[THIS PAGE IS FROM LAST YEAR]
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.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
(734) 207-6200
March 12, 1999
Dear Shareholder:
It is my pleasure to invite you to attend the 1999 Annual Meeting of
Shareholders of Simpson Industries, Inc. (the "Company") on Tuesday, April
20, 1999, at 11:00 a.m. Eastern Standard Time. The meeting will be held at
the Company's Bluffton, Indiana facility, located at 131 Harvest Street,
Bluffton, Indiana (map enclosed).
The following pages contain the formal Notice of the Annual Meeting
and the Proxy Statement. You will want to review this material for
information concerning the business to be conducted at the meeting and the
nominees for election as directors.
Your vote is important. Whether you plan to attend the meeting or
not, we urge you to complete, sign and return your Proxy as soon as possible
in the envelope provided. This will ensure representation of your shares in
the event you are unable to attend. You may, of course, revoke your Proxy and
vote in person at the meeting if you desire.
Sincerely,
Roy E. Parrott
Chairman of the Board
and Chief Executive Officer
<PAGE>
SIMPSON INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 20, 1999
- -----------------------------------------------------------------------------
The Annual Meeting of Shareholders of Simpson Industries, Inc., a
Michigan corporation, (the "Company") will be held on Tuesday, April 20,
1999, at 11:00 a.m. Eastern Standard Time, at the Company's Bluffton, Indiana
facility, located at 131 Harvest Street, Bluffton, Indiana. The purposes of
the Annual Meeting are to:
1. elect four Directors to the Company's Board of Directors;
2. approve an amendment to the Company's Bylaws to eliminate the
classification of the Company's Board of Directors and to provide
for the annual election of all Directors; and
3. conduct any other business that is properly raised at the meeting.
Only shareholders of record at the close of business on March 1, 1999
are entitled to notice of and to vote at the meeting.
By Order of the Board
Frank K. Zinn
March 12, 1999 Secretary
- -----------------------------------------------------------------------------
Whether or not you expect to attend the meeting, please sign and date the
enclosed Proxy and mail it promptly in the envelope we have provided you.
<PAGE>
SIMPSON INDUSTRIES, INC.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, APRIL 20, 1999
Solicitation of Proxies
Simpson Industries, Inc. (the "Company") is distributing this Proxy
Statement and the accompanying Proxy to the Company's shareholders to solicit
proxies to be used at the 1999 Annual Meeting of Shareholders of the Company.
The Annual Meeting will be held on Tuesday, April 20, 1999, at 11:00 a.m.
Eastern Standard Time at, at the Company's Bluffton, Indiana facility,
located at 131 Harvest Street, Bluffton, Indiana.
The Board of Directors of the Company is soliciting the enclosed
Proxy. The Board mailed this Proxy Statement and the enclosed Proxy to
shareholders beginning on March 12, 1999. The Company has enclosed its 1998
Annual Report to Shareholders with this Proxy Statement.
The Company will pay the entire cost of soliciting proxies. The
Company will arrange with brokerage houses, nominees, custodians and other
fiduciaries to send proxy soliciting materials to beneficial owners of the
Common Stock at the Company's expense.
Revoking a Proxy
Any person giving a Proxy has the power to revoke it at any time
before it is voted. There are three ways to revoke your Proxy: (1) you may
deliver a written notice of revocation, which is dated after the date of the
Proxy, to the Secretary of the Company at or before the Annual Meeting; (2)
you may deliver a later-dated Proxy to the Secretary of the Company at or
before the Annual Meeting; or (3) you may attend the Annual Meeting in person
and vote your shares by ballot.
Record Date
The record date for determining shareholders entitled to vote at the
Annual Meeting is March 1, 1999. Each of the 18,177,179 shares of
Common Stock of the Company issued and outstanding on that date is entitled
to one vote on any matter voted on at the Annual Meeting. Abstention votes
and votes withheld by brokers on non-routine proposals in the absence of
instructions from beneficial owners ("broker non-votes") will be counted as
"present" at the Annual Meeting to determine whether a quorum exists.
<PAGE>
1. ELECTION OF FOUR DIRECTORS
Currently, the Board of Directors is composed of three classes of
members, each class being as nearly equal in number as possible. One class of
directors is elected each year to hold office for a three-year term and until
successors of such class are duly elected and qualified. There are currently
nine members of the Board, although the size of the Board will be increased
to ten members at the Annual Meeting.
