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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]registrant [X]
Filed by a Partyparty other than one of the Registrantsregistrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statementproxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x][X] Definitive Proxy Statementproxy statement
[ ] Definitive Additional Materialsadditional materials
[ ] Soliciting Material Pursuantmaterial pursuant to Rule 14a-11(c) or Rule 14a-12
____________________________________________________________________________
HAYES WHEELS INTERNATIONAL, INC.Hayes Lemmerz International, Inc.
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(Name of Registrant as Specified in Its Charter)
N/A
____________________________________________________________________________- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (checkfiling fee (Check the appropriate box):
[x][X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set(Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:materials.
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[ ] 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:
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(3) Filing Party:party:
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(4) Date Filed:filed:
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Hayes Wheels Logo
September 18, 1997[HAYES LEMMERZ INTERNATIONAL, INC. LOGO]
May 12, 1999
Dear Stockholder:
You are cordially invited to attend the 19971999 Annual Meeting of Stockholders
of Hayes WheelsLemmerz International, Inc. (the "Meeting"), to be held at The Dearborn
Inn, 20301 Oakwood Boulevard, Dearborn,Crowne Plaza, Detroit
Metro Airport, 8000 Merriman Road, Romulus, Michigan 48124,48174 on October 22, 1997,June 17, 1999, at
10:00 a.m. The doors will open at 9:00 a.m.
At the meetingAnnual Meeting you will be asked to: (i) elect threefour (4) Class 1 directors3
Directors to serve until the 20002002 Annual Meeting of Stockholders; (ii) approve the adoption
of the Company's 1996 Stock Option Plan; (iii) authorize the issuance of shares
of the Company's Common Stock upon conversion of shares of the Company's Series
A Convertible Participating Preferred Stock, which were issued in connection
with the Company's recent acquisition (the "Lemmerz Acquisition") of Lemmerz
Holding GmbH, a limited liability company organized under the laws of the
Federal Republic of Germany ("Lemmerz"); (iv) approve a change in the Company's
name to Hayes Lemmerz International, Inc.; (v) approve an increase in the number
of authorized shares of the Company's Nonvoting Common Stock; and (vi)(ii)
ratify the appointment of KPMG Peat Marwick LLP as the Company'scompany's independent auditors for the
fiscal year ending January 31, 1998.2000. Each of these items is discussed in full in
the attached proxy statement and you are urged to read the attached proxy
statement in its entirety.
Your Board of Directors has considered each of these items and recommends
that you vote FOR the election of the Board of Directors' nominees as Class 1
directors3
Directors and in favor of eachFOR the ratification of the other items described above. In connection
withappointment of KPMG LLP as the
Lemmerz Acquisition, stockholders ofcompany's independent auditors for the Company owning approximately
58% of the Company's outstanding Common Stock have granted proxies to
representatives of the former shareholders of Lemmerz to vote all of such shares
in favor of items (iii) and (iv) above and in accordance with the Board of
Directors' recommendation on all other matters submitted to stockholders at the
Meeting. The former shareholders of Lemmerz have agreed to vote such proxies as
described. Accordingly, the Board of Directors' nominees as Class 1 directors
will be elected and all of the other items described above will be approved
without the vote of any other stockholder.
Nevertheless, itfiscal year ending January 31, 2000.
It is important that your shares be voted, regardless of whether you are
able to attend the Annual Meeting. To be sure that your shares are represented,
please sign and mail the enclosed proxy card promptly. This will not prevent you
from voting your shares in person if you choose to do so.
I look forward to meeting with you this year.
Very truly yours,
Ranko Cucuz
Ranko Cucuz
Chairman of the Board of Directors
President and Chief Executive Officer
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Hayes Wheels Logo[HAYES LEMMERZ INTERNATIONAL, INC. LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 22, 1997
NOTICE IS HEREBY GIVEN that
DATE: THURSDAY, JUNE 17, 1999
TIME: 10:00 AM EASTERN STANDARD TIME
LOCATION: The Crowne Plaza
Detroit Metro Airport
8000 Merriman Road
Romulus, Michigan 48174 USA
To Hayes Lemmerz Stockholders:
We invite you to attend our 1999 Annual Meeting of Stockholders next month
at The Crowne Plaza. At the Annual Meeting, (the "Meeting") of
Stockholders of Hayes Wheels International, Inc. (the "Company")you and the other stockholders will
be held at
The Dearborn Inn, 20301 Oakwood Boulevard, Dearborn, Michigan 48124,able to vote on October
22, 1997, at 10:00 a.m. (Eastern Daylight Time) for the following purposes:
1. To elect three (3) Class 1 directors of the Company, each to serve
for a term of three years;
2. To approve the adoption of the Company's 1996 Stock Option Plan;
3. To authorize the issuance of shares of the Company's Common Stock
upon conversion of shares of the Company's Series A Convertible
Participating Preferred Stock issued in connectionproposals, together with the acquisition by
the Company of Lemmerz Holding GmbH;
4. To approve an amendment to the Company's Restated Certificate of
Incorporation changing the name of the Company to Hayes Lemmerz
International, Inc.;
5. To approve an amendment to the Company's Restated Certificate of
Incorporation increasing the number of authorized shares of the Company's
Nonvoting Common Stock from 1,000,000 to 5,000,000 shares;
6. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending January 31, 1998; and
7. To transact suchany other business
asthat may properly come before the Annual Meeting:
1.Elect four Class 3 Directors to three-year terms on the Board of
Directors. The board has nominated for re-election Cleveland A.
Christophe, Paul S. Levy, Wienand Meilicke and John S. Rodewig, all
current directors.
2.Ratify the board's appointment of KPMG LLP as the company's independent
auditors for fiscal year 1999. KPMG LLP served in this same capacity in
fiscal year 1998, with the stockholders' approval.
You may vote on these proposals in person or by proxy. (See the attached
proxy statement for more details on voting by proxy.) If you cannot attend the
Annual Meeting, or any adjournments or postponements thereof.we urge you to complete and return the enclosed proxy promptly
in the enclosed self-addressed, stamped envelope, so that your shares will be
represented and voted at the Annual Meeting in accordance with your
instructions. Of course, if you attend the Annual Meeting, you may withdraw your
proxy and vote your shares. Only stockholders of record at the close of business
on September 15, 1997
are entitled to notice of and to vote at the Meeting and at any and all
adjournments or postponements thereof. A list of stockholdersMay 10, 1999 will be entitled to vote at the Annual Meeting will be available for inspection for at least ten days prior to
the Meeting, and will also be available for inspection at the Meeting.or any
adjournment thereof.
By Orderorder of the Board of Directors
Daniel M. Sandberg
Daniel M. Sandberg
Secretary
Romulus, Michigan
September 18, 1997
YOUR VOTE IS IMPORTANT
EACH STOCKHOLDER IS URGED TO COMPLETE, SIGN, DATE AND MAIL PROMPTLY THE ENCLOSED
PROXY TO THE COMPANY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. RETURNING A SIGNED PROXY WILL NOT PREVENT YOU FROM
ATTENDING THE MEETING AND VOTING IN PERSON, IF YOU SO DESIRE.
1May 12, 1999
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CONTENTS
PAGE
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INTRODUCTION................................................ 1
This Proxy Solicitation................................... 1
The Annual Meeting........................................ 1
Stockholders.............................................. 2
VOTING...................................................... 2
How to Vote Your Shares................................... 2
How to Vote under the 401(k) Plan......................... 3
Where to Find Voting Results.............................. 3
PROPOSALS................................................... 3
Election of Directors..................................... 3
Approval of Independent Auditors.......................... 4
Other Matters............................................. 4
BOARD OF DIRECTORS.......................................... 4
Directors Continuing in Office............................ 5
Directors' Meetings and Committees........................ 6
Director Compensation..................................... 7
Compensation Committee Interlocks and Insider 7
Participation..........................................
