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:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
/ / Preliminary Proxy Statement / / Confidential, for use of the Commission Only
/X/ Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material under Rule 14a-12
</TABLE>
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)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
ARVIN INDUSTRIES, INC.
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 11, 2000
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 Tuesday, April 11, 2000, at 10:30 a.m., for the following purposes:
1. To elect three directors, each for a term of three years;
2. To elect two directors, each for a term of one year;
3. To consider and vote upon an amendment to Arvin's Restated
Articles of Incorporation, as amended, to change its name to
Arvin, Inc.;
4. To ratify the Board of Directors' appointment of
PricewaterhouseCoopers LLP as Arvin's independent certified
public accountants for the current year; and
5. To transact any other business that may properly come before the
Annual Meeting and any adjournment thereof.
Shareholders of record at the close of business on February 21, 2000
are entitled to notice of and to vote at the Annual Meeting.
Arvin's Annual Report for fiscal year 1999 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 14, 2000
ARVIN INDUSTRIES, INC.
ONE NOBLITT PLAZA, BOX 3000, COLUMBUS, INDIANA 47202-3000
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 11, 2000
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" or the "Company") 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 11, 2000, and at any adjournment or postponement thereof, for
the purposes described 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, 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 those
persons, and Arvin will reimburse these brokerage firms, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them. In addition, Arvin has retained The Altman Group 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 14, 2000.
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 21,
2000, at which time Arvin had issued and outstanding 25,832,419 Common
Shares. Each shareholder will be entitled to one vote for each Common
Share held regarding 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 before
the Annual Meeting will be voted in accordance with the instructions
on these proxies unless they have been revoked. If no instruction is
indicated, the shares will be voted FOR the election of the five
nominees for director listed in this proxy statement, FOR approval of
the amendment of Arvin's Restated Articles of Incorporation, as
amended (the "Restated Articles of Incorporation"), FOR ratification
of the appointment of independent public accountants, and in the
discretion of the persons named in the proxy on any other matters that
may properly come before the Annual Meeting. Any shareholder who has
given a proxy may revoke that 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, present
in person or represented 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 as present and entitled to vote for
purposes of determining the presence of a quorum for the transaction
of business at the Annual Meeting. "Broker non-votes" refers to a
broker or other nominee holding shares for a beneficial owner not
voting on a particular proposal because the broker or other nominee
does not have discretionary voting power regarding that item and has
not received instructions from the beneficial owner.
A plurality of the Common Shares voted in person or by proxy is
required to elect a director. The amendment of Arvin's Restated
Articles of Incorporation and the ratification of the appointment of
the independent public accountants will be approved if the votes cast
favoring each action exceed the votes cast opposing that 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 amendment of Arvin's Restated
Articles of Incorporation and the ratification of the appointment of
the accountants, abstentions will not be considered. Broker non-
votes, because they are not considered votes cast, will not be counted
in the vote totals.
PROPOSALS 1 AND 2 - ELECTION OF DIRECTORS
Arvin's Restated Articles of Incorporation provide that its By-
Laws, as amended (the "By-Laws") may divide the Board of Directors
into classes and that the terms of office of directors in each class
may be more than one year. The By-Laws provide that the Board of
Directors shall be divided into three classes, with 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 terms of three years.
Richard A. Smith, the Vice President - Finance and Chief
Financial Officer and a director of Arvin, has announced his
retirement effective later in fiscal year 2000. Mr. Smith, whose term
as director expires at the Annual Meeting, will not stand for
reelection to Arvin's Board of Directors at the Annual Meeting. He
has served as Vice President - Finance and as a director of Arvin
since 1990. Arvin expresses its gratitude to Mr. Smith for his
service to Arvin.
- 2 -
At the Annual Meeting, V. William Hunt, Don J. Kacek and James E.
Perrella will be nominated for three-year terms as directors. Ivan W.
Gorr and Richard W. Hanselman, directors whose terms expire at the
Annual Meeting, have been reassigned to the class of 2001 and will be
nominated for one-year terms as they will be retiring as of the 2001
Annual Meeting of Shareholders. Mr. Hunt has been reassigned to the
class of 2000 to make the number of directors in each class more
equal. Unless otherwise directed, proxies will be voted for the
election of the five 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 is information about the director nominees and
continuing directors of Arvin:
- 3 -
NUMBER OF
COMMON SHARES
BENEFICIALLY
OWNED AS OF
NOMINEES FOR THREE-YEAR TERMS: JANUARY 1, 2000<1>
-----------------
V. WILLIAM HUNT, CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER OF ARVIN . . . 184,752<3><4><5>
Mr. Hunt, 55, 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
and Chief Operating Officer in 1996, Chief
Executive Officer in May 1998 and Chairman
of the Board in April 1999. Mr. Hunt was
first elected to the Board of Directors in
1983. Mr. Hunt is also a director of the
Motor Equipment Manufacturers' Association
and Chairman of its Presidents' Council and
is a director of Manufacturers'
Alliance/MAPI, Inc.
