<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 16, 1995 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 five directors, each to serve for a term of three years;
and to elect one director to serve for a term of two 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 5, 1995,
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 8, 1995
<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 16, 1995, 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 8, 1995.
Annual Report. A copy of the Company's Annual Report to Shareholders for
the fiscal year ended June 30, 1995 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 specifications, 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 5, 1995, 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 16,749,255 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 31, 1995, 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.......................................... 1,364,078(1) 8.2%
2130 West 110th Street
Cleveland, Ohio 44102
John D. Drinko............................................. 958,640(2) 5.7%
3200 National City Center
Cleveland, Ohio 44114
John D. Sigel.............................................. 298,440(3) 1.8%
Leigh H. Perkins........................................... 248,206(4) 1.4%
Theodore K. Zampetis....................................... 131,623(5) (6)
</TABLE>
1
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
----------------------------------------------------------- ------------------ --------
<S> <C> <C>
Malcolm R. Myers........................................... 87,125(7) (6)
Curtis E. Moll............................................. 58,435(8) (6)
W. Hayden Thompson......................................... 20,000 (6)
Alan E. Riedel............................................. 18,612 (6)
Edward B. Brandon.......................................... 4,000(9) (6)
Alfred M. Rankin, Jr....................................... 2,500 (6)
James C. Baillie........................................... 2,000 (6)
Stephan J. Mack............................................ 19,239(10) (6)
Gerard Mesnel.............................................. 2,400(11) (6)
Joseph Farkas.............................................. 3,872(12) (6)
All Executive Officers and Directors as a Group............ 3,181,717 19%
<FN>
---------------
(1) Includes 909,711 shares owned by Mr. Reid (which amount includes 16,400
restricted shares earned in fiscal 1994 and 1995 but subject to
forfeiture); 139,196 shares owned by his wife, Donna S. Reid; 15,220 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; 13,533 shares held for
his account under the Company's Individual Retirement and Investment Trust
Plan; and 214,431 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; 20,807 shares held in an
individual retirement account of which Mr. Drinko is the beneficiary;
36,175 shares owned by his wife Elizabeth G. Drinko; 1,000 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; 61,218 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; 146,062 shares owned by a foundation of which Mr.
Drinko 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, 83,700 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; 1,000 shares are owned by a
foundation of which Mr. Drinko and Mr. Myers are Trustees; and 29,752
shares are owned by a foundation of which Mr. Drinko and Mr. Perkins 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 15,253 shares owned by Mr. Sigel; 171,131 shares owned by his
wife, Sally C. Reid; 22,356 shares held by trusts of which his wife is a
trustee; 83,700 shares owned by a charitable lead trust of which Mr. Sigel
and Mr. Drinko are co-trustees. In addition, 241,431 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 130,307 shares owned by Mr. Perkins; 88,147 shares held by his
wife, Romi Perkins; and 29,752 shares owned by a foundation of which he and
Mr. Drinko are trustees.
(5) Includes 87,708 shares owned by Mr. Zampetis (which amount includes 28,900
restricted shares earned in fiscal 1993, 1994 and 1995 but subject to
forfeiture); 24,833 shares owned by his wife, Ann J. Zampetis; 9,642 shares
held for his account under the Company's Individual Retirement and Invest-
2
<PAGE> 5
ment Trust Plan; and 9,440 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.
(7) Includes 8,000 shares owned by Mr. Myers; 78,125 shares owned by Cloyes
Gear & Products, Inc.; and 1,000 shares owned by a foundation of which Mr.
Myers and Mr. Drinko are Trustees.
(8) Includes 210 shares owned by his wife, Sara Moll; 45,725 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 241,431 shares as of June 30, 1995, which shares are included
in the number of shares reported by Mr. Reid.
(10) Includes 9,350 shares owned by Mr. Mack; 799 shares held for his account
under the Individual Retirement and Investment Trust Plan; and 9,090 shares
which Mr. Mack has the right to acquire pursuant to stock options currently
exercisable or exercisable within 60 days.
