<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
TOWER AUTOMOTIVE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
TOWER AUTOMOTIVE, INC.
4508 IDS CENTER
MINNEAPOLIS, MN 55402
April 12, 1999
To Our Stockholders:
You are cordially invited to attend Tower Automotive, Inc.'s ("Tower
Automotive") 1999 Annual Meeting of Stockholders which will be held on May 25,
1999, at 1:00 p.m. local time, at the Tower Automotive Technical Center, 38900
Hills Tech Drive in Farmington Hills, Michigan.
The official Notice of Meeting, Proxy Statement and Proxy are included with
this letter. The proposals listed in the Notice of Meeting are more fully
described in the Proxy Statement.
Whether or not you plan to attend the Special Meeting in person, and
regardless of the number of shares you own, please complete, sign, date and
return the enclosed card promptly in the enclosed envelope. This will ensure
that your shares are voted as you wish and that a quorum will be present.
Sincerely,
/s/ S. A. Johnson
S. A. Johnson
CHAIRMAN OF THE BOARD
<PAGE>
TOWER AUTOMOTIVE, INC.
------------------
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
------------------------
<TABLE>
<S> <C>
TIME: 1:00 p.m. local time, May 25, 1999.
PLACE: Tower Automotive Technical Center
38900 Hills Tech Drive
Farmington Hills, Michigan.
PROPOSALS: (1) Election of directors;
(2) Approval of the Tower Automotive, Inc. Long-Term Incentive Plan;
(3) Approval of the Tower Automotive, Inc. Key Leadership Deferred Income
Stock Purchase Plan;
(4) Ratification of Arthur Andersen LLP as independent public accountants
of Tower Automotive; and
to transact any other proper business.
RECORD DATE: Only holders of record at the close of business on March 24, 1999 are
entitled to notice of and to vote on all proposals presented at the
meeting and at any adjournments or postponements thereof. A list of such
holders will be available prior to the meeting at Tower Automotive's
corporate office for examination by any such holder for any purpose
germane to the meeting.
</TABLE>
By Order of the Board of Directors,
/s/ James N. DeBoer
James N. DeBoer
SECRETARY
Dated: April 12, 1999
YOUR VOTE IS IMPORTANT!
TO VOTE YOUR SHARES, PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY
CARD.
<PAGE>
TOWER AUTOMOTIVE, INC.
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
------------------------
PROXY STATEMENT
------------------------
1999 ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 1999
------------------------
This Proxy Statement and accompanying Proxy are being furnished to the
holders of Common Stock, par value $.01 per share, (the "Common Stock") of Tower
Automotive, Inc. ("Tower Automotive" or the "Company") in connection with the
solicitation of Proxies on behalf of the Board of Directors of Tower Automotive
(the "Board of Directors") for the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on May 25, 1999 at 1:00 p.m. local time at the Tower
Automotive Technical Center, 38900 Hills Tech Drive in Farmington Hills,
Michigan, and at any adjournments and postponements thereof. These Proxy
materials are being mailed on or about April 12, 1999 to holders of record on
March 24, 1999 of the Common Stock.
When you sign and return the enclosed Proxy and if no direction is
indicated, such proxy will be voted FOR the slate of directors described herein,
FOR the proposals set forth in Items 2, 3 and 4 in the Notice of Meeting, and,
as to any other business as may properly be brought before the Annual Meeting
and any adjournments or postponements thereof, in the discretion of the Proxy
holders.
Returning your completed Proxy will not prevent you from voting in person at
the Annual Meeting should you be present and wish to do so. In addition, you may
revoke your Proxy any time before it is voted by written notice to the Secretary
of Tower Automotive prior to the Annual Meeting or by submission of a
later-dated Proxy or by the withdrawal of your Proxy and voting in person at the
Annual Meeting.
On March 24, 1999, there were 46,645,964 shares of Common Stock outstanding.
Each outstanding share of Common Stock entitles the holder thereof to one vote
per share. The presence in person or by Proxy of 51% of such shares shall
constitute a quorum. Under Delaware law, abstentions are treated as present and
entitled to vote and therefore have the effect of a vote against a matter. A
broker non-vote on a matter is considered not entitled to vote on that matter
and thus is not counted in determining whether a matter requiring approval of a
majority of the shares present and entitled to vote has been approved. Votes
cast at the meeting or submitted by Proxy will be counted by inspectors of the
meeting who will be appointed by the Company.
ELECTION OF DIRECTORS
The Board of Directors is currently comprised of eleven directors. Four of
the Company's current directors (Messrs. Clement, Diggs, Rosen and VanderStarre)
have chosen not to seek re-election to the Board and will therefore complete
their respective terms as of the date of this year's annual meeting of
stockholders. As a result, the Board of Directors has approved the reduction in
the number of Board members from eleven to seven persons, effective May 25,
1999. Accordingly, the Board has nominated and recommends the election of each
of the seven nominees set forth below as a director of Tower Automotive to serve
until the next annual meeting of stockholders or until their successors are duly
<PAGE>
elected and qualified. All of the nominees are incumbent directors of Tower
Automotive, previously elected by Tower Automotive's stockholders. The Board of
Directors expects all nominees named below to be available for election. In case
any nominee is not available, the Proxy holders may vote for a substitute unless
the Board of Directors reduces the number of directors.
Directors will be elected at the Annual Meeting by a plurality of the votes
cast at the meeting by the holders of shares represented in person or by Proxy.
Accordingly, the seven individuals who receive the greatest number of votes cast
by stockholders would be elected as directors of Tower Automotive. There is no
right to cumulative voting as to any matter, including the election of
directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
TO THE BOARD OF DIRECTORS.
The following sets forth information as to each nominee for election at the
Annual Meeting, including age as of March 24, 1999, principal occupation and
employment for a minimum of the past five years, directorships in other publicly
held companies and period of service as a director of Tower Automotive.
S. A. (TONY) JOHNSON, 58, has served as Chairman and a Director of Tower
Automotive since April 1993. Mr. Johnson is the founder, Chief Executive Officer
and President of Hidden Creek Industries ("Hidden Creek"), a private industrial
management company based in Minneapolis which has provided certain management
and other services to Tower Automotive. Mr. Johnson is also the Managing Partner
of J2R Partners ("J2R"), an investment partnership that participated in the
acquisition of R.J. Tower Corporation. Prior to forming Hidden Creek, Mr.
Johnson served from 1985 to 1989 as Chief Operating Officer of Pentair, Inc., a
diversified industrial company. From 1981 to 1985, Mr. Johnson was President and
Chief Executive Officer of Onan Corp., a diversified manufacturer of electrical
generating equipment and engines for commercial, defense and industrial markets.
Mr. Johnson currently serves as Chairman and a director of Dura Automotive
Systems, Inc., a manufacturer of mechanical assemblies and integrated systems
for the automotive industry, and served as Chairman and a director of Automotive
Industries Holding, Inc., a supplier of automotive interior trim components,
from May 1990 until its sale to Lear Corporation in August 1995.
DUGALD K. CAMPBELL, 52, has served as President, Chief Executive Officer and
a Director of Tower Automotive since December 1993. From 1991 to 1993, Mr.
Campbell served as a consultant to Hidden Creek. From 1988 to 1991, he served as
Vice President and General Manager of the Sensor Systems Division of Siemens
Automotive, a manufacturer of engine management systems and components. From
1972 to 1988, Mr. Campbell held various executive, engineering and marketing
positions with Allied Automotive, a manufacturer of vehicle systems and
components and a subsidiary of AlliedSignal, Inc.
JAMES R. LOZELLE, 53, has served as Executive Vice President for Tower
Automotive, with responsibility for Tower Automotive's operations in Milwaukee,
Wisconsin and Roanoke, Virginia since April 1997. From the acquisition of
Edgewood Tool and Manufacturing Company ("Edgewood") in May 1994 until March
1997, Mr. Lozelle served at the Tower Automotive Technical Centers, with
responsibility for advanced product development and customer service. Mr.
Lozelle has served as a Director of Tower Automotive since May 1994. Mr. Lozelle
served as President of Edgewood from 1982 until it was acquired by Tower
Automotive. Mr. Lozelle joined Edgewood in 1970 and served as Vice President
from 1971 to 1982. Mr. Lozelle is chairman of the Near Zero Stamping research
project of the Autobody Consortium.
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SCOTT D. RUED, 42, has served as Vice President, Corporate Development and a
Director of Tower Automotive since April 1993. Mr. Rued served as Vice
President, Chief Financial Officer and a director of Automotive Industries
Holding, Inc. from April 1990 until its sale to Lear Corporation in August 1995.
Mr. Rued, a partner of J2R, has also served as Executive Vice President and
Chief Financial Officer of Hidden Creek since January 1994 and served as its
Vice President -- Finance and Corporate Development from June 1989 through 1993.
Mr. Rued is also a director of The Rottlund Company, Inc., a corporation engaged
in the development and sale of residential real estate.
F.J. (JOE) LOUGHREY, 49, has served as a Director of Tower Automotive since
November 1994. Mr. Loughrey joined Cummins Engine Company, Inc. in 1974 and has
served as Executive Vice President and Group President -- Industrial and Chief
Technical Officer since April 1996. Prior thereto, Mr. Loughrey served as Group
Vice President -- Worldwide Operations and Technology from 1990 to 1995.
KIM B. CLARK, 49, has served as a Director of Tower Automotive since
December 1995. Mr. Clark has served as Dean of the Graduate School of Business
Administration at Harvard University in Cambridge, Massachusetts since September
1995. Since 1978, Dean Clark has served as a professor of business
administration at Harvard Business School. Dean Clark is also a director of
Guidant Corp., a manufacturer of medical implants, and Fleet Financial, a
financial services company.
ENRIQUE ZAMBRANO, 43, has served as a Director of Tower Automotive since
December 1997. Mr. Zambrano has served as Chief Executive Officer and a director
of Proeza, S.A. de C.V. since 1988.
There are no family relationships between any of the foregoing persons or
any of Tower Automotive's executive officers.
BOARD AND COMMITTEE MEETINGS
The Board of Directors held four meetings (exclusive of committee meetings)
during the preceding fiscal year. During 1998, each director attended at least
75% of the meetings of the Board of Directors and any committees on which such
director served. The Board of Directors has established the following
committees, the functions and current members of which are noted below.
EXECUTIVE COMMITTEE. The Executive Committee of the Board of Directors (the
"Executive Committee") consists of S.A. Johnson (Chairman), Dugald K. Campbell,
James R. Lozelle and Scott D. Rued. The Executive Committee has all the power
and authority vested in or retained by the Board of Directors and may exercise
such power and authority in such manner as it shall deem for the best interest
of Tower Automotive in all cases in which specific direction shall not have been
given by the Board of Directors and subject to any specific limitations imposed
by law or a resolution of the Board of Directors. The Executive Committee met
six times during the preceding fiscal year.
