SKYLINE CORPORATION
2520 By-Pass Road
P.O. Box 743
Elkhart, Indiana 46515
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 22, 1997
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 22,
1997, 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 24, 1997,
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 8, 1997
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 8, 1997
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 22, 1997. 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 8, 1997.
VOTING SECURITIES
Only shareholders of record as of the close of business on July 24, 1997, or
their proxies are entitled to vote at the meeting. As of that date, Skyline
had outstanding 9,666,144 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 <PAGE>
ownership of Skyline Common Stock by directors as a group is as follows:
Shares of Skyline
Common Stock bene-
Skyline ficially Owned at Percent
Name, Title, Address Director July 1, 1997 of
and Principal Occupation Age Since Directly or Indirectly Class(3)
ARTHUR J. DECIO 66 1959 1,477,784(1) 15.3 %
Chairman of the Board
and Chief Executive
Officer. Skyline
Corporation, 2520 By-Pass
Road, Elkhart, IN 46514.
Mr. Decio is also a
Director of NIPSCO
Industries, Inc., Hammond,
Indiana, Quality Dining,
Inc., Mishawaka, Indiana
and St. Joseph Capital
Corporation, Mishawaka,
Indiana.
TERRENCE M. DECIO 45 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 65 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. Mr Hammes is also
a Director of St.Joseph
Capital Corporation,
Mishawaka, Indiana.
RONALD F. KLOSKA 63 1965 28,600
Vice-Chairman, Deputy
Chief Executive Officer
and Chief Administration
Officer, Skyline
Corporation, 2520
By-Pass Road,
Elkhart, Indiana 46514.<PAGE>
Shares of Skyline
Common Stock bene-
Skyline ficially Owned at Percent
Name, Title, Address Director July 1, 1997 of
and Principal Occupation Age Since Directly or Indirectly Class(3)
WILLIAM H. LAWSON 60 1975 3,000
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, and American
Electronic Components, Inc.
DAVID T. LINK 60 1994 600
Dean and Professor of Law,
Notre Dame Law School,
University of Notre Dame,
Notre Dame, Indiana 46556.
President Emeritus,
University of Notre Dame
Australia, Fremantle, W.A.,
Australia.
ANDREW J. McKENNA 67 1971 12,300
8338 North Austin Avenue,
Morton Grove, Illinois
60053. Chairman and CEO of
Schwarz, 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, Dean Foods
Company and First Chicago
NBD.
WILLIAM H. MURSCHEL 52 1992 1,610
President and Chief
Operations Officer,
Skyline Corporation, 2520
By-Pass Road, Elkhart,
Indiana 46514.
DALE SWIKERT 67 1963 8,791
224 Carnation Drive,
Nampa, Idaho 83687.
President, Interstate West
Corp. and Private Investor.
ALL NOMINEES AND
OFFICERS AS A GROUP 1,576,565 16.3%<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, 1997. 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 four 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 six 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 one Director did not
attend one Board meeting.<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, 1997 Class (l)
Joseph B. Fanchi 100
Vice President, Finance
2520 By-Pass Road
Elkhart, Indiana 46514
Orbis Investment Management 950,000 9.8%
Limited (2)
Harold Hayes Frith Building
55 Par-Ia-Ville Road
Hamilton, HM 11
Bermuda
Orbis Asset Management Limited (2) 34,000 . .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 Orbis Asset Management
Limited may constitute a "group" owning 984,000 shares, which is
10.2% of the oustanding Skyline common stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of forms provided to Skyline and on certain
written representations, Skyline is unaware of any failure to file on a timely
basis reports required by Section 16(a) of the Exchange Act by any director,
officer or beneficial owner of more than ten percent of Skyline's common
stock.<PAGE>
EXECUTIVE COMPENSATION
All cash compensation paid during the fiscal year ended May 31, 1997 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 1997 395,000 403,000 9,000
Chairman of the Board 1996 395,000 379,200 9,000
and Chief Executive Officer 1995 395,000 264,000 9,000
Ronald F. Kloska 1997 330,000 337,000 9,000
Vice-Chairman, Deputy Chief 1996 300,000 320,000 9,000
Executive Officer and Chief 1995 245,000 181,300 9,000
Administration Officer
(Secretary prior to
September 18, 1995, and
President prior to
September 16, 1991)
William H. Murschel 1997 330,000 337,000 9,000
President and Chief 1996 300,000 320,000 9,000
Operations Officer 1995 295,000 194,700 9,000
Terrence M. Decio 1997 225,000 230,000 9,000
Senior Executive 1996 225,000 216,000 9,000
Vice-President, 1995 225,000 148,500 9,000
(Senior Vice-President
from September 16, 1991 to
September 21, 1992)
Joseph B. Fanchi 1997 160,000 60,000 9,000
Vice-President, Finance 1996 147,500 55,000 8,850
and Treasurer 1995 142,500 42,750 8,550<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, 1997: 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. Andrew J. McKenna is an executive officer of Schwarz.
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, 1997 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, 1997, each of the executive officers received a bonus, in the amounts<PAGE>
set forth above in the summary compensation table.
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, 1997,
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 CHART
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG SKYLINE CORPORATION, S & P 500 INDEX AND PEER GROUP**
1992 1993 1994 1995 1996 1997
SKYLINE 100 116.65 118.93 125.44 182.36 177.82
S & P 500 100 111.61 116.36 139.86 179.63 232.25
PEER GROUP 100 127.68 162.66 160.39 270.54 251.14
*Notes: **This self constructed peer group
consists of the following companies:
Assumes initial investment of $100
on May 31, 1992 and compares the Champion Enterprises, Inc.
return on that investment through Coachmen Industries, Inc.
May 31, 1997. Fleetwood Enterprises, Inc.
Liberty Homes, Inc.
For comparison purposes, Total Schult Homes, Inc.
Return assumes reinvestment of Thor Industries, Inc.
dividends, although Skyline has no
dividend reinvestment plan. The returns for each member of this
peer group have been weighted
Total Return is based on market according to that company's respective
capitalization. stock market capitalization.<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Skyline's independent public accounting firm is Price Waterhouse LLP. It
is expected that representatives of Price Waterhouse LLP 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 1998 Annual Meeting of Shareholders must be received at the
address shown above on or before April 3, 1998.
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 $6,500 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
