<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
DURAKON
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
<PAGE> 2
DURAKON INDUSTRIES, INC.
2101 N. LAPEER ROAD
LAPEER, MI 48446
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 1999
------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Durakon
Industries, Inc. (the "Company") will be held at the Company's corporate
headquarters located at 2101 N. Lapeer Road, Lapeer, Michigan 48446, on Tuesday,
May 25, 1999, at 2:00 p.m. local time, for the purposes of:
1. Electing five directors to serve until the 2000 Annual Meeting of
Shareholders; and
2. Transacting such other business as may properly come before the meeting
or any adjournment thereof.
You are invited to attend the meeting. However, if you do not expect to
attend in person, you are urged to sign and return immediately the enclosed
proxy which is solicited by the Board of Directors. A postage-paid envelope is
enclosed for your use in returning the proxy. The proxy is revocable and will
not affect your right to vote in person if you attend the meeting.
By Order of the Board of Directors,
JAMES C. SMITH
Secretary
Lapeer, Michigan
April 23, 1999
<PAGE> 3
DURAKON INDUSTRIES, INC.
2101 N. LAPEER ROAD
LAPEER, ML 48446
PROXY STATEMENT
ANNUAL MEETING TO BE HELD MAY 25, 1999
------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Durakon Industries, Inc., a Michigan
corporation (the "Company"), to be used at the Annual Meeting of Shareholders of
the Company to be held on Tuesday, May 25, 1999, or at any adjournments or
postponements thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders and in this Proxy Statement. The expenses of
soliciting proxies will be paid by the Company. This Proxy Statement and the
enclosed form of proxy will first be sent or given to shareholders on or about
April 23, 1999.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the Annual Meeting, a written
notice of revocation bearing a later date than the proxy, (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Secretary
of the Company at or before the Annual Meeting, or (iii) attending the Annual
Meeting and voting in person (although attendance at the Annual Meeting will not
in and of itself constitute a revocation of a proxy). Any written notice
revoking a proxy should be sent to the Secretary of the Company at the Company's
corporate headquarters.
The Annual Report to Shareholders for the year ended December 31, 1998 is
enclosed herewith.
Only shareholders of record at the close of business on April 15, 1999 will
be entitled to vote at the meeting or any adjournment thereof. Each holder of
the 6,125,200 issued and outstanding shares of the Company's common stock,
without par value (the "Common Stock"), is entitled to one vote per share.
Shares cannot be voted at the meeting unless the holder is present in person or
represented by proxy. Shares may not be voted cumulatively for the election of
directors.
1. ELECTION OF DIRECTORS
Five directors are to be elected at the Annual Meeting, each to hold office
until the next Annual Meeting of Shareholders and until his successor has been
elected and qualified. The nominees named below have been selected by the Board
of Directors of the Company. If, due to circumstances not now foreseen, any of
the nominees named below will not be available for election, the proxies will be
voted for such other person or persons as the Board of Directors may select.
Proxies solicited by the Board of Directors will be voted in favor of the five
nominees, unless a shareholder indicates otherwise on the proxy. The five
nominees receiving the greatest number of votes cast at the meeting or its
adjournment shall be elected. Abstentions, withheld votes and broker non-votes
will not be deemed votes cast in determining which nominees receive the greatest
number of votes cast.
The following table sets forth the name, age, position with the Company,
principal occupation, term of service and beneficial ownership of Common Stock
with respect to the five individuals who are nominees for election at the Annual
Meeting. The following table also sets forth the name and beneficial ownership
of Common Stock with respect to each executive officer of the Company named in
the Summary Compensation
1
<PAGE> 4
Table below and all directors and executive officers of the Company as a group.
