<PAGE> 1
BORG-WARNER AUTOMOTIVE, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Chicago, Illinois
March 22, 1996
To the Stockholders:
The Annual Meeting of Stockholders of Borg-Warner Automotive, Inc. will be
held on April 23, 1996, at 11:00 a.m. at the Company's headquarters located at
200 South Michigan Avenue, Chicago, Illinois, 60604, for the following purposes:
1. To elect the Class III Directors to serve for the next three years;
2. To approve the Company's Executive Stock Performance Plan;
3. To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the Company for 1996; and
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
Only stockholders at the close of business on March 15, 1996, will be
entitled to vote at the meeting or any adjournment or postponement thereof.
By order of the Board of Directors
Laurene H. Horiszny
Secretary
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. YOUR
VOTE IS IMPORTANT.
<PAGE> 2
BORG-WARNER AUTOMOTIVE, INC.
200 SOUTH MICHIGAN AVENUE
CHICAGO, ILLINOIS 60604
------------------------
PROXY STATEMENT
------------------------
March 22, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Borg-Warner Automotive, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of the Company on
April 23, 1996, to be held at the Company's headquarters at 200 South Michigan
Avenue, Chicago, Illinois 60604. This Proxy Statement and accompanying form of
proxy are being mailed to stockholders beginning on or about March 22, 1996. The
Company's Annual Report to Stockholders for the year ended December 31, 1995, is
enclosed.
Only stockholders of record at the close of business on March 15, 1996,
will be entitled to vote at the meeting. As of such date, there were 23,402,987
shares of Common Stock (the "Common Stock") issued and outstanding. Each share
of Common Stock entitles the holder to one vote. Holders of the Company's
Non-Voting Common Stock are not entitled to notice of, or to vote at, the Annual
Meeting.
The enclosed proxy, if properly signed and returned, will be voted in
accordance with its terms. Any proxy returned without specification as to any
matter will be voted as to each proposal in accordance with the recommendation
of the Board of Directors. You may revoke your proxy at any time before the vote
is taken by delivering to the Secretary of the Company written revocation or a
proxy bearing a later date, or by attending and voting at the Annual Meeting.
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitation of proxies by use of the mail, proxies may be solicited
by directors, officers and regularly engaged employees of the Company. Brokers,
nominees and other similar record holders will be requested to forward
solicitation material and will be reimbursed by the Company upon request for
their out-of-pocket expenses.
Votes cast by proxy or in person at the meeting will be tabulated by the
election inspectors appointed for the meeting and will determine whether a
quorum is present. Unless otherwise indicated herein, the election inspectors
will treat abstentions as shares that are present and entitled to vote for
purposes of determining the presence of a quorum but as unvoted for purposes of
determining the approval of any matter submitted to the stockholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
1. ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes. Three
nominees (the "Class III Directors") are to be elected at this meeting to serve
for a term of three years and until their successors are elected and qualified.
Three other directors (the "Class I Directors") have terms expiring at the 1997
Annual Meeting of Stockholders and two other directors (the "Class II
Directors") have terms expiring at the 1998 Annual Meeting of Stockholders. Each
of the nominees for election as
<PAGE> 3
Class III Director has agreed to serve if elected. Messrs. Bowman, Fitzgibbons
and Glaske are presently directors of the Company. In the event that any nominee
should become unavailable for election, the Board of Directors may designate a
substitute nominee, in which event the shares represented by proxies at the
meeting will be voted for such substitute nominee unless an instruction to the
contrary is indicated on the proxy card. A plurality of votes of shares of
Common Stock present in person or by proxy at the meeting is required to elect a
director.
The following table sets forth as of March 15, 1996, with respect to each
nominee and each director continuing to serve, their name, age, principal
occupation, the year in which they first became a director of the Company (if
currently a director) and directorships in other corporations.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
CLASS III DIRECTORS AGE AND DIRECTORSHIPS
- ------------------------------ --- ---------------------------------------------------------
<S> <C> <C>
Matthias B. Bowman 47 Mr. Bowman has been Vice Chairman of Investment Banking
1995 for Merrill Lynch & Co.("ML&Co.") since 1993, and has
been President and a Director of Merrill Lynch Capital
Partners, Inc. ("MLCP") since 1994. He has been a
Managing Director of the Investment Banking Division of
ML&Co. since 1978.
Albert J. Fitzgibbons, III 50 Mr. Fitzgibbons has been a Partner and a Director of
1993 Stonington Partners, Inc., an investment management firm,
since 1993, and has been a Director of MLCP since 1988.
He was a Partner of MLCP from 1993 to 1994 and Executive
Vice President of MLCP from 1988 to 1993. He was also a
Managing Director of the Investment Banking Division of
ML&Co. from 1978 to July 1994. He is a Director of
Borg-Warner Security Corporation ("BW-Security"),
Dictaphone Corporation, Eckerd Corporation and United
Artists Theatre Circuit, Inc.
Paul E. Glaske 62 Chairman and Chief Executive Officer since April 1992 and
1994 President since July 1986 of Blue Bird Corporation, a
leading manufacturer of school buses, motor homes and a
variety of other vehicles. Mr. Glaske is also a Director
of Trust Company Bank of Middle Georgia.
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
CLASS I DIRECTORS AGE AND DIRECTORSHIPS
- ------------------------------ --- ---------------------------------------------------------
<S> <C> <C>
James J. Kerley 73 Chairman of the Board of Rohr, Inc. ("Rohr"), a
1994 manufacturer of aircraft engine components from January
1993 until his retirement from the Board in December
1994. Mr. Kerley was interim President and Chief
Executive Officer of Rohr from January 1993 until May
1993. From September 1981 until his retirement in
December 1985, he was Vice Chairman and Chief Financial
Officer of Emerson Electric Company, a manufacturer of
electronic, electrical and other products. Mr. Kerley is
also a Director of Sterling Chemicals, Inc., ESCO
Electronics, Inc. and DT Industries, Inc.
