SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
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
[X] Definitive proxy statement permitted by Rule
14a-6(e) (2) )
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SIMPSON INDUSTRIES, INC.
(Name of Registrant as Specified in Its Charter)
_________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: ______
______________________________________________________________________
(2) Aggregate number of securities to which transaction applies: ________
______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
______________________________________________________________________
(4) Proposed maximum aggregate value of transaction: _____________________
______________________________________________________________________
(5) Total fee paid: ______________________________________________________
[ ] Fees paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid: _____________________________________________
(2) Form, schedule or registration statement no.: _______________________
(3) Filing party: _______________________________________________________
(4) Date filed: _________________________________________________________
<PAGE>
SIMPSON
INDUSTRIES, Inc. [logotype]
- ------------------------------------------------------------------------------
47603 Halyard Drive
Plymouth, Michigan 48170-2429
(313) 207-6200
March 21, 1997
To Our Shareholders:
You are cordially invited to attend the 1997 Annual Meeting of
Shareholders of Simpson Industries, Inc. (the "Company"), which will be held
on Tuesday, April 22, 1997 at the Company's headquarters, 47603 Halyard Drive,
Plymouth, Michigan (map enclosed). The meeting will start promptly at 11:00
a.m. eastern daylight time. After the required business session there will be
reports to the shareholders on the progress of the Company, and a discussion
period will follow the reports.
The attached notice of the meeting and Proxy Statement describe the
items of business to be transacted, including the election of directors and
a proposal to increase the number of authorized shares of Common Stock.
Whether or not you plan to attend the meeting, we urge you to sign, date
and return your proxy in the addressed envelope enclosed for your convenience
so that as many shares as possible may be represented at the meeting. No
postage is required if the envelope is mailed in the United States. The giving
of the proxy will not affect your right to attend the meeting, nor, if you
choose to revoke the proxy, your right to vote in person.
Sincerely,
/s/ Robert W. Navarre /s/ Roy E. Parrott
Robert W. Navarre Roy E. Parrott
Chairman of the Board President and Chief
Executive Officer
<PAGE>
SIMPSON
INDUSTRIES, Inc.
[logotype]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 22, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Simpson Industries, Inc. (the "Company"), will be held at the Company's
headquarters, 47603 Halyard Drive, Plymouth, Michigan, on Tuesday, April 22,
1997, at 11:00 a.m. eastern daylight time for the purposes of:
(1) Electing three directors to serve until the 2000 Annual
Meeting of Shareholders;
(2) Approving an amendment to the Restated Articles of
Incorporation of the Company to increase the number of
authorized shares of common stock from 35,000,000 to
55,000,000; and
(3) Transacting such other business as may properly come before
the meeting or any adjournment thereof.
You are invited to attend the meeting. If you do not expect to attend in
person, you are urged to sign and return immediately the enclosed proxy, which
is solicited by the Board of Directors. A postage paid envelope is enclosed
for use in returning the proxy. The proxy is revocable and will not affect
your right to vote in person if you attend the meeting.
By Order of the Board of
Directors,
FRANK K. ZINN
Secretary
Plymouth, Michigan
March 21, 1997
<PAGE>
SIMPSON
INDUSTRIES, Inc.
[logotype]
PROXY STATEMENT
Annual Meeting to be held April 22, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Simpson Industries, Inc., a Michigan
corporation (the "Company"), to be used at the Annual Meeting of Shareholders
of the Company to be held on Tuesday, April 22, 1997, or at any adjournment
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting of Shareholders and in this Proxy Statement. The expenses of
soliciting proxies will be paid by the Company. This Proxy Statement and the
enclosed form of proxy were first sent or given to security holders on or
about March 21, 1997.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Secretary of the Company, at or before the Annual Meeting, a
written notice of revocation bearing a later date than the proxy, (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company at or before the Annual Meeting, or (iii)
attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute a revocation of a proxy).
Any written notice revoking a proxy should be sent to the Secretary of the
Company at the Company's executive offices.
The Annual Report to Shareholders for the year ended December 31, 1996
is enclosed herewith.
The mailing address of the Company's principal executive offices is
47603 Halyard Drive, Plymouth, Michigan 48170.
Only shareholders of record of the Company's common stock, $1 par value,
at the close of business on March 7, 1997 will be entitled to vote at the
meeting or any adjournment thereof. On that date, the Company had 18,133,246
shares of common stock issued and outstanding. Each share of common stock
outstanding on the record date is entitled to one vote. A majority of
outstanding shares will constitute a quorum. Shares cannot be voted at the
meeting unless the holder is present in person or represented by proxy. Shares
may not be voted cumulatively for the election of directors.
MATTERS TO COME BEFORE THE MEETING
The nominees for election to the Board receiving a plurality of the
votes cast at the meeting will be elected as Directors. Abstentions are
counted only for purposes of determining whether a quorum is present at the
meeting. Broker non-votes will not be counted for any purpose.
(1) Election of Directors
The Bylaws of the Company provide that the Board of Directors shall
consist of not less than three nor more than 12 members, and that the
directors shall be divided into three classes as nearly equal in number as
possible. The term of office of each class of directors expires at the third
succeeding annual meeting after election and the terms of office of the three
classes overlap. Pursuant to the Company's Bylaws, the Board has fixed its
size at nine. Three directors are to be elected to hold office until the 2000
annual meeting, or until their successors have been elected and have been
qualified.