(11) Includes 2,400 restricted shares owned by Mr. Mensel which were earned in
1995, see footnote 6 on Page 7.
(12) Includes 812 shares owned by Mr. Farkas; 200 shares owned by his son,
Philippe Farkas; and 2,860 shares which Mr. Farkas has the right to acquire
pursuant to stock options currently exercisable or exercisable within 60
days.
</TABLE>
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
At its regular meeting on August 21, 1995 and in accordance with the
Company's Amended Code of Regulations, the Board of Directors increased the
number of directors from twelve to thirteen, divided into two classes of four
and one class of five. At the Annual Meeting, the shares represented by proxies,
unless otherwise specified, will be voted for the election of the six nominees
hereinafter named. Five of such nominees will serve for a term of three years
and one nominee will serve for a term of two years and, with respect to each
nominee, until his respective successor is duly elected and qualified.
The nominees for director are John Doddridge, Leigh H. Perkins, Alfred M.
Rankin, Jr., John D. Sigel, W. Hayden Thompson and James C. Baillie, all of
whom, except Mr. Doddridge, are presently directors of the Company. Messrs.
Perkins, Rankin, Sigel and Thompson were each elected at the 1992 Annual Meeting
of the Company's Shareholders. Mr. Baillie was elected on December 5, 1994 by
the Board of Directors pursuant to the Company's Amended Code of Regulations to
fill a vacancy until the next shareholders meeting called for the election of
directors. Mr. Baillie is a member of the class of directors whose term is to
expire in 1997. Proxies cannot be voted at the Annual Meeting for a greater
number of persons than the six persons named herein, although persons in
addition to those nominees named herein may be nominated by the shareholders at
the meeting.
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 DIRECTOR PROPOSED
------------------- ------------------------------------------- ------------- ---------
<S> <C> <C> <C>
John Doddridge Chairman and Chief Executive Officer of -- 1998
55 Intermet Corporation (manufacturer of
precision ductile and gray iron castings
for the automotive and truck industries)
Leigh H. Perkins Chairman, The Orvis Company, Inc. 1969 to date 1998
67 (manufacturer and distributor of fishing
tackle and sporting goods)
Alfred M. Rankin, Jr. Chairman, President and Chief Executive 1989 to date 1998
53 Officer, NACCO Industries, Inc. (holding
company with operations in mining,
manufacturing of small electrical
appliances and forklift trucks and service
parts)
John D. Sigel Attorney at Law, Hale and Dorr 1991 to date 1998
42 Boston, Massachusetts
W. Hayden Thompson Chairman and Chief Executive Officer, 1982 to date 1998
68 Solarflo Corporation (manufacturer of gas
and electric heating equipment)
James C. Baillie Partner, Tory Tory DesLauriers & 1994 to date 1997
57 Binnington, Barristers & Solicitors,
Toronto, Canada
</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 DIRECTOR OF TERM
--------------------- ------------------------------------------- ------------- ---------
<S> <C> <C> <C>
Edward B. Brandon Chairman, President and Chief Executive 1976 to date 1997
63 Officer, National City Corporation (bank
holding company)
James S. Reid, Jr. Chairman and Chief Executive Officer of the 1959 to date 1997
69 Company
Alan E. Riedel Retired Vice Chairman, Cooper Industries, 1976 to date 1997
65 Inc. (worldwide diversified manufacturer of
electrical products, electric power
equipment, tools and hardware, and
automotive products)
John D. Drinko Attorney at Law, Baker & Hostetler 1957-1958 1996
74 Cleveland, Ohio 1967-1968
1969 to date
Curtis E. Moll Chairman and Chief Executive Officer, MTD 1991 to date 1996
56 Products, Inc. (manufacturer of outdoor
power equipment, and tools, dies and
stampings for the automotive industry)
Malcolm R. Myers Chairman and Chief Executive Officer, 1984 to date 1996
61 Cloyes Gear & Products, Inc. (manufacturer
of automotive timing components)
Theodore K. Zampetis President and Chief Operating Officer of 1991 to date 1996
50 the Company
</TABLE>
4
<PAGE> 7
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.
