<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE STANDARD PRODUCTS COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
THE STANDARD PRODUCTS COMPANY
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
(4) Proposed maximum aggregate value of transaction:
/ / 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:
(4) Date filed:
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<PAGE> 2
THE STANDARD PRODUCTS COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------
Notice is hereby given that the annual meeting of shareholders of The
Standard Products Company, an Ohio corporation (the "Company"), will be held at
the offices of the Company, 2130 West 110th Street, Cleveland, Ohio 44102, on
Monday, October 17, 1994 at 9:00 a.m., Cleveland time, for the following
purposes:
1. To receive reports at the meeting. No action constituting approval
or disapproval of the matters referred to in said reports is contemplated.
2. To elect three directors, each to serve for a term of three years.
3. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on September 2, 1994
will be entitled to notice of and to vote at said meeting or any adjournment
thereof. Shareholders are urged to complete, date and sign the enclosed proxy
and return it in the enclosed envelope.
By order of the Board of Directors,
J. RICHARD HAMILTON,
SECRETARY
Dated: September 14, 1994
<PAGE> 3
THE STANDARD PRODUCTS COMPANY
PROXY STATEMENT
------------------
This proxy statement is furnished in connection with the solicitation of
proxies to be used at the annual meeting of shareholders of The Standard
Products Company, an Ohio corporation (the "Company"), to be held at the offices
of the Company, 2130 West 110th Street, Cleveland, Ohio 44102, on Monday,
October 17, 1994 at 9:00 a.m., Cleveland time. This proxy statement and the
accompanying notice and proxy will first be sent to shareholders by mail on or
about September 14, 1994.
ANNUAL REPORT. A copy of the Company's Annual Report to Shareholders for
the fiscal year ended June 30, 1994 is enclosed with this proxy statement.
Solicitation and Revocation of Proxies. This solicitation of proxies is
made by and on behalf of the Board of Directors. The cost of the solicitation of
proxies will be borne by the Company. The Company has retained Georgeson &
Company at an estimated cost of $8,000, plus reimbursement of expenses, to
assist in the solicitation of proxies from brokers, nominees, institutions and
individuals. In addition to solicitation of proxies by mail, Georgeson & Company
and regular employees of the Company may solicit proxies by telephone or
facsimile.
If the enclosed proxy is returned, the shares represented thereby will be
voted in accordance with any specifications made therein by the shareholder. In
the absence of any such specification, they will be voted to elect the directors
set forth under "Election of Directors" below. A shareholder's presence alone at
the meeting will not operate to revoke his proxy. The proxy is revocable by a
shareholder at any time insofar as it has not been exercised by giving notice to
the Company in writing at its address indicated above or in open meeting.
OUTSTANDING SHARES. The close of business on September 2, 1994 has been
fixed as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting. On such date, the Company's voting
securities outstanding consisted of 16,703,484 Common Shares, $1 par value, each
of which is entitled to one vote at the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of Common Shares of the Company as of July 1, 1994, by: (a) the
Company's directors (including nominees for director); (b) each other person who
is known by the Company to own beneficially more than 5% of the outstanding
Common Shares; (c) the Company's Chief Executive Officer and the other four most
highly compensated executive officers named in the Summary Compensation Table;
and (d) the Company's executive officers and directors as a group. Except as
otherwise described in the notes below, the following beneficial owners have
sole voting power and sole investment power with respect to all Common Shares
set forth opposite their names.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------------ ------------------ --------
<S> <C> <C>
James S. Reid, Jr............................................... 1,405,623(1) 8.4%
2130 West 110th Street
Cleveland, Ohio 44102
John D. Drinko.................................................. 780,481(2) 4.7%
John D. Sigel................................................... 298,840(3) 1.8%
Leigh H. Perkins................................................ 269,330(4) 1.6%
Theodore K. Zampetis............................................ 106,011(5) (6)
Malcolm R. Myers................................................ 84,218(7) (6)
Curtis E. Moll.................................................. 45,793(8) (6)
</TABLE>
1
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------------ ------------------ --------
<S> <C> <C>
W. Hayden Thompson.............................................. 17,000 (6)
Alan E. Riedel.................................................. 16,612 (6)
Richard J. Boland............................................... 4,000 (6)
Edward B. Brandon............................................... 3,750(9) (6)
Alfred M. Rankin, Jr............................................ 2,500 (6)
Stephan J. Mack................................................. 21,093(10) (6)
Larry J. Enders................................................. 19,551(11) (6)
Aubrey E. Arndt................................................. 5,207(12) (6)
All Executive Officers and Directors as a Group................. 3,254,099 19.5%
</TABLE>
- - ---------------
(1) Includes 926,477 shares owned by Mr. Reid (which amount includes 22,900
restricted shares earned in fiscal 1993 and 1994 but subject to
forfeiture); 139,196 shares owned by his wife, Donna S. Reid; 19,020 shares
which Mr. Reid has the right to acquire pursuant to stock options currently
exercisable or exercisable within 60 days; 71,987 shares held by a life
trust in which Mr. Reid has a remainder interest; 2,512 shares held for his
account under the Company's Individual Retirement and Investment Trust
Plan; and 246,431 shares held by The Standard Products Foundation, of which
Mr. Reid is President and a trustee. The number of shares shown above does
not include shares owned by Mr. Reid's children or grandchildren and
210,345 shares held by two trusts as to which Mr. Reid is an income
beneficiary and Mr. Drinko is trust advisor, which shares are included in
the number of shares reported by Mr. Drinko.