DON J. KACEK, CHAIRMAN AND CHIEF EXECUTIVE
OFFICER OF ADVANCED AUTOMATION
TECHNOLOGIES, INC. . . . . . . . . . . 2,000<2><3>
Mr. Kacek, 63, holds a Bachelor of Science
degree from Illinois Institute of
Technology. In 1989, Mr. Kacek became a
director of Advanced Automation
Technologies, Inc. and since 1990 has been
its Chairman 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.
- 4 -
NUMBER OF
COMMON SHARES
BENEFICIALLY
OWNED AS OF
NOMINEES FOR THREE-YEAR TERMS: JANUARY 1, 2000<1>
------------------
JAMES E. PERRELLA, CHAIRMAN OF INGERSOLL-
RAND COMPANY . . . . . . . . . . . . . 0
Mr. Perrella, 64, is a graduate of Purdue
University with a Bachelor of Science
degree in Mechanical Engineering, a
Master of Science degree in Industrial
Management and an Honorary Doctorate degree
in Engineering. Mr. Perrella has served as
Chairman of Ingersoll-Rand Company since
1993 and as a member of its Board of
Directors since 1992. Between 1993 and
October 1999, he also served as President
and Chief Executive Officer of Ingersoll-Rand.
Ingersoll-Rand is a diversified industrial
and components manufacturer. He was first
elected to Arvin's Board of Directors in
1999. He also serves on the Boards of
Directors of Becton Dickinson and Company,
Bombardier Inc., Milacron Inc. and Rio
Algom Limited.
- 5 -
NUMBER OF
COMMON SHARES
BENEFICIALLY
OWNED AS OF
NOMINEES FOR ONE-YEAR TERMS: JANUARY 1, 2000<1>
------------------
IVAN W. GORR, FORMER CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER OF COOPER
TIRE & RUBBER COMPANY . . . . . . . . 2,500<3>
Mr. Gorr, 70, is a graduate of the
University of Toledo and is a certified
public accountant. Mr. Gorr began his
career with Cooper Tire & Rubber Company 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. He also serves as a
director of Nations Rent, Inc. and Borg-
Warner Automotive, Inc.
RICHARD W. HANSELMAN, FORMER CHAIRMAN AND
CHIEF EXECUTIVE OFFICER OF GENESCO,
INC. . . . . . . . . . . . . . . . . . 2,200<3>
Mr. Hanselman, 72, 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. He is also a
director of Bradford Funds, Inc. and
Chairman of Foundation Health Corporation.
- 6 -
NUMBER OF
COMMON SHARES
BENEFICIALLY
OWNED AS OF
CONTINUING DIRECTORS: JANUARY 1, 2000<1>
-------------------
JOSEPH P. ALLEN, CHAIRMAN, VERIDIAN
CORPORATION (SUCCESSOR TO CALSPAN SRL
CORPORATION) . . . . . . . . . . . . . 4,790<3>
Dr. Allen, 62, 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., the predecessor to
Calspan SRL Corporation, a designer of
space facilities. Dr. Allen was elected
President in 1988 and Chief Executive
Officer in 1991 of Space Industries, Inc.
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 . . . . . . . . . . . . . . 2,600<2><3>
Dr. Beering, 67, 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
was first elected to Arvin's Board of
Directors in 1983 and his current term
expires in 2001. He is also a director of
Eli Lilly and Company, NiSource Inc.,
American United Life Insurance Co. and
Veridian Corporation.
- 7 -
NUMBER OF
COMMON SHARES
BENEFICIALLY
OWNED AS OF
CONTINUING DIRECTORS: JANUARY 1, 2000<1>
------------------
JOSEPH P. FLANNERY, CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER OF UNIROYAL 2,500<3>
HOLDING, INC. . . . . . . . . . . . .
