SKYLINE CORPORATION
2520 By-Pass Road
P.O. Box 743
Elkhart, Indiana 46515
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 16, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Skyline Corporation ("Skyline") will be held at the Shenandoah Room, in the
Ramada Inn, 3011 Belvedere Road, Elkhart, Indiana, on Monday, September 16,
1996, at 9:00 a.m., Eastern Standard Time, for the following purposes:
1. To elect a Board of Directors for the ensuing year, or until their
successors are elected and qualify.
2. To transact such other business as may properly come before the
meeting,or any adjournment thereof.
The Board of Directors has fixed the close of business on July 17,
1996, as the record date for the determination of shareholders entitled to
notice of, and to vote at, said meeting.
By Order of the Board of Directors
RONALD F. KLOSKA
Vice-Chairman,
Deputy Chief Executive Officer
and Chief Administration Officer
August 1, 1996
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.<PAGE>
SKYLINE CORPORATION
2520 By-Pass Road, P.O. Box 743
Elkhart, Indiana 46515
August 1, 1996
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of Skyline
Corporation ("Skyline") for use at the Annual Meeting of Shareholders to be
held September 16, 1996. The shares represented by properly executed proxies
received prior to the meeting will be voted. If the shareholder directs in
the proxy how the shares are to be voted, they will be voted accordingly.
When no direction has been given by the shareholder, it is the intention of
the proxies named in the proxy to vote the same in accordance with their best
judgment. Any proxy given may be revoked by the shareholder at any time prior
to the voting of the proxy. The approximate date on which this proxy
statement and the form of proxy are first sent or given to security holders
is August 1, 1996.
VOTING SECURITIES
Only shareholders of record as of the close of business on July 17, 1996, or
their proxies are entitled to vote at the meeting. As of that date, Skyline
had outstanding 10,429,844 shares of Common Stock having one vote per share.
ELECTION OF DIRECTORS
Each share of Common Stock is entitled to one vote, which means that the
holders of more than 50% of the shares voting for the election of Directors
can elect all of the Directors and approve any other matter as may properly
come before the meeting if they choose to do so.
It is proposed that nine Directors be elected at the meeting, each to serve
until the next Annual Meeting of Shareholders and until his successor is
elected and qualifies.
It is intended that the votes authorized by the enclosed proxy will be cast
for the election of the nine nominees for Directors whose names are set forth
below. In the event that one or more of the nominees shall unexpectedly
become unavailable for election, the votes will be cast, pursuant to
authority granted by the enclosed proxy, for such person or persons as may be
designated by the present Board of Directors or the Board may be reduced
accordingly. All of the nominees for whom the proxies intend to vote have
agreed to serve as Directors if elected.
Information about the nominees for election as Directors and the beneficial
ownership of Skyline Common Stock by directors as a group is as follows:<PAGE>
Shares of Skyline
Common Stock bene-
Skyline ficially Owned at Percent
Name, Title, Address Director July 1, 1995 of
and Principal Occupation Age Since Directly or Indirectly Class(3)
ARTHUR J. DECIO 65 1959 1,477,784(1) 14.2%
Chairman, Skyline Corporation,
2520 By-Pass Road, Elkhart,IN
46514. Chairman of the Board
and Chief Executive Officer.
Mr. Decio is also a Director
of NIPSCO Industries, Inc.,
Hammond, Indiana, and Quality
Dining, Inc., Mishawaka,
Indiana.
TERRENCE M. DECIO 44 1989 30,080(2)
Senior Executive Vice
President, Skyline Corporation,
2520 By-Pass Road Elkhart,
Indiana 46514. Mr. Decio is
also a Director of KeyCorp. of
Northern Indiana, South Bend,
Indiana.
JERRY HAMMES 64 1986 13,000
2015 West Western Avenue,
South Bend, Indiana 46629.
President of Romy Hammes,Inc.,
a bank holding company and real
estate investment company,
South Bend, Indiana, and
Chairman of Peoples Bank of
Kankakee County, a bank,
Bourbonnais, Illinois.
