SCHEDULE 14A
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
/X/ Definitive Proxy Statement use of the
/_/ Definitive Additional Materials Commission Only (as
/_/ Soliciting Material Pursuant to permitted by Rule
Rule 14a-113(c) or Rule 14a-12 14a-6(e)(2))
ARVIN INDUSTRIES, 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)(4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction
applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/_/ Fee paid previously with preliminary materials. <PAGE>
/_/ 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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ARVIN INDUSTRIES, INC.
ONE NOBLITT PLAZA, BOX 3000, COLUMBUS, INDIANA 47202-3000
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 15, 1999
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 15, 1999, 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 facsimile 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 12, 1999.
VOTING AT THE MEETING
The record date for the determination of shareholders entitled to
vote at the Annual Meeting was the close of business on February 22,
1999, at which time Arvin had issued and outstanding 25,862,905 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.
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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. Under certain circumstances, a broker or other nominee may
have discretionary authority to vote certain Common Shares if
instructions have not been received from the beneficial owner or other
person entitled to vote. The inspectors of election will treat
abstentions and broker non-votes (which occur when a broker or other
nominee holding shares for a beneficial owner does not vote on a
particular proposal because such broker or other nominee does not have
discretionary voting power with respect to that item and has not
received instructions from the beneficial owner) as present and
entitled to vote for purposes of determining the presence of a quorum
for the transaction of business at the Annual Meeting.
A plurality of the Common Shares voted in person or by proxy is
required to elect a director. The ratification of the appointment of
the independent public accountants will be approved if the votes cast
favoring such action 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 approval of the ratification of the appointment of the
accountants, abstentions will not be considered. Broker non-votes,
because they are not considered votes cast, are not counted in the
vote totals.
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.
Arvin acknowledges the retirement of two of its most experienced
and influential directors, Fred Meyer and Byron Pond, whose terms
expire this year. Mr. Meyer has been a member of Arvin's Board since
1980 and, during that time, has served as advisor to four different
Presidents and CEOs. Mr. Pond, first elected to the Board of Directors
in 1990, has led Arvin through the current decade, serving as
Executive Vice President, President, Chief Executive Officer and
Chairman. Arvin expresses its gratitude to Messrs. Meyer and Pond for
their leadership, wisdom and dedication.
At the Annual Meeting, four directors 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
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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 1,
1999 (1)
NOMINEES FOR THREE-YEAR TERMS:
ROBERT E. FOWLER, CHAIRMAN AND CHIEF
EXECUTIVE OFFICER OF IMC GLOBAL INC . . . . . 0
Mr. Fowler, 63, is a graduate of Vanderbilt
University with a Bachelor of Science degree
in Chemical Engineering. He joined IMC Global
as President and Chief Operating Officer in
1996 following its merger with The Vigoro
Corporation, of which he had served as
President, CEO and a director since 1994. He
was elected CEO of IMC Global in 1997 and its
Chairman in 1998. IMC Global is a supplier of
agricultural products and services,
headquartered in Northbrook, Illinois. Mr.
Fowler served as an Arvin director from 1987
to 1994. He is also a director of Anixter
International.
-5-<PAGE>
Number of Common
Shares
Beneficially Owned
as of January 1,
1999 (1)
WILLIAM D. GEORGE, JR., RETIRED PRESIDENT
AND CHIEF EXECUTIVE OFFICER OF S.C. JOHNSON &
SON INC. . . . . . . . . . . . . . . . . . . 3,000
Mr. George, 66, 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. He was elected
President in 1990, Chief Executive Officer
and a member of the Board in 1993 and he
retired in 1996. Mr. George was first elected
to the Arvin Board of Directors in 1994. He
also serves on the board of directors of
Ralcorp Holdings and Reilly Industries, Inc.
and is a member of the Board of Trustees of
Carthage College.
ARTHUR R. VELASQUEZ, CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER OF AZTECA FOODS, 1,575(6)
INC. . . . . . . . . . . . . . . . . . . . .
Mr. Velasquez, 60, 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 was first
elected an Arvin director in 1994. He also
serves on the boards of directors of Peoples
Energy Corporation, LaSalle National Bank,
Chicago Metro Board of Junior Achievement,
the Maryville City of Youth, and serves on
the Board of Trustees of the University of
Notre Dame.
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Number of Common
Shares
Beneficially Owned
as of January 1,
1999 (1)
NOMINEES FOR THREE-YEAR TERMS:
CAROLYN Y. WOO, DEAN OF THE COLLEGE OF
BUSINESS ADMINISTRATION AND PROFESSOR OF
MANAGEMENT, UNIVERSITY OF NOTRE DAME . . . . 0
Dr. Woo, 44, was graduated from Purdue
University with a Bachelor of Science degree
in Economics. She additionally earned from
Purdue a Masters of Science in Industrial
Administration and a Ph.D. She has also been
awarded a Certificate by the Institute for
Management Education at Harvard University.
