<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
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 Rule 14a-11(c) or Rule 14a-12
STANDARD MOTOR PRODUCTS, 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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
MAY 22, 1997
April 22, 1997
To the Shareholders of
STANDARD MOTOR PRODUCTS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
STANDARD MOTOR PRODUCTS, INC. (the "Company") will be held at the offices of
The Chase Manhattan Bank, 270 Park Avenue, New York, New York 10017, on
Thursday, the 22nd day of May, 1997 at 2:00 o'clock in the afternoon (New York
Time) for the following purposes:
1. To consider and vote upon a proposal to amend the Company's
1994 Omnibus Stock Option Plan to increase the number of
shares of the Company's Common Stock available for issuance
thereunder by 600,000 shares.
2. To elect eleven directors of the Company, all of whom shall
hold office until the next annual meeting of shareholders and
until their successors are elected and qualified; and
3. To transact such other business as may properly come before
the meeting.
Whether or not you plan to attend the Meeting, please vote, date and
sign the enclosed Proxy, which is solicited by the Board of Directors of the
Company, and return it to the Company, in the preaddressed envelope, to which
no postage need be affixed, if mailed in the United States.
By Order of the Board of Directors
SANFORD KAY
Secretary
ONLY SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS
ON APRIL 11, 1997 WILL BE ENTITLED TO NOTICE OF OR TO VOTE AT
THE MEETING, OR ANY ADJOURNMENT THEREOF
<PAGE> 3
STANDARD MOTOR PRODUCTS, INC. 37-18 NORTHERN BOULEVARD -
LONG ISLAND CITY, N.Y. 11101
MANAGEMENT PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, MAY 22, 1997
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Standard Motor Products, Inc. (the "Company") for
use at the annual meeting of the shareholders of the Company to be held on May
22, 1997, or at any adjournment thereof. Proxy material is being mailed on or
about April 22, 1997 to the Company's approximately 870 shareholders of record.
The total number of shares outstanding and entitled to vote on April 11, 1997,
is:
Common Stock . . . . . . . 13,130,560
The purposes of the annual meeting are: (1) to consider and vote upon a
proposal to amend the Company's 1994 Omnibus Stock Option Plan to increase the
number of shares of the Company's Common Stock available for issuance
thereunder by 600,000 shares (2) to elect eleven directors, and (3) to transact
such other business as may properly come before the meeting and at any
adjournment thereof.
PROPOSAL 1: AMENDMENT OF THE COMPANY'S 1994
OMNIBUS STOCK OPTION PLAN:
The Board of Directors and its Compensation Committee believe that the
Company's long-term success is dependent upon its ability to attract and retain
outstanding individuals and to motivate them to exert their best efforts on
behalf of the Company's shareholders. The Board and the Committee believe that
a stock option plan is instrumental in fulfilling these goals. However, except
for 1,000 shares, all shares made available for issuance under the previously
approved 1994 Omnibus Stock Option Plan have been fully utilized. Accordingly,
the Board and its Compensation Committee have approved and propose to the
Company's shareholders an amendment to the 1994 Omnibus Stock Option Plan ("The
Plan") increasing the number of shares available for issuance thereunder by
600,000.
SUMMARY OF MATERIAL PROVISIONS OF THE PLAN.
The amended Plan will authorize 600,000 shares of the Company's Common
Stock be made available for the grant of either incentive stock options or
non-qualified stock options. Unless sooner terminated by the Board of
Directors, the Plan would terminate on May 22, 2007.
No individual grant can exceed 50,000 shares. The Plan will be administered
by the Compensation Committee, none of the members of which is eligible to
participate in the Plan. The Committee has the power and complete discretion to
determine when to grant option awards, which eligible employees will receive
option awards, and the number of shares to be allocated to each option award.
The Committee may impose conditions on the exercise of options and may impose
such other restrictions and requirements as it may deem appropriate. Officers
and other key management employees of the Company and its subsidiaries will be
eligible to receive grants under the Plan.
If a grant is canceled, terminates or lapses unexercised, any such shares
allocable to that grant may be subjected again to a new grant. Adjustments will
be made in the number of shares which may be issued under the Plan in the event
of a future stock dividend, stock split or similar pro rata change in the
number of outstanding shares of Common Stock or the future creation or issuance
to stockholders generally of rights, options or warrants for the purchase of
Common Stock or Preferred Stock.
Stock option grants under the Plan may be either incentive stock options or
non-qualified stock options. No more than one grant may be made to an
individual in any calendar year. Incentive stock options qualify for favorable
income tax treatment under the Internal Revenue Code, while non-qualified stock
options do not. The option price of Common Stock covered by a stock option may
not be less than 100% of the fair market value of the Common Stock on the date
of the option grant. The value of incentive stock options, based on the
exercise price, that can be exercisable for the first time in any calendar year
under the Plan is limited by the Internal Revenue Code to $100,000.