</TABLE>
2
<PAGE> 4
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
CLASS I DIRECTORS AGE AND DIRECTORSHIPS
- ------------------------------ --- ---------------------------------------------------------
<S> <C> <C>
Alexis P. Michas 38 Mr. Michas has been a Partner and a Director of
1993 Stonington Partners, Inc., an investment management firm,
since 1993, and has been a Director of MLCP since 1989.
He was a Partner of MLCP from 1993 to 1994 and Senior
Vice President of MLCP from 1989 to 1993. He was also a
Managing Director of the Investment Banking Division of
ML&Co. from 1991 to 1994 and a Director in the Investment
Banking Division of ML&Co. from 1990 to 1991. He is also
a Director of Blue Bird Corporation, BW-Security,
Dictaphone Corporation, Eckerd Corporation, Pathmark
Stores, Inc. and Supermarkets General Holding
Corporation.
Donald C. Trauscht 62 Chairman of the Board from December 1992 until December
1987 1995; Chief Executive Officer from January 1992 to
October 1995; and President from January 1992 to April
1995 of BW-Security, a provider of guard, alarm, armored
transport and courier services. Mr. Trauscht was Chief
Operating Officer and President from September 1991 to
January 1992; Chief Operating Officer and Vice President
from 1990 to 1991; and Vice President-Finance and
Strategy of BW-Security from 1987 to 1990. Mr. Trauscht
was President of the Company from December 1990 and Chief
Operating Officer from September 1991 to September 1992.
Mr. Trauscht is also a Director of BW-Security, Baker
Hughes Incorporated, ESCO Electronics Corporation,
Thiokol Corporation, Blue Bird Corporation, and IMO
Industries, Inc.
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
CLASS II DIRECTORS AGE AND DIRECTORSHIPS
- ------------------------------ --- ---------------------------------------------------------
<S> <C> <C>
Ivan W. Gorr 66 Chairman and CEO of Cooper Tire & Rubber Company from
1995 1989 until his retirement in 1994 and President from 1982
until 1989. Mr. Gorr is a Director of Amcast Industrial
Corporation, Arvin Industries, Inc., Cooper Tire & Rubber
Company, Fifth Third Bancorp and OHM Corporation.
John F. Fiedler 57 Mr. Fiedler has been Chairman of the Board of Directors
1994 since March 1996 and has been Chief Executive Officer of
the Company since January 1995. He was President from
June 1994 to March 1996. He was Chief Operating Officer
from June 1994 to December 1994. Mr. Fiedler was
Executive Vice President of Goodyear Tire & Rubber
Company, in charge of the North American Tire Division,
from 1991 to 1994. He served as President of Kelly
Springfield Tire Company, a division of Goodyear, from
1989 to 1991 and as Vice President of the Asia Pacific
Region of Goodyear from 1987 to 1989. He is a Director of
Navistar, Inc.
</TABLE>
3
<PAGE> 5
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four regular meetings and two special meetings
during 1995. Messrs. Fiedler, Fitzgibbons, Glaske, Kerley, Michas, and Trauscht
attended at least 75% of the meetings of the Board of Directors and any
committee on which they served. After joining the Board during 1995, Messrs.
Bowman and Gorr also attended at least 75% of the meetings of the Board of
Directors and any committee on which they served.
The Board of Directors has a standing Compensation Committee and a Finance
and Audit Committee. The Board does not have a nominating committee.
The present members of the Compensation Committee are Albert J.
Fitzgibbons, III (Chairman), Paul E. Glaske, Alexis P. Michas and Donald C.
Trauscht. The responsibilities of the Compensation Committee include reviewing
and approving executive appointments and remuneration and supervising the
administration of the Company's employee benefit plans. The Compensation
Committee met three times during 1995.
The present members of the Finance and Audit Committee are James J. Kerley
(Chairman), Ivan W. Gorr, Alexis P. Michas and Donald C. Trauscht. The
responsibilities of the Finance and Audit Committee include: recommending to the
Board of Directors the independent certified public accountants to conduct the
annual audit of the books and accounts of the Company; reviewing the proposed
scope of such audit and approving the audit fees to be paid; and reviewing the
adequacy and effectiveness of the internal auditing, accounting and financial
controls of the Company with the independent certified public accountants and
the Company's financial and accounting staff. The Finance and Audit Committee
met four times during 1995.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or its subsidiaries or
affiliates of MLCP receive an annual retainer of $22,000 for service on the
Board of Directors and $1,000 for each Board meeting attended. Committee members
also receive $750 ($1,500 if Chairman of a committee) for each committee meeting
attended.
In addition, under the terms of the Borg-Warner Automotive, Inc. 1993 Stock
Incentive Plan, each director of the Company who from and after February 1,
1993, is not otherwise an employee of MLCP or of the Company or any of the
Company's subsidiaries shall, on the third Tuesday of each year, automatically
receive an annual grant of options to purchase 1,000 shares of Common Stock
having an exercise price equal to the fair market value of the Common Stock at
the date of grant of such option. Each director, upon joining the Board, will
also receive an initial grant of options to purchase 2,000 shares of Common
Stock having an exercise price equal to the fair market value of the Common
Stock as of such date. All such options expire ten years after the date of grant
and become exercisable in installments on the second and third anniversaries of
the date of grant.
In 1995, Messrs. Gorr and Kerley undertook a special strategic planning
project on behalf of the Board of Directors. Because the project required their
time and attention over an eight week period, they each received additional
compensation of $28,000.
J. Gordon Amedee served as Chief Executive Officer of the Company until
December 31, 1994 and as Chairman of the Company until his death in July 1995.
In 1995, the Company paid Mr. Amedee
4
<PAGE> 6
$586,863.92. Mr. Amedee's estate also realized a gain of $230,000 on the
exercise of stock options in 1995.