The nominees named below have been selected by the Nominating Committee
of the Board of Directors of the Company. If, due to unforseen circumstances,
any of the nominees will not be available for election, the proxies will be
voted for such other person or persons as the Board of Directors may select.
<PAGE>
The following table and accompanying text set forth the name, age,
principal occupation for the past five years and term of service with respect
to the three individuals who are nominees for election and the six directors
who will continue in office after the meeting, as provided to the Company by
each such person. Proxies solicited by the Board of Directors will be voted in
favor of the three nominees if they are received in time to be voted, unless a
shareholder indicates otherwise on the proxy.
<TABLE>
<CAPTION>
First Elected
Name and Age Principal Occupation as a Director
------------ -------------------- -------------
Nominees for Election as Directors Until the 1998 Annual Meeting
<S> <C> <C>
Susan F. Haka, 47 Ernst & Young Professor of Accounting, Michigan State
University (East Lansing, Michigan) .............. 1995
Walter J. Kirchberger, 62 First Vice President--Research, PaineWebber,
Incorporated (Troy, Michigan).................... 1971
Roy E. Parrott, 56 President and Chief Executive Officer, Simpson
Industries, Inc. ................................ 1989
<CAPTION>
Directors Whose Terms Continue Until the 1999 Annual Meeting
<S> <C> <C>
Michael E. Batten, 56 Chairman and Chief Executive Officer, Twin Disc,
Incorporated, a manufacturer of clutches, reverse
and reduction gears, hydraulic couplings and torque
converters, universal joints and transmissions
(Racine, Wisconsin)............................. 1995
Robert W. Navarre, 63 Business Consultant (Naples, Florida) .............. 1965
Frank K. Zinn, 62 Member in the firm of Dykema Gossett PLLC, attorneys
(Detroit, Michigan)............................. 1974
<CAPTION>
Directors Whose Terms Continue Until the 2000 Annual Meeting
<S> <C> <C>
George R. Kempton, 63 Chairman and Chief Executive Officer, Kysor
Industrial Corporation, a manufacturer of
commercial and transportation products for the
refrigeration, on and off highway vehicle and
marine industries (Cadillac, Michigan) ........... 1983
Ronald L. Roudebush, 49 Dealer Principal, Milford Dodge (Cincinnati, Ohio) .. 1993
F. Lee Weaver, 54 Partner in the firm of Weaver, Bennett & Bland, P.A.,
attorneys (Matthews, North Carolina) ............. 1976
</TABLE>
Each nominee is currently a director of the Company. Each director has
been employed in a principal occupation in the capacity shown above or in a
similar one with the same employer for more than five years, except as set
forth below.
Mr. Kirchberger also serves as a director of McClain Industries, Inc.
Mr. Parrott also serves as a director of Lear Corporation.
Mr. Batten also serves as a director of the following publicly-owned
companies: Twin Disc, Incorporated, Briggs & Stratton Corporation, Firstar
Corporation and Universal Foods Corporation.
Mr. Navarre, formerly Chief Executive Officer of the Company, retired
in November 1994. Mr. Navarre is Chairman of the Board of Directors and
presently serves as a consultant to the Company under an agreement providing
for payments of $100,000 during 1996 and $75,000 during 1997, which payments
include his normal director fees. Mr. Navarre also serves as a director of
Kysor Industrial Corporation.
The law firm of which Mr. Zinn is a member has provided legal services
to the Company and its subsidiaries for more than the past two fiscal years
and the Company expects to retain such firm for such purposes in the current
fiscal year.
Mr. Kempton also serves as a director of the following publicly-owned
companies: Kysor Industries Corporation and JLG Industries, Incorporated.
Prior to his ownership of Milford Dodge, Mr. Roudebush was President of
Automotive Operations of Rockwell International from 1991 to 1994, and a
Business Consultant from 1994 to 1995. Prior to 1991, Mr. Roudebush was
President of the On-Highway Products business of Rockwell International for
more than five years.
<PAGE>
Committees of the Board. The Audit Committee of the Board of Directors
is presently comprised of Ms. Haka and Messrs. Kirchberger and Kempton. The
Audit Committee recommends to the Board the appointment of independent
auditors, reviews with the independent auditors the scope and results of the
audit engagement and any non-audit services to be performed by the independent
auditors, monitors the Company's system of internal accounting controls and
evaluates the independence of the independent auditors and their fees for
services.
The Compensation Committee of the Board of Directors is presently
comprised of Messrs. Batten, Roudebush, Weaver and Zinn. The Compensation
Committee monitors the Company's compensation policies, sets the compensation
of the chief executive officer, and reviews the salary ranges of executive
officers of the Company and remuneration of the directors. The Compensation
Committee also administers the 1984 Stock Option Plan, which was terminated
during 1993, the Supplemental Executive Retirement Plan and the 1993
Executive Long-Term Incentive Plan.