Each of the nominees listed below was elected to his current term as a director
at the last Annual Meeting of Shareholders.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
POSITIONS AND OFFICES FIRST APRIL 15, 1999
WITH THE COMPANY AND ELECTED ---------------------------
OTHER PRINCIPAL AS A NUMBER PERCENT
NAME AND AGE OCCUPATIONS DIRECTOR OF SHARES OF CLASS
------------ --------------------- -------- --------- --------
<S> <C> <C> <C> <C>
-- NOMINEES FOR ELECTION AS DIRECTORS --
David Aronow, 53.................. President, Arco Alloys Corp., 1995 1,508,528(1) 24.6%
manufacturer of zinc alloys
(Detroit, MI)
Phillip Wm. Fisher, 48............ Chairman of the Board of 1991 1,498,528(2) 24.5%
Directors of the Company;
Private investor (Detroit, MI)
Richard J. Jacob, 79.............. President, Richard J. Jacob & 1993 34,500 *
Associates, consulting firm
(Dayton, OH)
Robert M. Teeter, 60.............. President, Coldwater 1991 104,000(3) 1.7%
Corporation (Ann Arbor, MI)
David W. Wright, 58............... President and CEO of the 1980 138,500(4) 2.2%
Company
-- OTHER EXECUTIVE OFFICERS --
Craig B. Parr................................................................ 6,000(5) *
James C. Smith............................................................... 3,000(5) *
H. William Lytle............................................................. 0 *
Jeffrey L. Weller............................................................ 6,000(5) *
All directors and executive officers as a group (nine persons)............... 1,790,528(6) 28.1%
</TABLE>
- ---------------
* Percentages omitted if less than 1%.
(1) Includes 10,528 shares owned by a partnership in which Mr. Aronow's wife is
a partner, and 1,488,000 shares owned by Martinique Hotel, Inc., a Delaware
corporation, of which Mr. Aronow's wife is a director and minority
shareholder. Also includes 10,000 shares which Mr. Aronow has the right to
acquire within the next 60 days pursuant to the exercise of stock options.
(2) Includes 10,528 shares owned by a partnership in which Mr. Fisher is a
partner, and 1,488,000 shares owned by Martinique Hotel, Inc., a Delaware
corporation, of which Mr. Fisher is a Vice President, director and minority
shareholder and of which several members of Mr. Fisher's family are
directors, officers, and shareholders.
(3) Includes 100,000 shares which Mr. Teeter has the right to acquire within the
next 60 days pursuant to the exercise of stock options.
(4) Includes 115,000 shares which Mr. Wright has the right to acquire within the
next 60 days pursuant to the exercise of options.
(5) Consists of shares which the individual has the right to acquire within the
next 60 days pursuant to the exercise of stock options.
(6) Includes 240,000 shares which all directors and executive officers as a
group have the right to acquire within the next 60 days pursuant to the
exercise of stock options.
2
<PAGE> 5
OTHER INFORMATION RELATING TO DIRECTORS
Mr. Aronow has served as the President of Arco Alloys Corp., a manufacturer
of zinc alloys located in Detroit, Michigan, for longer than the past five
years.
Mr. Fisher has served as the Chairman of the Board of Directors of the
Company since April, 1996. He also served in that position from March, 1993
until May, 1995, and he served as Secretary of the Company from April, 1991 to
March, 1993. Mr. Fisher has been a private investor for longer than the past
five years. He also serves as a director of Charter One Financial, Inc.
Mr. Aronow and Mr. Fisher are brothers-in-law.
Mr. Jacob retired as Chief Executive Officer of Dayco Corporation in 1987.
He serves as a Director Emeritus of Charter One Financial, Inc.
Mr. Teeter has been President of Coldwater Corporation, a corporate and
public planning company, since February, 1988. From December, 1966 to February,
1988 he was President of Market Opinion Research, Inc. He also serves as a
Director of The Bank of Ann Arbor, Browning-Ferris Industries, Inc., Optical
Imaging Systems, Inc. and United Parcel Service.