Options may only be exercised at such times as may be specified by the
Compensation Committee. The minimum period of time from date of grant that an
option vests (exercisable) is twelve months and all
1
<PAGE> 4
options are exercisable for a period of five years from the date of vesting.
Option grants may be fully exercisable (vest) at one point in time or may have
graded exerciseability (vesting) in which case exerciseability will occur over
a period of years. The Compensation Committee may require that, for stock
option grants in excess of a specified number of shares, an optionee must
directly own shares of the Company's Common Stock whose fair market value bears
a predetermined relationship to the optionee's base salary, up to a maximum of
50% of the optionee's base salary. Exerciseability may be accelerated by the
Compensation Committee at any time after grant, and is accelerated
automatically upon the death or disability of the optionee. Upon termination of
employment other than for cause, an optionee will have ninety days to exercise
any option grant that is vested. Any option grant not exercised within that
time period will be forfeited. Forfeiture will automatically occur if the
optionee's employment with the Company is terminated for cause.
Upon exercise, optionees may acquire their shares by paying the exercise
price to the Company in cash; by delivering or causing to be withheld from the
option shares, shares of the Company's Common Stock the value of which is equal
to the exercise price or by delivering an exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds from the option shares to pay the exercise
price.
The Plan provides that options would become immediately and fully
exercisable upon a Change in Control. For purposes of the Plan, a "Change in
Control" occurs principally (i) when a person (or group of persons acting in
concert) acquires 25% or more of the Company's Common Stock (other than those
presently holding such amount), (ii) when there is a change in the composition
of a majority of the Board of Directors when compared with those who are
currently serving or (iii) when the stockholders of the Company approve a
reorganization, merger, consolidation or other transaction as a result of which
the Company or a Subsidiary is not the surviving entity.
No option may be sold, transferred, pledged, or otherwise disposed of,
other than by will or by the laws of descent and distribution. All rights
granted to a participant under the Plan shall be exercisable during his
lifetime only by such participant, or his guardians or legal representatives.
The Compensation Committee may amend the Plan in such respects as it deems
advisable except that it may not (1) grant an option at a price that is less
than 100% of the fair market value of the Company's Common Stock on the date of
the option grant, (2) grant an individual option in excess of 50,000 shares of
the Company's Common Stock and (3) change the vesting requirement to be less
than twelve months from date of grant. The shareholders of the Company must
approve any amendment that would (i) materially increase the number of shares
of Common Stock that may be issued under the Plan, or (ii) materially modify
the requirements of eligibility for participation in the Plan. Stock option
grants under the Plan may be amended with the consent of the recipient so long
as the amended award is consistent with the terms of the Plan.
FEDERAL INCOME TAX CONSEQUENCES
An optionee will not incur Federal income tax liability when he or she is
granted an incentive stock option or a non-qualified stock option.
Upon exercise of an incentive stock option, an optionee generally will not
recognize income, unless he or she is subject to the alternative minimum tax.
Upon exercise of a non-qualified stock option, an optionee generally will
recognize compensation income, which is subject to income tax withholding by
the Company, equal to the difference between the fair market value of the
Common Stock on the date of the exercise and the option price.
The Company usually will be entitled to a tax deduction at the time and in
the amount that the optionee recognizes ordinary compensation income in
connection therewith. As stated above, this usually occurs upon exercise of
non-qualified options. No deduction is allowed in connection with an incentive
stock option, unless the employee disposes of Common Stock received upon
exercise in violation of the holding period requirements.
This summary of Federal income tax consequences of non-qualified stock
options and incentive stock options does not purport to be complete, and is
based upon interpretations of the existing laws, regulations and rulings which
could be materially altered with enactment of any new tax legislation. There
may also be state and local income taxes applicable to these transactions.
The Board of Directors believes that approval of the amendment to the 1994
Omnibus Stock Option Plan increasing the number of shares available for
issuance
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<PAGE> 5
thereunder by 600,000 is in the best interests of all shareholders and
recommends a vote "for" this Proposal.
The favorable vote of the holders of a majority of the shares of Common
Stock represented at the meeting is needed to approve this Proposal No. 1.
PROPOSAL 2. ELECTION OF DIRECTORS
At the annual meeting, eleven directors are to be elected to hold office
until the next annual meeting of shareholders and until their successors are
elected and qualified. Unless otherwise specified in the proxy, the shares
represented by the proxy hereby solicited will be voted by the persons
designated as proxies for the persons named below, all of whom are now
directors of the Company. Should any of these nominees become unable to accept
nomination or election (which is not anticipated), it is the intention of the
persons designated as proxies to vote for the election of the remaining
nominees named and for such substitute nominees as the management may
recommend.