Section 16(a) Beneficial Ownership Reporting Compliance... 8
EXECUTIVE COMPENSATION...................................... 8
Salary and Bonus.......................................... 8
Stock Options............................................. 8
Other Compensation and Benefits........................... 8
Compensation Committee Report on Executive Compensation... 8
The Role of the Compensation Committee.................... 9
Overall Objectives of Executive Compensation Programs..... 9
An Overview of the Company's Executive Compensation 9
Plan...................................................
Base Salary Program....................................... 9
Annual Performance Plan................................... 10
Long-Term Incentive Plan.................................. 10
Compliance with Internal Revenue Code Section 162(m)...... 10
Compensation of the Chief Executive Officer............... 11
OTHER MATTERS............................................... 12
Available Information..................................... 12
Incorporation of Certain Documents by Reference........... 12
Appendix A -- Stock Performance Graph....................... 13
Appendix B -- Stockholdings................................. 15
Appendix C -- Executive Compensation........................ 18
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HAYES WHEELSLEMMERZ INTERNATIONAL, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 22, 199738481 HURON RIVER DRIVE
ROMULUS, MICHIGAN 48174
PROXY STATEMENT
This Proxy Statement is being furnished to the stockholders of Hayes Wheels
International, Inc., a Delaware corporation (the "Company"), in connection with
the solicitation of proxies by the---------------------
May 12, 1999
INTRODUCTION
The Board of Directors is soliciting your proxy to encourage your
participation in the voting at the Annual Meeting and to obtain your support on
each of the Company for useproposals. You are invited to attend the Annual Meeting and vote
your shares directly. However, even if you do not attend, you may vote by proxy,
which allows you to direct another person to vote your shares at the 1997 Annual
Meeting on your behalf.
THIS PROXY SOLICITATION
There are two parts to this solicitation: the proxy card and this proxy
statement. The proxy card is the means by which you actually authorize another
person to vote your shares in accordance with your instructions.
This proxy statement provides you with a variety of Stockholdersinformation on the
proposals and other matters that you may find useful in determining how to vote.
It is divided into five sections following this Introduction:
- "Voting," page 2.
- "Proposals," page 3.
- "Board of Directors," page 4.
- "Executive Compensation," page 8.
- "Other Matters," page 12.
We have supplemented these sections with tables and other information, all
of which appears in the appendices, beginning on page 13. For your reference, a
table showing the performance of the Companycompany's stock from July 2, 1996 (the
"Meeting"),effective date of the Motor Wheel Transactions, as hereinafter defined) is
included in Appendix A.
The company will pay for soliciting these proxies. The company's directors,
officers and employees may solicit proxies in person or by telephone or by mail,
telecopy, telegraph or letter. The company has also retained ChaseMellon
Shareholder Services, L.L.C. to assist in distributing proxy solicitation
materials and soliciting proxies at a cost of approximately $5,000, plus
reasonable out-of-pocket expenses. The company will reimburse brokers and other
nominees for their reasonable out-of-pocket expenses for forwarding proxy
materials to beneficial owners of stock held of record by them.
THE ANNUAL MEETING
As shown in the Notice of Annual Meeting, the Annual Meeting will be held
at 10:00 a.m. (Eastern Daylight Time) on October 22, 1997Thursday, June 17, 1999, at The Dearborn
Inn, 20301 Oakwood Boulevard, Dearborn, Michigan 48124, and at any and all
adjournments or postponements thereof. At the Meeting, stockholders of the
Company are being asked to consider and vote upon: (i) the election of three
Class 1 directors, each to serve a term of three years; (ii) a proposal to adopt
the Hayes Wheels International, Inc. 1996 Stock Option Plan, as amended (the
"1996 Plan"); (iii) a proposal to authorize the issuance of shares of the
Company's common stock, par value $.01 per share ("Common Stock"), upon
conversion (the "Conversion") of shares of the Company's Series A Convertible
Participating Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock"), which were issuedCrowne Plaza in connection with the Company's acquisition (the
"Lemmerz Acquisition") of Lemmerz Holding GmbH ("Lemmerz"); (iv) a proposal to
amend the Company's Restated Certificate of Incorporation (the "Charter") to
approve a change in the Company's name to Hayes Lemmerz International, Inc.; (v)
a proposal to amend the Charter to approve an increase in the number of
authorized shares of the Company's nonvoting common stock, par value $.01 per
share ("Nonvoting Common Stock"), and (vi) a proposal to ratify the appointment
of KPMG Peat Marwick LLP ("KPMG Peat Marwick") as the Company's independent
auditors for the fiscal year ending January 31, 1998 ("Fiscal 1997").
This Proxy Statement and the accompanying form of proxy are first being
mailed to stockholders of the Company on or about September 18, 1997.
VOTING RIGHTS AND SOLICITATION OF PROXIESRomulus, Michigan. Only
holders of record of the Common Stock and the Nonvoting Common Stock at the
close of business on September 15, 1997May 10, 1999 (the "Record Date") are entitled to notice of
the Annual Meeting. Holders of Common Stock are entitled to vote on all matters
submitted to a vote of stockholders at the Annual Meeting. Holders of Nonvoting
Common Stock are onlynot entitled to vote as a separate class, on the proposal
described in clause (v) above. Atelection of the closedirectors or the
approval of business on the Record Date,
there were 24,949,119 sharesindependent auditors. The company's By-Laws require that a
majority of the company's Common Stock 159,026 shares of Nonvoting Common
Stock and 5,000,000 shares of Series A Preferred Stock issued and outstanding.
The presence, eitherbe represented at the Annual Meeting,
whether in person or by proxy, of the holders of a majority of the
shares of Common Stock outstanding on the Record Date is necessaryin order to constitute
a quorum at the Meeting. All abstentionstransact business. Abstentions and
broker non-votes will be counted as
shares that are present and entitled to vote for purposes ofin determining the
presence ofwhether or not there is a quorum
at the Annual Meeting.
Each stockholder will be entitled to one vote, in person or by proxy, for
each share held in such stockholder's name as of the Record Date on any matter
submitted to a vote of stockholders at the Meeting upon which such shares are
entitled to vote. Holders of shares of the Series A Preferred Stock will not be
entitled to vote on any matter submitted to a vote of stockholders at the
Meeting.1
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The election of the Class 13 Directors will require the vote of a plurality
of the shares of Common Stock represented and voting in person or by proxy and
entitled to vote at the Annual Meeting. Under applicable Delaware law, in
tabulating the vote for the election of the Class 3 Directors, abstentions and
broker non-votes will be disregarded and will have no effect on the outcome of
such vote.
Approval of the proposal to authorize the issuance of Common Stock upon the
Conversion of the Series A Preferred Stock will require the affirmative vote of
a majority of the votes cast on the proposal by holders of Common Stock in
person or by proxy at the Meeting. Under applicable Delaware law, in
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determining whether the proposal has received the requisite number of
affirmative votes, abstentions and broker non-votes will be disregarded and will
have no effect on the outcome of the vote.
Approval of the proposal to amend the Charter to change the name of the
Company to Hayes Lemmerz International, Inc. will require the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock. Under
applicable Delaware law, in determining whether the proposal has received the
requisite number of affirmative votes, abstentions and broker non-votes will be
counted and will have the same effect as a vote against the proposal.