(2) Includes 47,010 shares owned by Mr. Drinko; 20,215 shares held in an
individual retirement account of which Mr. Drinko is the beneficiary;
36,025 shares owned by his wife Elizabeth G. Drinko; 1,150 shares held in
an individual retirement account of which Mrs. Drinko is the beneficiary;
1,374 shares held by Mrs. Drinko as custodian for three grandchildren;
165,076 shares owned by a corporation of which Mr. Drinko is a shareholder,
officer and director; 62,218 shares owned by a charitable foundation
established by Mr. Drinko and his wife; 210,345 shares held by two trusts
as to which Mr. Drinko is a trust advisor and of which Mr. Reid is an
income beneficiary; 112,062 shares owned by a foundation of which he is
President and a trustee; and 125,006 shares held by a charitable lead trust
of which Mr. Drinko is a co-trustee. In addition, 88,000 shares are held by
a charitable lead trust in which Mr. Drinko and Mr. Sigel are co-trustees;
78,125 shares are owned by Cloyes Gear & Products, Inc. of which Mr. Drinko
and Mr. Myers are directors; and 29,752 shares are owned by a foundation of
which Mr. Drinko and Leigh H. Perkins, a director of the Company, are
trustees, none of which shares are included in the number of shares shown
in the table above as being owned by Mr. Drinko.
(3) Includes 14,278 shares owned by Mr. Sigel; 176,156 shares owned by his
wife, Sally C. Reid; 20,406 shares held by trusts of which his wife is a
trustee; 88,000 shares owned by a charitable lead trust of which Mr. Sigel
and Mr. Drinko are co-trustees. In addition, 246,431 shares are owned by
The Standard Products Foundation of which Mr. Sigel is a trustee, none of
which shares are included in the number of shares shown in the table as
being owned by Mr. Sigel. Mr. Sigel is the son-in-law of Mr. Reid, Chairman
and Chief Executive Officer of the Company.
(4) Includes 134,556 shares owned by Mr. Perkins; 87,522 shares held by his
wife, Romi Perkins; 17,500 shares owned by a foundation of which he is a
trustee; and 29,752 shares owned by a foundation of which he and Mr. Drinko
are trustees.
(5) Includes 71,533 shares owned by Mr. Zampetis (which amount includes 35,400
restricted shares earned in fiscal 1992, 1993 and 1994 but subject to
forfeiture); 24,833 shares owned by his wife, Ann J. Zampetis; 1,405 shares
held for his account under the Company's Individual Retirement and
Investment Trust Plan; and 8,240 shares which Mr. Zampetis has the right to
acquire pursuant to stock options currently exercisable or exercisable
within 60 days.
(6) Represents less than one percent.
2
<PAGE> 5
(7) Includes 6,093 shares owned by Mr. Myers and 78,125 shares owned by Cloyes
Gear & Products, Inc.
(8) Includes 168 shares owned by his wife, Sara Moll; 33,125 shares owned by
the pension fund of MTD Products, Inc.; and 12,500 shares owned by a
charitable foundation of which he is a trustee.
(9) In addition, Mr. Brandon is a trustee of The Standard Products Foundation,
which owned 246,431 shares as of June 30, 1994, which shares are included
in the number of shares reported by Mr. Reid.
(10) Includes 11,600 shares owned by Mr. Mack; 763 shares held for his account
under the Individual Retirement and Investment Trust Plan; and 8,730 shares
which Mr. Mack has the right to acquire pursuant to stock options currently
exercisable or exercisable within 60 days.
(11) Includes 14,601 shares owned by Mr. Enders; 1,668 shares held for his
account under the Company's Individual Retirement and Investment Trust
Plan; and 3,282 shares which Mr. Enders has the right to acquire pursuant
to stock options currently exercisable or exercisable within 60 days.
(12) Includes 1,000 shares owned by Mr. Arndt; 435 shares held for his account
under the Company's Individual Retirement and Investment Trust Plan; and
3,772 shares which Mr. Arndt has the right to acquire pursuant to stock
options currently exercisable or exercisable within 60 days.
The persons named in the table above disclaim any beneficial ownership with
respect to shares owned by their spouses and children or by any trust, estate,
foundation, custody account or other entity of which they are a trustee, trust
advisor or custodian.