The nominees are: Bernard Fife, Nathaniel L. Sills, John L. Kelsey, Robert
J. Swartz, William H. Turner, Lawrence I. Sills, Arthur D. Davis, Robert M.
Gerrity, Arthur S. Sills, Marilyn F. Cragin and Andrew M. Massimilla.
INFORMATION WITH RESPECT TO NOMINEES AND MAJOR
SHAREHOLDERS
Information with respect to each nominee is set forth in Chart "A" on page
4. Additional information with respect to major shareholders of the Company,
including their percentage ownership in the Company's voting stock is set forth
in Chart "B" on page 5.
Shares of Common Stock of the Company owned outright by Bernard Fife
together with shares held as trustee for or owned by Fife family members
aggregate 2,412,049 shares (18.4%). Shares of the Common Stock of the Company
owned outright by Nathaniel L. Sills, together with shares held as trustee for
or owned by Sills family members aggregate 2,563,195 shares (19.5%). The
244,125 shares of Common Stock owned by charitable foundations of which Messrs.
Fife and Sills are trustees represent 1.9% of the total outstanding voting
securities of the Company.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's Common Stock, to file with the Securities
and Exchange Commission and the New York Stock Exchange initial reports of
ownership and reports of changes in ownership of the Common Stock of the
Company. Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. To the Company's knowledge, based solely on review of
the copies of such reports furnished to the Company and written representations
that no other reports were required, during the fiscal year ended December 31,
1996 all Section 16(a) filing requirements applicable to its officers and
directors were complied with except that Mr. John Gethin, Vice President -
General Manager EIS Brake Parts Division, who became an officer of the Company
in 1996, filed a report, approximately one month late, regarding the purchase
of 900 shares of the Company's Common Stock in August 1996.
3
<PAGE> 6
CHART A--INFORMATION ABOUT NOMINEES
<TABLE>
<CAPTION>
HAS SHARES OF COMMON STOCK
OFFICE WITH COMPANY AND SERVED BENEFICIALLY OWNED DIRECTLY
PRINCIPAL OCCUPATION AS DIRECTOR OR INDIRECTLY AS OF
NAME AGE DURING THE PAST FIVE YEARS SINCE MARCH 15, 1997*
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<S> <C> <C> <C> <C>
Bernard Fife . . . . . . . 81 Co-Chairman and Director of the Company 1947 239,520 (1)(2)
318,632 (3)(4)
Nathaniel L. Sills . . . . 89 Co-Chairman and Director of the Company 1946 139,880 (1)(5)
335,507 (3)(6)
Marilyn F. Cragin . . . . . 44 Director of the Company (8) 1995 554,449
57,475 (3)
19,400 (7)
Arthur S. Sills . . . . . . 53 Director of the Company (9) 1995 483,147
36,667 (3)
34,724 (7)
Lawrence I. Sills . . . . . 57 President and Director of the Company (10) 1986 512,385 (1)
36,666 (3)
Arthur D. Davis . . . . . . 49 Director of the Company (11) 1986 45,879 (1)
60,982 (3)
John L. Kelsey . . . . . . 71 Director of the Company 1964 1,420
Robert J. Swartz . . . . . 71 Director of the Company 1992 295
Former Senior Partner of KPMG Peat Marwick
LLP (12)
William H. Turner . . . . . 57 Director of the Company 1990 1,295
President and Co-CEO
Franklin Electronic Publishers, Inc. (13)
Robert M. Gerrity . . . . . 59 Director of the Company 1996 295
Chairman & CEO, Antrim Group, Inc. (14)
Andrew M. Massimilla . . . 55 Director of the Company 1996 259
Business Consultant (15)
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</TABLE>
(1) Excludes allocated shares held by Trustees under the Company's ESOP.
(2) Excludes 112,063 shares of Common Stock held in the Fife Family
Foundation.
(3) Shares are subject to family trusts in which beneficial ownership is
disclaimed.
(4) Nathaniel L. Sills is co-trustee.
(5) Excludes 132,062 shares of Common Stock held in the Sills Family
Foundation.
(6) Bernard Fife is co-trustee.
(7) Held as custodian for minor children.
(8) Marilyn F. Cragin is an adult daughter of Bernard Fife. She is co-owner
of an art gallery. Prior to that she was a practicing psychotherapist.
She was elected a Director of the Company on October 18, 1995.
(9) Arthur S. Sills is an adult son of Nathaniel L. Sills and a brother of
Lawrence I. Sills. He has been an educator and administrator for more
than twenty years. He was elected a Director of the Company on October
18, 1995.