The Nominating Committee of the Board of Directors is presently
comprised of Messrs. Batten, Kempton and Roudebush. This Committee is
responsible for establishing criteria for selecting and retaining directors,
recommending to the Board nominees for election as directors and establishing
procedures for filling vacancies on the Board. Shareholders wishing to
propose director candidates for consideration by the Nominating Committee may
do so by writing to the Chairman of the Nominating Committee at the Company's
executive office prior to February 1 of each year for the Annual Meeting held
during the following April. The Bylaws of the Company require shareholders
who intend to make a director nomination at the Annual Meeting to provide
notice of this intention to the Secretary of the Company to be received not
less than 60 nor more than 90 days prior to April 22, 1998 in accord with the
procedures set forth in the Company's Bylaws.
Director Attendance and Remuneration. During the year ended December 31,
1996, the Board met a total of five times, the Audit Committee met two times,
the Compensation Committee met three times, and the Nominating Committee met
once. Directors (other than those who are employees of the Company) were paid
an annual retainer of $21,000 for the year ended December 31, 1996. Additional
fees are paid on a per diem basis in the event directors attend special
meetings of the Board and its committees which may be scheduled. Each
incumbent director attended 100% of the meetings of the Board and any
committees on which he or she served during the year ended December 31, 1996.
In addition, non-employee directors receive options to purchase shares
of the common stock of the Company pursuant to the 1993 Non-Employee Director
Stock Option Plan (the "Non-Employee Director Option Plan"). On the day
following each annual meeting of the Company's shareholders, each non-employee
director will be granted a non-qualified stock option ("NQSO") to purchase
1,500 shares, effective as of each such day following the annual shareholders'
meeting. The NQSO will have an exercise price equal to the fair market value
of the shares on the date of grant. All NQSOs granted under the Non-Employee
Director Option Plan will vest 100% upon the day preceding the first annual
shareholders' meeting following the grant of such NQSO and will remain
exercisable until the tenth anniversary of their grant date; provided that all
NQSOs held by a Director will immediately become 100% vested upon the
effective date of a change in control of the Company.
<PAGE>
(2) Amendment to the Restated Articles of Incorporation of the Company to
increase the Authorized Common Stock.
The Company's Restated Articles of Incorporation currently authorize
35,000,000 shares of Common Stock. As of March 7, 1997, 18,133,246 shares of
Common Stock were issued and outstanding, and 1,366,425 shares of Common
Stock were reserved for issuance under the Company's stock option plans,
compensation plans and other agreements.
Proposed Amendment
The Board of Directors has adopted a resolution recommending that
shareholders approve an amendment to the Restated Articles of Incorporation
to increase the number of authorized shares of Common Stock to 55,000,000
shares. If the proposal is approved by the shareholders, the first sentence
of Article IV of the Restated Articles of Incorporation, which describes the
total authorized capital stock of the Company, will be amended to read as
follows:
The total authorized capital stock is 55,000,000 shares of common
stock, par value $1.00 per share.
Reasons for Proposed Amendment
The Board of Directors believes that the authorized number of shares of
common stock should be increased to provide sufficient shares for such
corporate purposes as may be determined by the Board of Directors, including
acquiring other businesses in exchange for shares of the Company's common
stock; facilitating broader ownership of the Company's common stock by
effecting a stock split or issuing a stock dividend; flexibility for possible
future financings; and attracting and retaining valuable employees and
directors by the issuance of additional stock options or awards. The Company
at present has no commitments, agreements or undertakings to issue any such
additional shares.
The Board of Directors considers the authorization of additional shares
of common stock advisable to ensure prompt availability of shares for
issuance should the occasion arise. If required by law or regulation, the
Company will seek shareholder approval prior to any issuance of shares. The
issuance of additional shares of Common Stock could have the effect of
diluting existing shareholder earnings per share, book value per share and
voting power.
Adoption of this proposal requires the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock entitled to vote at
the Annual Meeting. Shares not voted (whether by abstention, broker non-votes
or otherwise) have the effect of a vote against the proposal.
Board Recommendation
The Board recommends that you vote FOR this proposal.
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth information with respect to the cash
compensation paid by the Company and its subsidiaries as well as certain other
compensation paid or accrued in all capacities in which they served during the
Company's last three fiscal years, to (i) the Chief Executive Officer of the
Company and (ii) each of the other three executive officers.
<TABLE>
<CAPTION>
Summary Compensation Table
- ---------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation Awards
------------------------- -----------------------
Restricted Securities
Stock Underlying All Other
Award(s) Options Compensa-
Name and Principal Position Year Salary Bonus ($) (#) tion (1)
--------------------------- ---- ------ ----- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Roy E. Parrott .................... 1996 $360,236 $209,252 $ 45,625(2) 25,000 $ 6,930
President; 1995 342,544 201,878 92,924 37,640 6,930
Chief Executive Officer 1994 300,686 182,914 60,500 16,500 7,020
Kathryn L. Williams ............... 1996 $153,360 $ 87,843 $ 20,714(3) 9,080 $ 6,930
Vice President -- Strategic 1995 148,077 85,946 21,528 8,720 6,841
Development and Treasurer 1994 142,060 81,091 22,000 6,000 6,648
James A. Hug....................... 1996 $158,040 $ 86,885 $ 20,714(4) 9,080 $ 6,930
Vice President--Automotive 1995 146,040 79,749 21,528 8,720 6,747
Group 1994 126,024 78,049 22,000 6,000 5,898
James B. Painter .................. 1996 $155,000 $ 85,376 $ 20,714(6) 9,080 $ 6,930
Vice President--Heavy Duty 1995 125,000(5) 70,750 38,000 -- 4,043
Group 1994 -- -- -- -- --
<FN>
- ------------------------------------------------------------------------------
(1) These amounts represent contributions by the Company to the accounts of
the named executives under the Simpson Industries, Inc. Savings Plan.