Mr. Wright has served as President and Chief Executive Officer of Durakon
Industries, Inc. since April, 1996. He served as the President of the Marketing
Division of Durakon from April, 1995 through March, 1996, and prior to that time
served as President of Wright Ventures, Inc., a private investment firm, from
February, 1994 through March, 1995, and as President and a Director of Blain
Buick/GMC, Inc., an automotive dealership, from February, 1990 through January,
1994. Mr. Wright also serves as a Director of Republic Bank in Flint, Michigan.
The Board of Directors is responsible for the overall affairs of the
Company. To assist it in carrying out its duties, the Board has delegated
certain authority to standing executive, audit and compensation committees.
Members of each standing committee are appointed by the Board of Directors at
its first meeting following each annual meeting of shareholders.
The Executive Committee consists of Messrs. Aronow, Fisher, Teeter and
Wright. The Executive Committee meets on call and has authority to act on most
matters during the intervals between Board meetings.
The Audit Committee consists of Messrs. Aronow, Jacob and Teeter. The Audit
Committee recommends to the Board the nomination of independent auditors,
reviews with the independent auditors the scope and results of the audit
engagement and any non-audit services to be performed by the independent
auditors, and evaluates the independence of the independent auditors and their
fees for audit and non-audit services.
The Compensation Committee consists of Messrs. Aronow and Fisher. The
Compensation Committee recommends to the Board the nomination of officers and
directors of the Company, reviews and recommends to the Board the salaries and
bonuses of officers and remuneration of directors, and provides recommendations
regarding other personnel matters. In addition, the Compensation Committee acts
as the Company's Stock Option Committee and administers the 1988 and 1996 Stock
Option Plans. In its capacity as a nominating committee, the Compensation
Committee will consider nominees for directors recommended by shareholders.
Shareholders desiring to recommend nominees for directors for the 2000 Annual
Meeting should submit such recommendations to the Chairman of the Board at the
Company's corporate headquarters no later than December 31, 1999.
During fiscal 1998, the Board met a total of seven times, the Audit
Committee met twice and the Compensation Committee met twice. The Executive
Committee met two times and also engaged in informal discussions in lieu of
meetings in 1998. Each director attended at least 75% of the total number of
meetings of the Board and of any committees on which he served during the period
in which he served as a director or a member of any such committee, except that
Mr. Jacob was absent at four of the seven Board of Directors meetings due to
illness.
3
<PAGE> 6
FURTHER INFORMATION
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information, as of December 31,
1998, concerning those persons who are known by management of the Company to be
beneficial owners of more than 5% of the Company's outstanding Common Stock (as
provided to the Company by such persons).
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES OF COMMON STOCK PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ---------------------- --------
<S> <C> <C>
Martinique Hotel, Inc. ..................................... 1,488,000(1) 24.3%
2700 Fisher Building
Detroit, Michigan 48202
FMR Corp. .................................................. 651,800(2) 10.6%
82 Devonshire Street
Boston, Massachusetts 02109
Dimensional Fund Advisors, Inc. ............................ 547,000(2) 8.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Heartland Advisors, Inc. ................................... 500,000(2) 8.2%
790 North Milwaukee Street
Milwaukee, WI 53202
</TABLE>
- -------------------------
(1) Based on information contained in a Schedule 13D filed with the Securities
and Exchange Commission on February 3, 1997. Does not include 10,528 shares
owned by a partnership in which certain officers, directors and shareholders
of Martinique Hotel, Inc. are partners, or 259,986 shares owned by Max M.
Fisher, several of whose family members are officers, directors and
shareholders of Martinique Hotel, Inc.
(2) Based on information contained in a Schedule 13D or 13G of such person as
received by the Company.
EXECUTIVE OFFICERS
The persons listed below are the executive officers of the Company.
<TABLE>
<CAPTION>
NAME AND AGE OFFICES AND LENGTH OF SERVICE
------------ -----------------------------
<S> <C>
David W. Wright, 58...................... President since April 1996.
Vice President -- Organization Development since
H. William Lytle, 52..................... October 1995.
Senior Vice President -- Operations since September
Craig B. Parr, 55........................ 1998.
Corporate Controller since September 1997 and
James C. Smith, 48....................... Secretary and Treasurer since March 1998.
