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 [ ] Confidential, for Use of the
Commission Only (as
[X] Definitive proxy statement permitted by Rule
14a-6(e) (2) )
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
TECUMSEH PRODUCTS COMPANY
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rules
14a-6(i)(4) and 0-11.
[ ] 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: _______________________________________________________
(4) Date filed: _________________________________________________________
<PAGE>
[logotype]
TECUMSEH PRODUCTS COMPANY
100 EAST PATTERSON STREET
TECUMSEH, MICHIGAN 49286
[corporate logo]
March 15, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 Annual Meeting of
Shareholders of Tecumseh Products Company, to be held at 9:00 a.m., local
Tecumseh, Michigan time, on Wednesday, April 24, 1996, at the Tecumseh Country
Club located in Tecumseh, Michigan.
Only holders of the Company's Class B Common Stock will be entitled to
vote at the meeting. However, all of the Company's shareholders are most
welcome to attend. The Company is sending the same Proxy Statement and related
materials to all shareholders, except that holders of Class A Common Stock who
do not also hold Class B Common Stock will not receive a form of proxy.
If you are a holder of Class B Common Stock, it is important that your
Class B shares be represented and voted at the Annual Meeting. Consequently,
even if you currently plan to attend in person, please sign, date, and mail the
enclosed proxy form at your earliest convenience. Thank you.
Sincerely,
/s/ K. G. Herrick
K. G. Herrick
Chairman
/s/ Todd W. Herrick
Todd W. Herrick
President and Chief
Executive Officer
<PAGE>
[logotype]
TECUMSEH PRODUCTS COMPANY
100 EAST PATTERSON STREET
TECUMSEH, MICHIGAN 49286
[corporate logo]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 24, 1996
To the Shareholders of Tecumseh Products Company:
Notice is hereby given that the Annual Meeting of Shareholders of
TECUMSEH PRODUCTS COMPANY, a Michigan corporation (the "Company"), will be
held, pursuant to the Bylaws of the Company, at the Tecumseh Country Club
located in Tecumseh, Michigan, approximately 1 mile east of the intersection of
Burt Street and the Tecumseh-Clinton Road, which intersection is approximately
1/2 mile north of the center of Tecumseh, Michigan, on Wednesday, April 24,
1996, at 9:00 a.m., local Tecumseh, Michigan time, for the following purposes:
1. To elect a Board of Directors of the Company to hold office until the next
Annual Meeting of the Shareholders of the Company, or until their
successors shall be elected and qualify.
2. To consider, take action upon, and authorize the carrying out of such other
business as may properly come before the Meeting or any adjournment or
adjournments thereof.
Although all shareholders of either class of Common Stock of the Company
are most welcome to attend the Annual Meeting, only the shares of the Company's
Class B Common Stock, $1.00 par value ("Class B Stock"), will have voting
rights upon any matter properly coming before the meeting. The record date for
the determination of holders of Class B Stock entitled to receive notice of,
and to vote at, the Annual Meeting is the close of business on March 1, 1996.
This Notice is being sent to you by order of the Company's Board of
Directors.
Tecumseh, Michigan TECUMSEH PRODUCTS COMPANY
March 15, 1996 Daryl P. McDonald
Corporate Counsel and Secretary
IF YOU ARE A HOLDER OF CLASS B STOCK ENTITLED TO VOTE AT THE MEETING,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN AND DATE
THE ENCLOSED PROXY FORM, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY, AND RETURN IT IN THE ENCLOSED ENVELOPE. THE PROXY MAY BE REVOKED AT
ANY TIME BEFORE IT IS VOTED, AND HOLDERS OF THE COMPANY'S CLASS B STOCK
EXECUTING PROXIES MAY ATTEND THE MEETING AND VOTE THEREAT IN PERSON SHOULD THEY
SO DESIRE.
<PAGE>
TECUMSEH PRODUCTS COMPANY
100 EAST PATTERSON STREET
TECUMSEH, MICHIGAN 49286
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Tecumseh Products Company (the "Company")
to be voted at the 1996 Annual Meeting of the Shareholders of the Company, to
be held on Wednesday, April 24, 1996, at 9:00 a.m., local Tecumseh, Michigan
time, and at any adjournment or adjournments thereof (the "Annual Meeting"),
for the purposes set forth in the accompanying Notice of Annual Meeting. The
approximate date on which this Proxy Statement and the accompanying documents
will first be sent or given to the security holders of the Company is March 15,
1996.
VOTING AT THE ANNUAL MEETING
The Company has two authorized classes of capital stock: Class B Common
Stock, $1.00 par value ("Class B Stock"), and Class A Common Stock, $1.00 par
value ("Class A Stock"). As of the close of business on March 1, 1996 (the
record date established for the Annual Meeting), there were 5,470,146 shares of
Class B Stock and 16,410,438 shares of Class A Stock issued and outstanding.
Shares of Class B Stock have full voting rights with respect to any matter
properly coming before the Company's shareholders at any meeting thereof, with
each Class B share being entitled to one vote on each such matter. Shares of
Class A Stock have no voting rights with respect to the election of Directors,
nor do they have voting rights with respect to any other matter coming before
any meeting of shareholders, except in limited circumstances specified in the
Company's Articles of Incorporation, as amended, or required by applicable
Michigan corporation law. No matter properly coming before the shareholders at
the Annual Meeting would require the vote of holders of Class A Stock.
Accordingly, while all holders of Class A Stock are cordially invited to attend
the Annual Meeting, proxies are not being solicited with respect to shares of
Class A Stock.
The Company's stock transfer books will not be closed in connection with
the Annual Meeting, but only record holders of Class B Stock as of the close of
business on March 1, 1996 are entitled to notice of and to vote at the meeting.