(2) As of December 31, 1996, Mr. Parrott held 23,556 shares of restricted
stock, valued at $256,540. On February 26, 1994, 4,125 shares were awarded
to Mr. Parrott of which 413 shares or 412 shares vest annually beginning
on December 1, 1994 and continuing on each December 1 until December 1,
2003. On February 24, 1995, 9,410 shares were awarded to Mr. Parrott of
which 941 shares vest annually beginning on February 1, 1996 and
continuing on each February 1 until February 1, 2005. On February 22,
1996, 5,000 shares were awarded to Mr. Parrott of which 500 shares vest
annually beginning on February 1, 1997 and continuing on each February
1 until February 1, 2006.
(3) As of December 31, 1996, Ms. Williams held 10,682 shares of restricted
stock, valued at $116,334. On February 26, 1994, 1,500 shares
were awarded to Ms. Williams of which 150 shares vest annually beginning
on December 1, 1994 and continuing on each December 1 until December 1,
2003. On February 24, 1995, 2,180 shares were awarded to Ms. Williams of
which 218 shares vest annually beginning on February 1, 1996 and
continuing on each February 1 until February 1, 2005. On February 22,
1996, 2,270 shares were awarded to Ms. Williams of which 227 shares
vest annually beginning on February 1, 1997 and continuing on each
February 1 until February 1, 2006.
(4) As of December 31, 1996, Mr. Hug held 7,698 shares of restricted stock,
valued at $83,836. On February 26, 1994, 1,500 shares were awarded to
Mr. Hug of which 150 shares vest annually beginning on December 1,
1994 and continuing on each December 1 until December 1, 2003. On
February 24, 1995, 2,180 shares were awarded to Mr. Hug of which
218 shares vest annually beginning on February 1, 1996 and
continuing on each February 1 until February 1, 2005. On February
22, 1996, 2,270 shares were awarded to Mr. Hug of which 227 shares
vest annually beginning on February 1, 1997 and continuing on each
February 1 until February 1, 2006.
(5) Mr. Painter joined the Company in March 1995.
(6) As of December 31, 1996, Mr. Painter held 5,870 shares of restricted
stock, valued at $63,928. On March 13, 1995, 4,000 shares were awarded to
Mr. Painter of which 400 shares vest annually beginning on February 1,
1996 and continuing on each February 1 until February 1, 2005. On
February 22, 1996, 2,270 shares were awarded to Mr. Painter of which
227 shares vest annually beginning on February 1, 1997 and continuing
on each February 1 until February 1, 2006.
/TABLE
<PAGE>
Stock Options
The following table sets forth information with respect to stock options
granted by the Company to the Chief Executive Officer and each of the other
three executive officers of the Company during the Company's last fiscal year.
In addition, the table provides an estimated grant date present value for each
set of options using the Black-Scholes valuation method.
<TABLE>
<CAPTION>
Option Grants In Last Fiscal Year
- --------------------------------------------------------------------------------------------
Individual Grants
- --------------------------------------------------------------------------------------------
% of Total
Options
Number of Granted
Securities To
Underlying Employees Grant Date
Options in Fiscal Exercise Price Expiration Present
Name Granted Year ($/Share) Date Value ($)(1)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Roy E. Parrott 25,000(2) 26.2% $9.13 2/21/06 $77,800
Kathryn L. Williams 9,080(2) 9.5% $9.13 2/21/06 $28,200
James A. Hug 9,080(2) 9.5% $9.13 2/21/06 $28,200
James B. Painter 9,080(2) 9.5% $9.13 2/21/06 $28,200
<FN>
- ----------------
(1) The material assumptions and adjustments incorporated in the Black-Scholes
model include the following:
<CAPTION>
Grant Date
-----------------
February 22, 1996
-----------------
<S> <C>
Risk-Free Interest Rate 6.0%
Stock Price Volatility 40.0%
Dividend Yield 3.8%
Expected Option Term 6.9 Years
The model assumes: (a) a Risk-Free Interest Rate that represents the
interest rate on a U.S. security with a maturity date corresponding to
that of the expected option term; (b) Stock Price Volatility is calculated
using daily stock prices calculated as of July 1 of the grant year;
(c) Dividend Yield is calculated using the average dividend yield of
Simpson Stock; and (d) an Expected Option Term of 6.9 years,which is
based on a 10% annual exercise rate plus 100% assumed exercise if the
ratio of stock to exercise price exceeds 200%. Notwithstanding the fact
that these options are non-transferable, no discount for lack of
marketability was taken.
The ultimate values of the options will depend on the future market
price of the Company's stock, which cannot be forecast with reasonable
accuracy. The actual value, if any, an optionee will realize upon exercise
of an option will depend on the excess of the market value of the
Company's common stock over the exercise price on the date the option is
exercised.
(2) These options were granted pursuant to the 1993 Executive Long-Term
Incentive Plan and become exercisable 20% per year beginning February 22,
1997.