Approval of the proposal to amend the Charter to increase the number of
shares of authorized Nonvoting Common Stock will require the affirmative vote of
(i) the holders of a majority of the outstanding shares of Common Stock and (ii)
the holders of a majority of the outstanding shares of Nonvoting Common Stock.
Under applicable Delaware law, in determining whether the proposal has received
the requisite number of affirmative votes, abstentions and broker non-votes will
be counted and will have the same effect as a vote against the proposal.
Approval of the proposals to adopt the 1996 Plan and to ratify the appointment of KPMG Peat MarwickLLP ("KPMG") as
the Company'scompany's independent auditors for Fiscal 1997the fiscal year ended January 31, 2000
("fiscal year 1999") will each require the affirmative vote of the holders of a
majority of the shares of Common Stock represented in person or by proxy and
entitled to vote at the Annual Meeting. Under applicable Delaware law, in
determining whether such
proposals havethe proposal to appoint KPMG as the company's independent
auditors received the requisite number of affirmative votes, abstentions and
broker non-votes will be counted and will have the same effect as a vote against
the proposal, except that broker nonvotesnon-votes will not be counted as votes cast
with respect to any proposal as to which the broker does not have discretionary
authority and has not received voting instructions from the beneficial owners
and, in such case, will have no effect on the outcome of that vote.
SharesRepresentatives of Common Stock represented by properly executed proxies received in
time for votingKPMG are expected to be present at the Annual Meeting.
They will have the opportunity to make a statement at the Annual Meeting will, unlessif they
desire to do so and are expected to be available to respond to appropriate
questions.
There were no stockholder proposals submitted for the Annual Meeting. If a
stockholder wishes to submit a proposal for the 2000 Annual Meeting of
Stockholders (the "2000 Annual Meeting"), such proxy has previously been
revoked,proposal must be voted in accordance with the instructions indicated thereon. In the
absence of specific instructionssent to the
contrary, the persons named in the
accompanying form of proxy intend to vote all properly executed proxies received
by them (i) FOR the election of the Board of Directors' nominees as Class 1
Directors, (ii) FOR the adoption of the 1996 Plan, (iii) FOR the issuance of
Common Stock upon the Conversion of the shares of Series A Preferred Stock, (iv)
FOR the amendment to the Charter changing the Company's name to Hayes Lemmerz
International, Inc., (v) FOR the amendment to the Charter increasing the number
of authorized shares of Nonvoting Common Stock and (vi) FOR the ratification of
KPMG Peat Marwick as the Company's independent auditors for Fiscal 1997. No
business other than as set forth in the accompanying Notice of Annual Meeting is
expected to come before the Meeting, but should any other matter requiring a
vote of stockholders be properly brought before the Meeting, it is the intention
of the persons named in the enclosed form of proxy to vote such proxy in
accordance with their best judgment on such matters. For information with
respect to advance notice requirements applicable to stockholders who wish to
propose any matter for consideration or nominate any person for election as a
director at an annual meeting, see "Stockholder Proposals for 1998 Annual
Meeting."
In connection with the Lemmerz Acquisition, stockholders of the Company
which own approximately 58% of the Company's outstanding Common Stock have
granted proxies to representatives of the former shareholders of Lemmerz (the
"Lemmerz Shareholders") to vote all of such shares in favor of items (iii) and
(iv) above and in accordance with the Board of Directors' recommendation on all
other matters submitted to stockholders at the Meeting, and the Lemmerz
Shareholders have agreed to vote those proxies as described. In addition, Chase
Equity Associates, L.P., which currently holds all of the issued and outstanding
shares of Nonvoting Common Stock, has informed the Company that it intends to
vote its shares in favor of the proposal to increase the authorized shares of
Nonvoting Common Stock. Accordingly, the Board of Directors' nominees as Class 1
Directors and all of the other items described above will be approved without
the vote of any other stockholder.
Execution of the enclosed proxy will not prevent a stockholder from
attending the Meeting and voting in person. Any proxy may be revoked at any time
prior to the exercise thereof by delivering in a timely manner a written
revocation or a new proxy bearing a later date to the Secretary of the Company,
at thecompany's principal executive offices of the Company, located at 38481 Huron River Drive, Romulus,
Michigan 48174 or by
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attending the Meeting and voting in person. Attendance at the Meeting will not,
however, in and of itself constitute a revocation of a proxy.
This solicitation is being mademust be received by the Company. The cost of this
solicitation will be borne bycompany on or before January 15,
2000. If a stockholder proposes to nominate a person for election to the Company. Solicitation will be made by mail,
and may be made personally or by telephone by officers and other employees of
the Company who will not receive additional compensation for solicitation.
PROPOSAL 1
ELECTION OF CLASS 1 DIRECTORS
The Board
of Directors at the 2000 Annual Meeting, the notice must include the name, age,
residence and business address, occupation, and class and number of shares of
Common Stock owned beneficially or of record by such nominee. If a stockholder
proposes any other matter for consideration at the 2000 Annual Meeting, the
notice must contain a brief description of the Companymatter, the reason such matter is
divided into three classes,
designated Class 1, Class 2proposed to be considered at the 2000 Annual Meeting and Class 3, serving staggered three-year terms. The
Charter requiresany material interest
of the stockholder in such matter. In addition, all notices must include the
name, address and class and number of shares of Common Stock beneficially owned
by such stockholder. Finally, such notice must contain any other information
related to a proposed matter or such stockholder that such classeswould be as nearly equalrequired to be
disclosed in number as possible;
accordingly, Class 1 is currently composeda proxy statement.
STOCKHOLDERS
On May 10, 1999, the company had issued and outstanding 27,684,429 shares
of three directorsCommon Stock and Classes 22,649,026 shares of Nonvoting Common Stock and 3 are each currently composedthere were
approximately 112 stockholders of four directors (although there is one vacancyrecord. Based on the Board amonglatest information
provided to the Class 2 Directors).
In connection withcompany, the seriesfollowing stockholders beneficially own more than
5% of related transactions in July 1996 pursuant
to which the Company acquired Motor Wheel Corporation (the "Motor Wheel
Transactions"),company's outstanding Common Stock, excluding warrants: Joseph
Littlejohn & Levy Fund II, L.P. ("JLL Fund II"(31.8%), Marianne Lemmerz (9.9%), TSG Capital
Fund II, L.P. ("TSG"(9.3%), CIBC WG Argosy Merchant Fund 2, L.L.C. ("Argosy"), Nomura Holding America, Inc. ("Nomura"(8.2%) and Chase Equity Associates
L.P. ("Chase"Horst
Kukwa-Lemmerz (6.0%) (collectively,. Additional information regarding stockholdings is included
in Appendix B.
VOTING
You are entitled to one vote at the "New Investors"), which collectively owned in
excess of 70%Annual Meeting for each share of the
outstandingcompany's Common Stock that you owned on the Record Date. The number of shares
you own (and may vote) is listed at the top of the Company's Common Stock upon
completionback of the Motor Wheel Transactions, entered intoproxy card.
HOW TO VOTE YOUR SHARES
You may vote your shares at the Annual Meeting in person or by proxy. To
vote in person, you must attend the Annual Meeting, and obtain and submit a
stockholders
agreementballot, which will be provided at the Annual Meeting. To vote by proxy, you must
complete and return the enclosed proxy card.
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The proxy card is fairly simple to complete, with specific instructions
right on the Company (the "Stockholders Agreement"card. By completing and submitting it, you will direct the
designated persons (known as "proxies"). Pursuant to vote your shares at the Annual
Meeting in accordance with your instructions. The board has appointed Daniel M.