AUDIT COMMITTEE. The Audit Committee of the Board of Directors (the "Audit
Committee") consists of Eric J. Rosen (Chairman), Kim B. Clark and F.J.
Loughrey. The Audit Committee is responsible for reviewing, as it shall deem
appropriate, and recommending to the Board of Directors, internal accounting and
financial controls for Tower Automotive and accounting principles and auditing
practices and procedures to be employed in the preparation and review of Tower
Automotive's financial statements. The Audit Committee is also responsible for
recommending to the Board of Directors independent public accountants to audit
the annual financial statements of Tower Automotive. The Audit Committee met
twice during the preceding fiscal year.
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COMPENSATION COMMITTEE. The Compensation Committee of the Board of
Directors (the "Compensation Committee") consists of Adrian VanderStarre
(Chairman), Kim B. Clark, W.H. Clement and F.J. Loughrey. During the last fiscal
year, the Compensation Committee made recommendations to the Board of Directors
with respect to salaries, compensation and benefits of directors and executive
officers of Tower Automotive and made recommendations as to the grant of options
under the 1994 Key Employee Stock Option Plan (the "Stock Option Plan") to
purchase Common Stock of Tower Automotive. The Compensation Committee met four
times during the preceding fiscal year.
NOMINATING COMMITTEE. Tower Automotive does not have a nominating
committee. However, the functions of the Nominating Committee are performed by
the Compensation Committee.
COMPENSATION OF DIRECTORS
Directors who are not employees of Tower Automotive or any of its affiliates
each receive an annual fee of $18,000 for serving as a director of Tower
Automotive. In addition, each non-employee director receives $1,000 for each
Board of Directors meeting attended, $500 for each committee meeting attended
and reimbursement of out of pocket expenses incurred to attend such meetings.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Tower Automotive's officers, directors and persons who beneficially own more
than ten percent of a registered class of Tower Automotive's equity securities
to file reports of securities ownership and changes in such ownership with the
Securities and Exchange Commission (the "SEC"). Officers, directors and greater
than ten percent beneficial owners also are required by rules promulgated by the
SEC to furnish Tower Automotive with copies of all Section 16(a) forms they
file.
Based solely upon a review of the copies of such forms furnished to Tower
Automotive, or written representations that no Form 5 filings were required,
Tower Automotive believes that during the period from January 1, 1998 through
December 31, 1998 all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were complied
with, except for one late report, each covering one transaction, filed by Mr.
Pitser and Mr. VanderStarre.
PROPOSAL TO APPROVE THE TOWER AUTOMOTIVE, INC.
LONG-TERM INCENTIVE PLAN
On March 2, 1999, the Board of Directors adopted the Tower Automotive, Inc.
Long-Term Incentive Plan (the "Plan"), subject to approval by the Company's
stockholders. If approved, the Plan will succeed the Company's 1994 Key
Colleague Stock Option Plan. The following summary of the Plan is subject to the
specific provisions contained in the complete text of the Plan set forth in
Appendix A to this Proxy Statement.
PURPOSE. The purpose of the Plan is to promote the long-term success of the
Company for the benefit of its stockholders, through stock-based compensation,
by aligning the personal interests of Plan participants with those of its
stockholders. The Plan is designed to allow key colleagues of the Company and
certain of its subsidiaries, as well as directors and consultants, to
participate in the Company's future, as well as to enable the Company to
attract, retain and reward such persons.
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<PAGE>
ADMINISTRATION. The Plan may be administered by different committees with
respect to different groups of Plan participants. For example, to the extent the
Administrator determines it is desirable to qualify certain Awards as
"performance-based compensation" within the meaning of Section 162(m) of the
Internal Revenue Code, the Plan is required to be administered by a committee of
two or more Non-Colleague Directors, as defined in the Plan. Other than to meet
these requirements, the Plan will be administered by the Board or committee of
the Board. Subject to the Company's Certificate of Incorporation, Bylaws, and
the provisions of the Plan, the Administrator has the authority to select those
persons to whom Awards may be awarded; the type of Awards (or combination
thereof) to be granted; the number of shares of Common Stock to be covered by
each Award; and the terms and conditions of any Award, such as conditions of
forfeiture, transfer restrictions and vesting requirements.
The Plan provides for the granting of a variety of stock-based Awards,
described in more detail below, such as Stock Options, including Incentive Stock
Options, as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), Stock Appreciation Rights, Performance Shares, and other
Stock-Based Awards. The term of the Plan is approximately ten (10) years; no
Awards may be granted under the Plan after May 25, 2009.
TYPES OF AWARDS. The following types of Awards may be granted under the
Plan:
An "Option" is a contractual right to purchase a number of shares at a price
determined at the date the Option is granted. Options include Incentive Stock
Options, as defined in Section 422 of the Code, as well as Nonqualified Stock
Options. The exercise price included in both Incentive Stock Options and
Nonqualified Stock Options must equal at least 100% of the fair market value of
the stock at the date of grant.
A "Stock Appreciation Right" is an Award of the right to receive stock or
cash of an equivalent value in an amount equal to the difference between the
price specified in the Stock Appreciation Right and the prevailing market price
of the Company's Common Stock at the time of exercise. Stock Appreciation Rights
may be granted only in tandem with Options.
"Performance Shares" are an Award of the right to receive stock or cash of
an equivalent value at the end of the specified performance period upon the
attainment of specified performance goals.
An "Other Stock-Based Award" is any other Award that may be granted under
the Plan that is valued in whole or in part by reference to or is payable in or
otherwise based on Common Stock.
SHARES SUBJECT TO PLAN. The maximum aggregate number of shares of Company
Common Stock that may be issued under the Plan and the DISP Plan is 3,000,000
shares. The number of shares that may be issued under the Plan and the number of
shares subject to Options are subject to adjustments in the event of a merger,
reorganization, consolidation, recapitalization, dividend (other than ordinary
cash dividends), stock splits, or other change in corporate structure affecting
the Common Stock. Subject to certain restrictions, unexercised Options and
shares surrendered (or shares subject to Options withheld) in payment for
exercising Options or to pay withholding tax may be reissued under the Plan.
TERMINATION OR AMENDMENT OF THE PLAN. The Board may at any time amend,
discontinue, or terminate this Plan or any part thereof; however, unless
otherwise required by law, after shareholder approval, the rights of a
participant may not be impaired without the consent of such participant. In
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<PAGE>
addition, without the approval of the Company's stockholders, no amendment may
be made which would increase the aggregate number of shares of Common Stock that
may be issued under the Plan, extend the maximum option period under the Plan,
or decrease the Option price of any Option to less than 100% of the fair market
value on the date of grant.
ELIGIBILITY. Key colleagues of the Company and its designated subsidiaries,
as well as directors and consultants, are eligible to be granted Awards under
the Plan. Eligibility is determined by the Administrator. At present, eight
colleagues have been granted Options under the Plan, each of which is subject to
the approval of the Plan by the Company's stockholders, as described in more
detail below:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
NAME AND PRINCIPAL UNDERLYING OPTIONS
POSITION GRANTED(1)
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<S> <C>
Dugald K. Campbell,
President and Chief Executive Officer............................................... 115,000
James R. Lozelle,
Executive Vice President............................................................ 50,000
Paul D. Rysenga,
Vice President...................................................................... 40,000
Luigi Candusso,
Vice President...................................................................... 40,000
Anthony A. Barone,
Vice President and Chief Financial Officer.......................................... 50,000
Current officers as a Group (8 Persons)............................................. 405,000
</TABLE>
- ------------------------------
(1) The exercise price of each Option is $19.25, which equaled 100% of the fair
market value of the Company's Common Stock on March 2, 1999, the date of
grant. These options expire ten years from the date of grant and vest
ratably over four years, beginning one year from the date of grant.
PARTICIPATION AND ASSIGNABILITY. Generally, no Award, Option, or other
benefit payable under the Plan may, except as otherwise specifically provided by
law, be subject in any manner to assignment, transfer, or encumbrance. However,
Nonqualified Stock Options may be transferred without consideration to (i) an
immediate family member of the optionee, (ii) a trust for the benefit of an
immediate family member of the optionee, or (iii) a partnership or limited
liability company whose only partners or members are immediate family members,
if the option holder satisfies certain conditions as may be required by the
Administrator. Neither the Plan nor any Award agreement granted under the Plan
entitles any participant or other colleague to any right to continued service to
or employment by the Company or any subsidiary.
FEDERAL TAX CONSEQUENCES. The following summarizes the consequences of the
grant and acquisition of Awards under the Plan for federal income tax purposes,
based on management's understanding of existing federal income tax laws. This
summary is necessarily general in nature and does not purport to be complete.
Also, State and local income tax consequences are not discussed, and may vary
from locality to locality.
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OPTIONS. Plan participants will not recognize taxable income at the time an
Option is granted under the Plan unless the Option has a readily ascertainable
market value at the time of grant. Management understands that Options to be
granted under the Plan will not have a readily ascertainable market value;
therefore, income will not be recognized by participants before the time of
exercise of an Option. For Nonqualified Stock Options, the difference between
the fair market value of the shares at the time an Option is exercised and the
Option price generally will be treated as ordinary income to the optionee, in
which case the Company will be entitled to a deduction equal to the amount of
the optionee's ordinary income. With respect to Incentive Stock Options,
participants will not realize income for federal income tax purposes as a result
of the exercise of such Options. In addition, if Common Stock acquired as a
result of the exercise of an Incentive Stock Option is disposed of more than two
years after the date the Option is granted and more than one year after the date
the Option was exercised, the entire gain, if any, realized upon disposition of
such Common Stock will be treated for federal income tax purposes as capital
gain. Under these circumstances, no deduction will be allowable to the Company
in connection with either the grant or exercise of an Incentive Stock Option.
Exceptions to the general rules apply in the case of a "disqualifying
disposition." If a participant disposes of shares of Common Stock acquired
pursuant to the exercise of an Incentive Stock Option before the expiration of
one year after the date of exercise or two years after the date of grant, the
sale of such stock will be treated as a "disqualifying disposition." As a
result, such a participant would recognize ordinary income and the Company would
be entitled to a deduction in the year in which such disposition occurred.
The amount of the deduction and the ordinary income recognized upon a
disqualifying disposition would generally be equal to the lesser of: (a) the
sale price of the shares sold minus the Option price, or (b) the fair market
value of the shares at the time of exercise and minus the Option price. If the
disposition is to a related party (such as a spouse, brother, sister, lienal
descendant, or certain trusts for business entities in which the seller holds a
direct or indirect interest), the ordinary income recognized generally is equal
to the excess of the fair market value of the shares at the time of exercise
over the exercise price. Any additional gain recognized upon disposition, in
excess of the ordinary income, will be taxable as capital gain. In addition, the
exercise of Incentive Stock Options may result in an alternative minimum tax
liability.