STOCK OWNERSHIP
The following table sets forth as of March 15, 1996, certain information
regarding beneficial ownership of Common Stock by all entities that, to the best
knowledge of the Company, beneficially owned more than five percent of the
Common Stock.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES CLASS
-------------------------------------------------------------- --------- ----------
<S> <C> <C>
AIM Management Group Inc.(a).................................. 1,198,000 5.12
FMR Corp(b)................................................... 1,637,400 7.00
Merrill Lynch KECALP L.P. 1986(c)............................. 35,573 *
Merrill Lynch KECALP L.P. 1987(c)............................. 177,866 *
Merchant Banking L.P. No. 1(c)................................ 444,664 1.90
ML Venture Partners II, L.P.(c)............................... 444,664 1.90
Merrill Lynch Capital Appreciation Partnership No. VIII,
L.P.(c)..................................................... 5,895,020 25.19
ML Offshore LBO Partnership No. VIII, L.P.(c)................. 149,872 *
ML Employees LBO Partnership No. I, L.P.(c)................... 146,543 *
ML IBK Positions, Inc......................................... 1,776,952 7.59
--------- ----
Total ML Entities............................................. 9,071,154 38.76
========= =====
</TABLE>
- ---------------
*Represents less than one percent.
(a) Pursuant to a Schedule 13G dated February 12, 1996, AIM Management Group
Inc. indicated that it had shared voting power and shared dispositive power
with respect to 1,198,000 shares.
(b) Pursuant to a Schedule 13G dated February 14, 1996, FMR Corp. indicated that
it had sole voting power with respect to 109,600 shares and sole dispositive
power with respect to 1,637,400 shares.
(c) An investment fund managed for the benefit of investors.
The address of AIM Management Group Inc. is: 11 Greenway Plaza, Suite 1919,
Houston, Texas 77046-1173. The address of FMR Corp. is: 82 Devonshire Street,
Boston, Massachusetts 02109. The address of each of the Merrill Lynch Entities
is: c/o Merrill Lynch & Co., Inc., World Financial Center, New York, New York
10281.
5
<PAGE> 7
The following table sets forth as of March 15, 1996, certain information
regarding beneficial ownership of Common Stock by the Company's directors and
executive officers named in the Summary Compensation Table and by all directors
and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES(A) CLASS
-------------------------------------------------------------- --------- ----------
<S> <C> <C>
John F. Fiedler............................................... 5,000 *
Fred M. Kovalik............................................... 12,500 *
Gary P. Fukayama.............................................. 46,000 *
Ronald M. Ruzic............................................... 63,668 *
Terry A. Schroeder............................................ 5,000 *
Matthias B. Bowman(b)......................................... 0 *
Albert J. Fitzgibbons, III (c)................................ 0 *
Alexis P. Michas (c).......................................... 0 *
Donald C. Trauscht............................................ 3,000 *
James J. Kerley............................................... 2,000 *
Paul E. Glaske................................................ 0 *
Ivan W. Gorr.................................................. 0 *
All directors and executive officers of the Company (17
persons).................................................... 194,035 *
</TABLE>
- ---------------
*Represents less than one percent.
(a) Includes the following number of shares issuable upon the exercise of
options within the next 60 days: 37,000 for Mr. Fukayama; 1,000 for Mr.
Kerley; 12,500 for Mr. Kovalik; 48,000 for Mr. Ruzic; 5,000 for Mr.
Schroeder; and 153,306 for all directors and executive officers of the
Company.
(b) Although Mr. Bowman is only a limited partner of the limited partnerships
that are recordholders of the shares reported (includes 6,699,686 shares of
Common Stock held by the following entities: Merrill Lynch Capital
Appreciation Partnership No. VIII, L.P., ML Employees LBO Partnership No. I,
L.P., Merrill Lynch KECALP L.P. 1986, Merrill Lynch KECALP L.P. 1987 and
Merchant Banking L.P. No. 1), he is an advisor to or a director and/or an
officer of the ultimate general partner of such partnerships; therefore he
may be deemed to beneficially own the shares held by such limited
partnerships. Mr. Bowman expressly disclaims beneficial ownership of such
shares for all purposes.
(c) Messrs. Fitzgibbons and Michas are directors of MLCP, which manages Merrill
Lynch Capital Appreciation Partnership No. VIII, L.P. and ML Offshore LBO
Partnership No. VIII, L.P. Such persons may be deemed to beneficially own
the 6,044,892 shares of Common Stock held by such partnerships. MLCP is part
of a group that beneficially owns 9,071,154 shares of Common Stock.
Beneficial ownership of such shares by such individuals is expressly
disclaimed.
SECTION 16(A) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's executive officers, directors and greater than 10% stockholders file
certain reports with respect to beneficial ownership of the Company's equity
securities. Based on information provided to the Company by each director and
executive officer, the Company believes all reports required to be filed in 1995
were timely filed.
6
<PAGE> 8
EXECUTIVE COMPENSATION
The following table shows, for the years ending December 31, 1995, 1994 and
1993, the cash compensation paid by the Company and its subsidiaries, as well as
certain other compensation paid or accrued for these years, to the Company's
Chief Executive Officer and the four most highly compensated executive officers
who were serving as executive officers at December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(B)
------------
ANNUAL COMPENSATION SECURITIES
NAME AND PRINCIPAL -------------------- OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS($) COMPENSATION(A) OPTIONS(#) COMPENSATION(C)
- -------------------------- ---- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
John F. Fiedler(d)........ 1995 $ 450,000 $415,752 $ 0 0 $70,152
Chairman and 1994 $ 221,282 $200,000 $14,287(e) 40,000 $ 0
Chief Executive Officer
Gary P. Fukayama.......... 1995 $ 212,000 $211,798 $ 0 0 $27,445
Executive Vice President 1994 $ 192,100 $224,266 $ 0 0 $36,673
1993 $ 169,125 $ 79,868 $ 0 20,000 $42,189
Fred M. Kovalik(d)........ 1995 $ 236,300 $ 36,155 $ 0 0 $36,101
Executive Vice President 1994 $ 187,500 $228,300 $24,700(e) 25,000 $ 8,250
Ronald M. Ruzic........... 1995 $ 219,000 $197,413 $ 0 0 $67,220
Executive Vice President 1994 $ 197,469 $250,343 $ 0 0 $70,311
1993 $ 182,821 $225,528 $ 0 20,000 $43,669
Terry A. Schroeder(d)..... 1995 $ 176,800 $ 99,682 $ 0 0 $24,982
Vice President 1994 $ 170,000 $ 69,297 $23,291(e) 0 $10,788
1993 $ 14,167 $ 0 $ 0 10,000 $ 0
</TABLE>
- ---------------
(a) Excludes certain non-cash benefits that are deemed compensation for federal
income tax purposes. These non-cash benefits are provided by the Company to
its executive officers and include group term life insurance and
automobiles. The net cost to the Company of such benefits during 1995, 1994
and 1993 did not exceed the lesser of $50,000 or 10% of the total of annual
salary and bonus for each named executive officer.