Sandberg and Patrick B. Carey, the company's Secretary and Assistant Secretary,
respectively, to serve as the proxies for the Annual Meeting.
Your proxy will be valid only if you sign, date and return it before the
Annual Meeting. If you complete all of the proxy card except the voting
instructions, then the designated proxies will vote your shares for the election
of the nominated directors and the ratification of the company's independent
auditors. If any nominee for election to the Stockholders Agreement, amongboard is unable to serve, which is
not anticipated, or if any other things,matters properly come before the New Investors (other than
Argosy) agreed toAnnual
Meeting, then the designated proxies will vote your shares in accordance with
their shares of Common Stock so that the Company's Board
of Directors would consist of nine members, of which four members would be
designatedbest judgment.
You may revoke your proxy at any time before it is exercised by JLL Fund II (initially, Messrs. Timothy Clark, Peter Joseph, Paul
Levy and Marcos Rodriguez), one member would be designated by TSG (initially,
Mr. Cleveland Christophe), one member would be the Chief Executive Officer of
the Company (initially, Mr. Ranko Cucuz), and the remaining three members, which
could not be affiliated with the Company or any of the
New Investors, wouldfollowing means:
- Notifying the company's Secretary in writing.
- Submitting a later dated proxy.
- Attending the Annual Meeting and voting. Your attendance at the Annual
Meeting will not by itself revoke a proxy; you must vote your shares.
HOW TO VOTE UNDER THE 401(K) PLAN
If you are a company employee participating in the company's 401(k) plan,
then you may be selected byreceiving this material because of shares held for you in the
remaining members ofplan. In that case, you may use the Company's Board of Directors
(initially, Messrs. John Rodewig and Kenneth Way and one vacancy). During 1997,
Messrs. Way and Rodriguez resigned fromenclosed proxy card to instruct the Board and Messrs. Andrew Heyer and
David Ying were appointed by the Boardplan
trustees how to fill the vacancies created thereby.
In connection with the Lemmerz Acquisition, the Company, the New Investors
and the Lemmerz Shareholders entered into an Amended and Restated Stockholders
Agreement (the "Amended Stockholders Agreement") to provide, among other things,
that the Board of Directors would be increased to eleven members and that
certain of the New Investors and all of the Lemmerz Shareholdersvote those shares. The trustees will vote theirthe shares of Common Stock so thatin
accordance with your instructions and the Board of Directors of the Company will be
comprised of the Chief Executive Officer of the Company (currently, Mr. Cucuz),
four designees of JLL Fund II (currently, Messrs. Clark, Joseph, Levy and Ying),
one designee of TSG (currently, Mr. Christophe), two designees of the Lemmerz
Shareholders (currently, Messrs. Horst Kukwa-Lemmerz and Wienand Meilicke), and
three individuals determined by the Board who are not affiliated with the
Company or any of the parties to the Amended Stockholders Agreement other than
one member that may be affiliated with Argosy (currently, Messrs. Heyer and
Rodewig and one vacancy). The Amended Stockholders Agreement also provides,
among other things, for certain transfer restrictions and registration rights
for the stockholder parties thereto.
The terms of the Company'splan.
The plan trustees may vote the shares held for you even if you do not
direct them how to vote. The trustees will vote any shares for which they do not
receive instructions in the same proportion as they vote the shares for which
they receive instructions.
WHERE TO FIND VOTING RESULTS
The company will publish the voting results from the Annual Meeting in its
Form 10-Q for the second quarter of fiscal year 1999, which it will file with
the Securities and Exchange Commission (the "SEC") in September 1999. You will
also find the results from the Annual Meeting in the investor information
section of the company's home page on the World Wide Web
(www.hayes-lemmerz.com).
PROPOSALS
The board has nominated four current directors -- Cleveland A. Christophe,
Paul S. Levy, Wienand Meilicke and John S. Rodewig -- for new, three-year terms
and recommends that you vote for their re-election. In addition, the board has
approved KPMG as the company's independent auditors for fiscal year 1999 and
recommends that you vote for their ratification.
ELECTION OF DIRECTORS
The first proposal on the agenda for the Annual Meeting will be the
election of four directors to serve as Class 1 Directors expire3 directors for three-year terms
beginning at the Meeting.
Each person nominated as a Class 1 Director, if elected, will serve a three-year
termthis Annual Meeting and expiring at the 20002002 Annual Meeting or until his successor is elected and
qualified, or his earlier death, resignation or removal. Currently,of
Stockholders. (For a description of the Class 1three classes of directors, are Timothy J. Clark, Peter A. Joseph and Horst Kukwa-Lemmerz.see the
"Board of Directors" section beginning on page 4.) The four nominees receiving
the greatest number of votes cast will be elected.
The Board of Directors has nominated Messrs. ClarkCleveland A. Christophe, Paul S. Levy,
Wienand Meilicke and Kukwa-LemmerzJohn S. Rodewig for re-election as Class 1 Directors. Mr. Joseph, however, has notified the Board that he does
not intend to seek re-election to the Board.3 directors. The
Board has nominated Mr. Jeffrey
Lightcap, a principal of Joseph Littlejohn & Levy ("JLL"), an affiliate of JLL
Fund II, for election as a Class 1 Director. Each of the three nominees has
consented to serve as a Director if elected at the Meeting and, to the best
knowledge of the Board of Directors, each of such nominees is and will be able
to serve if so
4
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elected. In the event that any of such nominees should be unavailable to stand
for election before the Meeting, the persons named in the accompanying proxy
intend to vote for such other person, if any, as may be designated by the Board
of Directors, in the place of a nominee unable to serve.
The Class 1 Directors will be elected by a plurality of the votes cast in
the election of directors at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
COMPANY'S NOMINEES AS CLASS 1 DIRECTORS.
Set forth belowfollowing is a brief biography of each nominee for election as a
Class 1 Director and of all other membersnominee. You will find information on
their holdings of the Board of Directors who will
continuecompany's stock in office:
NOMINEES FOR ELECTION AS CLASS 1 DIRECTORS
TERM EXPIRING IN 2000
Timothy J. Clark, age 33,Appendix B.
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CLEVELAND A. CHRISTOPHE is 53 years old. He has been a director of the
Company since July
1996. Mr. Clark is a principal of JLL, which he joined in 1993. Prior to that
time, Mr. Clark was corporate planning manager of Edgcomb Metals Company and a
financial analyst at the Blackstone Group. Mr. Clark is also a director of
Freedom Chemical Company ("Freedom").
Horst Kukwa-Lemmerz, age 54, was appointed to his present position as Vice
Chairman of the Company's Board of Directors upon consummation of the Lemmerz
Acquisition in June 1997. Mr. Kukwa-Lemmerz served as CEO and President of
Lemmerz from June 1993 through June 1997 and as Personal Liable Partner,
President and CEO of Lemmerz Werke KGaA from April 1977 until June 1993. He also
acted as Chairman of Lemmerz Espaniola from 1978 through the closing of the
Lemmerz Acquisition (the "Closing") and as Vice President of Borlem S.A.
Empreendimentos Industriais, Lemmerz's joint venture in Brazil, from 1982
through the Closing.
Jeffrey Lightcap, age 38, has been a principal of JLL since June 1997. From
February 1993 until May 1997, Mr. Lightcap was employed by Merrill Lynch & Co.,
an investment banking firm, first as a Director and then, commencing in 1994, as
a Managing Director. From 1987 until January 1993, Mr. Lightcap was a Senior
Vice President at Kidder Peabody & Co., an investment banking firm.