STOCK APPRECIATION RIGHTS. Upon the grant of a Stock Appreciation Right,
the participant will realize no taxable income and the Company will receive no
deduction. A participant will realize income at the time of exercise if the
Award becomes vested and is no longer subject to forfeiture and the participant
is entitled to receive the value of the Award. The Company will receive a
deduction of an equal amount in the same year the participant recognizes income.
PERFORMANCE SHARES. Participants are not taxed upon the grant of
Performance Shares. Upon receipt of the underlying shares or cash, a participant
will be taxed at ordinary income tax rates (subject to withholding) on the
amount of cash received and/or the current fair market value of stock received,
and the Company will be entitled to a corresponding deduction. The participant's
basis in any Performance Shares received will be equal to the amount of ordinary
income on which he or she was taxed and, upon subsequent disposition, any gain
or loss will be capital gain or loss.
REQUIRED VOTE FOR APPROVAL. The affirmative vote of a majority of the
Company's Common Stock voted at the Annual Meeting, by person or by proxy, is
required to approve the Plan. While broker nonvotes will not be treated as votes
cast on the approval of this Plan, shares voted as abstentions will
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be counted as votes cast. Since a majority of the votes cast is required for
approval, the sum of any negative votes and abstentions will necessitate
offsetting affirmative votes to assure approval. Unless otherwise directed by
marking the accompanying proxy, the proxy holders named therein will vote for
the approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PROPOSED
PLAN.
PROPOSAL TO APPROVE THE TOWER AUTOMOTIVE, INC.
KEY LEADERSHIP DEFERRED INCOME STOCK PURCHASE PLAN
On March 2, 1999, the Board of Directors adopted the Tower Automotive, Inc.
Key Leadership Deferred Income Stock Purchase Plan (the "DISP Plan"), subject to
approval by the Company's stockholders. The DISP Plan permits each key
leadership colleague selected as a participant to defer and invest all or part
of his or her annual cash bonus in restricted stock units equivalent to shares
of Common Stock of the Company. The following summary of the DISP Plan is
subject to the specific provisions contained in the complete text of the DISP
Plan set forth in Appendix B to this Proxy Statement.
PURPOSE. The purposes of the DISP Plan are to provide key leadership
colleagues the opportunity to increase their equity interest in the Company, to
attract and retain highly qualified key leadership colleagues and to align the
interest of key leadership colleagues with the interests of stockholders of the
Company.
ADMINISTRATION. The DISP Plan will be administered by the Compensation
Committee of the Board of Directors (the "Committee"), or any other committee
designated by the Board of Directors to administer the DISP Plan. Subject to the
provisions of the DISP Plan, the Committee has the authority to select key
leadership colleagues who are eligible to participate in the DISP Plan for a
particular year.
ELIGIBILITY. Each year, the Committee will select those key leadership
colleagues eligible to participate in the DISP Plan. Such determination will be
made by November 1 of that year. An eligible key leadership colleague becomes a
participant in the DISP Plan by filing with the Committee and "Election to
Participate" for each plan year. It is not possible to predict the number or
identity of future participants.
RESTRICTED STOCK UNITS. The DISP Plan permits each key leadership colleague
selected as a participant to defer and invest all or part of his or her annual
cash bonus ("Cash Bonus") in restricted stock units ("Restricted Stock Units")
equivalent to shares of Common Stock of the Company. Each year the eligible key
leadership colleagues may elect to defer a percentage (at least 25%) of their
Cash Bonus. The deferred amount will be reflected on the Company's records as
Restricted Stock Units credited to an account maintained by the Company for each
participant.
The Restricted Stock Unit account maintained for each participant will
consist of a Basic Account and a Premium Account. The number of Restricted Stock
Units credited to a participant's Basic Account shall be the number determined
by dividing the amount of the deferred Cash Bonus by the fair market value of a
share of Common Stock on the last day of the month in which the Cash Bonus would
otherwise have been paid. The number of Restricted Stock Units concurrently
credited to a participant's Premium Account will equal one third the number
credited to the participant's Basic Account based on such deferral.
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All Restricted Stock Units credited to a participant's Basic Account shall
at all times be fully vested and nonforfeitable. All Restricted Stock Units
credited to a participant's Premium Account become fully vested and
nonforfeitable on the first day of the third plan year following the date such
Restricted Stock Units are credited to the participant's Premium Account. In
addition, all Restricted Stock Units are immediately vested and nonforfeitable
if a participant's employment terminates due to death, disability, normal
retirement or terminates within 24 months following a "change of control" of the
Company as defined in the DISP Plan.
The DISP Plan provides that as cash dividends are paid on shares of Common
Stock, an equivalent number of additional Restricted Stock Units will be
credited to the participant's Restricted Stock Unit Account. Each DISP Plan year
will begin on the first day of the Company's fiscal year and will end at the
last day of its fiscal year.
PAYMENT OF ACCOUNTS. Payment of the vested Restricted Stock Units to a
participant will commence in January of the year of payment specified by the
participant in his or her initial deferral election. The total number of vested
whole Restricted Stock Units in a participant's Restricted Stock Unit Account
will be paid the participant in an equal number of whole shares of Company
Common Stock. The participant may also elect in his or her initial deferral
election to receive installment payments over a period not to exceed ten years.
Payment may be made only in the form of the Company's Common Stock
The DISP Plan is unfunded with respect to the Company's obligations to pay
amounts due, and a participant's rights to receive any payment with respect to
any Restricted Stock Unit shall be no greater that the rights of an unsecured
general creditor of the Company. The Company may in its discretion establish one
or more trusts to accumulate shares of Common Stock to fund all or part of the
obligations of the Company pursuant to the DISP Plan.
SHARES SUBJECT TO DISP PLAN. The maximum aggregate number of shares of
Company Common Stock that may be issued under the DISP Plan is 750,000 shares of
authorized but unissued shares. An unlimited number of shares may be acquired by
the Company to fund its obligations under the Plan. The number of shares that
may be issued under the DISP Plan is subject to adjustments in the event of a
merger, reorganization, consolidation, recapitalization, dividend (other than
ordinary cash dividends), stock splits, or other change in corporate structure
affecting the Common Stock.
TERMINATION OR AMENDMENT OF THE DISP PLAN. The Board may at any time amend,
discontinue, or terminate the DISP Plan or any part thereof; provided, however,
that no amendment may adversely affect the right of any participant to have
dividend units credited to a Restricted Stock Unit Account or to receive payment
of any shares of Common Stock upon the payout of such accounts, unless the
participant consents. Except as provided in the DISP Plan, no amendment to the
DISP Plan that increases the number of authorized but unissued shares of Common
Stock that may be issued under the DISP Plan will be effective unless approved
by the stockholders of the Company.
PARTICIPATION AND ASSIGNABILITY. The right to have amounts credited to a
Restricted Stock Unit Account and the right to receive payment with respect to
such account under the DISP Plan are not assignable or transferable and shall
not be subject to any encumbrances, liens, pledges, or charges of the
participant or the claims of the participant's creditors. Neither the DISP Plan
nor any Restricted Stock Units granted under the DISP Plan entitles any
participant or other colleague to any right to continued employment by the
Company or any subsidiary.
9
<PAGE>
FEDERAL TAX CONSEQUENCES. The following summarizes the consequences of the
deferral of Cash Bonus and the crediting of Restricted Stock Units under the
DISP Plan for federal income tax purposes, based on management's understanding
of existing federal income tax laws. This summary is necessarily general in
nature and does not purport to be complete. Also, State and local income tax
consequences are not discussed, and may vary from locality to locality.
Participants are not taxed at the time of the deferral of the Cash Bonus or
upon crediting of the Restricted Stock Units. Upon issuance of Company Common
Stock to a participant in satisfaction of that participant's Restricted Stock
Units, the participant will be taxed at ordinary income tax rates (subject to
withholding) on the value of the Common Stock received, and the Company will be
entitled to a corresponding deduction. The participant's basis in the shares of
Common Stock received will be equal to the amount of ordinary income on which he
or she was taxed and, upon subsequent disposition, any gain or loss will be
capital gain or loss.
REQUIRED VOTE FOR APPROVAL. The affirmative vote of a majority of the
Company's Common Stock voted at the Annual Meeting, by person or by proxy, is
required to approve the DISP Plan. While broker nonvotes will not be treated as
votes cast on the approval of this DISP Plan, shares voted as abstentions will
be counted as votes cast. Since a majority of the votes cast is required for
approval, the sum of any negative votes and abstentions will necessitate
offsetting affirmative votes to assure approval. Unless otherwise directed by
marking the accompanying proxy, the proxy holders named therein will vote for
the approval of the DISP Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PROPOSED
DISP PLAN.
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Arthur Andersen LLP, as independent public accountants, to audit the
consolidated financial statements of Tower Automotive for the year ending
December 31, 1999, and to perform other appropriate services as directed by
Tower Automotive's management and the Board of Directors.
A proposal will be presented at the meeting to ratify the appointment of
Arthur Andersen LLP as Tower Automotive's independent public accountants. It is
expected that a representative of Arthur Andersen LLP will be present at the
Annual Meeting to respond to appropriate questions or to make a statement if he
or she so desires. If the stockholders do not ratify this appointment by the
affirmative vote of a majority of the shares represented in person or by Proxy
at the meeting, other independent public accountants will be considered by the
Board of Directors upon recommendation of the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS TOWER AUTOMOTIVE'S INDEPENDENT PUBLIC
ACCOUNTANTS.
OTHER BUSINESS
At the date of this Proxy Statement, Tower Automotive has no knowledge of
any business other than that described above that will be presented at the
Annual Meeting. If any other business should properly be brought before the
Annual Meeting and any adjournments or postponements thereof, the Proxies will
be voted in the discretion of the Proxy holders.
10
<PAGE>
SECURITY OWNERSHIP
Unless otherwise noted, the following table sets forth certain information
regarding ownership of the Common Stock as of March 1, 1999 by (i) the
beneficial owners of more than 5% of the Common Stock of Tower Automotive, (ii)
each Director, Director nominee and named executive officer of Tower Automotive
and (iii) all Director nominees and executive officers of Tower Automotive as a
group. To the knowledge of Tower Automotive, each of such stockholders has sole
voting and investment power as to the shares shown unless otherwise noted.