Doddridge, who served as Vice Chairman and Chief Executive Officer of Magna
International, Inc. from November 1992 to November 1994 and President of North
American Operations of Dana Corporation from mid-1989 to 1992; 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 1991, 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. Brandon is a director of National City Corporation, RPM, Inc. and
Premier Industrial Corporation. Mr. Doddridge is a director of the Detroit
Diesel Corporation. Mr. Moll is a director of Society National Bank, United
Screw and Bolt Corporation and Shiloh Industries, Inc. Mr. Rankin is a director
of NACCO Industries, Inc., The B.F. Goodrich Company and The Vanguard Group. Mr.
Riedel is a director of Belden Inc., First Knox Bank Corp., Arkwright Mutual
Insurance Company and Chairman of Gardner Denver Machinery, Inc. Mr. Zampetis is
a director of Shiloh Industries, Inc. and National City Bank.
During the fiscal year ended June 30, 1995, 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 attended at least 75% of the meetings of the Board of Directors and of
the committees on which he served. Mr. Richard J. Boland, a former director of
the Company, now serves as Director-Emeritus and attends Board of Directors
meetings.
The Audit Committee of the Board of Directors of the Company (the "Audit
Committee"), of which Mr. Brandon was Chairman and Messrs. Baillie, 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. Brandon,
Myers and Perkins were members, held three 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,
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 who participate in the plans and stock options to be granted.
The Finance Committee, of which Mr. Drinko was chairman and Messrs. Moll,
Perkins, Riedel and Thompson were members, held one meeting and consulted
informally 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 each 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. 1995 $600,000 $144,000 -- -- (4) -- $1,957
Chairman and Chief 1994 550,000 228,800 -- -- 3,000 3,484
Executive Officer 1993 500,000 250,000 -- -- 22,550 3,546
Theodore K. Zampetis 1995 $400,000 $ 96,000 -- -- -- $1,957
President and Chief 1994 338,542 140,833 -- -- (5) 3,000 3,758
Operating Officer 1993 300,000 150,000 -- -- 20,600 4,742
Stephan J. Mack 1995 $225,000 $ 78,300 -- -- -- --
President, Holm 1994 225,000 90,000 -- -- 4,650 --
Industries, Inc. 1993 225,000 67,500 -- -- 950 --
Joseph Farkas 1995 $246,578 $ 74,800 -- -- -- $3,102
President, Standard 1994 219,825 -- -- -- -- --
Products Industriel 1993 93,750(7) -- -- -- -- --
Gerard Mesnel 1995 $191,250 $ 45,900 -- $537,500(6) -- --
Executive Vice President- 1994 75,000(8) 31,200 -- -- -- --
Advanced Technology 1993 -- -- -- -- -- --
Worldwide
<FN>
---------------
(1) Amounts shown represent bonuses earned pursuant to the Company's Officers
Incentive Compensation Plan, except that amounts shown with respect to Mr.
Mack and Mr. Farkas reflect amounts paid pursuant to the Holm Industries,
Inc. and Standard Products Industriel bonus plans, respectively.
(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 $1,597 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 $1,597 and $360, respectively.
(4) Mr. Reid was awarded 62,500 restricted Common Shares (adjusted to reflect a
5-for-4 stock split of the Company's Common Shares effected in the form of a
stock dividend paid on June 3, 1993 to shareholders of record on May 20,
1993) 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 fiscal 1993, 10,400 in fiscal 1994, and 6,000
in fiscal year 1995, 12,500 of which shares vested in 1995, 10,400 of
6
<PAGE> 9
which shares will vest in 1996 and 6,000 of which shares will vest in 1997.