Subject to shareholder approval of the amendment to the Company's
Bylaws to eliminate the classification of the Board of Directors, four
Directors are to be elected at the Annual Meeting to serve one-year terms
expiring at the 2000 Annual Meeting of Shareholders. Unless proxy votes have
been withheld, each Proxy received will be voted to elect George R. Kempton,
Ronald L. Roudebush, George A. Thomas, and F. Lee Weaver as Directors. If any
nominee is unable or declines to serve, Proxies will be voted for the balance
of the nominees and for such additional person as the Board of Directors
designates to replace such nominee. However, the Board of Directors does not
anticipate that this will occur.
Persons receiving a plurality of the votes cast at the Annual Meeting
in person or by Proxy will be elected as Directors. "Plurality" means that
the persons who receive the largest number of votes cast will be elected as
Directors. Shares not voted (whether by abstention, broker non-votes or
otherwise) will have no effect on the election.
Shareholders are being asked to approve an amendment to the Company's
Bylaws which would, if approved, eliminate the classification of the Board of
Directors and provide for the annual election of all Directors. For a
description of this proposal, see "2. Approval of an Amendment to the
Company's Bylaws to Eliminate Classification of the Board of Directors." If
the shareholders approve the Bylaw amendment, all of the Directors elected at
the Annual Meeting will serve one-year terms expiring at the 2000 Annual
Meeting of Shareholders. If the shareholders do not approve the Bylaw
amendment, all of the Directors elected at the Annual Meeting will serve
three-year terms expiring at the 2002 Annual Meeting of Shareholders.
Information about the nominees for election as Directors and the
Directors who will continue in office after the Annual Meeting appears below.
All nominees currently are Directors, except for George A. Thomas.
Nominees For Election As Directors Until The 2000 Annual Meeting
George R. Kempton Mr. Kempton, age 65, has served as a Director since
1983. He is a Business Consultant based in Naples,
Florida. Mr. Kempton was Chairman and Chief Executive
Officer of Kysor Industrial Corporation for more than
five years. Mr. Kempton also serves as a director of
JLG Industries, Incorporated.
Ronald L. Roudebush Mr. Roudebush, age 51, has served as a Director since
1993. He is the Vice Chairman and Chief Executive
Officer of The Standard Products
2
<PAGE>
Company, a sealing systems supplier to the automotive
and appliance industries based in Dearborn, Michigan.
Mr. Roudebush formerly was Dealer Principal of
Milford Dodge. Prior to his ownership of Milford
Dodge, Mr. Roudebush was President of Automotive
Operations of Rockwell International from 1991 to
1994, and was a Business Consultant from 1994 to
1995. Mr. Roudebush also serves as a director of The
Standard Products Company.
George A. Thomas Mr. Thomas, age 49, is standing for election to the
Board for the first time. Mr. Thomas joined the Company
on March 1, 1999 as President and Chief Operating
Officer. Mr. Thomas formerly was an executive with the
automotive supply operations of TRW, Inc. from 1972
until he joined the Company.
F. Lee Weaver Mr. Weaver, age 56, has served as a Director since
1976. He is a Partner in the law firm of Weaver,
Bennett & Bland, P.A. based in Matthews, North
Carolina.
*If the shareholders do not approve the Bylaw
amendment, all of the Directors elected at the
annual meeting will serve three-year terms expiring
at the 2002 Annual Meeting of Shareholders.
Directors Whose Terms Continue Until the 2000 Annual Meeting
Susan F. Haka Ms. Haka, age 49, has served as Director since 1995.
She is the Ernst & Young Professor and Chair,
Department of Accounting at Michigan State
University in East Lansing, Michigan.
Walter J. Kirchberger Mr. Kirchberger, age 64, has served as a Director
since 1971. He is Vice President -- Research of
PaineWebber, Incorporated in Troy, Michigan. Mr.
Kirchberger also serves as a director of McClain
Industries, Inc.
Roy E. Parrott Mr. Parrott, age 58, has served as a Director since
1989. He is the Chairman and Chief Executive Officer
of the Company. Mr. Parrott also serves as a director
of Lear Corporation.
Directors Whose Terms Continue Until the 2001 Annual Meeting
Michael E. Batten Mr. Batten, age 58, has served as a Director since
1995. He is the Chairman and Chief Executive Officer
of Twin Disc, Incorporated, a publicly-owned
manufacturer of clutches, reverse and reduction
gears, hydraulic couplings and torqueconverters,
universal joints and transmissions based in Racine,
Wisconsin. Mr. Batten serves as a director of Twin
Disc, Incorporated and of the following
publicly-owned companies: Briggs & Stratton
Corporation; Firstar Corporation; and Universal Foods
Corporation.
