ARVIN INDUSTRIES, INC.
NOTICE
of
Annual Meeting of Shareholders To Be Held April 13, 1995
To the Shareholders of
ARVIN INDUSTRIES, INC.
The Annual Meeting of Shareholders of Arvin Industries,
Inc., an Indiana corporation, will be held at the Holiday
Inn Conference Center, 2480 Jonathan Moore Pike (Highway 46
West), Columbus, Indiana on Thursday, April 13, 1995, at
10:30 a.m., for the following purposes:
(1) To elect four directors for a term of three years;
(2) To ratify the Board of Directors' appointment of Price
Waterhouse as Arvin's independent certified public
accountants for the current year; and
(3) To transact such other business as may properly come
before the Annual Meeting and any adjournment thereof.
Shareholders of record at the close of business on February
24, 1995, are entitled to notice of and to vote at the
Annual Meeting.
Arvin's Annual Report for fiscal year 1994 is enclosed.
IMPORTANT! TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED
PROXY CARD IN THE ENVELOPE PROVIDED.
No postage is required if the proxy is mailed in the United
States. If you attend the Annual Meeting, you may vote your
shares in person even if you have previously submitted a
proxy.
Ronald R. Snyder
Secretary
Columbus, Indiana
March 10, 1995
ARVIN INDUSTRIES, INC.
One Noblitt Plaza, Box 3000, Columbus, Indiana 47202-3000
Proxy Statement For Annual Meeting of Shareholders
To Be Held April 13, 1995
This proxy statement and the enclosed proxy are being
furnished in connection with the solicitation of proxies by
the Board of Directors of Arvin Industries, Inc. ("Arvin")
from holders of Arvin's common shares, par value $2.50 per
share ("Common Shares"), for use at the Annual Meeting of
Shareholders to be held April 13, 1995, and at any
adjournment or postponement thereof, for the purposes set
forth in the accompanying Notice (the "Annual Meeting").
Arvin will bear all costs relating to the solicitation of
proxies from its shareholders. In addition to soliciting
proxies by mail, Arvin's officers and employees, without
receiving additional compensation therefor, may solicit
proxies by telephone, by telegram or in person. Arrangements
also will be made with brokerage firms and other custodians,
nominees and fiduciaries to forward solicitation materials
to the beneficial owners of Common Shares held of record by
such persons, and Arvin will reimburse such brokerage firms,
custodians, nominees and fiduciaries for reasonable out-of-
pocket expenses incurred by them in that connection. In
addition, Arvin has retained Hill and Knowlton, Inc. to
assist in soliciting proxies from shareholders, including
brokers' accounts, at a fee of $6,250 plus reasonable out-
of-pocket expenses.
This proxy statement is first being sent to shareholders
on or about March 10, 1995.
VOTING AT THE MEETING
The record date for the determination of shareholders
entitled to vote at the Annual Meeting is the close of
business on February 24, 1995, at which time Arvin had
issued and outstanding 22,250,307 Common Shares. Each
shareholder will be entitled to one vote for each Common
Share held with respect to all matters which may be properly
submitted to a vote of shareholders at the Annual Meeting.
All proxies that are properly signed and received by
Arvin prior to the Annual Meeting will be voted in
accordance with the instructions on such proxies unless they
have been revoked. If no instruction is indicated, the
shares will be voted FOR the election of the four nominees
for director listed in this proxy statement, FOR
ratification of the appointment of independent public
accountants, and in the discretion of the persons named in
the proxy on such other matters as may properly come before
the Annual Meeting. Any shareholder who has given a proxy
may revoke such proxy at any time before it is voted at the
Annual Meeting by delivering to the Secretary of Arvin
written notice of revocation or a duly executed proxy
bearing a later date or by attending the meeting and voting
in person.
A quorum of shareholders is necessary to take action at
the Annual Meeting. A majority of the outstanding Common
Shares, represented in person or by proxy, will constitute a
quorum of shareholders at the Annual Meeting. The inspectors
of election appointed for the Annual Meeting will determine
whether a quorum is present and will treat abstentions as
Common Shares that are present and entitled to vote for
purposes of determining the presence of a quorum. If a
broker indicates on a proxy that it does not have the
discretionary authority as to certain Common Shares to vote
on a particular matter, those shares will not be considered
as present and entitled to vote with respect to that matter.
A plurality of the Common Shares voted in person or by
proxy is required to elect a director. Ratification of the
appointment of the independent public accountants will be
approved if the votes cast favoring the appointment of the
independent accountants exceed the votes cast opposing such
action. Votes cast by proxy or in person at the meeting will
be tabulated by the inspectors of election appointed for the
Annual Meeting. For purposes of determining the approval of
the matters submitted to the holders of Common Shares for a
vote, abstentions will not be considered.
PROPOSAL 1 - ELECTION OF DIRECTORS
Arvin's Restated Articles of Incorporation, as amended,
provide that its By-Laws may divide the Board of Directors
into classes, with the terms of office of directors in each
class being more than one year. The By-Laws provide that the
Board of Directors shall be divided into three classes, each
class being as nearly equal in number as possible, and that
at each Annual Meeting of Shareholders the successors to the
directors whose terms expire that year shall be elected for
a term of three years. At the Annual Meeting, four incumbent
directors whose terms expire at the 1995 meeting will be
nominated for a three-year term.