Prior to being appointed to her present
position in 1997, Dr. Woo served as a
Professor of Management in the School of
Management and the Krannert Graduate School
of Management at Purdue University (1991-
1997), the Director of Professional M.S.
Programs in the Krannert Graduate School of
Management (1993-1995) and Associate
Executive Vice President for Academic Affairs
at Purdue (1995-1997). She also serves on the
Board of Directors of Bindley-Western Inc.,
NIPSCO Industries, Inc. and Aon Corporation
and is a member of the Board of Overseers at
St. Meinrad Seminary.
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Number of Common
Shares
Beneficially Owned
as of January 1,
1999 (1)
CONTINUING DIRECTORS:
Joseph P. Allen, Chairman, Veridian
Corporation (successor to Calspan SRL
Corporation) . . . . . . . . . . . . . . . . 3,790
Dr. Allen, 61, 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., predecessor to
Calspan SRL Corporation, a designer of space
facilities. Dr. Allen was elected President
of Space Industries, Inc. in 1988 and Chief
Executive Officer in 1991. Dr. Allen was
first elected to Arvin's Board of Directors
in 1985 and his current term expires in 2001.
He is also a director of Veridian Corporation
STEVEN C. BEERING, PRESIDENT OF PURDUE
UNIVERSITY . . . . . . . . . . . . . . . . . 1,600(2)
Dr. Beering, 66, 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., American United Life
Insurance Co. and Veridian Corporation. He
was first elected to Arvin's Board of
Directors in 1983 and his current term
expires in 2001.
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Number of Common
Shares
Beneficially Owned
as of January 1,
1999 (1)
CONTINUING DIRECTORS:
JOSEPH P. FLANNERY, CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER OF UNIROYAL HOLDING,
INC. . . . . . . . . . . . . . . . . . . . . 1,500
Mr. Flannery, 66, 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 Holding, Inc. He was first elected
an Arvin director in 1991 and his current
term expires in 2001. Mr. Flannery also
serves on the boards of directors of APS
Holding Corporation, Ingersoll-Rand Company,
Kmart Corp., Newmont Mining Corporation,
Newmont Gold Company and The Scotts Company.
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Number of Common
Shares
Beneficially Owned
as of January 1,
1999 (1)
IVAN W. GORR, FORMER CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER OF COOPER TIRE &
RUBBER COMPANY . . . . . . . . . . . . . . . 1,500
Mr. Gorr, 69, 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 expires in 2000. He also
serves as a director of Amcast Industrial
Corporation, Fifth Third Bancorp, OHM
Corporation and Borg-Warner Automotive, Inc.
RICHARD W. HANSELMAN, FORMER CHAIRMAN AND
CHIEF EXECUTIVE OFFICER OF GENESCO, INC. . . 1,200
Mr. Hanselman, 71, 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 expires in
2000. He is also a director of Becton,
Dickinson & Co., BEC Group, Inc., Bradford
Funds, Inc., Foundation Health Corporation,
Gryphon Holdings, Inc. and IMCO Recycling
Inc.
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Number of Common
Shares
Beneficially Owned
as of January 1,
1999 (1)
CONTINUING DIRECTORS:
V. WILLIAM HUNT, PRESIDENT AND CHIEF
EXECUTIVE OFFICE OF ARVIN . . . . . . . . . . 142,909 (3)(4)(5)
Mr. Hunt, 54, 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, Executive Vice
President in 1990, President & COO in 1996
and Chief Executive Officer in May 1998. Mr.
Hunt is also a director of the Motor
Equipment Manufacturers' Association and
Chairman of its Presidents' Council. Mr. Hunt
was first elected to the Board of Directors
in 1983 and his current term expires in 2001.
DON J. KACEK, CHAIRMAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER OF ADVANCED AUTOMATION
TECHNOLOGIES, INC. . . . . . . . . . . . . . 1,000 (2)
Mr. Kacek, 62, 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
expires in 2000.
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Number of Common
Shares
Beneficially Owned
as of January 1,
1999 (1)
RICHARD A. SMITH, VICE PRESIDENT-FINANCE AND
CHIEF FINANCIAL OFFICER OF ARVIN . . . . . . 80,241(2)(3)(4)
Mr. Smith, 53, was 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. Mr. Smith has been Vice
President-Finance and a member of Arvin's
Board of Directors since 1990, and his
current term expires in 2000.