Robert W. Navarre Mr. Navarre, age 65, has served as a Director since
1965. He is a Business Consultant based in Naples,
Florida. Mr. Navarre retired as Chief Executive
Officer of the Company in November 1994 and as
Chairman of the Board in November 1997.
3
<PAGE>
Frank K. Zinn Mr. Zinn, age 64, has served as a Director
since 1974. He is a Member in the law firm of Dykema
Gossett PLLC in Detroit, Michigan. Dykema Gossett
PLLC provided legal services to the Company and its
subsidiaries during the last fiscal year and the
Company expects to retain the firm for such purposes
in the current fiscal year.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid an annual
retainer of $22,300 and all directors are reimbursed for travel expenses
incurred in connection with attending Board and Committee meetings.
Additional fees are paid on a per diem basis for attendance at special Board
or Committee meetings. Each non-employee director also is granted an option
to purchase 3,000 shares of the Company's Common Stock under the Company's
1993 Non-Employee Director Stock Option Plan on the day following each Annual
Meeting of Shareholders, which vest on the day preceding the next Annual
Meeting of Shareholders. The exercise price for such options is the fair
market value of the Common Stock on the grant date.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company meets regularly, at least once
each quarter. During 1998, the Board of Directors held four meetings. The
standing committees established by the Board of Directors are described
below.
Audit Committee. The Audit Committee is responsible for reviewing
with management the internal financial controls and accounting and reporting
activities of the Company. The Audit Committee reviews the qualifications of
the Company's independent auditors, makes recommendations to the Board of
Directors regarding the selection of independent auditors, reviews the scope,
fees and results of any audit and reviews non-audit services and related
fees. The Audit Committee met two times during 1998. The members of the Audit
Committee are Ms. Haka, Mr. Kempton, and Mr. Kirchberger.
Compensation Committee. The Compensation Committee develops and
monitors the executive compensation policies of the Company. The Compensation
Committee sets the compensation of the chief executive officer, reviews the
salary ranges of executive officers and sets the compensation of Directors.
The Compensation Committee also administers the Company's 1984 Stock Option
and Incentive Plan, which terminated during 1993, the Supplemental Executive
Retirement Plan and the 1993 Executive Long-Term Incentive Plan. The
Compensation Committee met three times during 1998. The members of the
Compensation Committee are Mr. Batten, Mr. Roudebush, and Mr. Weaver.
Nominating Committee. The Nominating Committee establishes criteria
for selecting and retaining directors, recommends to the Board nominees for
election as directors, and establishes procedures for filling vacancies on
the Board. A shareholder who wishes to propose director candidates for
4
<PAGE>
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 to be held during the
following April. The Bylaws of the Company require that: (a) shareholders who
intend to make a director nomination at the Annual Meeting provide notice of
this intention to the Secretary of the Company by following the directions in
the Bylaws; and (b) the Secretary receives this notice not less than 60 nor
more than 90 days prior to the date of the next Annual Meeting. The
Nominating Committee met one time during 1998. The members of the Nominating
Committee are Mr. Batten, Mr. Kempton, Mr. Navarre and Mr. Roudebush.
Retirement Fund Investment Committee. The Retirment Fund Investment
Committee establishes broad investment philosophies and guidelines for the
investment of assets held in the Company's pension and 401(k) retirement
plans, and employs advisors having special competence to assist the Committee
in fulfilling its responsibilities. The Retirement Fund Investment Committee
met one time during 1998. The members of the Retirement Fund Investment
Committee are Ms. Haka, Mr. Kirchberger, Mr. Navarre and Mr. Zinn.
5
<PAGE>
2. APPROVAL OF AN AMENDMENT TO THE COMPANY'S BYLAWS TO
ELIMINATE CLASSIFICATION OF THE BOARD OF DIRECTORS
Proposed Amendment
The Company's Bylaws currently provide for the Directors to be
divided into three classes as nearly equal in number as possible, with each
Director having a three-year term. After reviewing the corporate governance
policies of a number of publicly-owned companies discussing this issue with a
number of shareholders of the Company, the Board of Directors adopted,
subject to shareholder approval, an amendment to Section 4.04 and
Section 4.05 of the Company's Bylaws to eliminate the classification of
the Directors and to provide for the annual election of all Directors. If
approved, the amendment to the Bylaws will result in the Directors elected
at this Annual Meeting serving one-year terms expiring at the 2000 Annual
Meeting, but will not affect the unexpired terms of those Directors elected
prior to this Annual Meeting. If approved by the shareholders, the amended
Section 4.04 and Section 4.05 would read in their entirety as follows:
Section 4.04 (Section 4) Term of Office. Upon the expiration
of the directors existing terms of office, each director shall be
elected at each annual meeting of shareholders, to hold office until
the next annual meeting of shareholders, and until the director's
successor is elected and has qualified, or until the director's
resignation or removal.
