 $0 or $606,000
David B. Liner.............. 14,000 1.0% $19 02/17/08 $0 or $167,000 $0 or $424,000
Brian P. Campbell........... 0
</TABLE>
- -------------------------
Securities and Exchange Commission regulations require information as to the
potential realizable value of each of these options, assuming that the market
price of Company Common Stock appreciates in value from the date of grant to the
end of the option term at annual rates of five percent and ten percent. These
options, which are discussed further under "Executive Compensation Committee
Report," are not exercisable (due to pledges by the holders thereof) unless
Company Common Stock attains certain price targets by certain dates. As shown in
the table, these price targets would not be attained, and the potential
realizable value would be $0, if Company Common Stock only appreciates in value
from the date of grant at an annual rate of five percent, and further, the price
targets would not be met, and the potential realizable value would be $0, even
if Company Common Stock appreciates in value from the date of grant at an annual
rate of ten percent. Assuming the price targets are attained by the target
dates, the potential realizable value at the end of the option term at assumed
annual rates of stock price appreciation of five percent and ten percent are as
set forth above. These amounts are based on assumed rates of appreciation only.
Actual gains, if any, on stock option exercises and Company Common Stock
holdings will depend on overall market conditions and the future performance of
the Company and its Common Stock. There can be no assurance that the amounts
reflected in the table will be realized.
16
<PAGE> 19
OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table sets forth information concerning each exercise of
stock options during 1998 by each named executive officer and the value at
December 31, 1998 of unexercised options held by such individuals under the
Company's stock option plans. The value of unexercised options reflects the
increase in market value of Company Common Stock from the date of grant through
December 31, 1998 (the closing price of Company Common Stock on December 31,
1998 was $17.125 per share). The value actually realized upon future option
exercises by the named executive officers will depend on the value of Company
Common Stock at the time of exercise.
AGGREGATED OPTION EXERCISES IN 1998, AND DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1998 DECEMBER 31, 1998
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
---- ----------- -------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Richard A. Manoogian..... 1,080,000 $11,608,000 712,000 28,000 $3,814,000 $ 74,000
Frank M. Hennessey....... 0 400,000 0 0 0
Lee M. Gardner........... 0 315,000 192,061 1,508,000 1,599,000
Timothy Wadhams.......... 0 171,000 86,769 820,000 821,000
William T. Anderson...... 0 52,000 8,000 84,000 21,000
David B. Liner........... 0 14,000 0 0 0
Brian P. Campbell........ 0 0 0 0 0
</TABLE>
PENSION PLANS
The executive officers other than Mr. Manoogian participate in pension
plans maintained by the Company for certain of its salaried employees. The
following table shows estimated annual retirement benefits payable for life at
age 65 for various levels of compensation and service under these plans.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE(1)
-------------------------------------------------------------
REMUNERATION(2) 5 10 15 20 25 30
- --------------- ------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $ 5,645 $11,290 $ 16,935 $ 22,580 $ 28,225 $ 33,870
200,000 11,290 22,580 33,870 45,161 56,451 67,741
300,000 16,935 33,870 50,806 67,741 84,676 101,611
400,000 22,580 45,161 67,741 90,321 112,902 135,482
500,000 28,225 56,451 84,676 112,902 141,127 169,352
600,000 33,870 67,741 101,611 135,482 169,352 203,223
700,000 39,516 79,031 118,547 158,062 197,578 237,093
800,000 45,160 90,321 135,482 180,643 225,803 270,964
</TABLE>
- -------------------------
(1) The plans provide for credit for employment with any of the Company or Masco
Corporation and their subsidiaries. Vesting occurs after five full years of
employment. The benefit amounts set forth in the table above have been
converted from the plans' calculated five-year certain and life benefit
17
<PAGE> 20
and are not subject to reduction for social security benefits or for other
offsets, except to the extent that pension or equivalent benefits are
payable under a Masco Corporation plan. The table does not depict Code
limitations on tax-qualified plans because one of the plans is a
non-qualified plan established by the Company to restore for certain
salaried employees (including certain of the named executive officers)
benefits that are otherwise limited by the Code. Approximate years of
credited service for the named executive officers participating in the plan
are: Mr. Hennessey -- 9; Mr. Gardner -- 12; Mr. Wadhams -- 23; Mr.
Anderson -- 26; and Mr. Liner -- 19.