--------------------------------
(1) Except as otherwise noted, each person exercises sole voting and
investment power over the Common Shares beneficially owned by
him. 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: Dr. Beering -
1,600 shares, Mr. Kacek - 1,000 shares and Mr. Smith - 23,350
shares.
(3) Includes Common Shares subject to options which may be exercised
within 60 days after January 1, 1999, as follows: Mr. Hunt -
102,456 shares and Mr. Smith - 53,000 shares.
(4) Includes Common Shares held in such participant's accounts under
certain Arvin employee benefit plans, as follows: Arvin Savings
Plan: Mr. Hunt - 7,879 shares and Mr. Smith - 2,702 shares; Arvin
Equity Account Plan: Mr. Hunt - 1,471 shares; and Arvin Deferred
Compensation Plan: Mr. Hunt - 2,308 shares and Mr. Smith - 1,189
shares. Common Shares held in these Plans are voted at the
direction of the participant.
(5) Does not include 614,746 Common Shares as to which Mr. Hunt can
direct the voting at any and all annual or special meetings of
Arvin pursuant to the shareholders' agreement described under the
heading "Certain Beneficial Owners." Mr. Hunt disclaims
beneficial ownership of such Common Shares.
(6) Held in an individual retirement account self-directed by Mr.
Velasquez.
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COMPENSATION OF DIRECTORS
During 1998, the non-employee members of the Board of Directors
were compensated for their service as directors as follows: an annual
fee of $26,000; 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. In addition, Vice
Chairman James K. Baker was paid $5,000 per month for the first
quarter of 1998 for services performed for Arvin. Also, the non-
employee members of the Board of Directors were each granted options
during 1998 to purchase 1,000 Common Shares pursuant to the 1998 Stock
Benefit Plan.
MEETINGS OF DIRECTORS AND COMMITTEES
The Board of Directors met four times in 1998.
There are three standing committees of the Board of Directors.
The Audit Committee, the current members of which are Messrs. Gorr
(Chairman), Kacek and Velasquez, 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 1998.
The Human Resources Committee (formerly the Compensation
Committee), which met three times during 1998, is currently comprised
of Messrs. Beering (Chairman), Allen and George. The Human Resources
Committee is responsible for reviewing and approving the general
compensation policy of Arvin and administering its application to the
senior management group. This Committee's objectives are to maximize
the return on Arvin's most valuable assets, its human resources, as
well as to attract and retain the best possible management and to
motivate that management to increase long-term shareholder value. See
"Report of the Human Resources Committee on Executive Compensation."
The Committee on Directors, in conjunction with the Chairman,
recommends to the Board candidates for election as directors at the
Annual Meeting of Shareholders or to fill vacancies on the Board. It
also makes recommendations concerning the composition, organization
and functions of the Board and its committees, as well as on the
performance, qualifications, conduct and compensation of 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
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Committee on Directors, which met four times in 1998, are Messrs.
Hanselman (Chairman), Flannery and Meyer.
EXECUTIVE COMPENSATION
Summary
The following table summarizes the annual and long-term
compensation for services to Arvin and its subsidiaries for fiscal
years 1998, 1997, and 1996 awarded or paid to or earned by the
individuals who served as the chief executive officers of Arvin and
each of the four other most highly compensated executive officers of
Arvin and its subsidiaries (the "Named Officers") during 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS PAYOUTS
RESTRICTED SECURITIES ALL OTHER
OTHER ANNUAL STOCK UNDERLYING LTIP COMPEN-
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS PAYOUTS SATION($)
POSITION YEAR ($) ($) ($) (1) ($) (#) ($)(2) (3)
Byron O. Pond (4) 1998 $625,000 $1,074,938(5) $18,258 $335,563(6) 12,000 $0 $75,940
Chief Executive Officer 1997 608,174 1,110,568(5) 13,514 350,350(6) 32,609 0 23,719
and Chairman of the Board 1996 500,000 216,125(5) 14,972 966,124(6) 32,609 5,850
0
V. William Hunt(4) 1998 $569,423 $1,009,192(7) $4,593 $335,563(8) 176,471 $0 $52,723
President and Chief 1997 440,577 703,362(7) 7,179 394,913(8) 26,000 0 5,293
Executive Officer 1996 371,115 625,988(7) 5,050 162,094(8) 25,000 0 5,850
David S. Hoyte(9) 1998 $312,981 $309,851 $6,892 $0 12,000 0 $23,903
Vice President 1997 300,009 275,020 6,135 119,992(10) 14,000 0 11,700
1996 69,231 0 679 90,000(10) 7,500 0 900
Richard A. Smith 1998 $296,635 $350,919 $6,957 $0 12,000 0 $28,223
Vice President-Finance & 1997 272,132 340,166 5,143 0 14,000 0 5,850
Chief Financial Officer 1996 252,581 315,726 5,148 0 14,000 0 5,850
Wesley B. Vance 1998 $234,615 $288,578 $202,110(11) $0 10,000 $0 $13,784
Vice President 1997 182,906 288,633 176,723(11) 0 10,000 0 6,240
1996 122,962 16,667 89,008(11) 0 7,000 0 5,791
E. Leon Viars 1998 $312,981 $259,774 $4,744 $0 12,000 $15,695 $28,681
Vice President 1997 289,616 362,019 4,553 0 14,000 44,726 25,303
1996 228,062 285,077 4,550 0 12,000 72,252 5,850
</TABLE>
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(1) The compensation reported is the amount reimbursed or paid by
Arvin for certain taxes.
