SKYLINE CORPORATION
2520 By-Pass Road
P.O. Box 743
Elkhart, Indiana 46515
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 28, 1998
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 28,
1998, 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 23, 1998,
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 7, 1998
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 7, 1998
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 28, 1998. 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 7, 1998.
VOTING SECURITIES
Only shareholders of record as of the close of business on July 23, 1998, or
their proxies are entitled to vote at the meeting. As of that date, Skyline had
outstanding 9,433,144 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 matters 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
<PAGE>
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 67 1959 1,477,784(1) 15.7 %
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 and
Quality Dining, Inc.,
Mishawaka, Indiana.
TERRENCE M. DECIO 46 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 66 1986 13,000
2015 West Western Avenue,
South Bend, Indiana 46629.
Chairman of Romy Hammes
Bancorp, Inc. and 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 64 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 61 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
and Sentry Insurance, a
Mutual Company.
DAVID T. LINK 61 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 68 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
Chicago NBD Corporation,
Tribune Company, Aon
Corporation, McDonalds
Corporation and Dean Foods
Company.
WILLIAM H. MURSCHEL 53 1992 1,610
President and Chief
Operations Officer,
Skyline Corporation,
2520 By-Pass Road,
Elkhart, Indiana 46514.
DALE SWIKERT 68 1963 8,791
224 Carnation Drive,
Nampa, Idaho 83687.
Private Investor.
ALL NOMINEES AND
OFFICERS AS A GROUP 1,576,865 16.7%<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, 1998.
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 one time 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 three 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 two Directors did not
attend one Board meeting and one Director did not attend one committee 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, 1998 Class (l)
Charles W. Chambliss 500
Vice President, Product Design
and Engineering
2520 By-Pass Road
Elkhart, Indiana 46514
Orbis Investment Management 725,000 7.7%
Limited (2)
Harold Hayes Frith Building
55 Par-Ia-Ville Road
Hamilton, HM 11
Bermuda
Orbis Asset Management Limited (2) 26,000 .3%
Harold Hayes Frith Building
55 Par-Ia-Ville Road
Hamilton, HM 11
(l) Less than one percent (1%) if not specified.
(2) Orbis Investment Management Limited and Orbis Asset Management
Limited may constitute a "group" owning 751,000 shares, which is
8% of the outstanding 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
The following table sets forth all cash compensation paid during the
fiscal year ended May 31, 1998 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 1998 395,000 379,000 9,000
Chairman of the Board 1997 395,000 403,000 9,000
and Chief Executive Officer 1996 395,000 379,200 9,000
Ronald F. Kloska 1998 355,000 340,000 9,000
Vice-Chairman, Deputy Chief 1997 330,000 337,000 9,000
Executive Officer and Chief 1996 300,000 320,000 9,000
Administration Officer
(Secretary prior to
September 18, 1995, and
President prior to
September 16, 1991)
William H. Murschel 1998 330,000 316,000 9,000
President and Chief 1997 330,000 337,000 9,000
Operations Officer 1996 300,000 320,000 9,000
Terrence M. Decio 1998 245,000 240,000 9,000
Senior Executive 1997 225,000 230,000 9,000
Vice-President, 1996 225,000 216,000 9,000
(Senior Vice-President from
September 16, 1991 to
September 21, 1992)
Charles W. Chambliss 1998 176,000 79,200 9,000
Vice-President, Product 1997 150,000 60,000 8,625
Design and Engineering 1996 125,000 37,500 6,975
(Manager, Product Design and
Engineering prior to
December 18, 1996)
<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, 62, or later, in the following
annual amounts: Ronald F. Kloska, $100,000; William H. Murschel,$75,000;
Terrence M. Decio, $60,000; and Charles W. Chambliss, $60,000; and all
executive officers as a group, consisting of 7 individuals, $435,000. 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 Charles W. Chambliss,
$40,000; and all executive officers as a group, consisting of 7 individuals,
$375,000. Skyline is the owner and beneficiary of policies insuring the
lives of all such executive officers in the total amount of $3,111,659.
<PAGE>
In addition, in the event of the death of Arthur J. Decio, whether before
or after his retirement from Skyline, 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, 1998: 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, 1998 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
<PAGE>
executive officers, including the Chief Executive Officer. For the fiscal year
ended May 31, 1998, each of the executive officers received a bonus, in the
amounts set forth above in the executive 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 in 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, 1998,
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**
1993 1994 1995 1996 1997 1998
SKYLINE 100 101.96 107.54 156.34 152.45 184.21
S & P 500 100 104.26 125.31 160.94 208.28 272.19
PEER GROUP 100 129.17 127.92 215.62 199.14 297.95
*Notes:
Assumes initial investment of $100 on May 31, 1993 and compares the return on
that investment through May 31, 1998.
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.
Coachmen Industries, Inc.
Fleetwood Enterprises, Inc.
Liberty Homes, Inc.
Thor Industries, Inc.
Schult Homes Corporation is no longer included in this self constructed peer
group because after its acquisition by Oakwood Homes Corp. on April 1, 1998
Schult Homes Corporation ceased to have a class of publicly traded shares
which can be referenced for the performance graph.
The returns for 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 PricewaterhouseCoopers LLP.
It is expected that representatives of PricewaterhouseCoopers 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 1999 Annual Meeting of Shareholders must be received at the
address shown above on or before April 2, 1999.
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 judgments.
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