Mr. Flannery, 67, holds a Bachelor of
Science degree from the University of
Lowell and a Masters of Business
Administration degree from Harvard
University. 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 Ingersoll-
Rand Company, Kmart Corp., Newmont Mining
Corporation and The Scotts Company.
ROBERT E. FOWLER, JR., FORMER CHAIRMAN AND
CHIEF EXECUTIVE OFFICER OF IMC GLOBAL
INC. . . . . . . . . . . . . . . . . . 0
Mr. Fowler, 64, is a graduate of Vanderbilt
University with a Bachelor of Science
degree in Chemical Engineering. He joined
IMC Global Inc. as President and Chief
Operating Officer in 1996 following its
merger with The Vigoro Corporation, of
which he had served as President, Chief
Executive Officer and a director since
1994. He was elected Chief Executive
Officer in 1997 and Chairman in 1998 of IMC
Global, serving in these capacities until
October 1999. 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 and was reelected in 1999.
His current term expires in 2002. He is
also a director of Anixter International
Inc.
- 8 -
NUMBER OF
COMMON SHARES
BENEFICIALLY
OWNED AS OF
CONTINUING DIRECTORS: JANUARY 1, 2000<1>
------------------
WILLIAM D. GEORGE, JR., RETIRED PRESIDENT 4,000<3>
AND CHIEF EXECUTIVE OFFICER OF S.C.
JOHNSON & SON INC. . . . . . . . . . .
Mr. George, 67, 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 1997. Mr. George was first
elected to Arvin's Board of Directors in
1994 and his current term expires in 2002.
He also serves on the Boards of Directors
of Ralcorp Holdings and Reilly Industries,
Inc. and is a member of the Board of
Trustees of Carthage College.
- 9 -
NUMBER OF
COMMON SHARES
BENEFICIALLY
OWNED AS OF
CONTINUING DIRECTORS: JANUARY 1, 2000<1>
------------------
ARTHUR R. VELASQUEZ, CHAIRMAN, PRESIDENT
AND CHIEF EXECUTIVE OFFICER OF AZTECA
FOODS, INC. . . . . . . . . . . . . . 2,575<3><6>
Mr. Velasquez, 61, 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 and his current term
expires in 2002. 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.
- 10 -
NUMBER OF
COMMON SHARES
BENEFICIALLY
OWNED AS OF
CONTINUING DIRECTORS: JANUARY 1, 2000<1>
------------------
CAROLYN Y. WOO, DEAN OF THE COLLEGE OF
BUSINESS ADMINISTRATION AND PROFESSOR
OF MANAGEMENT, UNIVERSITY OF NOTRE
DAME . . . . . . . . . . . . . . . . . 0
Dr. Woo, 45, was graduated from Purdue
University with a Bachelor of Science
degree in Economics. She also 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. Before 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). Dr. Woo was
first elected to Arvin's Board of Directors
in 1999 and her current term expires in
2002. She also serves on the Boards of
Directors of Bindley-Western Inc., NiSource
Inc. and Aon Corporation.
-------------------------
<1> Except as otherwise noted, each person exercises sole voting and
investment power over the Common Shares beneficially owned by him
or her. No nominee or director is individually the beneficial
owner of more than 1 percent of Arvin's outstanding Common
Shares.
<2> Shared voting and investment power, as follows: Dr. Beering -
1,600 shares and Mr. Kacek - 1,000 shares.
<3> Includes Common Shares subject to options which may be exercised
within 60 days after January 1, 2000, as follows: Mr. Hunt -
- 11 -
128,927 shares and 1,000 shares for each of Messrs. Allen,
Beering, Flannery, George, Gorr, Hanselman, Kacek and Velasquez.
<4> Includes Common Shares held in Mr. Hunt's accounts under the
following Arvin employee benefit plans. Arvin Savings Plan:
8,183 shares; Arvin Equity Account Plan: 1,510 shares; and Arvin
Deferred Compensation Plan: 3,882 shares. Common Shares held in
these Plans are voted at the direction of Mr. Hunt.
<5> Does not include 564,746 Common Shares as to which Mr. Hunt can
direct the voting at any and all Annual or Special Meetings of
Arvin under the shareholders' agreement described under the
heading "Certain Beneficial Owners." Mr. Hunt disclaims
beneficial ownership of these Common Shares.
<6> Held in an individual retirement account self-directed by Mr.
Velasquez.
COMPENSATION OF DIRECTORS
During 1999, the non-employee members of the Board of Directors
were compensated for their service as directors as follows: an annual
fee of $30,000; a fee of $4,000 for chairing and $1,500 for membership
on any regular committee of the Board; and attendance fees of $1,500,
$1,000 and $1,000, respectively, for each Board, telephonic Board and
committee meeting. In addition, Board members may be paid $1,000 per
day for special assignments and $500 for telephonic consultations.
Also, the non-employee members of the Board of Directors were each
granted options during 1999 to purchase 1,000 Common Shares under the
1998 Stock Benefit Plan.
MEETINGS OF DIRECTORS AND COMMITTEES
In 1999, the Board of Directors met four times in person and
twice by telephone.
There are three standing committees of the Board of Directors.
The Audit Committee, whose current members are Messrs. Gorr
(Chairperson), Kacek, Velasquez and Dr. Woo, 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 related functions as the Board of
Directors may, from time to time, delegate to the Audit Committee.
The Audit Committee met five times in 1999.
- 12 -
The Human Resources Committee, formerly the Compensation
Committee, met four times during 1999 and currently consists of Dr.
Beering (Chairperson) and Messrs. Fowler 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. Its 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 of
the Board, 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, and on the performance, qualifications, conduct and
compensation of directors. The Committee on Directors will consider
nominees recommended by Arvin shareholders. These recommendations may
be submitted in writing to the Chairperson 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 1999, are Messrs. Hanselman (Chairperson), Allen, Flannery
and Perrella.
EXECUTIVE COMPENSATION
SUMMARY
The following table summarizes the annual and long-term
compensation for services rendered to Arvin and its subsidiaries for
fiscal years 1999, 1998, and 1997 awarded or paid to or earned by the
Chief Executive Officer of Arvin and each of the four other most
highly compensated executive officers of Arvin and its subsidiaries
(together, the "Named Officers") during 1999.
- 13 -
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- -------------
AWARDS PAYOUTS
------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
RESTRICTED ALL OTHER
OTHER ANNUAL STOCK SECURITIES LTIP COM-
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) UNDERLYING PAYOUTS PENSATION
POSITION YEAR ($) ($) ($)<F1> ($) OPTIONS (#) ($)<F2> ($)<F3>
----------------- ---- ------ ------ ------------ ----------- --------- ------- ---------
V. William Hunt<F4> 1999 $708,173 $850,527<F5> $6,771 $184,844<F6> 51,785 $0 $53,890
Chairman of the Board, 1998 569,423 1,009,192<F5> 4,593 335,563<F6> 176,471 0 52,723
President and Chief 1997 440,577 703,362<F5> 7,179 394,913<F6> 26,000 0 35,274
Executive Officer
David S. Hoyte 1999 $327,981 $235,490 $7,271 $0 12,000 $0 $24,887
Vice President 1998 312,981 309,851 6,892 0 12,000 0 23,903
1997 300,009 275,020 6,135 119,992<F7> 14,000 0 11,700
Richard A. Smith 1999 $343,269 $22,679 $7,119 $359,994<F8> 12,500 $0 $27,073
Vice President-Finance & 1998 296,635 350,919 6,957 0 12,000 0 28,223
Chief Financial Officer 1997 272,132 340,166 5,143 0 14,000 0 22,926
Wesley B. Vance 1999 $345,289 $403,297 $37,854 $0 12,500 $0 $24,721
Vice President 1998 234,615 288,578 202,110<F9> 0 10,000 0 13,784
1997 182,906 228,633 176,723<F9> 0 10,000 0 6,240
E. Leon Viars 1999 $305,134 $218,880 $4,366 $0 12,000 $0 $22,031
Vice President 1998 312,981 259,774 4,744 0 12,000 15,695 28,681
1997 289,616 362,019 4,553 0 14,000 44,726 25,303
</TABLE>
<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.
- 14 -
<4> Mr. Hunt was elected, effective May 1, 1998, Chief Executive
Officer, and, effective April 15, 1999, Chairman of the Board, of
Arvin.
<5> For fiscal year 1999, includes a cash bonus of $665,683 plus the
value, as of February 9, 2000, of 9,100 performance shares
distributed to Mr. Hunt as Common Shares. 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
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 Common Shares.
<6> For fiscal year 1999, represents the value of 9,100 performance
shares distributed to Mr. Hunt as restricted Common Shares. 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. Fiscal year 1997 also 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 $822,648 as of
the Arvin 1999 fiscal year-end.
<7> For fiscal year 1997, represents the value of 3,602 restricted
Common Shares. The value of Mr. Hoyte's restricted share
holdings was $102,207 as of the Arvin 1999 fiscal year-end.
<8> For fiscal year 1999, represents the value of 12,687 restricted
Common Shares. Mr. Smith elected to receive a portion of his
1999 cash bonus incentive compensation in these restricted Common
Shares rather than in cash. The value of Mr. Smith's restricted
share holdings was $359,994 as of the Arvin 1999 fiscal year-end.
<9> Overseas service reimbursement.
OPTIONS GRANTED IN 1999
The following table sets forth certain information as to options
to purchase Common Shares of Arvin granted to each of the Named
Officers under the 1998 Stock Benefit Plan during the fiscal year
ended January 2, 2000 and the potential realizable value, assuming
certain annual rates of appreciation.
- 15 -
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------- AT ASSUMED ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE APPRECIATION
SECURITIES TOTAL FOR OPTION TERM<F3>
UNDERLYING OPTIONS EXERCISE --------------------------
OPTIONS GRANTED TO PRICE EXPIRA-
GRANTED EMPLOYEES IN ($ PER TION
NAME (#)<F1> FISCAL YEAR SHARE)<F2> DATE 5% ($) 10% ($)
------ ----------- ----------- ---------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
V. William Hunt 51,785 10.5% $39.5000 7/15/09 $1,286,624 $3,260,539
David S. Hoyte 12,000 2.4% 39.5000 7/15/09 298,146 755,556
Richard A. Smith 12,500 2.5% 39.5000 7/15/09 310,569 787,038
Wesley B. Vance 12,500 2.5% 39.5000 7/15/09 310,569 787,038
E. Leon Viars 12,000 2.4% 39.5000 7/15/09 298,146 755,556
All Optionees 490,885 100.0% $39.3873 $12,161,485 $30,819,408
</TABLE>
_____________________
<1> All options granted to the Named Officers were granted on July
15, 1999 under the 1998 Stock Benefit Plan. The options granted
to the Named Officers in 1999 will first become exercisable July
15, 2000. Vesting may be accelerated as a result of certain
changes in control of Arvin.
<2> All options were granted at market value, the average of the high
and low prices of the Arvin Common Shares, on the date of grant.
<3> The potential realizable value illustrates the value that might
be recognized upon the exercise of the options immediately before
the expiration of their term, assuming the specified compounded
rates of stock price appreciation over the ten-year term of the
option. Potential realizable value is presented net of the
option exercise price, but before taxes associated with the
exercise. Actual gains, if any, on stock option exercises and
Common Share holdings are dependent on the future performance of
the Common Shares and overall market conditions as well as the
option holders' continued employment through the ten-year term of
the option. There can be no assurance that the amounts reflected
in this table will be achieved.
- 16 -
OPTION EXERCISES IN 1999
The table below shows certain information concerning the exercise
of options to purchase Common Shares under the 1998 Stock Benefit Plan
and the 1988 Stock Benefit Plan during fiscal year 1999 by each of the
Named Officers and the value of unexercised options held by each of
the Named Officers as of January 2, 2000.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT FISCAL YEAR-END
FISCAL YEAR-END (#) ($)<F2>
VALUE ------------------------------- --------------------------------
SHARES ACQUIRED REALIZED
NAME ON EXERCISE (#) ($)<F1> EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
V. William Hunt 0 $0 128,927 201,785 $409,931 $0
David S. Hoyte 0 $0 26,000 12,000 $0 $0
Richard A. Smith 0 $0 65,000 12,500 $208,000 $0
Wesley B. Vance 4,907 $105,501 25,493 12,500 $23,494 $0
E. Leon Viars 0 $0 58,506 12,000 $135,809 $0
</TABLE>
_______________________
<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 $28.375, the closing price of
the Arvin Common Shares on the New York Stock Exchange on
December 31, 1999, and the option exercise price.
EMPLOYMENT AGREEMENT WITH V. WILLIAM HUNT
An employment agreement between Arvin and Mr. Hunt, effective May
1, 1998, provides 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 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
- 17 -
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 is triggered, it will supersede his
employment agreement. The change of control agreements of Mr. Hunt
and certain Company officers are discussed below.
CHANGE OF CONTROL AGREEMENTS
Arvin has entered into change of control employment agreements
(together, the "Agreements") with certain Company 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, as each
is defined in the Agreement. In this 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 the 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 any Agreement or otherwise, in
connection with a change in control, Arvin is obligated to make whole
the individual with respect to the excise tax. Each officer also
would 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 in
control.