ELECTION OF DIRECTORS
In accordance with the Company's Amended Code of Regulations, the Board of
Directors has fixed the number of directors at twelve, divided into three
classes of four. At the Annual Meeting, the shares represented by proxies,
unless otherwise specified, will be voted for the election of the three nominees
hereinafter named, each to serve for the term of three years and until his
respective successor is duly elected and qualified.
One vacancy will remain on the Board. The reason for leaving a vacancy on
the Board at this time is that a person who could make a valuable contribution
to the Company as a director may become available during the year. The Amended
Code of Regulations of the Company permits the Board of Directors to fill the
vacancy until the next meeting of the Company's shareholders is called for the
election of directors. Although the Company may fill the vacancy during the
course of the year, no candidates have yet been considered and approved by the
Board of Directors. Proxies cannot be voted at the Annual Meeting for a greater
number of persons than the three persons named hereinafter, although persons in
addition to those nominees named herein may be nominated by the shareholders at
the meeting.
The nominees for director are Edward B. Brandon, James S. Reid, Jr. and
Alan E. Riedel, all of whom are presently directors of the Company. Messrs.
Brandon, Reid and Riedel were each elected at the 1991 Annual Meeting of the
Company's Shareholders.
If for any reason any of the nominees is not a candidate (which is not
expected) when the election occurs, it is intended that proxies will be voted
for the election of a substitute nominee designated by management. The following
information is furnished with respect to each person nominated for election as a
director.
3
<PAGE> 6
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
<TABLE>
<CAPTION>
EXPIRATION
PERIOD OF TERM
OF SERVICE FOR WHICH
NAME AND AGE PRINCIPAL OCCUPATION AS A DIRECTOR PROPOSED
------------ -------------------- ------------- ---------
<S> <C> <C> <C>
Edward B. Brandon Chairman, President and Chief 1976 to date 1997
62 Executive Officer, National City
Corporation (bank holding
company)
James S. Reid, Jr. Chairman and Chief Executive 1959 to date 1997
68 Officer of the Company
Alan E. Riedel Retired Vice Chairman, Cooper 1976 to date 1997
64 Industries, Inc. (worldwide
diversified manufacturer of
electrical products, electric
power equipment, tools and
hardware, automotive products and
petroleum and industrial
equipment)
</TABLE>
DIRECTORS WHOSE TERMS WILL CONTINUE AFTER THE ANNUAL MEETING
The following information is furnished with respect to each person
continuing as a director.
<TABLE>
<CAPTION>
PERIOD
OF SERVICE EXPIRATION
NAME AND AGE PRINCIPAL OCCUPATION AS A DIRECTOR OF TERM
------------ -------------------- ------------- ---------
<S> <C> <C> <C>
John D. Drinko Attorney at Law, Baker & Hostetler 1957-1958 1996
73 1967-1968
1969 to date
Curtis E. Moll Chairman and Chief Executive Officer, 1991 to date 1996
55 MTD Products, Inc. (manufacturer of
outdoor power equipment and tools,
dies and stampings for the automotive
industry)
Malcolm R. Myers Chairman and Chief Executive 1984 to date 1996
60 Officer, Cloyes Gear & Products,
Inc. (manufacturer of automotive
timing components)
Theodore K. Zampetis President and Chief Operating 1991 to date 1996
49 Officer of the Company
Leigh H. Perkins Chairman, The Orvis Company, 1969 to date 1995
66 Inc. (manufacturer and
distributor of fishing tackle and
sporting goods)
Alfred M. Rankin, Jr. Chairman, President and Chief 1989 to date 1995
52 Executive Officer, NACCO
Industries, Inc. (holding company
with operations in mining,
manufacturing of small electrical
appliances and forklift trucks
and service parts)
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PERIOD
OF SERVICE EXPIRATION
NAME AND AGE PRINCIPAL OCCUPATION AS A DIRECTOR OF TERM
------------ -------------------- ------------- ---------
<S> <C> <C> <C>
John D. Sigel Attorney at Law, Hale and Dorr 1991 to date 1995
41
W. Hayden Thompson Chairman and Chief Executive 1982 to date 1995
67 Officer, Solarflo Corporation
(manufacturer of gas and electric
heating equipment)
</TABLE>
- - ---------------
Each of the above directors and nominees for election as a director has had
the principal occupation indicated for at least five years, except Mr. Rankin,
who served as President and Chief Operating Officer of NACCO Industries, Inc.
from 1989 to May 1991; Mr. Riedel, who served as Senior Vice President-
Administration of Cooper Industries, Inc. from 1973 to August 1992; and Mr.
Zampetis, who served as Vice President-Manufacturing, North American Automotive
Operations of the Company, from February 1989 to February 1990, Executive Vice
President of the Company from February 1991 to June 1991, and Executive Vice
President and President, Standard Products Automotive Operations from June 1991
to October 1991.
Mr. Riedel is a director of Belden Inc., First Knox Bank Corp., Arkwright
Mutual Insurance Company and Chairman of Gardner Denver Machinery, Inc. Mr.
