<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Hayes Lemmerz International, 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.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
[HAYES LEMMERZ INTERNATIONAL, INC. LOGO]
May 12, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of Hayes Lemmerz International, Inc., to be held at The Crowne Plaza, Detroit
Metro Airport, 8000 Merriman Road, Romulus, Michigan 48174 on June 17, 1999, at
10:00 a.m. The doors will open at 9:00 a.m.
At the Annual Meeting you will be asked to: (i) elect four (4) Class 3
Directors to serve until the 2002 Annual Meeting of Stockholders; and (ii)
ratify the appointment of KPMG LLP as the company's independent auditors for the
fiscal year ending January 31, 2000. Each of these items is discussed in full in
the attached proxy statement and you are urged to read the attached proxy
statement in its entirety.
Your Board of Directors has considered each of these items and recommends
that you vote FOR the election of the Board of Directors' nominees as Class 3
Directors and FOR the ratification of the appointment of KPMG LLP as the
company's independent auditors for the fiscal year ending January 31, 2000.
It is important that your shares be voted, regardless of whether you are
able to attend the Annual Meeting. To be sure that your shares are represented,
please sign and mail the enclosed proxy card promptly. This will not prevent you
from voting your shares in person if you choose to do so.
I look forward to meeting with you this year.
Very truly yours,
Ranko Cucuz
Ranko Cucuz
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE> 3
[HAYES LEMMERZ INTERNATIONAL, INC. LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
<TABLE>
<C> <S>
DATE: THURSDAY, JUNE 17, 1999
TIME: 10:00 AM EASTERN STANDARD TIME
LOCATION: The Crowne Plaza
Detroit Metro Airport
8000 Merriman Road
Romulus, Michigan 48174 USA
</TABLE>
To Hayes Lemmerz Stockholders:
We invite you to attend our 1999 Annual Meeting of Stockholders next month
at The Crowne Plaza. At the Annual Meeting, you and the other stockholders will
be able to vote on the following proposals, together with any other business
that may properly come before the Annual Meeting:
1.Elect four Class 3 Directors to three-year terms on the Board of
Directors. The board has nominated for re-election Cleveland A.
Christophe, Paul S. Levy, Wienand Meilicke and John S. Rodewig, all
current directors.
2.Ratify the board's appointment of KPMG LLP as the company's independent
auditors for fiscal year 1999. KPMG LLP served in this same capacity in
fiscal year 1998, with the stockholders' approval.
You may vote on these proposals in person or by proxy. (See the attached
proxy statement for more details on voting by proxy.) If you cannot attend the
Annual Meeting, we urge you to complete and return the enclosed proxy promptly
in the enclosed self-addressed, stamped envelope, so that your shares will be
represented and voted at the Annual Meeting in accordance with your
instructions. Of course, if you attend the Annual Meeting, you may withdraw your
proxy and vote your shares. Only stockholders of record at the close of business
on May 10, 1999 will be entitled to vote at the Annual Meeting or any
adjournment thereof.
By order of the Board of Directors
Daniel M. Sandberg
Daniel M. Sandberg
Secretary
Romulus, Michigan
May 12, 1999
<PAGE> 4
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION................................................ 1
This Proxy Solicitation................................... 1
The Annual Meeting........................................ 1
Stockholders.............................................. 2
VOTING...................................................... 2
How to Vote Your Shares................................... 2
How to Vote under the 401(k) Plan......................... 3
Where to Find Voting Results.............................. 3
PROPOSALS................................................... 3
Election of Directors..................................... 3
Approval of Independent Auditors.......................... 4
Other Matters............................................. 4
BOARD OF DIRECTORS.......................................... 4
Directors Continuing in Office............................ 5
Directors' Meetings and Committees........................ 6
Director Compensation..................................... 7
Compensation Committee Interlocks and Insider 7
Participation..........................................
Section 16(a) Beneficial Ownership Reporting Compliance... 8
EXECUTIVE COMPENSATION...................................... 8
Salary and Bonus.......................................... 8
Stock Options............................................. 8
Other Compensation and Benefits........................... 8
Compensation Committee Report on Executive Compensation... 8
The Role of the Compensation Committee.................... 9
Overall Objectives of Executive Compensation Programs..... 9
An Overview of the Company's Executive Compensation 9
Plan...................................................
Base Salary Program....................................... 9
Annual Performance Plan................................... 10
Long-Term Incentive Plan.................................. 10
Compliance with Internal Revenue Code Section 162(m)...... 10
Compensation of the Chief Executive Officer............... 11
OTHER MATTERS............................................... 12
Available Information..................................... 12
Incorporation of Certain Documents by Reference........... 12
Appendix A -- Stock Performance Graph....................... 13
Appendix B -- Stockholdings................................. 15
Appendix C -- Executive Compensation........................ 18
</TABLE>
<PAGE> 5
HAYES LEMMERZ INTERNATIONAL, INC.
38481 HURON RIVER DRIVE
ROMULUS, MICHIGAN 48174
PROXY STATEMENT
---------------------
May 12, 1999
INTRODUCTION
The Board of Directors is soliciting your proxy to encourage your
participation in the voting at the Annual Meeting and to obtain your support on
each of the proposals. You are invited to attend the Annual Meeting and vote
your shares directly. However, even if you do not attend, you may vote by proxy,
which allows you to direct another person to vote your shares at the Annual
Meeting on your behalf.
THIS PROXY SOLICITATION
There are two parts to this solicitation: the proxy card and this proxy
statement. The proxy card is the means by which you actually authorize another
person to vote your shares in accordance with your instructions.
This proxy statement provides you with a variety of information on the
proposals and other matters that you may find useful in determining how to vote.
It is divided into five sections following this Introduction:
- "Voting," page 2.
- "Proposals," page 3.
- "Board of Directors," page 4.
- "Executive Compensation," page 8.
- "Other Matters," page 12.
We have supplemented these sections with tables and other information, all
of which appears in the appendices, beginning on page 13. For your reference, a
table showing the performance of the company's stock from July 2, 1996 (the
effective date of the Motor Wheel Transactions, as hereinafter defined) is
included in Appendix A.
The company will pay for soliciting these proxies. The company's directors,
officers and employees may solicit proxies in person or by telephone or by mail,
telecopy, telegraph or letter. The company has also retained ChaseMellon
Shareholder Services, L.L.C. to assist in distributing proxy solicitation
materials and soliciting proxies at a cost of approximately $5,000, plus
reasonable out-of-pocket expenses. The company will reimburse brokers and other
nominees for their reasonable out-of-pocket expenses for forwarding proxy
materials to beneficial owners of stock held of record by them.
THE ANNUAL MEETING
As shown in the Notice of Annual Meeting, the Annual Meeting will be held
on Thursday, June 17, 1999, at The Crowne Plaza in Romulus, Michigan. Only
holders of record of the Common Stock and the Nonvoting Common Stock at the
close of business on May 10, 1999 (the "Record Date") are entitled to notice of
the Annual Meeting. Holders of Common Stock are entitled to vote on all matters
submitted to a vote of stockholders at the Annual Meeting. Holders of Nonvoting
Common Stock are not entitled to vote on the election of the directors or the
approval of the independent auditors. The company's By-Laws require that a
majority of the company's Common Stock be represented at the Annual Meeting,
whether in person or by proxy, in order to transact business. Abstentions and
broker non-votes will be counted in determining whether or not there is a quorum
at the Annual Meeting.
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<PAGE> 6
The election of the Class 3 Directors will require the vote of a plurality
of the shares of Common Stock represented and voting in person or by proxy and
entitled to vote at the Annual Meeting. Under applicable Delaware law, in
tabulating the vote for the election of the Class 3 Directors, abstentions and
broker non-votes will be disregarded and will have no effect on the outcome of
such vote.
Approval of the proposal to ratify the appointment of KPMG LLP ("KPMG") as
the company's independent auditors for the fiscal year ended January 31, 2000
("fiscal year 1999") will require the affirmative vote of the holders of a
majority of the shares of Common Stock represented in person or by proxy and
entitled to vote at the Annual Meeting. Under applicable Delaware law, in
determining whether the proposal to appoint KPMG as the company's independent
auditors received the requisite number of affirmative votes, abstentions and
broker non-votes will be counted and will have the same effect as a vote against
the proposal, except that broker non-votes will not be counted as votes cast
with respect to any proposal as to which the broker does not have discretionary
authority and has not received voting instructions from the beneficial owners
and, in such case, will have no effect on the outcome of that vote.
Representatives of KPMG are expected to be present at the Annual Meeting.