Section 4.05 (Section 5) Vacancies. Newly created
directorships resulting from an increase in the number of directors
and vacancies occurring in the Board for any reason may be filled by
vote of a majority of the directors then in office, although less
than a quorum, or by a sole remaining director, at any meeting of the
Board. A director elected to fill a vacancy shall be elected to hold
office until the next annual meeting of shareholders, and until the
director's successor is elected and has qualified, or until the
director's resignation or removal.
Vote Required
The affirmative vote of 66 2/3% of the outstanding shares of the
Common Stock of the Company is required to approve the proposed amendment to
the Bylaws. Shares not voted (whether by abstention, broker non-votes or
otherwise) will have the same effect as a vote against the proposed
amendment.
Recommendation
The Board of Directors has unanimously approved the proposed
amendment and recommends that the shareholders vote FOR this proposal.
6
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. All of the members of the
Compensation Committee are non-employee Directors. The Compensation Committee
has the primary responsibility to review and approve the Company's executive
compensation philosophy and policies and to monitor the compensation
programs. The Compensation Committee reviews the performance and establishes
the compensation of the Chief Executive Officer. In the performance of its
responsibilities, the Compensation Committee reviews compensation data,
surveys and other information obtained from independent sources reflecting
the compensation practices of other companies. From time to time, the
Compensation Committee engages the services of independent consultants to
evaluate and make recommendations regarding the Company's executive
compensation policies and programs and to ensure they are appropriate to the
Company's objectives.
The Internal Revenue Code (the "Code") was amended, effective for tax
years commencing in 1994, to limit a publicly held corporation's ability to
deduct more than $1 million of an executive's nonperformance-based
compensation. The Code generally excludes from this limitation compensation
that is determined under pre-established objective performance goals, such as
stock options awarded at fair market value, provided that such compensation
has met shareholder approval and independent director requirements. Although
this limitation will not affect the deductibility of executive compensation
in the current year, the Compensation 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 initiative, 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:
(1) annual base salary; (2) short-term incentives through annual bonus
awards; and (3) long-term incentives through participation in the Company's
long-term incentive plan. The Compensation Committee annually reviews
executive officer salary ranges based primarily on current market salary data
compiled from various independent sources and nationwide compensation studies
covering senior executive officers from manufacturing companies. The
Company's philosophy is 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.
7
<PAGE>
The short-term incentive plan provides for annual cash bonuses of a
percentage of base salary ranging from a maximum of 20% for mid-level
executives to a maximum of 120% for the chief executive officer. 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 executives individual performance and that of his or her
operating unit.
Long-term incentive awards are made by the Committee through the
Company's 1993 Executive Long-Term Incentive Plan. This plan 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 the recipient cannot sell or transfer
until the applicable restriction period lapses and which the recipient may
forfeit if the recipient terminates employment prior to the expiration of the
restriction period. The Company has designed its long-term incentive awards
principally to encourage long-term enhancement of shareholder value and to
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 Compensation 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 Compensation
Committee in conformance with the policies described above for executive
officers. The last adjustment to Mr. Parrott's salary occurred on January 1,
1998 when it was increased to $400,000, which places his salary slightly
below the mid-point of the 1999 salary range established by the Committee.
The Compensation Committee based its decision on executive compensation data
for comparable companies provided by an independent consulting firm, some of
which companies are included in the Industry Index used for the comparison of
Five Year Cumulative Return appearing on page 9 of this Proxy Statement. The
Compensation Committee also based its decision on its subjective evaluation
of Mr. Parrott's expansion of the Company's global activities and
reorganization of the Company's business units.
The Compensation Committee based Mr. Parrott's bonus for 1998 on the
Company's 1998 earnings in accordance with the formula provided in the
short-term incentive plan, and the Compensation Committee's subjective
assessment of Mr. Parrott's attainment of specific goals established at the
beginning of the year. The restricted stock and stock option awards made to
Mr. Parrott during 1998 were also established in accordance with the formula
described above.