Rankin is a director of NACCO Industries, Inc., The B.F. Goodrich Company and
Reliance Electric Company. Mr. Brandon is a director of National City
Corporation, RPM, Inc. and Premier Industrial Corporation. Mr. Zampetis is a
director of Shiloh Industries, Inc. and National City Bank. Mr. Moll is a
director of United Screw and Bolt Corporation and Shiloh Industries, Inc.
During the fiscal year ended June 30, 1994, the Board of Directors held
seven meetings. During the last fiscal year the Board of Directors appointed an
Audit Committee, a Finance Committee and a Compensation Committee. The Board of
Directors does not have a Nominating Committee. Each member of the Board of
Directors, with the exception of Mr. Brandon, attended at least 75% of the
meetings of the Board of Directors and all of the committees on which he served.
The Audit Committee of the Board of Directors of the Company (the "Audit
Committee"), of which Mr. Boland, who is retiring as director of the Company
this year, was chairman and Messrs. Brandon, Moll, Myers, Rankin, Sigel and
Thompson were members, held three meetings and consulted informally on other
occasions during the last fiscal year. The Audit Committee recommends annually
to the Board of Directors the independent public accountants for the Company,
reviews with the independent public accountants the arrangements for and scope
of the audits to be conducted by them and the results of those audits, and
reviews various financial and accounting matters affecting the Company.
The Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee"), of which Mr. Riedel was chairman and Messrs. Boland,
Brandon, Myers and Perkins were members, held four meetings and consulted
informally on other occasions during the last fiscal year. The Compensation
Committee periodically reviews and determines the compensation, including fringe
benefits and incentive compensation, of officers and management personnel of the
Company, and administers the Company's restricted stock plan and the Company's
stock option plans. The Compensation Committee also determines the officers and
key employees of the Company eligible to participate in the plans and the stock
options to be awarded.
The Finance Committee, of which Mr. Drinko was chairman and Messrs. Moll,
Perkins, Riedel and Thompson were members, held two meetings and consulted
informally on other occasions during the last fiscal year. The Finance Committee
administers the investments of the Company's retirement funds and renders advice
and counsel to management on financial matters affecting the Company.
DIRECTOR'S COMPENSATION. Each director who is not an officer of the
Company or a subsidiary of the Company is compensated at the rate of $16,000
per year. Each director also receives $1,000 for attendance at each meeting of
the Board of Directors and for each meeting of any committee not held in
conjunction with a meeting of the Board of Directors. Committee Chairmen
receive an additional $1,000 per year.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following information is set forth with respect to the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers.
I. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION
---------------------------------- AWARDS
OTHER ---------------------- ALL
ANNUAL RESTRICTED OTHER
COMPEN- STOCK STOCK COMPEN-
NAME AND FISCAL SALARY BONUS SATION AWARD(S) OPTIONS SATION
PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) ($) (#) ($)(3)
------------------ ------ -------- -------- -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
James S. Reid, Jr. 1994 $550,000 $228,800 -- -- 3,000 $3,484
Chairman and Chief 1993 500,000 250,300 -- -- 22,550 3,546
Executive Officer 1992 500,000 250,000 -- $1,200,000(4) -- 4,700
Theodore K. Zampetis 1994 $338,542 $140,833 -- -- 3,000 $3,758
President and Chief 1993 300,000 150,000 -- -- 20,600 4,742
Operating Officer 1992 275,000 137,500 -- $2,400,000(5) -- 4,800
Stephan J. Mack 1994 $225,000 $ 90,000 -- -- 4,650 $3,635
President, Holm 1993 225,000 67,500 -- -- 950 1,558
Industries, Inc. 1992 225,000 67,500 -- -- -- --
Larry J. Enders 1994 $158,687 $ 65,804 -- -- 2,750 $4,508
Vice President and 1993 110,000 55,000 -- -- 3,380 3,143
President and Chief 1992 102,500 51,250 -- -- -- 1,894
Executive Officer, Oliver
Rubber Company
Aubrey E. Arndt 1994 $155,625 $ 64,470 -- -- 3,000 $4,261
Vice President- 1993 142,500 71,250 -- -- 6,930 3,620
Finance 1992 97,750 40,325 -- -- -- 1,674
</TABLE>
- - ---------------
(1) Amounts shown represent bonuses earned pursuant to the Company's Officers
Incentive Compensation Plan, except that amounts shown with respect to Mr.
Mack reflect amounts paid pursuant to the Holm Industries, Inc. bonus plan.
(2) Total perquisites and other personal benefits for each of the named
executive officers do not exceed the threshold amounts specified in the
regulations promulgated by the Securities and Exchange Commission.
(3) Amounts shown represent the Company's contributions on behalf of the named
executive officers under the Individual Retirement and Investment Trust Plan
and, in the case of Messrs. Reid and Zampetis, the Monthly Investment Plan.