They will have the opportunity to make a statement at the Annual Meeting if they
desire to do so and are expected to be available to respond to appropriate
questions.
There were no stockholder proposals submitted for the Annual Meeting. If a
stockholder wishes to submit a proposal for the 2000 Annual Meeting of
Stockholders (the "2000 Annual Meeting"), such proposal must be sent to the
company's principal executive offices at 38481 Huron River Drive, Romulus,
Michigan 48174 and must be received by the company on or before January 15,
2000. If a stockholder proposes to nominate a person for election to the Board
of Directors at the 2000 Annual Meeting, the notice must include the name, age,
residence and business address, occupation, and class and number of shares of
Common Stock owned beneficially or of record by such nominee. If a stockholder
proposes any other matter for consideration at the 2000 Annual Meeting, the
notice must contain a brief description of the matter, the reason such matter is
proposed to be considered at the 2000 Annual Meeting and any material interest
of the stockholder in such matter. In addition, all notices must include the
name, address and class and number of shares of Common Stock beneficially owned
by such stockholder. Finally, such notice must contain any other information
related to a proposed matter or such stockholder that would be required to be
disclosed in a proxy statement.
STOCKHOLDERS
On May 10, 1999, the company had issued and outstanding 27,684,429 shares
of Common Stock and 2,649,026 shares of Nonvoting Common Stock and there were
approximately 112 stockholders of record. Based on the latest information
provided to the company, the following stockholders beneficially own more than
5% of the company's outstanding Common Stock, excluding warrants: Joseph
Littlejohn & Levy Fund II, L.P. (31.8%), Marianne Lemmerz (9.9%), TSG Capital
Fund II, L.P. (9.3%), CIBC WG Argosy Merchant Fund 2, L.L.C. (8.2%) and Horst
Kukwa-Lemmerz (6.0%). Additional information regarding stockholdings is included
in Appendix B.
VOTING
You are entitled to one vote at the Annual Meeting for each share of the
company's Common Stock that you owned on the Record Date. The number of shares
you own (and may vote) is listed at the top of the back of the proxy card.
HOW TO VOTE YOUR SHARES
You may vote your shares at the Annual Meeting in person or by proxy. To
vote in person, you must attend the Annual Meeting, and obtain and submit a
ballot, which will be provided at the Annual Meeting. To vote by proxy, you must
complete and return the enclosed proxy card.
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The proxy card is fairly simple to complete, with specific instructions
right on the card. By completing and submitting it, you will direct the
designated persons (known as "proxies") to vote your shares at the Annual
Meeting in accordance with your instructions. The board has appointed Daniel M.
Sandberg and Patrick B. Carey, the company's Secretary and Assistant Secretary,
respectively, to serve as the proxies for the Annual Meeting.
Your proxy will be valid only if you sign, date and return it before the
Annual Meeting. If you complete all of the proxy card except the voting
instructions, then the designated proxies will vote your shares for the election
of the nominated directors and the ratification of the company's independent
auditors. If any nominee for election to the board is unable to serve, which is
not anticipated, or if any other matters properly come before the Annual
Meeting, then the designated proxies will vote your shares in accordance with
their best judgment.
You may revoke your proxy at any time before it is exercised by any of the
following means:
- Notifying the company's Secretary in writing.
- Submitting a later dated proxy.
- Attending the Annual Meeting and voting. Your attendance at the Annual
Meeting will not by itself revoke a proxy; you must vote your shares.
HOW TO VOTE UNDER THE 401(K) PLAN
If you are a company employee participating in the company's 401(k) plan,
then you may be receiving this material because of shares held for you in the
plan. In that case, you may use the enclosed proxy card to instruct the plan
trustees how to vote those shares. The trustees will vote the shares in
accordance with your instructions and the terms of the plan.
The plan trustees may vote the shares held for you even if you do not
direct them how to vote. The trustees will vote any shares for which they do not
receive instructions in the same proportion as they vote the shares for which
they receive instructions.
WHERE TO FIND VOTING RESULTS
The company will publish the voting results from the Annual Meeting in its
Form 10-Q for the second quarter of fiscal year 1999, which it will file with
the Securities and Exchange Commission (the "SEC") in September 1999. You will
also find the results from the Annual Meeting in the investor information
section of the company's home page on the World Wide Web
(www.hayes-lemmerz.com).
PROPOSALS
The board has nominated four current directors -- Cleveland A. Christophe,
Paul S. Levy, Wienand Meilicke and John S. Rodewig -- for new, three-year terms
and recommends that you vote for their re-election. In addition, the board has
approved KPMG as the company's independent auditors for fiscal year 1999 and
recommends that you vote for their ratification.
ELECTION OF DIRECTORS
The first proposal on the agenda for the Annual Meeting will be the
election of four directors to serve as Class 3 directors for three-year terms
beginning at this Annual Meeting and expiring at the 2002 Annual Meeting of
Stockholders. (For a description of the three classes of directors, see the
"Board of Directors" section beginning on page 4.) The four nominees receiving
the greatest number of votes cast will be elected.
The Board of Directors has nominated Cleveland A. Christophe, Paul S. Levy,
Wienand Meilicke and John S. Rodewig for re-election as Class 3 directors. The
following is a brief biography of each nominee. You will find information on
their holdings of the company's stock in Appendix B.
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<PAGE> 8
CLEVELAND A. CHRISTOPHE is 53 years old. He has been a director of the
company since July 1996. Mr. Christophe has been a Managing Member of TSG
Capital Group, L.L.C. since January 1995, and a director and the President of
TSG Associates II, Inc. since January 1995. He served as a principal, a director
and the Executive Vice President of TSG Ventures Inc. (formerly known as Equico
Capital Corporation), a private equity investment firm, from May 1992 until
December 1997 and as Executive Vice President and Treasurer of TSG Management
Co., L.L.C., a private equity investment firm, from December 1997 until November
1998. He has been a Treasurer, Executive Vice President and director of TSGVI
Associates, Inc. since December 1997. He has served as Managing Member of TSG
Associates III, L.L.C. since August 1998. Mr. Christophe is also a director of
Midwest Stamping, Inc., Urban Brands, Inc. (formerly known as The Ashley Stewart
Group, Ltd.), Z-Spanish Media Corporation (formerly known as PAR Radio Holdings,
L.L.C.), Vista Media Group, Inc., Urban Children's Stores, Inc., Millennium
Digital Media, Inc. and Orbseal L.L.C. He also was a director of Envirotest
Systems Corporation until October 1998.
PAUL S. LEVY is 51 years old. He has been a director of the company since
July 1996. Mr. Levy has been a Senior Managing Director of Joseph Littlejohn &
Levy ("JLL"), which is the managing general partner of Joseph Littlejohn & Levy
Fund II, L.P. ("JLL Fund II"), from its inception in 1988. Mr. Levy has served
as Chairman of the Board of Directors and Chief Executive Officer of Lancer
Industries Inc. since July 1989. Mr. Levy is also a director of Fairfield
Manufacturing Co., Inc, New World Pasta Company, BSL Holdings, Inc. and Jackson
Automotive Group, Inc.
WIENAND MEILICKE is 53 years old. He has been a director of the company
since June 1997. Mr. Meilicke is an attorney admitted to practice in Bonn,
Germany and has, during at least the last five years, been a partner of Meilicke
& Partner, a law firm located in Bonn, Germany. Mr. Meilicke is also a member of
the supervisory boards of WABCO Standard GmbH and Breuniger Beteilgungs GmbH.
JOHN S. RODEWIG is 65 years old. He has been a director of the company
since December 1992. He served as President of Eaton Corporation and as its
Chief Operating Officer -- Vehicle Components from 1992 until his retirement on
January 1, 1996. Mr. Rodewig also serves as Chairman of the Board of Directors
of Eaton Limited (United Kingdom) and as a director of FKI plc.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MESSRS.
CHRISTOPHE, LEVY, MEILICKE AND RODEWIG.
APPROVAL OF INDEPENDENT AUDITORS
The next proposal on the agenda for the Annual Meeting will be the
ratification of the board's appointment of KPMG as the company's independent
auditors for fiscal year 1999.
KPMG served in this capacity for the fiscal year ended January 31, 1999
("fiscal year 1998"), and has reported on the company's 1998 consolidated
financial statements. The Audit Committee recommended to the board that KPMG be
re-appointed for fiscal year 1999.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL YEAR 1999.
OTHER MATTERS
Neither the company nor its directors intend to bring before the Annual
Meeting any matters other than the election of the four directors and the
ratification of the company's independent auditors. Also, they have no present
knowledge that any other matters will be presented by others for action at the
Annual Meeting.