February 23, 1999 COMPENSATION COMMITTEE
F. Lee Weaver, Chairman
Michael E. Batten
Ronald L. Roudebush
8
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides certain summary information concerning
the compensation of the Company's Chief Executive Officer and the other four
most highly compensated executive officers of the Company for the last three
years.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------- ------------------------
Restricted Securities
Stock Underlying All Other
Award(s) Options Compensation
Name and Principal Position Fiscal Year Salary Bonus ($) (#) (1 )
- --------------------------- ----------- ------ ----- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Roy E. Parrott ................ 1998 $400,009 $197,284 $99,999(2) 31,920 $5,664
Chairman; President; and 1997 367,536 175,039 84,338 34,600 5,985
Chief Executive Officer 1996 360,236 209,252 45,625 25,000 6,930
Vinod M. Khilnani.............. 1998 $176,388 $ 93,274 $49,620(3) 13,390 $5,664
Vice President and Chief 1997 82,174(4) 75,152 31,500 5,000 1,071
Financial Officer 1996 -- -- -- -- --
James A. Hug .................. 1998 $179,280 $ 88,883 $23,183(5) 7,390 $5,664
Vice President - Transmission 1997 170,688 84,210 19,500 8,000 5,985
& Chassis Group 1996 158,040 86,885 20,714 9,080 6,930
James B. Painter .............. 1998 $170,256 $ 85,100 $23,183(6) 7,390 $5,664
Vice President - Engine 1997 162,680 86,201 19,500 8,000 6,048
Products 1996 155,000 85,376 20,714 9,080 6,930
George G. Gilbert.............. 1998 $168,248 $ 77,192 $23,183(7) 7,390 $5,664
Vice President - Strategic 1997 160,688 88,212 19,500 8,000 5,985
Development & Emerging Markets 1996 152,672 79,320 20,714 9,080 6,930
& Technology Services
<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, 1998, Mr. Parrott held 31,715 shares of restricted
stock, valued at $307,239. The Company made the following awards of
shares of restricted stock to Mr. Parrott: (a) 5,000 shares on February
22, 1996, of which 500 shares vest annually beginning February 1, 1997
and continuing on each February 1 until February 1, 2006; (b) 8,650
shares on February 24, 1997, of which 865 shares vest annually beginning
9
<PAGE>
February 1, 1998 and continuing on each February 1 until February 1,
2007; and (c) 7,980 shares on February 23, 1998, of which 798 shares vest
annually beginning February 1, 1999 and continuing on each February 1
until February 1, 2008.
(3) As of December 31, 1998, Mr. Khilnani held 6,550 shares of restricted
stock valued at $63,453. The Company made the following awards of shares
of restricted stock to Mr. Khilnani: (a) 3,000 shares on August 18, 1997,
of which 300 shares vest annually beginning on September 1, 1998 and
continuing on each September 1 until September 1, 2007; (b) 1,850 on
February 23, 1998, of which 185 shares vest annually on February 1, 1999
and continuing on each February 1 until February 1, 2008; and (c) 2,000
shares on July 1, 1998, of which 400 shares vest annually beginning
February 1, 1999 and continuing on each February 1 until February 1,
2003.
(4) Mr. Khilnani joined the Company in July 1997.
(5) As of December 31, 1998, Mr. Hug held 8,660 shares of restricted stock,
valued at $83,894. The Company made the following awards of shares of
restricted stock to Mr. Hug: (a) 2,270 shares on February 22, 1996, of
which 227 shares vest annually beginning on February 1, 1997 and
continuing on each February 1 until February 1, 2006; (b) 2,000 shares on
February 24, 1997, of which 200 shares vest annually beginning February
1, 1998 and continuing on each February 1 until February 1, 2007; and (c)
1,850 shares on February 23, 1998, of which 185 shares vest annually on
February 1, 1999, and continuing on each February 1 until February 1,
2008.
(6) As of December 31, 1998, Mr. Painter held 8,266 shares of restricted
stock, valued at $80,077. The Company made the following awards of shares
of restricted stock to Mr. Painter: (a) 2,270 shares on February 22,
1996, of which 227 shares vest annually beginning on February 1, 1997 and
continuing on each February 1 until February 1, 2006; (b) 2,000 shares on
February 24, 1997, of which 200 shares vest annually beginning February
1, 1998 and continuing on each February 1 until February 1, 2007; and (c)
1,850 shares on February 23, 1998, of which 185 shares vest annually on
February 1, 1999, and continuing on each February 1 until February 1,
2008.