During the last fiscal year, the Company's contributions on behalf of Mr.
Reid under each of the Individual Retirement and Investment Trust Plan and
the Monthly Investment Plan were $3,124 and $360, respectively. During the
last fiscal year, the Company's contributions on behalf of Mr. Zampetis
under each of the Individual Retirement and Investment Trust Plan and the
Monthly Investment Plan were $3,488 and $270, respectively.
(4) Mr. Reid was awarded 62,500 restricted Common Shares in fiscal 1992. Under
the terms of the award, up to 12,500 of the awarded Common Shares may be
earned in each of five consecutive fiscal years beginning in fiscal 1992,
based on the percentage of bonus earned during such fiscal year. Awarded
Common Shares earned by Mr. Reid are subject to forfeiture until the end of
the second fiscal year following the fiscal year in which such awarded
Common Shares are earned. Mr. Reid earned 12,500 of the awarded Common
Shares in each of fiscal 1992 and 1993, and 10,400 in fiscal 1994, 12,500 of
which shares vested in fiscal year 1994, 12,500 of which shares will vest in
1995 and 10,400 of which shares will vest in 1996. Awarded Common Shares, if
any, which are earned in fiscal years 1995 or 1996 will vest in
6
<PAGE> 9
fiscal years 1997 and 1998, respectively. In the event of Mr. Reid's death,
all earned but unvested awarded Common Shares and one-half of awarded but
unearned Common Shares shall vest in his designated beneficiary. Based on
the last reported sale price of the Company's Common Shares on the New York
Stock Exchange, the awarded and earned Common Shares had a fair market value
on June 30, 1994 of $1,035,450. For a discussion of the bonus payable to the
Company's officers, see "Executive Compensation--Compensation Committee
Report." Dividends are paid only with respect to the awarded Common Shares
which are earned.
(5) Mr. Zampetis was awarded 125,000 restricted Common Shares in fiscal 1992.
Under the terms of the award, up to 12,500 of the awarded Common Shares may
be earned in each of ten consecutive fiscal years beginning in fiscal 1992,
based on the percentage of bonus earned during such fiscal year. Awarded
Common Shares earned by Mr. Zampetis are subject to forfeiture until the end
of the third fiscal year following the fiscal year in which such awarded
Common Shares are earned. Mr. Zampetis earned 12,500 Common Shares in each
of fiscal 1992 and 1993 and 10,400 Common Shares in fiscal 1994, which
shares will vest in fiscal 1995, 1996 and 1997, respectively. In the event
of Mr. Zampetis' death, all earned but unvested awarded Common Shares and
one-half of awarded but unearned Common Shares will vest in his designated
beneficiary. Based on the last reported sale price of the Company's Common
Shares on the New York Stock Exchange, the awarded and earned Common Shares
had a fair market value on June 30, 1994 of $1,035,450. Dividends are paid
only with respect to the awarded Common Shares which have been earned. For a
discussion of the bonus payable to the Company's officers, see "Executive
Compensation--Compensation Committee Report."
II. OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK PRICE
GRANTED TO APPRECIATION FOR OPTION
OPTIONS EMPLOYEES EXERCISE TERM(4)
GRANTED IN FISCAL PRICE EXPIRATION -----------------------
NAME (#) YEAR(3) ($/SH) DATE 5% ($) 10% ($)
---- ------- ---------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
James S. Reid, Jr. 3,000 (1) 2.8% $32.050 June 1999 $ 26,600 $ 58,700
Theodore K. Zampetis 3,000 (1) 2.8% 29.125 June 1999 24,100 53,300
Stephan J. Mack 4,650 (1) 4.4% 29.125 June 1999 37,400 82,700
Larry J. Enders 2,750 (1) 2.6% 29.125 June 1999 22,100 48,900
Aubrey E. Arndt 3,000 (2) 2.8% 29.125 June 2004 55,000 139,300
</TABLE>
- - ---------------
(1) Options are not exercisable for the one-year period from the date of grant;
then, no more than 40% of such options may be exercised in any succeeding
one-year period.
(2) Mr. Arndt's options are exercisable as follows: 1,716 are exercisable on and
after June 28, 1996, and 1,284 are exercisable on and after June 28, 1997.
(3) Based on 105,500 options granted to all employees during the fiscal year.
(4) These amounts are based on hypothetical appreciation rates of 5% and 10% and
are not intended to forecast the actual future appreciation of the Company's
stock price. No gain to optionees is possible without an actual increase in
the price of the Company's shares, which increase will benefit all of the
Company's shareholders. All calculations are based on a five-year option
period except with respect to Mr. Arndt, whose options are exercisable for a
ten-year period.