Beneficial ownership of the Common Stock listed in the table has been determined
in accordance with the applicable rules and regulations promulgated under the
Securities Exchange Act of 1934.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF
COMMON STOCK
-----------------------
DIRECTORS, OFFICERS NUMBER OF PERCENT OF
AND 5% STOCKHOLDERS SHARES CLASS
- ------------------------------------------------------- --------- ------------
<S> <C> <C>
S.A. Johnson........................................... 363,312 *
Adrian VanderStarre.................................... 1,700 *
Dugald K. Campbell(1).................................. 494,663 1.1%
James R. Lozelle(2).................................... 474,126 1.0%
Anthony A. Barone...................................... 46,213 *
Richard S. Burgess..................................... 22,156 *
Luigi Candusso......................................... 53,000 *
Ronald E. Gavalis...................................... 135,750 *
Tom G. Pitser.......................................... 27,700 *
Scott D. Rued.......................................... 111,978 *
Paul D. Rysenga........................................ 34,300 *
Matthew O. Diggs, Jr................................... 42,200 *
Kim B. Clark........................................... 30,200 *
W.H. Clement........................................... 232,040 *
F.J. Loughrey.......................................... 34,200 *
Eric J. Rosen.......................................... 18,000 *
Enrique Zambrano....................................... -- --
American Express Company(3)............................ 2,906,600 6.2%
Capital Research and Management Co.(4)................. 2,971,700 6.4%
Citigroup Inc.(5)...................................... 3,768,634 8.1%
Lazard Freres & Co. LLC(6)............................. 2,788,522 6.0%
All Directors and Officers as a group (17 persons)..... 2,126,538 4.5%
</TABLE>
- ------------------------
* Less than one percent.
(1) Includes: (i) 6,390 shares owned by Mr. Campbell's wife; (ii) 402,570 shares
held in an annuity trust, of which Mr. Campbell is the trustee; (iii) 9,066
shares held in an annuity trust, of which Mr. Campbell's wife is the
trustee; and (iv) 72,500 shares issuable upon the exercise of currently
exercisable options held by Mr. Campbell. Mr. Campbell disclaims beneficial
ownership of the shares held by his wife and in trust.
(2) Includes 193,200 shares of Common Stock issuable upon the conversion of
Convertible Notes and 274,468 shares issuable upon the exercise of currently
exercisable options held by Mr. Lozelle.
11
<PAGE>
(3) American Express Company ("AEC") and American Express Financial Corporation
("AEFC") each reported as of December 31, 1998 shared dispositive power with
respect to 2,906,600 shares of Common Stock, which represented approximately
6.3% of the outstanding Common Stock at that time. The address for AEC is
American Express Tower, 200 Vesey Street, New York, New York 10285 and the
address for AEFC is IDS Tower 10, Minneapolis, Minnesota 55440.
(4) Capital Research and Management Company reported as of December 31, 1998
sole dispositive power with respect to 2,971,700 shares of Common Stock. The
address for Capital Research and Management Company is 333 South Hope
Street, Los Angeles, California 90071.
(5) Citigroup Inc. and its subsidiary Salomon Smith Barney Holdings Inc.
reported as of December 24, 1998 shared voting and dispositive power with
respect to 3,768,634 shares of Common Stock, which represented approximately
7.9% of the outstanding Common Stock at that time. The address for such
entities is 153 East 53(rd) Street, New York, New York 10043.
(6) Lazard Freres & Co. LLC reported as of February 16, 1999 sole voting power
with respect to 2,337,970 shares of Common Stock and sole dispositive power
with respect to 2,788,522 shares of Common Stock. The address for Lazard
Freres & Co. LLC is 30 Rockefeller Plaza, New York, New York 10020.
12
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation packages for the years ended
December 31, 1998, 1997 and 1996 for Tower Automotive's chief executive
officer's and the four other most highly compensated executive officers (the
"Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- -------------
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND SALARY BONUS COMPENSATION GRANTED COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) (#) ($)(3)
- -------------------------------- --------- ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dugald K. Campbell.............. 1998 $ 487,812 $ 200,000 -- 100,000 $ 11,069
President and Chief 1997 386,250 585,000 -- 20,000 12,450
Executive Officer 1996 275,984 400,000 -- 20,000 12,518
James R. Lozelle................ 1998 253,674 194,600 40,000 10,995
Executive Vice 1997 218,750 225,000 -- 15,000 13,314
President 1996 200,704 200,000 -- 15,000 12,898
Paul D. Rysenga................. 1998 222,819 -- 40,000 11,042
Vice President 1997 175,000 190,000 -- 15,000 12,450
1996 163,139 130,000 -- 15,000 11,479
Luigi Candusso.................. 1998 220,344 -- 38,246(4) 40,000 11,220
Vice President 1997 173,750 185,000 -- 15,000 10,004
1996 156,053 135,000 -- 15,000 13,190
Anthony A. Barone............... 1998 218,222 57,500 40,000 11,067
Vice President and 1997 165,750 180,000 -- 10,000 10,259
Chief Financial Officer 1996 152,234 145,000 60,178(5) 10,000 11,743
</TABLE>
- ------------------------------
(1) Includes amounts deferred by employees under Tower Automotive's 401(k)
employee savings plan, pursuant to Section 401(k) of the Internal Revenue
Code.
(2) Represents amounts earned under the Company's bonus plan, but excludes
amounts foregone at the election of the Named Executive Officer and payable
in shares of the Company's Common Stock under the Tower Automotive's Key
Leadership Deferred Income Stock Purchase Plan, as reported in the Long-Term
Incentive Plan table.
13
<PAGE>
(3) The amounts disclosed in this column include: (a) amounts contributed by
Tower Automotive to Tower Automotive's 401(k) employees savings plan and
profit sharing plan, and (b) dollar value of premiums paid by Tower
Automotive for term life insurance on behalf of the named executive officers
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C> <C>
D.K. Campbell (a).......................... $ 11,069 $ 12,450 $ 12,500
(b).......................... -- -- 18
J.R. Lozelle (a).......................... 10,995 12,450 12,000
(b).......................... -- 864 898
P.D. Rysenga (a).......................... 11,042 12,450 11,450
(b).......................... -- -- 29
L. Candusso (a).......................... 11,220 9,651 12,838
(b).......................... -- 353 352
A.A. Barone (a).......................... 11,067 9,913 11,388
(b).......................... -- 346 355
</TABLE>
(4) Represents reimbursement of relocation costs in 1998.
(5) Includes $45,553 for reimbursement of relocation costs in 1996.
OPTION GRANT TABLE
The following table shows all grants of options to acquire shares of Tower
Automotive Common Stock granted to the Named Executive Officers under the Stock
Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATES OF
UNDERLYING OPTIONS STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(2)
GRANTED EMPLOYEES IN PRICE EXPIRATION --------------------------
NAME (#)(1) FISCAL YEAR (PER SHARE) DATE 5% 10%
- ------------------------------------------ ----------- ----------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
D.K. Campbell............................. 50,000 4.7% $ 22.97 2/24/08 $ 722,254 $ 1,830,334
50,000 4.7% 17.13 9/11/08 538,491 1,364,642
J.R. Lozelle.............................. 20,000 1.9% 22.97 2/24/08 288,902 732,133
20,000 1.9% 17.13 9/11/08 215,396 545,857
P.D. Rysenga.............................. 20,000 1.9% 22.97 2/24/08 288,902 732,133
20,000 1.9% 17.13 9/11/08 215,396 545,857
L. Candusso............................... 20,000 1.9% 22.97 2/24/08 288,902 732,133
20,000 1.9% 17.13 9/11/08 215,396 545,857
A.A. Barone............................... 20,000 1.9% 22.97 2/24/08 288,902 732,133
20,000 1.9% 17.13 9/11/08 215,396 545,857
</TABLE>
- ------------------------------
(1) These options vest ratably over four years commencing one year from the date
of grant.
(2) Amounts reflect certain assumed rates of appreciation set forth in the
executive compensation disclosure rules of the Securities and Exchange
Commission. Actual gains, if any, on stock option exercises depend on future
performance of Tower Automotive's Common Stock and overall stock market
conditions. No assurances can be made that the amounts reflected in these
columns will be achieved.
14
<PAGE>
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table shows aggregate exercise of options in the year ended
December 31, 1998 by the Named Executive Officers and the aggregate number and
value of unexercised options held by each Named Executive Officer as of December
31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN-THE-
OPTIONS AT MONEY OPTIONS
YEAR-END(#) YEAR-END($)(2)
SHARES VALUE ------------------ ------------------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($)(1) UNEXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- ----------- ------------------ ------------------------
<S> <C> <C> <C> <C>
D.K. Campbell.................. 30,000 $ 642,315 30,000/160,000 $596,875/$1,225,925
J.R. Lozelle................... -- -- 42,000/84,000 855,938/ 727,339
P.D. Rysenga................... 27,000 520,313 7,500/83,500 187,031/ 716,870
L. Candusso.................... 15,500 266,719 19,000/81,500 399,594/ 673,495
A.A. Barone.................... 5,000 74,698 14,000/69,000 291,313/ 539,120
</TABLE>
- ------------------------------
(1) Aggregate market value of shares acquired at time of exercise, less
aggregate exercise price paid by the employee to Tower Automotive.
(2) Values are based on the difference between the closing bid price of Tower
Automotive's Common Stock on December 31, 1998 ($24.94) and the exercise
prices of the options.
LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
PERFORMANCE OR OTHER
NUMBER OF SHARES, PERIOD UNTIL
UNITS OR OTHER MATURATION
NAME RIGHTS(#)(1) OR PAYOUT(2)
- --------------------------------------------------- ----------------- ---------------------
<S> <C> <C>
D.K. Campbell...................................... 43,389.83 3 years
J.R. Lozelle....................................... 6,031.19 3 years
P.D. Rysenga....................................... 16,922.04 3 years
L. Candusso........................................ 16,632.77 3 years
A.A. Barone........................................ 12,474.57 3 years
</TABLE>
- ------------------------------
(1) Represents the number of units credited to an employee's account under the
terms of the Company's Key Leadership Deferred Income Stock Purchase Plan
(the "DISP Plan). Under the terms of the DISP Plan, participants may elect
to defer all or a portion (but not less than 25%) of their cash bonus
payment. Deferred amounts are credited in stock units, based on the value of
the Company's stock as of the end of the month in which the bonus would have
been paid to the employee.Stock units are payable only in shares of the
Company's common stock. Includes the following number of restricted stock
units credited to each of the Named Executive's premium account, as
described in footnote 2 below: D.K. Campbell -- 10,847.46, J.R. Lozelle --
1,507.80, P.D. Rysenga -- 4,230.51; L. Candusso -- 4,158.19, and A.A. Barone
-- 3,118.64.
(2) Under the terms of the DISP Plan, the number of restricted stock units
credited to a participant's basic account is required to equal the amount of
the deferred bonus, divided by the value of a share of the Company's common
stock on the last day of the month in which the cash bonus would otherwise
be paid. In addition, participants are concurrently credited with additional
stock units to a separate Premium Account equal to one-third of the number
of the restricted stock units credited to their basic account. Restricted
stock units credited to this Premium Account do not vest until the first day
of the third plan year following the date the units are credited to a
participant's account, provided that the participant is then a
15
<PAGE>
colleague of the Company. The DISP Plan allows for accelerated vesting in
the event of a participant's death, disability, retirement or termination
during a period of 24 months following a change in control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee are Messrs.