(10) Lawrence I. Sills is an adult son of Nathaniel L. Sills. He was appointed
President of the Company in May 1986. Prior to that, and since 1983, he
had been Vice President, Operations of the Company
(11) Arthur D. Davis is an adult son-in-law of Bernard Fife. He was appointed
Vice President, Materials Management of the Company in May 1986 and held
that position until January 1989 when he resigned this position.
(12) Mr. Swartz was a senior partner in the accounting firm KPMG Peat Marwick
LLP (and predecessor firms) for more than five years. On March 31, 1991
Mr. Swartz retired from KPMG Peat Marwick LLP and is currently working as
an independent financial consultant. He is also a director of Victoria
Creations, Inc., United Merchants & Manufacturers, Inc. and Bed Bath &
Beyond, Inc.
(13) Mr. Turner assumed his present position on October 1, 1996. Prior to that
date he was Vice Chairman, Chase Manhattan Bank, and its predecessor
Chemical Banking Corporation. He is also a director of Franklin
Electronic Publishers, Inc. and The Park Avenue Bank.
(14) Mr. Gerrity has been the Chairman & CEO of the Antrim Group Inc. since
1996. Prior to that he was the Vice Chairman of New Holland, n.v. He is
also a director of Rubbermaid Inc., Harnischfeger Industries Inc. and
Libralter Engineering Systems Inc. He was elected a Director of the
Company on July 18, 1996.
(15) Mr. Massimilla is presently a business consultant. He held the positions
of Consultant and Managing Director of the Henley Group & Affiliated
Companies from 1989 to 1995. He was elected a Director of the Company on
October 17, 1996.
* Mr. Bernard Fife, Mr. Nathaniel L. Sills, Mr. Larry I. Sills, Mr. Arthur S.
Sills and Mrs. Marilyn F. Cragin disclaim beneficial ownership of securities
with respect to which their ownership is specified to be indirect.
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<PAGE> 7
CHART B--HOLDINGS OF MANAGEMENT AND HOLDERS OF 5% OR MORE OF ANY
CLASS OF THE COMPANY'S VOTING SECURITIES
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
TITLE OF ADDRESS OF OWNERSHIP PERCENT OF
CLASS BENEFICIAL OWNER AS OF MARCH 15, 1997* CLASS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bernard Fife . . . . . . . . . . Common 37-18 Northern Boulevard 239,520 (1)(2) 1.82
Long Island City, N.Y. 318,632 (3)(4) 2.43
Nathaniel L. Sills . . . . . . . Common 37-18 Northern Boulevard 139,880 (1)(5) 1.07
Long Island City, N.Y. 335,507 (3)(6) 2.56
Lawrence I. Sills (8) . . . . . . Common 37-18 Northern Boulevard 512,385 (1) 3.90
Long Island City, N.Y. 36,666 (3) .28
Arthur D. Davis (9) . . . . . . . Common 37-18 Northern Boulevard 45,879 (1) .35
Long Island City, N.Y. 60,982 (3) .46
Marilyn F. Cragin (10) . . . . . Common 37-18 Northern Boulevard 554,449 4.22
Long Island City, N.Y. 57,475 (3) .44
19,400 (7) .15
Arthur S. Sills (11) . . . . . . Common 37-18 Northern Boulevard 483,147 3.68
Long Island City, N.Y. 36,667 (3) .28
34,724 (7) .26
John L. Kelsey . . . . . . . . . Common P.O. Box 8264 1,420 .01
Vero Beach, FL
William H. Turner . . . . . . . . Common One Franklin Plaza 1,295 .01
Burlington, N.J.
Robert J. Swartz . . . . . . . . Common 1500 Palisade Avenue 295 -
Fort Lee, NJ.
Robert M. Gerrity . . . . . . . . Common 114 Division Street 295 -
Bellaire, MI
Andrew M. Massimilla . . . . . . Common One Peninsula Dr. 259 -
Stratham, NH
Directors and Officers as a
Group (twenty persons) . . . . . 2,919,533 (1) 22.23
Glickenhaus & Co. . . . . . . . . Common Six East 43rd St. 1,276,600 9.72
New York, N.Y.
Lazard Freres & Co. . . . . . . . Common One Rockefeller Plaza 768,685 5.85
New York, N.Y.
Gabelli Funds, Inc. . . . . . . . Common One Corporate Center 1,094,200 8.33
Rye, N.Y.
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</TABLE>
(1) Excludes allocated shares held by Trustees under the Company's ESOP.
(2) Excludes 112,063 shares of Common Stock held in the Fife Family
Foundation.
(3) Shares are subject to family trusts in which beneficial ownership is
disclaimed.
(4) Nathaniel L. Sills is co-trustee.
(5) Excludes 132,062 shares of Common Stock held in the Sills Family
Foundation.