</TABLE>
<PAGE>
Option/SAR Exercises and Holdings
The following table sets forth information with respect to the named
executives in the Summary Compensation Table, concerning the unexercised
options and stock appreciation rights ("SARs") held as of the end of the last
fiscal year. No stock options or SARs were exercised by the named executives
during the last fiscal year.
<TABLE>
<CAPTION>
Fiscal Year-End Option/SAR Values
- -----------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs
Fiscal Year End at Fiscal Year End
---------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
R. E. Parrott 55,978 72,212 $84,461 $74,723
K. L. Williams 11,344 24,456 $ 1,771 $23,117
J. A. Hug 7,744 20,056 $ 1,771 $23,117
J. B. Painter 0 9,080 $ 0 $16,032
</TABLE>
Severance Arrangements
To help retain key management personnel in the event of a change in
control of the Company, the Company has entered into severance agreements with
Messrs. Parrott, Hug, and Painter and Ms. Williams. The agreements provide for
special severance pay and benefits in the event of termination of employment
within three years (for Mr. Parrott) or two years (for Ms. Williams and Messrs.
Hug and Painter) after a change in control of the Company. The agreements
define a change in control as (i) a change in the stock ownership of the
Company of a magnitude which requires filing of reports under the Securities
Exchange Act of 1934, and such a change is deemed to have occurred if any
person acquires 25% of the Company's outstanding voting stock, or (ii) a
change in the composition of the majority of the Board of Directors during
any two-year period unless each new director was approved by at least
two-thirds of the remaining directors who were also directors at the
beginning of the period. The agreements expire December 31, 1997. Each
agreement is automatically extended for successive one-year periods unless
terminated on 30 days notice and provided that no change in control has
occurred.
Under the agreements, the special severance pay and benefits will not be
paid if employment is terminated because of death or disability, or if
terminated by the Company for cause or by the executive officer for other than
a "good reason," as defined in the severance agreements. If, after a change in
control in the Company, the employment relationship is terminated by the
Company other than for cause or is terminated by the executive officer for
"good reason," the Company will pay the executive officer, from the date of
termination to the earlier of the date which is three years (for Mr. Parrott)
or two years (for Ms. Williams and Messrs. Hug and Painter) after the change
in control or until the executive officer's normal retirement date, monthly
payments equal to the executive officer's monthly salary prior to termination
plus 1/12th of 70% of the executive officer's salary for the year immediately
prior to the termination, up to the maximum allowable under applicable federal
tax laws (for Mr. Parrott) or the executive officer's monthly salary prior to
termination plus 1/12 of the average of the short-term incentive bonus
payments paid to the executive officer or accrued with respect to each of the
two years preceding termination (for Ms. Williams and Messrs. Hug and
Painter). The Company shall also maintain in full force and effect during
each period any stock option or incentive compensation arrangement and all
group insurance and retirement plans to which the executive officer was
otherwise entitled immediately prior to his or her termination and the right
to immediately exercise in full all outstanding stock options.
<PAGE>
Pension Plan
The Company has a non-contributory defined benefit pension plan for
salaried employees which provides for payment of a fixed retirement benefit to
participants upon retirement at age 65. The amount of a participant's annual
defined retirement benefit is comprised of up to three component amounts
determined on the basis of the average base compensation paid to a participant
during three separate time periods. The first component amount, applicable to
service performed from July 1, 1976 through June 30, 1981, is equal to the sum
of .75% of average base compensation up to $9,000 plus 1.5% of average base
compensation in excess of $9,000 multiplied by the number of years of
participation as of July 1, 1981. The second component amount, applicable to
service performed from July 1, 1981 through December 31, 1988, is equal to the
sum of 1.5% of each year's base compensation up to a specified break point
amount, 2.5% of each year's base compensation in excess of the break point
amount, and 2.5% of the participant's salary reduction contributions under the
Savings Plan. The third component amount, applicable to service performed
after December 31, 1988, is equal to the sum of 1.7% of each year's base
compensation below the break point amount, 2.05% of each year's base
compensation above the break point amount (with such calculations continuing
until such time as the participant has accumulated 35 years of participation),
and 1.7% of a participant's compensation for each plan year commencing after
December 31, 1988 in which he or she has been a participant for more than 35
years. The sum of these three component amounts equals a participant's annual
retirement benefit. Base compensation under the pension plan includes base
salary, but does not include cash bonuses paid by the Company under its annual
incentive plan. Once benefit payments commence, they may not be reduced
because of any increases in a participant's Social Security payments or other
similar benefits. Benefits under the pension plan are payable, at the election
of the participant, under several different annuity forms or in an equivalent
lump sum payment. The estimated annual benefits payable upon retirement at
normal retirement age (assuming continued employment at the person's current
base compensation rate) under a lifetime annuity for the executive officers
listed in the above table are as follows: Mr. Parrott--$52,125; Ms.
Williams--$79,042; Mr. Hug--$73,248; and Mr. Painter--$58,107.