VanderStarre, Clement, Diggs and Loughrey. As described more fully under the
capiton "Employment and Other Compensatory Agreements" below, Mr. VanderStarre
received certain payments for consulting services to the Company during the past
year. As described below under the caption "Certain Relationships and Related
Transactions," Mr. Clement is a party to a registration agreement.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This Compensation Committee report shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that Tower Automotive
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The following has been submitted by the Compensation Committee:
GENERAL EXECUTIVE OFFICER COMPENSATION POLICIES
The Compensation Committee, which was established in connection with Tower
Automotive's initial public offering of Common Stock in August 1994, is
responsible for developing and recommending Tower Automotive's executive
compensation policies to the Board of Directors. The Compensation Committee
believes that executive compensation should be related to the value created for
Tower Automotive's stockholders. The executive officer compensation program has
been designed to attract and retain highly qualified and motivated employees and
to reward superior performance.
The combination of both cash compensation (salary and performance bonus) and
equity-based compensation are intended to encourage and reward near-term
objectives, such as financial performance, and Tower Automotive's long-term
goals, such as continuous improvement in customer and colleague satisfaction,
and the growth and prosperity of Tower Automotive and its stakeholders.
SALARY AND BONUS
In general, the base salaries of Tower Automotive's executive officers are
established at levels believed to be at or below market rates. Each year, the
committee reviews compensation data from outside recruiters, available survey
information and data from companies of comparable size and performance in
ascertaining comparable salary rates. Subject to Committee approval, the base
salaries are set at or below comparable market rates. To provide performance
incentives and to compensate for the below-peer salary rates, Tower Automotive
provides for annual cash awards that are payable if Tower Automotive meets or
exceeds certain predetermined goals established and approved by the Board of
Directors.
Tower Automotive's bonus program is comprised of three principle factors.
First, the Committee establishes a target for each officer expressed as a
percentage of salary. Second, a financial performance factor is determined that
creates a minimum performance requirement and recognition of performance related
to expectations. Third, a team performance factor relating to progress toward
16
<PAGE>
company goals and an individual leadership initiative are established. The bonus
is payable only if the minimum financial performance, the team performance and
the individual leadership initiative are achieved.
Currently, and for the past fiscal year, the financial performance factor
has been based on achievement of a predetermined goal for return on sales. This
goal for return on sales is approved by the Committee, after taking into
consideration investor expectations, historical Company performance and expected
continuous improvement.
The achievement of team objectives and the personal leadership initiative
(established for each officer and approved by the Committee or Board of
Directors) are based on indicators of progress toward the long-term goals of
Tower Automotive, consistent with Tower Automotive's approach to values based
leadership. The Committee approves the achievement of team objectives and
personal leadership initiatives based on a determination by the colleague's
mentor, or in the case of the CEO, by the Committee or Board of Directors. To
counterbalance the near-term objectives of financial performance, the team
objectives and individual leadership initiatives are intended to reward and
promote the attainment of long-term objectives. Achievement is based on measures
of Tower Automotive goals of customer satisfaction, colleague satisfaction and
Company growth and prosperity. The goal of Company growth and prosperity is
primarily focused on the enhancement of stockholder value, taking into
consideration progress toward obtaining new customers, securing new technology,
expanding global presence, expanding business with existing customers, as well
as improving earnings per share and the market value of Tower Automotive's
stock.
In addition to the above-referenced objective factors, the Compensation
Committee has the right to adjust bonus payments based upon its evaluation of
Tower Automotive's performance relative to the overall economy and specific
market considerations. This discretion is intended to better align potential
plan payout as an indication of overall Company performance.
LONG-TERM EQUITY INCENTIVES
The long-term equity incentives consist of awards under the Stock Option
Plan administered by the Compensation Committee. Pursuant to the terms of the
Stock Option Plan, options are granted at an exercise price equal to Tower
Automotive's Common Stock price on the date the options are granted. The
Compensation Committee believes the Stock Option Plan aligns management's
long-term interests with stockholder interests, as the ultimate compensation is
based upon Tower Automotive's stock performance. The Compensation Committee also
believes the Stock Option Plan is a cost effective method of providing key
management with long-term compensation. The Compensation Committee approves the
employees who participate in the Stock Option Plan based upon recommendations by
the Chairman of the Board of Directors and the Chief Executive Officer. The
Compensation Committee determines the number of shares to be optioned to each
colleague based upon individual performance, responsibility and level of cash
compensation. The Compensation Committee may also, based on the recommendation
of the Board of Directors, approve the issuance of stock option agreements not
in connection with the Stock Option Plan.
The income tax laws of the United States limit the amount the Company may
deduct for compensation paid to the Company's Named Executive Officers. Certain
compensation that qualifies as "performance-based" under IRS guidelines is not
subject to this limit. Stock options granted under the Company's stock option
plan is designed to qualify as performance-based compensation thereby
17
<PAGE>
permitting the Company to deduct the related expenses. The Compensation
Committee believes that these limitations should not cause the Company to be
denied a deduction for 1998 compensation paid to the Named Executive Officers.
The Compensation Committee will continue to work to structure components of its
executive compensation to achieve the maximum deductibility under the Internal
Revenue Code in a manner consistent with its compensation goals and the
Company's values.
CHIEF EXECUTIVE OFFICER COMPENSATION
In 1998, the salary of Dugald K. Campbell, Tower Automotive's Chief
Executive Officer, was set at $487,812, based upon the factors described above
for establishing the salaries of Tower Automotive's executive officers. Mr.
Campbell's bonus is determined under the same criteria used for other executive
officers of Tower Automotive, except that the evaluation of whether the
predetermined goals and criteria have been satisfied are determined by the
Committee or the Board of Directors. A cash bonus of $200,000 and a deferred
bonus of $600,000 was earned by Mr. Campbell for 1998 based on Tower Automotive
and Mr. Campbell exceeding both the financial performance criteria, Company
goals and personal performance criteria, respectively. Stock options are granted
to the CEO under the same criteria referenced above, as a result of which Mr.
Campbell was granted an option for 100,000 shares of Tower Automotive's common
stock at an exercise price equal to the market value on the date of grant.
The foregoing report has been approved by all members of the Compensation
Committee.
Compensation Committee:
Adrian VanderStarre, Chairman
Kim B. Clark
W.H. Clement
F.J. Loughrey
18
<PAGE>
PERFORMANCE GRAPH
The following graph compares Tower Automotive's cumulative total stockholder
return since the Common Stock became publicly traded on August 12, 1994 with the
Nasdaq National Market Index, the New York Stock Exchange Index and with the OEM
Automotive Supplier Composite Index. The OEM Automotive Supplier Composite Index
consists of the following: Amcast Industrial Corporation, Borg-Warner
Automotive, Inc., BREED Technologies, Inc., Citation Corporation, Collins &
Aikman Corporation, Control Devices, Inc., Dana Corporation, Donnelly
Corporation, Dura Automotive Systems, Inc., Eaton Corporation, Gentex
Corporation, Hayes Lemmerz International, Inc., Intermet Corporation, Johnson
Controls, Inc., Lear Corporation, Magna International Inc., MascoTech, Inc.,
Modine Manufacturing Company, Shiloh Industries, Inc., Simpson Industries, Inc.,
The Standard Products Company, STRATTEC Security Corporation, Superior
Industries International, Inc., TRW Inc., and Walbro Corporation. The comparison
is based on the assumption that $100.00 was invested on August 12, 1994 in each
of the Common Stocks, the Standard & Poor's 500 Index ("S&P 500 Index") and the
OEM Automotive Supplier Composite Index with dividends reinvested.
COMPARISON OF TOTAL RETURN
AMONG NASDAQ STANDARD & POOR'S 500 INDEX,
OEM AUTOMOTIVE SUPPLIER COMPOSITE INDEX
AND TOWER AUTOMOTIVE, INC.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TWR OEM SUPPLIERS S&P 500
<S> <C> <C> <C>
Aug. 12, 1994 100 100 100
Dec. 31, 1994 78.3 96.7 99.4
Dec. 31, 1995 132.2 109.8 133.3
Dec. 31, 1996 271.7 130.7 160.4
Dec. 31, 1997 365.8 173.6 210.1
Dec. 31, 1998 433.7 167.7 266.1
</TABLE>
19
<PAGE>
EMPLOYMENT AND OTHER COMPENSATORY AGREEMENTS
In May 1994, Tower Automotive and James Lozelle entered into an Employment
Agreement in connection with the acquisition of Edgewood. The Employment
Agreement provides that James Lozelle shall serve as an Executive Vice President
of Tower Automotive until May 4, 1999 or his earlier resignation, death,
disability or termination. The Employment Agreement also provides that James
Lozelle will receive an annual base salary of $200,000 plus annual bonus of up
to 30% of his annual base salary for attaining goals developed by Tower
Automotive's Board of Directors and James Lozelle. Upon his resignation or
termination for certain specified reasons, James Lozelle will be entitled to
receive all salary, bonus and fringe benefits for the remaining term of the
Employment Agreement, but in no event longer than one year. In May 1994, James
Lozelle and Tower Automotive also entered into a Stock Option Agreement pursuant
to which James Lozelle was granted an option to purchase 205,968 shares of
Common Stock at an exercise price of $3.28 per share. The option vests and
becomes exercisable with respect to one-third of the shares covered on each of
May 4, 1996, 1997 and 1998; provided that James Lozelle is still employed by
Tower Automotive on each such date. The agreement also provides for acceleration
of the unvested portion of the option upon a sale of Tower Automotive, subject
to certain conditions, or in the event of death, disability, termination without
cause or resignation for certain reasons. The option is non-transferable except
pursuant to applicable laws of descent and distribution.
S.A. Johnson and Scott Rued provide to Tower Automotive strategic direction,
management and financial services with an annual allocation of salary costs of
$200,000 and $100,000, respectively, and will be eligible for performance-based
bonuses of up to 50% of their base salaries.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Tower Automotive, Onex and certain stockholders including J2R, S.A. Johnson,
Scott Rued, W.H. Clement and James Lozelle, the former stockholders of Edgewood,
including James Lozelle's brother, and MascoTech are parties to a registration
agreement pursuant to which Tower Automotive has granted certain rights to
register shares of Tower Automotive's Common Stock.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 2000 ANNUAL MEETING
Proposals of Stockholders intended to be presented at the Annual Meeting in
2000 must be received by the secretary of Tower Automotive, Inc., 4508 IDS
Center, Minneapolis, Minnesota, 55402, not later than December 3, 1999 to be
considered for inclusion in Tower Automotive's 2000 Proxy materials. As of March
24, 1999, no proposals to be presented at the 1999 Annual Meeting had been
received by Tower Automotive. If Tower Automotive receives notice of a
shareholder proposal after February 28, 2000, the persons named as proxies for
the 2000 Annual Meeting of Stockholders will have discretionary voting authority
to vote on that proposal at the meeting.