(6) Bernard Fife is co-trustee.
(7) Held as custodian for minor children.
(8) Lawrence I. Sills is an adult son of Nathaniel L. Sills.
(9) Arthur D. Davis is an adult son-in-law of Bernard Fife.
(10) Marilyn F. Cragin is an adult daughter of Bernard Fife.
(11) Arthur S. Sills is an adult son of Nathaniel L. Sills and a brother of
Lawrence I. Sills.
* Mr. Bernard Fife, Mr. Nathaniel L. Sills, Mr. Arthur S. Sills and Mrs.
Marilyn F. Cragin disclaim beneficial ownership of securities with
respect to which their ownership is specified to be indirect.
5
<PAGE> 8
MEETINGS OF THE BOARD OF DIRECTORS AND ITS
COMMITTEES
In the last full fiscal year the total number of meetings of the Board of
Directors, including regularly scheduled and special meetings was six.
The Company has a Compensation Committee and an Audit Committee of the
Board of Directors, each consisting of five independent outside directors. The
members of both committees are John L. Kelsey, Robert J. Swartz, William H.
Turner, Robert M. Gerrity and Andrew M. Massimilla. The Compensation
Committee's function is to approve the compensation packages (salary and bonus)
of the Company's Executive Officers, to administer the Company's Stock Option
Plan and to review the Company's overall compensation policies. The
Compensation Committee was established in late 1992 and held three meetings in
1996. The Audit Committee recommends to the Board of Directors the engagement
of the independent auditors of the Company and reviews with the independent
auditors the scope and results of the Company's audits, the professional
services furnished by independent auditors to the Company and their Management
Letter with comments on the Company's internal accounting controls. The Audit
Committee met three times in 1996. The Company does not have a nominating
committee charged with the search for and recommendation to the Board of
potential nominees for Board positions. This function is performed by the Board
as a whole, which considers all recommendations for potential nominees.
Directors who are not officers or related to officers were paid a retainer
of $15,000 consisting of cash remuneration of $10,000 and shares of the
Company's Common Stock valued at $5,000 as of the date of the 1996 Annual
Meeting of Shareholders. In addition, pursuant to the Company's Independent
Outside Directors' Stock Option Plan, these directors each receive an annual
stock option grant of 1,000 shares of the Company's Common Stock as of the date
of each year's Annual Meeting of Shareholders. Directors who are not officers
or related to officers receive $1,000 for each Regular, Audit Committee and
Compensation Committee meeting they attend. Marilyn F. Cragin, Arthur D. Davis
and Arthur S. Sills receive $500 for each meeting they attend. All other
directors receive no payment for the fulfillment of their directorial
responsibilities.
CERTAIN TRANSACTIONS
During the year 1996, the Company, from time to time, borrowed monies on a
short-term basis from the Chase Manhattan Bank under a line of credit. Such
borrowings were evidenced by notes which bore interest at rates which varied
between 5.72% and 7.08% per annum depending on the time of the borrowing. In
1996 the Company had no compensating balance requirements from Chase Manhattan
Bank. Short-term borrowing from Chase Manhattan Bank fluctuated from $0 to
$30,000,000. The largest principal amount of such notes outstanding at any
month-end during the year was $30,000,000. The aggregate amount of interest
paid to Chase Manhattan Bank during the year was approximately $889,000.
In addition, on March 10, 1989 the Company entered into an agreement with
Chemical Bank (subsequently merged with Chase Manhattan Bank) to finance the
purchase, on the open market, of 1,000,000 shares of the Company's Common Stock
in connection with the Company's Employee Stock Ownership Plan (ESOP) which was
established in January 1989. Under this agreement the Company borrowed
$16,729,000 payable in equal installments through 1998. As of December 1991,
Chemical Bank and NBD Bank, N.A. entered into an Assignment Agreement wherein
Chemical Bank assigned all of its right, title and interest in the March 10,
1989 ESOP financing agreement to NBD Bank, N.A. At April 22, 1997, the
Company's indebtedness to NBD Bank, N.A. under this agreement was $1,673,571.
Interest on this loan agreement is the lower of 91% of the prime rate, or 91%
of the "LIBOR" plus 1.092%. The Company and Chase Manhattan Bank are parties to
an interest rate swap agreement to reduce the impact of changes in interest
rates on the ESOP loan agreement. The swap agreement modifies the interest rate
on loan agreement notional indebtedness adjusting favorably or unfavorably for
the spread between 77.52% of the 3-month reserve unadjusted "LIBOR" and 7.69%.
During 1996 three executive officers, Steven Brown, Vice President and
General Manager, Champ Division, Joseph G. Forlenza, Vice President and General
Manager, Standard Division, and Stanley Davidow, Vice President and General
Manager, Four Seasons Division were indebted to the Company as a result of
loans made by the Company to these officers. In 1994, officers of the Company
were granted stock options under the Company's 1994 Omnibus Stock Option Plan.