(7) As of December 31, 1998, Mr. Gilbert held 9,842 shares of restricted
stock, valued at $95,344. The Company made the following awards of shares
of restricted stock to Mr. Gilbert: (a) 2,270 shares on February 22,
1996, of which 227 shares vest annually beginning on February 1, 1997 and
continuing on each February 1 until February 1, 2006; (b) 2,000 on
February 24, 1997, of which 200 shares vest annually beginning February
1, 1998 and continuing on each February 1 until February 1, 2007; and (c)
1,850 shares on February 23, 1998, of which 185 shares vest annually on
February 1, 1999, and continuing on each February 1 until February 1,
2008.
</TABLE>
10
<PAGE>
Option Grants in Last Fiscal Period
The following table provides information about stock options granted
to the persons named in the Summary Compensation Table during the last fiscal
year. The table also shows an estimated grant date present value for each set
of options using the Black-Scholes valuation method.
<TABLE>
<CAPTION>
% of Total
Options
Number of Granted
Securities To
Underlying Employees Grant Date
Options in Fiscal Exercise Price Expiration Present
Name Granted Year ($/Share) Date Value ($)(1)
---- --------- --------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Roy E. Parrott .............. 31,920(2) 33.9% $12.53 02/22/08 $121,934
Vinod M. Khilnani ........... 7,390(2) 7.9% $12.53 02/22/08 $ 28,230
6,000(3) 6.4% $13.22 06/30/08 $ 23,580
James A. Hug ................ 7,390(2) 7.9% $12.53 02/22/08 $ 28,230
James B. Painter ............ 7,390(2) 7.9% $12.53 02/22/08 $ 28,230
George G. Gilbert............ 7,390(2) 7.9% $12.53 02/22/08 $ 28,230
- ---------
<FN>
(1) The material assumptions and adjustments incorporated in the
Black-Scholes model include the following:
Grant Date Grant Date
----------------- ------------
February 23, 1998 July 1, 1998
Risk-Free Interest Rate ..... 5.8% 5.6%
Stock Price Volatility ...... 35.0% 35.0%
Dividend Yield .............. 3.8% 3.8%
Expected Option Term ........ 7.0 Years 6.6 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 based on a five year average of 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 7.0 years or 6.6 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 23,
1999.
(3) These options were granted pursuant to the 1993 Executive Long-Term
Incentive Plan and become exercisable 25% per year beginning July 1,
1999.
</TABLE>
11
<PAGE>
Aggregated Fiscal Year-End Option Values
The following table provides information regarding the values of
unexpired in-the-money options and stock appreciation rights ("SARs") held at
the end of the last fiscal year by the executives named in the Summary
Compensation Table. No options or SARs were exercised by the named executives
during the last fiscal year.
<TABLE>
<CAPTION>
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 ....... 101,754 92,956 $45,083 $8,438
V. M. Khilnani ...... 1,000 17,390 $ 0 $ 0
J. A. Hug ........... 21,264 23,926 $ 2,043 $3,065
J. B. Painter ....... 5,232 19,238 $ 2,043 $3,065
G. G. Gilbert........ 21,264 23,926 $ 2,043 $3,065
</TABLE>
12
<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,
and pay dividends.
<TABLE>
<CAPTION>
Comparison of Five Year Cumulative Total Return*
Among Simpson Industries, Inc.,
Russell 2000 Index, and Industry Index
[ Performance Graph ]
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C>
Simpson Industries, Inc. 100.00 67.82 68.73 86.59 96.90 82.70
Russell 2000 100.00 98.18 126.10 146.90 179.75 175.17
Industry Index 100.00 91.15 108.44 131.07 149.63 152.04
<FN>
- ---------
* Assumes that the value of an investment in the Company's common stock and
each index was $100 on December 31, 1993 and that all dividends were
reinvested.
</TABLE>
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
None of the Company's executive officers have employment contracts
with the Company and their employment may be terminated at any time at the
discretion of the Board of Directors. However, to help retain key management
personnel in the event of a threatened or potential change in control of the
Company, the Company has entered into severance agreements with Mr. Parrott,
Mr. Khilnani, Mr. Hug, Mr. Painter, and Mr. Gilbert. The agreements provide
for severance pay and benefits in the event of termination of employment
within three years (for Mr. Parrott) or two years (for Mr. Khilnani, Mr. Hug,
Mr. Painter, and Mr. Gilbert) 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; such a change will be 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, 1999. Each
agreement is automatically extended for successive one-year periods unless
terminated on 30 days notice, provided that no change in control has occurred.
13
<PAGE>
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 Mr. Khilnani, Mr. Hug, Mr. Painter and Mr.