Awarded Common Shares, if any, which are earned in fiscal year 1996 will
vest in fiscal year 1998. 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 total awarded and earned Common Shares had a fair market value on June
30, 1995 of $895,275. Dividends are paid only with respect to the awarded
Common Shares which are earned. For a discussion of the bonus payable to the
Company's officers, see "Executive Compensation -- Compensation Committee
Report."
(5) Mr. Zampetis was awarded 125,000 restricted Common Shares (adjusted to
reflect a 5-for-4 stock split of the Company's Common Shares effected in the
form of a stock dividend paid on June 3, 1993 to shareholders of record on
May 20, 1993) 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 fiscal 1993, 10,400 Common Shares in fiscal
1994 and 6,000 Common Shares in fiscal 1995, which will vest in 1996, 1997
and 1998, respectively. Awarded Common Shares, if any, which are earned in
fiscal year 1996 will vest in fiscal year 1999. In the event of Mr.
Zampetis's 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 total awarded and earned Common
Shares had a fair market value on June 30, 1995 of $895,275. 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."
(6) Mr. Mesnel was awarded 25,000 restricted Common Shares in fiscal 1995, which
on the date of grant had a fair market value of $537,500. Under the terms of
the award, up to 5,000 of the awarded Common Shares may be earned in each of
five consecutive fiscal years beginning in fiscal 1995, based on the
percentage of bonus earned during such fiscal year. Awarded Common Shares
earned by Mr. Mesnel 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. Mesnel earned 2,400 Common Shares in fiscal 1995, which
shares will vest in fiscal 1998. Awarded Common Shares, if any, which are
earned in fiscal year 1996 will vest in fiscal year 1999. In the event of
Mr. Mesnel's 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, 1995 of $51,900. Dividends are paid only
with respect to the awarded Common Shares which have been earned. For a
discussion of the bonus payable to the Company's officers, see "Executive
Compensation -- Compensation Committee Report."
(7) Mr. Farkas commenced employment with the Company on February 1, 1993.
(8) Mr. Mesnel commenced employment with the Company on February 1, 1994.
</TABLE>
II. OPTION/SAR GRANTS IN LAST FISCAL YEAR
James S. Reid, Jr., Theodore K. Zampetis, Stephan J. Mack, Joseph Farkas
and Gerard Mesnel were not granted any options or stock appreciation rights
during fiscal year 1995.
7
<PAGE> 10
III. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END FISCAL
(#) YEAR-END($)
SHARES VALUE --------------- ------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
------------------------- ----------- -------- --------------- ------------
<S> <C> <C> <C> <C>
James S. Reid, Jr. 10,000 $100,350 15,220/15,330 $29,550/ --
Theodore K. Zampetis -- -- 9,440/14,160 -- / --
Stephan J. Mack 4,925 $ 30,138 9,090/3,360 $56,513/ --
Joseph Farkas -- -- -- --
Gerard Mesnel -- -- -- --
</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 (the "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 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 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
survivor annuity options; the 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, any other amounts reported as wages on IRS Form W-2 and
salary deferred under the Company's Individual Retirement and Investment Trust
Plan. Reimbursements or other expense allowances, fringe benefits, moving
expenses, deferred compensation, welfare benefits and Company contributions to
the Company's Individual Retirement and Investment Trust Plan are not included
in covered compensation.
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
8
<PAGE> 11
and Supplemental Plan to any salaried employee upon retirement in 1995 at age 65
after selected periods of service.