These grants required, among other things, that the grantees attain, by May 3,
1996, a Common Stock ownership position with a market value equal to 50% of the
grantee's base salary. The Compensation Committee permitted the Company to
make available
6
<PAGE> 9
to each grantee a loan for up to 75% of his stock ownership requirement at a
fixed rate of interest equal to the Company's short term interest rate the day
the loan is made. The Committee also required that any loan made for the above
purpose must be repaid within four years and must be collateralized by the
Common Stock acquired with the loan proceeds.
In 1996 Mr. Brown borrowed $45,948 for the purchase of the Company's Common
Stock to meet the above-mentioned stock ownership requirement. At March 31,
1997, the amount of this indebtedness was $40,908. In addition, Mr. Brown has
an outstanding loan balance relating to his 1982 relocation upon employment
with the Company. In 1996 the highest amount of this indebtedness was $24,772.
At March 31, 1997, the amount of this indebtedness was $18,505.
In 1994 Mr. Forlenza borrowed $88,875 for the purchase of the Company's
Common stock to meet the above-mentioned stock ownership requirement. At March
31, 1997, the amount of this indebtedness was $62,213.
In 1996 Mr. Davidow borrowed $77,916 for the purchase of the Company's
Common stock to meet the above-mentioned stock ownership requirement. At March
31, 1997, the amount of this indebtedness was $73,716.
During 1996, the Company's Four Seasons Division purchased a portion of its
remanufacturing component requirements (approximately $2,800,000) from Recore
Automotive, Incorporated. The owner of Recore Automotive is a member of the
immediate family of Mr. Stanley Davidow, Vice President and General Manager,
Four Seasons Division. The purchases made from Recore Automotive are within the
Company's guidelines for transactions with related parties, which requires that
any such transactions be conducted on an arm's length basis.
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation for the Co-Chief
Executive Officers and the four other most highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION ALL OTHER
ANNUAL COMPENSATION AWARDS COMPENSATION
NAME AND ----------------------------------------------------------------------------------------
PRINCIPAL OTHER STOCK OPTIONS
POSITION YEAR SALARY BONUS COMPENSATION (1) GRANTED (2) (3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bernard Fife . . . . . . . . . . . . . . 1996 $259,000 $ 27,600 -- $ 3,514 $ 6,774
Co-Chief Executive Officer, . . . . . 1995 259,000 26,490 -- 6,835 8,223
Co-Chairman of the Board and Director . 1994 259,000 130,000 30,000 9,062 12,858
Nathaniel L. Sills . . . . . . . . . . . 1996 259,000 27,600 -- (3,727) 6,774
Co-Chief Executive Officer, . . . . . 1995 259,000 26,490 -- (3,634) 8,223
Co-Chairman of the Board and Director . 1994 259,000 130,000 30,000 (2,832) 12,858
Lawrence I. Sills . . . . . . . . . . . . 1996 278,000 92,000 22,000 14,823
President, Chief Operating . . . . . . 1995 278,000 79,470 -- 21,381
Officer and Director . . . . . . . . . 1994 278,000 130,000 30,000 32,716
Joseph G. Forlenza . . . . . . . . . . . 1996 260,000 115,875 16,000 15,341
Vice President/ . . . . . . . . . . . 1995 250,000 100,938 -- 20,958
General Manager Standard Division . . 1994 240,000 131,138 20,000 30,514
Stanley Davidow . . . . . . . . . . . . . 1996 257,000 89,288 16,000 14,637
Vice President/ . . . . . . . . . . . 1995 240,000 79,800 -- 18,869
General Manager Four Seasons Division . 1994 230,000 110,019 20,000 28,166
Michael J. Bailey . . . . . . . . . . . . 1996 225,000 79,500 16,000 11,876
Vice President Finance, . . . . . . . 1995 210,000 78,596 -- 15,107
Chief Financial Officer . . . . . . . 1994 190,000 89,938 20,000 19,004
</TABLE>
(1) Does not include compensation associated with perquisites because such
amounts do not exceed the lesser of either $50,000 or 10% of total salary
and bonus disclosed.
(2) Includes accruals to fund a widows death benefit program which provides
for payments of $2,500 per month (as adjusted for cost of living increases
from 1977) payable to the widows of Messrs. B. Fife and N. L. Sills and,
in 1992, premiums paid by the Company for life insurance, on the lives of
Messrs. B. Fife and N. L. Sills, in the amount of $200,000 each, payable
to designated beneficiaries.
(3) Company contributions to Profit Sharing, 401K, ESOP and SERP programs.