ADDITIONAL INFORMATION
This solicitation is being made by Tower Automotive. All expenses of Tower
Automotive in connection with this solicitation will be borne by Tower
Automotive. Tower Automotive will request brokerage firms, nominees, custodians
and fiduciaries to forward Proxy materials to the beneficial
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owners of shares held of record by such persons and will reimburse such persons
and Tower Automotive's transfer agent for their reasonable out-of-pocket
expenses in forwarding such materials.
Tower Automotive will furnish without charge to each person whose Proxy is
being solicited, upon the written request of any such person, a copy of Tower
Automotive's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, as filed with the SEC, including the financial statements. Requests for
copies of such Annual Report on Form 10-K should be directed to: Tower
Automotive, Inc., 4508 IDS Center, Minneapolis, MN 55402.
PLEASE COMPLETE THE ENCLOSED PROXY AND MAIL IT IN THE ENCLOSED POSTAGE-PAID
ENVELOPE AS SOON AS POSSIBLE.
By Order of the Board of Directors,
/s/ James N. DeBoer
James N. DeBoer
SECRETARY
April 12, 1999
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APPENDIX A
TOWER AUTOMOTIVE, INC.
LONG-TERM INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE OF THE PLAN
1.1 ESTABLISHMENT OF THE PLAN. Tower Automotive, Inc., a Delaware
corporation (the "Company"), hereby establishes an incentive compensation plan
to be known as the "Tower Automotive, Inc. Long-Term Incentive Plan" (the
"Plan"), as set forth in this document. The Plan permits the granting of stock
options, stock appreciation rights, and other stock-based awards to key
colleagues of the Company and its subsidiaries, Directors and Consultants. Upon
approval by the Board of Directors of the Company, subject to ratification by
the affirmative vote of holders of a majority of shares of the Company's Common
Stock present and entitled to vote at the 1999 Annual Meeting of Shareholders,
the Plan shall be effective as of March 1, 1999 (the "Effective Date").
1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
long-term success of the Company for the benefit of the Company's stockholders,
through stock-based compensation, by aligning the personal interests of Plan
Participants with those of its shareholders. The Plan is also designed to allow
Plan Participants to participate in the Company's future, as well as to enable
the Company to attract, retain and award such individuals.
1.3 TERM OF PLAN. No Awards shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date ("Termination Date"), provided
that Awards granted prior to the Termination Date may extend beyond that date,
and Cash Payment Rights may be effected pursuant to the terms of Awards granted
prior to the Termination Date.
ARTICLE 2
DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings set
forth below:
2.1 "Administrator" shall mean the Board or any of the Committees designated
to administer the Plan in accordance with Section 3.1 of the Plan.
2.2 "Award" shall mean any award under this Plan of any Options, Stock
Appreciation Rights, Performance Shares or Other Stock-Based Award.
2.3 "Award Agreement" shall mean an agreement evidencing the grant of an
Award under this Plan. Awards under the Plan shall be evidenced by Award
Agreements that set forth the details, conditions and limitations for each
Award, as established by the Administrator and shall be subject to the terms and
conditions of the Plan.
2.4 "Award Date" shall mean the date that an Award is made, as specified in
an Award Agreement.
2.5 "Board" shall mean the Board of Directors of the Company.
2.6 "Code" shall mean the Internal Revenue Code of 1986, as amended.
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2.7 "Colleague" shall mean any person employed by the Company or a
Subsidiary. Neither service as a Director nor the payment of a Director's fee by
the Company shall be sufficient to constitute employment by the Company.
2.8 "Committee" shall mean one of the Committees, as specified in Article 3,
appointed by the Board to administer the Plan.
2.9 "Common Stock" shall mean the Common Stock, $.01 par value per share, of
the Company.
2.10 "Consultant" shall mean any person or entity engaged by the Company or a
Subsidiary to render services to the Company or that Subsidiary.
2.11 "Director" shall mean a member of the Board.
2.12 "Disability" shall mean permanent and total disability as determined
under the rules and guidelines established by the Committee for purposes of the
Plan.
2.13 "Fair Market Value" shall be the closing sale price of the Company's
Common Stock on the New York Stock Exchange. If no sale of shares of Common
Stock is reflected on the New York Stock Exchange on a date, "Fair Market Value"
shall be determined according to the closing sale price on the next preceding
day on which there was a sale of shares of Common Stock reflected on New York
Stock Exchange.
2.14 "Incentive Stock Option" or "ISO" shall mean an option to purchase
shares of Common Stock granted under Article 6, which is designated as an
Incentive Stock Option and is intended to meet the requirements of Section 422
of the Code.
2.15 "Insider" shall mean a colleague who is an officer (as defined in Rule
16a-1(f) of the Exchange Act) or director of the Company, or holder of more than
ten percent (10%) of its outstanding shares of the Company's Common Stock.
2.16 "Noncolleague Director" shall mean a person who satisfies (1) the
definition of "Nonemployee Director" within the meaning set forth in Rule
16b-3(b)(3), as promulgated by the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934 (the "Exchange Act"), or any
successor definition adopted by the SEC, or (2) the definition of "outside
director" within the meaning of Section 162(m) of the Code.
2.17 "Nonqualified Stock Option" or "NQSO" shall mean an option to purchase
shares of Common Stock, granted under Article 6, which is not an Incentive Stock
Option.
2.18 "Option" means an Incentive Stock Option or a Nonqualified Stock Option.
2.19 "Option Price" shall mean the price at which a share of Common Stock may
be purchased by a Participant pursuant to an Option, as determined by the
Committee.
2.20 "Other Stock-Based Award" shall mean an Award under Article 9 of this
Plan that is valued in whole or in part by reference to, or is payable in or
otherwise based on, Common Stock.
2.21 "Participant" shall mean a colleague of the Company or a Subsidiary, a
Director or Consultant who holds an outstanding Award granted under the Plan.
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2.22 "Performance Shares" shall mean an Award granted under Article 8 of this
Plan evidencing the right to receive Common Stock or cash of an equivalent value
at the end of a specified performance period.
2.23 "Permitted Transferee" means (i) the spouse, children or grandchildren
of a Participant (each an "Immediate Family Member"), (ii) a trust or trusts for
the exclusive benefit of the Participant and/or one or more Immediate Family
Members, or (iii) a partnership or limited liability company whose only partners
or members are the Participant and/or one or more Immediate Family Members.
2.24 "Retirement" shall mean the termination of a Participant's employment
with the Company or a Subsidiary after the Participant attains the age of 55 and
the Participant has completed at least ten (10) years of employment with the
Company or a Subsidiary (including any predecessor to the Company or a
Subsidiary).
2.25 "Stock Appreciation Right" or "SAR" shall mean an Award granted to a
Participant under Article 7 of this Plan.
2.26 "Subsidiary" shall mean any corporation in which the Company owns
directly, or indirectly through subsidiaries, at least fifty percent (50%) of
the total combined voting power of all classes of stock, or any other entity
(including, but not limited to, partnerships and joint ventures) in which the
Company owns at least fifty percent (50%) of the combined equity thereof.
2.27 "Termination of Service" shall mean the termination of a Colleague's
employment with the Company or a Subsidiary. A Colleague employed by a
Subsidiary shall also be deemed to incur a Termination of Service if the
Subsidiary ceases to be a Subsidiary and the Participant does not immediately
thereafter become a colleague of the Company or another Subsidiary. With respect
to a Participant that is not a Colleague, Termination of Service shall mean the
termination of the person's service as a Director of the company or as a
Consultant to the Company or a Subsidiary.
ARTICLE 3
ADMINISTRATION
3.1 THE COMMITTEE. The Plan may be administered by different Committees
with respect to different groups of Plan Participants. To the extent that the
Administrator determines it to be desirable to qualify Awards granted hereunder
as "performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a committee of two or more Non-Colleague
Directors. To the extent desirable to qualify transactions hereunder as exempt
under Rule 16b-3, the transactions contemplated hereunder shall be structured to
satisfy the requirements for exemption under Rule 16b-3. Other than as provided
above, the Plan shall be administered by (a) the Board, or (b) a Committee,
which Committee shall be constituted to satisfy the foregoing conditions.
3.2 COMMITTEE AUTHORITY. Subject to the Company's Certificate of
Incorporation, Bylaws and the provisions of this Plan, the Administrator shall
have full authority to grant Awards to key Colleagues of the Company or a
Subsidiary, as well as Directors and Consultants. Awards may be
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granted singly, in combination, or in tandem. The authority of the Administrator
shall include the following:
(a) To select the key colleagues of the Company or a Subsidiary,
Directors or Consultants to whom Awards may be granted under the Plan;
(b) To determine whether and to what extent Options, Stock Appreciation
Rights, Performance Shares and Other Stock-Based Awards, or any combination
thereof are to be granted under the Plan;
(c) To determine the number of shares of Common Stock to be covered by
each Award;
(d) To determine the terms and conditions of any Award Agreement,
including, but not limited to, the Option Price, any vesting restriction or
limitation, any vesting schedule or acceleration thereof, or any forfeiture
restrictions or waiver thereof, regarding any Award and the shares Common
Stock relating thereto, based on such factors as the Administrator shall
determine in its sole discretion;
(e) To determine whether, to what extent and under what circumstances
grants of Awards are to operate on a tandem basis and/or in conjunction with
or apart from other cash compensation arrangement made by Company other than
under the terms of this Plan;
(f) To determine under what circumstances an Award may be settled in
cash, Common Stock, or a combination thereof; and
(g) To determine to what extent and under what circumstances shares of
Common Stock and other amounts payable with respect to an Award shall be
deferred.
The Administrator shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (including any Award Agreement) and to
otherwise supervise the administration of the Plan. A majority of the any
Committee shall constitute a quorum, and the acts of a majority of a quorum at
any meeting, or acts reduced to or approved in writing by a majority of the
members of any Committee, shall be the valid acts of any Committee. The
interpretation and construction by any Committee of any provisions of the Plan
or any Award granted under the Plan shall be final and binding upon the Company,
the Board and Participants, including their respective heirs, executors and
assigns. No member of the Board or any Committee shall be liable for any action
or determination made in good faith with respect to the Plan or an Award granted
hereunder.
ARTICLE 4
COMMON STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 12.1, the maximum aggregate
number of shares of Common Stock which may be issued under this Plan, which may
be either unauthorized and unissued Common Stock or issued Common Stock
reacquired by the Company ("Plan Shares") shall be three million (3,000,000)
Shares.