<TABLE>
<CAPTION>
AVERAGE ANNUAL ESTIMATED ANNUAL BENEFITS UPON RETIREMENT IN 1995
SALARY USED WITH 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 $ 28,917 $ 45,312 $ 50,000 $ 57,834 $ 57,834
150,000 35,167 54,375 60,000 70,334 70,334
175,000 41,417 63,438 70,000 82,834 82,834
200,000 47,667 72,500 80,000 95,334 95,334
225,000 53,917 81,563 90,000 107,834 107,834
250,000 60,167 90,625 100,279 120,334 120,334
300,000 72,667 108,750 121,112 145,334 145,334
400,000 97,667 145,000 162,779 195,334 195,334
450,000 110,167 163,125 183,612 220,334 220,334
500,000 122,667 181,250 204,445 245,334 245,334
550,000 135,167 199,375 225,279 270,334 270,334
600,000 147,667 217,500 246,112 295,334 295,334
650,000 160,167 235,625 266,945 320,334 320,334
700,000 172,667 253,750 287,779 345,334 345,334
750,000 185,167 271,875 308,612 370,334 370,334
800,000 197,667 290,000 329,445 395,334 395,334
850,000 210,167 308,125 350,279 420,334 420,334
900,000 222,667 326,250 371,112 445,334 445,334
</TABLE>
As of June 30, 1995, the Credited Years of Service for retirement purposes
were as follows: Mr. Reid -- 39; Mr. Zampetis -- 22; Mr. Mack -- 6; Mr.
Farkas -- 3; and Mr. Mensel -- 1.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Brandon, Myers, Perkins and Riedel are the members of the Company's
Compensation Committee. There are no compensation committee interlocks.
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, 1998. National City has a
31.4% participation in such credit agreement. The Company borrowed from National
City during the 1995 fiscal year on a short-term uncommitted line of credit at
prevailing market rates.
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 show below,
assuming in each case an initial investment of $100 on July 1, 1990 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>
1990 100.00 100.00 100.00
1991 68.04 84.49 107.39
1992 121.53 121.84 121.79
1993 157.20 148.84 138.39
1994 182.94 168.03 140.34
1995 130.15 158.73 176.93
</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 four 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 $600,000 base salary established for Mr. Reid in June
1994 for fiscal 1995, the Compensation Committee took into account Mr. Reid's
increased responsibilities as a result of the acquisition of Standard Products
Industriel, the Company's French subsidiary, and the new product launches under
management, 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 1995 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 1995 were $1.20, the bonus award for fiscal 1995 to each
executive officer of the Company, including Mr. Reid, was equal to 24% 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 (adjusted to
reflect a 5-for-4 stock split of the Company's Common Shares effected in the
form of a stock dividend paid on June 3, 1993 to shareholders of record on May
20, 1993) were made in fiscal 1992 to Messrs. Reid and Zampetis, respectively.
In fiscal 1995, Mr. Mensel was award 25,000 restricted Common Shares. 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, Zampetis and Mensel are earned and subject to forfeiture. Only
one other award of restricted Common Shares has been made to an executive
officer of the Company.
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.
Alan E. Riedel, Chairman
Edward B. Brandon
Malcolm R. Myers
Leigh H. Perkins
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Any shareholder proposals intended to be presented at the Company's 1996
Annual Meeting of Shareholders must be received by the Company at 2130 West
110th Street, Cleveland, Ohio 44102 on or before May 9, 1996 for inclusion in
the Company's proxy statement and form of proxy relating to the 1996 Annual
Meeting of Shareholders.
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,
1995,
11
<PAGE> 14
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 8, 1995
12
<PAGE> 15
THE STANDARD PRODUCTS COMPANY
P R O X Y
---------
The undersigned hereby appoints JAMES S. REID, JR., DONALD R.
SHELEY, JR. 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 16, 1995 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 1998: John Doddridge, Leigh
H. Perkins, Alfred M. Rankin, Jr., John D. Sigel and W.
Hayden Thompson; and the following nominee of the class the
term of which will expire in 1997: James C. Baillie.
(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 Annual Meeting
of Shareholders and Proxy
Statement dated September 8,
1995 is hereby acknowledged.
Dated: , 1995
-----------------------------
-----------------------------
-----------------------------
Signature(s)
(Please sign exactly as your
name or names appear hereon,
indicating, where proper,
official position or
representative capacity.)