7
<PAGE> 10
III. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT IN-THE-MONEY
FISCAL YEAR-END OPTIONS AT FISCAL
(#) YEAR-END($)
SHARES VALUE --------------- -----------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- --------------- -----------------
<S> <C> <C> <C> <C>
James S. Reid, Jr. 14,500 $223,146 19,020/21,530 $ 134,100/$67,050
Theodore K. Zampetis 13,100 231,399 8,240/15,360 -- / 375
Stephan J. Mack 9,350 183,088 8,730/ 8,645 125,213/ 54,525
Larry J. Enders 1,000 21,750 3,282/ 5,048 22,313/ 344
Aubrey E. Arndt 1,000 19,000 3,772/ 7,658 15,750/ 8,250
</TABLE>
PENSION PLAN AND SUPPLEMENTAL PLAN
Salaried employees of the Company with one year of full-time service are
eligible to participate in The Standard Products Company Salaried Employees'
Retirement Plan ("Pension Plan") and The Standard Products Company Supplemental
Salaried Pension Plan ("Supplemental Plan"). Except as otherwise noted in "Table
I. Summary Compensation Table," the amounts shown therein exclude amounts, if
any, expended for financial reporting purposes by the Company as contributions,
reserves or benefits paid under the Pension Plan and Supplemental Plan.
The Pension Plan provides for normal retirement benefits based on the
highest average monthly compensation for 60 consecutive months within the last
120 months prior to retirement (final average compensation). The basic formula
is 1 1/15% times final average compensation (up to but not exceeding Social
Security-covered compensation), plus 1 2/3% of the amount (if any) of final
average compensation in excess of Social Security-covered compensation, all
multiplied by the participant's years of pension service under the Pension Plan
(up to a maximum of 30 years). Employees who were hired prior to July 1, 1976
may have their normal retirement benefit calculated under an alternative formula
as follows: final average compensation multiplied by a percentage equal to the
sum of (i) 21.25%, plus (ii) 0.75% for each year of pension service up to a
maximum of 25 years (that is, a maximum of 40%). In addition, the Pension Plan
provides that the minimum normal retirement benefit shall in all events be no
less than $13.00 multiplied by a participant's years of pension service. Certain
of these benefit formulas were adopted effective July 1, 1989 to comply with the
Tax Reform Act of 1986. Notwithstanding any new benefit formulas, each
participant is entitled to a benefit no less than his or her accrued benefit as
of June 30, 1989. Participants may elect that retirement benefits be paid in the
form of a life annuity, a ten-year or five-year sum certain annuity, or various
joint and surviving spouse options; the Pension Plan's normal retirement benefit
amount is payable monthly, based on a single-life annuity with five years
certain.
Compensation covered under the Pension Plan includes salary, bonuses,
payments for overtime and salary deferred under the Company's Individual
Retirement and Investment Trust Plan. Extraordinary payments and Company
contributions to the Company's Individual Retirement and Investment Trust Plan
are not included in the compensation definition.
The Supplemental Plan is a nonqualified plan which provides a supplemental
benefit for eligible salaried employees under terms and conditions similar to
those under the Pension Plan. The supplemental benefit is equal to the excess of
(i) the benefit that would have been payable to the employee under the Pension
Plan without regard to certain annual retirement income and benefit limitations
imposed by federal law over (ii) the benefit payable to the employee under the
Pension Plan.
The Table below shows estimated annual benefits payable (assuming payments
made in the normal retirement form, and not under any of the various survivor
forms of benefit payments) under the Pension Plan
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<PAGE> 11
and Supplemental Plan to any salaried employee upon retirement in 1994 at age 65
after selected periods of service.
<TABLE>
<CAPTION>
AVERAGE ANNUAL ESTIMATED ANNUAL BENEFITS UPON RETIREMENT IN 1994
SALARY USED YEARS OF SERVICE INDICATED
TO DETERMINE ------------------------------------------------------------------------------------------
BENEFITS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- - -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
$125,000 $ 29,062 $ 45,313 $ 50,000 $ 58,124 $ 58,124
150,000 35,312 54,375 60,000 70,624 70,624
175,000 41,562 63,438 70,000 83,124 83,124
200,000 47,812 72,500 80,000 95,624 95,624
225,000 54,062 81,563 90,103 108,124 108,124
250,000 60,312 90,625 100,520 120,624 120,624
300,000 72,812 108,750 121,353 145,624 145,624
400,000 97,812 145,000 163,020 195,624 195,624
450,000 110,312 163,125 183,853 220,624 220,624
500,000 122,812 181,250 204,687 245,624 245,624
550,000 135,312 199,375 225,520 270,624 270,624
600,000 147,812 217,500 246,353 295,624 295,624
650,000 160,312 235,625 267,187 320,624 320,624
700,000 172,812 253,750 288,020 345,624 345,624
750,000 185,312 271,875 308,853 370,624 370,624
800,000 197,812 290,000 329,687 395,624 395,624
850,000 210,312 308,125 350,520 420,624 420,624
900,000 222,812 326,250 371,353 445,624 445,624
</TABLE>
As of June 30, 1994, the Credited Years of Service for retirement purposes
were as follows: Mr. Reid--38; Mr. Zampetis--21; Mr. Mack--5; Mr. Enders--31;
and Mr. Arndt--4.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Boland, Brandon, Myers, Perkins and Riedel are the members of the
Company's Compensation Committee.