Unless otherwise directed, proxies will be voted for the
election of the four nominees listed below who have been
designated by the Board of Directors. If, on account of
death or other unforeseen contingencies, any of these
persons is unavailable for election, the proxies will be
voted for a substitute nominee designated by the Board of
Directors.
The following sets forth certain information with respect
to the nominees and continuing directors of Arvin:
Number of
Common Shares
Beneficially
Owned as of
January 2,
1995(1)
Nominees for Three-Year Terms:
Joseph P. Allen, President and Chief Executive Officer,
Space Industries International, Inc. 3,390
Dr. Allen, 57, is a graduate of DePauw
University with a Bachelor of Arts degree and
attended Christian Albrechts Universitaet in
Kiel, Germany as a Fulbright Scholar. He also
earned Master of Science and Doctor of
Philosophy degrees from Yale University. Dr.
Allen was an astronaut with NASA from 1967 to
1985, when he became Executive Vice President
of Space Industries, Inc., a designer of space
facilities located in Webster, Texas. Dr. Allen
was elected President of Space Industries
International in 1988 and Chief Executive
Officer in 1991. Dr. Allen was first elected to
Arvin's Board of Directors in 1985. He is also
a director of Space Industries.
Number of
Common Shares
Beneficially
Owned as of
January 2,
1995(1)
Nominees for Three-Year Terms:
Steven C. Beering, President of Purdue University 1,000
(2)
Dr. Beering, 62, holds Bachelor of Science and
Doctor of Medicine degrees from the University
of Pittsburgh. He was named President of Purdue
University and the Purdue University
Foundations in 1983. He is also a director of
Eli Lilly and Company, NIPSCO Industries, Inc.,
Space Industries International, Inc., American
United Life Insurance Co. and Guidant
Corporation. He was first elected to Arvin's
Board of Directors in 1983.
Joseph P. Flannery, Chairman, President and Chief Executive
Officer of Uniroyal, Inc. 1,000
Mr. Flannery, 61, holds a Bachelor of Science
degree from the University of Lowell and a
Masters of Business Administration degree from
Harvard University. He joined Uniroyal, Inc. in
1959 and, after holding a number of positions
with Uniroyal, Inc. and its Uniroyal Chemical
Division, was elected a director and President
and Chief Operating Officer of Uniroyal, Inc.
in 1977 and its Chief Executive Officer in
1980. Since 1987 Mr. Flannery has been Chairman
of the Board, President and Chief Executive
Officer of Uniroyal, Inc. He was first elected
an Arvin director in 1991. Mr. Flannery also
serves on the boards of directors of APS
Holding Corporation, Ingersoll-Rand Company,
K mart Corp., Newmont Mining Corp., Newmont
Gold Co., The Scotts Company and ARS Holding
Corporation. He also serves on the national
board of trustees of Boys Clubs of America and
The Little League Foundation.
V. William Hunt, Executive Vice President of Arvin 70,503(3)(4)
Mr. Hunt, 50, holds Bachelor of Arts and Doctor
of Jurisprudence degrees from Indiana
University. Mr. Hunt joined Arvin in 1976 and
was elected Vice President-Administration in
1980, Secretary in 1982 and Executive Vice
President in 1990. He was first elected to the
Board of Directors in 1983.
Number of
Common Shares
Beneficially
Owned as of
January 2,
1995(1)
Continuing Directors:
James K. Baker, Chairman of the Board of Directors of Arvin
283,108(3)(4)(5)
Mr. Baker, 63, graduated from DePauw University
and holds a Master of Business Administration
degree from Harvard University. Associated with
Arvin since 1955, he was elected a member of
the Board of Directors in 1968, elected
President and appointed Chief Executive Officer
in 1981, and elected Chairman of the Board in
1986. His current term on the Board of
Directors expires in 1997. Mr. Baker is also a
director of Amcast Industrial Corporation, Geon
Company, NBD Bancorp, CINergy, Inc., Space
Industries International, Inc. and Tokheim
Corp., and is a former Chairman of the United
States Chamber of Commerce. He also serves as
Chairman of the Board of Trustees of DePauw
University and is a director of the Business
Higher Education Forum.
William D. George, President and Chief Executive Officer of
S.C. Johnson & Son, Inc. 1,000
Mr. George, 62, received a Bachelor of Arts
degree from DePauw University and a Masters of
Business Administration degree from Harvard
University. In 1981, he joined S.C. Johnson
Wax, a manufacturer of chemical specialty
products headquartered in Racine, Wisconsin,
and, after holding a number of positions,
became Executive Vice President and Chief
Operating Officer, Worldwide Consumer Products
in 1988 and President of Worldwide Consumer
Products in 1990. He was elected President and
Chief Executive Officer and a member of the
Board in 1993. Mr. George was elected to the
Arvin Board of Directors in 1994, and his
current term expires in 1996. He also serves on
the board of directors of Ralcorp Holdings and
is a member of the Board of Trustees of
Carthage College.
Number of
Common Shares
Beneficially
Owned as of
January 2,
1995(1)
Continuing Directors:
Ivan W. Gorr, Former Chairman of the Board and Chief
Executive Officer of Cooper Tire & Rubber Company 1,500
Mr. Gorr, 65, is a graduate of the University
of Toledo and is a certified public accountant.
Mr. Gorr began his career with Cooper Tire in
1972 as corporate controller and, after having
served as executive vice president, treasurer
and chief financial officer, was elected
president and chief operating officer in 1982
and Chairman and Chief Executive Officer in
1989, serving in those capacities until 1994.