(2) For purposes of determining benefits payable, remuneration in general is
equal to the average of the highest five consecutive January 1 annual base
salary rates paid by the Company prior to retirement. The compensation
covered by the plans includes amounts paid to Mr. Hennessey by Masco
Corporation prior to his employment with the Company.
Under the Company's Supplemental Executive Retirement and Disability Plan,
certain officers and other key executives of the Company, or any company in
which the Company or a subsidiary owns at least 20 percent of the voting stock,
may receive retirement benefits in addition to those provided under the
Company's other retirement plans and supplemental disability benefits. Each
participant is designated by the Chairman of the Board (and approved by the
Compensation Committee) to receive annually upon retirement on or after age 65,
an amount which, when combined with benefits from the Company's other retirement
plans, and for most participants any retirement benefits payable by reason of
employment by prior employers, equals 60 percent of the average of the
participant's highest three years' cash compensation received from the Company
(limited to base salary and regular year-end cash bonus). Participants are
limited to an annual payment under this plan, which when combined with benefits
under the Company's non-qualified plan, may not exceed a maximum, currently
approximately $405,000. A participant may also receive supplemental medical
benefits. A participant who has been employed at least two years and becomes
disabled prior to retirement will receive annually 60 percent of the
participant's total annualized cash compensation in the year in which the
participant becomes disabled, subject to certain limitations on the maximum
payment and reduced by benefits payable pursuant to the Company's long-term
disability insurance and similar plans. Upon a disabled participant's reaching
age 65, such participant receives the annual cash benefits payable upon
retirement, as determined above. A surviving spouse will receive reduced
benefits upon the participant's death. Participants are required to agree that
they will not engage in competitive activities for at least two years after
termination of employment, and if employment terminates by reason of retirement
or disability, during such longer period as benefits are received under this
plan. Messrs. Gardner and Wadhams participate in this plan.
18
<PAGE> 21
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on Company Common Stock with the cumulative total return of the Standard
& Poor's SmallCap 600 Index ("S&P 600 Index") and the Standard & Poor's Trucks &
Parts Index ("S&P Trucks Index") for the period from January 1, 1994 through
December 31, 1998, when the closing price of Company Common Stock was $17.125
per share (on April 15, 1999 the closing price was $17.00 per share). Pursuant
to Securities and Exchange Commission regulations, the graph also includes the
index used last year, the Standard & Poor's 500 Composite Stock Price Index
("S&P 500 Index"). The Company believes the S&P 600 Index provides a more
meaningful comparison to the Company's stock performance than the S&P 500 Index
as the S&P 600 Index includes companies with market capitalization similar to
the Company's, and the Company was recently included in the S&P 600 Index. The
graph assumes investments of $100 on December 31, 1993 in Company Common Stock,
the S&P 600 Index, the S&P Trucks Index and the S&P 500 Index, and the
reinvestment of dividends.
Performance Graph
The table below sets forth the value, as of December 31 of each of the
years indicated, of a $100 investment made on December 31, 1993 in each of
Company Common Stock, the S&P 600 Index, the S&P 500 Index and the S&P Trucks
Index, and the reinvestment of dividends.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MascoTech $100.00 $ 47.21 $ 40.00 $ 60.89 $ 69.15 $ 65.42
- ---------------------------------------------------------------------------------------------------------
S&P SmallCap 600 Index 100.00 95.23 123.60 149.81 187.96 185.45
- ---------------------------------------------------------------------------------------------------------
S&P 500 Index 100.00 101.28 138.88 170.38 226.78 291.04
- ---------------------------------------------------------------------------------------------------------
S&P Trucks & Parts Index 100.00 83.96 87.14 110.59 177.92 144.25
- ---------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE> 22
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors currently consists of
Messrs. Dow, Howenstein, Morgan and Stern. From time to time Morgan Lewis
Githens & Ahn, Inc., of which Mr. Morgan is Managing Director, performs
investment banking and other related services for the Company and Masco
Corporation. No fees were paid by the Company or Masco Corporation to such firm
for financial advisory services rendered in 1998. Mr. Fridholm serves as an
executive officer of MSX International, Inc. ("MSXI"), an affiliate of the
Company. Prior to his appointment in 1998 as an executive officer of MSXI, Mr.
Fridholm served as member of the Compensation Committee of the Company. Messrs.