INCUMBENT CLASS 2 DIRECTORS
TERM EXPIRING IN 1998
Ranko ("Ron") Cucuz, age 53, was elected Chairman of the Board of Directors
of the Company in July 1996, and has been President, Chief Executive Officer and
a director of the Company since October 1992. He also serves as Chairman of the
Management Board of Hayes Wheels Autokola, the Company's joint venture located
in the Czech Republic, as a director of Hayes Wheels, S.p.A. (Italy) and Hayes
Wheels de Espana, S.A. (Spain), the Company's wholly owned subsidiaries, and
serves as Chairman of each of the Company's North American Aluminum Wheel Group
subsidiaries. Mr. Cucuz is also a director of National-Standard Company.
Andrew R. Heyer, age 40, has been a director of the Company since April
1997. Mr. Heyer has been a Managing Director and co-head of the High Yield Group
of CIBC Wood Gundy Securities Corp. since August 1995. Mr. Heyer was a founder
and, from February 1990 until July 1995, a Managing Director of The Argosy
Group, an investment banking firm. Mr. Heyer is Chairman of the Board of The
Hain Food Group and a director of Niagara Corporation.
David Ying, age 42, has been a director of the Company since June 1997. Mr.
Ying has been a partner of JLL since June 1997. From January 1993 until May
1997, Mr. Ying was a Managing Director of Donaldson Lufkin & Jenrette, an
investment banking firm, and from January 1990 until December 1992, Mr. Ying was
a Managing Director of Smith Barney, an investment banking firm.
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INCUMBENT CLASS 3 DIRECTORS
TERM EXPIRING IN 1999
Cleveland A. Christophe, age 51, has been a director of the Companycompany since July 1996. Mr. Christophe has been a Managing Partner and major shareholderMember of TSG
Capital Group, L.L.C. since January 1995, and a director and the President of
TSG Associates II, Inc. since January 1995. He has served as a principal, a director
and the Executive Vice President of TSG Ventures Inc. (formerly known as Equico
Capital Corporation), a private equity investment firm, from May 1992 until
December 1997 and as Executive Vice President and Treasurer of TSG Management
Co., L.L.C., a private equity investment firm, from December 1997 until November
1998. He has been a Treasurer, Executive Vice President and director of TSGVI
Associates, Inc. since May
1992.December 1997. He has served as Managing Member of TSG
Associates III, L.L.C. since August 1998. Mr. Christophe is also a director of
Envirotest Systems Corporation,
Midwest Stamping, Inc., Urban Brands, Inc. (formerly known as The Ashley Stewart
Group, Ltd. and), Z-Spanish Media Corporation (formerly known as PAR Radio Holdings,
L.L.C.
Paul), Vista Media Group, Inc., Urban Children's Stores, Inc., Millennium
Digital Media, Inc. and Orbseal L.L.C. He also was a director of Envirotest
Systems Corporation until October 1998.
PAUL S. Levy, age 49,LEVY is 51 years old. He has been a director of the Companycompany since
July 1996. Mr. Levy has been a Senior Managing Director of Joseph Littlejohn &
Levy ("JLL"), which is the managing general partner of Joseph Littlejohn & Levy
Fund II, L.P. ("JLL Fund II"), from its inception in 1988. Mr. Levy has served
as Chairman of the Board of Directors and Chief Executive Officer of Lancer
Industries Inc. since July 1989. Mr. Levy is also a director of Freedom,
Fairfield
Manufacturing Co., Inc, New World Pasta Company, BSL Holdings, Inc. and Peregrine Incorporated.
Wienand Meilicke, age 51,Jackson
Automotive Group, Inc.
WIENAND MEILICKE is 53 years old. He has been a director of the Companycompany
since the
consummation of the Lemmerz Acquisition in June 1997. Mr. Meilicke is an attorney admitted to practice in Bonn,
Germany and has, during at least the last five years, been a partner of Meilicke
& Partner, a law firm located in Bonn, Germany. Mr. Meilicke is also a member of
the supervisory boardboards of WABCO Standard GmbH and Breuniger Beteilgungs GmbH.
JohnJOHN S. Rodewig, age 63,RODEWIG is 65 years old. He has been a director of the Companycompany
since December 1992. He served as President of Eaton Corporation ("Eaton") and as its
Chief Operating Officer -- Vehicle Components from 1992 until his retirement on
January 1, 1996. Mr. Rodewig also serves as Chairman of the Board of Directors
of Eaton Limited (United Kingdom) and as a director of FKI plcplc.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MESSRS.
CHRISTOPHE, LEVY, MEILICKE AND RODEWIG.
APPROVAL OF INDEPENDENT AUDITORS
The next proposal on the agenda for the Annual Meeting will be the
ratification of the board's appointment of KPMG as the company's independent
auditors for fiscal year 1999.
KPMG served in this capacity for the fiscal year ended January 31, 1999
("fiscal year 1998"), and AP Parts
International.has reported on the company's 1998 consolidated
financial statements. The Audit Committee recommended to the board that KPMG be
re-appointed for fiscal year 1999.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
KPMG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR FISCAL YEAR 1999.
OTHER MATTERS
Neither the company nor its directors intend to bring before the Annual
Meeting any matters other than the election of the four directors and the
ratification of the company's independent auditors. Also, they have no present
knowledge that any other matters will be presented by others for action at the
Annual Meeting.
BOARD OF DIRECTORS
The Board of Directors consists of eleven directors divided into three
classes (Class 1, Class 2 and Class 3) serving staggered three-year terms. The
company's By-Laws require that the three classes be as nearly equal in number as
possible. Class 1 is currently composed of three directors and Classes 2 and 3
are
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9
each currently composed of four directors. The Class 3 directors are up for
election at the Annual Meeting, and the nominees for election are all currently
Class 3 directors.
In connection with the series of related transactions in July 1996 pursuant
to which the company acquired Motor Wheel Corporation (the "Motor Wheel
Transactions"), JLL Fund II, TSG Capital Fund II, L.P. ("TSG"), CIBC WG Argosy
Merchant Fund 2, L.L.C. ("Argosy"), Nomura Holding America, Inc. ("Nomura") and
Chase Equity Associates L.P. ("Chase") (collectively, the "New Investors"),
entered into a stockholders agreement with the company (the "Stockholders
Agreement"). Thereafter, in connection with the acquisition of Lemmerz Holding
GmbH in June 1997 (the "Lemmerz Acquisition"), the company, the New Investors
and Marianne Lemmerz, Horst Kukwa-Lemmerz, Inge Kruger-Pressl and Renate Kukwa-
Lemmerz (collectively, the "Lemmerz Shareholders") entered into an Amended and
Restated Stockholders Agreement (the "Amended Stockholders Agreement"). The
Amended Stockholders Agreement provides, among other things, that the Board of
Directors shall consist of eleven members and that certain of the New Investors
and all of the Lemmerz Shareholders will vote their shares of Common Stock so
that the Board of Directors of the company will be comprised of the Chief
Executive Officer of the company (currently, Mr. Cucuz), four designees of JLL
Fund II (currently, Messrs. Grillo, Levy, Lightcap and Ying), one designee of
TSG (currently, Mr. Christophe), two designees of the Lemmerz Shareholders
(currently, Mr. Kukwa-Lemmerz and Dr. Meilicke), and three individuals
determined by the Board who are not affiliated with the company or any of the
parties to the Amended Stockholders Agreement other than one member that may be
affiliated with Argosy (currently, Messrs. Heyer, Rodewig and Witt). The Amended
Stockholders Agreement also provides, among other things, for certain transfer
restrictions and registration rights for the stockholder parties thereto.
In connection with the acquisition of CMI International, Inc. ("CMI") in
February 1999, the company agreed to appoint Mr. Witt as a director of the
company and Mr. Witt was so appointed in April 1999.