(2) Amounts for Mr. Viars represent payouts for awards for the 1986
through 1990 performance periods under the Maremont Corporation
Senior Management Deferred Compensation Plan, which was
terminated on January 1, 1991.
(3) The compensation reported represents Arvin qualified and non-
qualified matching contributions to the Arvin Savings Plan and to
the Arvin Deferred Compensation Plan.
(4) On May 1, 1998, Mr. Hunt succeeded Mr. Pond as Chief Executive
Officer of Arvin.
(5) For fiscal year 1998, includes a cash bonus of $739,375 plus the
value (as of February 10, 1999) of 9,100 performance shares
distributed to Mr. Pond as restricted Common Shares. For fiscal
year 1997, includes a cash bonus of $760,218 plus the value (as
of February 12, 1998) of 9,100 performance shares distributed to
Mr. Pond as restricted Common Shares. For fiscal year 1996,
represents the value (as of February 13, 1997) of 9,100
performance shares distributed to Mr. Pond as restricted Common
Shares.
(6) For fiscal years 1998 and 1997, represents the value of 9,100
performance shares distributed to Mr. Pond as restricted Common
Shares in each year, respectively. For fiscal year 1996, includes
30,303 Common Shares restricted for a five-year period that
Mr. Pond elected to receive in lieu of his 1996 cash bonus of
$625,000. 1996 also includes the value of 9,100 performance
shares distributed to Mr. Pond as restricted Common Shares.
Dividends will be paid on all Common Shares distributed to
Mr. Pond during the restricted period. The value of Mr. Pond's
restricted share holdings was $2,138,693 as of the Arvin 1998
fiscal year-end.
(7) For fiscal year 1998, includes a cash bonus of $673,629 plus the
value (as of February 10, 1999) of 9,100 performance shares
distributed to Mr. Hunt as restricted Common Shares. For fiscal
year 1997, includes a cash bonus of $440,599 plus the value (as
of February 12, 1998) of 6,825 performance shares distributed to
Mr. Hunt as restricted Common Shares. For fiscal year 1996,
includes a cash bonus of $463,894 and the value (as of
February 13, 1997) of 6,825 performance shares distributed to
Mr. Hunt as restricted Common Shares.
(8) For fiscal year 1998, represents the value of 9,100 performance
shares distributed to Mr. Hunt as restricted Common Shares. For
fiscal year 1997, includes 3,967 Common Shares restricted for a
five year period that Mr. Hunt elected to receive in lieu of
$110,144 of his 1997 cash bonus. 1997 also includes the value of
6,825 performance shares distributed to Mr. Hunt as restricted
Common Shares. For fiscal year 1996, includes the value of 6,825
performance shares distributed to Mr. Hunt as restricted Common
Shares. Dividends will be paid on all Common Shares distributed
to Mr. Hunt during the restricted period. The value of Mr. Hunt's
restricted share holdings was $894,905 as of the Arvin 1998
fiscal year-end.
(9) Mr. Hoyte became an officer of Arvin during 1996.
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(10) For fiscal years 1997 and 1996, represents the value of 3,602 and
3,636 restricted Common Shares, respectively. The value of
Mr. Hoyte's restricted share holdings was $30,734 as of the Arvin
1998 fiscal year-end.
(11) Overseas service reimbursement.