Gardner and Manoogian, executive officers of the Company, serve as directors of
MSXI.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company became a publicly owned company in July 1984 as part of a
restructuring of Masco Corporation, a manufacturer of home improvement and
building products.
In January 1998, the Company expanded its business operations when it
acquired the remaining 63 percent of the outstanding shares of TriMas
Corporation that it did not previously own for approximately $920 million in
cash through a tender offer. The Company paid $34.50 net per share and Masco
Corporation tendered to the Company the 1,583,708 shares (approximately 4
percent) of TriMas it held. In connection with the transaction, Brian P.
Campbell, who was the President, a director and a significant stockholder in
TriMas, became a President and Co-Chief Operating Officer of the Company. Mr.
Campbell entered into an employment agreement with the Company that would have
expired March 8, 2001. This agreement provided for minimum annual compensation
of $528,000, plus bonuses of at least $285,000 for each of 1997 and 1998, pro
rata for the period of employment. Mr. Campbell's employment terminated in
September 1998 when he resigned as a President and Co-Chief Operating Officer of
the Company. As part of the acquisition of TriMas, employees of TriMas,
including Mr. Campbell, who held stock options under TriMas' stock option plans
received a cash payment equal to the difference between $34.50 and the option
exercise price for each share subject to an outstanding option. The Company also
substituted shares of Company Common Stock with a value equivalent to the TriMas
common stock that was subject to restrictions under TriMas' restricted stock
award program. After completion of this acquisition in January 1998, Mr.
Hennessey resigned as Masco Corporation's Executive Vice President and became a
Director and Vice Chairman and Chief Executive Officer of the Company. Mr.
Hennessey has agreed to serve as a part-time employee of Masco Corporation (for
no more than twenty percent of his time) in connection with matters with which
he was involved as Executive Vice President of Masco Corporation for an annual
salary of $100,000 plus a bonus opportunity of up to $50,000.
The Company is a party to certain agreements with Masco Corporation as
described below.
CORPORATE SERVICES AGREEMENT. Under a Corporate Services Agreement, Masco
Corporation provides the Company and its subsidiaries with office space for
executive offices, use of Masco Corporation's data processing equipment and
services, certain research and development services, corporate administrative
staff and other support services in return for the Company's payment of an
20
<PAGE> 23
annual base service fee of .8 percent of its consolidated annual net sales,
subject to adjustments. This agreement also provides for various license rights
and confidential treatment of information which may arise from Masco
Corporation's performance of research and development services on behalf of the
Company. In connection with the Company's acquisition of TriMas, the parties
terminated the Corporate Services Agreement between Masco Corporation and TriMas
and amended the Corporate Services Agreement with the Company to include TriMas.
Approximately $9 million has been charged to the Company (including TriMas) by
Masco Corporation for 1998, subject to adjustment in accordance with the terms
of the agreement, which renews automatically for one-year periods, unless
terminated by either party upon at least 90 days' notice before any October 1
renewal date.
CORPORATE OPPORTUNITIES AGREEMENT. The Company and Masco Corporation are
parties to a Corporate Opportunities Agreement which addresses potential
conflicts of interest with respect to future business opportunities. This
agreement materially restricts the ability of either party to enter into
acquisitions, joint ventures or similar transactions involving businesses in
which the other party is engaged without the consent of the other party. It
renews automatically from year to year, unless terminated by either party at
least 90 days before any October 1 renewal date.
STOCK REPURCHASE AGREEMENT. Under a Stock Repurchase Agreement, Masco
Corporation has the right to sell to the Company, at a price based on fair
market value, shares of Company Common Stock upon certain events that would
result in Masco Corporation's ownership of Company Common Stock exceeding 49
percent of the Company's then outstanding shares. Such events include
repurchases of Company Common Stock initiated by the Company or any of its
subsidiaries and reacquisitions of Company Common Stock through forfeitures of
shares previously awarded by the Company pursuant to employee stock incentive
plans. In each case the Company has control over the amount of Company Common
Stock it would ultimately acquire, including shares subject to repurchase under
the Stock Repurchase Agreement. Masco Corporation's right expires 30 days from
the date notice of an event is given by the Company. In view of Masco
Corporation's current level of ownership of Company Common Stock, the Company
does not anticipate that this right will ever be invoked.