Transactions with Management. Edward B. Brandon, a director of the Company,
is Chairman and Chief Executive Officer of National City Corporation. The
Company has a $125,000,000 revolving credit agreement with National City Bank,
Cleveland, Ohio ("National City"), a wholly owned subsidiary of National City
Corporation, and three other banks, until January 19, 1996. National City has a
31.4% participation in such credit agreement. The Company borrowed from National
City during the 1994 fiscal year on a short-term uncommitted line of credit at
prevailing market rates. During fiscal year 1994, the $3,184,011 aggregate
principal amount of Athens-Clarke County (Georgia) Industrial Development
Authority Industrial Revenue Bonds of which National City held a principal
amount equal to $192,006, and $1,312,500 aggregate principal amount of the
Industrial Development Authority of The County of Alameda (California)
Industrial Revenue Bonds, which bonds were guaranteed by the Company, were paid
by the Company. National City also acted as trustee for the holders of such
bonds. National City, as trustee for certain trusts, holds 1,052,514 Common
Shares of the Company.
Society National Bank, Cleveland, Ohio ("Society"), has a 25.7%
participation in the Company's $125,000,000 revolving credit agreement. In
addition, Society held $115,203 of the principal amount of the Athens-Clarke
County (Georgia) Industrial Development Authority Industrial Revenue Bonds
referred to above which were paid by the Company. Society, as trustee of certain
trusts, holds 864,661 Common Shares of the Company. Until March 1, 1994, James
S. Reid, Jr. was a director of Society's parent, Society Corporation.
John D. Drinko, a director of the Company, is senior advisor to the policy
committee of Baker & Hostetler, which firm acts as general legal counsel for the
Company.
9
<PAGE> 12
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return of a
hypothetical investment in the Common Shares with the cumulative total return of
a hypothetical investment in each of the Standard & Poor's Composite--500 Index
and the Dow Jones Auto Parts Index based on the respective market price of each
such investment at the end of each of the Company's fiscal years shown below,
assuming in each case an initial investment of $100 on July 1, 1989 and
reinvestment of dividends.
<TABLE>
<CAPTION>
THE STANDARD DOW JONES
MEASUREMENT PERIOD PRODUCTS AUTO PARTS
(FISCAL YEAR COVERED) COMPANY INDEX S&P 500
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 92.06 88.13 116.49
1991 59.23 71.30 125.10
1992 105.78 102.82 141.88
1993 136.83 125.61 161.22
1994 159.24 141.79 163.49
</TABLE>
COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is administered by the
Compensation Committee which has responsibility for reviewing all aspects of the
compensation program for the executive officers of the Company. The Compensation
Committee is comprised of the five directors listed at the end of this report,
none of whom is an employee of the Company and each of whom qualifies as a
disinterested person for purposes of Rule 16b-3 under the Securities Exchange
Act of 1934.
The Compensation Committee's primary objective with respect to executive
compensation is to establish programs which attract and retain key managers and
align their compensation with the Company's overall business strategies, values,
and performance. To this end, the Compensation Committee has established, and
the Board of Directors has endorsed, an executive compensation philosophy to
compensate executive officers based on their responsibilities, achievement of
annual established goals and the Company's overall annual and longer-term
performance.
The primary components of the Company's executive compensation program are:
(a) base salaries; (b) annual cash incentive opportunities; and (c) long-term
incentive opportunities in the form of stock-based awards. Each of these primary
components of compensation is discussed below.
Base Salaries. Base salaries for each of the Company's executive officers
are generally established annually by the Compensation Committee using as a
guide one or more widely accepted salary evaluation systems taking into account
individual and company performance and competitive, inflationary, and internal
equity considerations.
10
<PAGE> 13
With respect to the $550,000 base salary established for Mr. Reid in June
1993 for fiscal 1994, the Compensation Committee took into account the
leadership Mr. Reid displayed in the completion of the acquisition of Standard
Products Industriel, the Company's French subsidiary, and his increased
responsibilities as a result of that acquisition, as well as a review of the
compensation paid to chief executive officers of comparable companies.
ANNUAL CASH INCENTIVES. All executives of the Company are eligible to
receive annual cash bonus awards based on a set percentage of base salary with a
maximum bonus attainable equal to 50% of base salary. Each year the Company's
Board of Directors, usually at the directors' meeting held in August, sets a
target goal for maximum bonus awards based on the Company's earnings per common
share. Actual bonus awards paid are proportional to the percentage of the target
goal actually attained. The bonus target in fiscal year 1994 was $2.50 per
common share, subject to adjustment for nonrecurring items, including personnel
relocation costs. Since earnings per common share, as adjusted for the bonus
awards, for fiscal 1994 were $2.08, the bonus award for fiscal 1994 to each
executive officer of the Company, including Mr. Reid, was equal to 41.6% of base
salary.