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.
- 18 -
<TABLE>
<CAPTION>
ANNUAL COMPENSATION ANNUAL LIFE INCOME WITH YEARS OF SERVICE AT
(AVERAGE OF 5 HIGHEST AGE 62 (SINGLE LIFE ANNUITY)
CONSECUTIVE YEARS ------------------------------------------
IN LAST 10)
-------------------
15 20 25 30 35 40
-- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$ 250,000 $53,132 $70,842 $88,553 $106,263 $123,974 $141,684
$ 450,000 97,382 129,842 162,303 194,763 227,224 259,684
$ 650,000 141,632 188,842 236,053 283,263 330,474 377,684
$ 850,000 185,882 247,842 309,803 371,763 433,724 495,684
$ 1,050,000 230,132 306,842 383,553 460,263 536,974 613,684
$ 1,250,000 274,382 365,842 457,303 548,763 640,224 731,684
$ 1,450,000 318,632 424,842 531,053 637,263 743,474 849,684
$ 1,650,000 362,882 483,842 604,803 725,763 846,724 967,684
$ 1,850,000 407,132 542,842 678,553 814,263 949,974 1,085,684
$ 2,050,000 451,382 601,842 752,303 902,763 1,053,224 1,203,684
$ 2,250,000 495,632 660,842 826,053 991,263 1,156,474 1,321,684
$ 2,450,000 539,882 719,842 899,803 1,079,763 1,259,724 1,439,684
$ 2,550,000 562,007 749,342 936,678 1,124,013 1,311,349 1,498,684
</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 multiplying 1.1 percent of the
average annual compensation by years of credited service and adding an
amount determined by multiplying 0.375 percent of the average annual
compensation that exceeds the social security covered compensation
times years of credited service. The social security covered
compensation in 1999, at age 62, was $38,772. 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, 1999, credited years of service for
the Named Officers are as follows: Mr. Hunt - 23 years; Mr. Hoyte - 3
- 19 -
years; Mr. Smith - 10 years; Mr. Vance - 10 years and Mr. Viars - 30
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 in 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 limitations imposed by law in prescribed circumstances.
To the extent that an individual employee's retirement benefit would
exceed the limit, the pension benefit payable upon retirement shown in
the above table will be paid pursuant to the Supplemental Retirement
Plan.
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
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 incentive opportunities and long-term stock-based
incentive opportunities. The compensation philosophy for base salary
- 20 -
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 1999 were determined by gathering competitive
compensation information from 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 1999 these objectives, designed to increase shareholder
value, were earnings per share, return on net producing assets and
revenue growth. 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 0.67 and
revenue growth was weighted by a factor of 0.42. 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. The
CEO and the other corporate executive officers, including Mr. Smith,
participated in the 1999 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 1998 the CEO, certain Named Officers and certain other
officers of Arvin were authorized by the Committee to elect to receive
a portion of their 1999 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
trading day of calendar 1999. A condition of each such award provides
that the recipient elects 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, the award of
performance shares to the Chairman Emeritus and the CEO and the Arvin
Long Term Incentive Plan. Stock options, performance shares and the
Long Term Incentive Plan 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
- 21 -
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
the 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, CEO, and Mr. Pond, Chairman Emeritus, to provide an
incentive to enhance Arvin's earnings growth. In 1999, performance
share awards could be earned upon attainment of performance goals,
which were based upon the percentages by which Arvin's 1999 profit
after tax from continuing operations exceeded Arvin's 1998 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 1999, 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. The maximum
number of performance shares that the Chairman Emeritus could earn was
9,100, 7,000 of which were payable in Arvin Common Shares and 2,100 of
which were payable in cash. In 1999, the CEO, certain Named Officers
and certain other officers of Arvin became participants in the Arvin
Long Term Incentive Plan which provides a target award, based upon a
doubling of 1998 actual net sales and actual net earnings by 2003. If
this objective is achieved earlier than 2003, the target award is
enhanced. If at least 80% of the objective is achieved by 2003, the
target award is reduced. There is no payout if less than 80% of the
objective is achieved by 2003. The target award for each participant
is the participant's base salary for 1999, divided by $34 and
multiplied by two. The target award, if any, is multiplied by the
closing price of Arvin Common Shares on the New York Stock Exchange on
the final trading day of the calendar year in which the objective is
achieved and is paid two-thirds in Arvin Common Shares and one-third
in cash.