Cooper Tire, located in Findlay, Ohio,
specializes in the manufacture and marketing of
rubber products for consumers and industrial
users. Mr. Gorr was elected a director of Arvin
in 1994, and his current term on the Board of
Directors expires in 1997. He also serves as a
director of Amcast Industrial Corporation,
Fifth Third Bancorp, OHM Corporation and Cooper
Tire & Rubber Company.
Richard W. Hanselman, Former Chairman and Chief Executive
Officer of Genesco, Inc. 1,200
Mr. Hanselman, 67, is a graduate of Dartmouth
College. He joined Genesco in 1980 and was
named Chief Executive Officer in 1981, serving
in that capacity and as its Chairman until
1986. Genesco is a diversified manufacturer of
footwear and apparel located in Nashville,
Tennessee. Mr. Hanselman was first elected to
Arvin's Board of Directors in 1983, and his
current term on the Board of Directors expires
in 1997. He is also a director of Becton,
Dickinson & Co., Benson Eyecare Corporation,
Healthtrust Inc., Bradford Funds, Inc.,
Foundation Health Corp., Gryphon Holdings, Inc.
and IMCO Recycling Inc.
Number of
Common Shares
Beneficially
Owned as of
January 2,
1995(1)
Continuing Directors:
Don. J. Kacek, Chairman, President and Chief Executive
Officer
of Advanced Automation Technologies, Inc. 1,000(2)
Mr. Kacek, 58, holds a Bachelor of Science
degree from Illinois Institute of Technology.
He became President and Chief Executive Officer
of Ransburg Corporation in 1977 and was elected
Chairman of its Board of Directors in 1978, in
which capacities he served until 1988. In 1989,
Mr. Kacek became a director of Advanced
Automation Technologies, Inc. and since 1990
has been its Chairman, President and Chief
Executive Officer. Advanced Automation
Technologies is a manufacturer of factory
automation equipment located in Indianapolis,
Indiana. He was first elected to Arvin's Board
of Directors in 1982, and his current term on
the Board of Directors expires in 1997.
Frederick R. Meyer, Chairman of the Board of Aladdin
Industries, Inc. 13,100
Mr. Meyer, 67, graduated from Purdue University
and holds a Master of Business Administration
degree from Harvard University. Mr. Meyer was
named President and Chief Operating Officer of
Tyler Corporation in 1983, a position which he
held until his resignation in 1986. In 1985 he
became Chairman of the Board, and from 1987 to
1994 also served as President of Aladdin
Industries, Inc., a diversified company
principally engaged in the manufacture of
children's lunch kits, thermosware, insulated
food delivery systems and related products
located in Nashville, Tennessee. Mr. Meyer was
first elected to Arvin's Board of Directors in
1980, and his current term expires in 1996. He
also serves as a director of Tyler Corporation
and Southwest Securities Group, Inc.
Number of
Common Shares
Beneficially
Owned as of
January 2,
1995(1)
Continuing Directors:
Byron O. Pond, President and Chief Executive Officer of
Arvin 114,204 (3)(4)
Mr. Pond, 58, is a graduate of Wayne State
University with a Bachelor of Science degree in
Business Administration. Mr. Pond was first
employed by Maremont Corporation as a Director
of Field Sales Planning in 1968. After serving
successively as Vice President, General
Manager, Senior Vice President and Executive
Vice President, he became President of Maremont
Corporation in 1979 and Chief Executive Officer
in 1981. Mr. Pond became an Executive Vice
President and director of Arvin in 1990, was
elected President in 1991 and was appointed
Chief Executive Officer in 1993. His current
term on the Board of Directors expires in 1996.
Richard A. Smith, Vice President-Finance & Chief Financial
Officer of Arvin 41,722(2)(3)(4)
Mr. Smith, 49, graduated from the University of
Illinois at Chicago, was awarded a Master of
Business Administration by Northwestern
University and earned a Doctor of Jurisprudence
degree from St. Louis University. He held a
series of executive financial positions with
The May Department Stores Company from 1981
until joining Arvin in 1989. May, headquartered
in St. Louis, Missouri, operates retail
department and specialty stores. Mr. Smith was
elected Vice President-Finance and a member of
Arvin's Board of Directors in 1990. His current
term on the Board of Directors expires in 1996.
Number of
Common Shares
Beneficially
Owned as of
January 2,
1995(1)
Continuing Directors:
Arthur R. Velasquez, President and Chief Executive Officer
of
Azteca Foods, Inc. 1,000
Mr. Velasquez, 56, is a graduate of the
University of Notre Dame with a Bachelor of
Science degree in Electrical Engineering and
holds a Masters of Business Administration from
the University of Chicago. He was a founder of
Azteca Corn Products Corporation in 1970, now
Azteca Foods, Inc. Azteca is a manufacturer of
Mexican foods located in Chicago, Illinois. Mr.
Velasquez is also co-founder and principal
owner of radio station WOPA in Chicago. Mr.
Velasquez was first elected an Arvin director
in 1994, and his current term expires in 1996.
He also serves on the boards of directors of
LaSalle National Bank, Peoples Energy
Corporation, Chicago Metro Board of Junior
Achievement, the Maryville City of Youth, and
serves on the Boards of Trustees of the
University of Notre Dame and St. Xavier
University.
(1) Except as otherwise noted, each person exercises sole
voting and investment power over the shares beneficially
owned by him. Other than Mr. Baker, who beneficially owns
approximately 1.3% of the outstanding Common Shares, no
nominee or director is individually the beneficial owner
of more than 1.0% of Arvin's outstanding Common Shares.