LONG-TERM STOCK INCENTIVES. The Company's restricted stock plan permits the
Compensation Committee to award restricted shares, which awards are designed to
attract and retain well-qualified personnel for positions of substantial
responsibility with the Company and its subsidiaries. Awards of restricted
Common Shares may be made by the Compensation Committee, in its sole discretion.
To date, awards of 62,500 and 125,000 restricted Common Shares were made in
fiscal 1992 to Messrs. Reid and Zampetis, respectively. See "Table I--Summary
Compensation Table" set forth on page 6 of this proxy statement for a discussion
of the terms pursuant to which the restricted Common Shares awarded to Messrs.
Reid and Zampetis are earned and subject to forfeiture. No other awards of
restricted Common Shares have been made.
The Company's stock option plans permit the Compensation Committee, in its
sole discretion, to grant stock option awards which are designed to encourage
and enable key management employees of the Company to acquire a larger stock
ownership and personal financial interest in the Company. The Compensation
Committee believes that stock option awards subject to periodic vesting enable
the Company to attract and retain qualified individuals for service with the
Company. Individual option grants, with exercise prices at least equal to the
fair market value of the Company's Common Shares on the date of grant, are
determined by the Compensation Committee based on the executive's current
performance, potential for future responsibility, and the impact of the
particular executive officer's performance on the operational results of the
Company. Stock option awards during the last fiscal year to each executive
officer of the Company, including Mr. Reid, are set forth in "Table
II--Option/SAR Grants In Last Fiscal Year" on page 7 of this proxy statement.
Alan E. Riedel, Chairman
Richard J. Boland
Edward B. Brandon
Malcolm R. Myers
Leigh H. Perkins
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's 1995
Annual Meeting of Shareholders must be received by the Company at 2130 West
110th Street, Cleveland, Ohio 44102 on or before May 15, 1995 for inclusion in
the Company's proxy statement and form of proxy relating to the 1995 Annual
Meeting of Shareholders.
11
<PAGE> 14
OTHER MATTERS
The Company has not selected its independent public accountants for the
current fiscal year. This selection will be made later in the year by the Board
of Directors. Representatives of Arthur Andersen & Co., which served as the
Company's independent public accountants during the fiscal year ended June 30,
1994, are expected to be present at the annual meeting with the opportunity to
make a statement if they so desire and to be available to respond to appropriate
questions.
If the enclosed proxy is executed and returned to the Company, the persons
named in it will vote the shares represented by such proxy at the meeting. The
form of proxy permits specification of a vote for the election of directors as
set forth under "Election of Directors" above, the withholding of authority to
vote in the election of directors, or the withholding of authority to vote for
one or more specified nominees.
Where a choice has been specified in the proxy, the shares represented will
be voted in accordance with such specification. If no specification is made,
such shares will be voted at the meeting to elect directors as set forth under
"Election of Directors" above. Under Ohio law and the Company's Second Amended
and Restated Articles of Incorporation, as amended, broker non-votes and
abstaining votes will not be counted in favor of or against any nominee. If any
other matters shall properly come before the meeting, the persons named in the
proxy will vote thereon in accordance with their judgment. Management does not
know of any other matters which will be presented for action at the meeting.
By order of the Board of Directors,
J. RICHARD HAMILTON,
SECRETARY
Dated: September 14, 1994
12
<PAGE> 15
THE STANDARD PRODUCTS COMPANY
P R O X Y
The undersigned hereby appoints JAMES S. REID, JR., AUBREY E.
ARNDT, and J. RICHARD HAMILTON, and each of them, attorneys and
proxies of the undersigned, with full power of substitution, to
attend the annual meeting of shareholders of The Standard Products
Company to be held at its office, 2130 West 110th Street,
Cleveland, Ohio, on Monday, October 17, 1994 at 9:00 a.m.,
Cleveland time, or any adjournment thereof, and to vote the number
of shares of said Company which the undersigned would be entitled
to vote, and with all the power the undersigned would possess, if
personally present, as follows:
1. / / FOR, or / / WITHHOLD AUTHORITY to vote for, the
following nominees for election as directors of the class,
the term of which will expire in 1997: Edward B. Brandon,
James S. Reid, Jr. and Alan E. Riedel.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE LINE
PROVIDED BELOW.)
---------------------------------------------------------------
2. On such other business as may properly come before the
meeting.
THE PROXIES WILL VOTE AS SPECIFIED ABOVE, OR IF A CHOICE IS NOT
SPECIFIED, THEY WILL VOTE FOR THE NOMINEES LISTED IN ITEM 1.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY.
Receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement dated
September 14, 1994 is hereby acknowledged.
Dated: ________________________, 1994
---------------------------------------
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Signature(s)
(Please sign exactly as your name or
names appear hereon, indicating, where
proper, official position or
representative capacity.)