7
<PAGE> 10
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (2)
- -----------------------------------------------------------------------------------------------------------------------------------
% OF TOTAL
OPTIONS/SARS
OPTIONS/ GRANTED TO EXERCISE OR
SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE (1) 5% 10%
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence I. Sills . . . . . . . . . . . . 22,000 14.5% $16.25 4/4/02-5/4/05 $98,706 $218,218
Joseph G. Forlenza . . . . . . . . . . . 16,000 10.5% 16.25 4/4/02-5/4/05 71,786 158,704
Stanley Davidow . . . . . . . . . . . . . 16,000 10.5% 16.25 4/4/02-5/4/05 71,786 158,704
Michael J. Bailey . . . . . . . . . . . . 16,000 10.5% 16.25 4/4/02-5/4/05 71,786 158,704
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Stock option grants expire at the rate of 25% of the total grant on April
4th of each year beginning April 4, 2002.
(2) The dollar amounts under these columns are the result of calculations at
five percent and ten percent rates set by the Securities and Exchange
Commission and therefore are not intended to forecast possible future
appreciation, if any, of the Company's stock price.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to option exercises
in 1996 by the Named Officers and the value of such Officers' unexercised
options at December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996
AND DECEMBER 31, 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR-END FISCAL YEAR-END (2)
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bernard Fife . . . . . . . . . . . . . . -- -- 25,000 15,000 -- --
Nathaniel L. Sills . . . . . . . . . . . -- -- 25,000 15,000 -- --
Lawrence I. Sills . . . . . . . . . . . . -- -- 25,000 37,000 -- --
Joseph G. Forlenza . . . . . . . . . . . -- -- 10,000 26,000 -- --
Stanley Davidow . . . . . . . . . . . . . 5,000 2,435 5,000 26,000 -- --
Michael J. Bailey . . . . . . . . . . . . -- -- 10,000 26,000 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Market value of underlying securities on date of exercise, minus the
exercise price.
(2) Market value of unexercised options is based on the closing price of the
Company's Common Stock on the New York Stock Exchange of $13.875 per share
on December 31, 1996 (the last trading day of 1996), minus the exercise
price. All of the stock options unexercised at December 31, 1996 have an
exercise price per share greater than the market value at December 31, 1996
($13.875) and are therefore "Out of the Money".
8
<PAGE> 11
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Company's Compensation Committee of the Board of Directors was
established in late 1992. The Committee is responsible for approving the
compensation packages (salary and bonus) of the Company's Executive Officers,
for administering the Company's 1994 Omnibus Stock Option Plan and for
reviewing the Company's overall compensation policies. These policies include
annual base salary, a formal Management by Objective (MBO) Bonus Program and a
Stock Option Program.
Under the MBO Bonus Program, which was instituted in 1987, the bonuses of
the Co-Chief Executive Officers and the Chief Operating Officer are based on
Company earnings and asset management. The goals of the other executive
officers are based one-half on individual goals approved by the Chief Operating
Officer and one-half on Company earnings.
The MBO Bonus Program created a direct connection between Company
performance and executive compensation while the executives are given strong
incentives for long-term future performance by the granting, from time to time,
of stock options. These stock options, which require a holding period before
they can be exercised, have value for executives only if the Company's stock
price increases above the option grant price, which is set at the market price
on the date of each grant.
As a matter of Company policy, until 1995, the compensation of the current
Co-Chief Executive Officers had consisted of a relatively modest base salary, a
regular bonus separate from the MBO Program and a bonus under the MBO Program.
Beginning in 1995, the payment of a regular bonus was discontinued. As a
result, their compensation in 1996, exclusive of MBO bonus, represents a 21%
decrease from the 1994 level.
Submitted by:
John L. Kelsey
Robert J. Swartz
William H. Turner
Robert M. Gerrity
Andrew M. Massimilla
9
<PAGE> 12
FIVE YEAR PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
FOR STANDARD MOTOR PRODUCTS, INC. S&P 500 INDEX AND A PEER GROUP (1)
<TABLE>
<CAPTION>
SMP S&P PEER
GROUP
<S> <C> <C> <C>
1991 100 100 100
1992 137 108 149
1993 268 118 236
1994 205 120 170
1995 163 165 176
1996 155 199 228
</TABLE>
Assumes $100 invested on December 31, 1991 in Standard Motor Products, Inc.
Common stock, S&P 500 Index and a Peer Group (1).
* Total Return assumes reinvestment of dividends.
(1) The Peer Group companies consist of Echlin Inc., Federal-Mogul Corporation,
Dana Corporation, SPX Corporation, MascoTech, Inc., Genuine Parts Company
and Arvin Industries, Inc.