President of the Company's Jerr-Dan Corporation
Jeffrey L. Weller, 47.................... subsidiary since January 1996.
</TABLE>
The executive officers of the Company serve at the pleasure of the Board of
Directors.
For additional information concerning Mr. Wright, see "Election of
Directors".
Mr. Lytle joined the Company in March, 1995 as Executive Director of Human
Resources. He has served since October, 1995 as Vice President of Organization
Development. From June, 1997 through December, 1998, Mr. Lytle also served as
Vice President of Duraliner USA, during which time the Company implemented a
controlled exit strategy from that business. Prior to joining the Company, Mr.
Lytle served in senior human resources and operations capacities with Volkswagen
of America, American Motors Corporation and Ford Motor Company.
4
<PAGE> 7
Mr. Parr has served as the Company's Senior Vice President of Operations
since September, 1998. He joined the Company in December, 1996 as Vice
President -- Manufacturing of the Company's Durakon Division. Mr. Parr retired
from General Motors Corporation in 1992, having served that corporation in a
variety of manufacturing assignments over a 30-year career. Subsequent to
leaving General Motors Corporation, Mr. Parr was a shareholder, director and
president of New Center Stamping, a metal stamping company that served the
automotive aftermarket, until November, 1996.
Mr. Smith joined the Company in September, 1997 as Corporate Controller.
Mr. Smith was appointed Secretary and Treasurer of the Company in March, 1998.
He served as Operations Controller for Tumi Luggage, Inc. from March, 1996 to
September, 1997. From January, 1993 to March, 1996 he served as Director --
Financial Analysis and Planning for Goody Products, Inc. Mr. Smith served in
various financial positions for General Motors from June, 1985 to January, 1993.
Mr. Weller has been with Jerr-Dan Corporation for 28 years. He has held the
office of President since January, 1996. Prior to becoming President, he held
various positions including Vice President/General Manager, Vice President --
Operations, Manager of Manufacturing Operations and Supervisor.
5
<PAGE> 8
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth information for each of the fiscal years
ended December 31, 1998, 1997 and 1996 concerning the compensation of the
individuals who served as the Company's Chief Executive Officer in 1998 and as
the Company's other executive officer.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------- ------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS COMPENSATION(2)
------------------ ---- ------ -------- ------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
David W. Wright.......... 1998 $233,654 $112,500 $ 6,700(3)(4) -- $5,700
President & CEO 1997 216,346 -- 11,918(3)(4)(5) -- 5,575
1996 203,712 56,250 15,040(4)(5) 150,000 4,260
Craig B. Parr............ 1998 139,231 58,968 6,546(4) 24,000 4,521
V.P. Operations 1997 116,923 2,500 7,700(3) -- 2,906
1996 -- -- --(6) -- --
James C. Smith........... 1998 121,538 50,000 1,990(4) 12,000 2,430
Corporate Controller 1997 31,713 17,559 46,081(4) -- --
1996 -- -- --(6) -- --
H. William Lytle......... 1998 135,000 53,756 7,366(4) -- 5,200
V.P. Organization 1997 125,000 1,794(4) -- 5,555
Development 1996 134,231 34,000 4,892(4) -- 4,308
Jeffrey Weller........... 1998 119,237 30,801 3,263(4) 24,000 1,789
President, Jerr-Dan 1997 112,000 3,263(4) -- 2,440
1996 112,000 50,650 3,263(4) -- 4,269
</TABLE>
- ---------------
(1) Except as noted, includes the bonus accrued in the year indicated, which was
paid in the following year.
(2) Consists only of the Company's 401(k) contributions.
(3) Includes monthly auto allowance.
(4) Includes amounts relating to use of company owned auto, lodging, medical and
other expenses.
(5) Includes country club dues.
(6) Not employed with Company during year.