RIGHT OF FIRST REFUSAL. In connection with the Company's 1996 purchase from
Masco Corporation of Company Common Stock and warrants, Masco Corporation
granted the Company a right of first refusal, which expires September 30, 2000,
to purchase the remaining shares of Company Common Stock held by Masco
Corporation.
ASSUMPTION AND INDEMNIFICATION AGREEMENT. Under an Assumption and
Indemnification Agreement, the Company assumed, and agreed to indemnify Masco
Corporation against, all of the liabilities and obligations of the businesses
transferred to it in Masco Corporation's 1984 restructuring, including claims
and litigation resulting from events or circumstances that occurred or existed
prior to the transfer, but excluding specified liabilities.
In addition, TriMas, which is now a wholly owned subsidiary of the Company,
acquired several businesses from Masco Corporation in early 1990, and as part of
the transaction, Masco Corporation agreed to indemnify TriMas against certain
liabilities of the acquired businesses.
SECURITIES PURCHASE AGREEMENT. Under a Securities Purchase Agreement, the
Company and Masco Corporation agreed that Masco Corporation will purchase from
the Company at the Company's option
21
<PAGE> 24
up to $200 million of subordinated debentures and, in connection therewith, the
Company pays an annual commitment fee to Masco Corporation of $250,000. This
commitment extends to March 31, 2002. As part of the 1996 transaction referred
to above, the Company has also agreed to file registration statements under the
federal securities laws to enable Masco Corporation from time to time to
publicly dispose of securities of the Company held by Masco Corporation.
In 1988 the Company and Masco Corporation jointly established Masco Capital
Corporation to seek business and other investment opportunities of mutual
interest that for various reasons were viewed as more appropriately undertaken
on a joint basis rather than individually. In December 1991, the Company sold
its 50 percent ownership interest in Masco Capital to Masco Corporation for
approximately $49.5 million and may receive additional payments based upon any
aggregate net increase in the value of Masco Capital's remaining investments.
MascoTech GmbH, a German subsidiary of the Company, and Masco GmbH, a
German subsidiary of Masco Corporation, have from time to time advanced excess
funds held in such foreign country to one another to be used for working
capital. The parties negotiated a fluctuating rate of interest for these loans.
The largest amount outstanding payable to MascoTech GmbH during 1998 was
approximately $435,200.
Sales of products and services and other transactions occur from time to
time between the Company and Masco Corporation. As a result of such transactions
in 1998, the Company paid approximately $80,000 to Masco Corporation and
received approximately $12.8 million from Masco Corporation. The Company also
participates with Masco Corporation in a number of national purchasing programs
which enable them to obtain favorable terms from certain of their service and
product suppliers.
In 1989 the Company made long-term restricted stock awards to a number of
key Company employees, which included tandem rights to phantom TriMas shares
having a value equal to the value of TriMas common stock. At the time of the
grant, the aggregate value of the award of Company Common Stock to each
participant was equal to the aggregate value of the alternative phantom TriMas
shares that were awarded. On each vesting date the participant received the
vesting shares of Company Common Stock and, if the value of the vesting phantom
TriMas shares was greater, the participant also received the excess paid in
cash. For the 1998 vesting and the final vesting in 1999, the Compensation
Committee of the Board of Directors determined the per share value of TriMas to
be $34.50, the price per share paid by the Company in connection with its
acquisition of TriMas.
Ownership of securities and various other relationships and incentive
arrangements may result in conflicts of interest in the Company's dealings with
Masco Corporation and others. The Corporate Opportunities Agreement with Masco
Corporation and other aspects of the relationship between the companies may
affect their ability to make acquisitions and develop new business under certain
circumstances, although the Company does not believe that it has experienced any
such effect to date. Three persons affiliated with Masco Corporation are
currently members of the Company's Board of Directors. Mr. Manoogian, the
Company's Chairman of the Board, is also the Chairman of the Board and Chief
Executive Officer of Masco Corporation and a significant stockholder of both
companies. Mr. Hennessey, a Director and Vice Chairman and Chief Executive
Officer of the Company, was
22
<PAGE> 25
formerly Executive Vice President and is currently a part-time employee of Masco
Corporation. Mr. Morgan, who is a Director of the Company, is also a Director of
Masco Corporation. Because of these relationships, an independent committee of
the Company's Board of Directors reviews its significant transactions with
affiliated companies.