BOARD OF DIRECTORS
The Board of Directors consists of eleven directors divided into three
classes (Class 1, Class 2 and Class 3) serving staggered three-year terms. The
company's By-Laws require that the three classes be as nearly equal in number as
possible. Class 1 is currently composed of three directors and Classes 2 and 3
are
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<PAGE> 9
each currently composed of four directors. The Class 3 directors are up for
election at the Annual Meeting, and the nominees for election are all currently
Class 3 directors.
In connection with the series of related transactions in July 1996 pursuant
to which the company acquired Motor Wheel Corporation (the "Motor Wheel
Transactions"), JLL Fund II, TSG Capital Fund II, L.P. ("TSG"), CIBC WG Argosy
Merchant Fund 2, L.L.C. ("Argosy"), Nomura Holding America, Inc. ("Nomura") and
Chase Equity Associates L.P. ("Chase") (collectively, the "New Investors"),
entered into a stockholders agreement with the company (the "Stockholders
Agreement"). Thereafter, in connection with the acquisition of Lemmerz Holding
GmbH in June 1997 (the "Lemmerz Acquisition"), the company, the New Investors
and Marianne Lemmerz, Horst Kukwa-Lemmerz, Inge Kruger-Pressl and Renate Kukwa-
Lemmerz (collectively, the "Lemmerz Shareholders") entered into an Amended and
Restated Stockholders Agreement (the "Amended Stockholders Agreement"). The
Amended Stockholders Agreement provides, among other things, that the Board of
Directors shall consist of eleven members and that certain of the New Investors
and all of the Lemmerz Shareholders will vote their shares of Common Stock so
that the Board of Directors of the company will be comprised of the Chief
Executive Officer of the company (currently, Mr. Cucuz), four designees of JLL
Fund II (currently, Messrs. Grillo, Levy, Lightcap and Ying), one designee of
TSG (currently, Mr. Christophe), two designees of the Lemmerz Shareholders
(currently, Mr. Kukwa-Lemmerz and Dr. Meilicke), and three individuals
determined by the Board who are not affiliated with the company or any of the
parties to the Amended Stockholders Agreement other than one member that may be
affiliated with Argosy (currently, Messrs. Heyer, Rodewig and Witt). The Amended
Stockholders Agreement also provides, among other things, for certain transfer
restrictions and registration rights for the stockholder parties thereto.
In connection with the acquisition of CMI International, Inc. ("CMI") in
February 1999, the company agreed to appoint Mr. Witt as a director of the
company and Mr. Witt was so appointed in April 1999.
Except as described above, there are no arrangements or understandings
between any director and any other person pursuant to which he was selected as a
director.
DIRECTORS CONTINUING IN OFFICE
The Class 1 and Class 2 Directors will continue in office following this
Annual Meeting, and their terms will expire in 2000 (Class 1) or 2001 (Class 2).
The following are brief biographies of each of these directors. You will find
information on their holdings of the company's stock in Appendix B.
RANKO ("RON") CUCUZ is 55 years old. He has been a director of the company
since 1992 and his current term as a Class 2 Director expires in 2001. He was
elected Chairman of the Board of Directors of the company in July 1996, and has
been Chief Executive Officer of the company since October 1992. Mr. Cucuz is
also a director of National-Standard Company.
ANTHONY GRILLO is 43 years old. He has been a director of the company since
April 1999 and his current term as a Class 1 Director expires in 2000. Mr.
Grillo is a Senior Managing Director of JLL, which he joined in January 1999.
From January 1991 to December 1998, he was a Senior Managing Director at the
Blackstone Group, an investment banking firm. Mr. Grillo is also a director of
Lancer Industries Inc.
ANDREW R. HEYER is 41 years old. He has been a director of the company
since April 1997 and his current term as a Class 2 Director expires in 2001. Mr.
Heyer has been a Managing Director and co-head of the High Yield Group of CIBC
Oppenheimer Corp. since August 1995. From February 1990 until July 1995, Mr.
Heyer was a founder and the Managing Director of The Argosy Group, an investment
banking firm. Mr. Heyer is Chairman of the Board of Hain Food Group, Inc. and a
director of Niagara Corporation, Argosy Heating Partners, Inc., Argosy
Investment Corporation, Lancer Industries Inc. and a member of the Investment
Committee of Caravelle Advisors, L.L.C.
HORST KUKWA-LEMMERZ is 56 years old. He has been a director of the company
since June 1997 and his current term as a Class 1 Director expires in 2000. He
was appointed to his present position as Vice Chairman of the company's Board of
Directors and Chairman of the Board of Directors of HLI (Europe), Ltd. upon
consummation of the Lemmerz Acquisition in June 1997. Mr Kukwa-Lemmerz is also
the president, chief executive officer and a director of Port Armor Investment
and Development, Inc. and H.K.L., L.L.C.
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<PAGE> 10
JEFFREY LIGHTCAP is 40 years old. He has been a director of the company
since October 1997 and his current term as a Class 1 Director expires in 2000.
He has been a Senior Managing Director of JLL since June 1997. From February
1993 until May 1997, Mr. Lightcap was employed by Merrill Lynch & Co., an
investment banking firm, first as a Director and then, commencing in 1994, as a
Managing Director. Mr. Lightcap is also a director of New World Pasta Company
and Jackson Automotive Group, Inc.
RAY H. WITT is 70 years old. He has been a director of the company since
April 1999 and his current term as a Class 2 Director expires in 2001. Mr. Witt
is currently Chairman of the Board of Directors of CMI-Management Services, Inc.
and a director of Atchison Casting Corporation. Mr. Witt was the principal
shareholder and Chairman of the Board of Directors of CMI for at least five
years prior to the acquisition of CMI by the company in February 1999.
DAVID YING is 44 years old. He has been a director of the company since
June 1997 and his current term as a Class 2 Director expires in 2001. Mr. Ying
has been a Senior Managing Director of JLL since June 1997. From January 1993
until May 1997, Mr. Ying was a Managing Director of Donaldson Lufkin & Jenrette,
an investment banking firm. Mr. Ying is also a director of Fairfield
Manufacturing Co., Inc, New World Pasta Company and Jackson Automotive Group,
Inc.
DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors met eight times and took action by unanimous consent
two times during fiscal year 1998. Of the total number of Board meetings and
meetings of Board committees held in fiscal year 1998, each current director
(other than Mr. Ying) attended at least 75% of such meetings held during the
period in which he served as a director or member of such committee. The Board
of Directors has established a standing Audit Committee, Compensation Committee
and Executive Committee, which are the only committees of the Board of
Directors. The membership and functions of the standing committees of the Board
of Directors are as follows:
Executive Committee: The Board of Directors has an Executive Committee,
consisting of Messrs. Cucuz, Kukwa-Lemmerz and Ying. The Executive Committee did
not meet during fiscal year 1998. The duties of the Executive Committee
generally are to:
- review and monitor the financial results of the company in comparison
to the business plans and budgets approved by the Board of Directors,
- determine and make recommendations on questions of general policy with
regard to the business of the company, and
- perform and exercise such other powers as may be lawfully delegated to
the Executive Committee by the Board of Directors, not in conflict
with the specific powers conferred by the Board of Directors upon any
other committee.
Audit Committee: The Board of Directors has an Audit Committee, consisting
of Messrs. Christophe and Rodewig. During fiscal year 1998, the Audit Committee
met three times. The duties of the Audit Committee generally are to:
- review the scope and results of the annual audit of the company's
financial statements with the company's independent auditors,
- review the company's financial condition and results of operations
with management and the company's independent auditors,
- consider the adequacy of the internal accounting and control
procedures of the company,
- review any non-audit services and special engagements to be performed
by the company's independent auditors and consider the effect of such
performance on the auditors' independence,
- periodically review the company's environmental compliance and
litigation matters,
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- review the terms of all material transactions and arrangements between
the company and its affiliates, and
- recommend to the Board of Directors the firm to be selected as
independent auditor of the company's financial statements and to
perform services related to the completion of such audit.
Compensation Committee: The Board of Directors has a Compensation
Committee, consisting of Messrs. Christophe, Levy and Rodewig. In addition,
Messrs. Cucuz and Kukwa-Lemmerz serve as nonvoting members of the Compensation
Committee. During fiscal year 1998, the Compensation Committee met five times.