(2) Shared voting and investment power, as follows: Mr.
Beering-1,000 shares; Mr. Kacek-1,000 shares; and Mr.
Smith-9,500 shares.
(3) Includes Common Shares subject to options which may be
exercised within 60 days after January 2, 1994, as
follows: Mr. Hunt-56,250 shares, Mr. Baker-112,773
shares, Mr. Pond-90,500 shares, and Mr. Smith-30,750
shares.
(4) Includes Common Shares held in such participant's
accounts under certain Arvin employee benefit plans, as
follows: Arvin Savings Plan: Mr. Hunt-6,134 shares,
Mr. Baker- 18,190 shares, Mr. Pond-704 shares, and
Mr. Smith-1,472 shares; and Arvin Equity Account Plan:
Mr. Hunt-1,330 shares and Mr. Baker-25,880 shares.
Common Shares held in the Arvin Savings Plan and the
Arvin Equity Account Plan are voted at the direction of
the participant.
(5) Includes Common Shares owned of record by Mr. Baker's
immediate family. Mr. Baker has disclaimed any beneficial
interest in 33,648 of these Common Shares.
Compensation of Directors
During 1994, the Chairman of the Board of Directors and
non-employee members of the Board of Directors were
compensated for their service as directors as follows: an
annual fee of $20,000; a fee of $1,500 for membership on any
regular committee of the Board; and attendance fees of
$1,500 and $1,000, respectively, for each Board and
committee meeting. The Chairman and non-employee Board
members are also paid fees of $500 for telephonic
consultation and $1,000 per day or half-day for special
assignments. Further, during 1994, Dr. Beering was paid
$24,550 for his services as a non-employee director of Space
Industries International, Inc., approximately a 70%-owned
subsidiary of Arvin.
Meetings of Directors and Committees
The Board of Directors met six times in 1994.
There are three standing committees of the Board of
Directors. The Audit Committee, the current members of which
are Messrs. Kacek (Chairman), Velasquez, Gorr and Smith (ex-
officio), has the responsibility to assess and oversee the
adequacy of internal controls and the integrity of Arvin's
financial statements. Its functions include: recommending
outside auditors; assessing the plan and scope of the audit;
reviewing the results of the annual audit and financial
statements before release (including disclosure
requirements); evaluating auditors' fees; overseeing the
effectiveness of the internal audit function; directing and
supervising any investigation into matters within the scope
of the foregoing duties (including compliance with the
Foreign Corrupt Practices Act); and performing such other
related functions as the Board of Directors may, from time
to time, delegate to the Audit Committee. The Audit
Committee met four times in 1994.
The Compensation Committee, which met four times during
1994, is currently comprised of Messrs. Meyer (Chairman),
Hanselman and Beering. The Compensation Committee is
responsible for establishing and administering the
compensation policies of Arvin. See "Report of the
Compensation Committee on Executive Compensation."
The Committee on Directors makes recommendations to the
Board of Directors as to nominees for election as directors.
This committee will consider nominees recommended by Arvin
shareholders; any such recommendations may be submitted in
writing to the Chairman of the Committee on Directors, in
care of Arvin's executive offices in Columbus, Indiana. The
current members of the Committee on Directors, which met
four times in 1994, are Messrs. Flannery (Chairman), Allen
and George.
EXECUTIVE COMPENSATION
Summary
The following table summarizes the annual and long-term
compensation for services to Arvin and its subsidiaries for
fiscal years 1994, 1993, and 1992 awarded or paid to or
earned by the chief executive officer and each of the four
other most highly compensated executive officers of Arvin
(the "Named Officers") during 1994.
<TABLE>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
Awards
------------------------------- ----------
Other Annual Securities All Other
Name and Principal Salary Bonus Compensation Underlying Compensation
Position Year ($) ($) ($)(1) Options(#) ($)(2)
- ------------------ ---- -------- -------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Byron O. Pond 1994 $500,000 $225,000 $10,145 30,000 $4,500
President & Chief 1993 438,269 112,347 6,626 171,500 7,075
Executive Officer 1992 325,000 211,250 10,839 20,000 6,866
James K. Baker 1994 228,500(3) 90,000 3,280 0 4,500
Chairman 1993 381,731 97,341 2,432 11,000 7,075
1992 475,000 308,750 2,069 28,500 6,866
V. William Hunt 1994 288,615 129,877 4,677 13,000 4,500
Executive Vice President 1993 276,500 70,508 3,991 10,000 7,075
1992 265,000 172,250 2,550 13,250 6,866
Richard A. Smith 1994 232,800 104,760 4,003 11,000 4,500
Vice President-Finance & 1993 222,608 56,765 3,601 8,000 7,075
Chief Financial Officer 1992 215,000 139,750 2,703 10,750 6,866
Ronald R. Snyder 1994 188,846 84,981 5,604 8,500 4,500
Vice President, General 1993 180,000 45,900 4,925 6,500 7,075
Counsel & Secretary 1992 17,308 0 0 5,000 0
(1) The compensation reported is the amount reimbursed by
Arvin for the payment of certain taxes.
(2) The compensation reported represents Arvin matching
contributions to the Arvin Savings Plan.
(3) The compensation reported includes amounts paid for
services as a director as follows: an annual fee of
$20,000 and attendance fees of $8,500.