Mr. Hunt's employment agreement (see "Executive Compensation-
Employment Agreement") did not impact the determination of his
compensation for 1999 except insofar as it addresses minimum annual
base salary. Mr. Hunt's cash incentive bonus was determined in
accordance with the 1999 cash bonus incentive plan. In 1999, the
objectives relating to earnings per share and revenue growth 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 1999, was $665,683. Mr. Hunt was granted
performance shares which could be earned based upon attainment of 1999
profit after-tax performance goals. The earnings goals were fully
- 22 -
achieved in 1999, resulting in Mr. Hunt earning the maximum number of
performance shares. The stock options granted to Mr. Hunt during 1999
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. 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, Chairperson
Robert E. Fowler, Jr.
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 Automobile
Parts & Equipment Index during the years 1995 through 1999, assuming
the investment of $100 on December 31, 1994 and the reinvestment of
dividends.
- 23 -
COMPARISON OF 5 YEAR CUMULATIVE
TOTAL RETURN AMONG ARVIN INDUSTRIES, INC.,
THE S&P 500 INDEX AND THE DOW JONES
AUTOMOBILE PARTS & EQUIPMENT INDEX
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/94 12/95 12/96 12/97 12/98 12/99
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Arvin Industries, Inc. $100.00 $73.59 $114.02 $157.60 $201.35 $140.59
S & P 500 $100.00 $137.58 $169.17 $225.61 $290.09 $351.13
Dow Jones Automobile
Parts & Equipment $100.00 $122.04 $140.62 $180.39 $178.25 $138.92
</TABLE>
CERTAIN BENEFICIAL OWNERS
As of February 21, 2000, the only persons or groups known to
Arvin to be the beneficial owners of more than 5 percent of the Common
Shares, as reported in Schedule 13D, as amended, in the case of The
Northern Trust Company, and Schedule 13G, as amended, in the
case of Primecap Management Company, 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 1,694,621<1> 6.56%
225 S. Lake Avenue, Suite 400
Pasadena, CA 91101
The Northern Trust Company 1,449,629<2> 5.61%
50 S. LaSalle Street
Chicago, IL 60675
<1> The nature of the beneficial ownership of these securities is sole
voting and investment power.
<2> Held as trustee for the Arvin Industries, Inc. Employee Stock
Benefit Trust. The Northern Trust Company disclaims beneficial
ownership of these securities.
As of January 1, 2000, Mr. Smith beneficially owned 93,177 Common
Shares, which includes 65,000 Common Shares subject to options which
may be exercised within 60 days thereafter, 2,962 Common Shares in the
Arvin Savings Plan and 1,865 Common Shares in the Arvin Deferred
Compensation Plan. Except for 23,350 Common Shares, over which Mr.
- 24 -
Smith exercises shared voting and investment power, Mr. Smith
exercises sole voting and investment power over the Common Shares
which he beneficially owns.
Also, as of January 1, 2000, Mr. Viars beneficially owned 87,862
Arvin Common Shares, which includes 58,506 Common Shares subject to
options which may be exercised within 60 days after January 1, 2000,
2,047 Common Shares in the Arvin Savings Plan and 1,821 Common Shares
in the Arvin Deferred Compensation Plan.
As of January 1, 2000, Mr. Hoyte beneficially owned 40,549 Common
Shares, which includes 26,000 Common Shares subject to options which
may be exercised within 60 days thereafter, 465 Common Shares in the
Arvin Savings Plan and 1,376 Common Shares in the Arvin Deferred
Compensation Plan and 3,470 Common Shares held in trust.
Additionally, as of January 1, 2000, Mr. Vance beneficially owned
36,460 Common Shares, which includes 25,493 Common Shares subject to
options which may be exercised within 60 days thereafter, 1,696 Common
Shares in the Arvin Savings Plan and 771 Common Shares in the Arvin
Deferred Compensation Plan.
As of January 1, 2000, all directors and executive officers as a
group or 22 persons, beneficially owned 683,555 Arvin Common Shares,
or 2.65 percent 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 following Arvin
plans was as follows: the Arvin pension plans - 1,036,910, the Arvin
savings plans - 1,012,996, the Arvin Equity Account - 272,008, the
Arvin Deferred Compensation Plan - 17,905 and the Arvin Employee Stock
Benefit Trust - 1,473,035.