The duties of the Compensation Committee generally are to:
- review and make recommendations to the Board of Directors as to
compensation and other terms and conditions of employment of officers
of the company,
- administer the company's benefit plans for officers of the company,
including any stock option plans, share-price related incentive plans,
and long-term incentive plans,
- make recommendations to the Board of Directors as to termination
settlements for officers of the company,
- plan for succession of officers of the company, and
- review requests by officers of the company to join the Board of
Directors of any entity not affiliated with the company.
DIRECTOR COMPENSATION
The independent directors of the company receive an annual retainer of
$20,000, a fee of $1,000 for each Board or committee meeting attended, an annual
stock gift of 250 shares of Common Stock and are reimbursed for expenses
incurred in attending Board and/or committee meetings. Independent directors are
directors who are not company employees and who are not affiliated with any of
the New Investors or the Lemmerz Shareholders. The independent directors are
Messrs. Rodewig and Witt, but during fiscal year 1998, only Mr. Rodewig received
compensation as a director because Mr. Witt was not elected until April 1999. No
other director of the company receives any payment for his participation as a
director or member of a committee of the Board.
Mr. Kukwa-Lemmerz is a designee on the Board of Directors of the Lemmerz
Shareholders, who own an aggregate of five million shares of Common Stock. In
connection with the Lemmerz Acquisition, Mr. Kukwa-Lemmerz was elected as (i)
Vice Chairman of the company's Board of Directors, (ii) a member of the
Executive Committee and a nonvoting member of the Compensation Committee, and
(iii) Chairman of the Board of the company's subsidiary, HLI (Europe) Ltd. The
company also entered into consulting agreements (the "Consulting Agreements")
with Mr. Kukwa-Lemmerz and an affiliate of Mr. Kukwa-Lemmerz pursuant to which,
among other things, (i) Mr. Kukwa-Lemmerz retired from all positions held with
Lemmerz and its subsidiaries, (ii) the company agreed to pay Mr. Kukwa-Lemmerz
and his affiliate an aggregate of $500,000 annually during the five-year period
for which consulting services will be provided, and (iii) the company granted
Mr. Kukwa-Lemmerz and his affiliate options to purchase an aggregate of 250,000
shares of Common Stock at an exercise price of $16 per share, such options to
become exercisable at the rate of 20% annually on June 30, 1998 and each June
30th thereafter during the term of the Consulting Agreements.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors are
Messrs. Christophe, Levy and Rodewig. In addition, Messrs. Cucuz and
Kukwa-Lemmerz are non-voting members of the Compensation Committee. On June 30,
1997, the company consummated the Lemmerz Acquisition in which the Lemmerz
Shareholders, including Mr. Kukwa-Lemmerz, received $200 million in cash and
five million shares of Series A Preferred Stock (which were subsequently
converted into five million shares of Common Stock). In addition, in connection
with the Lemmerz Acquisition, the company entered into the Consulting Agreements
with Mr. Kukwa-Lemmerz and an affiliate of Mr. Kukwa-Lemmerz. See "Director
Compensation."
7
<PAGE> 12
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the company's directors and certain officers to file
with the United States Securities and Exchange Commission (the "SEC") and the
New York Stock Exchange (the "NYSE") initial reports of ownership and reports of
changes in ownership of the company's Common Stock. Copies of all such Section
16(a) reports are required to be furnished to the company. These filing
requirements also apply to holders of more than ten percent of the company's
Common Stock. To the company's knowledge, based solely on a review of the copies
of Section 16(a) reports furnished to the company during fiscal year 1998, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, all Section 16(a) filing requirements applicable to
the company's officers and directors and beneficial owners of more than 10% of
the Common Stock were complied with on a timely basis.
EXECUTIVE COMPENSATION
This section provides summary information regarding the compensation of
Ranko Cucuz, Chief Executive Officer, and the four most highly compensated
officers other than Mr. Cucuz: Giancarlo Dallera, Vice President -- President,
European Aluminum Wheels; Klaus Junger, Vice President -- President, European
Fabricated Wheels; Daniel M. Sandberg, Vice President -- President, Automotive
Brakes and Secretary; and William D. Shovers, Vice President -- Finance and
Chief Financial Officer (collectively, the "Named Executive Officers"). This
section also includes a report of the board's Compensation Committee, which
discusses the general compensation principles used by the committee, as well as
the specific factors used to determine Mr. Cucuz's compensation.
SALARY AND BONUS
The Named Executive Officers had their salaries reviewed and increased in
fiscal year 1998. This is consistent with the company's compensation principles
for executive officers, since their salaries were last reviewed in fiscal year
1997. The Named Executive Officers also received bonuses for fiscal year 1998.
You will find additional information regarding the salaries and bonuses of the
Named Executive Officers in Appendix C.
STOCK OPTIONS
None of the Named Executive Officers received stock options during fiscal
year 1998. You will find additional information regarding stock options held by
the Named Executive Officers in Appendix C.
OTHER COMPENSATION AND BENEFITS
The Named Executive Officers receive medical, group life insurance and
other benefits (including matching contributions under the company's 401(k)
plan) that are available generally to all of the company's salaried employees.
The Named Executive Officers based in the United States participate in the
company's salaried employees pension plan, which is qualified under Section
401(a) of the Internal Revenue Code and receive certain other perquisites and
they also participate in the company's supplemental employee retirement plan
(which is not qualified under Section 401(a) of the Internal Revenue Code). You
will find additional information regarding other compensation and benefits of
the Named Executive Officers in Appendix C.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors submits the following
report on executive compensation for fiscal year 1998:
This report provides an overview of the company's compensation
philosophy and executive compensation programs. It also discusses
compensation-related decisions in general, and specifically those relating
to the company's Chief Executive Officer, for fiscal year 1998.
8
<PAGE> 13
THE ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is responsible
for all matters relating to the compensation of the executive officers of
the company. It carries out these responsibilities by reviewing all
executive compensation and benefit plans, administering the company's stock
option and other long-term incentive plans and overseeing succession
planning. To comply with regulations of the SEC and to separate members of
management more completely from compensation decisions, only non-management
directors are eligible to serve as voting members of the Compensation
Committee (Messrs. Cucuz and Kukwa-Lemmerz serve as non-voting members of
the Compensation Committee).
OVERALL OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAMS
The company's executive compensation programs have been designed to
support the company's goal of enhancing stockholder value by providing
incentives that will attract, reward and retain highly qualified executives
critical to the long-term success of the company. The company's policy is
to establish overall compensation at median competitive levels. Median
competitive levels are determined by an independent consulting firm (in
fiscal year 1998, such consulting firm was Mercer & Associates), utilizing
several widely used published compensation surveys. These surveys included
several hundred companies, but the methodology under which compensation was
determined focused on compensation level data from approximately 25
companies in the automotive supply industry (the "Comparison Group").
However, as a result of the relationship between executive compensation and
corporate performance, the company's executives may be paid more or less in
any particular year than the executives of companies included in the
Comparison Group, depending on the company's performance. The companies in
the Comparison Group are not the same as those in the peer group utilized
in preparing the Peer Group Index (see "Stock Performance Graph") because
the Compensation Committee's independent consultant uses surveys of
publicly traded and privately owed companies in the automotive industry to
determine median compensation levels, whereas the Peer Group Index has been
chosen by the company to reflect publicly traded automotive parts and
accessories suppliers. The Compensation Committee believes that it would
not be practicable to prepare a compensation survey of the companies
included only in the Peer Group Index.
Following research and assistance from the independent consultant, the
Compensation Committee has determined to structure the company's short-term
and long-term incentive compensation plans to emphasize corporate financial
performance which the Compensation Committee believes will enhance
stockholder value. To implement this approach, commencing in fiscal year
1993, the company has utilized a compensation plan for its executive
officers which comprises an annual performance plan for its executive
officers, with earned short-term incentive awards being paid out in cash
(subject to maximum annual payouts) plus a stock-based incentive
compensation program under the company's stock option plans.
AN OVERVIEW OF THE COMPANY'S EXECUTIVE COMPENSATION PLAN
The company's executive compensation programs have three components:
base salary, annual incentive and long-term incentive. A discussion of the
Compensation Committee's decisions regarding executive compensation and an
overview of its various elements are presented below.
BASE SALARY PROGRAM
The company's base salary program is intended to provide base salary
ranges that reflect the median salary levels of the Comparison Group. Base
salaries are periodically adjusted to reflect each executive's performance
and contribution to the overall financial results of the company, the
executive's length of service with the company and changes in median salary
levels of the Comparison Group. The Compensation Committee, based upon
research and advice provided by its independent consultant, annually
reviews and compares each executive's salary level against comparable
executives' positions in the Comparison Group.