6
<PAGE> 9
OPTION GRANTS IN FISCAL YEAR
The following table sets forth information concerning stock options granted
during the fiscal year ended December 31, 1998 to each of the executive officers
named in the Summary Compensation Table above:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED VALUE
----------------------------------- AT ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK PRICE
OPTIONS APPRECIATION FOR OPTION
OPTIONS GRANTED TO TERM(2)
GRANTED EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME (1) FISCAL YEAR PRICE DATE (5%) (10%)
---- ------- ------------ -------- ---------- ---- -----
<S> <C> <C> <C> <C> <C> <C>
David W. Wright................... -- -- -- -- -- --
Craig B. Parr..................... 24,000 16% $7.50 03/03/02 $113,201 $286,874
James C. Smith.................... 12.000 8 7.50 03/03/02 56,601 143,437
H. William Lytle.................. -- -- -- -- -- --
Jeffrey Weller.................... 24,000 16 7.50 03/03/02 113,201 286,874
</TABLE>
- ---------------
(1) Options vest in four equal, annual installments following the date of grant.
(2) "Potential realizable value" is disclosed pursuant to SEC rules which
require such disclosure for illustration only. The values disclosed are not
intended to be, and should not be interpreted by shareholders as,
representations or projections of the future value of the Company's stock.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information concerning each exercise of
stock options during the fiscal year ended December 31, 1998 by each of the
executive officers named in the Summary Compensation Table above and the value
of unexercised options held by such persons as of December 31, 1998:
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN THE MONEY
OPTIONS AT OPTIONS AT
FY END FY END(1)
-------------- -------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- --------------- -------- ------------- -------------
<S> <C> <C> <C> <C>
David W. Wright........................... -- -- 105,000/95,000 $0/$0
Craig B. Parr............................. -- -- 0/24,000 0/ 48,000
James C. Smith............................ -- -- 0/12,000 0/ 24,000
H. William Lytle.......................... -- -- -- --
Jeffrey Weller............................ -- -- 0/24,000 0/ 48,000
</TABLE>
- ---------------
(1) Based on the December 31, 1998 closing price on the Nasdaq Stock Market of
$9.50 per share.
COMPENSATION OF DIRECTORS
Under the Company's standard arrangements, each director who is not an
officer of or consultant to the Company receives a director's fee in the amount
of $15,000 plus $500 per meeting attended. Officers of and consultants to the
Company do not receive any additional compensation for services as a director.
On January 25, 1999, Mr. Aronow was awarded an option to purchase 10,000 shares
of the Company's Common Stock at a price of $9.50 per share. For information
concerning Mr. Teeter's compensation, see "Certain Transactions with
Management."
EMPLOYMENT AGREEMENTS
The Company is currently a party to an employment agreement with Mr. Wright
entered into on June 27, 1996 with an effective date of July 1, 1996. Under the
agreement, Mr. Wright's employment is at will with no fixed term of employment.
The employment agreement provides for a minimum base salary of $225,000 to be
7
<PAGE> 10
reviewed annually by the Compensation Committee. Mr. Wright is eligible to be
paid a bonus, targeted at 50% of his annual base salary, based upon his and the
Company's performance of objectives determined by Mr. Wright and the
Compensation Committee. The employment agreement also provides for, among other
things, Mr. Wright's participation in the Company's 1996 Stock Option Plan and
certain other benefits available to the Company's senior management. The
employment agreement may be terminated by the Company upon the death of Mr.
Wright, upon his permanent disability or with or without cause. If Mr. Wright's
employment is terminated (i) without cause, (ii) because the Company breaches a
material term of the employment agreement which it has not cured, or (iii)
because Mr. Wright terminates his employment within 6 months after substantially
all of the Company's common stock or assets are sold by the Company to a third
party, then Mr. Wright will receive a lump sum payment equal to 200% of the
annual salary then being paid to Mr. Wright by the Company. Mr. Wright is also
subject to certain noncompetition and non-solicitation restrictions pursuant to
the terms of the employment agreement.
The Company has entered into change of control agreements with Messrs.