</TABLE>
Options Granted in 1994
The following table sets forth certain information as to
options to purchase Common Shares of Arvin granted to each
of the Named Officers under the 1988 Stock Benefit Plan
during the fiscal year ended January 1, 1995 and the
potential realizable value, assuming certain annual rates of
appreciation.
<TABLE>
Option Grants In Last Fiscal Year
Potential realizable value at
assumed annual rates of stock
Individual Grants price appreciation for option term(3)
------------------------------------------------ -------------------------------------
Number of Percent of
securities total options
underlying granted to Exercise
options employees in price ($ Expiration
Name granted(#)(1) fiscal year per Sh(2)) date 5% ($) 10%($)
- --------------- ---------- ----------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Byron O. Pond 30,000 8.7% $25 09/09/2004 $471,750 $1,195,500
James K. Baker 0 0.0 - - 0 0
V. William Hunt 13,000 3.8 25 09/09/2004 204,425 518,050
Richard A. Smith 11,000 3.2 25 09/09/2004 172,975 438,350
Ronald R. Snyder 8,500 2.5 25 09/09/2004 133,663 338,725
All Optionees 345,850 100.0 25 09/09/2004 5,438,491 13,782,122
(1) All options granted to the Named Officers were granted on
September 9, 1994 and will first become exercisable September 9, 1995.
Vesting may be accelerated as a result
of certain changes in control of Arvin.
(2) All options were granted at market value (the average
of the high and low prices of the Arvin Common Shares) on
the date of grant.
(3) The potential realizable value illustrates the value
that might be recognized upon the exercise of the options
immediately prior to the expiration of their term,
assuming the specified compounded rates of stock price
appreciation over the ten-year term of the option.
Potential realizable value is presented net of the option
exercise price, but before taxes associated with the
exercise. Actual gains, if any, on stock option exercises
and Common Share holdings are dependent on the future
performance of the Common Shares and overall market
conditions as well as the optionholders' continued
employment through the ten-year term of the option. There
can be no assurance that the amounts reflected in this
table will be achieved.
</TABLE>
Option Exercises in 1994
The table below sets forth certain information concerning
the exercise of options to purchase Common Shares under the
1988 Stock Benefit Plan and the 1978 Stock Option Plan
during fiscal year 1994 by each of the Named Officers and
the value of unexercised options held by each of the Named
Officers as of January 2, 1995.
<TABLE>
Aggregated Option Exercises In Last Fiscal Year And Fiscal Year-End Option Values
Value Number of Securities Value of Unexercised
Shares Acquired Realized Underlying Unexercised Options in the Money Options
Name on Exercise (#) ($)(1) at Fiscal Year-End (#) at Fiscal Year-End ($)(2)
- -------------- --------------- -------- ----------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Byron O. Pond 15,306 $157,027 90,500 180,000 $158,625 $0
James K. Baker 0 0 112,773 0 115,968 0
V. William Hunt 0 0 56,260 13,000 23,344 0
Richard A. Smith 2,500 22,406 30,750 11,000 41,750 0
Ronald R. Snyder 0 0 11,500 8,500 0 0
(1) Represents the difference between the closing price of
the Arvin Common Shares on the New York Stock Exchange on
the business day preceding the date of exercise and the
option exercise price.
(2) Represents the difference between $23.25, the closing
price of the Arvin Common Shares on the New York Stock
Exchange on December 31, 1994, and the option exercise
price.
</TABLE>
Employment Agreement
An employment agreement between Arvin and Mr. Pond,
effective June 17, 1993, provides, among other things, for
his full time employment until June 16, 1997, with automatic
one-year extensions each June 17, unless terminated by
Arvin or Mr. Pond, at an annual salary of not less than
$500,000. The agreement also provides that it will be
binding upon a successor corporation in the event that Arvin
is merged into any other corporation or that any other
corporation acquires substantially all of the assets of
Arvin.
Retirement Plan
The table below shows the estimated annual benefits
payable upon retirement to persons, including the Named
Officers, covered under Arvin's Retirement Plan for Exempt
Salaried Employees (the "Retirement Plan") and Arvin's
Supplemental Retirement Plan (the "Supplemental Retirement
Plan") (based on the benefit formulas in effect and
calculated on a straight life annuity basis, as described
below), in the specified compensation and years of service
classifications. The table assumes that the last five years
of service occur after October 1, 1991. The amounts
reflected in the table are not subject to any deduction for
Social Security benefits or other offset amounts except for
the Arvin Equity Account described below.
<TABLE>
Annual Compensation
(Average of 5 Highest
Consecutive Years Annual Life Income With Years of Service at
in Last 10) Age 65 (Single Life Annuity)
- ------------------ ---------------------------------------------------------------
15 20 25 30 35 40
------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
$250,000 $40,145 $52,645 $55,145 $77,645 $90,145 $102,645
$350,000 56,395 73,895 91,395 108,895 126,395 143,895
$450,000 72,645 95,145 117,645 140,145 162,645 185,145
$550,000 88,895 116,395 143,895 171,895 198,895 226,395
$650,000 105,145 137,645 170,145 202,645 235,145 267,645
$750,000 121,395 158,895 196,395 233,895 271,395 308,895
$850,000 137,645 180,145 222,645 265,145 307,645 350,145
$950,000 153,895 201,395 248,895 296,395 343,895 391,395
</TABLE>
The Retirement Plan is a defined benefit plan, based on
total years of service, which provides a life annuity
determined by the average of the five highest consecutive
years' annual earnings in the last ten years of service. For
credited service earned prior to October 1, 1991, the
benefit is calculated by multiplying 1% for each year of
credited service times the average annual earnings figure.