Except as described above, there are no arrangements or understandings
between any director and any other person pursuant to which he was selected as a
director.
DIRECTORS CONTINUING IN OFFICE
The Class 1 and Class 2 Directors will continue in office following this
Annual Meeting, and their terms will expire in 2000 (Class 1) or 2001 (Class 2).
The following are brief biographies of each of these directors. You will find
information on their holdings of the company's stock in Appendix B.
RANKO ("RON") CUCUZ is 55 years old. He has been a director of the company
since 1992 and his current term as a Class 2 Director expires in 2001. He was
elected Chairman of the Board of Directors of the company in July 1996, and has
been Chief Executive Officer of the company since October 1992. Mr. Cucuz is
also a director of National-Standard Company.
ANTHONY GRILLO is 43 years old. He has been a director of the company since
April 1999 and his current term as a Class 1 Director expires in 2000. Mr.
Grillo is a Senior Managing Director of JLL, which he joined in January 1999.
From January 1991 to December 1998, he was a Senior Managing Director at the
Blackstone Group, an investment banking firm. Mr. Grillo is also a director of
Lancer Industries Inc.
ANDREW R. HEYER is 41 years old. He has been a director of the company
since April 1997 and his current term as a Class 2 Director expires in 2001. Mr.
Heyer has been a Managing Director and co-head of the High Yield Group of CIBC
Oppenheimer Corp. since August 1995. From February 1990 until July 1995, Mr.
Heyer was a founder and the Managing Director of The Argosy Group, an investment
banking firm. Mr. Heyer is Chairman of the Board of Hain Food Group, Inc. and a
director of Niagara Corporation, Argosy Heating Partners, Inc., Argosy
Investment Corporation, Lancer Industries Inc. and a member of the Investment
Committee of Caravelle Advisors, L.L.C.
HORST KUKWA-LEMMERZ is 56 years old. He has been a director of the company
since June 1997 and his current term as a Class 1 Director expires in 2000. He
was appointed to his present position as Vice Chairman of the company's Board of
Directors and Chairman of the Board of Directors of HLI (Europe), Ltd. upon
consummation of the Lemmerz Acquisition in June 1997. Mr Kukwa-Lemmerz is also
the president, chief executive officer and a director of Port Armor Investment
and Development, Inc. and H.K.L., L.L.C.
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10
JEFFREY LIGHTCAP is 40 years old. He has been a director of the company
since October 1997 and his current term as a Class 1 Director expires in 2000.
He has been a Senior Managing Director of JLL since June 1997. From February
1993 until May 1997, Mr. Lightcap was employed by Merrill Lynch & Co., an
investment banking firm, first as a Director and then, commencing in 1994, as a
Managing Director. Mr. Lightcap is also a director of New World Pasta Company
and Jackson Automotive Group, Inc.
RAY H. WITT is 70 years old. He has been a director of the company since
April 1999 and his current term as a Class 2 Director expires in 2001. Mr. Witt
is currently Chairman of the Board of Directors of CMI-Management Services, Inc.
and a director of Atchison Casting Corporation. Mr. Witt was the principal
shareholder and Chairman of the Board of Directors of CMI for at least five
years prior to the acquisition of CMI by the company in February 1999.
DAVID YING is 44 years old. He has been a director of the company since
June 1997 and his current term as a Class 2 Director expires in 2001. Mr. Ying
has been a Senior Managing Director of JLL since June 1997. From January 1993
until May 1997, Mr. Ying was a Managing Director of Donaldson Lufkin & Jenrette,
an investment banking firm. Mr. Ying is also a director of Fairfield
Manufacturing Co., Inc, New World Pasta Company and Jackson Automotive Group,
Inc.
DIRECTORS' MEETINGS AND COMMITTEES
The Board of Directors met fiveeight times and took action by unanimous consent
fourtwo times during the fiscal year ended January 31, 1997 ("Fiscal 1996").1998. Of the total number of Board meetings and
meetings of Board committees held in Fiscal
1996,fiscal year 1998, each current director
(other than Mr. Ying) attended at least 75% of such meetings held during the
period in which he served as a director or member of such committee. The Board
of Directors has established a standing Audit Committee, Compensation Committee
and Executive Committee, which are the only committees of the Board of
Directors. The membership and functions of the standing committees of the Board
of Directors are as follows:
EXECUTIVE COMMITTEE:Executive Committee: The Board of Directors has an Executive Committee,
consisting of Messrs. Cucuz, Kukwa-Lemmerz and Ying. The Executive Committee has responsibility for: (i)
reviewingdid
not meet during fiscal year 1998. The duties of the Executive Committee
generally are to:
- review and monitoring on a regular basismonitor the financial results of the Companycompany in comparison
to the business plans and budgets approved by the Board of Directors; (ii) determiningDirectors,
- determine and makingmake recommendations on questions of general policy with
regard to the business of the Company;company, and
(iii) performing- perform and exercisingexercise such other powers as may be lawfully delegated to
the Executive Committee by the Board of Directors, not in conflict
with the specific powers conferred by the Board of Directors upon any
other committee.
Audit Committee: The current
membersBoard of Directors has an Audit Committee, consisting
of Messrs. Christophe and Rodewig. During fiscal year 1998, the Audit Committee
met three times. The duties of the Executive Committee are Messrs. Cucuz, Kukwa-Lemmerz and Levy.
AUDIT COMMITTEE: The Audit Committee has responsibility for (i) reviewinggenerally are to:
- review the scope and results of the annual audit of the Company'scompany's
financial statements with the Company'scompany's independent auditors,
(ii) reviewing- review the Company'scompany's financial condition and results of operations
with management and the Company'scompany's independent auditors,
(iii) considering- consider the adequacy of the internal accounting and control
procedures of the Company, (iv) reviewingcompany,
- review any non-audit services and special engagements to be performed
by the Company'scompany's independent auditors and consideringconsider the effect of such
performance on the auditors' independence,
(v)- periodically reviewingreview the Company'scompany's environmental compliance and
litigation matters,
(vi) reviewing6
11
- review the terms of all material transactions and arrangements between
the Companycompany and its affiliates, and
(vii) recommending- recommend to the Board of Directors the firm to be selected as
independent auditor of the Company'scompany's financial statements and performingto
perform services related to the completion of such audit.
Compensation Committee: The AuditBoard of Directors has a Compensation
Committee, 6
9
met four times during Fiscal 1996. The currentconsisting of Messrs. Christophe, Levy and Rodewig. In addition,
Messrs. Cucuz and Kukwa-Lemmerz serve as nonvoting members of the Audit Committee
are Messrs. Christophe, Joseph and Rodewig.
COMPENSATION COMMITTEE: TheCompensation
Committee. During fiscal year 1998, the Compensation Committee has responsibility for
(i) reviewingmet five times.
The duties of the Compensation Committee generally are to:
- review and makingmake recommendations to the Board of Directors as to
compensation and other terms and conditions of employment of officers
of the Company, (ii) administration ofcompany,
- administer the Company'scompany's benefit plans for officers of the Company,company,
including any stock option plans, share-price related incentive plans,
and long-term incentive plans,
(iii) making- make recommendations to the Board of Directors as to termination
settlements for officers of the Company, (iv)
planningcompany,
- plan for succession of officers of the Companycompany, and
(v) reviewing- review requests by officers of the Companycompany to join the boardBoard of
directorsDirectors of any entity not affiliated with the Company.company.
DIRECTOR COMPENSATION
The Compensation Committee met two times during
Fiscal 1996. The current membersindependent directors of the Compensation Committee are Messrs.