Parr, Smith, Weller and four other officers pursuant to which each such
individual may receive one year's compensation if his employment is terminated
following a change of control of the Company. Such agreements also contain
confidentiality and noncompetition provisions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1998, Mr. Fisher and Mr. Aronow
served as members of the Company's Compensation Committee. Neither Mr. Fisher
nor Mr. Aronow has ever been an employee of the Company or any of its
subsidiaries.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL. The Compensation Committee's overall compensation policy
applicable to the Company's executive officers is to provide a compensation
program that is intended to attract and retain qualified executives for the
Company and to provide them with incentives to achieve Company goals and
increase shareholder value. The Compensation Committee implements this policy
through establishing salaries and bonuses and granting stock options. The
Compensation Committee's current policy is not to provide significant pension or
other retirement benefits for the Company's employees.
SALARIES. The Compensation Committee's policy is to provide salaries that
are generally similar to those of similar executive officers in similar
companies. The Compensation Committee determines comparable salaries through
discussions with candidates for such positions, Company research and the
research of independent consultants concerning the salaries paid by other
similar companies.
BONUSES. The Compensation Committee's policy is to provide a significant
portion of executive officers' total compensation through annual bonuses to
provide them with incentives to achieve the Company's financial and operational
goals and increase shareholder value. The Company's bonus arrangements for its
officers are intended to make a major portion of each officer's compensation
dependent on the Company's overall performance. The bonuses for the Company's
officers are also intended to identify and give priority to the Company's goals
by tying compensation to the Company's business plans, and to link executive
compensation to shareholder value and to encourage the executives to act as a
team. Bonuses are also intended to recognize the executive's individual
contributions to the Company.
For the fiscal year ended December 31, 1998, the Company's highest paid
executives could have received bonuses at or above following target percentages
of their salaries: Mr. Lytle -- 30%; Mr. Parr -- 30%; Mr. Smith -- 25%; Mr.
Weller -- 40%; and Mr. Wright -- 50%. Such bonuses are based on the Compensation
Committee's discretionary evaluation of the individual executive's performance
for the year, the Company's financial condition, strategic and operational
accomplishments and operating income.
STOCK OPTIONS. The Compensation Committee's policy is to award stock
options to the Company's officers in amounts reflecting the participant's
position and ability to influence the Company's overall performance. Options are
intended to provide participants with an increased incentive to make
contributions to
8
<PAGE> 11
the long-term performance and growth of the Company, to join the interests of
participants with the interests of shareholders of the Company and to attract
and retain qualified employees. The Compensation Committee's policy has been to
grant options with a term of ten years to provide a long-term incentive and to
fix the exercise price of the options at the fair market value of the underlying
shares on the date of grant. Such options only have value if the price of the
underlying shares increases.
COMPENSATION OF DAVID W. WRIGHT
Mr. Wright's annual salary as President and Chief Executive Officer of the
Company was $233,654 in 1998, and Mr. Wright's bonus was $112,500. Mr. Wright
and the Company are parties to an employment agreement (see "Employment
Agreements"). Mr. Wright's annual salary was determined in accordance with his
employment agreement; his bonus was based upon his performance and the financial
performance of the Company. In order to recognize Mr. Wright's leadership
position, to provide Mr. Wright with additional incentive to improve the
Company's stock price and to more closely link Mr. Wright's interests with those
of the Company's shareholders, the Compensation Committee has awarded Mr. Wright
options to purchase 200,000 shares of the Company's common stock. The
Compensation Committee believes that Mr. Wright's entire compensation package is
consistent with the compensation provided to chief executive officers by similar
companies.
By the Compensation Committee
Phillip Wm. Fisher
David S. Aronow
9
<PAGE> 12
PERFORMANCE GRAPH
The following line graph compares for the fiscal years ended December 31,
1994, 1995, 1996, 1997 and 1998 (i) the-yearly cumulative total shareholder
return (i.e., the change in share price plus the cumulative amount of dividends,
assuming dividend reinvestment, divided by the initial share price, expressed as
a percentage) on the Company's Common Stock, with (ii) the cumulative total
return of the Nasdaq Stock Market Composite Index, and (iii) the cumulative
total return on Nasdaq stocks within SIC codes 3070-3079 (plastic products) and
3710-3719 (motor vehicles and equipment) (assuming dividend reinvestment;
weighted based on market capitalization).
