SKYLINE CORPORATION
2520 By-Pass Road
P.O. Box 743
Elkhart, Indiana 46515
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 27, 1999
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 27,
1999, 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 22, 1999,
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 and
Chief Executive Officer
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.
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SKYLINE CORPORATION
2520 By-Pass Road, P.O. Box 743
Elkhart, Indiana 46515
August 6, 1999
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 27, 1999. 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 6, 1999.
VOTING SECURITIES
Only shareholders of record as of the close of business on July 22, 1999, or
their proxies are entitled to vote at the meeting. As of that date, Skyline
had outstanding 8,999,944 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:
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Shares of Skyline
Common Stock Bene-
Skyline ficially Owned at Percent
Name, Title, Address Director July 1, 1999 of
and Principal Occupation Age Since Directly or Indirectly Class(3)
ARTHUR J. DECIO 68 1959 1,477,784(1) 16.4 %
Chairman of the Board
Skyline Corporation, 2520
By-Pass Road, Elkhart, IN
46514. Mr. Decio is also a
Director of NiSource Inc.,
Hammond, Indiana and Quality
Dining, Inc., Mishawaka,
Indiana. (Mr. Decio was Chief
Executive Officer of Skyline
until December 16, 1998.)
TERRENCE M. DECIO 47 1989 30,080(2)
Senior Executive Vice
President, Skyline Corporation,
2520 By-Pass Road, Elkhart,
Indiana 46514. Mr. Decio is
also a Director of Key Bank of
Northern Indiana, South Bend,
Indiana.
JERRY HAMMES 67 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 65 1965 28,600
Vice-Chairman and Chief Executive
Officer, Skyline Corporation,
2520 By-Pass Road, Elkhart,
Indiana 46514. (Mr. Kloska was
Deputy Chief Executive Officer of
Skyline until December 16, 1998
and Secretary prior to September
18, 1995.)
Shares of Skyline
Common Stock Bene-
Skyline ficially Owned at Percent
Name, Title, Address Director July 1, 1999 of
and Principle Occupation Age Since Directly of Indirectly Class(3)
WILLIAM H. LAWSON 62 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 62 1994 600
Dean Emeritus, Notre Dame Law
School, University of Notre Dame,
Notre Dame, Indiana 46556.
President Emeritus, University of
Notre Dame Australia, Fremantle,
W.A., Australia. Associate Vice
President, University of St.
Thomas, St. Paul, Minnesota.
ANDREW J. McKENNA 69 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 Tribune
Company, Aon Corporation, McDonalds
Corporation and Dean Foods Company.
WILLIAM H. MURSCHEL 54 1992 3,010
President and Chief Operations
Officer, Skyline Corporation, 2520
By-Pass Road, Elkhart, Indiana 46514.
DALE SWIKERT 69 1963 8,791
811 Queen Victoria Ct., Nampa, Idaho
83686. Private Investor.
ALL NOMINEES AND
OFFICERS AS A GROUP 1,578,565 17.5%
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(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, 1999. 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 Chairman of the Board and consults
with the Chairman of the Board 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 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 one Director
did not attend one Board meeting, Terrence M. Decio did not attend two Board
meetings because of other commitments on behalf of Skyline and two Directors
did not attend one committee meeting.
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, 1999 Class (l)
Charles W. Chambliss 500
Vice President, Product Design
and Engineering
2520 By-Pass Road
Elkhart, Indiana 46514
Private Capital Management, Inc. 884,600 9.8%
3003 Tamiami Trail North, 3rd Floor
Naples, Florida 34103
T. Rowe Price Associates, Inc. (2) 620,900 6.9%
100 East Pratt Street
Baltimore, Maryland 21202
(l) Less than one percent (1%) if not specified.
(2) T. Rowe Price Associates, Inc. (Price Associates) has informed Skyline
that these securities are owned by various individual and institutional
investors which Price Associates serves as investment advisor with power to
direct investment and/or sole power to vote the securities and that for
purposes of the reporting requirements of the Securities Exchange Act of
1934, Price Associates is deemed to be a beneficial owner of such securities;
however, Price Associates expressly disclaims that it is, in fact, the
beneficial owner of such securities.
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.
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid during the
fiscal year ended May 31, 1999 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 1999 365,000 481,800 9,000
Chairman of the Board (Chief 1998 395,000 379,000 9,000
Executive Officer of Skyline until 1997 395,000 403,000 9,000
December 16, 1998)
Ronald F. Kloska 1999 365,000 481,800 9,000
Vice-Chairman and Chief Executive 1998 355,000 340,000 9,000
Officer (Deputy Chief Executive 1997 330,000 337,000 9,000
Officer of Skyline until December
16, 1998 and Secretary prior to
September 18, 1995)
William H. Murschel 1999 330,000 435,600 9,000
President and Chief Operations 1998 330,000 316,000 9,000
Officer 1997 330,000 337,000 9,000
Terrence M. Decio 1999 275,000 363,000 9,000
Senior Executive Vice-President 1998 245,000 240,000 9,000
1997 225,000 230,000 9,000
Charles W. Chambliss 1999 176,000 114,000 9,000
Vice-President, Product Design and 1998 176,000 79,200 9,000
Engineering (Manager, Product 1997 150,000 60,000 8,625
Design and Engineering prior to
December 18, 1996)
Compensation of Directors
Directors who are not full-time employees of Skyline 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: Arthur J. Decio, $100,000; Ronald F. Kloska, $100,000;
William H. Murschel, $75,000; Terrence M. Decio, $75,000; and Charles W.
Chambliss, $60,000; and all executive officers as a group, consisting of 8
individuals, $550,000. 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,
$75,000; and Charles W. Chambliss, $40,000; and 3 other executive officers,
totaling 7 individuals, $390,000. Skyline is the owner and beneficiary of
policies insuring the lives of all such executive officers in the total
amount of $3,111,659.
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, 1999: Andrew J. McKenna,
Jerry Hammes, William H. Lawson and David T. Link. Arthur J. Decio is the
Chairman of the Board 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, 1999 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, 1999, 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 Chairman of the Board.
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, 1999,
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")
PERFORMANCE CHART
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG SKYLINE CORPORATION, S & P 500 INDEX AND PEER GROUP
1994 1995 1996 1997 1998 1999
SKYLINE 100 105.47 153.34 149.52 180.67 197.72
S & P 500 100 120.19 154.37 199.77 261.07 315.96
PEER GROUP 100 99.03 166.93 154.17 230.67 175.30
*Notes:
Assumes initial investment of $100 on May 31, 1994 and compares the return on
that investment through May 31, 1999.
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.
The returns for each member of this peer group have been weighted according to
that company's respective stock market capitalization.
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 2000 Annual Meeting of Shareholders must be received at the
address shown above on or before April 3, 2000.
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, telefax 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 and Chief Executive Officer