OPTIONS GRANTED IN 1998
The following table sets forth certain information as to options
to purchase Common Shares of Arvin granted to each of the Named
Officers under the 1988 and 1998 Stock Benefit Plans during the fiscal
year ended January 3, 1999 and the potential realizable value,
assuming certain annual rates of appreciation.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
<S> <C> <C> <C> <C> <C> <C>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------------------------------------------------------------------- AT ASSUMED ANNUAL RATES
PERCENT OF OF STOCK PRICE
NUMBER OF TOTAL APPRECIATION
SECURITIES OPTIONS FOR OPTION TERM(3)
UNDERLYING GRANTED TO --------------------------
OPTIONS EMPLOYEES EXERCISE PRICE
GRANTED IN FISCAL ($ PER EXPIRATION
NAME (#)(1) YEAR SHARE)(2) DATE 5% ($) 10% ($)
Byron O. Pond 12,000 2.1% $39.1875 7/15/08 $ 295,787 $ 749,579
V. William Hunt 150,000 26.7% 37.9375 2/11/08 3,579,403 9,070,856
V. William Hunt 26,471 4.7% 39.1875 7/15/08 652,482 1,653,508
David S. Hoyte 12,000 2.1% 39.1875 7/15/08 295,787 749,579
Richard A. Smith 12,000 2.1% 39.1875 7/15/08 295,787 749,579
Wesley B. Vance 10,000 1.8% 39.1895 7/15/08 246,489 624,649
E. Leon Viars 12,000 2.1% 39.1875 7/15/08 295,787 749,579
All Officers as a
Group (20 people) 297,471 52.9% 38.5572 7,214,409 18,282,620
All Optionees 562,771 100.0% 38.8754 13,761,229 34,873,449
-------------------------------
(1) 150,000 of Mr. Hunt's options were granted on February 11, 1998
under the 1988 Plan; all other options granted to Mr. Hunt and
the other Named Officers were granted on July 15, 1998 pursuant
to the 1998 Plan. 150,000 of Mr. Hunt's options will first
become exercisable May 1, 2003; the other options granted to Mr.
</TABLE>
-16-<PAGE>
Hunt and to the other Named Officers in 1998 will first become
exercisable July 15, 1999. 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
option holders' 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.
OPTION EXERCISES IN 1998
The table below sets forth certain information concerning the
exercise of options to purchase Common Shares under the 1998 Stock
Benefit Plan and the 1988 Stock Option Plan during fiscal year 1998 by
each of the Named Officers and the value of unexercised options held
by each of the Named Officers as of January 3, 1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS AT MONEY OPTIONS AT FISCAL YEAR-
ACQUIRED ON VALUE FISCAL YEAR-END (#) END ($)(2)
EXERCISE REALIZED
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Byron O. Pond 29,459 $545,302 310,759 12,000 $3,850,719 $30,000
V. William Hunt 11,500 $228,656 102,456 176,471 $1,699,751 $628,678
E. Leon Viars 32,694 $669,792 46,506 12,000 $714,545 $30,000
Richard A. Smith 10,750 $188,125 53,000 12,000 $871,687 $30,000
David S. Hoyte 3,470 $59,641 14,000 12,000 $150,500 $30,000
Wesley B. Vance 1,500 $33,750 20,400 10,000 $307,650 $25,000
----------------------------
</TABLE>
-17-<PAGE>
(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 $41.6875, the closing price of
the Arvin Common Shares on the New York Stock Exchange on
December 31, 1998, and the option exercise price.
EMPLOYMENT AGREEMENT WITH V. WILLIAM HUNT
An employment agreement between Arvin and Mr. Hunt, effective May
1, 1998, provides, among other things, for his full employment until
April 30, 2001, with automatic one-year extensions commencing May 1,
1999, and continuing each May 1 thereafter, unless terminated earlier
by Arvin or Mr. Hunt, at an annual salary of at least $600,000 plus
such additional compensation as may be determined from time to time by
the Board of Directors. The agreement also provides that it will be
binding upon a successor corporation in the event that Arvin is merged
into or consolidated with any other corporation or that any other
corporation acquires substantially all of the assets of Arvin. In the
event Mr. Hunt's change of control agreement (discussed below) is
triggered, it will supersede his employment agreement.
CHANGE OF CONTROL AGREEMENTS
Arvin has entered into Change of Control Employment Agreements (the
"Agreements") with certain Arvin officers, including the Named
Officers, which provide severance payments and benefits in the event
of the termination of employment of the officer under certain
circumstances within the three year period following a change in
control. Under the Agreements, each officer would be entitled to
severance payments and benefits in the event that his employment is
terminated during the three year period following a change in control
without "cause" by Arvin, or for "good reason" by the officer, each as
is defined in the Agreement. In such case, the officer would be
entitled to a severance payment equal to three times his current
annual salary and his highest bonus during the preceding three years.
During such three-year period, the officer would be entitled to
participate in all incentive, retirement and welfare plans of Arvin.