Supplemental Executive Retirement Plan
Since 1988, the Company has maintained an unfunded plan to provide
additional retirement income to selected executive employees to help attract
and retain superior executive personnel. The Supplemental Executive Retirement
Plan ("SERP") is administered by the Compensation Committee of the Board of
Directors. Generally, a participant in the SERP will be eligible for benefits
after he or she has completed at least five years of service as an officer of
the Company or ten years of service at a specified level at which an employee
bonus is available ("bonus service"). The normal retirement benefit that a
participant is eligible to receive under the SERP is equal to the greater of
(i) 2% of his average base compensation times his years of bonus service up to
30 years, or (ii) 4% of his average base compensation times his years of
officer service to a maximum of 15 years. No participant is entitled to more
than 60% of his average base compensation less deductions for social security
benefits and benefits under other pension plans provided by the Company or
from previous employers. Participants are eligible for similar benefits upon
early retirement, disability or termination of employment, subject to the same
reductions provided under the Company's Pension Plan. Benefits under the SERP
are payable, at the election of the participant, under several different
annuity forms or in an equivalent lump sum payment. Such benefits are paid out
of the general assets of the Company and are not funded in advance of payment.
The estimated annual benefits payable upon retirement at normal retirement age
(assuming continued employment at the person's current base compensation rate)
under a lifetime annuity for the executive officers listed in the above table
are as follows: Mr. Parrott--$116,660; Ms. Williams--$0; Mr. Hug--$11,155; and
Mr. Painter--$0.
Board Compensation Committee Report on Executive Compensation
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors which is comprised entirely
of non-employee directors. It is the primary responsibility of the Committee
to review and approve the Company's executive compensation philosophy and
policies and to monitor the compensation programs. The Committee reviews the
performance and establishes the compensation of the Chief Executive Officer.
In the performance of its responsibilities, the Committee reviews compensation
data, surveys and other information obtained from independent sources
reflecting the compensation practices of other companies. From time to time,
the Committee engages the services of independent consultants to evaluate and
make recommendations regarding the Company's executive compensation policies
and programs. In 1992 and 1993, an independent consulting firm was engaged to
evaluate the Company's executive compensation program including incentive
compensation. On the basis of the consulting firm's evaluation and other data
reviewed by the Committee, the Board of Directors adopted the 1993 Executive
Long-Term Incentive Plan which was subsequently approved by the shareholders.
<PAGE>
The Internal Revenue Code (the "Code") was amended, effective for tax
years commencing in 1994, to limit the Company's ability to deduct more than
$1 million of an executive's nonperformance-based compensation. The Code and
proposed regulations issued thereunder generally exclude from this limitation
compensation that is determined under pre-established objective performance
goals. Although this limitation will not affect the deductibility of executive
compensation in the current year, the Committee will continue to review the
issue and determine whether the Company's executive compensation programs
should be amended in the future to meet the deductibility requirements.
Compensation Policies for Executive Officers. The Company's executive
compensation policies are designed to attract and retain highly qualified
executive officers through competitive salary and benefit programs, to
recognize individual initative, and to encourage extraordinary effort through
incentive awards. The policies are also designed to promote Company stock
ownership among the executive group to align their long-term interests with
those of the shareholders and to encourage enhancement of shareholder value.
The Company's executive compensation program has three components: (i)
annual base salary, (ii) short-term incentives through annual bonus awards,
and (iii) long-term incentives through participation in the Company's
long-term incentive plan. Executive officer salary ranges are reviewed
annually by the Committee based primarily on current market salary data
compiled from various independent sources and nationwide compensation
studies covering senior executive officers from manufacturing companies. It is
the Company's philosophy to target base salaries at or slightly below the 50th
percentile of the salary ranges determined by those compensation studies.
Individual salaries are based on individual performance, contribution to the
overall success of the management team, and position in the salary range.
Additionally, the Company's incentive programs are designed to provide an
opportunity for significant performance-based compensation if certain
objectives are achieved.
The short-term incentive plan provides for annual cash bonuses of a
percentage of base salary ranging from a maximum of 36% for mid-level
executives to a maximum of 75% for senior executive officers. Bonus amounts
are determined on the basis of the Company's earnings performance related to
beginning of the year shareholders' equity. Under the program, no annual
bonuses are earned until a 16% defined return on shareholders' equity is
realized. Maximum bonus levels are only achieved after the Company realizes a
34% defined return on shareholders' equity. Individual bonus awards also take
into account the officer's individual performance and that of his operating
unit.
Long-term incentive awards are made by the Committee through the
Company's 1993 Executive Long-Term Incentive Plan, which provides for the
granting of stock options, stock appreciation rights, restricted stock,
performance units and performance shares to officers and key employees. Stock
option awards provide the executive with the right to purchase shares of
common stock over a ten-year period at a price equal to the fair market value
of the common stock on the date of grant. Restricted stock awards consist of
shares of common stock which cannot be sold or transferred until the
applicable restriction period lapses and may be forfeited if the executive
terminates employment prior to the expiration of the restriction period.
Long-term incentive awards are principally designed to encourage long-term
enhancement of shareholder value and align the future interests of executive
officers with the success of the Company. Stock options only reward executive
officers to the extent that shareholders have benefitted. The amount of these
awards is primarily determined by a formula based on the midpoint of such
executive's salary range divided by the current price of the Company's stock.