Christophe, Levy and Rodewig. In addition, Messrs. Cucuz and Kukwa-Lemmerz serve
as nonvoting members of the Compensation Committee.
COMPENSATION OF DIRECTORS AND RELATED MATTERS
The Company's independent directors (those who are not Company employees
and are not affiliated with any of the New Investors or the Lemmerz
Shareholders)company receive an annual retainer of
$20,000, a fee of $1,000 for each Board or committee meeting attended, an annual
stock gift of 250 shares of Common Stock and are reimbursed for expenses
incurred in attending Board and/or committee meetings. Independent directors are
directors who are not company employees and who are not affiliated with any of
the New Investors or the Lemmerz Shareholders. The independent directors are
Messrs. Rodewig and Witt, but during fiscal year 1998, only Mr. Rodewig received
compensation as a director because Mr. Witt was not elected until April 1999. No
other director of the Companycompany receives any retainer, fee or reimbursementpayment for his participation as a
director or member of a committee of the Board.
Mr. Kukwa-Lemmerz is a designee on the Board of Directors of the Lemmerz
Shareholders, who own an aggregate of five million shares of Series A Preferred Stock, which, upon
stockholder approval, will automatically convert into five million shares of
Common Stock. (See "Proposal 3: Authorization of Issuance of Common Stock Upon
Conversion of the Series A Preferred Stock.") In
connection with the Lemmerz Acquisition, Mr. Kukwa-Lemmerz was elected as (i)
Vice Chairman of the Company'scompany's Board of Directors, (ii) a member of the
Executive Committee and a nonvoting member of the Compensation Committee, and
(iii) Chairman of the Board of the Company'scompany's subsidiary, HWIHLI (Europe) Ltd. The
Companycompany also entered into consulting agreements (the "Consulting Agreements")
with Mr. Kukwa-Lemmerz and an affiliate of Mr. Kukwa-Lemmerz pursuant to which,
among other things, (i) Mr. Kukwa-Lemmerz retired from all positions held with
Lemmerz and its subsidiaries, (ii) the Companycompany agreed to pay Mr. Kukwa-Lemmerz
and his affiliate an aggregate of $500,000 annually during the five-year period
for which consulting services will be provided, and (iii) the Companycompany granted
Mr. Kukwa-Lemmerz and his affiliate options to purchase an aggregate of 250,000
shares of Common Stock at an exercise price of $16 per share, such options to
become exercisable at the rate of 20% annually on June 30, 1998 and each June
30th thereafter during the term of the Consulting Agreements.
PROPOSAL 2
APPROVAL OF THE COMPANY'S
1996 STOCK OPTION PLAN
On May 14, 1997, the BoardCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of Directors approved the Hayes Wheels
International, Inc. 1996 Stock Option Plan (the "1996 Plan") and on September
11, 1997, the Board of Directors approved certain amendments to the 1996 Plan
(which term, as used herein, shall mean such plan as so amended). Subject to
approval by stockholders, the 1996 Plan will be effective as of July 2, 1996 and
all stock options that have been granted under the 1996 Plan will be effective
retroactively to such date. If the 1996 Plan is not approved by stockholders,
the options granted thereunder will not become exercisable.
The description of the 1996 Plan set forth below is not intended to be
complete and is qualified in its entirety by the actual terms of the 1996 Plan
and the form of stock option agreement relating to the Initial Grants (as
defined herein), copies of which are attached hereto as Exhibits A and B.
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DESCRIPTION OF PRINCIPAL FEATURES OF THE 1996 PLAN.
Purpose of the 1996 Plan. The 1996 Plan is intended to afford an incentive
to selected employees and consultants of the Company and its subsidiaries and
affiliates to acquire a proprietary interest in the Company, to increase their
efforts on behalf of the Company and to promote the success of the Company's
business through the grant of options. Such options may be "incentive stock
options" ("ISOs"), within the meaning of Section 422 of the Code, or
non-qualified stock options ("NQSOs" and, collectively with ISOs, "Options").
Participants in the 1996 Plan. Participants in the 1996 Plan will be
selected employees and consultants of the Company and its present and future
subsidiaries and affiliates, who will be designated by the Compensation Committee of the Board of Directors of the Company (the "Compensation
Committee"). The Compensation Committee takes into account such factors as it
deems relevant in connection with accomplishing the purpose of the 1996 Plan.
Approximately 50 persons are
eligible to participate in the 1996 Plan.
Shares Subject to the 1996 Plan. The 1996 Plan provides that an aggregate
of 3,000,000 shares of Common Stock will be available for issuance pursuant to
the exercise of Options granted thereunder. No optionee may receive awards under
the 1996 Plan during its term that relate to more than an aggregate of 1,200,000
shares of Common Stock.
Administration of the 1996 Plan. The 1996 Plan will be administered by the
Compensation Committee. The Board of Directors may fill vacancies on the
Compensation CommitteeMessrs. Christophe, Levy and may from time to time remove or add members. AllRodewig. In addition, Messrs. Cucuz and
Kukwa-Lemmerz are non-voting members of the Compensation Committee must be "non-employee directors" within
the meaning of Rule 16b-3 under the Exchange Act, and "outside directors" within
the meaning of Section 162(m) of the Code. All action taken under the 1996 Plan
with respect to executive officers of the Company is taken solely by such
outside directors. All grants and awards under the Stock Option Plan are made at
the discretion of the Compensation Committee; the size of grants and awards to
be received by any person or group of persons under the 1996 Plan is therefore
not determinable. Option grants made to the Company's Chief Executive Officer
and the four other most highly compensated executive officers of the Company
(the "Named Executive Officers") in Fiscal 1996 are set forth below (see
"Options Granted Under the 1996 Plan").
Amendment and Termination of the 1996 Plan. The 1996 Plan may be altered,
amended, suspended or terminated at any time by the Board of Directors, provided
that such termination may not adversely affect the rights of any Optionee,
without such Optionee's consent, under any Option granted under the 1996 Plan.
Terms of Options in General. Option awards under the 1996 Plan consist of
NQSOs and ISOs. Options granted pursuant to the 1996 Plan need not be identical.
Subject to the approval of the Company's stockholders, the Initial Grants have
been made under the terms described below in "-- Terms of Initial Option
Grants."
The purchase price under each Option will be established by the
Compensation Committee; provided, however, that in the event that an ISO is
granted to an individual who holds as of the date of grant more than 10% of the
Common Stock (a "Ten Percent Stockholder"), the exercise price of such ISO will
be no less than 110% of the fair market value of the Common Stock on the date of
grant. The exercise price of the Option must be paid in full at the time of
exercise and may be paid in whole or in part with previously purchased Common
Stock valued at the fair market value as of the date of exercise. The aggregate
fair market value of shares as to which ISOs are exercisable for the first time
by an optionee during any calendar year may not exceed $100,000. The term of
each Option will be no greater than 10 years from the date of grant; provided,
however, that an ISO granted to a Ten Percent Stockholder shall have a term of
no greater than five years. At the time of grant of an Option, the Compensation
Committee may provide for accelerated exercisability in connection with a change
in control of the Company. If the employment of any optionee is terminated other
than for "Cause" (as defined in the 1996 Option Plan) or by reason of the
optionee's death or disability, the optionee or the optionee's representative
will have one year from the date of such death or disability, or seven months
from the date of termination of employment for reason other than death,
disability or for Cause, to exercise all Options to the extent exercisable as of
the date of such termination, death or disability.
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Each Option is transferable only by will or the law of descent and
distribution and may only be exercisable by the optionee during his or her
lifetime.