The following table sets forth the number of shares of Masco Corporation
common stock beneficially owned as of March 15, 1999 by nominees, Directors and
named executive officers and by the Directors and executive officers of the
Company as a group (excluding from the group Mr. Campbell, who resigned in
September, 1998). Except as indicated below, each person exercises sole voting
and investment power with respect to the shares listed.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK OF
MASCO CORPORATION
NAME BENEFICIALLY OWNED(1)
---- ---------------------
<S> <C>
Peter A. Dow................................................ 10,000
Roger T. Fridholm........................................... 0
Frank M. Hennessey(2)....................................... 347,403
William K. Howenstein....................................... 0
Richard A. Manoogian(2)(3).................................. 8,588,329
John A. Morgan(4)........................................... 11,740
Helmut F. Stern............................................. 0
William T. Anderson......................................... 0
Lee M. Gardner.............................................. 800
David B. Liner(2)........................................... 68,268
Timothy Wadhams............................................. 18,000
Brian P. Campbell........................................... 800
All 13 Directors and executive officers of the Company as a
group
(excluding subsidiary, divisional and group
executives)(2)(3)(4)(5)................................... 9,244,114
</TABLE>
- -------------------------
(1) The only nominee, Director or named executive officer of the Company who
beneficially owns one percent or more of Masco Corporation common stock is
Mr. Manoogian, who beneficially owns 2.5 percent of Masco Corporation common
stock. Directors and executive officers of the Company as a group
beneficially own 2.7 percent of Masco Corporation common stock.
(2) Includes unvested restricted stock award shares issued under Masco
Corporation's restricted stock incentive plan (188,336 shares for Mr.
Hennessey; 569,992 shares for Mr. Manoogian; 8,916 for Mr. Liner; and
826,848 shares for all Directors and executive officers of the Company as a
group)and shares which may be acquired before May 15, 1999 upon exercise of
stock options (73,262 for Mr. Hennessey; 463,461 shares for Mr. Manoogian;
49,280 shares for Mr. Liner; and 636,525 shares for all Directors and
executive officers of the Company as a group). Holders have voting but no
investment power over unvested restricted shares and exercise neither voting
nor investment power over unexercised option shares.
(3) Includes 3,273,800 shares of Masco Corporation common stock owned by
charitable foundations for which Mr. Manoogian serves as director. Shares
beneficially owned by Mr. Manoogian and by
23
<PAGE> 26
all Directors and executive officers of the Company as a group include in
each case 1,429,000 shares of Masco Corporation common stock owned by a
trust for which Mr. Manoogian serves as a trustee. The directors of the
foundations and the trustees share voting and investment power with respect
to the Masco Corporation common stock owned by the foundations and trusts,
but Mr. Manoogian disclaims beneficial ownership of such shares.
(4) Includes 1,600 unvested restricted stock award shares issued under Masco
Corporation's 1997 Non-Employee Directors Stock Plan and 4,164 shares which
may be acquired before May 15, 1999 upon exercise of stock options issued
under such Plan. Holders have voting but no investment power over unvested
restricted shares and exercise neither voting nor investment power over
unexercised option shares.
(5) Include 26,802 shares of Masco Corporation common stock owned by a
charitable foundation for which one executive officer serves as a director
and 29,240 shares of Masco Corporation common stock held by trusts for which
certain executive officers serve as trustees. The directors of the
foundation and the trustees share voting and investment power with respect
to the Masco Corporation common stock owned by the foundation and trusts,
but such executive officers disclaim beneficial ownership of such shares.
Mr. Manoogian may be deemed to be a controlling person of Masco Corporation
by reason of his significant ownership of Masco Corporation common stock and his
position as a director and executive officer of Masco Corporation.
24
<PAGE> 27
STOCKHOLDER PROPOSAL
Mr. Richard Dee, 115 East 89th Street, New York, NY 10128, record owner of
2,592 shares of Company Common Stock, has submitted the following proposal:
"Stockholders of publicly-owned corporations do not 'elect' directors.
Directors are selected by incumbent directors and managements -- stockholders
merely 'ratify' or approve those selections much as they ratify selections of
auditors.
"The term 'Election of Directors' has been misused in corporate proxy
materials for many years to refer to the process by which directors are
empowered. The term is not only inappropriate -- it is misleading. WITH NO
CHOICE OF CANDIDATES, THERE IS NO ELECTION.
"Understandably, incumbent directors are anxious to protect their absolute
power over corporate activities. The root of that power is control of Corporate
Governance -- which is assured by control of board composition. Unfortunately,
the 'Elective Process Rights' of stockholders are being ignored.