RONALD F. KLOSKA 62 1965 28,600
Vice-Chairman, Deputy Chief
Executive Officer and Chief
Administration Officer,
Skyline Corporation, 2520
By-Pass Road, Elkhart,
Indiana 46514.
WILLIAM H. LAWSON 59 1975 3,000
Chairman of the Board and Chief
Executive Officer, Franklin
Electric Co., Inc., 400 East
Spring Street, Bluffton,
Indiana 46714. Chairman of the
Board, Chief Executive Officer
and a Director of Franklin
Electric Company, Inc., a
manufacturer of electric
motors, Bluffton, Indiana.
Mr. Lawson is also a Director
of JSJ Corporation, Sentry
Insurance, a Mutual Company.<PAGE>
DAVID T. LINK 59 1994 600
Dean and Professor of Law,
Notre Dame Law School,
University of Notre Dame,
Notre Dame, Indiana 46556.
ANDREW J. McKENNA 66 1971 12,300
Chairman and CEO, Schwarz Paper
Company,8338 North Austin
Avenue, Morton Grove, Illinois
60053. Chairman and CEO of
Schwarz Paper Company, a
national printer, converter
and distributor of packaging
and promotional materials,
Morton Grove, Illinois. Mr.
McKenna is also a director of
First National Bank of Chicago,
Tribune Company, Aon
Corporation, McDonalds
Corporation and Dean Foods
Company.
WILLIAM H. MURSCHEL 51 1992 1,610
President and Chief Operations
Officer, Skyline Corporation,
2520 By-Pass Road, Elkhart,
Indiana 46514. Mr. Murschel was
Vice President of Skyline from
June 1986 through September 16,
1991.
DALE SWIKERT 66 1963 8,791
224 Carnation Drive, Nampa,
Idaho 83687. President,
Interstate West Corp., Private
Investor and former President
of Vanamera Industries, Ltd.,
Kelowna, British Columbia, a
Canadian manufacturer of van
conversions.
ALL NOMINEES AND
OFFICERS AS A GROUP 1,576,065 15.1%<PAGE>
(l) Includes 83,500 shares in The Arthur J. Decio Foundation, a charitable
foundation, of which Mr. Decio is a trustee. Mr. Decio disclaims any
beneficial interest with respect to these shares.
(2) Terrence M. Decio is the son of Arthur J. Decio.
(3) Less than one percent unless otherwise indicated.
Information about Board and Committee meetings is as follows:
The Audit Committee consisted of Messrs. Hammes, McKenna, Link and Swikert.
It met two times during the fiscal year ended May 31, 1996. The Committee
meets with the accounting firm which conducts the annual audit of Skyline's
books, reviews auditors' recommendations, reviews the independence of
Skyline's auditors and considers the range of audit and non-audit fees. It
also meets with the internal audit staff and Chief Financial Officer, reviews
the scope and adequacy of Skyline's internal auditing program and reports its
findings to the Board with any recommendations it considers appropriate.
The Governance and Compensation Committee consisted of Messrs. McKenna,
Hammes, Lawson and Link. It met two times during the last fiscal year. The
Committee establishes compensation for the Chief Executive Officer and
consults with the Chief Executive Officer concerning compensation for other
elected officers of the Company. The Committee also recommends to the Board
the selection of nominees for election as directors, and considers the
performance of incumbent directors in determining whether to nominate them
for re-election. Nominees recommended by shareholders will be considered upon
their submission in writing by the shareholders to Skyline prior to the end
of the fiscal year immediately preceding the next regular annual shareholders
meeting.
The Executive Committee of the Board of Directors consisted of Messrs.
Arthur J. Decio, McKenna, Hammes, Lawson and Link, and met two times during
the last fiscal year. This Committee exercises the powers of the Board of
Directors in the management of the business affairs of Skyline, subject to
the approval of the full Board of Directors at the next regular or special
meeting.
The Board of Directors met or took action seven times during the last
fiscal year. Every Board member was present at all Board meetings and
meetings of all committees of which he was a member, except that two
Directors did not attend one Board meeting each, and one Director did not
attend one committee meeting.