Additional benefits would include the right to receive a pension
supplement, fringe benefits and paid vacation. In the event that any
payments made in connection with the change-in-control would be
subject to the excise tax imposed under Section 4999 of the Internal
Revenue Code as a result of the aggregate compensation payments and
benefits made to the individual, under the Agreement or otherwise, in
connection with a change-in-control, Arvin is obligated to make whole
the individual with respect to such excise tax. Each officer would
also be entitled to receive the foregoing severance payments and
benefits of the Agreement if employment is terminated for any reason
by the officer during a limited period of time following a change of
control.
-18-<PAGE>
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
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>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ANNUAL ANNUAL LIFE INCOME WITH YEARS OF SERVICE AT
COMPENSATION AGE 62 (SINGLE LIFE ANNUITY)
(AVERAGE OF 5 ----------------------------------------------
HIGHEST
CONSECUTIVE YEARS
IN LAST 10)
----------------
15 20 25 30 35 40
------- -------- -------- -------- -------- --------
$ 250,000 $ 53,258 $ 71,010 $ 88,763 $106,515 $124,268 $142,021
$ 450,000 97,508 130,010 162,513 195,015 227,518 260,021
$ 650,000 141,758 189,010 236,263 283,515 330,768 378,021
$ 850,000 186,008 248,010 310,013 372,015 434,018 496,021
$1,050,000 230,258 307,010 383,763 460,515 537,258 614,021
$1,250,000 274,508 366,010 457,513 549,015 640,518 732,021
$1,450,000 318,758 425,010 531,263 637,515 743,768 850,021
$1,650,000 363,008 484,010 605,013 726,015 847,018 968,021
$1,850,000 407,258 543,010 678,763 814,515 950,268 1,086,021
$2,050,000 451,508 602,010 752,513 903,015 1,053,518 1,204,021
$2,250,000 495,758 661,010 826,263 991,515 1,156,768 1,322,021
$2,450,000 540,008 720,010 900,013 1,080,015 1,260,018 1,440,021
$2,550,000 562,133 749,510 936,888 1,124,265 1,311,643 1,499,021
</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' earnings in the last
ten years of service. On January 1, 1998, a new unified benefit
formula was adopted for determining benefits under the Retirement
Plan. The benefit is calculated by (i) multiplying 1.1% of the average
annual compensation times years of credited service and adding (ii) an
amount determined by multiplying 0.375% of the average annual
-19-<PAGE>
compensation that exceeds the social security wage base (for 1998,
$36,529) times years of credited service. Employees may qualify for
full benefits at age sixty-two, 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
and the Arvin Deferred Compensation Plan. For the calendar year ended
December 31, 1998, credited years of service for the Named Officers
are as follows: Mr. Pond 30 years; Mr. Hunt 22 years; Mr. Hoyte 2
years; Mr. Smith 9 years; Mr. Viars 29 years and Mr. Vance 9 years.
In 1983, the master trust governing the Retirement Plan was
amended to allow investment of Plan funds in 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.
In addition to benefits under the Retirement Plan, 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 HUMAN RESOURCES COMMITTEE ON EXECUTIVE COMPENSATION
The Human Resources Committee of the Board of Directors (the
"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,
reviews and approves the annual cash bonus incentive plan for
executives, including the Named Officers, administers the 1988 Stock
-20-<PAGE>
Benefit Plan and the 1998 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 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 approximately at 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 1998 were determined by gathering competitive
compensation information from the companies comprising the Hewitt
Associates Data Base 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 1998, these objectives, designed to increase shareholder
value, were earnings per share, return on net producing assets and
debt-to-capital ratio. The relative weights assigned to these
objectives were as follows: earnings per share was weighted by a
factor of one, return on net producing assets was weighted by a factor
of 0.6 and debt-to-capital ratio was weighted by a factor of 0.5.
Maximum bonuses that could 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 could be earned if all of the objectives
were attained was 125% of the executive's base salary. Minimum
achievement levels against each of the financial objectives were
required before the portion of the bonus relating to that objective
could be earned. Each of the CEOs and the other corporate executive
officers, including Mr. Smith, participated in the 1998 cash bonus
incentive plan. Each of the other Named Officers participated in a
similar cash bonus incentive plan which also included financial
objectives specific to their operating units.
In 1997, the CEO, certain Named Officers and certain other
officers of Arvin were authorized by the Committee to elect to receive
a portion of their 1998 cash bonus incentive compensation, if any, in
the form of restricted Common Shares of Arvin. The number of
restricted Common Shares so awarded was determined by dividing a
designated portion of the recipient's bonus by the closing price of
Arvin Common Shares on the New York Stock Exchange on the final
-21-<PAGE>
trading day of calendar 1998. A condition of each such award provides
that the recipient elect to hold his restricted Common Shares for a
period of three years, or five years, in which instance he is entitled
to receive an increase of 10%, or 20%, respectively, in the number of
restricted Common Shares so awarded. The Committee believes that the
availability of this discretionary alternative to cash bonuses further
encourages employee investment in the long-term future of Arvin.