Determinations as to the number of Plan Shares that remain available for
issuance under the Plan shall be made in accordance with such rules and
procedures as the Administrator shall determine from time to time. If an Award
expires unexercised or is forfeited, cancelled, terminated or settled in
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cash in lieu of Common Stock, the shares of Common Stock that were theretofore
subject (or potentially subject) to such Award may again be made subject to an
Award Agreement. In addition, Shares from the following sources shall be added
to the number of Plan Shares available for issuance under the Plan: (1) any
Shares of the Company's Common Stock surrendered in payment of the exercise
price of Options or to pay the tax withholding obligations incurred upon the
exercise of Options; and (2) Options withheld to pay the exercise price or tax
withholding obligations incurred upon the exercise of Options.
ARTICLE 5
ELIGIBILITY
The persons who shall be eligible to receive Awards under the Plan shall be
selected by the Administrator from time to time. In making such selections, the
Administrator shall consider the nature of the services rendered by such
persons, their present and potential contribution to the Company's success and
the success of the particular Subsidiary or division of the Company by which
they are employed or to whom they provide services, and such other factors as
the Administrator in its discretion shall deem relevant. Participants may hold
more than one Award, but only on the terms and subject to the restrictions set
forth in the Plan and their respective Award Agreements. No Participant may
receive Awards under the Plan covering more than twenty-five percent (25%) of
Plan Shares.
ARTICLE 6
STOCK OPTIONS
6.1 OPTIONS. Options may be granted alone or in addition to other Awards
granted under this Plan. Each Option granted under this Plan shall be either an
Incentive Stock Option (ISO) or a Nonqualified Stock Option (NQSO).
6.2 GRANTS. The Administrator shall have the authority to grant to any
Participant one or more Incentive Stock Options, Nonqualified Stock Options, or
both types of Options. To the extent that any Option does not qualify as an
Incentive Stock Option (whether because of its provisions or the time or manner
of its exercise or otherwise), such Option or the portion thereof which does not
qualify shall constitute a separate Nonqualified Stock Option.
6.3 INCENTIVE STOCK OPTIONS. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participants affected,
to disqualify any Incentive Stock Option under such Section 422. An Incentive
Stock Option shall not be granted to an individual who, on the date of grant,
owns stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company. The aggregate Fair Market Value,
determined on the Award Date of the shares of Common Stock with respect to which
one or more Incentive Stock Options (or other incentive stock options within the
meaning of Section 422 of the Code, under all other option plans of the Company)
granted on or after January 1, 1987, that are exercisable for the first time by
a Participant during any calendar year shall not exceed the $100,000 limitation
imposed by Section 422(d) of the Code.
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6.4 TERMS OF OPTIONS. Options granted under the Plan shall be evidenced by
Award Agreements in such form as the Administrator shall, from time to time
approve, which Agreement shall comply with and be subject to the following terms
and conditions:
(a) OPTION PRICE. The Option Price per share of Common Stock
purchasable under an Option shall be determined by the Committee at the time
of grant but shall be not less than one hundred percent (100%) of the Fair
Market Value of the Common Stock at the Award Date.
(b) OPTION TERM. The term of each Option shall be fixed by the
Administrator, provided that no Option that has been designated as an
Incentive Stock Option shall be exercisable more than ten (10) years after
the date the Option is granted.
(c) EXERCISABILITY. Except as provided in Section 12.2, no Option
shall be exercisable in either in whole or in part prior to the first
anniversary of the Award Date. Thereafter, an Option shall be exercisable at
such time or times and subject to such terms and conditions as shall be
determined by the Administrator and set forth in the Award Agreement. If the
Administrator provides that any Option is exercisable only in installments,
the Administrator may at any time waive such installment exercise
provisions, in whole or in part, based on such factors as the Administrator
may determine.
(d) METHOD OF EXERCISE. Subject to whatever installment exercise and
waiting period provisions apply under subsection (c) above, Options may be
exercised in whole or in part at any time during the term of the Option, by
giving written notice of exercise to the Company specifying the number of
shares to be purchased. Such notice shall be accompanied by payment in full
of the purchase price in such form as the Administrator may accept.
Notwithstanding the foregoing, an Option shall not be exercisable with
respect to less than 100 shares of Common Stock unless the remaining shares
covered by an Option are fewer than 100 shares. If and to the extent
determined by the Administrator in its sole discretion at or after grant,
payment in full or in part may also be made in the form of Common Stock
owned by the Participant (and for which the Participant has good title free
and clear of any liens and encumbrances and with respect to any shares of
Common Stock acquired upon the exercise of an Option, has been held by the
Optionee for a period of at least six (6) consecutive months), or by
reduction in the number of shares issuable upon such exercise based, in each
case, on the Fair Market Value of the Common Stock on the last trading date
preceding payment as determined by the Administrator. No shares of stock
shall be issued until payment has been made. A Participant shall generally
have the rights to dividends or other rights of a shareholder with respect
to shares subject to the Option when the person exercising such option has
given written notice of exercise, has paid for such shares as provided
herein, and, if requested, has given the representation described in Section
13.1 of the Plan.
(e) TRANSFERABILITY OF OPTIONS. No Option may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution, provided, however, the
Administrator may, in its discretion, authorize all or a portion of a
Nonqualified Stock Option to be granted to an optionee to be on terms which
permit transfer by such optionee to a Permitted Transferee, provided that
(i) there may be no consideration for any such transfer (other than the
receipt of or interest in a family partnership or limited liability
company), (ii) the stock option agreement pursuant to which such options are
granted must be approved by the Administrator, and must expressly provide
for transferability in a manner consistent with this Section 6.4(e), and
(iii) subsequent transfers of transferred options shall be
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prohibited except those in accordance with Section 6.4(h). Following
transfer, any such options shall continue to be subject to the same terms
and conditions as were applicable immediately prior to transfer. The events
of termination of service of Sections 6.4(f), (g) and (h) hereof, and the
tax withholding obligations of Section 12.3 shall continue to be applied
with respect to the original optionee, following which the options shall be
exercisable by the Permitted Transferee only to the extent, and for the
periods specified in Sections 6(f), (g), and (h). The Company shall not be
obligated to notify Permitted Transferee(s) of the expiration or termination
of any option. Further, all Options shall be exercisable during the
Participant's lifetime only by such Participant and, in the case of a
Nonqualified Stock Option, by a Permitted Transferee. The designation of a
person entitled to exercise an Option after a person's death will not be
deemed a transfer.
(f) TERMINATION OF SERVICE FOR REASONS OTHER THAN RETIREMENT,
DISABILITY, OR DEATH. Upon termination of Service for any reason other than
Retirement or on account of Disability or death, each Option held by the
Participant shall, to the extent rights to purchase shares under such Option
have accrued at the date of such Termination of Service and shall not have
been fully exercised, be exercisable, in whole or in part, at any time for a
period of more than three (3) months following Termination of Service,
subject, however, to prior expiration of the term of such Options and any
other limitations on the exercise of such Options in effect at the date of
exercise. Whether an authorized leave of absence or absence because of
military or governmental service shall constitute Termination of Service for
such purposes shall be determined by the Administrator, which determination
shall be final and conclusive.
(g) TERMINATION OF SERVICE FOR RETIREMENT OR DISABILITY. Upon
Termination of Service by reason of Retirement or Disability, each Option
held by such Participant shall, to the extent rights to purchase shares
under the Option have accrued at the date of such Retirement or Disability
and shall not have been fully exercised, remain exercisable in whole or in
part, for a period of not greater than two (2) years following such
Termination of Service, subject, however, to prior expiration according to
its terms and other limitations imposed by the Plan. If the Participant dies
after such Retirement or Disability, the Participant's Options shall be
exercisable in accordance with Section 6.4(h) below.
(h) TERMINATION OF SERVICE FOR DEATH. Upon Termination of Service due
to death, each Option held by such Participant or Permitted Transferee
shall, to the extent rights to purchase shares under the Options have
accrued at the date of death and shall not have been fully exercised, be
exercisable, in whole or in part, by the personal representative of the
estate of the Participant or Permitted Transferee or by any person or
persons who shall have acquired the Option directly from the Participant or
Permitted Transferee by bequest or inheritance only under the following
circumstances and during the following periods: (i) if the Participant dies
while providing service to the Company or a Subsidiary as a Colleague,
Director or Consultant, at any time within a period of not greater than two
(2) years after his death, or (ii) if the Participant dies during the
extended exercise period following Termination of Service specified in
Section 6.4(g), at any time within the longer of such extended period or for
a period of not more than twelve (12) months after death, subject, however,
in any case, to the prior expiration of the term of the Option and any other
limitation on the exercise of such Option in effect at the date of exercise.
(i) TERMINATION OF OPTIONS. Any Option that is not exercised within
whichever of the exercise periods specified in Sections 6.4(f), (g) or (h)
is applicable shall terminate upon expiration of such exercise period.
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(j) PURCHASE AND SETTLEMENT PROVISIONS. The Administrator may at any
time offer to purchase an Option previously granted, based on such terms and
conditions as the Administrator shall establish and communicate to the
Participant at the time that such offer is made. In addition, if an Award
Agreement so provides at the Award Date or is thereafter amended to so
provide, the Administrator may require that all or part of the shares of
Common Stock to be issued with respect to the exercise of an Option, in an
amount not greater than the Fair Market Value of the shares that is in
excess of the aggregate Option Price, take the form of Performance Shares,
which shall be valued on the date of exercise on the basis of the Fair
Market Value of such Performance Shares determined without regard to the
deferral limitations and/or forfeiture restrictions involved.
ARTICLE 7
STOCK APPRECIATION RIGHTS
7.1 GRANT OF SARS. The Administrator may approve the grant of Stock
Appreciation Rights ("SARs") that are related to Options only. A SAR may be
granted only at the time of grant of the related Option. A SAR will entitle the
holder of the related Option, upon exercise of the SAR, to surrender such
Option, or any portion thereof to the extent unexercised, with respect to the
number of shares as to which such SAR is exercised, and to receive payment of an
amount computed pursuant to Section 7.2. Such Option will, to the extent
surrendered, then cease to be exercisable. Subject to Section 7.4, a SAR granted
hereunder will be exercisable at such time or times, and only to the extent that
a related Option is exercisable, and will not be transferable except to the
extent that such related Option may be transferable.
7.2 PAYMENT OF SAR AMOUNT. Upon the exercise of a SAR, a Participant shall
be entitled to receive payment from the Company in an amount determined by
multiplying (i) the difference between the Fair Market Value of a share of
Common Stock on the date of exercise over the Option Price, by (ii) the number
of shares of Common Stock with respect to which the SAR is exercised. At the
discretion of the Committee, the payment upon SAR exercise may be in cash, in
shares of Common Stock of equivalent value, or in some combination thereof.
7.3 NONTRANSFERABILITY. No SAR may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. Further, all SARs shall be exercisable, during
the Participant's lifetime, only by such Participant.
ARTICLE 8
PERFORMANCE SHARES
8.1 AWARD OF PERFORMANCE SHARES. Performance Shares may be awarded either
alone or in addition to other Awards granted under this Plan. The Administrator
shall determine the eligible persons to whom and the time or times at which
Performance Shares shall be awarded, the number of Performance Shares to be
awarded to any person, the duration of the period (the "Performance Period")
during which, and the conditions under which, receipt of the Performance Shares
will be deferred, and the other terms and conditions of the Award in addition to
those set forth in Section 8.2, as specified in the Award Agreement. The
Administrator may condition the grant of Performance Shares upon the achievement
of specific business objectives, measurements of individual or business unit or
Company performance, or such other factors or criteria as the Administrator
shall determine.
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The provisions of the award of Performance Shares need not be the same with
respect to each Participant, and such Awards to individual Participants need not
be the same in subsequent years.
8.2 TERMS AND CONDITIONS. Performance Shares awarded pursuant to this
Article 8 shall be subject to the following terms and conditions:
(a) NONTRANSFERABILITY. Subject to the provisions of this Plan and the
related Award Agreement, Performance Shares may not be sold, assigned,
transferred, pledged or otherwise encumbered during the Performance Period.
At the expiration of the Performance Period, share certificates or cash of
an equivalent value (as the Administrator may determine in its sole
discretion) shall be delivered to the Participant, or his legal
representative, in a number equal to the shares covered by the Award
Agreement.
(b) DIVIDENDS. Unless otherwise determined by the Administrator at the
time of Award, amounts equal to any cash dividends declared during the
Performance Period with respect to the number of shares of Common Stock
covered by a Performance Share Award will not be paid to the Participant.
(c) TERMINATION OF EMPLOYMENT. Subject to the provisions of the Award
Agreement and this Article 8, upon Termination of Service for any reason
during the Performance Period for a given Award, the Performance Shares in
question will vest or be forfeited in accordance with the terms and
conditions established by the Administrator at or after grant.
(d) ACCELERATED VESTING. Based on service, performance and/or such
other factors or criteria as the Administrator may determine and set forth
in the Award Agreement, the Administrator may, at or after grant, accelerate
the vesting of all or any part of any award of Performance Shares and/or
waive the deferral limitations for all or any part of such Award.
ARTICLE 9
OTHER STOCK-BASED AWARDS
9.1 OTHER AWARDS. Other Awards of Common Stock and other Awards that are
valued in whole or in part by reference to, or are payable in or otherwise based
on, Common Stock ("Other Stock-Based Awards"), may be granted either alone or in
addition to or in tandem with Options, SARs, or Performance Shares. Subject to
the provisions of this Plan, the Administrator shall have authority to determine
the persons to whom and the time or times at which such Awards shall be made,
the number of shares of Common Stock to be awarded pursuant to such awards, and
all other conditions of the Awards. The Administrator may also provide for the
grant of Common Stock under such Awards upon the completion of a specified
performance period. The provisions of Other Stock-Based Awards need not be the
same with respect to each Participant and such Awards to individual Participants
need not be the same in subsequent years.
9.2 TERMS AND CONDITIONS. Other Stock-Based Awards made pursuant to this
Article 9 shall be set forth in an Award Agreement and shall be subject to the
following terms and conditions:
(a) NONTRANSFERABILITY. Subject to the provisions of this Plan and the
Award Agreement, shares of Common Stock subject to Awards made under this
Article 9 may not be sold, assigned, transferred, pledged, or otherwise
encumbered prior to the date on which the shares are issued, or, if later,
the date on which any applicable restriction, performance or deferral period
lapses.
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(b) DIVIDENDS. Unless otherwise determined by the Administrator at the
time of Award, subject to the provisions of this Plan and the Award
Agreement, the recipient of an Award under this Article 9 shall be entitled
to receive, currently or on a deferred stock basis, dividends or other
distributions with respect to the number of shares of Common Stock covered
by the Award.
(c) VESTING. Any Award under this Article 9 and any Common Stock
covered by any such Award shall vest or be forfeited to the extent so
provided in the Award Agreement, as determined by the Administrator, in its
sole discretion.
(d) WAIVER OF LIMITATION. In the event of the Participant's
Retirement, Disability or death, or in cases of special circumstances, the
Administrator may, in its sole discretion, waive in whole or in part any or
all of the limitations imposed hereunder (if any) with respect to any or all
of an Award under this Article 9.
(e) PRICE. Common Stock issued or sold under this Article 9 may be
issued or sold for no cash consideration or such consideration as the
Administrator shall determine and specify in the Award Agreement.
ARTICLE 10
TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time amend, discontinue or terminate this Plan or any
part thereof (including any amendment deemed necessary to ensure that the
Company may comply with any applicable regulatory requirement); provided,
however, that, unless otherwise required by law, the rights of a Participant
with respect to Awards granted prior to such amendment, discontinuance or
termination, may not be impaired without the consent of such Participant and,
provided further, without the approval of the Company's shareholders, no
amendment may be made which would (i) increase the aggregate number of shares of
Common Stock that may be issued under this Plan (except by operation of Article
4 or of Section 12.1); (ii) decrease the option price of any Option to less than
one hundred percent (100%) of the Fair Market Value on the date of grant for an
Option; or (iii) extend the maximum option period under Section 6.4(b) of the
Plan. The Administrator may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Section 12.2, no such amendment
or other action by the Administrator shall impair the rights of any Participant
without the Participant's consent. Awards may not be granted under the Plan
after the Termination Date, but Awards granted prior to such date shall remain
in effect or become exercisable pursuant to their respective terms and the terms
of this Plan.
ARTICLE 11
UNFUNDED PLAN
This Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payment not yet made to a Participant
by the Company, nothing contained herein shall give any such Participant any
rights that are greater than those of a general creditor of the Company.
A-10
<PAGE>
ARTICLE 12
ADJUSTMENT PROVISIONS
12.1 ANTIDILUTION. Subject to the provisions of this Article 12, if the
outstanding shares of Common Stock are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of Common Stock or other securities, through merger, consolidation,
sale of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other distribution with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may be made in (i) the
maximum number and kind of shares provided in Article 4 of the Plan, (ii) the
number and kind of shares or other securities subject to the then outstanding
Awards, and (iii) the price for each share or other unit of any other securities
subject to the then outstanding Awards.
12.2 CHANGE IN CONTROL. Notwithstanding Section 12.1, upon dissolution or
liquidation of the Company, or upon a reorganization, merger, or consolidation
of the Company with one or more corporations as a result of which the Company is
not the surviving corporation, or upon the sale of all or substantially all the
assets of the Company, all Awards then outstanding under the Plan will be fully
vested and exercisable and all restrictions will immediately cease, unless
provisions are made in connection with such transaction for the continuance of
the Plan and the assumption of or the substitution for such Awards of new Awards
covering the stock of a successor employer corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices.
12.3 ADJUSTMENTS BY ADMINISTRATOR. Any adjustments pursuant to this
Article 12 will be made by the Administrator, whose determination as to what
adjustments will be made and the extent thereof will be final, binding, and
conclusive. No fractional interest will be issued under the Plan on account of
any such adjustments. Only cash payments will be made in lieu of fractional
shares.
ARTICLE 13
GENERAL PROVISIONS
13.1 LEGEND. The Administrator may require each person purchasing shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Administrator
deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed, any applicable Federal or state securities law,
and any applicable corporate law, and the Administrator may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
13.2 NO RIGHT TO EMPLOYMENT. Neither this Plan nor the grant of any Award
hereunder shall give any Participant or other colleague any right with respect
to continuance of employment by the Company or any Subsidiary, nor shall there
be a limitation in any way on the right of the Company or any Subsidiary by
which a colleague is employed to terminate his or her employment at any time.
A-11
<PAGE>
13.3 WITHHOLDING OF TAXES. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock or the payment of any
cash hereunder, payment by the Participant of, any Federal, state or local taxes
required by law to be withheld. Unless otherwise prohibited by the
Administrator, each Participant may satisfy any such withholding tax obligation
by any of the following means or by a combination of such means: (a) tendering a
cash payment; (b) authorizing the Company to withhold from the shares otherwise
issuable to the Participant a number of shares having a Fair Market Value as of
the "Tax Date", less than or equal to the amount of the withholding tax
obligation; or (c) delivering to the Company unencumbered shares owned by the
Participant having a Fair Market Value, as of the Tax Date, less than or equal
to the amount of the withholding tax obligation. The "Tax Date" shall be the
date that the amount of tax to be withheld is determined.
13.4 NO ASSIGNMENT OF BENEFITS. No Award or other benefit payable under
this Plan shall, except as otherwise specifically transfer, provided by law, be
subject in any manner to anticipation, alienation, attachment, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, attach, sell, transfer, assign, pledge, encumber or charge, any such
benefits shall be void, and any such benefit shall not in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or torts of any
person who shall be entitled to such benefit, nor shall it be subject to
attachment or legal process for or against such person.
13.5 GOVERNING LAW. This Plan and actions taken in connection herewith
shall be governed and construed in accordance with the laws and in the courts of
the state of Delaware.
13.6 APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to Awards granted under this Plan will
be used for general corporate purposes.
13.7 RIGHTS AS A SHAREHOLDER. Except as otherwise provided in an Award
Agreement, a Participant shall have no rights as a shareholder of the Company
until he or she becomes the holder of record of Common Stock.
A-12
<PAGE>
Please mark your
/X/ votes as in this
example.
This Proxy, when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR the election of
Directors and FOR Proposals 2, 3 and 4.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND
FOR PROPOSALS 2, 3 AND 4.
- -------------------------------------------------------------------------------
FOR WITHHELD
1. Election of
Directors / / / /
(SEE REVERSE)
For, except vote withheld from
the following nominee(s):
----------------------------------
FOR AGAINST ABSTAIN
2. Approval of the Tower
Automotive, Inc. Long- / / / / / /
Term Incentive Plan.
3. Approval of the Tower FOR AGAINST ABSTAIN
Automotive, Inc. Key
Leadership Deferred / / / / / /
Income Stock Purchase
Plan.
FOR AGAINST ABSTAIN
4. To ratify the selection
of Arthur Andersen LLP / / / / / /
as the Company's
Independent Public
Accountants.
Change of
Address/Comments / /
on reverse side.
- -------------------------------------------------------------------------------
5. In their discretion, the Proxies
are authorized to vote upon such
other business as may properly
come before the meeting.
Please sign exactly as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee,
guardian, officer, general partner,
etc., please give full title as such.
-------------------------------------
-------------------------------------
SIGNATURE(S) DATE
- FOLD AND DETACH HERE -
- -------------------------------------------------------------------------------
<PAGE>
TOWER AUTOMOTIVE, INC.
ANNUAL MEETING OF STOCKHOLDERS
Tuesday, May 25, 1999 at 1:00 PM
Tower Automotive Technical Center
38900 Hills Tech Drive
Farmington Hills, Michigan
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