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR DURAKON INDUSTRIES, INC.
<TABLE>
<CAPTION>
12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
<S> <C> <C> <C> <C> <C> <C>
Durakon Industries, Inc. 100.0 99.3 71.9 73.4 54.7 60.4
Nasdaq Stock Market (US
Companies) 100.0 97.8 138.3 170.0 208.5 293.8
Nasdaq Stocks (SIC 3070-3079,
3710-3719 US Companies) 100.0 91.7 89.7 123.1 163.4 150.5
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission ("SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1998 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
10
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CERTAIN TRANSACTIONS WITH MANAGEMENT
In August 1991, the Company entered into a consulting agreement with
Coldwater Corporation, a Michigan corporation, of which Robert M. Teeter is
President and sole shareholder. That agreement has since been renewed annually.
Pursuant to such agreement, Coldwater Corporation receives an annual fee of
$50,000. Such fee is in lieu of, and not in addition to, director's fees to
which Mr. Teeter would otherwise be entitled.
AUDITORS
The Board of Directors has selected Coopers & Lybrand LLP to serve as the
Company's independent auditors for fiscal 1999. Coopers & Lybrand LLP has served
in such capacity since 1991. Representatives from Coopers & Lybrand LLP will be
present at the Annual Meeting of Shareholders, will have an opportunity to make
a statement if they wish, and will be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2000 Annual Meeting
which are eligible for inclusion in the Company's proxy statement for that
meeting under the applicable rules of the SEC must be received by the Company no
later than December 31, 1999. Such proposals should be addressed to the
Secretary at the Company's corporate headquarters.
GENERAL
At the date of this Proxy Statement, management is not aware of any matters
to be presented for action at the meeting other than those described above.
However, if any other matters should come before the meeting, it is the
intention of the persons named in the accompanying proxy to vote in accordance
with their judgment on such matters.
By Order of the Board of Directors,
JAMES C. SMITH
Secretary
Lapeer, Michigan
April 23, 1999
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<TABLE>
<S><C>
|
__ --
[X]PLEASE MARK |
VOTES AS IN THIS
EXAMPLE
NOMINEES: David Aronow, Phillip Wm. Fisher,
FOR WITHHELD Richard J. Jacob, Robert M. Teeter,
1.) ELECTION OF [ ] [ ] David W. Wright 2.) In their discretion with respect
DIRECTORS to any other matter that properly
comes before the meeting.
For, except vote withheld from the following nominee(s):
- ------------------------------------------------------------------------
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES LISTED ABOVE.
The proxies will vote your shares in accordance with your
SIGNATURE(S) DATE directions on this card and in their discretion with respect
---------------------------------------------- --------- to any other matters which may properly come before the
NOTE: Please sign exactly as name appears hereon. When shares are held meeting. If you do not indicate your choice on this card,
by joint tenants, both should sign. When signing as attorney, executor, the proxies will vote your shares FOR the nominees for
administrator, trustee or guardian, please give full title as such. If director set forth.
a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name
by authorized person.
BOWNE OF DETROIT - (313)964-1330
K48145 - CN2 - PAGE 1 OF 2
FRIDAY, APRIL 16, 1999 4:29 PM K48145.QXD
</TABLE>
<PAGE> 15
DURAKON INDUSTRIES, INC.
The undersigned hereby appoints Phillip Wm. Fisher and David W. Wright, or
either of them, as his, her or its proxies and attorneys-in-fact to vote at
Durakon Industries, Inc.'s Annual Meeting of Shareholders on May 25, 1999 and
any adjournments or postponements thereof on matters which may properly come
before the Annual Meeting, in accordance with and as more fully described in the
Notice of Meeting and the Proxy Statement, receipt of which is acknowledged.
(To be Signed on Reverse Side)