Based solely upon a review of Forms 3 and 4 provided to Skyline and on
certain written representations, David T. Link, a director of Skyline, filed
one report on Form 4 after the deadline for filing that report, concerning
the purchase of 500 shares of Skyline common stock by his spouse and the
purchase of 100 shares of Skyline common stock jointly by him and his spouse.<PAGE>
CERTAIN OTHER BENEFICIAL OWNERS
The following person, entities or "group" as indicated are known to
Skyline to own beneficially at least five percent (5%) of Skyline's common
stock or are members of management identified in the summary compensation
table but who are not on Skyline's Board. The beneficial ownership of Skyline
common stock by the members of its Board and its nominees for directors is
shown in the table under "Election of Directors" above.
Shares of Skyline Common
Name and Address Stock Beneficially Owned Percent of
of Beneficial Owner at July 1, 1995 Class (l)
Joseph B. Fanchi 100
Vice President, Finance and Treasurer
2520 By-Pass Road
Elkhart, Indiana 46514
Orbis Investment Management 1,014,000 9.7%
Limited (2)
Harold Hayes Frith Building
55 Par-Ia-Ville Road
Hamilton, HM 11
Bermuda
PosAlpha Management Limited (2) 45,000 .4%
Harold Hayes Frith Building
55 Par-Ia-Ville Road
Hamilton, HM 11
Bermuda
(l) Less than one percent (1%) if not specified.
(2) Orbis Investment Management Limited and PosAlpha Management
Limited may constitute a "group" owning 1,059,000 shares, which is
10.2% of the outstanding Skyline common stock.<PAGE>
EXECUTIVE COMPENSATION
All cash compensation paid during the fiscal year ended May 31, 1996 for
each of the five highest paid executive officers of Skyline, including the
Chief Executive Officer. The table also shows for each such officer, the
amounts set aside during the last fiscal year under Skyline's Profit Sharing
Plan.
All
Other
Annual Compensation Compensation
(Vested
Name and Principal Profit
Position Year Salary ($) Bonus ($) Sharing)
Arthur J. Decio 1996 395,000 379,200 9,000
Chairman of the Board 1995 395,000 264,000 9,000
and Chief Executive Officer 1994 395,000 248,000 6,000
Ronald F. Kloska 1996 300,000 320,000 9,000
Vice-Chairman, Deputy Chief Executive 1995 245,000 181,300 9,000
Officer and Chief Administrative Officer 1994 245,000 139,500 6,000
(Secretary prior to September 18, 1995, and
President prior to September 16, 1991)
William H. Murschel 1996 300,000 320,000 9,000
President and Chief Operations Officer 1995 295,000 194,700 9,000
(Vice-President prior to September 16, 1991)1994 295,000 170,500 6,000
Terrence M. Decio 1996 225,000 216,000 9,000
Senior Executive Vice President 1995 225,000 148,500 9,000
(Senior Vice-President from 1994 225,000 139,500 6,000
September 16, 1991 to September 21, 1992 and
Vice-President before September 16, 1991)
Joseph B. Fanchi 1996 147,500 55,000 9,000
Vice-President, Finance and Treasurer 1995 142,500 42,750 9,000
1994 135,000 40,500 6,000<PAGE>
Compensation of Directors
Directors who are not full-time employees receive an annual fee of $16,000
payable in quarterly installments and receive $500 for each Board or
Committee meeting attended. Chairmen of the Board Committees who are not
full-time employees of Skyline receive an additional $2,000 annually and
Committee members who are not full-time employees of Skyline receive an
additional $1,500 annually payable in quarterly installments.