Long-term incentives are currently provided through the grant of
stock options to the Named Officers and the CEO and the award of
performance shares to the CEO and COO. Stock options and performance
shares are an important component of the Committee's long-term
performance-based compensation philosophy. 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. Since the value of an
option is directly related to Arvin's stock price, it provides an
incentive to create value for shareholders. The Committee also
believes that direct ownership of Arvin shares will serve to further
align executives' interest with that of all shareholders. Accordingly,
all members of senior management, including the CEO and Named
Officers, are subject to guidelines which call for ownership of Arvin
shares equal to 1.75 to 3.0 times base salary. These individuals are
expected to meet these guidelines progressively over the five year
period ending in 2001. Performance shares were awarded to Mr. Hunt,
the CEO as of May 1, 1998, and Mr. Pond, the CEO prior to that time,
to provide an incentive to enhance Arvin's earnings growth. In 1998,
performance share awards could be earned upon attainment of
performance goals, which were based upon the percentages by which
Arvin's 1998 profit after tax from continuing operations exceeded
Arvin's 1997 profit after tax from continuing operations. If earned,
performance shares are paid in a combination of Arvin Common Shares
and cash. Fifty percent of the Arvin Common Shares earned must be held
for a period of three years. In 1998, the maximum number of
performance shares that the CEO could earn was 18,200, 14,000 of which
were payable in Arvin Common Shares and 4,200 of which were payable in
cash.
Mr. Hunt's employment agreement (see "Executive Compensation-
Employment Agreement") did not impact the determination of his
compensation for 1998 except insofar as it addresses minimum annual
base salary. Mr. Hunt's cash incentive bonus was determined in
accordance with the 1998 cash bonus incentive plan. In 1998, the
objectives relating to earnings per share and debt-to-capital ratio
were fully achieved; those regarding return on net producing assets
were substantially accomplished. As a result, the cash bonus paid to
Mr. Hunt, as CEO during 1998, was $739,375. Mr. Hunt was granted
performance shares which could be earned based upon attainment of 1998
profit after-tax performance goals. The earnings goals were fully
achieved in 1998, resulting in Mr. Hunt earning the maximum number of
performance shares. The stock options granted to Mr. Hunt during 1998
-22-<PAGE>
are consistent with the design and philosophy of the overall program
and are shown above in the Summary Compensation Table.
The Committee believes this compensation philosophy and practice
encourages 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.
Section 162(m) of the Internal Revenue Code provides that
compensation in excess of $1.0 million paid to the chief executive
officer and the four most highly compensated executive officers of a
public company will generally be non-deductible for federal income tax
purposes, subject to certain exceptions. This limitation had
application to the Company for the first time in 1997. The Committee
intends to structure compensation arrangements in a manner that will
avoid the deduction limitations imposed by Section 162(m) in
appropriate circumstances. However, the Committee believes that it is
important and necessary that the Committee retain the right and
flexibility to provide and revise compensation arrangements, such as
base salary and cash bonus incentive opportunities, that may not
qualify under Section 162(m) if, in the Committee's view, such
arrangements are in the best interests of the Company and its
shareholders.
This report is submitted on behalf of the Committee:
Steven C. Beering, Chairman
Joseph P. Allen
William D. George, Jr.
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 1994 through 1998, assuming the
investment of $100 on December 31, 1993 and the reinvestment of
dividends.
-23-<PAGE>
CERTAIN BENEFICIAL OWNERS
As of February 22, 1999, 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 (in the case of
Northern Trust) and Form 13F (in the case of Primecap) filed with the
Securities and Exchange Commission were:
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
Primecap Management Company 1,231,000 5.02%
225 S. Lake Avenue, Suite 400
Pasadena, CA 91101
The Northern Trust Company 1,698,295(1) 6.93%
50 S. LaSalle Street
Chicago, IL 60675
(1) Held as trustee for the Arvin Industries, Inc. Employee Stock
Benefit Trust. Northern Trust disclaims beneficial ownership of
these securities.
As of January 1, 1999, Mr. Viars beneficially owned 75,104 Arvin
Common Shares, which includes 46,506 Common Shares subject to options
which may be exercised within 60 days after January 1, 1999, 1,810
Common Shares in the Arvin Savings Plan and 1,300 Common Shares in the
Arvin Deferred Compensation Plan.