Chief Executive Officer Compensation. The Committee conducts the same
type of competitive review and analysis to determine base salary and incentive
compensation ranges for the Chief Executive Officer as it does for the other
executive positions. Accordingly, salary and incentive compensation awards for
Mr. Parrott were determined by the Committee in 1996 in conformance with the
policies described above for executive officers. Effective June 1, 1996,
Mr. Parrott's annual salary was increased to $367,536, representing a 5%
increase, which placed Mr. Parrott slightly below the mid-point of the 1996
salary range established by the Committee. The Committee's decision was based
on executive compensation data for comparable companies provided by an
independent consulting firm, some of which companies are included in the
Industry Index used for the comparison of Five Year Cumulative Return
appearing in this Proxy Statement. The Committee also based its decision
on its subjective evaluation of Mr. Parrott's management leadership and his
continuing development of leadership talent within the organization.
<PAGE>
Mr. Parrott's bonus for 1996 was based on the Company's 1996 earnings in
accordance with the formula provided in the short-term incentive plan, and the
Committee's subjective assessment of Mr. Parrott's attainment of specific
goals established at the beginning of the year. The restricted stock and stock
option awards made to Mr. Parrott during 1996 were also established in
accordance with the formula described above.
COMPENSATION COMMITTEE
F. Lee Weaver, Chairman
Michael E. Batten
Ronald L. Roudebush
February 22, 1997 Frank K. Zinn
<PAGE>
Performance Graph
The following is a line-graph presentation comparing cumulative,
five-year shareholder return, on an indexed basis, of the Company's common
stock with the Russell 2000 Index and an industry index of publicly-traded
companies operating primarily in Standard Industrial Classification 371
("Industry Index"). The Russell 2000 Index is comprised of companies with a
market capitalization similar to that of the Company. The Company selected the
Industry Index because the companies included therein are engaged in the
manufacturing of motor vehicles and related parts, accessories and equipment.
Comparison of Five Year Cumulative Total Return*
Among Simpson Industries, Inc.,
Russell 2000 Index and Industry Index
[ GRAPH ]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Simpson Industries, Inc. 100.00 124.78 173.94 117.96 119.55 150.62
Russell 2000 100.00 118.41 140.80 138.23 177.55 206.83
Industry Index 100.00 139.72 192.95 172.38 211.65 267.64
<FN>
- ----------------
* Assumes that the value of an investment in the Company's common stock and
each index was $100 on December 31, 1991 and that all dividends were
reinvested.
</TABLE>
<PAGE>
FURTHER INFORMATION
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information concerning those
persons who are known by management of the Company to be beneficial owners of
more than 5% of the Company's outstanding common stock (as provided to the
Company by such persons or the recordholder of such shares).
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
<S> <C> <C>
Pioneering Management Group 1,640,000 shrs. (1) 9.1%
60 State Street
Boston, Massachusetts
J. P. Morgan & Co., Incorporated 1,540,150 shrs. (2) 8.5%
60 Wall Street
New York, New York
Farmers Group, Inc. 1,080,700 shrs. (3) 6.0%
4680 Wilshire Boulevard
Los Angeles, California
<FN>
- ----------------
(1) Sole voting power -- 1,640,000 shares (9.1%); sole investment power --
315,000 shares (1.7%), as reported in the Schedule 13G, dated January 23,
1997, received by the Company from such beneficial owner.
(2) Sole voting power-- 979,400 shares (5.4%); sole investment
power--1,540,150 shares ( 8.5%), as reported in the Schedule 13G, dated
December 31, 1996, received by the Company from such beneficial owner.
(3) Farmers Group, Inc. exercises shared voting and investment powers over
1,080,700 shares with B.A.T. Industries p.l.c., as reported in the
Schedule 13G, dated February 10, 1997, received by the Company from such
beneficial owners.
</TABLE>
Security Ownership of Management
The following table sets forth certain information, as of February 1,
1997, concerning the beneficial ownership of common stock by the Company's
directors and named executive officers, and all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent
Beneficial Ownership(1) of Class
----------------------- --------
<S> <C> <C>
Roy E. Parrott 111,970 .6%
Walter J. Kirchberger 85,932 .5%
F. Lee Weaver 84,201 (2) .5%
Frank K. Zinn 54,561 (3) .3%
James A. Hug 51,417 .3%
Kathryn L. Williams 35,498 .2%
Robert W. Navarre 27,062 .2%
George R. Kempton 26,313 (4) .1%
Ronald L. Roudebush 14,500 .1%
James B. Painter 8,546 --
Michael E. Batten 2,500 --
Susan F. Haka 1,720 --
------- ---
All present directors and executive officers as a
group (12 in number) 504,220 shrs. 2.8%
<FN>
- ----------------
(1) Includes shares beneficially held for certain executive officers and
directors under the Simpson Industries, Inc. Savings Plan and also includes
226,280 shares of Common Stock certain executive officers and directors
may acquire within the next 60 days pursuant to the exercise of stock
options under the Company's long-term incentive plans.
(2) Includes 55,917 shares owned by Prudence B. Weaver, Mr. Weaver's wife, for
her own benefit.
(3) Includes 14,061 shares owned jointly by Mr. Zinn and Ruth A. Zinn, his
wife.
(4) Includes 20,463 shares owned jointly by Mr. Kempton and Joyce H. Kempton,
his wife.
</TABLE>
<PAGE>
Executive Officers
Set forth below is certain information concerning the current executive
officers of the Company, which group includes the Company's principal
officers.