"Approval of this Corporate Governance proposal will provide MascoTech
stockholders with a choice of director candidates each year -- and an
opportunity to vote for those whose qualifications and stated intentions they
favor. Its approval will provide stockholders with 'duly elected'
representatives.
"Public officials are duly elected -- and are held accountable. Continuing
in office depends upon satisfying constituents, not simply nominators. Corporate
directors take office unopposed and answer only to fellow directors.
"A substantial majority of MascoTech directors are closely allied to Masco
Corporation (and its affiliates), as present or past senior officers and
directors -- or as suppliers to MascoTech or Masco. Three are also directors of
a major privately-owned company controlled by a Masco director.
"MascoTech and Masco have vastly different stockholder constituencies. It
is crucial to bear in mind that what is good for the stockholders of one is not
necessarily good for the stockholders of the other.
"Therefore, as long as MascoTech directors are allowed to select and
propose only the number of "candidates" as directorships to be filled, and as
long as it is impossible, realistically, for stockholders to utilize their right
to nominate and elect directors, no practical means will exist for stockholders
to cause director turnover -- until this or a similar proposal is approved.
Turnover reduces the possibility of conflicts of interest, such as those that
occur regularly -- and provides sources for new ideas and new approaches to
problems.
"It is hereby requested that the Board of Directors promptly adopt a
resolution calling upon the Nominating Committee to nominate two candidates for
each directorship to be filled by the voting of stockholders at annual meetings.
In addition to customary personal background information, Proxy Statements shall
include a statement by each candidate as to why he or she believes they should
be elected.
"Although Delaware law enables incumbents to select all nominees, approval
of this proposal will permit stockholders to replace any or all directors if
they become dissatisfied with them or the results of
25
<PAGE> 28
corporate policies and/or performance. Not a happy prospect even for those able
to nominate their possible successors.
"It is vital that MascoTech stockholders be provided an opportunity to
elect a board composed of representatives willing to have their respective
qualifications reviewed and weighed carefully by those whose interests they are
to serve.
"PLEASE VOTE FOR THIS PROPOSAL."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
Your Board of Directors believes that its appropriate role is to provide
Company stockholders with a slate of Director candidates whom the Board has
determined, in its best judgment and in keeping with its fiduciary duties to
stockholders, to be the most qualified to manage the affairs of the Company in a
way to further the common interests of our stockholders.
To fulfill this function, we established a Nominating Committee in 1998
whose responsibility is to identify and consider candidates to serve as
Directors of the Company. Stockholders are encouraged to recommend the names of
suitable candidates to the Nominating Committee. As we stated in our Proxy
Statement for the 1998 Annual Meeting of Stockholders, the Nominating Committee
will consider any candidates proposed by stockholders for nomination as
Directors.
In keeping with its role the Nominating Committee has carefully reviewed
the qualifications of each candidate prior to nominating such candidate for the
position of Director and made its nominations based on the qualifications of
each candidate to serve the best interests of the Company. The experience of
incumbent Directors and the contributions they make in the service of the
Company are important considerations in nominating incumbent Directors for
re-election.
We do not agree with Mr. Dee's statement that a "substantial majority" of
the Company's Directors are closely allied to Masco Corporation (and its
affiliates). To the contrary, four of the seven Directors of the Company -- a
majority of the Board--are not current or former officers or Directors of Masco
Corporation and have no other material relationship with Masco Corporation.
These unaffiliated Directors also represent all of the members of the Audit
Committee and three out of four of the members of the Nominating and
Compensation Committees.
We do not think it is in the interests of stockholders, or consistent with
our fiduciary duties, to be required to propose an alternative slate of
Directors who are not the Nominating Committee's first choice. The candidates
selected by the Nominating Committee are often in demand by other companies
seeking proven director talent. We believe that our ability to recruit the best
potential candidates would be hurt if we were required to ask such candidates to
set aside other available directorships without the assurance that they have in
fact been identified as the Nominating Committee's best choice for the Company's
Board of Directors and have the full support of the Nominating Committee.
Furthermore, we do not believe it is the proper role of the Nominating Committee
to foster a political environment in which nominees compete with each other for
available directorships.