A quorum of the Class B shares entitled to vote at the Annual Meeting is
required for the transaction of any business at the meeting. The presence in
person or by proxy of a majority of the shares of that class entitled to vote
will constitute a quorum.
If the enclosed form of Proxy is executed and returned, it is,
nevertheless, revocable at any time prior to its exercise. Shares covered by
any Proxy which is properly executed and returned prior to the time of the
Annual Meeting, and which is not revoked prior to the exercise thereof, will be
voted at the Annual Meeting and, where a specification is made by the
shareholder as provided therein, will be voted in accordance with such
specification.
PRINCIPAL SHAREHOLDERS
So far as is known to the Company, the only persons who, as of March 1,
1996 (except where a different date is indicated below), were beneficial owners
(as the term "beneficial owner" is defined in Rule 13d-3 of the Securities and
Exchange Commission (the "Commission")) of over 5% of the outstanding Class B
Stock (the Company's only class of "voting securities," as defined in the
applicable rules of the Commission) are the persons named in the following
table:
<PAGE>
<TABLE>
<CAPTION>
Class B Shares Owned
Sole Sole Shared Shared Percent
Name and Mailing Address Voting Power Investment Power Voting Power Investment Power of Class
- ------------------------ ------------ ---------------- ------------ ---------------- --------
<S> <C> <C> <C> <C> <C>
Herrick Foundation
150 West Jefferson
Suite 2500
Detroit, MI 48226 1,367,525(1) 1,367,525(1) 25.0%
Kenneth G. Herrick
Tecumseh Products Co.
100 E. Patterson St.
Tecumseh, MI 49286 888,113(2) 888,113(2) 16.2%
Comerica Bank
411 West Fort St.
Detroit, MI 48226 3,394(3) 2,019(3) 1,308,005(3) 1,308,380(3) 23.9%
John W. Gelder
150 West Jefferson
Suite 2500
Detroit, MI 48226 100 100 1,081,821(4) 1,081,821(4) 19.8%
<FN>
- ----------------
(1) Each of Kenneth G. Herrick, Todd W. Herrick, and John W. Gelder, all of
whom are Directors and nominees for Director, is a member of the Board of
Trustees of Herrick Foundation.
(2) Shared ownership in a fiduciary capacity as a trustee of trusts for the
benefit of himself and his descendants (the "Kenneth Herrick Trusts").
Kenneth G. Herrick is also a Trustee of Herrick Foundation.
(3) As of December 31, 1995, based on a Schedule 13G filed by Comerica Bank
with the Commission. Includes shared ownership in a fiduciary capacity as a
trustee of the Kenneth Herrick Trusts. Also includes shared ownership in a
fiduciary capacity as a trustee of other trusts, including trusts holding
an aggregate of 193,708 Class B shares of which John W. Gelder as well as
other persons also are trustees.
(4) Shared ownership in a fiduciary capacity as a trustee of the Kenneth
Herrick Trusts and of the other trusts referred to in note (3).
</TABLE>
<PAGE>
ELECTION OF DIRECTORS
Nominees for Election as Director
Pursuant to the authority conferred upon it in the Company's Bylaws, the
Board of Directors of the Company (the "Board") has established the number of
Directors constituting the entire Board as nine. Edward C. Levy, Jr., who had
served as a Director since 1989, retired from the Board in September 1995. The
Board has nominated for election as Directors of the Company, to act and serve
as such until the next annual meeting of shareholders of the Company or until
their respective successors are elected and qualify, the persons named below,
all of whom are presently Directors of the Company. Proxies will be voted for
such nominees unless a contrary specification is made by the Class B
shareholder as provided therein, in which event those Proxies containing such
contrary specifications will be voted in accordance therewith. The persons
named in the form of Proxy will vote in accordance with their best judgment in
the event that any nominee named below should prove to be unable to serve as a
Director. However, the Board of Directors has no reason to expect that any of
the nominees proposed by it will be unable to serve as a Director.
Assuming the presence of a quorum, Directors will be elected at the
Annual Meeting, from among those persons duly nominated for such positions, by
a plurality of the votes cast by holders of Class B Stock who are present in
person, or represented by proxy, and entitled to vote at the meeting. Thus,
since nine Directors are to be elected, those nominees who receive the highest
through ninth-highest numbers of votes for their election as Directors will be
elected, regardless of the number of votes which for any reason, including
abstention, broker non-vote, or the withholding of authority to vote, are not
cast for the election of such nominees.
Information as to Nominees for Director
There is shown below for each nominee for Director, as reported to the
Company, the nominee's name, age, and family relationship, if any, with any
other nominee for Director; the nominee's principal occupation and position, if
any, with the Company; the nominee's business experience during at least the
past five years; period of service as a Director of the Company; certain other
directorships held by the nominee; and the Committees of the Board of Directors
on which the nominee serves.
<TABLE>
<CAPTION>
Name of Nominee,
Period of Service Principal Occupation
as a Director, and Age and Other Information
---------------------- ---------------------
<S> <C>
Kenneth G. Herrick
Director since 1951, Age: 74 Chairman of the Board of Directors of the Company.
Mr. Kenneth G. Herrick served as President and Chief
Executive Officer of the Company from 1966 to 1970,
served as Chairman of the Board of Directors and
Chief Executive Officer of the Company from 1970
until April 23, 1986, and has served as Chairman of
the Board of Directors of the Company since April 23,
1986.
Mr. Kenneth G. Herrick is a member of the Board of
Trustees of Howe Military School and of Herrick
Foundation.
<PAGE>
Todd W. Herrick
Director since 1973, Age: 53 President and Chief Executive Officer of the Company.
Mr. Todd W. Herrick served as a Vice President of the
Company from 1974 until January 1984, when he became
Executive Vice President and Assistant to the
President of the Company. He served in those
capacities until June 27, 1984, when he was elected
President and Chief Operating Officer of the Company.