9
<PAGE> 14
ANNUAL PERFORMANCE PLAN
The fiscal year 1998 annual performance plan (the "Annual Performance
Plan") provided competitive variable pay opportunities to executive
officers based upon the achievement of established targets based on the
company's earnings before interest and taxes ("EBIT"), the company's cash
flow and the achievement of certain personal objectives by the executive.
In addition, with respect to those officers who are responsible for the
performance of the particular business units of the company, their bonuses
are also based upon the achievement of certain EBIT and cash flow targets
for their respective business units. Thus, annual incentive compensation is
determined by the degree to which the company and, for certain officers,
the business units, achieve the annual EBIT and cash flow targets
established by the Compensation Committee and by the degree to which each
individual officer achieves his personal objectives. The aggregate bonus
amount in fiscal year 1998 was established as a percentage of base salary,
which was 60% for all executive officers, except Mr. Cucuz, the Chief
Executive Officer, whose percentage was 100%.
If the EBIT and cash flow targets are met and the personal objectives
are achieved, 100% of the normative bonus percentage is paid. If certain
minimum EBIT and cash flow targets are met (set at 75% of each such
target), but either of such amounts is less than the targeted amounts, or
if the individual performance objectives are not fully realized, the amount
paid for each component of the Annual Performance Plan which is not fully
achieved will be proportionally less than the normative amount. Similarly,
if either the EBIT or cash flow performance exceeds the EBIT or cash flow
targets, respectively, the amount of the bonus attributable to such
component of the Annual Performance Plan will be proportionally more than
the normative amount, up to a aggregate maximum of twice the normative
amount. Notwithstanding the foregoing, if the minimum cash flow target is
not met, no bonus is paid, even if the EBIT target and personal objectives
are achieved. The performance-based component may result in higher than
competitive compensation for superior EBIT and cash flow performance or
lower than competitive compensation for performance not reaching the EBIT
or cash flow targets.
LONG-TERM INCENTIVE PLAN
In the fiscal year ended January 31, 1997 ("fiscal year 1996"), in
connection with the Motor Wheel Transactions, the Compensation Committee
approved stock option grants to the executive officers of the company under
the 1996 Stock Option Plan (the "1996 Plan"), which option grants were
significantly larger than those granted to the executive officers in prior
years. The options granted in fiscal year 1996 under the 1996 Plan are
divided into five tranches (each, a "Tranche") of an equal number of
options. The options in each such Tranche vest (i.e., become exercisable by
the optionee) only when both a time condition and a stock performance
condition tied to the price of the company's Common Stock have been met.
These time and performance conditions for such vesting are intended to
ensure that the stockholders of the company receive a significant return on
their investment before the optionees realize a financial gain therefrom.
Subsequent stock options granted in the Lemmerz Transaction, and
thereafter, are similarly structured, but with different Tranches.
The Compensation Committee believes that the option grants under the
1996 Plan, including the terms thereof which cause such options to vest
progressively as certain price and time conditions are met, will align the
interests of the company's executive officers with those of the
stockholders of the company by creating a long-term incentive for such
officers to achieve corporate performance which also enhances stockholder
value. As a result, and because of the size and significance of the option
grants made in fiscal year 1996, the Compensation Committee elected not to
grant any additional stock options in fiscal year 1998 to the company's
executive officers (except to those executive officers who were promoted
into their positions as executive officers during fiscal year 1998).
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended,
effective for years beginning after 1993, generally limits to $1,000,000
the amounts deductible by a public company in respect of
10
<PAGE> 15
annual compensation paid to a "covered employee" (i.e., the chief executive
officer and the four other most highly compensated executive officers of
the company), including, unless an exception applies, compensation
otherwise deductible upon the exercise of compensatory options. Qualifying
performance-based compensation and compensation, including stock options,
that meets other exceptions to the general limitation will not be subject
to the limitation. The company's Annual Performance Plan meets the
foregoing requirements and was approved at the 1998 Annual Meeting of
Stockholders. Accordingly, all compensation payable under the Annual
Performance Plan is deductible by the company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Fiscal year 1998 was a year of continued progress and growth for the
company, most notably the acquisition of CMI (which closed in fiscal year
1999), five other global acquisitions and the continued integration into
the company of the operations of Lemmerz and Motor Wheel. Based upon the
contributions made by Mr. Cucuz to these matters, as well as certain other
considerations, the Compensation Committee approved an increase in Mr.
Cucuz's base salary for fiscal year 1998 from $550,000 to $600,000 per
year. In addition, the Compensation Committee continued the rate of
normative bonus compensation for Mr. Cucuz under the Annual Performance
Plan of 100% of his base salary, which is a higher rate than for the other
executive officers.
/s/ Paul S. Levy, Chairman
/s/ Cleveland A. Christophe
/s/ John S. Rodewig
11
<PAGE> 16
OTHER MATTERS
AVAILABLE INFORMATION
The company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the SEC. The reports, proxy statements and other information
filed by the company with the SEC can be inspected and copied at prescribed
rates at the following facilities of the SEC: 450 Fifth Street, N.W.,
Washington, D.C. 20549, Seven World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The SEC also maintains a Web site at http://www.sec.gov
that contains reports, proxy statements and other information. In addition, such
materials may be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10012.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The company hereby incorporates by reference pursuant to the Exchange Act
the company's Annual Report on Form 10-K for the fiscal year ended January 31,
1999 as filed with the SEC.
All documents and reports filed by the company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement
and before the Annual Meeting shall be deemed to be incorporated by reference
into this proxy statement and to be a part hereof from the dates of filing of
such documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this proxy statement to the extent that a statement
contained herein or in any other subsequently filed document deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this proxy statement.
The company will provide without charge to each person, including any
beneficial owner, to whom a copy of this proxy statement is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to the company, 38481 Huron
River Drive, Romulus, Michigan 48174, Attention: Director of Investor Relations,
telephone (313) 941-2000. These documents are also available in the investor
information section of the company's home page on the World Wide Web
(www.hayes-lemmerz.com).
By order of the Board of Directors,
Daniel M. Sandberg
Daniel M. Sandberg
Secretary
Romulus, Michigan
May 12, 1999
12
<PAGE> 17
APPENDIX A
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
company's Common Stock for the period from July 2, 1996 (the effective date of
the Motor Wheel Transactions, on which date the company's Common Stock was
recapitalized) through January 31, 1999 with (i) the cumulative total return on
The NASDAQ National Market System market index through December 17, 1997 (the
date on which the company's Common Stock ceased trading on the NASDAQ National
Market System) and the NYSE market index from and after December 18, 1997 (the
date on which the company's Common Stock commenced trading on the NYSE)
(collectively "Market Index") and (ii) the cumulative total return of an
industry peer group composed of automotive parts and accessories suppliers
("Peer Group Index") for the same period. In accordance with the rules of the
SEC, the graph assumes an investment of $100 on July 2, 1996 in each of the
Common Stock, the stocks comprising the Market Index and the stocks comprising
the Peer Group Index, and assumes that all dividends were reinvested.
Stock Performance Graph
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
7/2/96 7/31/96 10/31/96 1/31/97 4/30/97 7/31/97 10/31/97 1/30/98
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
HAYES LEMMERZ INTERNATIONAL, INC. 100.00 97.94 109.47 133.33 151.44 204.12 222.22 157.23
- --------------------------------------------------------------------------------------------------------------------------
PEER GROUP INDEX 100.00 94.99 101.13 111.09 113.43 137.51 142.58 135.71
- --------------------------------------------------------------------------------------------------------------------------
MARKET INDEX 100.00 91.57 101.85 115.82 105.79 134.00 134.40 136.90
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------ ------------------------------------------
4/30/98 7/31/98 10/31/98 1/31/99
<S> <C> <C> <C> <C> <C>
- ------------------------------------------
HAYES LEMMERZ INTERNATIONAL, INC. 253.08 239.92 176.54 216.00
- ------------------------------------------
PEER GROUP INDEX 154.83 138.79 130.09 137.08
- ------------------------------------------
MARKET INDEX 155.16 152.08 147.65 164.41
- ------------------------------------------
</TABLE>
13
<PAGE> 18
Data respecting the following Companies was utilized in calculating the
Peer Group Index in the table above:
<TABLE>
<S> <C>
Aftermarket Tech Corp. Simpson Industries Inc.
American Axle & Manufacturing Inc. Smith AO Corp.
Amerigon Inc. SPX Corp.
Arvin Industries Inc. Standard Motor Products
Asha Corp. Standard Products Co.
Autocam Corporation Stoneridge Inc.