The Board of Directors believes the existing process for evaluating
potential candidates, including those proposed by Company stockholders, is the
most efficient way to present stockholders with qualified
26
<PAGE> 29
Directors to serve the Company. Because we, your Board of Directors, believe
that the current selection process for choosing Directors serves the best
interests of stockholders, we urge stockholders to vote AGAINST this proposal.
RATIFICATION OF SELECTION OF
INDEPENDENT ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
selected the independent public accounting firm of PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") to audit the Company's financial statements for the
year 1999, and believes it appropriate to submit its choice for ratification by
stockholders.
PricewaterhouseCoopers has acted as the Company's independent certified
public accounting firm since the Company's formation in 1984. It has performed
services of an accounting and auditing nature and, from time to time, has
provided other consulting services for the Company as well as for Masco
Corporation. Representatives of PricewaterhouseCoopers are expected to be
present at the meeting, will have the opportunity to make a statement and are
expected to be available to respond to appropriate questions. If the selection
is not ratified, the Board will consider selecting another public accounting
firm as the independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF PRICEWATERHOUSECOOPERS AS INDEPENDENT AUDITORS FOR THE COMPANY FOR
THE YEAR 1999.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and Directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Officers, Directors and greater than ten
percent stockholders are required by regulations of the Securities and Exchange
Commission to furnish the Company copies of all Section 16(a) forms they file.
Based solely on the Company's review of copies of such forms received by
it, or written representations from certain reporting persons that no Forms 5
are required for those persons, the Company believes that its Directors,
officers and greater than ten percent beneficial owners met all applicable
filing requirements during the last fiscal year.
STOCKHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
Stockholders who intend to present a proposal for inclusion in the
Company's proxy statement and proxy relating to the 2000 Annual Meeting or at
such Meeting must provide written notice of such intent to the Chairman or
Secretary of the Company at its address stated in the Notice of Annual Meeting
by December 22, 1999. The Company will have the right to exercise discretionary
voting authority on any
27
<PAGE> 30
matter presented at the 2000 Annual Meeting that has not been presented to the
Company in writing by December 22, 1999.
VOTING PROCEDURES
Stockholders of record (stockholders who hold their shares in their own
name) can also give proxies by calling a toll-free telephone number or by using
the Internet. The telephone and Internet voting procedures are designed to
authenticate stockholders' identities, to allow stockholders to give their
voting instructions and to confirm that stockholders' instructions have been
recorded properly. The Company has been advised by counsel that the procedures
that have been put in place comply with applicable law. Specific instructions
for stockholders of record who wish to use the telephone or Internet voting
procedures are included with the enclosed proxy card.
OTHER MATTERS
The Board of Directors knows of no other matters to be voted upon at the
Meeting. If any other matters properly come before the Meeting, it is the
intention of the proxies named in the enclosed Proxy to vote the shares
represented thereby with respect to such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ EUGENE A. GARGARO, JR.
EUGENE A. GARGARO, JR.
Secretary
Taylor, Michigan
April 20, 1999
28
<PAGE> 31
MASCOTECH, INC.
ANNUAL MEETING OF STOCKHOLDERS
AT CORPORATE HEADQUARTERS
21001 VAN BORN ROAD
TAYLOR, MICHIGAN 48180
[MAP]
FROM DOWNTOWN DETROIT (EAST)
- - Take I-94 west to the Pelham Road exit.
- - Turn right onto Pelham Road and travel to Van Born Road.
- - Turn left onto Van Born Road and proceed to the corporate headquarters.
FROM METRO AIRPORT (WEST)
- - Take I-94 east to the Pelham Road exit.
- - Turn left onto Pelham and travel to Van Born Road.
- - Turn left onto Van Born Road and proceed to the corporate headquarters.
FROM SOUTHFIELD/BIRMINGHAM (NORTH)
- - Take the Southfield Freeway to the Outer Drive/Van Born Road exit.
- - Stay on the service drive and proceed to Van Born Road.
- - Bear right onto Van Born Road and travel to the corporate headquarters.
FROM TOLEDO (SOUTH)
- - Take I-75 north to the Telegraph Road north exit.
- - Proceed on Telegraph Road north to Van Born Road.
- - Turn right on Van Born Road and proceed to the corporate headquarters.