<TABLE>
<CAPTION>
Name and Age Office(s) and Length of Service
------------ -------------------------------
<S> <C>
Roy E. Parrott, 56 President and director since 1989; Chief Executive
Officer since 1994
Kathryn L. Williams, 41 Vice President--Strategic Development and Treasurer
since 1996; Vice President and Chief Financial
Officer from 1994 to 1996; Vice President--Finance
from 1992 to 1994
James A. Hug, 50 Vice President--Automotive Group since 1995; Vice
President--Heavy Duty Products Group from 1992 to
1995 and Vice President--Heavy Duty Products
Group-South from 1990 to 1992
James B. Painter, 47 Vice President--Heavy Duty Group since 1995 and Vice
President--Materials Management during 1995
</TABLE>
Prior to joining the Company in November 1992, Ms. Williams served from
1991 to 1992 as Vice President, Finance--Grocery Products Division and
Controller of the Kraft USA Group of the Kraft General Foods subsidiary of
Philip Morris Companies, Inc.
Prior to joining the Company in March 1995, Mr. Painter served as General
Manager, Specialty Axle Group, Rockwell International Automotive Operations
from 1993 to 1995; President, Rockwell Clutch Company, Inc. from 1991 to 1993.
Executive officers of the Company are appointed annually by the Board of
Directors and serve at the pleasure of the Board.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10%
of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(S.E.C.). Executive officers, directors and greater than 10% shareholders are
required by S.E.C. regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Form-5s were
required for those persons, the Company believes that, during the Company's
last fiscal year, all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with.
ACCOUNTANTS
KPMG Peat Marwick, independent public accountants, have audited the
financial statements of the Company since 1991. Representatives from KPMG Peat
Marwick will be present at the Annual Meeting of Shareholders, will have an
opportunity to make a statement if they wish, and will be available to respond
to appropriate questions. The Board of Directors has selected KPMG Peat
Marwick to audit the financial statements of the Company for the fiscal year
ending December 31, 1997.
OTHER MATTERS AND SHAREHOLDER PROPOSALS
At the date of this Proxy Statement, the Board of Directors is not aware
of any matters to be presented for action at the meeting other than those
described above. However, if any other matters should come before the meeting,
it is the intention of the persons named in the accompanying proxy to vote
such proxy in accordance with their judgment on such matters. Any proposals of
shareholders to be presented at the 1998 Annual Meeting which are eligible for
inclusion in the Company's proxy statement for that meeting under applicable
rules of the Securities and Exchange Commission must be received by the
Company no later than November 23, 1997. Shareholders who intend to make a
director nomination or a proposal of business at any Annual or Special
Meeting, which proposal was not included in the Company's proxy statement for
that meeting, must provide notice of this intention to the Secretary of the
Company to be received not less than 60 nor more than 90 days prior to the
date of the meeting in accord with the procedures set forth in the Company's
Bylaws in order to be properly brought before the Annual or Special Meeting.
Plymouth, Michigan
March 21, 1997
<PAGE>
[Form of Proxy -- Front]
SIMPSON INDUSTRIES, INC.
The undersigned hereby constitutes and appoints Roy E. Parrott and
Kathryn L. Williams, or either of them, attorneys and proxies with full
power of substitution to vote at the Annual Meeting of Shareholders of
Simpson Industries, Inc., to be held on Tuesday, April 22, 1997, or at any
adjournment or adjournments thereof.
The shares represented by this proxy will be voted as directed. Unless
authority is withheld, this proxy will be voted to elect as directors the
nominees shown and in favor of Proposal 2.
Discretionary authority is hereby conferred as to any other matters as
may properly come before the meeting. The undersigned acknowledges receipt
of the Notice of Annual Meeting of Shareholders, the Proxy Statement dated
March 21, 1997, and the Annual Report of Simpson Industries, Inc. to its
Shareholders for the year ended December 31, 1996. The undersigned
ratifies all that the proxies or any of them or their substitutes may
lawfully do or cause to be done by virtue hereof and revokes all former
proxies.
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE.
Please sign this Proxy exactly as your name appears on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where
more than one name appears, a majority must sign. If a corporation, this
signature should be that of an authorized officer who should state his or
her title.
HAS YOUR ADDRESS CHANGED?
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
[Form of Proxy -- Back]
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
With- For All
For hold Except
1.) Election of Directors / / / / / /
SIMPSON INDUSTRIES, INC. Susan F. Haka, Walter J. Kirchberger
and Roy E. Parrott
If you do not wish to direct the voting of
your shares for a particular nominee, mark
the "For All Except" box and strike a line
through the Nominee(s) name. Your shares
will be voted for the remaining Nominee(s).
2.) Approving an amendement to the Articles of
Incorporation of the Company to increase
the number of authorized shares of Common
Stock from 35,000,000 to 55,000,000
For Against Abstain
/ / / / / /
RECORD DATE SHARES:
3.) To act in their discretion upon the
transaction of such other business as may
properly come before the meeting.
Please be sure to sign and date this Proxy.
Mark box at right / /
Date____________________ if address change
has been noted
________________________ ________________________ on the reverse side.
Shareholder sign here Co-owner sign here
DETACH CARD DETACH CARD