Autoliv Inc. Strattec Security CP
Barnes Group Inc. Superior Industries International
Bonded Motors Inc. T.J.T. Inc.
Borg Warner Automotive Tesma International
Clarcor Inc. Top Source Technologies
Collins Industries Inc. Transpro Inc.
Colonel's International Inc. TRW Inc.
Consulier Engineering U.S. Automotive Manufacturing Inc.
Dana Corp. Universal Manufacturing
Decoma International Inc. Unova Inc.
Delco Remy International Inc. Walbro Corp.
Desc S.A. De Cv Adr Westcast Industries Inc.
Detroit Diesel Corp. Westinghouse Air Brake
Donaldson Co. Inc. Williams Controls Inc.
Durakon Industries Inc. Wynn's International Inc.
Eaton Corp.
Edelbrock Corp.
Federal-Mogul Corp.
Gentex Corp.
Glas-Aire Industries Grp.
Hastings Manufacturing
Hilite Industries Inc.
IMPCO Technologies Inc.
ITT Industries Inc.
Jason Inc.
Johnson Controls Inc.
Kroll-O'Gara Company (The)
Lund International Holdings
Magna International Inc.
Mascotech Inc.
Meritor Automotive Inc.
Modine Manufacturing Co.
Motorcar Parts & Accessories
Noble International Ltd.
OEA Inc.
Orbital Engine Cp Ltd.
R&B Inc.
Safety Components Int.
</TABLE>
14
<PAGE> 19
APPENDIX B
STOCKHOLDINGS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
This Appendix B contains stockholding information for persons known to the
company to own five percent or more of the company's Common Stock, the nominees
for election as directors, the directors continuing in office, and the company's
executive officers.
Ownership of the company's Common Stock is shown in terms of "beneficial
ownership." A person generally "beneficially owns" shares if he has either the
right to vote those shares or dispose of them. More than one person may be
considered to beneficially own the same shares.
In this proxy statement, unless otherwise noted, a person has sole voting
and dispositive power for those shares shown as beneficially owned by him.
Shares shown as beneficially owned by the company's executive officers include
shares that they have the right to acquire by exercising options on or before 60
days from the Record Date. The percentages shown in this proxy statement compare
the person's beneficially owned shares with the total number of shares of the
company's Common Stock outstanding on May 10, 1999 (30,333,455 shares).
As of the Record Date, the outstanding Common Stock was held by
approximately 112 stockholders of record.
<TABLE>
<CAPTION>
PERCENT OF PERCENTAGE OF
OWNERSHIP OF OWNERSHIP OF
SHARES OF SHARES OF
COMMON STOCK COMMON STOCK
NAME AND ADDRESS SHARES OF (EXCLUDING (INCLUDING
OF BENEFICIAL OWNER COMMON STOCK WARRANTS(1) WARRANTS)(2) WARRANTS)(3)
------------------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C>
Joseph Littlejohn & Levy Fund II,
L.P................................... 9,634,176 1,825,376 31.8% 34.8%
450 Lexington Avenue
Suite 3350
New York, New York 10017
Marianne Lemmerz........................ 3,000,002 -- 9.9% 9.1%
Ladestrasse
D-53639 Konigswinter
Germany
TSG Capital Fund II, L.P................ 2,812,500 67,500 9.3% 8.8%
177 Broad Street
12th Floor
Stamford, Connecticut 06901
CIBC WG Argosy Merchant Fund 2, L.L.C... 2,500,000(4) 60,000 8.2% 7.8%
425 Lexington Avenue, Third Floor
New York, New York 10017
Horst Kukwa-Lemmerz..................... 1,825,000(5) -- 6.0% 5.5%
Ladestrasse
D-53639 Konigswinter
Germany
</TABLE>
- -------------------------
(1) Each Warrant allows the holder thereof to acquire one share of Common Stock
for a purchase price of $24.00. The Warrants are exercisable from July 2,
2000 through July 2, 2003.
(2) Excludes options to purchase Common Stock held by certain officers and
directors of the company and also excludes Warrants to purchase 2,600,000
shares of Common Stock.
15
<PAGE> 20
(3) Excludes options to purchase Common Stock held by certain officers and
directors of the company, but includes Warrants to purchase 2,600,000 shares
of Common Stock.
(4) All of the shares of Common Stock owned by Argosy are Nonvoting Common
Stock. Does not include 713,000 shares (2.3% of the Common Stock) owned by
CIBC Oppenheimer Corp., an affiliate of Argosy; Argosy disclaims beneficial
ownership of all such shares.
(5) Consists of 1,800,000 shares of Common Stock owned by Mr. Kukwa-Lemmerz and
an affiliated entity which he controls and 25,000 shares of Common Stock
owned by Renate Kukwa-Lemmerz, his wife. Such shares represent 6.0% of the
outstanding Common Stock. In addition, Mr. Kukwa-Lemmerz is the trustee of a
trust established by Marianne Lemmerz for the benefit of her grandchildren,
which trust owns 199,998 shares (less than 1%) of Common Stock. Mr.
Kukwa-Lemmerz disclaims beneficial ownership of all shares of Common Stock
owned by his wife and such trust.
SECURITY OWNERSHIP OF MANAGEMENT AND THE BOARD OF DIRECTORS
The following table sets forth, as of the Record Date, without giving
effect to the Warrants, the beneficial ownership of the company's Common Stock
by each of the Directors and the Named Executive Officers of the company and by
the Directors and executive officers of the company as a group:
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES (1)(2)
------------------------ -----------------------
<S> <C>
Cucuz, Ranko 412,802
Dallera, Giancarlo 101,800
Junger, Klaus 15,208
Sandberg, Daniel M. 60,761
Shovers, William D. 119,554
Christophe, Cleveland A.(3) --
Grillo, Anthony(4) 9,634,176
Heyer, Andrew R.(5) --
Kukwa-Lemmerz, Horst(6) 1,825,000
Levy, Paul S.(4) 9,634,176
Lightcap, Jeffrey(4) 9,634,176
Meilicke, Wienand 200
Rodewig, John S. 1,310
Witt, Ray H. 5,000
Ying, David Y.(4) 9,644,936
All directors and executive officers as a group (22 persons) 12,457,291
</TABLE>
- -------------------------
(1) Includes the following shares of Common Stock issuable upon the exercise of
options granted under the company's 1992 Stock Incentive Plan (the "1992
Plan") and the 1996 Plan which are exercisable within 60 days of the Record
Date (assuming that no additional options vest during that period) and
shares of Common Stock purchased under the company's 401(k) plan:
<TABLE>
<CAPTION>
ISSUABLE UPON
ISSUABLE UPON EXERCISE OF
EXERCISE OF OPTIONS OPTIONS PURCHASED
GRANTED UNDER GRANTED UNDER UNDER
NAME 1992 PLAN 1996 PLAN 401(K) PLAN
---- ------------------- ------------- ---------------
<S> <C> <C> <C>
Cucuz, Ranko 180,300 182,503 1,289
Dallera, Giancarlo 65,300 36,500 --
Junger, Klaus -- 15,208 --
Sandberg, Daniel M. 26,000 30,417 244
Shovers, William D. 62,000 36,500 --
All directors and officers as a Group 414,800 471,461 6,294
</TABLE>
16
<PAGE> 21
- -------------------------
(2) In each case, except as to Messrs. Kukwa-Lemmerz, Grillo, Levy, Lightcap and
Ying and "all directors and executive officers as a group," less than 1% of
the outstanding shares of Common Stock.
(3) Mr. Christophe is associated with TSG, which owns 9.3% of the Common Stock
of the company; he disclaims any beneficial ownership of such Common Stock.
(4) Messrs. Grillo, Levy, Lightcap and Ying are all associated with JLL Fund II,
which owns 31.8% of the Common Stock of the company. Messrs. Grillo, Levy,
Lightcap and Ying are general partners of JLL Associates II, L.P., the
general partner of JLL Fund II, and, as a result, each of them may be deemed
to beneficially own all of the shares of Common Stock of JLL Fund II. In
addition, Mr. Ying owns individually 10,760 shares of Common Stock.
(5) Mr. Heyer is associated with Argosy, which owns 8.2% of the Common Stock of
the company (all of which shares are Nonvoting Common Stock), and CIBC
Oppenheimer Corp., which owns 2.3% of the Common Stock of the company; he
disclaims any beneficial ownership of all such Common Stock.
(6) Consists of 1,800,000 shares of Common Stock owned by Mr. Kukwa-Lemmerz and
25,000 shares of Common Stock owned by Renate Kukwa-Lemmerz, his wife. Such
shares represent 6.0% of the outstanding Common Stock. In addition, Mr.