Effective October 1, 1991 the Retirement Plan and certain
other defined benefit pension plans covering domestic
salaried employees of Arvin and its subsidiaries (including
the Maremont Corporation Pension Plan for Salaried
Employees, discussed below) adopted a new unified benefit
formula for service credited after that date. With respect
to credited service earned on or after October 1, 1991, the
benefit is calculated by (i) multiplying 1% for each year of
credited service times the average annual earnings figure
and (ii) adding to that amount an amount determined by
multiplying 0.25% for each year of credited service (up to a
maximum of 35 years) times the amount by which the average
annual earnings figure exceeds a portion of the social
security wage base (for 1994, $38,400). Five years of
service are required for vesting under the Plan. Employees
may qualify for full benefits at age sixty-five, subject to
certain exceptions under the Employee Retirement Income
Security Act of 1974, though provisions are made within the
Plan for early retirement at reduced benefits and for
disability retirement. The compensation covered by the Plan
includes salaries, bonuses and compensation deferred at the
option of the employees resulting from contributions to the
Arvin Savings Plan. For the calendar year ended December 31,
1994, credited years of service for the Named Officers are
as follows: Mr. Pond- 3 years (for determination of
benefits; 26 years for vesting purposes); Mr. Baker-38
years; Mr. Hunt-18 years; Mr. Smith-5 years; and
Mr. Snyder-2 years. With respect to the period prior to
October 1, 1991, Mr. Pond is covered under the Maremont
Pension Plan discussed below.
In 1983, the Arvin Retirement Plan was amended to allow
investment of up to 10% of Plan funds in Common Shares which
may be acquired from time to time in private or market
purchases or by contribution of original issue or treasury
shares. In 1994, the Plan acquired 22,922 Common Shares.
As of September 1, 1985, the Retirement Plan was further
amended to transfer to the Arvin Equity Account of the Arvin
Savings Plan assets and liabilities for the accrued benefits
of active Retirement Plan participants, and a provision was
added which credits the benefit payable under the Arvin
Equity Account against the benefit payable under the
Retirement Plan. The 1985 amendment also added provisions
prohibiting termination of the Retirement Plan and recovery
of any excess assets ("overfunding") in the Plan unless
approved by a majority of the "Continuing Directors" (as
defined in the Retirement Plan) and providing that, in the
event of a change of control of Arvin without Continuing
Director approval, the percentage for each year of credited
service used in the Retirement Plan's benefit formula would
be increased as necessary so that all Plan assets would be
needed to provide benefits to participants and any
overfunding would be eliminated.
Annual benefits payable upon retirement under the
Retirement Plan are subject to limitation imposed by law in
prescribed circumstances. To the extent that an individual
employee's retirement benefit would exceed such limit, the
pension benefit payable upon retirement set forth in the
above table will be paid pursuant to the Supplemental
Retirement Plan.
As noted above, prior to October, 1991 Mr. Pond was
President and Chief Executive Officer of Maremont
Corporation. Mr. Pond became a participant in the Arvin
Retirement Plan effective October 1, 1991, and his pension
for the period prior to that date will be provided under the
Maremont Corporation Pension Plan for Salaried Employees in
lieu of the Arvin Retirement Plan. The Maremont Pension Plan
is a defined benefit plan, based on total years of service,
which provides a life annuity determined by the average of
the five highest consecutive years' annual earnings in the
last fifteen years of service. With respect to service
earned prior to October 1, 1991, the benefit is calculated
by multiplying 1.5% for each year of credited service times
the average annual earnings figure and is reduced by a
portion of expected primary Social Security payments.
Vesting schedules and early retirement and disability
retirement benefits are substantially similar to those under
the Arvin Retirement Plan. The compensation covered by the
Maremont Plan includes salaries, bonuses and employee
contributions to the Maremont Thrift Plan. As of October 1,
1991, Mr. Pond was credited with 223/4 years of service
under the Maremont Pension Plan. Subsequent to that date,
Mr. Pond will not be credited with any additional years of
service under the Maremont Pension Plan as Mr. Pond will be
covered by the Arvin Retirement Plan. The estimated annual
benefits payable to Mr. Pond upon his retirement under
Maremont's Pension Plan, assuming continued employment until
age 65, would be $49,500 for every $100,000 of
annual compensation, or $246,084 (based on the average of
his five highest consecutive years of compensation in his
last fifteen years of service with Maremont), and in each
case is subject to reduction to reflect Social Security
benefits. To the extent that the retirement benefit under
the Maremont Pension Plan exceeds certain limitations
imposed by law, the excess will be paid pursuant to a
Supplemental Retirement Plan similar to the one maintained
by Arvin.
In addition, upon retirement at age 65, Mr. Pond will be
entitled to receive $30,000 per year under a Maremont
insurance-funded retirement program for a period of ten (10)
years. In the event of Mr. Pond's death prior to retirement
or during the ten (10) years following retirement, such
annual benefits will be paid to his beneficiary.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of the Board of Directors (the
"Compensation Committee") establishes the general
compensation policies of Arvin, makes recommendations to the
Board of Directors with respect to the specific compensation
levels for the Chairman and the President/CEO, reviews and
approves the annual cash bonus incentive plan for
executives, including the Named Officers, who are members of
the Office of the Chief Executive, administers the 1988
Stock Benefit Plan, reviews the remuneration of other
officers and considers and recommends the adoption of
compensation plans for officers and directors.