<PAGE> 32
MASCOTECH, INC. VOTE BY TELEPHONE OR INTERNET OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
<TABLE>
<CAPTION>
- ------------------------------------ ------------------------------------------- ------------------------------
TELEPHONE INTERNET MAIL
800-650-4226 OR https://proxy.shareholder.com/msx OR
- ------------------------------------ ------------------------------------------- ------------------------------
<S><C>
Use any touch-tone telephone to vote Use the Internet to vote your proxy. Have Mark, sign and date your proxy
your proxy. Have your proxy card in your proxy card in hand when you access card and return it in the
hand when you call. You will be the website. You will be prompted to postage-paid envelope we have
prompted to enter your control number, enter your control number, located in the provided.
located in the box below, and then box below, to create an electronic ballot.
follow the simple directions.
- --------------------------------------------------------------------------------
Your telephone or Internet vote authorizes the named proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If you have submitted your proxy by telephone or the Internet there is no
need for you to mail back your proxy card.
- --------------------------------------------------------------------------------
CALL TOLL-FREE TO VOTE
IT'S FAST AND CONVENIENT
800-650-4226
------------------------------------------
CONTROL NUMBER
FOR TELEPHONE/INTERNET VOTING
------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
\/ DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR INTERNET \/
- ------------------------------------------------------------------------------------------------------------------------------------
<S><C>
[ ] PROXY CARD
(1) Election of Directors FOR all nominees [X] WITHHOLD AUTHORITY to vote [X] EXCEPTIONS [X]
listed below for all nominees listed below
Class II Directors to hold office until the Annual Meeting of Stockholders in 2002 or until their respective successors are elected
and qualified.
Nominees: PETER A. DOW, ROGER T. FRIDHOLM AND FRANK M. HENNESSEY
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS" BOX AND STRIKE A LINE THROUGH THAT
NOMINEE'S NAME.)
(2) Ratification of the selection of PricewaterhouseCoopers LLP as (3) Stockholder proposal regarding choice of director
independent auditors for the Company for the year 1999. nominees.
FOR [X] AGAINST [X] ABSTAIN [X] FOR [X] AGAINST [X] ABSTAIN [X]
(4) In the proxies' discretion upon such other business
as may properly come before the meeting.
The shares represented by this Proxy will be voted in accordance with the specifications CHANGE OF ADDRESS OR [X]
above. IF SPECIFICATIONS ARE NOT MADE, THE PROXY WILL BE VOTED FOR THE ELECTION OF ALL COMMENTS MARK HERE
NOMINEES, FOR RATIFICATION OF INDEPENDENT AUDITORS, AGAINST THE STOCKHOLDER PROPOSAL AND
IN THE PROXIES' DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
Please sign exactly as name appears at left.
Executors, administrators, trustees, et al. should
so indicate when signing. If the signature is for a
corporation, please sign the full corporate name
by an authorized officer. If the signature is for a
partnership, please sign the full partnership name
by an authorized person. If shares are registered
in more than one name, all holders must sign.
Dated: , 1999
--------------------------------------
-------------------------------------------- (L.S.)
Signature
-------------------------------------------- (L.S.)
Signature
IF VOTING BY MAIL, PLEASE SIGN, DATE AND RETURN THIS PROXY VOTES MUST BE INDICATED
CARD PROMPTLY IN THE ENCLOSED ENVELOPE. (X) IN BLACK OR BLUE INK. [X]
</TABLE>
PLEASE DETACH HERE
YOU MUST DETACH THIS PORTION OF THE PROXY CARD
\/ BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE \/
- --------------------------------------------------------------------------------
<PAGE> 33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 18, 1999
MASCOTECH, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, hereby revoking any Proxy heretofore given, appoints
RICHARD A. MANOOGIAN and EUGENE A. GARGARO, JR. and each of them attorneys and
proxies for the undersigned, each with full power of substitution, to vote the
shares of Company Common Stock registered in the name of the undersigned to the
same extent the undersigned would be entitled to vote if then personally present
at the Annual Meeting of Stockholders of MascoTech, Inc. to be held at the
offices of the Company at 21001 Van Born Road, Taylor, Michigan 48180, on
Tuesday, May 18, 1999, at 2:00 p.m. Eastern daylight time and at any adjournment
thereof.
The undersigned hereby acknowledges receipt of the accompanying Notice of
Annual Meeting of Stockholders and Proxy Statement.
(Continued and to be dated and signed on
the reverse side.)
MASCOTECH, INC.
P.O. BOX 11275
NEW YORK, N.Y. 10203-0275