Gilbert) 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 (ii) 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 (f or 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 Mr. Khilnani, Mr. Hug, Mr. Painter, and Mr. Gilbert). 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 offic er was otherwise entitled
immediately prior to his termination and the right to immediately exercise in
full all outstanding stock options.
Pension Plan
The Company has a non-contributory defined benefit pension plan for
salaried employees. This plan provides for payment of a fixed retirement
benefit to participants in the plan 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 0.75% of the participant's average base
compensation up to $9,000, plus 1.5% of the participant's average base
compensation in excess of $9,000, multiplied by the number of years the
participant has participated 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 of the participant's base
compensation up to a specified break point amount, 2.5% of each year of the
participant'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 of the participant's base
14
<PAGE>
compensation below the break point amount, 2.05% of each year of the
participant'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 the 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,
$52,104; Mr. Khilnani, $58,583; Mr. Hug, $73,212 ; Mr. Painter, $59,586 and
Mr. Gilbert,$66,733.
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 (1) 2% of his or her average base compensation times his or
her years of bonus service up to 30 years, or (2) 4% of his or her average
base compensation times his or her years of officer service to a maximum of
15 years. No participant is entitled to more than 60% of his or her 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, $138,823; Mr. Khilnani, $0; Mr. Hug,
$25,814; Mr. Painter, $0; and Mr. Gilbert, $0.
15
<PAGE>
ADDITIONAL 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 shares of common stock (as provided
to the Company by such persons or the recordholders of such shares.)
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
- ------------------ -------------------- --------
Dimensional Fund Advisors, Inc. .... 1,188,625 shrs.(1) 6.5%
1299 Ocean Avenue.
Santa Monica, California
- ---------
(1) Sole voting power -- 1,188,625 shares (6.5%); sole investment power--
1,188,625 shares (6.5%); as reported in the Schedule 13G, dated February 11,
1999, received by the Company from Dimensional Fund Advisors Inc.
("Dimensional"). Dimensional, a registered investment advisor, is deemed to
have beneficial ownership of 1,188,625 shares of the Company's common stock
as of December 31, 1998, all of which shares are held by certain registered
investment companies or certain other investment vehicles. Dimensional serves
as investment advisor or manager to all such investment companies and
investment vehicles. Dimensional disclaims beneficial ownership of all such
shares.
Security Ownership of Management
The following table provides information about the beneficial
ownership of the Company's Common Stock by the Directors and executive
officers of the Company.
<TABLE>
<CAPTION>
As of March 1, 1999
-----------------------------------
Amount and Nature of Percent
Name Beneficial Ownership(1) of Class
---- ----------------------- --------
<S> <C> <C>
Roy E. Parrott .................... 194,037 1.1%
Walter J. Kirchberger ............. 90,432 0.5%
F. Lee Weaver ..................... 84,420(2) 0.5%
James A. Hug ...................... 71,438 0.4%
George G. Gilbert.................. 66,146 0.4%
Frank K. Zinn ..................... 59,061(3) 0.3%
Robert W. Navarre ................. 31,562 0.2%
George R. Kempton ................. 30,813(4) 0.2%
Vinod M. Khilnani ................. 24,669 0.1%
James B. Painter .................. 22,707 0.1%
George A. Thomas .................. 19,898(5) 0.1%
Ronald L. Roudebush ............... 19,000 0.1%
Jeoffrey A. Burris................. 17,361 0.1%
Susan F. Haka ..................... 7,020 --
Michael E. Batten ................. 7,000 --
------- ---
All present directors and executive
officers ........................ 743,564 shrs. 4.0%
<FN>
- ---------
(1) Includes shares beneficially held for certain executive officers and
directors under the Simpson Industries, Inc. Savings Plan and also
includes 296,924 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 43,311 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.
(5) Includes 9,898 shares owned jointly by Mr. Thomas and Carolyn C. Thomas,
his wife.
</TABLE>
16
<PAGE>
Section 16(a) Beneficial Ownership Reporting Requirements
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 (the "SEC") and the Nasdaq Stock Market. Officers, Directors, and
greater than 10% shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms
received by it, or written representations from certain reporting persons,
the Company believes that its officers, Directors, and greater than 10%
shareholders met all applicable filing requirements during the last fiscal
year.
Independent Accountants
KPMG LLP has served as independent accountants for the Company since
1991. KPMG LLP was selected by the Board of Directors to serve as the
Company's auditors for the current fiscal year (ending December 31, 1999). It
is anticipated that representatives of KPMG LLP will be present at the Annual
Meeting, will have an opportunity to make a statement, and will respond to
appropriate questions.