Arvin's compensation philosophy is to provide a total
compensation program which will attract and retain qualified
executives and motivate superior performance. The
Compensation Committee and management of Arvin are committed
to the principle that pay should be commensurate with
performance and attainment of predetermined financial and
strategic objectives. As a consequence, pay is more heavily
influenced by company performance.
The compensation program consists of three components:
base salary, annual cash incentive opportunities and long-
term stock-based incentive opportunities. The compensation
philosophy for base salary is to set executive base salaries
slightly below industry norms, with the proportion of total
cash compensation that can be earned based on variable
incentive compensation above industry norms. Industry norms
used in establishing base salaries for the CEO and each of
the Named Officers in 1994 were determined by gathering
competitive compensation information from the companies
comprising the Dow Jones Auto Parts and Equipment Index as
well as from other manufacturing companies selected on the
basis of similar sales volume, level of employment and
international scope.
The Arvin philosophy for variable cash bonus incentive
compensation is to provide rewards when financial objectives
are achieved. In 1994, these objectives, designed to
increase shareholder value, were earnings per share, labor
cost as a percentage of net sales, cost of quality as a
percentage of cost of sales, net cash flow and stock price
performance. The relative weights assigned to these
objectives were equal except for earnings per share which
was weighted more by a multiple of five and labor cost as a
percentage of net sales and cost of quality as a percentage
of cost of sales, each of which was weighted more by a
multiple of one and one-half. Maximum bonuses that can be
earned with respect to each of these objectives are set as a
percentage of the executive's base salary. The maximum
aggregate bonus that can be earned if all of the financial
objectives are attained was 100% of the executive's base
salary. Minimum achievement levels against each of the
financial objectives are required before the portion of the
bonus relating to that objective can be earned. The CEO and
each of the Named Officers participated in the 1994 cash
bonus incentive plan.
Long-term incentives are currently provided through the
grant of stock options. The number of options granted is
determined subjectively by considering the executive's
ability to influence Arvin's long-term growth and
profitability. Options are granted at the current market
price and are exercisable commencing one year after the date
of grant, or are granted in excess of the current market
price and are exercisable more than one year after the date
of grant. Since the value of an option is directly related
to Arvin's stock price, it provides an incentive to create
value for shareholders. Stock options are an important
component of the Compensation Committee's long-term
performance based compensation philosophy.
The compensation for Mr. Pond, the President and CEO, was
consistent with this philosophy and exemplifies the
performance oriented nature of the compensation program. Mr.
Pond's cash bonus incentive was determined in accordance
with the 1994 cash bonus incentive plan. In 1994, the
minimum achievement levels were met on all of the financial
objectives, except net cash flow and the financial objective
relating to labor cost as a percentage of net sales was
fully achieved. As a result, the cash bonus paid to Mr.
Pond, as CEO for 1994 was substantially greater than that
paid in 1993. Mr. Pond's employment agreement (see
"Executive Compensation-Employment Agreement") did not
impact the determination of his compensation for 1994. The
stock options granted to the CEO during 1994 are consistent
with the design and philosophy of the overall program and
are shown above in the summary compensation table.
In consideration of the CEO's strong leadership in
reducing and containing costs, the Committee decided that
determining cash bonuses under the 1994 cash bonus incentive
plan for the CEO and the Named Officers prior to
restructuring and other charges was appropriate to measure
performance because the restructuring and other actions,
none of which represent 1994 cash costs, result from a more
rapid recognition for accounting purposes of future
reductions in the Company's cost structure.
The Compensation Committee believes this compensation
philosophy and practice encourage outstanding individuals to
achieve levels of performance that otherwise would not have
been reached and to maintain their employment and personal
commitment to Arvin. Arvin shareholders and customers are
also beneficiaries.
Because Arvin's stock benefit plans are currently
considered "performance based" and therefore not subject to
the limitations on deductibility of executive compensation
under Section 162(m) of the Internal Revenue Code, and
because the Compensation Committee considers it unlikely
that compensation subject to the one million dollar
limitation will be paid to any of the Named Officers, the
Committee has not yet had a need to adopt a policy relating
to such compensation.
This report is submitted on behalf of the Compensation Committee:
Frederick R. Meyer,
Chairman
Richard W. Hanselman
Steven C. Beering
COMMON SHARE PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return of the
Arvin Common Shares with the S&P 500 Index and the Dow Jones
Auto Parts and Equipment Index during the years 1990 through
1994, assuming the investment of $100 on December 31, 1989
and the reinvestment of dividends.
<TABLE>
Comparison of Five-Year Cumulative Total Return;
Among Arvin Industries, Inc., The S & P 500 Index
and The Dow Jones Auto Parts & Equipment Index
Cumulative Total Return
1990 1991 1992 1993 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Arvin Industries, Inc. 113 149 215 230 172
S & P 500 97 126 136 150 152
Dow Jones Auto Parts & Equipment 79 118 152 189 161
</TABLE>
<TABLE>
CERTAIN BENEFICIAL OWNERS
As of February 24, 1995, the only persons or groups known
to Arvin to be the beneficial owners of more than 5% of the
Common Shares, as reported in a Statement on Schedule 13G
filed by each such person with the Securities and Exchange
Commission, were:
Amount and nature of Percent
Name and Address of Beneficial Ownership Beneficial Ownership of class
- ---------------------------------------- -------------------- --------
<S> <C> <C>
Cincinnati Financial Corporation 1,368,120 6.15%
P. O. Box 145496
Cincinnati, OH 45250-5496
PRIMECAP Management Company 1,113,000 5.00%
225 South Lake Avenue, #400
Pasadena, California 91101-3005
</TABLE>
On January 2, 1995, Mr. Snyder beneficially owned 12,725
Arvin Common Shares, which includes 11,500 Common Shares
subject to options which may be exercised within 60 days
after January 2, 1995 and 360 shares held in the Arvin
Savings Plan.