Also, as of January 1, 1999, Mr. Hoyte beneficially owned 24,238
Common Shares, which includes 14,000 Common Shares subject to options
which may be exercised within 60 days thereafter, 310 Common Shares in
the Arvin Savings Plan and 738 Common Shares in the Arvin Deferred
Compensation Plan.
Additionally, as of January 1, 1999, Mr. Vance beneficially owned
23,569 Common Shares, which includes 20,400 Common Shares subject to
options which may be exercised within 60 days thereafter, 1,468 Common
Shares in the Arvin Savings Plan and 201 Common Shares in the Arvin
Deferred Compensation Plan.
Common Shares, which includes 310,759 Common Shares subject to
options which may be exercised within 60 days thereafter, 1,826 Common
Shares in the Arvin Savings Plan and 2,295 Common Shares in the Arvin
Deferred Compensation Plan.
Further, as of January 1, 1999, all directors and executive
officers as a group (20 persons) beneficially owned 947,538 Arvin
Common Shares, or 3.66% of the outstanding Common Shares (excluding
Common Shares referred to in the following paragraph). In addition, on
that date, the number of Arvin Common Shares held in the Arvin pension
-24-<PAGE>
plans, the Arvin savings plans, the Arvin Equity Account, the Arvin
Deferred Compensation Plan and the Arvin Employee Stock Benefit Trust
were: respectively, 974,664; 853,503; 334,254; 9,785 and 1,713,160.
Additionally, pursuant to a Shareholders' Agreement, Mr. Hunt has
the right to direct the manner in which the Arvin Common Shares owned
by certain other shareholders (currently 614,746 shares, or 2.38,% of
the outstanding Common Shares) are voted at any or all annual or
special meetings of Arvin. The agreement also provides that such
shares shall not be tendered in response to any offer that would
result in the offeror owning more than 5% of the Common Shares of
Arvin unless the Board of Directors of Arvin recommends that
shareholders accept the offer.
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 1998 except
that Mr. Pond was late in reporting his sale in December 1998 of 2,000
Common Shares. Mr. Pond filed a Form 4 to report this sale on January
19, 1999.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OFINDEPENDENT PUBLIC
ACCOUNTANTS
Based upon the recommendation of the Audit Committee, at its
February 1999 meeting, the Board of Directors approved the engagement
of the accounting firm of PricewaterhouseCoopers LLP as Arvin's
independent certified public accountants for the fiscal year beginning
January 4, 1999.
Representatives from PricewaterhouseCoopers 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 PricewaterhouseCoopers is not ratified
by the shareholders, it will be reconsidered by the Board of
Directors. The Board recommends that its appointment of
PricewaterhouseCoopers be ratified by the shareholders.
SHAREHOLDER NOMINATIONS AND PROPOSALS
Pursuant to the rules under the Securities Exchange Act of 1934,
as amended, proposals of shareholders intended to be presented at the
2000 Annual Meeting must be received at Arvin's executive offices no
-25-<PAGE>
later than November 13, 1999 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
2000 Annual Meeting of Shareholders must be received by the Secretary
of Arvin at its executive offices in Columbus, Indiana no earlier than
January 16, 2000 and no later than February 15, 2000.
BUSINESS TO BE TRANSACTED
At the date of this proxy statement, the Board of Directors does
not know of any business to be brought before the Annual Meeting other
than the matters described herein. 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 12, 1999
-26-<PAGE>
FORM OF PROXY CARD FOR HOLDERS OF COMMON SHARES OF ARVIN
APPENDIX I
COMMON STOCK COMMON STOCK
ARVIN INDUSTRIES, INC.
----------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD APRIL 15, 1999
The undersigned hereby appoints V. William Hunt 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 15, 1999 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 1 AND 2.
---
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)<PAGE>
ARVIN INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY
This proxy, as properly executed, will be voted in the manner directed
herein by the shareholder(s). If no direction is given this proxy
will be voted "FOR" proposals 1 & 2.
1. ELECTION OF DIRECTORS FOR For Withhold For All
TERMS OF 3 YEARS -- All All Except Nominee(s)
NOMINEES: Robert E. Written Below,
Fowler, William D. George, /__/ /__/ /__/ ______________
Arthur R. Velasquez and
Carolyn Y. Woo
2. Ratification of appointment For Withhold Abstain
of Price Waterhouse as /__/ /__/ /__/
independent auditors
3. In their discretion on such
other business as may properly
come before the meeting.
Dated:________________________________________________, 1999
Signature(s)________________________________________________
____________________________________________________________
The shareholder's signature above 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.
---------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE
ENCLOSED ENVELOPE.<PAGE>
U:/USER\DOCPROC\EDGAR\GOODSON\PROXY.EDG<PAGE>