Kukwa-Lemmerz is the trustee of a trust established by Marianne Lemmerz for
the benefit of her grandchildren, which trust owns 199,998 shares of Common
Stock. Mr. Kukwa-Lemmerz disclaims beneficial ownership of all shares of
Common Stock owned by his wife and such trust.
As of the Record Date, all Directors and executive officers of the company
as a group may be deemed beneficially to own approximately 41.1% of the
outstanding Common Stock.
17
<PAGE> 22
APPENDIX C
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION FOR FISCAL YEAR 1998
The following summary compensation table sets forth certain information
concerning compensation for services in all capacities awarded to, earned by or
paid to the company's Named Executive Officers for fiscal year 1998, fiscal year
1997 and fiscal year 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- ---------------------------
AWARDS PAYOUTS
OTHER ANNUAL SECURITIES LTIP ALL OTHER
FISCAL SALARY BONUS COMPENSATION UNDERLYING PAYOUTS COMPENSATION
YEAR ($) ($) ($) OPTIONS ($) ($)(1)
----- ------- ------- ------------ ------------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cucuz, Ranko............ 1998 579,167 626,640 -- -- -- 121,167
Chief Executive
Officer............... 1997 497,918 774,150
1996 389,502 366,076
Dallera, Giancarlo(2)... 1998 266,377 186,381 -- -- -- --
Vice President -........ 1997 240,833 220,000
President, European..... 1996 228,000 137,902
Aluminum Wheels
Junger, Klaus(3)........ 1998 216,084 185,366 -- -- -- --
Vice President -........ 1997 94,248 110,675
President, European
Fabricated Wheels
Sandberg, Daniel
M.(4)................. 1998 236,690 168,269 -- -- -- 28,099
Vice President -........ 1997 204,585 153,450
President, Automotive... 1996 168,000 88,240
Brakes and Secretary
Shovers, William D...... 1998 258,763 150,346 -- -- -- 35,803
Vice
President - Finance... 1997 239,583 208,000
and Chief Financial
Officer............... 1996 208,667 129,896
</TABLE>
- -------------------------
(1) For each Named Executive Officer (except Messrs. Dallera and Junger),
consists of matching contributions accrued under the company's retirement
savings plan and contributions under the company's non-tax qualified
supplemental employee retirement plan for the benefit of the company's
executive officers based in the United States.
(2) Mr. Dallera's salary is paid in Italian Lire and his bonus is paid in United
States Dollars. The U.S. Dollar amount for Mr. Dallera's salary for fiscal
year 1998 was calculated using the exchange rate of 1 Lira = 0.0005766
Dollars, which was the average exchange rate of such currency during
calendar year 1998.
(3) Mr. Junger's salary and bonus is paid in German Deutschemarks. The U.S.
Dollar amount for Mr. Junger's salary and bonus for fiscal year 1998 was
calculated using the exchange rate of 1 Deutschemark = 0.5691 Dollars, which
was the average exchange rate of such currency during calendar year 1998.
Mr. Junger's employment with the company commenced on June 30, 1997 and,
accordingly, no compensation information is required for any earlier period.
(4) Mr. Sandberg was appointed to his current position in February 1999. Mr.
Sandberg was the company's Vice President -- International Operations,
General Counsel and Secretary during all periods for which his compensation
is presented.
18
<PAGE> 23
STOCK OPTIONS GRANTED IN FISCAL YEAR 1998
There were no grants of stock options or stock appreciation rights during
fiscal year 1998 to any of the Named Executive Officers.
AGGREGATE OPTION EXERCISES IN FISCAL YEAR 1998 AND JANUARY 31, 1999 OPTION VALUE
The following table shows the number of shares covered by both exercisable
and non-exercisable stock options held by the Named Executive Officers as of
January 31, 1999. This table also shows the value on that date of their
"in-the-money" options, which is the positive spread between the exercise price
of existing stock options and $32.8125 per share (the closing market price of
the Common Stock on January 31, 1999). No options were exercised in fiscal year
1998 by any of the Named Executive Officers and no stock appreciation rights
have been granted in connection with any stock options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISABLE OPTIONS AT IN-THE-MONEY OPTIONS
JANUARY 31, 1999 AT JANUARY 31, 1999
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- ------------------------ -----------------------
<S> <C> <C>
Cucuz, Ranko....................................... 362,803/577,927 $ 6,356,571/$9,716,398
Dallera, Giancarlo................................. 101,800/115,485 $ 1,876,726/$1,943,273
Junger, Klaus...................................... 15,208/106,460 $ 12,357/$86,499
Sandberg, Daniel M................................. 56,417/96,323 $ 1,031,851/$1,619,430
Shovers, William D................................. 98,500/115,585 $ 1,789,519/$1,943,273
</TABLE>
- -------------------------
PENSION PLAN
The company maintains a defined benefit pension plan covering all persons
who were United States salaried employees of the company and its subsidiaries on
or before December 31, 1994. Pension income at normal retirement age is
calculated by averaging the participant's highest consecutive 60 months of
compensation out of the final 120 months of compensation and providing 1% of the
first $7,800 thereof and 1 1/3% of the remainder for each of the first 30 years
of service, and 1/2% and 2/3% of such compensation, respectively, for each of
the next 10 years of service. Benefits under the company's pension plan are
limited by restrictions imposed by the Internal Revenue Code of 1986, as amended
(the "Code"). Prior to the company's initial public offering in December 1992
(the "IPO"), the eligible United States salaried employees of the company
participated in a pension plan sponsored by K-H Corporation ("K-H"), which at
the time was the parent corporation of the company. In connection with the IPO,
K-H transferred the assets and liabilities of its plan relating to participants
employed in the company's wheel business to the company's pension plan, in
accordance with the requirements of the Employee Retirement Income Security Act
of 1974, as amended. Effective January 1, 1995, (1) certain provisions of the
plan that had frozen final average compensation for purposes of the plan as of
December 31, 1991, were rescinded, (2) no new participants may enter the plan
and (3) for purposes of calculating benefits payable under the plan, no
additional service may be credited under the plan; however, service continues to
be credited under the plan for vesting purposes and to determine eligibility for
retirement benefits under the plan. In addition, increases in compensation will
be recognized under the plan for purposes of determining pensions.
19
<PAGE> 24
The following table illustrates the annual pension benefits payable from
the company's defined benefit pension plan to a person in the specified earnings
and years of service classifications at normal retirement date.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------------------------------
10 15 20 25 30 35
----- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$50,000.................................. $ 6,407 $ 9,610 $12,813 $16,017 $19,220 $20,822
$100,000................................. $13,073 $19,610 $26,147 $32,683 $39,220 $42,488
$150,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
$200,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
$250,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
$300,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
$350,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
$400,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
</TABLE>
Base salary is the only compensation upon which benefits under this plan
are determined.
Messrs. Cucuz, Sandberg and Shovers are participants in the pension plan
described above, and each had covered compensation and credited years of service
(which amounts were frozen as of December 31, 1994) as set forth below:
<TABLE>
<CAPTION>
COVERED YEARS OF
COMPENSATION SERVICE
------------ --------
<S> <C> <C>
Cucuz, Ranko................................................ $150,000 4
Sandberg, Daniel M.......................................... $150,000 2
Shovers, William D.......................................... $150,000 2
</TABLE>
The covered compensation amounts set forth in the above table differ from
the amounts set forth in the Summary Compensation Table because of limitations
contained in the Code on compensation permitted to be used for pension plan
purposes.
The Pension Plan Table shows amounts that are payable in the form of a
straight-life annuity; such amounts are not subject to offset for Social
Security or any other payments.
Effective January 1, 1995, the company adopted a defined contribution
pension plan for its United States salaried employees, under which, the company
contributes to a retirement account for each eligible employee 5% of his
compensation up to the amount of the Social Security wage base ($68,400 in 1998)
plus 8% of his compensation over the amount of the Social Security wage base.
Compensation, for purposes of this plan, includes salary, bonus and commissions,
but is limited to a maximum of $160,000 under provisions of the Code. The
retirement account is invested at the direction and risk of the employee, who is
entitled, subject to certain vesting requirements, to the contents of his
account when his employment terminates, at retirement or otherwise. The company
does not assure the employee of the amount of his retirement benefit or the
value of this account at any time.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The company, through its subsidiary, Hayes Lemmerz, S.p.A. ("HLI Italy"),
entered into an employment agreement with Mr. Dallera, dated February 1, 1993,
as amended on June 6, 1996, that provides for his employment as General Manager
of HLI Italy at an initial base salary which automatically increases annually
following increases in an index commonly used to determine the cost of living
increases for senior managers in Italy. For fiscal year 1998, Mr. Dallera's base
salary was $266,377 (translated from Italian lire at the exchange rate of 1 lira
= 0.0005766 US Dollars). Under this agreement, Mr. Dallera is entitled to all
HLI Italy employee benefits; his annual bonus, however, is paid under the Annual
Performance Plan and based upon the criteria established for the other executive
officers of the company. The agreement expires by its terms on December 31,
2003, or in the event of Mr. Dallera's death.