He then served as President and Chief Operating
Officer of the Company until April 23, 1986, when he
was elected President and Chief Executive Officer of
the Company.
Mr. Todd W. Herrick is a member of the Board of
Directors of Comerica Bank and is a member of the
Board of Trustees of Henry Ford Health System, of
Albion College, of Howe Military School, and of
Herrick Foundation. He is also a member of the
Advisory Board to the School of Business of the
University of Michigan and a member of the Advisory
Board to the School of Business of the University of
Notre Dame. He is a member of the Audit Committee and
the Pension Committee.
Mr. Todd W. Herrick is the son of Kenneth G. Herrick.
John H. Foss
Director since 1982, Age: 53 Vice President, Treasurer and Chief Financial Officer
of the Company.
Mr. Foss has been the Treasurer of the Company since
November 28, 1979, and a Vice President and the
Treasurer of the Company since April 23, 1980.
Mr. Foss is a member of the Board of Directors of
United Bancorp, Inc., of United Bank & Trust, and of
Bartech, Inc. He also is a member of the Board of
Trustees of Adrian College. He is a member of the
Pension Committee.
J. Russell Fowler
Director since 1967, Age: 77 Retired. From 1992 to May 1, 1994, Mr. Fowler served
as Chairman Emeritus of Jacobson Stores, Inc.,
mercantile business. From 1982 to 1992, he was
Chairman of the Board of Directors and Chief
Executive Officer of Jacobson Stores, Inc.
Mr. Fowler is a member of the Board of Directors of
Camp Realty Company, of Guardsman Producers Co., and
of Butterfield Investment Company. He is a member of
the Audit Committee.
Dean E. Richardson
Director since 1979, Age: 68 Retired. Prior to his retirement on April 1, 1990,
Mr. Richardson served as Chairman of the Board of
Directors of Manufacturers National Corporation (a
bank holding company).
Mr. Richardson is a member of the Board of Directors
of DTE Energy Company and of its principal
subsidiary, The Detroit Edison Company. He is a
member of the Audit Committee and the Executive
Compensation Committee.
<PAGE>
John W. Gelder
Director since 1989, Age: 62 Senior Member of the law firm of Miller, Canfield,
Paddock and Stone, P.L.C., general legal counsel for
the Company.
For more than five years prior to January 1, 1994,
Mr. Gelder was actively engaged in the practice of
law as a Partner in the law firm of Miller, Canfield,
Paddock and Stone. On January 1, 1994, that firm
converted from a partnership to a professional
limited liability company, and Mr. Gelder's
relationship with the firm changed to that of a
Member. Since that date, he has continued to be
actively engaged in the practice of law as a Member
of Miller, Canfield, Paddock and Stone, P.L.C.
Mr. Gelder is a member of the Board of Trustees of
Herrick Foundation. He is a member of the Pension
Committee and the Executive Compensation Committee.
Stephen L. Hickman
Director since 1991, Age: 53 Chairman of the Board of Directors, President, and
Chief Executive Officer of Brazeway, Inc.,
manufacturer of aluminum extrusions and fabrication
of aluminum products.
Mr. Hickman has been Chairman of the Board of
Directors and President and Chief Executive Officer
of Brazeway, Inc. for more than five years.
Mr. Hickman is a member of the Board of Directors of
Adrian State Bank, of Kenmore-Brazeway of Crook,
England, and of Spangler Candy Company. He also is a
member of the Board of Trustees of Siena Heights
College. He is a member of the Audit Committee and
the Executive Compensation Committee.
Peter M. Banks
Director since 1991, Age: 58 President and Chief Executive Officer, Environmental
Research Institute of Michigan.
Dr. Banks has served as President and Chief Executive
Officer of Environmental Research Institute of
Michigan since January 1995. From June 1990 through
December 1994, he served as Dean of the College of
Engineering of the University of Michigan. For more
than five years prior thereto, Dr. Banks was a
professor on the faculty of the Electrical
Engineering Department of Stanford University and
Director of both its Space, Telecommunications and
Radioscience Laboratory and its Center for
Aeronautics and Space Information Sciences.
Dr. Banks is a member of the Board of Directors of
the Center for Space and Advanced Technology of
Fairfax, Virginia, and of Research Environmental
Industries, Inc. He is a member of the Pension
Committee.
<PAGE>
Jon E. Barfield
Director since 1993, Age: 44 Chairman and Chief Executive Officer, Bartech, Inc.,
contract employment and related staffing services
(since 1995); President and Chief Executive Officer,
Bartech, Inc., from 1981 to 1995.
Mr. Barfield is a member of the Board of Directors of
First of America Bank Corporation. He also is a
Charter Trustee of Princeton University, a member of
the Board of Trustees of GMI Engineering and
Management Institute, of Henry Ford Museum and
Greenfield Village, and of Detroit Educational
Television Foundation Channel 56, and a director of
the Community Foundation for Southeastern Michigan.
He is a member of the Pension Committee and the
Executive Compensation Committee.
</TABLE>
Directors' Meetings and Certain Standing Committees
During the fiscal year ended December 31, 1995, the Board of Directors of
the Company held ten meetings. For that year, each Director attended at least
75% of the aggregate of (a) the total number of Board meetings held while he
was serving as a Director and (b) the total number of meetings of all Board
Committees on which he served that were held during his period of service,
except that Kenneth G. Herrick attended 70% of the meetings applicable to him.
The Audit Committee of the Board of Directors, the members of which
currently are Todd W. Herrick, J. Russell Fowler, Dean E. Richardson, and
Stephen L. Hickman, met three times in the 1995 fiscal year. Among its
functions, the Audit Committee reviews the scope and effectiveness of audits of
the Company by the independent public accountants and by the Company's internal
auditors; selects and recommends to the Board the employment of independent
public accountants for the Company; reviews the audit plans of the independent
public accountants and the Company's internal auditors; reviews the fees
charged by the independent public accountants; reviews the Company's annual
financial statements before their release; reviews recommendations of the
independent accountants with respect thereto; and reviews and acts on comments
and suggestions by the independent public accountants and by the internal
auditors with respect to their audit activities.
Membership on the Executive Compensation Committee of the Board is
restricted exclusively to non-employee Directors. Currently, its members are
Dean E. Richardson, John W. Gelder, Stephen L. Hickman, and Jon E. Barfield.
The functions of the Executive Compensation Committee include annually fixing
the salaries of the Chief Executive Officer and the other Executive Officers of
the Company; considering, developing, reviewing, and making recommendations to
the Board concerning programs for the provision of annual and long term
incentive compensation for such executives and for other key employees; and
administering such incentive programs, including the Company's Management
Incentive Plan. The Committee met twice during the last fiscal year. Additional
information concerning the Management Incentive Plan and actions of this
Committee affecting the 1995 compensation of Executive Officers is provided in
the Executive Compensation Committee Report below.
The Company has no standing nominating committee or committee performing
similar functions.
Compensation of Directors
During the 1995 fiscal year, Directors who are not employees of the
Company received a monthly retainer of $600, a fee of $1,500 ($1,400 until May
1995) for each Board meeting attended, and a fee of $600 for each meeting of a
Committee attended, together with reimbursement for travel expenses. No person
who receives a salary from the Company and is also a Director is separately
compensated for his services as a Director.
<PAGE>
Ownership by Management of Equity Securities
There is shown below, as reported to the Company, information as of March
1, 1996 concerning the Rule 13d-3 beneficial ownership of Class B Stock and
Class A Stock of each Director or nominee for Director, each Executive Officer
of the Company, and all Directors and Executive Officers as a group.
Number of Shares of Common Stock Beneficially Owned on March 1, 1996
<TABLE>
<CAPTION>
Class of Sole Voting and Aggregate
Common Investment Aggregate Percent
Name Stock Power Other Total Owned
---- --------- --------------- ----- --------- ---------
<S> <C> <C> <C> <C> <C>
Peter M. Banks Class B .............. -0- -0- -0- -0-
Class A .............. -0- -0- -0- -0-
Jon E. Barfield Class B .............. -0- -0- -0- -0-
Class A .............. 659 -0- 659 *
John H. Foss Class B .............. 100 72,550(1) 72,650 1.3%
Class A .............. 300 -0- 300 *
J. Russell Fowler Class B .............. 1,300 -0- 1,300 *
Class A .............. 900 -0- 900 *
John W. Gelder Class B .............. 100 -0-(2) 100 *
Class A .............. 300 -0-(2) 300 *
Kenneth G. Herrick Class B .............. -0- 2,328,188(3)(4) 2,328,188 42.6%
Class A .............. -0- 1,015,765(3)(4) 1,015,765 6.2%
Todd W. Herrick(5) Class B .............. 21,906 10,000(6) 31,906 *
Class A .............. -0- -0-(6) -0- -0-
Stephen L. Hickman Class B .............. 100 -0- 100 *
Class A .............. 300 -0- 300 *
Dean E. Richardson Class B .............. 100 -0- 100 *
Class A .............. 300 -0- 300 *
Harry L. Hans Class B .............. -0- -0- -0- -0-
Class A .............. -0- -0- -0- -0-
All Directors and Class B .............. 23,606 2,410,738 2,434,344 44.5%
Executive Officers as Class A .............. 2,759 1,015,765 1,018,524 6.2%
a group (10 persons)
<FN>
- ----------------
* Less than 1%
(1) Shares owned by Adrian College, of which John H. Foss is a member of the
Board of Trustees, as to which shares Mr. Foss disclaims beneficial
ownership.
(2) Does not include (a) 1,367,525 Class B shares (25.0% of the class) and
458,347 Class A shares (2.8% of the class) owned by Herrick Foundation, of
which John W. Gelder is an officer and a member of the Board of Trustees,
which shares are included in the amounts set after the name of Kenneth G.
Herrick; (b) 888,113 Class B shares (16.2% of the class) and 454,441 Class
A shares (2.8% of the class) owned by the Kenneth Herrick Trusts, in
respect of which trusts Mr. Gelder is a co-trustee and all of which shares
also are included in the amounts set after Mr. Kenneth Herrick's name; and
(c) 193,708 Class B shares (3.5% of the class) owned by other trusts of
which Mr. Gelder is a co-trustee. Mr. Gelder disclaims beneficial ownership
of all of these excluded shares.
(3) Includes (a) the 1,367,525 Class B shares and 458,347 Class A shares owned
by Herrick Foundation, of which Kenneth G. Herrick is an officer and a
member of the Board of Trustees; and (b) 72,550 Class B shares (1.3% of the
class) and 102,977 Class A shares (less than 1% of the class) owned by Howe
Military School, of which Kenneth G. Herrick is a member of the Board of
Trustees. Mr. Kenneth Herrick disclaims beneficial ownership of all of
these shares.
<PAGE>
(4) Includes the 888,113 Class B shares and 454,441 Class A shares owned by the
Kenneth Herrick Trusts, of which Kenneth G. Herrick is a beneficiary and a
co-trustee.
(5) Todd W. Herrick is an income beneficiary of the Kenneth Herrick Trusts.
(6) Does not include (a) the 1,367,525 Class B shares and 458,347 Class A
shares owned by Herrick Foundation, of which Todd W. Herrick is an officer
and member of the Board of Trustees; and (b) the 72,550 Class B shares and
102,977 Class A shares owned by Howe Military School, of which Todd W.
Herrick is a member of the Board of Trustees, all of which shares are
included in the amounts set after the name of Kenneth G. Herrick. Includes
10,000 Class B shares (less than 1% of the class) owned by Albion College,
of which Todd W. Herrick is a member of the Board of Trustees. Mr. Todd
Herrick disclaims beneficial ownership both of the excluded shares and of
the shares owned by Albion College.
</TABLE>
Section 16(a) Compliance
Directors and certain officers of the Company, beneficial owners of more
than 10% of the Company's Class B Stock, and certain related trusts ("Section
16 Reporting Persons") are required to file initial reports of ownership and
(except in certain cases pertaining to trusts) reports of changes in ownership
of Company equity securities and related derivative securities, pursuant to
Section 16(a) of the Securities Exchange Act of 1934, as amended. Since May 1,
1991, such persons also have been required to provide the Company with copies
of such reports. The Company has reviewed all such report copies as it has
received from persons known to it to be (or during 1995 to have been) Section
16 Reporting Persons and also has received and reviewed written representations
from some such persons to the effect that other reports have not been required
of them. Based solely on such review, the Company believes that in respect of
1995 all Section 16(a) filing requirements were met.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Information
The table which follows provides information, for each of the Company's
last three completed fiscal years, concerning the compensation of Todd W.
Herrick, the Company's Chief Executive Officer ("CEO"), and of each of the
other Executive Officers who served as such during 1995 and whose total salary
and bonus for such year exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
--------------------- ------------
Awards
------------
Restricted
Stock All Other
Name and Principal Position Year Salary(1) Bonus(1) Award(s)(2) Compensation(3)
--------------------------- ---- --------- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Todd W. Herrick 1995 $330,000 $ -0- $ 80,496 $4,500
President, CEO 1994 300,000 -0- 126,562 4,500
1993 250,000 50,000 -0- 4,497
John H. Foss 1995 $220,000 $ -0- $ 53,664 $4,500
Vice President, Treasurer, CFO 1994 198,500 -0- 83,742 4,500
1993 162,000 40,000 -0- 4,497
Harry L. Hans 1995 $135,000 $ -0- $ 10,478 $4,050
Group Vice President, 1994 123,000 -0- 55,818 4,140
Engine & Power Train Components 1993 108,000 15,000 -0- 3,690
<FN>
(1) Includes, where applicable, amounts deferred at the election of the
pertinent Executive Officer, which were contributed on the officer's behalf
to the Company's Retirement Savings Plan, a so-called "401(k) plan."
(2) The awards reported in this column are restricted phantom stock units
relating to the Class A Stock that were awarded for achievement of
performance goals under the Management Incentive Plan begun in 1994. As
more fully discussed in the Executive Compensation Committee Report, awards
under this Plan and any deemed dividend reinvestments that may be credited
on such awards generally are nontransferable and subject to forfeiture
until five years after the end of the year for which they were granted. As
required by Commission rules, for purposes of attributing a dollar value to
the units reported in this column, values have been calculated by
multiplying the number of units awarded by the grant date closing price for
a share of Class A Stock on the NASDAQ National Market System. Shareholders
should note, however, that awards under the Management Incentive Plan are
denominated in share units, not dollars, so that the potential payout on an
award, when and if vested, is tied directly to the market value performance
of the Class A Stock following the grant. Thus, the actual dollar amount a
grantee ultimately may realize from a reported award will depend on future
Company performance and on general market conditions prevailing in the
future.
As and when cash dividends are paid on Class A Stock, additional phantom
share units, which correspond to the dividend paid, are credited to
employees' accounts.
As of December 31, 1995, prior to the 1995 awards reported in this column,
the persons named held, respectively, the following numbers of share units,
which had the following values based on the closing price for the Class A
Stock on the NASDAQ National Market System on the last trading day of 1995:
Todd W. Herrick -- 2,809.73 share units valued at $145,404; John H. Foss --
1,859.11 share units valued at $96,209; and Harry L. Hans -- 1,239.18 share
units valued at $64,128.
(3) Amounts shown are Company "matching" contributions to the Retirement
Savings Plan.
</TABLE>
<PAGE>
Retirement Plans
The Company's retirement plan, which is a broad-based defined benefit and
(since 1985) noncontributory plan, and its supplemental retirement plan, which
covers certain executives (collectively, the "Pension Plans"), provide benefits
in the event of normal (i.e., at age 65), early, deferred, or disability
retirement. Upon a participant's death, the Pension Plans provide for a
surviving spouse pension and a refund of any pre-1985 employee contributions.
Participants are vested after five years of credited service with the Company.
As of January 1, 1996, the number of years of credited service for the
executives named in the Summary Compensation Table were, respectively, as
follows: Mr. Todd Herrick, 31.5 years; Mr. Foss, 17 years; and Mr. Hans, 39.5
years.
The Pension Plans as currently in effect provide for retirement benefits
to a vested participant in the form of a life-time pension, the amount of which
is equal to a percentage of the participant's average base salary over the 60
months immediately prior to his or her retirement date, multiplied by years of
credited service (up to a maximum of 35 years), and reduced in the case of
certain benefits payable pursuant to the supplemental retirement plan by a
percentage of Social Security benefits.
The table which follows shows the estimated annual pension benefit (which
is not subject to further deduction for Social Security benefits or other
offset amounts) payable under the Pension Plans on a straight life annuity
basis to Executive Officers retiring at age 65 in the earnings and years of
service classifications therein specified, without considering any benefits
which in some cases may be payable to a given participant in respect of
voluntary contributions made by the participant prior to 1985.
<TABLE>
<CAPTION>
Pension Plan Table
Estimated Annual Benefit at Age 65
for Years of Service Indicated
Average ------------------------------------------------------
Annual 35 or
Base Salary 15 20 25 30 Longer
- ----------- -------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 90,000 $ 16,875 $ 22,500 $ 28,125 $ 33,750 $ 39,375
100,000 18,750 25,000 31,250 37,500 43,750
125,000 23,437 31,250 39,062 46,875 54,687
150,000 28,125 37,500 46,875 56,250 65,625
175,000 35,777 47,703 59,628 71,555 84,680
200,000 41,402 55,203 69,003 82,805 97,805
225,000 47,027 62,703 78,378 94,055 110,930
250,000 52,652 70,203 87,753 105,305 124,055
275,000 58,277 77,703 97,128 116,555 137,180
300,000 63,902 85,203 106,503 127,805 150,305
400,000 86,402 115,203 144,003 172,805 202,805
450,000 97,652 130,203 162,753 195,305 229,055
500,000 108,902 145,203 181,503 217,805 255,305
</TABLE>
EXECUTIVE COMPENSATION COMMITTEE REPORT
The report which follows is provided to shareholders by the Executive
Compensation Committee of the Board of Directors (the "Committee"), all of the
members of which are non-employee Directors.
Compensation Philosophy and Objectives
Beginning in 1994, the Company dramatically changed its approach to
compensating executives. It abandoned the use of traditional discretionary cash
bonuses in favor of a "pay for performance" philosophy designed to accomplish
three primary objectives:
* Encouraging teamwork among members of management and excellence in the
performance of individual responsibilities.
<PAGE>
* Aligning the interests of key managers with the interests of
shareholders by offering an incentive compensation vehicle that is
based on growth in shareholders' equity and the value and the
profitability of the Company.
* Attracting, rewarding, and retaining strong management.
The Company's "pay for performance" strategy is intended to enhance
shareholder value:
* In the short term, by focusing management's attention on return on
equity, cash return on assets, and other measures of current financial
performance, thereby challenging each of the Company's business groups
to achieve and maintain positions of market leadership, to reduce costs
where appropriate, and to continually seek to maintain and enhance the
Company's reputation for excellence in product quality and customer
service.
* In the longer term, by causing a substantial portion of each
executive's potential compensation to be directly tied to market
performance of the Company's stock.
Management Incentive Plan Awards
The principal tool for implementing the Company's "pay for performance"
philosophy is the Management Incentive Plan, a so-called "phantom stock" plan
which covers approximately 30 key executives, including all Executive Officers.
(The Company also maintains a plan for awarding annual cash bonuses based on
similar performance criteria, which covers approximately 100 lower level
management employees.) Adopted by the Board of Directors on the Committee's
recommendation effective January 1, 1994, the Management Incentive Plan is
structured to provide both a short-term incentive tied to achievement of
Company and business unit annual performance goals and a long-term incentive
tied to the market performance of Company stock.
All Plan awards are maintained in phantom stock "units" considered for
Plan recordkeeping purposes as equivalents to shares of Class A Stock and
valued accordingly. Except in cases of earlier employment termination due to
death, disability, or retirement, or in the event of a "change in control" (as
defined in the Plan), the entire award granted an employee under the Management
Incentive Plan for any fiscal year (including the fiscal 1995 awards reported
in the Summary Compensation Table) is subject to forfeiture if the grantee does
not remain with the Company for at least five full fiscal years. As and when
cash dividends are paid on Class A stock, additional phantom stock units (also
subject to forfeiture), which correspond in value to the dividend paid, will be
credited to employee accounts under the Plan. Thus, the potential payout on an
award, although payable only in cash, is tied directly to the market value
performance of the Class A Stock over a five-year period. For purposes of
computations under the Plan, units are valued at the average of the month-end
closing prices for the Class A Stock during the year, rather than by the method
required by the Commission for the Summary Compensation Table.
The Management Incentive Plan affords the Committee broad discretion to
determine the amounts of awards granted, subject only to a limitation setting
the maximum number of units awardable during a given year at 2% of the number
of Class A shares outstanding at the end of the year. The Committee also has
broad discretion under the Plan with respect to developing and establishing
criteria under which otherwise eligible employees may receive awards. In
general, however, as was true for fiscal 1995, it is contemplated that, prior
to or early in each year, the Committee will establish objective Company-wide
and business group performance criteria and that, after year-end, the extent of
the Company's and each group's achievement of the pre-established criteria will
form the principal basis for Committee phantom stock grant decisions for that
year.
For fiscal 1995, the Company-wide criteria established for the Corporate
Office Group, which includes Messrs. Todd Herrick and John Foss, related to
return on equity, both in absolute terms and in relation to historical Company
performance. The same Company-wide return on equity criteria also were
established for each of the Company's business units, including the Engine &
Power Train Group headed by Mr. Hans, and additional group criteria relating to
cash return on assets relative to prior performance also were established for
each business unit. Pursuant to the Plan as implemented for 1995, depending on
the extent to which the Company's actual return on equity for that year (and,
for employees in a business unit, the extent to which the unit's actual cash
return on assets for the year) fell within or exceeded the Committee's
pre-approved ranges, each covered employee could receive an award of phantom
stock units equal to up to 40% of 1995 salary based on these objective
criteria. In addition, each covered employee could receive an award of up to
10% of 1995 salary depending on the Committee's evaluation of 1995 performance
based on achievement of business plan goals, completion of specified strategic
plan actions, recommendations of the Chief Executive Officer ("CEO"), and such
other factors as the Committee deems appropriate.
<PAGE>
In most cases, the Company's actual 1995 performance was good when
measured against the pre-established objective criteria. The Company's
outstanding 1994 performance, however, had the effect of attenuating 1995
results under those performance criteria based on comparisons with prior
results. Accordingly, Executive Officers received phantom stock awards pursuant
to these criteria amounting to a lesser portion of the 40% of 1995 salary
maximum than was the case last year. In each case, 1995 awards to Executive
Officers on the basis of objective performance criteria constituted over 50% of
their total awards.
The balance of each award, while necessarily determined in a more
subjective manner, was also based on 1995 performance. The Committee believed
that the performance of each of the Company's business groups reflected a team
effort on the part of the executives in that group and, in the interest of
maintaining a team spirit, concluded that all covered employees in a given
group should receive awards which were identical in terms of percentage of
salary. In fixing this portion of the awards for executives in the Corporate
Office Group (which includes the CEO), the Committee considered the degree to
which the Company had succeeded in accomplishing strategic objectives
established at the beginning of the year by the CEO, including objectives
relating to operations, human resources, corporate finance, employee benefits,
investor and shareholder relations, and other matters. The non-objective
portions of the awards for participating employees in other groups were based
principally on the CEO's recommendations, which were in turn based on the
performance of those groups in relation to their business plans for the year.
Salaries
In keeping with the Company's "pay for performance" philosophy, the
Committee believes that Executive Officers should receive salaries that are
reasonable but modest in light of their experience, skills, and
responsibilities, and that the opportunity to achieve significantly greater
total compensation should be tied to the Company's short- and long-term
performance through the potential for awards under the Management Incentive
Plan. When the Committee considered fiscal 1995 executive salaries, it was the
shared perception of its members, based on their general business knowledge and
without review of any data specifically collected by the Committee for that
purpose, that the preexisting salary levels for the CEO and other executives
were not commensurate with their responsibilities in light of the global
expansion of the Company in recent years. In its salary deliberations with
respect to Executive Officers other than the CEO, the Committee considered the
CEO's recommendations. The Company's fiscal 1994 performance also was a factor,
but not a controlling factor, in the Committee's decisions on 1995 salary, due
to its members' belief that short term performance generally is not appropriate
for consideration with respect to that form of compensation. Based on the
foregoing, the Committee determined to increase the 1995 salary for each
Executive Officer to the level reported in the Summary Compensation Table
above. Except for the fact that the Committee did not obtain a recommendation
from the CEO concerning his own salary, the Committee's salary determinations
were made on the same basis for each Executive Officer.
Concluding Observations
Management has reported to the Committee that the Company's "pay for
performance" strategy continues to have an observable, positive effect on
employee behavior and appears to be promoting the precise objectives it was
intended to promote. The Committee therefore expects to continue to approach
executive compensation in a similar fashion in 1996 and for the foreseeable
future. Nevertheless, the Committee intends to closely monitor the continuing
impact of compensation philosophy on Company performance and shareholder value
and to consider ways in which its current plans and policies might be improved.
<PAGE>
In mid-1993, a new Section 162(m) was added to the Internal Revenue Code.
In general, this section prohibits the deduction of certain compensation in
excess of $1 million per year paid on or after January 1, 1994 by a
publicly-held corporation to any individual named in the corporation's summary
compensation table for the year. As indicated by the Summary Compensation
Table, the compensation paid to each of the Company's Executive Officers was
well below $1 million for fiscal 1995, and the Committee expects the same will
be true for the current year. Consequently, the Committee has decided to defer
consideration of any compensation policies related to Section 162(m) for the
present.
Presented By: The Members of the Executive Compensation
Committee
of the Board of Directors
Dean E. Richardson, Chairman
Jon E. Barfield
John W. Gelder
Stephen L. Hickman
<PAGE>
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The graph which follows compares the performance over the last five
Company fiscal years of the Company's voting common stock (since April 22,
1992, designated as the Class B Stock and having the trading symbol TECUB) to
the Standard & Poor's 500 Stock Index (the "S&P 500 Index") and to a composite
industry group index (the "Composite S&P Industry Index") comprised of the
Standard & Poor's Household Furnishing and Appliances Index (70%) and the
Standard & Poor's Diversified Machinery Index (30%). The graph assumes: (1) an
investment of $100 in the Company's voting common stock and in each index on
December 31, 1990, (2) retention of the Class A Stock paid as a one-for-one
dividend upon the Class B Stock on May 29, 1992 and the Class A Stock paid as a
one-for-one dividend upon the Class A Stock and the Class B Stock on June 30,
1993, and (3) reinvestment of all other dividends (with respect to dividends
upon the Company's voting common stock and, since May 29, 1992, the Class A
Stock, in shares of the same respective class).
Comparison of Five Year Cumulative Total Return
Among Tecumseh Products Company, S&P 500 Index,
and S&P Composite Industry Index
[ GRAPH ]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Tecumseh Products Co. $100.00 $133.60 $150.49 $254.14 $254.12 $301.92
S&P 500 Index 100.00 130.47 140.41 154.56 156.60 215.45
S&P Composite Industry Index 100.00 139.02 152.07 220.89 190.71 233.26
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Three of the four Directors currently serving on the Executive
Compensation Committee, i.e., Messrs. Richardson, Gelder, and Hickman, also
served on that Committee throughout the period covered by the Executive
Compensation Committee Report above. Mr. Barfield, who was first appointed to
the Committee in November 1995 (and who consequently did not participate in the
Committee's deliberations concerning 1995 executive salaries or the
establishment of 1995 performance goals for the Management Incentive Plan,
which deliberations preceded his appointment), is the only other current
Director who served on the Committee during that period. Mr. Edward C. Levy,
Jr., who served as a Director until September 1995, also served on the
Committee until his retirement as a Director. None of these five gentlemen is
or has ever been an officer or employee of the Company or of any of its
subsidiaries.
<PAGE>
During 1995, the law firm of Miller, Canfield, Paddock and Stone, P.L.C.
was retained by the Company as its general legal counsel. The Company also has
retained the services of that law firm for the Company's current fiscal year.
Mr. Gelder is a Member of Miller, Canfield, Paddock and Stone, P.L.C.
Executive Officer and Director John H. Foss served during 1995 and
continues to serve on the boards and compensation committees of Bartech, Inc.
and Utility Support Services, Inc. Both of these companies are owned by the
family of Director and Committee member Jon E. Barfield, who served during 1995
and continues to serve as the Chief Executive Officer of each of them.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Ciulla, Smith & Dale, LLP (formerly known as "Moore, Smith & Dale"), the
Company's independent accountants for its fiscal year ended December 31, 1995
and for many years prior thereto, will continue to serve as such for the
Company's fiscal year ending December 31, 1996. A representative of Ciulla,
Smith & Dale, LLP will be present at the Annual Meeting and available to
respond to appropriate questions from shareholders, and will have an
opportunity to make a statement if he so desires.
OTHER MATTERS
The Board of Directors knows of no business to be acted upon at the
Annual Meeting, other than the matters set forth in the accompanying Notice of
Annual Meeting. If any other matters should be presented to the meeting upon
which a vote properly may be taken, it is intended that the Class B shares
represented by Proxies will be voted with respect to such matters in accordance
with the judgment of the person or persons voting such shares.
Form 10-K
The Company will provide without charge to each person who, on March 1,
1996, was the holder of record, or the beneficial owner, of shares of its
issued and outstanding Class B Stock or Class A Stock, on the written request
of such person directed to:
Tecumseh Products Company
100 East Patterson Street
Tecumseh, Michigan 49286
Attention: Daryl P. McDonald
Corporate Counsel and Secretary
a copy of the Company's Annual Report for its Fiscal Year ended December 31,
1995 on Form 10-K, including the financial statements and the schedules and
exhibits thereto, filed by the Company with the Commission.
1997 Shareholder Proposals
In order for shareholder proposals for the Company's 1997 Annual Meeting
of Shareholders to be eligible for inclusion in the Company's Proxy Statement,
they must be received by the Company at its principal office in Tecumseh,
Michigan prior to November 15, 1996.
Expenses Incidental to Proxy Solicitation
Expenses in connection with solicitation of Proxies by the Board will be
borne by the Company. The Company has engaged Georgeson & Company Inc. to
assist in soliciting proxies, for whose services the Company will pay a fee
estimated at $7,000 plus out-of-pocket costs and expenses. The Company also may
pay brokers, nominees, fiduciaries, custodians, and other organizations
performing similar functions their reasonable expenses for sending proxy
material to principals and obtaining their instructions. In addition to
solicitation by mail, Proxies may be solicited in person, or by telephone,
telegraph, facsimile transmission, or similar means, by directors, officers,
and regular employees of the Company.
<PAGE>
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. CLASS B SHAREHOLDERS
ARE URGED TO EXECUTE AND RETURN, WITHOUT DELAY, THE ENCLOSED FORM OF PROXY IN
THE POSTAGE PAID, SELF-ADDRESSED ENVELOPE PROVIDED FOR THAT PURPOSE, EVEN IF
THEY CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON.
By Order of the Board of Directors,
/s/ Daryl P. McDonald
-------------------------------
Daryl P. McDonald
Corporate Counsel and Secretary
Tecumseh, Michigan
March 15, 1996
<PAGE>
TECUMSEH PRODUCTS COMPANY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD APRIL 24, 1996.
KNOW ALL MEN BY THESE PRESENTS, that the undersigned do(es) hereby
constitute and appoint KENNETH G. HERRICK and TODD W. HERRICK, and each of
them, his (their) true and lawful attorneys, with full power of substitution,
for him (them) and in his (their) name(s) at the Annual Meeting of the
Shareholders of Tecumseh Products Company (the "Company") to be held at the
Tecumseh Country Club located in Tecumseh, Michigan on Wednesday, April 24,
1996 at 9:00 a.m., local Tecumseh, Michigan time, and at any and all
adjournments thereof, to vote any and all shares of the Class B Common Stock,
$1.00 par value, of the Company owned or held or standing in his (their)
name(s) or which for any reason he (they) may or shall be entitled to vote,
such proxies being directed to vote as specified on the reverse side and to
vote in their discretion upon such other matters as may properly come before
said Annual Meeting.
If you sign and return this proxy, the shares represented hereby will be voted
in accordance with the specification made hereon. WHERE A VOTE IS NOT
SPECIFIED, THE PROXIES WILL VOTE THE SHARES REPRESENTED BY THIS PROXY FOR THE
ELECTION AS DIRECTORS OF ALL THE NOMINEES LISTED HEREIN, AND IN ACCORDANCE
WITH THEIR DISCRETION ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
Please sign this proxy card exactly as your name or names appear hereon. Joint
owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature should be that
of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_________________________________ _________________________________
_________________________________ _________________________________
- -----------------------------------------------------------------------------
/X/ PLEASE MARK VOTES With- For All
AS IN THIS EXAMPLE For hold Except
Election of Directors. / / / / / /
Kenneth G. Herrick, Todd W. Herrick, John H. Foss,
J. Russell Fowler, Dean E. Richardson, John W. Gelder,
Stephen L. Hickman, Peter M. Banks, Jon E. Barfield
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, CHECK THE "FOR ALL EXCEPT" BOX AND
STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST
PROVIDED ABOVE.)
RECORD DATE SHARES:
Please be sure to sign and date this proxy. Date ____________
_____________________________ __________________________________
Shareholder sign here Co-owner sign here
Mark box at right if comments or address change have
been noted on the reverse side of this card. / /
DETACH CARD