Additionally, under a shareholders' agreement, Mr. Hunt has the
right to direct the manner in which the Arvin Common Shares owned by
certain other shareholders, currently 564,746 shares, or 2.19 percent
of the outstanding Common Shares as of January 1, 2000, are voted at
any or all Annual or Special Meetings of Arvin. The shareholders'
agreement also provides that these shares shall not be tendered in
response to any offer that would result in the offeror owning more
than 5 percent 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 furnished to Arvin under 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 these Forms were filed on a timely basis by
reporting persons during fiscal year 1999, except that reports on Form
- 25 -
3 which disclosed that there was no ownership of securities for each
of Mr. Fowler and Dr. Woo were filed late and Mr. Snyder's report on
Form 4 of his two June 1999 exercises of options to purchase 1,646 and
3,354 Common Shares under Arvin's 1998 Stock Benefit Plan was filed
late on July 30, 1999.
PROPOSAL 3 - APPROVAL OF AMENDMENT
TO ARVIN'S RESTATED ARTICLES OF INCORPORATION
TO CHANGE ITS NAME TO ARVIN, INC.
The Board of Directors has unanimously approved and recommends to
the shareholders that Arvin's Restated Articles of Incorporation be
amended to change its name from Arvin Industries, Inc. to Arvin, Inc.
The Board of Directors believes that the change to Arvin's name will
better convey that Arvin is involved in knowledge-based business
activities providing full system solutions to our customers in addition
to quality products, and that the resulting shorter name will promote the
retention of Arvin's name.
If the name change is approved, current Arvin stock certificates
will remain valid and no exchange of certificates will be required,
unless or until the securities evidenced by those stock certificates
are sold or transferred. Arvin intends to retain as its trading
symbol the letters "ARV."
This name change will be effected by an amendment to Article I of
Arvin's Restated Articles of Incorporation. Article I presently
provides:
The name of the corporation is ARVIN INDUSTRIES, INC. (the
"Corporation" or the "Company").
The Board of Directors recommends that the shareholders vote to
amend Article I to provide:
The name of the corporation is ARVIN, INC. (the
"Corporation" or the "Company").
PROPOSAL 4 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Based upon the recommendation of the Audit Committee, at its
February 2000 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 3, 2000.
Representatives from PricewaterhouseCoopers will be present at
the Annual Meeting and will be afforded the opportunity to make a
statement if they desire and to respond to appropriate shareholder
questions.
- 26 -
Although it is not mandatory, 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
Under the rules under the Securities Exchange Act of 1934, as
amended, proposals of shareholders intended to be presented at the
2001 Annual Meeting must be received at Arvin's executive offices no
later than November 14, 2000 to be considered for inclusion in next
year's proxy materials.
Further, Arvin's By-Laws describe 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. Under these provisions, written notice
of any shareholder nominations or proposals relating to the 2001
Annual Meeting of Shareholders must be received by the Secretary of
Arvin at its executive offices in Columbus, Indiana no earlier than
January 11, 2001 and no later than February 10, 2001.
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 above. 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 these matters.
By the order of the Board of Directors.
Ronald R. Snyder
Secretary of
ARVIN INDUSTRIES, INC.
Columbus, Indiana
March 14, 2000
- 27 -
APPENDIX I
FORM OF PROXY CARD FOR HOLDERS OF COMMON SHARES OF ARVIN
COMMON STOCK COMMON STOCK
ARVIN INDUSTRIES, INC.
-------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING TO BE HELD APRIL 11, 2000
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 the Holiday Inn Conference Center, 2480 Jonathan Moore Pike
(Highway 46 West), Columbus, Indiana, on April 11, 2000 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 EACH PROPOSAL.
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
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" all proposals.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Election of Directors for For Withhold For All
terms of 3 years All All Except Nominee(s)
Nominees: V. William Hunt, Written Below,
Don J. Kacek and James E. /__/ /__/ /__/______________
Perrella
2. Election of Directors for For Withhold For All
terms of 1 year All All Except Nominee(s)
Nominees: Ivan W. Gorr and Written Below,
Richard W. Hanselman /__/ /__/ /__/______________
3. Amendment of Arvin's Restated For Withhold Abstain
Articles of Incorporation /__/ /__/ /__/
to change its name to Arvin, Inc.
4. Ratification of appointment For Withhold Abstain
of PricewaterhouseCoopers LLP /__/ /__/ /__/
as independent auditors
</TABLE>
5. In their discretion on such other business as may properly come
before the meeting.
Dated:_______________________________, 2000
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.
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FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE
ENCLOSED ENVELOPE.