20
<PAGE> 25
On September 25, 1997, the company, through its subsidiary, Hayes Lemmerz
Holding GmbH ("HLH"), entered into a managing director's service agreement with
Klaus Junger, the company's Vice President -- President, European Fabricated
Wheels, that provides for his employment as Managing Director of HLH at an
initial base salary which is to be reviewed and adjusted annually based upon
market conditions and the performance of the company, HLH and Mr. Junger. For
fiscal year 1998, Mr. Junger's annualized base salary was $216,084 (translated
from German Deutschemarks at the exchange rate of 1 Deutschemark = 0.5691 US
Dollars). Under this agreement, Mr. Junger is entitled to all HLH employee
benefits; his annual bonus, however, is paid under the Annual Performance Plan
and based upon the criteria established for the other executive officers of the
company. The agreement may be terminated at any time by either party upon six
months prior written notice.
The company entered into separate agreements (the "Company Severance
Agreements") with nine executive officers and three other employees of the
company (the "Covered Individuals"), including Messrs. Cucuz, Dallera, Sandberg
and Shovers on or about November 6, 1995, pursuant to which, upon a change of
control of the company (as defined therein), each Covered Individual is entitled
to an immediate payment of all earned but unpaid compensation, including any
unpaid bonuses for previous fiscal years and a pro rata bonus payment for the
current fiscal year under any bonus plan for which he is then eligible.
In addition, the Company Severance Agreements provide that each Covered
Individual whose employment with the company is terminated (i) by the company
upon a change of control or in anticipation of a change of control, (ii) by the
company, other than for cause or as a result of death or disability, within
three years following a change of control, or (iii) voluntarily by such Covered
Individual, within three years following a change of control because of a change
in the material terms of his employment, is entitled to a lump sum cash payment
in the aggregate amount of: (a) earned but unpaid compensation, less any payment
previously made in respect of such amount, (b) the product of the individual's
Highest Compensation (as defined in the Company Severance Agreements), his
highest normative bonus percentage in the immediately preceding three fiscal
years and the fraction of the current fiscal year expired at the time of such
termination, less any payments previously made in respect of such amounts upon
such change of control, (c) up to three times the sum of (x) the individual's
Highest Compensation and (y) the product of his Highest Compensation and his
highest normative bonus percentage in the immediately preceding three fiscal
years, (d) up to 60% of a Covered Individual's Highest Compensation and (e) an
amount equal to any accrued but unvested account balances as of the date of
termination and the actuarial present value of any accrued but unvested benefits
other than account balances that as a result of termination are forfeited under
any qualified or nonqualified company retirement or pension plan. The Company
Severance Agreements also provide that the Covered Individuals are entitled to
have the company (i) continue for up to three years all welfare benefit
programs, such as medical and life, provided by the company and its affiliated
companies, (ii) pay or provide any other amounts incurred prior to the date of
termination, or benefits required or permitted under any program or agreement of
the company, (iii) provide the title to or use of a company automobile and (iv)
provide key executive level outplacement services.
The Company Severance Agreements also contain provisions regarding
termination of employment upon disability, death, and other certain
circumstances. In addition, if any payments or benefits paid to the Covered
Individuals under the Company Severance Agreements or any other plan,
arrangement or agreement with the company are subject to the federal excise tax
on excess parachute payments or any similar state or local tax, or any interest
or penalties are incurred with respect thereto, the company will pay to the
Covered Individuals an additional amount so that the net amount retained by the
Covered Individuals after deduction or payment of those taxes will be as if no
such tax, interest or penalty were imposed.
CERTAIN RELATED TRANSACTIONS
Mr. Dallera is the President of Cromodora Wheels S.p.A. ("Cromodora").
Prior to June 6, 1996, the company's subsidiary, Hayes Lemmerz S.p.A., was a 30%
stockholder in Cromodora and Mr. Dallera was a 35% stockholder in Cromodora. On
June 6, 1996, Hayes Lemmerz S.p.A. sold one-third of its equity interest in
Cromodora to Cromodora and two-thirds of its equity interest in Cromodora to Mr.
Dallera. The sale price for the company's equity interest in Cromodora was an
aggregate of approximately $1,437,000, which amount
21
<PAGE> 26
was offset by the company's agreement to pay Cromodora and Mr. Dallera
approximately $562,000 for a five year non-competition agreement with the
company, resulting in net sale proceeds to the company of approximately
$875,000. This sale price was established based upon an appraisal of Cromodora
performed by KPMG, the company's independent public accountants. In connection
with this transaction, Mr. Dallera agreed to extend the term of his employment
agreement with the company so that it will not expire until December 31, 2003
(previously, the expiration date was April 30, 1998).
The company manufactures and sells castings to Cromodora on a cost-plus
basis, licenses certain aluminum wheel technology from Cromodora and provides
certain marketing services to Cromodora relating to such technology. The company
does not believe that these arrangements have a material effect on the company's
operations or financial condition. In addition, for certain tax reasons,
Cromodora is the owner of 0.01% of Lemmerz.
22
<PAGE> 27
[HAYES LEMMERZ LOGO]
<PAGE> 28
HAYES LEMMERZ INTERNATIONAL, INC.
38481 HURON RIVER DRIVE
ROMULUS, MICHIGAN 48174
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON THURSDAY, JUNE 17, 1999
The undersigned holder of shares of Common Stock of Hayes Lemmerz
International, Inc. hereby appoints Daniel M. Sandberg and Patrick B. Carey,
and each of them, with full power of substitution, as proxies to vote all
shares owned by the undersigned at the Annual Meeting of Stockholders to be
held at The Crowne Plaza, Detroit Metro Airport, 8000 Merriman Road, Romulus,
Michigan on Thursday, June 17, 1999 at 10:00 a.m., local time, and any
adjournment or postponement thereof. A majority of said proxies, or any
substitute or substitutes, who shall be present and act at the meeting (or if
only one shall be present and act, then that one) shall have all powers of said
proxies hereunder.
Please mark, date and sign the proxy and return it promptly in the accompanying
business reply envelope, which requires no postage if mailed in the United
States. If you plan to attend the meeting, please so indicate in the space
provided on the reverse side.
This Proxy, if signed and returned, will be voted as specified on the reverse
side. If no specification is made, your shares will be voted FOR approval of
all matters listed on the reverse side of this Proxy Card.
IMPORTANT: PLEASE MARK AND SIGN ON THE REVERSE SIDE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF ALL MATTERS LISTED ON
THE REVERSE SIDE OF THIS PROXY CARD.
(SEE REVERSE SIDE)
<PAGE> 29
<TABLE>
<S><C>
[X] PLEASE MARK
YOUR VOTE AS
IN THIS
EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2
FOR WITHHELD
1. To elect the following four (4) nominees as Class 3 [ ] [ ]
directors of the Company, each to serve for a term of
three years: Cleveland A. Christophe, Paul S. Levy,
Wienand Meilicke and John S. Rodewig [Authority to vote
for any of the nominees listed above may be withheld by
striking out the name of such nominee(s).);
FOR AGAINST ABSTAIN
2. To ratify the appointment of KPMG LLP [ ] [ ] [ ]
as the Company's independent auditors for the fiscal
year ending January 31, 2000.
3. To transact such other business as may properly
come before the Meeting or any adjournments or
postponements thereof.
MARK HERE IF YOU PLAN TO ATTEND [ ]
MEETING
The undersigned acknowledges receipt of the
Notice of Annual Meeting of Stockholders to
be held on Thursday, June 17, 1999 and the
related Proxy Statement.
Please sign exactly as name(s) appear hereon.
Joint owners should each sign. Executors,
administrators, trustees, etc., should give
full title as such. If signer is a corporation,
please sign full corporate name by duly
authorized offer. PLEASE SIGN, DATE AND MAIL
THIS PROXY PROMPTLY whether or not you expect
to attend the meeting. You may nevertheless
vote in person if you do attend.
Signature(s)____________________________________________________________________ Date___________________
</TABLE>