(b) No restricted stock awards or long-term incentive plan payouts were made in
1995, 1994 or 1993.
(c) Includes amounts contributed by the Company on behalf of the named executive
officers during 1995, 1994 and 1993 pursuant to the provisions of the
Borg-Warner Automotive, Inc. Retirement Savings Plan and credits made
pursuant to the Borg-Warner Automotive, Inc. Retirement Savings Excess
Benefit Plan.
(d) Messrs. Fiedler and Kovalik became executive officers of the Company in
1994. Mr. Schroeder was first employed by the Company in November, 1993.
(e) Represents gross-up to cover taxes incurred for relocation expense
reimbursement.
7
<PAGE> 9
STOCK OPTIONS
During 1995, the named executive officers were not granted any stock
options. The following table sets forth information with respect to unexercised
options held by the named executive officers at the end of 1995. No such
executive officer exercised any options during 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)(B)
------------------------------ ---------------------------
NAME EXERCISABLE UNEXERCISABLE(A) EXERCISABLE UNEXERCISABLE
- ------------------------------------------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
John F. Fiedler............................ 0 40,000 $ 0 $ 337,500
Gary P. Fukayama........................... 36,232 10,768 $ 541,612 $ 90,736
Fred M. Kovalik............................ 0 25,000 $ 0 $ 34,250
Ronald M. Ruzic............................ 46,300 11,700 $ 829,185 $ 115,900
Terry A. Schroeder......................... 5,000 5,000 $ 43,400 $ 43,400
</TABLE>
- ---------------
(a) Represents shares that could not be acquired by the named executive officer
as of December 31, 1995, and that become exercisable based upon the
satisfaction of certain periods of employment.
(b) Represents the difference between the exercise price and the share price of
Common Stock as of December 31, 1995.
LONG-TERM INCENTIVE PLANS
The following table sets forth information with respect to the named
executive officers concerning long-term incentive plan awards made during 1995
pursuant to the Company's Executive Stock Performance Plan.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK
NUMBER OF PERFORMANCE OR PRICE-BASED PLANS(C)
SHARES, UNITS OTHER PERIOD -------------------------------
OR OTHER UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#)(A) OR PAYOUT(B) ($) ($) ($)
- ------------------------------------- ------------- ---------------- ------- --------- ---------
<S> <C> <C> <C> <C> <C>
John F. Fiedler...................... 595 32 months 148,750 595,000 1,041,250
Gary P. Fukayama..................... 210 32 months 52,500 210,000 367,500
Fred M. Kovalik...................... 210 32 months 52,500 210,000 367,500
Ronald M. Ruzic...................... 210 32 months 52,500 210,000 367,500
Terry A. Schroeder................... 100 32 months 25,000 100,000 175,000
All executive officers as a
group(10).......................... 1,775 32 months 443,750 1,775,000 3,106,250
All employees who are not executive
officers, as a group(4)............ 133.333 32 months 33,333 133,333 233,333
</TABLE>
- ---------------
(a) Performance units with an initial value of $1,000 per unit.
(b) The performance period is April 18, 1995 through December 31, 1997.
(c) Payouts under the Company's Executive Stock Performance Plan are based upon
the percentile rank of the total shareholder return of the Company among the
total shareholder returns of a peer group of companies. Total shareholder
return is based on a formula relating to market price appreciation of the
Company's common stock and dividend return as compared to the peer group
companies' stock market price appreciation and dividend return.
8
<PAGE> 10
EMPLOYMENT AGREEMENTS
The Company has an employment agreement (the "Agreement") with Mr. Fiedler
for a term of three years that provides for, among other things, a lump sum
payment to be made to Mr. Fiedler if his employment is terminated for reasons
other than expiration of the three year term, death, "disability", "cause" (as
those terms are defined in the Agreement) or resignation. The lump sum payment
shall be the greater of one and one-half (1-1/2) times the annual base salary on
the date of termination or the balance of salary which would be paid for the
remaining term of employment. Mr. Fiedler has agreed not to compete with the
Company for a period of two years after termination of employment or to disclose
confidential information.
The Company has entered into Change of Control Employment Agreements (the
"Employment Agreements") with each of the named executive officers. Below is a
general description of certain terms and conditions of the Employment
Agreements.
In the event of a "Change of Control" of the Company followed within three
years by (1) the termination of the executive's employment by the Company for
any reason other than death, disability, or "Cause" or (2) the termination of
the executive's employment by the executive for "Good Reason", the Employment
Agreements provide that the executive shall be paid a lump sum cash amount equal
to three times the executive's annual base salary and recent average bonus, and
a lump sum cash amount equal to three times the Company's retirement
contributions which would have been made on behalf of the executive in the first
year after termination of employment. In addition, the executive is entitled to
continued employee welfare benefits for three years after termination of
employment, and to out placement services.
"Change of Control" means, subject to certain exceptions, (a) the
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) of 20% or more of
either (i) the then outstanding shares of common stock of the Company or (ii)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors, (b) a change in
the majority of the board of directors, (c) a major corporate transaction, such
as a merger or sale of substantially all of the Company's assets, which results
in a change in the majority of the Board or a majority of shareholders or (d) a
liquidation of the Company.
"Cause" means the willful and continued failure of the executive to perform
substantially the executive's duties or the willful engaging by the executive in
illegal conduct or gross misconduct materially injurious to the Company.
"Good Reason" means the diminution of responsibilities, assignment to
inappropriate duties, failure of the Company to comply with compensation or
benefit provisions, transfer to a new work location more than 35 miles from the
executive's previous work location, a purported termination of the Employment
Agreement by the Company other than in accordance with the Employment Agreement,
or failure of the Company to require any successor to the Company to comply with
the Employment Agreement.
Messrs. Fukayama and Ruzic are "Executives" as defined in the Borg-Warner
Automotive, Inc. Transitional Income Guidelines for Executive Employees (the
"Guidelines") and are eligible to receive Transitional Income (as defined in the
Guidelines) if their employment is terminated as a result of (1) a reduction in
workforce, (2) elimination of their job position, or (3) an inability to
9
<PAGE> 11
perform the duties of their job for reasons beyond their control. Transitional
Income will also be paid if employment is terminated within one year after a
"Change of Control" or "Sale of the Company." An Executive eligible for
Transitional Income shall receive up to 12 monthly payments in an amount equal
to the Executive's monthly salary at the time of termination and a lump sum
payment based upon the Executive's most recent annual bonus award. Other
benefits provided pursuant to the guidelines include life, medical, dental,
health, accident and disability insurance coverage for up to 12 months after
termination of employment. Payments under the Guidelines will not be made where
termination of employment is as a result of a Change of Control of the Company
and the executive officer has entered into a Change of Control Employment
Agreement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the Compensation Committee of the Board of Directors included
Messrs. Fitzgibbons, Glaske, Michas and Trauscht. Mr. Trauscht was formerly an
officer of the Company. Each of Messrs. Fitzgibbons and Michas is a Director of
MLCP; MLCP and certain of its affiliates (the "ML Entities") may be deemed to
beneficially own approximately 38.76% of the outstanding Common Stock of the
Company and approximately 45% of the outstanding Common Stock of BW-Security,
the predecessor parent corporation of the Company. In 1987, BW-Security acquired
its predecessor corporation ("Old Borg-Warner") in a leveraged buyout led by
MLCP.
In January 1993, BW-Security distributed all of the outstanding Common
Stock of the Company as a dividend to the holders of BW-Security common stock
(the "Spin-Off"). In August 1993, the Company completed an initial public
offering ("IPO") of approximately 3.6 million shares of its Common Stock. During
1995, affiliates of the ML Group did not receive any fees from the Company.
Affiliates of the ML Group may provide investment banking and other services to
the Company if retained by the Board of Directors.
Pursuant to a Registration Rights Agreement entered into by certain current
stockholders with the Company in connection with the Spin-Off, Merrill Lynch,
Pierce, Fenner & Smith ("MLPF&S") has the right to act as the underwriter with
respect to public offerings requested under the Agreement.
------------------------
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings by
reference, including this Proxy Statement, in whole or in part, the following
Compensation Committee Report on Executive Compensation and Performance Graph
shall not be incorporated by reference into any such filings.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
setting and administering the policies that govern base salary, annual bonus,
long-term incentives and stock ownership programs for the executive officers of
the Company.
OVERALL POLICY
The Company's executive compensation program is designed to link executive
compensation to corporate performance. To this end, the Company has developed an
overall compensation strategy and specific compensation plans that tie executive
compensation to the Company's success in meeting
10
<PAGE> 12
specified performance goals. The overall objectives of this strategy are to
attract and retain the best possible executive talent, to motivate these
executives to achieve goals that support the Company's business strategy, to
link executive and stockholder interests through equity-based plans, and to
provide a compensation package that is based on individual performance as well
as overall business results.
The Compensation Committee reviews the Company's executive compensation
program annually. The review includes a comparison of current total compensation
levels (including base salary, annual bonus and long-term incentives) to those
provided at other companies of similar size and complexity in the durable
manufacturing sector, with data being collected primarily from several prominent
compensation surveys (the "Compensation Surveys"). In addition to survey
information, the Company also considers the compensation reported for executives
by the companies included in a peer group of automotive companies (the "Peer
Group Companies"). Financial results of the Peer Group Companies are used to
compare shareholder returns on the performance graph. The Compensation Committee
may adjust compensation levels based upon information obtained from the
Compensation Surveys and the Peer Group Companies.
The Compensation Committee determines the compensation of the five most
highly compensated corporate executives, reviews the policies and philosophy set
for the next level of key executives (approximately 125), and evaluates and
recommends all long-term incentive plans. This process is designed to ensure
congruity throughout the executive compensation program. In reviewing the
individual performance of the executives whose compensation is detailed in this
proxy statement (other than Mr. Fiedler), the Compensation Committee takes into
account the views of Mr. Fiedler.
The key elements of the Company's executive compensation program are base
salary, annual bonus and long-term incentives which consist of stock options,
Company stock and cash compensation. The Compensation Committee's policies with
respect to each of these elements, including the basis for the compensation
awarded to Mr. Fiedler, the Company's CEO during 1995, are discussed below.
BASE SALARY
Annual salary adjustments are determined by the Compensation Committee by
examining each executive officer's current responsibilities and performance and
by comparing the officer's current base salary to competitive median salaries as
reported in the Compensation Surveys.
Mr. Fiedler was CEO of the Company in 1995, with a base salary of $450,000.
The Compensation Committee considered the scope and complexity of Mr. Fiedler's
position, the Company's recent performance, his prior salary, and the median
salaries paid for similar positions as reported in the Compensation Surveys.
ANNUAL BONUS
The Company's executive officers are eligible participants in an annual
cash bonus plan. Performance objectives are established at the beginning of each
year for the Company and each of its business units. The performance objectives
are based on the increase in value of the Company or business unit over the
prior year. Value is determined by a formula taking into account the current
earning power of the Company or business unit as well as cash flow.
11
<PAGE> 13
Eligible executives are assigned threshold, target and maximum bonus
levels. For those executive officers responsible for the entire Company, 100% of
their bonus opportunity is based on the increase in value for the Company; for
those executive officers responsible for a business unit, 20% of the bonus
opportunity is based on the increase in value for the Company, and 80% is based
on the increase in value for the business unit. If the threshold level of these
performance measures is not met, no bonus is paid.
Executive officers are also eligible for an additional bonus payment under
the carryover feature of the annual bonus plan (the "Carryover Bonus"). The
Compensation Committee believes that the Carryover Bonus encourages a longer
term perspective while continuing to reward participants for the achievement of
annual goals. Carryover Bonus allows participants in the bonus plan to
earn--over a two year period--any bonus opportunity which was not attained
during the current Plan Year. Executives can earn the balance of the unattained
bonus opportunity whenever cumulative value targets are achieved during the
subsequent two years. No Carryover Bonus from a prior year is earned if the
threshold level of performance for the current year is not achieved.
The potential annual total cash compensation (base salary plus bonus) for
each executive officer is targeted at the 65th percentile of annual total cash
compensation levels as reported in the Compensation Surveys for similar
positions. Carryover Bonus from prior years may increase the annual bonus
opportunity of the executive officers above the target level.
Although annual bonuses depend primarily on the achievement of performance
objectives as described above, the Compensation Committee may adjust bonus
awards based on other financial or non-financial actions that the Compensation
Committee believes will benefit long-term stockholder value. No adjustments were
made in 1995.
In 1995, the increase in value of the Company resulted in a bonus payout
between the target opportunity and the maximum opportunity. As a result Mr.
Fiedler earned a $415,752 cash bonus for the year; there was no Carryover Bonus
opportunity from prior years. Mr. Fiedler's total cash compensation (salary and
bonus) for 1995 approximates the 55th percentile of total cash compensation for
CEOs as reported in the Compensation Surveys.
LONG-TERM INCENTIVE PLANS
STOCK OPTIONS
The Company uses stock incentives in the form of stock options to align the
executives' interests with those of the stockholders and to motivate the
executives to continue the long-term focus required for the Company's future
success. Executives are granted stock awards based on their level of
responsibility for the management and growth of the Company and individual
contribution. Current base salary and annual incentive opportunity, as well as
size and timing of previous stock awards, are also considered when determining
stock awards.
All stock options are granted at no less than the fair market value of the
stock on the date of grant. The number of shares awarded to each executive
officer is determined by an analysis of median competitive data provided in the
Compensation Surveys. The analysis is based on the Company's current stock price
and the projected stock price appreciation rate.
None of the named executive officers received an option grant in 1995.
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<PAGE> 14
EXECUTIVE STOCK PERFORMANCE PLAN
The Compensation Committee recommended to the Board of Directors and the
Board of Directors approved, subject to the approval of the stockholders at the
1996 annual meeting of stockholders, the adoption of the Borg-Warner Automotive,
Inc. Executive Stock Performance Plan. This plan is a long-term incentive plan
for selected top executives including the named executive officers. It is
designed to provide competitive payouts at the end of a three year period
relative to how well the Company performs against a peer group of automotive
companies in terms of total shareholder return ("TSR"). The Compensation
Committee believes that the Executive Stock Performance Plan will help to focus
key senior executives on the long-term overall value of the Company to the
investor community.
The award levels under the Executive Stock Performance Plan are targeted to
pay at approximately the 65th percentile of total direct compensation (as
reported by the Compensation Surveys) for 65th percentile TSR performance
relative to the TSR performance of the Peer Group Companies.
The plan is administered by a committee which consists solely of two or
more "outside directors" as defined by Section 162(m) of the Code and the
regulations thereunder.
For the period between April 16, 1995 to December 31, 1997, Mr. Fiedler has
a proposed target award of 595 performance units at a value of $1,000 per unit.
Depending upon the performance of the Company, Mr. Fiedler's final award can
range from $0 if the Company's TSR performance is below the 25th percentile of
the TSR performance of the Peer Group Companies to $1,041,250 if the Company's
TSR performance is at the 90th percentile (or higher) of the TSR performance of
the Peer Group Companies.
OTHER
Because the taxable compensation of any of the named executives is not
anticipated to exceed one million dollars in 1996, the Compensation Committee
does not believe that the limitation on the tax deductibility of executive
compensation in excess of one million dollars (IRC Section 162(m)) will effect
the Company during 1996. The Compensation Committee believes, however, that
subject to shareholder approval, the provisions of the Company's Executive Stock
Performance Plan meet the requirements of IRC Section 162(m).
The Compensation Committee will periodically review its compensation plans
to determine their compliance with IRC Section 162(m). The Compensation
Committee may, however, recommend that compensation be paid to executive
officers that may not be deductible when such payments are deemed in the best
interest of shareholders.
COMPENSATION COMMITTEE
Albert J. Fitzgibbons, III, Chairman
Paul E. Glaske Alexis P. Michas
Donald C. Trauscht
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<PAGE> 15
PERFORMANCE GRAPH
COMPARISON OF TWENTY-NINE MONTH CUMULATIVE TOTAL RETURN
AMONG COMPANY, S&P 500 INDEX AND PEER GROUPS (1)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD PEER GROUP
(FISCAL YEAR COVERED) BWA (2) SIC 3714 (3) DJOTA (4) (5) S&P 500 (6)
<S> <C> <C> <C> <C> <C>
8/13/93 100 100 100 100 100
9/30/93 105.50 106.50 103.35 101.79 102.99
12/31/93 112.00 114.40 111.84 121.21 105.39
3/31/94 119.99 109.22 107.84 116.61 101.39
6/30/94 91.39 100.34 100.49 110.70 101.82
9/30/94 103.04 99.99 100.24 106.00 106.79
12/30/94 102.70 97.08 97.16 104.07 106.78
3/31/95 99.73 96.42 100.86 103.12 117.17
6/30/95 117.92 106.61 108.46 114.49 128.36
9/29/95 133.00 105.40 112.00 118.13 138.56
12/29/95 133.70 103.47 110.04 121.89 146.91
</TABLE>
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(1) Assumes $100 invested on August 13, 1993; assumes dividends reinvested for
period of August 13, 1993 through December 31, 1995.
(2) BWA--Borg-Warner Automotive, Inc. (As compiled by Media General Financial
Services of Richmond, VA).
(3) SIC Code 3714--Motor Vehicle Parts & Accessories (As compiled by Media
General Financial Services of Richmond, VA).
(4) DJOTA--Dow Jones Other Automobile Parts and Equipment (As compiled by Dow
Jones & Co., New York, NY). The Company will delete the DJOTA index from the
Performance Graph in subsequent years. The Company has determined that the
majority of companies in the DJOTA are primarily either suppliers to the
automotive aftermarket or have significant nonautomotive businesses.
(5) Peer Group--Consists of the following companies: Arvin Industries, Inc.,
Chrysler Corporation, Coltec Industries, Cummins Engine, Inc., Dana
Corporation, Detroit Diesel Corporation, Eaton Corporation, Ford Motor
Company, General Motors Corporation, Johnson Controls, Inc., Lear Seating
Company, Magna International, Inc. Class A, Mascotech, Inc., Smith AO
Corporation Class A, SPX Corporation, Timken Company, TRW, Inc. and Varity
Corporation (As compiled by Media General Financial Services of Richmond,
VA).
(6) S&P 500--Standard & Poor's 500 Total Return Index (As compiled by Media
General Financial Services of Richmond, VA).
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<PAGE> 16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As part of a recapitalization, BW-Security distributed all of the
outstanding Common Stock of the Company to BW-Security's stockholders of record
as of January 22, 1993 in the Spin-Off. The ML Entities currently hold
approximately 38.76% of the voting power of the Company and approximately 45% of
the outstanding Common Stock of BW-Security. In connection with the Spin-Off,
the Company and BW-Security entered into certain agreements, including, but not
limited to, a Distribution and Indemnity Agreement, a Service Agreement and a
Tax Sharing Agreement. The terms of such agreements were approved by the Board
of Directors of the Company. Subsequent to the Spin-Off, the Company and
BW-Security entered into a Government Relations Service Agreement.
The Distribution and Indemnity Agreement (the "Distribution Agreement")
provides for, among other things, the principal corporate transactions required
to effect the Spin-Off and certain other agreements governing the relationship
between the Company and BW-Security with respect to or in consequence of the
Spin-Off. Subject to certain exceptions, the Distribution Agreement provides for
certain cross-indemnities designed principally to place financial responsibility
for the liabilities of BW-Security and its subsidiaries with BW-Security, and
financial responsibility for the liabilities of the Company, or related to its
automotive business, with the Company.
The Service Agreement provides that the Company will sublease office space
from BW-Security until May 31, 1999 (or, if earlier, the expiration or
termination of BW-Security's current lease), with the amounts payable under such
sublease to be equal to 50% of the rent and common overhead expenses payable by
BW-Security related to its lease of the premises. In 1995, such amounts paid to
BW-Security aggregated approximately $881,000.
The Company is included in the consolidated federal income tax returns of
BW-Security through December 31, 1992.
Generally, the Tax Sharing Agreement provides that if any Internal Revenue
Service audit adjustment results in a Tax Benefit (as defined in the Tax Sharing
Agreement) to the Company, the Company must pay to BW-Security the amount of
such Tax Benefit and if any audit adjustment results in a Tax Detriment (as
defined in the Tax Sharing Agreement), BW-Security must pay to the Company the
amount of such Tax Detriment.
Under the Tax Sharing Agreement, BW-Security retains the right to resolve
any disputes with the IRS with respect to pre-Spin-Off periods involving returns
filed by BW-Security which include the Company or its subsidiaries. The party
responsible for filing any other returns will control audits and controversies
with respect to those returns.
The Company has agreed to indemnify BW-Security (but not its stockholders)
against any liability resulting from any transaction after the date of the
Spin-Off involving the stock or assets, or any combination thereof, of the
Company or any of its subsidiaries which causes the Spin-Off to fail to qualify
as tax-free under Section 355 of the Internal Revenue Code (the "Code").
The Company has agreed that for a three-year period following the date of
the Spin-Off, it will not (a) cease to be engaged in the active conduct of a
trade or business within the meaning of the Code, (b) except in certain limited
circumstances, redeem shares of the Company's stock, or (c) liquidate or merge
with another corporation, unless an opinion is obtained from counsel of the
Company to the effect that such transaction would not adversely affect the
federal income tax consequences of the Spin-Off to the Company, BW-Security or
BW-Security's stockholders.
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<PAGE> 17
Pursuant to the Government Relations Service Agreement, BW-Security
performed for the Company such services relating to government affairs and
relations with the legislative, regulatory and executive branches of the federal
government as the Company requested. For such services in 1995, the Company paid
BW-Security 40% of BW-Security's costs and expenses incurred in maintaining the
staff required to perform such services, or approximately $56,000. The Agreement
was terminated by the Company in May 1995.
Also during 1995, BW-Security performed services for the Company relating
to risk management and other office services. The Company paid BW-Security
approximately $130,000 in 1995.
2. APPROVAL OF THE COMPANY'S EXECUTIVE STOCK PERFORMANCE PLAN
GENERAL
At the meeting there will be presented to the stockholders a proposal to
approve and ratify the adoption by the Board of Directors of the Executive Stock
Performance Plan (the "Plan").
Section 162(m) of the Internal Revenue Code (the "Code") limits the
allowable deduction for compensation paid or accrued with respect to the chief
executive officer and each of the four most highly compensated executive
officers of a publicly held corporation to no more than $1,000,000 per year.
Certain performance based compensation which has been approved by stockholders,
however, is not subject to the deduction limitation. The Plan has been drafted
to allow the Company to claim the deduction for awards and benefits paid
pursuant to the Plan.
Benefits and amounts to be received under the Plan are not currently
determinable. For awards made for fiscal year 1995, see the table on page 8 for
benefits and amounts estimated and allocated for each of the named executive
officers, all executive officers as a group and all employees who are not
executive officers as a group.
DESCRIPTION OF THE PLAN
The following description of the Plan is intended as a summary only and is
qualified in its entirety by reference to the Plan itself. A copy of the Plan
will be furnished by the Company to any stockholder upon written request to the
Corporate Secretary.
The purpose of the Plan is to motivate senior executives of the Company to
improve the long-term performance of the Company as a whole, relative to its
Peer Group, to enable the Company to grow in value and serve the long-term
interests of the stockholders.
Pending stockholder approval, the Plan was effective as of April 18, 1995.
The Plan is administered by a committee which consists solely of two or
more "outside directors" as defined in Section 162(m) of the Code and the
regulations thereunder (the "Committee").
Participation in the Plan is limited to executives of the Company who are
designated to be eligible by the Committee. Such executives shall (a) be part of
a "select group of management or highly compensated employees" (as that phrase
is used under Department of Labor Regulation Section 2520.104-23) and (b)
generally be those executives who are in a position to make significant
contributions to the earnings of the Company. Participation in the Plan during
any performance period does not guarantee participation in any subsequent
performance period. Each of the named executive officers are participants in the
Plan during the initial performance period.
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<PAGE> 18
The Committee assigns threshold, target and maximum performance awards to
each participant prior to the beginning of a performance period. The awards are
expressed in terms of performance units, each with an initial value of $1,000.
The initial performance period is 32 months (subsequent performance periods
shall be 3 years). The performance award for each performance period shall be
based on the percentile rank of total shareholder return ("TSR") of the Company
among the TSR of a peer group* of companies during the performance period. TSR
can be expressed as a formula:
share price at end of period-share price at start of period+dividends per share
paid during period
share price at start of period
During the initial performance period, Company TSR at the 65th percentile
among peer group companies will result in a payout per performance unit of
$1,000. Payout per performance unit will be greater than $1,000 when Company TSR
is greater than the 65th percentile and less than $1,000 when Company TSR is
less than the 65th percentile. No performance payout is made if Company TSR is
below the 25th percentile.
Performance awards are payable 60% in Company common stock and 40% in cash.
The maximum number of shares of Company common stock available for payment of
performance awards under the Plan shall not exceed 400,000.
The Committee, in its discretion, may decrease, but not increase, the size
of a participant's target performance award once the performance period has
begun; the Committee may decrease, but not increase, the amount of a performance
award payout once the comparative results from peer group companies have been
considered.
In the event of a change of control, a performance period shall end on the
effective date of the change of control. TSR for a performance period in which a
change of control occurs shall be determined by substituting the change of
control price for the share price at the end of the performance period in the
TSR formula.
Change of control price is defined as the higher of (a) the highest
reported sales price of a share of the company's common stock as reported on the
New York Stock Exchange composite tape during the 60-day period prior to and
including the date of a change of control, or (b) if the change of control is
the result of a tender or exchange offer or a business combination, the highest
price per share of common stock paid in such tender or exchange offer or
business combination.
A change of control is defined as, subject to certain exceptions, (a) the
acquisition by any individual, entity or group (within the meaning of section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) of 20% or more of
either (i) the then outstanding shares of common stock of the Company or (ii)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors, (b) a change in
the majority of the Board of Directors, (c) a major corporate transaction, such
as a merger or sale of substantially all of the Company's assets which results
in a change in the majority of the Board of Directors or a majority of
shareholders or (d) a liquidation of the Company.
- ---------------
*See footnote 5 of the performance graph on page 14 for a listing of the peer
group companies.
17
<PAGE> 19
The Plan may be amended in whole or in part by the Board of Directors of
the Company at any time (including amendments which may have the effect of
increasing the cost of the Plan to the Company).
VOTE REQUIRED AND BOARD OF DIRECTOR'S RECOMMENDATION
Approval of the Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock represented and voting in person or by
proxy at the Annual Meeting.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE PLAN IS IN THE BEST
INTERESTS OF ALL STOCKHOLDERS AND, ACCORDINGLY, RECOMMENDS A VOTE FOR THE PLAN.
YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
3. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors proposes that the stockholders approve the selection
by the Finance and Audit Committee of Deloitte & Touche LLP to serve as the
Company's independent auditors for the 1996 fiscal year. The Board of Directors
anticipates that representatives of Deloitte & Touche LLP will be present at the
meeting to respond to appropriate questions, and will have an opportunity, if
they desire, to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF DELOITTE &
TOUCHE LLP AS THE INDEPENDENT AUDITORS AND YOUR PROXY WILL BE SO VOTED UNLESS
YOU SPECIFY OTHERWISE.
OTHER INFORMATION
The Company has no reason to believe that any other business will be
presented at the Annual Meeting, but if any other business shall be presented,
votes pursuant to the proxy will be cast thereon in accordance with the
discretion of the persons named in the accompanying proxy.
Stockholder proposals to be presented at the 1997 Annual Meeting must be
received by the Company on or before November 26, 1996, for inclusion in the
proxy statement relating to that meeting. Proposals should be sent to the
attention of the Corporate Secretary. In addition, the Company's By-laws contain
certain requirements with respect to the submission of proposals and the
nomination of directors at any stockholder meeting.
The Company will furnish, without charge, to each person whose proxy is
being solicited, upon request of such person, one copy of the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, as filed with the
Securities and Exchange Commission. Requests for copies of such report should be
directed to the Communications Department, 200 South Michigan Avenue, Chicago,
Illinois 60604.
BORG-WARNER AUTOMOTIVE, INC.
18