Termination of Employment Arrangements
The Skyline Corporation and Affiliates Employees' Profit Sharing Plan
provides benefits on death, disability or retirement for officers and
executives, sales, administrative and supervisory employees. Employees hired
on or after June 1, 1987 become eligible as of the June 1 or December 1
immediately following completion of six months of employment. Under the Plan,
as amended effective June 1, 1989, the amount of contribution under the Plan
is at the discretion of Skyline each year. However, the maximum contribution
for any participant shall not exceed 12% of a participant's basic
compensation. Upon retirement, death or permanent total disability, a
participant is entitled to all of the funds credited to his account. In case
of termination of employment by resignation or discharge, the participant is
entitled to a percentage of the amount credited to his account, ranging from
0% (10% for employees hired on or before May 31, 1987) after one year of
employment to 100% after seven years. For plan years beginning on or after
June 1, 1987, forfeitures resulting from any employee's termination of
employment prior to full vesting will be used to reduce employer
contributions. Net investment earnings or net losses for each fiscal year are
allocated to the account of each participant in the same ratio as the
participant's account balance bears to the total account balances of all
participants. Skyline reserves the right to modify, amend or terminate the
Plan. In the event of termination of the plan, the entire amount theretofore
contributed under the Plan must be paid to participants or their
beneficiaries and under no circumstances reverts to Skyline.
Under an insurance plan, payments would be made to the below named
executive officers, and executive officers as a group, for a period of 10
years upon retirement from Skyline at age 60 or later, in the following
annual amounts: Ronald F. Kloska, $100,000; William H. Murschel, $75,000;
Terrence M. Decio, $60,000; and Joseph B. Fanchi, $40,000; and all executive
officers as a group, consisting of 5 individuals, $315,000. Under the same
insurance plan, in the event of the death of any of such executive officers
while employed by Skyline, payments would be made for a period of 10 years in
the annual amounts hereinafter specified to the beneficiaries of the
following individuals and group: Ronald F. Kloska, $100,000; William H.
Murschel, $75,000; Terrence M. Decio, $60,000; and Joseph B. Fanchi, $30,000;
and all executive officers as a group, consisting of 5 individuals, $295,000.
Skyline is the owner and beneficiary of policies insuring the lives of all
such executive officers in the total amount of $1,950,984.<PAGE>
In addition, in the event of the death of Arthur J. Decio, Skyline has
agreed to pay his survivor(s) the sum of $1,920,000, which at the present
income tax rates, would result in after tax cost to Skyline of approximately
$1,150,000. Skyline is the owner and beneficiary of policies insuring Arthur
J. Decio's life in the amount of $1,000,000.
The appreciation in cash surrender value of all of the above-described
insurance policies is such that there is no current cost to Skyline for their
maintenance.
Compensation Committee Interlocks and Insider Participation
The following persons served as members of the Governance and Compensation
Committee (the "Compensation Committee") of Skyline's Board of Directors
during the fiscal year ended May 31, 1996: Andrew J. McKenna, Jerry Hammes,
William H. Lawson and David T. Link. Arthur J. Decio is the Chairman of the
Board and Chief Executive Officer of Skyline, and is a member of the Board of
Directors of Schwarz Paper Company. Andrew J. McKenna is an executive officer
of Schwarz Paper Company.
Report of the Governance and Compensation
Committee (the "Compensation Committee")
on Executive Compensation
The compensation of Skyline's executive officers is determined by the
Compensation Committee of the Board of Directors. Each member of the
Compensation Committee is a director who is not an employee of Skyline or any
of its affiliates. The following report with respect to compensation paid to
Skyline's executive officers for the fiscal year ended May 31, 1996 is
furnished by the Compensation Committee.
General Policies. Skyline's compensation programs are intended to enable
Skyline to attract, motivate, reward and retain the executive management
talent required to achieve corporate objectives. It is Skyline's policy to
reward exceptional performance and contributions to the development of
Skyline's business. To attain these objectives, Skyline's executive
compensation program includes a competitive base salary coupled with the
opportunity to participate in a bonus pool which is created based on the
performance of Skyline's business. The Compensation Committee establishes
the base salaries and discretionary bonuses which will be paid to Skyline's
executive officers for each fiscal year. In setting salaries and bonuses, the
Compensation Committee takes into account several factors, including
compensation paid by competitors and other industries' compensation data as
well as qualitative factors bearing on an individual's experience,
responsibilities, management and job performance. The Compensation Committee
evaluates the contributions to Skyline's overall performance during the last
fiscal year, leadership, effectiveness and commitment of all executive
officers, including the Chief Executive Officer. For the fiscal year ended
May 31, 1996, each of the executive officers received a bonus, in the amounts
set forth above in the summary compensation table.<PAGE>
Salaries. Salary levels for executive officer positions are set so as to
reflect the duties and level of responsibilities inherent in the position and
current economic conditions relating to Skyline's business. Comparative
salaries paid by other companies in the industries which Skyline does
business are considered in establishing the salary level for a given
position. The Compensation Committee does not, however, target a specific
percentile range within the comparative group in setting salaries of
Skyline's executive officers. The particular qualifications and level of
experience of the individual holding the position are also considered in
establishing a salary level when the individual is first appointed to a given
position.