On January 2, 1995, all directors and executive officers
as a group (17 persons) beneficially owned 580,794 Arvin
Common Shares, or 2.6% of the outstanding Common Shares.
COMPLIANCE WITH FORMS 3, 4 AND 5 REPORTING REQUIREMENTS
Based solely upon its review of Reports on Forms 3, 4 or
5 and any amendments thereto furnished to Arvin pursuant to
Section 16 of the Securities Exchange Act of 1934, as
amended, and written representations from the executive
officers and directors that no other reports were required,
Arvin believes that all of such Forms were filed on a timely
basis by reporting persons during 1994, with the exception
of the following: each of Messrs. Baker, Pond, Hunt, Smith,
W. Frederick Meyer and Snyder filed their respective Form 5
late, which Forms included reports of transactions in the
Arvin Savings Plan and the Arvin Equity Plan. In addition,
Mr. Raymond Mack, an executive officer, inadvertently failed
to file a Report on Form 3 in January, 1994. Arvin Common
Shares and options to purchase Arvin Common Shares held by
Mr. Mack were reported on his Form 5.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
Based upon the recommendation of the Audit Committee, at
its February, 1995 meeting, the Board of Directors approved
the engagement of the accounting firm of Price Waterhouse as
Arvin's independent certified public accountants for the
fiscal year beginning January 2, 1995.
Representatives from Price Waterhouse will be present at
the Annual Meeting and will be afforded the opportunity to
make a statement if they so desire and to respond to
appropriate shareholder questions.
Although not required to do so, the Board of Directors is
submitting its appointment of auditors for shareholder
ratification. In the event the appointment of Price
Waterhouse is not ratified by the shareholders, it will be
reconsidered by the Board of Directors. The Board recommends
that its appointment of Price Waterhouse be ratified by the
shareholders.
SHAREHOLDER NOMINATIONS AND PROPOSALS
Pursuant to the rules under the Securities Exchange Act
of 1934, proposals of shareholders intended to be presented
at the 1996 Annual Meeting must be received at Arvin's
executive offices no later than November 11, 1995 to be
considered for inclusion in next year's proxy materials.
Further, Arvin's By-Laws set forth certain additional
procedures regarding shareholder nominations of persons for
election to the Board of Directors and shareholder proposals
of business to be considered at meetings of the
shareholders. Pursuant to these provisions, written notice
of any shareholder nominations or proposals relating to the
1996 Annual Meeting of Shareholders must also be received by
the Secretary of Arvin at its executive offices in Columbus,
Indiana, no earlier than January 14, 1996 and no later than
February 13, 1996.
BUSINESS TO BE TRANSACTED
At the date of this statement, the Board of Directors
does not know of any business to be brought before the
Annual Meeting other than the matters described in this
proxy statement. In the event that any other matters
properly shall 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 the order of the Board of Directors.
Ronald R. Snyder
Secretary of
ARVIN INDUSTRIES, INC.
Columbus, Indiana
March 10, 1995
COMMON STOCK ARVIN INDUSTRIES, INC. PROXY
This Proxy is Solicited on Behalf of the Board of Directors
for The Annual meeting to be held April 13, 1995
The undersigned hereby appoints James K. Baker and
Ronald R. Snyder, or either of them, the true and
lawful proxies of the undersigned, with full power of
substitution, for and on behalf of the undersigned to
vote the shares of ARVIN INDUSTRIES, INC. registered
in the name of the undersigned, or with respect to
which the undersigned may be entitled to vote, at the
Annual Meeting of Shareholders to be held at Holiday
Inn Conference Center, 2480 Jonathan Moore Pike
(Highway 46 West), Columbus, Indiana, on April 13,
1995, at 10:30 A.M., and at any adjournment thereof,
upon the matters set forth on the reverse side hereof.
The Board of Directors recommends a vote "FOR"
proposals numbered 1 & 2.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
(Continued and TO BE SIGNED on reverse side.)
ARVIN INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK
INK ONLY. ( o )
This proxy, as properly executed, will be voted in the
manner directed herein by the undersigned shareholder(s).
If no direction is given this proxy will be voted "FOR"
proposals numbered 1 & 2.
For Withheld FOR ALL Except
1. Election of Directors for terms of 3 years-( ) ( ) Nominee(s) Written
Nominees: J.P. Allen, S.C.Beering, below
J.P. Flannery, & V.W. Hunt --------------------------------
For Against Abstain
2. Ratification of appointment of Price ( ) ( ) ( )
Waterhouse as independent auditors. 3.In their discretion on such
other business as may properly
come before the meeting.
Dated: __________________, 1995
Signature:_____________________
The shareholder's signature below should
correspond with the name of the shareholder
as it appears here. A proxy executed by a
corporation should be signed in its name by a
duly authorized officer. If the proxy is to
be signed by an attorney, executor,
administrator, trustee, guardian or in any
other representative capacity, the title of
the person signing should be given in full.
When shares are held by joint tenants, both
should sign.