10
<PAGE> 13
INFORMATION AS TO VOTING SECURITIES
Holders of shares of Common Stock have the right to one vote for each share
registered in their names on the books of the Company as of the close of
business on April 11, 1997. On such date 13,130,560 shares of Common Stock were
outstanding and entitled to vote.
The close of business on April 11, 1997 has been fixed by the Board of
Directors as the record date for the determination of shareholders entitled to
notice of, and vote at, the annual meeting of shareholders of the Company to be
held on May 22, 1997.
VOTING AND REVOCATION OF PROXIES
The persons named in the accompanying form of proxy will vote the shares
represented thereby, as directed in the proxy, if the proxy appears to be valid
on its face and is received on time. In the absence of specific instructions,
proxies so received will be voted for the election of the named nominees to the
Company's Board of Directors. Proxies are revocable at any time before they are
exercised by sending in a subsequent proxy (with the same or other
instructions), by appearing at the Annual Meeting of Shareholders and voting in
person or by notifying the Company that it is revoked.
METHOD AND EXPENSE OF PROXY SOLICITATION
The solicitation of proxies will be made primarily by mail. Proxies may
also be solicited personally and by telephone by regular employees of the
Company at nominal cost.
The Company does not expect to pay compensation for any solicitation of
proxies but may pay brokers and other persons holding shares in their names, or
in the names of nominees, their expenses for sending proxy material to
principals for the purpose of obtaining their proxies. The Company will bear
all expenses in connection with the solicitation of proxies.
INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick LLP
to audit the accounts of the Company for the fiscal year ending December 31,
l997. Management does not believe it is necessary for shareholders to ratify
this appointment due to the satisfactory services of KMPG Peat Marwick LLP, in
the prior year. There is no requirement under Federal or New York law that the
appointment of independent auditors be approved by shareholders.
Management's recommendation for the appointment of KMPG Peat Marwick LLP
was unanimously approved by the Audit Committee of the Board of Directors
consisting of Messrs. Kelsey, Turner, Swartz, Gerrity and Massimilla.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the Company's 1998 Annual
Meeting of Shareholders pursuant to the provisions of Rule 14a-8 of the
Securities and Exchange Commission, promulgated under the Securities Exchange
Act of 1934, as amended, must be received at the Company's offices in Long
Island City, New York, by January 6, 1998 for inclusion in the Company's proxy
statement and form of proxy relating to that meeting.
GENERAL
The Company's 1996 Annual Report has been mailed to shareholders. A copy of
the Company's Annual Report on Form 10-K will be furnished to any shareholder
who requests the same free of charge (except for Exhibits thereto for which a
nominal fee covering reproduction and mailing expenses will be charged.)
OTHER MATTERS
As of the date of this proxy statement, the management knows of no matters
other than Proposal 1 and the election of directors to come before the meeting.
However, if any other matters should properly come before the meeting, it is
the intention of the persons named in the accompanying form of proxy to vote
all proxies not marked to the contrary in accordance with their judgment on
such matters.
By Order of the Board of Directors
SANFORD KAY
Secretary
Dated: April 22, 1997
11
<PAGE> 14
[STANDARD LOGO]
STANDARD MOTOR PRODUCTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of STANDARD MOTOR PRODUCTS, INC. (the "Company")
hereby appoints BERNARD FIFE and NATHANIEL L. SILLS, as Proxies, each with
power to appoint his substitute, and hereby authorizes them to represent and
vote as designated below, all of the shares of the Company's Common Stock held
of record by the undersigned on April 11, 1997 at the annual meeting of
shareholders of the Company to be held on May 22, 1997, or at any adjournment
thereof.
1. To consider and vote upon a proposal to amend the Company's 1994 Omnibus
Stock Option Plan to increase the number of shares of the Company's Common
Stock available for issuance thereunder by 600,000 shares.
FOR n AGAINST n ABSTAIN n
2. Election of Directors
n FOR all nominees listed below (except as marked to the contrary below)
n WITHHOLD AUTHORITY to vote for any individual nominee listed below.
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.) Bernard
Fife, Nathaniel L. Sills, John L. Kelsey, Robert J. Swartz,
William H. Turner, Lawrence I. Sills, Arthur D. Davis, Marilyn F.
Cragin, Arthur S. Sills, Robert M. Gerrity and Andrew M.
Massimilla
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
PLEASE DATE AND SIGN ON REVERSE SIDE
<PAGE> 15
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND THE
NOMINEES ON THE REVERSE SIDE.
DATE: ........................ 1997
...................................
SIGNATURE
...................................
SIGNATURE IF HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME APPEARS
HEREON. WHEN SHARES ARE HELD BY JOINT
TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, AS EXECUTOR, ADMINISTRATOR,
TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH. IF A CORPORATION, PLEASE SIGN IN
FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE
