<PAGE>
TRICO PRODUCTS CORPORATION
817 WASHINGTON STREET
BUFFALO, NEW YORK 14203
INFORMATION STATEMENT
PURSUANT TO SECTION 14(F) OF
THE SECURITIES EXCHANGE ACT OF 1934
AND RULE 14F-1 THEREUNDER
------------------------
This information statement is being mailed on or about November 14, 1994,
as part of a Solicitation/Recommendation Statement on Schedule 14D-9 (the
'Schedule 14D-9'), to holders of record on November 10, 1994, of shares of
Common Stock, no par value (the 'Shares'), of Trico Products Corporation, a New
York corporation (the 'Company'), in connection with the election, other than at
a meeting of the stockholders of the Company, to the Board of Directors of the
Company (the 'Board') of up to five persons (the 'Designees') to be designated
by Stant Expansion Corporation, a New York corporation (the 'Purchaser'). The
Purchaser is a wholly owned subsidiary of Stant Corporation, a Delaware
corporation ('Parent'). Such designation will be made pursuant to the Agreement
and Plan of Merger, dated as of November 8, 1994 (the 'Merger Agreement'), among
the Parent, the Purchaser and the Company, which provides for a tender offer by
the Purchaser for the Shares (the 'Offer') followed by a merger of the Purchaser
into the Company (the 'Merger'). Capitalized terms not otherwise defined herein
have the meanings ascribed to them in the Schedule 14D-9.
The Merger Agreement provides that promptly upon the acceptance for payment
of, and payment for, any Shares by the Purchaser pursuant to the Offer, all of
the present directors of the Company shall resign, the number of directors on
the Board of Directors shall be reduced to five and the Purchaser shall be
entitled to designate replacement directors on the Board of Directors of the
Company such that the Purchaser, subject to compliance with Section 14(f) of the
Exchange Act, will control a majority of such directors, and the Company and its
Board of Directors shall take all such action needed to cause the Purchaser's
designees to be appointed to the Company's Board of Directors.
The information contained herein concerning the Parent, the Purchaser and
the Designees has been furnished to the Company by the Parent and the Purchaser,
and the Company assumes no responsibility for the accuracy or completeness of
such information. Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder require the information contained herein to be filed with the
Securities and Exchange Commission (the 'Commission') and transmitted to the
Company's stockholders not less than ten days prior to the date any of the
Designees are elected or appointed to the Board in accordance with the terms of
the Merger Agreement.
As of November 10, 1994, 1,878,629 Shares were issued and outstanding. Each
Share is entitled to one vote on all matters submitted to stockholders of the
Company.
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THE DESIGNEES AND THE CURRENT MEMBERS OF THE BOARD OF DIRECTORS AND EXECUTIVE
OFFICERS OF THE COMPANY
THE DESIGNEES
Set forth below is certain information about each of the Designees.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
DESIGNEE DURING THE PAST 5 YEARS
- --------------------------------- -------------------------------------------------------------------------------
<S> <C>
Christopher T. Dunstan .......... See information under 'Present Directors of the Company.'
Age 39
Anthony W. Graziano, Jr. ........ Vice President, General Counsel and Secretary since October 1994 of Parent,
Age 53 which is engaged in the design, manufacture and distribution of a broad range
of automotive parts and tools for the original equipment, aftermarket and
industrial markets; from April 1993 until June 1994, Executive Vice President
and General Counsel of Triarc Companies, Inc., which is engaged, through its
subsidiaries in fast food, soft drinks, textiles and liquified petroleum gas;
from its formation in January 1989 until April 1993, Senior Vice
President -- Legal Affairs of Trian Group, Limited Partnership, which
provided investment banking and management services for entities controlled
by Nelson Peltz and Peter W. May.
David R. Paridy ................. Director and Chief Executive Officer of Parent since 1987.
Age 53
Thomas F. Plocinik .............. Senior Vice President -- Finance of Parent since 1991; held executive positions
Age 52 at Standard-Thomson Corporation from 1989 to 1991.
Richard L. Wolf ................. See information under 'Present Directors of the Company.'
Age 59
</TABLE>
PRESENT DIRECTORS OF THE COMPANY
The following table contains information with respect to the present
Directors of the Company, all of whom were elected by the stockholders. Under
the Merger Agreement, the present Directors of the Company will resign on the
date of consummation of the Offer.
<TABLE>
<CAPTION>
YEAR
FIRST
PRINCIPAL OCCUPATIONS BECAME SHARES AND PERCENT OF
NAME DURING THE PAST 5 YEARS DIRECTOR SHARES OWNED(A)
- ------------------------------ --------------------------------------------- -------- ---------------------
<S> <C> <C> <C>
Christopher T. Dunstan ....... Vice Chairman since 1992, Senior Vice 1992 3,439(b)
Age 39 President and Chief Financial Officer since
1989; Vice President Finance for North
America Operations and Corporate Treasurer
of Schlegel Corporation prior thereto
J. Walter Frey ............... Retired; Senior Vice President (1988 to 1989) 1980 1,081(b)(c)
Age 68 Vice President and Secretary (1985 to 1989)
of the Corporation
Randolph A. Marks ............ Retired; Former Chairman of the Board of 1989 1,500(b)
Age 59 Directors of American Brass Co.; Director
of Merchants Group, Inc., Pratt & Lambert,
Inc. and Computer Task Group, Inc.
William F. Milliken, Jr. ..... President of Milliken Research Associates, 1963 200(b)
Age 83 Inc. (engineering consulting firm)
Albert R. Mugel .............. Partner of law firm of Jaeckle, Fleischmann & 1968 None(c)
Age 77 Mugel
</TABLE>
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(table continued from previous page)
<TABLE>
<CAPTION>
YEAR
FIRST
PRINCIPAL OCCUPATIONS BECAME SHARES AND PERCENT OF
NAME DURING THE PAST 5 YEARS DIRECTOR SHARES OWNED(A)
- ------------------------------ --------------------------------------------- -------- ---------------------
<S> <C> <C> <C>
William Rollo ................ Retired President, Vice President and General 1989 625(b)
Age 67 Manager of Automotive Division of Briggs &
Stratton Corporation
Paul A. Schoelkopf ........... Chairman of the Board of Directors of Niagara 1950 400(b)
Age 77 Share Corporation; Director Emeritus of US
Air Group Inc.
Richard L. Wolf .............. Chairman, President and Chief Executive 1980 20,107(1.1%)(d)
Age 59 Officer of the Corporation; President and
Chief Operating Officer of the Corporation
(1985 to 1989); Director of Fiamm
Technologies, Inc. and member of Chase
Manhattan Bank Upstate Advisory Board
</TABLE>
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(a) Unless otherwise indicated, individuals have sole voting and sole
investment power of shares listed opposite their names.
(b) Represents ownership of less than 1% outstanding Shares.
(c) Does not include 319,260 Shares owned by the John R. Oishei Appreciation
Charitable Trust, of which Messrs. Frey and Mugel are Trustees. Under the
prohibitions of the 1969 Tax Reform Act, Mr. Frey cannot increase his
existing ownership of the Shares and Mr. Mugel cannot acquire any Shares
without adversely impacting this trust.
(d) Does not include 51,087 Shares owned by a Trust created under the Last Will
and Testament of John R. Oishei, of which Mr. Wolf is co-trustee or 444
Shares owned by the Estate of Jean Reese Oishei, of which Mr. Wolf is
executor.
MEETING AND COMMITTEE DATA
The Board of Directors held four meetings during 1993. Each Director of the
Company attended at least 75% of the aggregate of (i) all meetings of the Board
and (ii) all meetings of committees of the Board of which he was a member.
The Audit Committee of the Board is composed of Messrs. Schoellkopf, Frey
and Marks. The Committee held three meetings during 1993. The Committee reviews
the scope and results of the audit activities of the independent accountants,
significant proposed changes in accounting principles or practices, the
financial reports of the Company and the compensation and general performance of
the Company's public accountants.
The Compensation Committee of the board is composed of Messrs. Mugel,
Milliken and Marks (A. Neville Procter served on this Committee until his death
in May 1994). The Committee held two meetings during 1993. The functions of this
Committee include the review and approval of compensation of employees above a
certain salary level, preparation of recommendations to the Board on the
compensation of employee-directors and administration of the Trico Products
Corporation 1990 Incentive Plan.
The Executive Committee of the board is composed of Messrs. Mugel,
Schoellkopf, Rollo and Wolf. The Executive Committee has the powers of the Board
in directing the management of the Company except as limited by law. Nominees
for election as Director are selected by the Executive Committee. The Committee
held nine meetings during 1993.
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DIRECTORS' FEES
Directors other than employees of the Company receive an annual retainer of
$10,000 plus $500 for each regular, special or committee meeting attended.
PRESENT EXECUTIVE OFFICERS
The present executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD AND YEAR APPOINTED
- ------------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
Richard L. Wolf................ 59 President -- 1985, Chief Executive Officer -- 1989
Christopher T. Dunstan......... 39 Vice Chairman -- 1992, Senior Vice President Finance and
Administration and Chief Financial Officer -- 1991, Vice
President Finance and Chief Financial Officer -- 1989
Emrys G. Thomas................ 51 Managing Director Trico Folberth Limited -- 1989
Donald R. Fletcher............. 43 Vice President -- 1992
Richard N. Hiss................ 58 Vice President -- Original Equipment Sales -- 1991
Dennis J. Petrus............... 46 Vice President -- 1992
Glenn H. Winkles............... 47 Vice President -- Aftermarket Sales -- 1989
</TABLE>
- ----------------------------------------------------------
Mr. Wolf has been President of the Company since 1985 and Chief Executive
Officer since 1989.
Mr. Dunstan was hired and appointed Vice President -- Finance and Chief
Financial Officer in 1989 and is presently Vice Chairman, Senior Vice President
Finance and Administration and Chief Financial Officer. Prior to his employment
by the Company, Mr. Dunstan, a Certified Public Accountant, was employed for a
number of years by Schlegel Corporation, most recently as Vice
President -- Finance for North American Operations and Corporate Treasurer.
Schlegel manufactured and sold to the automotive, building and office equipment
industries with sales of over $300 million.
Mr. Thomas was hired in 1989 as the Managing Director of Trico Ltd., the
Company's subsidiary in the United Kingdom. Prior to employment by the Company,
Mr. Thomas held positions in top management with Fram Europe, Ltd. and TRW Cam
Gears Ltd., which are European manufacturers of components for the automotive
industry.
Mr. Fletcher became Vice President in 1992. Prior to that, he was director
of Corporate Quality Assurance. Before joining the Company in 1990, Mr. Fletcher
was Plant Manager with Alliance Metal Stamping.
Mr. Hiss joined the Company as Vice President -- Original Equipment Sales
in 1991. Prior to joining the Company, he was Director of Marketing, Planning
and Operations for Associated Spring/Barnes Group, Inc.
Mr. Petrus became employed by the Company in 1989 and has been Director of
Manufacturing Engineering, and Director of Product Engineering before being
appointed to his present position. Before joining the Company, he was
Manufacturing Engineer Manager employed by General Motors Corporation.
Mr. Winkles has been Vice President of aftermarket sales for the Company
since 1989.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Information regarding certain beneficial owners of Shares as of November
11, 1994, is as follows:
<TABLE>
<CAPTION>
PERCENTAGE
NAME AND ADDRESS OF AMOUNT AND NATURE OF OF
BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OWNERSHIP
- ----------------------------------------------- ------------------------------------------ ----------
<S> <C> <C>
Raymond A. Deibel, Carl E. Larson, Albert R.
Mugel, Rupert Warren and J. Walter Frey,
Trustees of the John R. Oishei Appreciation
Charitable Trust ............................ 319,260 Shares owned indirectly as 17%
trustees with shared voting and
investment power
817 Washington Street
Buffalo, New York 14203
</TABLE>
(table continued on next page)
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(table continued from previous page)
<TABLE>
<CAPTION>
PERCENTAGE
NAME AND ADDRESS OF AMOUNT AND NATURE OF OF
BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OWNERSHIP
- ----------------------------------------------- ------------------------------------------ ----------
<S> <C> <C>
Rupert Warren ................................. 17,320 Shares owned directly and 126,992 8%
817 Washington Street owned indirectly as trustee with sole
Buffalo, New York 14203 voting and investment power(a)
Rupert Warren and Carl E. Larson,
as Officers and Directors of the Julia R. &
Estelle L. Foundation, Incorporated ......... 150,924 Shares owned indirectly as 8%
officers and directors with shared
voting and investment power
817 Washington Street
Buffalo, New York 14203
Peter Cundill & Associates
(Bermuda) Ltd. .............................. 245,900 Shares owned indirectly of which 13%
210,000 have shared voting power, of
which 185,000 have sole investment power
and 60,900 have shared investment power
15 Alton Hill
Southampton SN 01
Bermuda
</TABLE>
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(a) Does not include 319,260 Shares owned by the John R. Oishei Appreciation
Charitable Trust or 150,924 Shares owned by the Julia R. & Estelle L.
Foundation Incorporated, of which Mr. Warren is a trustee and a member,
officer and director, respectively.
- ----------------------------------------------------------
The ownership of Shares by the executive officers of the Company listed in
the Summary Compensation Table (other than Messrs. Wolf and Dunstan, whose
ownership is disclosed above) who own shares as of October 31, 1994 is as
follows: Richard N. Hiss -- 1,568 shares; and Donald R. Fletcher -- 1,000
shares.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains information concerning the annual and
long-term compensation for the years ended December 31, 1993, 1992 and 1991 of
those persons who were, at December 31, 1993, (i) the chief executive officer
and (ii) the other four most highly compensated executive officers of the
Company (the 'Named Officers'):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C>
ANNUAL COMPENSATION
------------------------------------ LONG TERM COMPENSATION
ALL OTHER AWARDS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS/SARS(2)
- ----------------------------------------- ---- -------- ----- --------------- ----------------------
Richard L. Wolf ......................... 1993 $239,549 -0- $ 2,352 7,000
Chairman, Chief Executive Officer 1992 225,000 -0- 1,688 -0-
1991 225,000 -0- -- -0-
Christopher T. Dunstan .................. 1993 159,480 -0- 2,983 5,000
Vice Chairman, Senior Vice President 1992 130,000 -0- 1,300 -0-
and Chief Financial Officer 1991 134,812 -0- -- -0-
Richard N. Hiss ......................... 1993 136,877 -0- 1,416 2,400
Vice President -- Original Equipment 1992 128,291 -0- 1,073 -0-
Sales 1991 59,531 -0- -- -0-
Donald R. Fletcher ...................... 1993 124,476 -0- 908 3,500
Vice President 1992 98,234 -0- 871 -0-
1991 69,343 -0- -- -0-
Emrys G. Thomas ......................... 1993 116,120 -0- 18,716 -0-
Managing Director -- Trico Ltd. 1992 136,005 -0- 21,362 -0-
1991 133,528 -0- -- -0-
</TABLE>
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(1) Under a transition provision of the Securities and Exchange Commission's new
disclosure rules, only 1992 and 1993 amounts are disclosed under this
heading. With respect to all Named Officers except Mr. Thomas, this amount
represents the Company's contributions to the Trico Retirement Income Plan
for the benefit of the Named Officer.
(2) Granted under the Trico Products Corporation 1990 Incentive Plan.
- ----------------------------------------------------------
Option Exercises and Fiscal Year End Values. Shown below is information
with respect to the unexercised options to purchase and stock appreciation
rights (SARs) with respect to the Company's Common Stock. Valuations are based
upon the December 31, 1993 closing price for Shares of $27 per share. None of
the Named Officers exercised any options during the year ended December 31,
1993.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END AT FY-END
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Richard L. Wolf........................................................ 58,800/5,600 $2,450/$9,800
Christopher T. Dunstan................................................. 23,800/4,000 $1,750/$7,000
Richard N. Hiss........................................................ 480/1,920 $840/$3,360
Donald R. Fletcher..................................................... 1,700/2,800 $1,225/$4,900
Emrys G. Thomas........................................................ 19,680/0 $0/0
</TABLE>
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Option Grants. The following table gives information regarding options
granted to the Named Officers during 1993.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS/SARS
GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE PRESENT
NAME GRANTED (#)(1) FISCAL YEAR ($/SH) DATE VALUE ($)(2)
- ---------------------------------- -------------- ------------ ----------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
Richard L. Wolf................... 7,000 10.7% $ 25.25 4/7/03 $102,970
Christopher T. Dunstan(3)......... 5,000 7.6 25.25 4/7/03 73,550
Richard H. Hiss................... 2,400 3.7 25.25 4/7/03 35,304
Donald R. Fletcher................ 3,500 5.4 25.25 4/7/03 51,485
</TABLE>
- ------------
(1) Each option becomes exercisable with respect to 20% of the Shares subject
thereto on each of October 15, 1993, 1994, 1995, 1996 and 1997.
(2) The present value of options granted has been reported using the
Black-Scholes option pricing model. These values assume: grant date -- April
8, 1993; exercise price -- $25.25; assumed exercise date -- April 7, 2003;
risk free rate of return -- 6.8%; and volatility assumption -- 30.2%. This
valuation assumes that the Named Officer will exercise the option
immediately before it expires, and an officer who exercises an option prior
thereto will realize less value.
(3) Mr. Dunstan was also issued an option to purchase 5,000 Shares on June 13,
1994 at an exercise price of $26.00 per Share.
PENSION PLAN
The Company maintains a plan to provide pension benefits to officers upon
retirement. Pension benefits for officers are determined as the sum of the
accrued benefit as of December 31, 1988, plus the sum of annual accruals for
each year thereafter. For each year of credited service after 1988 a participant
accrues a benefit equal to 1 percent of the participant's compensation for the
year plus 0.5 percent of the amount by which the participant's compensation for
the year exceeds the participant's Social Security covered compensation (which
is the average of the Social Security taxable wage bases in effect and projected
for each calendar year in the 35-year period ending with the year in which the
participant will reach Social Security retirement age). A participant's December
31, 1988 accrued benefit was determined under the following formula: (i) 1.5
percent of the participant's average annual base salary for the five highest
consecutive years during the ten year period ended December 31, 1988, less 1.5
percent of the participant's anticipated Social Security primary insurance
amount; multiplied by (ii) the number of the participant's years of credited
service through December 31, 1988. The benefits payable under the plan in the
form of a single life annuity upon normal retirement at age 65 would be $63,200,
$59,500, $18,200 and $38,200 for Messrs. Wolf, Dunstan, Hiss and Fletcher,
respectively, assuming these employees remained with the Company through normal
retirement age at their current rate of compensation. Mr. Thomas is not covered
by the plan but does receive a contribution from the Company for his personal
pension plan in the United Kingdom.
SUPPLEMENTAL RETIREMENT PLAN
The Trico Products Corporation Supplemental Retirement Plan ('SRP') is an
unfunded plan for the provision of supplemental pension benefits for selected
highly compensated management employees. The Board of Directors of the
Corporation designates the employees eligible to participate. Currently, R.L.
Wolf, C.T. Dunstan, and R. Hiss are the only participants. The supplemental
pension benefit under the SRP is calculated under following formula:
(a) Multiply (i) 1.5 percent of the participant's highest five-year
average annual salary less 1.5 percent of the participant's primary Social
Security benefit; by (ii) the participant's years of credited service;
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(b) Reduce (a) above by the participant's accrued benefit under the
Trico Products Corporation Salaried Employees' Pension Plan (the 'Salaried
Pension Plan'). See 'Pension Plan' for a description of the benefit
provided under the Salaried Pension Plan.
The SRP takes into account as annual salary a participant's salary at its
regular rate, whether or not it is deferred, and without regard to bonuses,
options, or other forms of compensation. The salary taken into account and the
benefits payable under the SRP are not limited by Internal Revenue Code limits
on qualified plan benefits. SRP benefits are payable at retirement on or after
age 62; a reduced benefit is payable upon retirement between ages 55 and 62 and
in the case of disability. A participant involuntarily terminated without cause
after 10 years of service is entitled to a deferred vested benefit. A SRP
benefit is payable under the same form as a participant's Salaried Pension Plan
benefit.
SRP benefits are payable from the general assets of the Corporation. The
Corporation has reserved the right to terminate the SRP; upon termination of the
SRP benefits accrued through the date of termination would be preserved. The SRP
provides that the Corporation's successor in a merger or consolidation would
succeed to the Corporation's obligations under the SRP.
Participants' estimated annual supplemental pension benefits under the SRP
in the form of a single life annuity starting at age 62 would be: Mr. Wolf,
$20,279; Mr. Dunstan, $0; and Mr. Hiss, $0; these estimates are based on
credited service projected only through December 31, 1994.
EMPLOYMENT AGREEMENTS
The Company has entered into identical agreements with each of its
executive officers other than Mr. Wolf. Each agreement has a two-year term that
is extended automatically each month for the following 24 months. Each executive
officer is entitled to a minimum base salary under his agreement ($175,000 for
Mr. Dunstan, $120,000 for Mr. Hiss, $130,000 for Mr. Fletcher, and $116,000 for
Mr. Thomas). The Board may terminate an agreement at any time with no further
obligation upon a finding that an officer has breached or neglected his duties,
and an officer may resign at any time upon 30 days' notice. The Board may also
terminate an agreement at any time without cause; in that event, or upon death
or disability, the officer is entitled to continued salary and benefits for 24
months. Provisions for termination of employment upon a change of control
supersede the agreements' regular termination provisions. Change in control is
defined, subject to various qualifications, as the acquisition by a person or
group of beneficial ownership of 20 percent or more of the Shares, together with
a change in the composition of a majority of the Board. If, within 24 months of
a change of control, either the Company terminates an officer's employment for
reasons other than cause (as defined) or disability, or the officer resigns
because of certain changes in the circumstances of his employment, the officer
is entitled to a severance benefit equal to the lesser of (i) the amount
deductible by the Company under Section 280G of the Internal Revenue Code of
1986, as amended, or (ii) two times the base annual salary payable to the
executive officer at the time of termination.
Mr. Wolf is a party to an employment agreement which provides for an annual
salary of $240,000 and has a term expiring on August 31, 1997. Under this
Agreement, Mr. Wolf's employment may be terminated for misconduct and, in the
event Mr. Wolf resigns because of certain changes in the circumstances of his
employment, the Company may be required to pay Mr. Wolf his salary and to
provide him with benefits for the balance of the term of the Agreement.
COMPENSATION COMMITTEE REPORT
The Company maintains a Compensation Committee composed entirely of
independent, outside directors. The Compensation Committee has established a
compensation program for senior officers of the Company that is composed of
three components: basic salary compensation; cash incentive compensation to
reward senior officers for their and the Company's yearly performance; and stock
based compensation for long-term incentive.
The Compensation Committee set basic compensation for senior executives at
a level it believes that is necessary to attract and retain highly-qualified
executives to lead the Company. In determining the appropriate level of basic
compensation for Mr. Wolf, the Company's chief executive officer, and the other
persons named in the Summary Compensation Table, the Compensation Committee
engaged an
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independent compensation consultant to determine the median salary levels for
senior executives in various positions in other companies in the automotive
parts and accessories business. Based upon this report and the individual
officer's level of responsibility, the Compensation Committee set the 1993
salary levels for Mr. Wolf and the other persons named in the Summary
Compensation Table at the amounts set forth in the 'salary' column of the
Summary Compensation table. The survey performed by the independent consultant
showed that the Company's level of basic compensation for all senior officers
was below the median for the automotive parts and accessories business, ranging
from 70 to 75% of the median for the chief executive officer and the chief
financial officer to upwards 90% of median for others. Although basic
compensation is not primarily performance based, after the Company sustained
operating losses during 1993, Messrs. Wolf, Dunstan, Fletcher and Hiss the
Company's four most highly domestic compensated executive officers, agreed to
take 10% cuts in basic compensation effective on March 1, 1994.
The Compensation Committee implemented a Critical Success Factors
Management Incentive Plan for 1993. Under this plan, each senior officer will be
evaluated with respect to the Company's goals and objectives and that
executive's performance in helping the Company achieve those goals. These goals
include primarily the maximization of shareholder value, as well as ancillary
goals of customer satisfaction, competitiveness, corporate excellence, employee
morale and corporate social responsibility. The plan required that the Company
achieve certain financial performance goals (70% of the Company's projection for
1993 financial performance) before any bonus awards could be paid to Mr. Wolf or
the other persons named in the Summary Compensation Table. These financial
performance criteria were not achieved in 1993, and no bonuses were paid to Mr.
Wolf and the other persons named in the Summary Compensation Table with respect
to 1993. However, in the event that the performance goals were met, an
individual officer would be entitled to a bonus only to the extent that officer
had met his personal goals. Accordingly, the Compensation Committee believes
that this type of plan promotes the interests of shareholders by providing
incentive compensation to senior management based upon the Company's and each
senior officer's performance.
The Compensation Committee also believes that stock based compensation
awards increase executive's motivation and interest in the Company's long-term
success as measured by the price of the Company's shares. The Compensation
Committee endorses the position that ownership of stock and stock based
performance compensation arrangements are beneficial in aligning management's
and shareholders' interest. In 1993, the Compensation Committee made grants of
stock options to senior management in order to give them further incentive to
increase shareholder value. The Compensation Committee granted options to
purchase 17,900 shares to the persons named in the Summary Compensation Table.
The relative number of option shares granted to an individual was based upon
that person's base compensation. The Board also adopted in 1993 a policy stating
that certain officers designated by the Board (including those in the Summary
Compensation Table) should acquire an amount of the Company's shares with a
value in the range of the officer's annual basic compensation. The Board also
adopted a program to provide those officers with financing to purchase the
Company's shares. The Compensation Committee believes that this policy and
program will further encourage the Company's executives to manage the Company in
the best interest of the shareholders and to maximize shareholder value.
The Compensation Committee also has considered the potential effects on the
Company of the limitations on deductibility of executive compensation in excess
of $1,000,000 for an individual imposed by the Revenue Reconciliation Act of
1993, and based upon the current levels of executive compensation, the Committee
does not believe that this limitation will have any impact on the Company.
A. NEVILLE PROCTER
WILLIAM F. MILLIKEN, JR.
RANDOLPH A. MARKS
PERFORMANCE COMPARISON
Set forth below is a line graph comparing the percentage change in the
cumulative return to the shareholders on the Company's Common Stock against the
cumulative return of Standard & Poor's 500
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<PAGE>
and a peer group index for last five years. The peer group index was prepared by
the Company in good faith in accordance with the rules of the Securities and
Exchange Commission using the following issuers who are engaged in similar lines
of business: Masco Industries, Inc., Standard Products Company, Lifetime
Products, Inc., Douglas & Lomason Company and Simpson Industries, Inc.
[GRAPH]
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Jaeckle, Fleischmann & Mugel, a law firm in which Mr. Mugel is a partner,
rendered legal services to the Company in 1993 and is rendering such services in
1994.
The Company has a program whereby it makes loans to officers to purchase
Shares on the open market, which Shares are then pledged to the Company as
security for those loans. The interest rates on these loans is the applicable
federal rate as set by the Internal Revenue Service. As of September 30, 1994,
the Company had made loans of $235,000 and $24,000 to Messrs. Wolf and Dunstan,
respectively.
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<PAGE>
APPENDIX
ON PAGE A-10 OF INFORMATION STATEMENT
The Information Statement mailed to stockholders of the Company contains a
graph with datapoints comparing the total return to an investor as of each
December 31 from 1989 through 1993 assuming such investor had invested $100 on
the close of business on December 31, 1988 in (i) Shares, (ii) the Standard and
Poor's 500 Index (the 'S&P 500'), (iii) the peer group index (the 'Peer Group').
The datapoints on the graph as follows:
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
---- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Shares.................................................... 100 71.82 55.80 30.54 28.14 43.72
S&P 500................................................... 100 131.49 127.32 166.21 178.96 196.84
Peer Group................................................ 100 77.18 49.92 69.92 98.92 130.97
</TABLE>