Bonus. Skyline provides executive officers the opportunity to earn an
annual incentive bonus based on an evaluation of the executive's individual
performance and Skyline's performance. No executive officer is automatically
entitled to a bonus or a bonus in any particular amount. In considering
bonuses for executives other than Arthur J. Decio, the Compensation Committee
consults with the Chief Executive Officer.
Other. In addition, the executive officers participate in a profit sharing
program and insurance and other plans described above providing payments on
death or retirement.
Compensation of Chief Executive Officer ("CEO"). In setting the base salary
and bonus for Skyline's CEO, for the fiscal year ended May 31, 1996, the
Compensation Committee considered the same factors as with other executive
officers of Skyline. The Compensation Committee believes the CEO's
compensation was fully supported by those standards.
Andrew J. McKenna, Chairman
Jerry Hammes
William H. Lawson
David T. Link
Being all the members of Skyline's
Governance and Compensation Committee
(the "Compensation Committee")<PAGE>
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG SKYLINE CORPORATION, S & P 500 INDEX AND PEER GROUP**
Skyline S&P Peer
Corporation 500 Group
Starting Basis - 1991 $100.00 $100.00 $100.00
1992 95.49 109.85 112.22
1993 111.39 122.61 143.29
1994 113.57 127.83 182.54
1995 119.78 153.64 179.99
1996 174.14 197.33 303.57
* Notes:
Assumes initial investment of $100 on May 31,1991 and compares the return on
that investment through May 31, 1996.
For comparison purposes, Total Return assumes reinvestment of dividends,
although Skyline has no dividend reinvestment plan.
Total Return is based on market capitalization.
** This self constructed peer group consists of the following companies:
Champion Enterprises, Inc.
Coachman Industries, Inc.
Fleetwood Enterprises, Inc.
Liberty Homes, Inc.
Schult Homes, Inc.
Thor Industries, Inc.
The returns of each member of this peer group have been weighted according to
that company's respective stock market capitalization.<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Skyline's independent public accounting firm is Price Waterhouse. It is
expected that representatives of Price Waterhouse will be present at the
meeting of shareholders, will have the opportunity to make a statement if
they so desire and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Any proposal submitted for inclusion in Skyline's Proxy Statement and form
of proxy for the 1997 Annual Meeting of Shareholders must be received at the
address shown above on or before April 4, 1997.
MISCELLANEOUS
As of the date of this Proxy Statement, the Board of Directors knows of no
other business which will be presented for consideration at the annual
meeting. However, if other proper matters are presented at the meeting, it is
the intention of the proxies named in the enclosed proxy to take such action
as shall be in accordance with their best judgment.
The expense of this solicitation, including the cost of preparing and
mailing this Proxy Statement and accompanying material, will be paid by
Skyline. Skyline expects to pay approximately $6,000 to Georgeson & Company
as compensation for the solicitation of proxies, and may reimburse brokers
and others for their expense for sending proxy material to principals for the
purpose of obtaining signed proxies. In addition, solicitation may be by
mail, telephone, telegraph and personal interview by regularly engaged
officers of Skyline who will not be additionally compensated therefor.
Shareholders are respectfully requested to date, sign and return promptly
the enclosed proxy in the enclosed envelope. No postage is required if mailed
in the United States.
By Order of the
Board of Directors
RONALD F. KLOSKA
Vice-Chairman,
Deputy Chief Executive Officer
and Chief Administration Officer<PAGE>