Shareholder Proposals
Shareholder proposals to be presented at the 2000 Annual Meeting must
be received by the Company not later than November 12, 1999 if they are to be
included in the Company's Proxy Statement for the 2000 Annual Meeting. Such
proposals should be addressed to the Secretary at the Company's executive
offices. Shareholder proposals or director nominations to be presented at the
2000 Annual Meeting or any Special Meeting which are not to be included in
the Proxy Statement for that meeting must be received by the Company not less
than 60 nor more than 90 days prior to the date of the meeting in accordance
with the procedures set forth in the Company's Bylaws.
Other Matters
At the date of this Proxy Statement, management is not aware of any
matters to be presented for action at the Annual Meeting other than the
matters described in this Proxy Statement. However, if any other matters
should come before the meeting, the persons named in the proxy card intend to
vote the proxy in accordance with their judgment on such matters.
Plymouth, Michigan
March 12, 1999 By Order of the Board of Directors,
Frank K. Zinn
Secretary
17
<PAGE>
Appendix 1
[Form of Proxy -- Front]
PROXY PROXY
SIMPSON INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SIMPSON INDUSTRIES, INC.
The undersigned hereby constitutes and appoints Roy E. Parrott and
Vinod M. Khilnani, 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 20, 1999, 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 for the proposed amendment to the Company's By-laws.
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
12, 1999, and the Annual Report of Simpson Industries, Inc. to its
Shareholders for the year ended December 31, 1998. 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.
Has your address changed? PLEASE VOTE, DATE AND SIGN AND
________________________________ RETURN THE PROXY CARD PROMPTLY
_________________________________ USING THE ENCLOSED ENVELOPE.
_________________________________ (Continued and to be signed on
reverse side.)
- -------------------------------------------------------------------------------
[Form of Proxy -- Back]
SIMPSON INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. Election of Directors:
Nominees: George R. Kempton, Ronald L. Roudebush, FOR WITHHOLD FOR ALL
George A. Thomas, and F. Lee Weaver ALL ALL EXCEPT
/ / / / / /
(INSTRUCTION:to withhold authority to vote for any
individual nominee, write such name or names in the
space provided below.)
________________________________________________
_________________________________________________
- -----------------------------------------------
2. Amendment to the Company's Bylaws to eliminate
classification of the Board of Directors.
FOR AGAINST ABSTAIN
/ / / / / /
3. To act in their discretion upon the transaction of such
other businesses as may properly come before the meeting.
Mark box at right if address change has been
noted on the reverse side. / /
Please be sure to sign and date this proxy.
Dated:___________________, 1999.
____________________________________ ____________________________________
Shareholder sign here Co-owner sign here
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.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
YOUR VOTE IS IMPORTANT.
PLEASE VOTE, DATE AND SIGN AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE>
Appendix 2
[ Letterhead ]
SIMPSON
INDUSTRIES, Inc.
- -----------------------------------------------------------------------------
47603 Halyard Drive
Plymouth, MI 48170-2429
734/207-6200 Fax: 734/207-6570
March 12, 1999
To our Shareholders:
This year's Annual Meeting will be held at Simpson's Bluffton, Indiana
facility.
We encourage you to attend at 11 a.m. Eastern Standard Time on Tuesday, April
20, 1999. A map is included on the back of this page. Please contact Kathy
Wolff if you need additional directions or have questions (734) 207-6200.
Along with many other public companies, technology now enables us to deliver
information to shareholders more quickly and economically. We are no longer
producing traditional quarterly reports. However, you will be able to access
Simpson information in several timely new ways.
* Fax Dial 1-800-758-5804. When requested, enter Simpson's extension number
107165 and the fax number where you will receive the report.
* Internet On the World Wide Web at http://www.prnewswire.com. Once on the
Home Page, access Simpson from the "Company News on Call" page.
* Mail Full text of earnings press releases will be mailed to you if you
write Shareholder Relations at Simpson's Corporate Headquarters.
Of course, earnings will also be carried by the Wall Street Journal and other
financial publications. Our S.E.C. filings are available through EDGAR on the
Internet.
Company earnings are normally released close to these dates: April 14, first
quarter; July 15, second quarter; October 15, third quarter; January 30,
fourth quarter and full year.
We look forward to reporting on Simpson's progress and plans on April 20,
1999, and hope you will be able to attend.
Sincerely,
/s/ Roy E. Parrott
Roy E. Parrott
Chairman, and Chief Executive Officer
A detailed map describing the location of the Annual Meeting, which
was also provided to the shareholders of the Company, is omitted.