Terms of Initial Option Grants. Subject to the approval of the Company's
stockholders, Options to purchase an aggregate of 2,301,077 shares of Common
Stock have been granted as of July 2, 1996 under the 1996 Plan (collectively,
the "Initial Grants") to the Named Executive Officers and certain other key
employees and consultants of the Company. The number of shares underlying each
Initial Grant are divided into five equal portions, with each such portion
referred to as a "Tranche" and the Tranches designated "A", "B", "C", "D" and
"E". The exercise price of the Initial Grants is $16 per share (such exercise
price was adjusted from the initial price of $32 per share to reflect the
two-for-one stock split effected in the form of a 100% stock dividend (the
"Stock Split") which was paid on January 6, 1997 to the Company's stockholders
of record as of December 20, 1996). The Initial Grants will become exercisable
(i.e., "vest") according to the following schedule, upon the occurrence of each
of the following events:
(a) Time Condition: 20% of the shares included in each of Tranches A
through E shall satisfy the Time Condition if the optionee is an employee
or consultant to the Company or subsidiary or affiliate thereof on January
31, 1997 and on each January 31 thereafter; and
(b) Performance Condition: 100% of the shares included in each of
Tranches A through E shall satisfy the Performance Condition if the average
per share price of the Common Stock for any consecutive twenty trading days
on the principal exchange (or Nasdaq Stock Market) on which the Common
Stock is traded equals or exceeds the following price (each such price, a
"Target Price"):
(i) Tranche A: $16 per share
(ii) Tranche B: $32 per share
(iii) Tranche C: $48 per share
(iv) Tranche D: $64 per share
(v) Tranche E: $80 per share
Notwithstanding the foregoing, the Initial Grants shall become fully exercisable
on the ninth anniversary of the date of grant.
The Company's Common Stock has traded at the prices necessary to allow all
of the shares in Tranches A and B of the Initial Grants to satisfy the
Performance Condition. Accordingly, subject to stockholder approval of the 1996
Plan, 20% of the shares in both Tranches A and B of the Initial Grants made to
each optionee will be vested and exercisable, and the balance of the shares in
both Tranches A and B of the Initial Grants will be subject only to the Time
Condition.
Upon the occurrence of a Change in Control (as defined in the agreements
setting forth the terms of such grants), all then unexercisable Tranches will
vest to the extent that the Performance Condition is satisfied, without regard
to any applicable Time Condition, taking into account the per share price of the
Common Stock during the 30 calendar-day period immediately preceding the Change
in Control in relation to the applicable Target Price. In addition, a portion of
the remaining outstanding unvested Tranches will vest equal to the product of
(x) the total number of shares underlying each such Tranche and (y) a fraction,
the numerator of which will be the per share price of the Common Stock as of the
date of the Change in Control and the denominator of which will be the Target
Price applicable to such Tranche. Notwithstanding the foregoing, if a Change in
Control occurs prior to January 2, 1999, a portion of the unvested Initial
Grants in the three Tranches immediately following the last Tranche which became
vested pursuant to the first sentence of this paragraph will vest equal to the
product of (1) the total number of shares included in each such Tranche and (2)
a fraction, the numerator of which will be the per share price of the Common
Stock as of the date of the Change in Control and the denominator of which will
be the Target Price applicable to such Tranche.
The following table sets forth certain information respecting the Initial
Grants to the Named Executive Officers and each of (i) the executive officers,
(ii) directors who are not executive officers, and (iii) all other
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employees who are not executive officers of the Company as a group. Inasmuch as
Option grants other than the Initial Grants will be made at the discretion of
the Compensation Committee, the size of future Option grants made under the 1996
Plan cannot be determined. The Common Stock is listed and traded on the Nasdaq
Stock Market's National Market System (the "Nasdaq Stock Market"). The closing
price of a share of Common Stock as reported on the Nasdaq Stock Market on
September 8, 1997 was $35.44.
OPTIONS GRANTED UNDER THE 1996 PLAN(1)
PERCENT OF POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO PER SHARE STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OPTION TERM(2)
OPTIONS FISCAL OR BASE EXPIRATION ------------------------------
NAME AND POSITION OF OPTIONEE GRANTED 1996(3) PRICE DATE 5% 10%
- ----------------------------- ---------- ------------ --------- ---------- -- ---
Cucuz, Ranko................. 760,431 33.05% $16 7/02/06 $1,528,160 $5,324,226
CEO and President
Dallera, Giancarlo........... 152,086 6.61% 16 7/02/06 305,632 1,064,838
Vice President --
President, European
Aluminum Wheels
Linski, William S. .......... 152,086 6.61% 16 7/02/06 305,632 1,064,838
Vice President --
President, Fabricated
Wheels
Sandberg, Daniel M. ......... 126,739 5.51% 16 7/02/06 254,695 887,348
Vice President --
International Operations,
General Counsel and
Secretary
Shovers, William D. ......... 152,086 6.61% 16 7/02/06 305,632 1,064,838
Vice President -- Chief
Financial Officer
All current executive
officers as a group........ 1,825,034 16
All current directors who are
not executive officers, as
a group.................... 0 --
All other employees,
including all current
officers who are not
executive officers, as a
group...................... 476,043 16
- -------------------------
(1) The 1996 Plan has been adopted and approved by the Company's Board of
Directors, but has not yet been approved and adopted by the Company's
stockholders. Until such time as such approval is obtained, the options
granted under the 1996 Plan are not effective or exercisable. If such
approval is obtained, all stock option grants reported in this table will be
effective retroactively to July 2, 1996.
(2) Values are reported net of the option's exercise price, but before taxes
associated with exercise. These values are calculated using assumed rates of
appreciation prescribed by the Commission.
(3) Percentages reflect percentage of options granted during Fiscal 1996 under
the 1996 Plan only.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF AWARDS UNDER THE OPTION PLAN
THE FOLLOWING DISCUSSION OF CERTAIN RELEVANT FEDERAL INCOME TAX EFFECTS
APPLICABLE TO OPTIONS GRANTED UNDER THE 1996 PLAN IS A BRIEF SUMMARY ONLY, AND
REFERENCE IS MADE TO THE CODE AND THE REGULATIONS AND INTERPRETATIONS ISSUED
THEREUNDER FOR A COMPLETE STATEMENT OF ALL RELEVANT FEDERAL INCOME TAX
CONSEQUENCES.
Incentive Stock Options No taxable income will be realized by an optionee
upon the grant or timely exercise of an ISO. If shares are issued to an optionee
pursuant to the exercise of an ISO and if a disqualifying disposition of such
shares is not made by the optionee (i.e., no disposition is made within two
years after the date of grant or within one year after the receipt of shares by
such optionee, whichever is later), then (i) upon sale of the shares so
acquired, any amount realized in excess of the exercise price of the ISO will be
taxed to the optionee as long-term capital gain and any loss sustained will be a
long-term capital loss and (ii) no deduction will be allowed to the Company.
However, if shares acquired upon the exercise of an ISO are disposed of prior to
satisfying the holding period described above, generally (i) the optionee will
realize ordinary income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of the shares at the time of exercise
(or, if less, the amount realized on the disposition of the shares), over the
exercise price thereof, and (ii) the Company will be entitled to deduct an
amount equal to such income. Any additional gain recognized by the optionee upon
a disposition of shares prior to satisfying the holding period described above
will be taxed as short-term or long-term capital gain, as the case may be, and
will not result in any deduction by the Company.
If an ISO is exercised at a time when it no longer qualifies as an ISO, the
Option will be treated as an NQSO. Subject to certain exceptions, an ISO
generally will not be eligible for the federal income tax treatment described
above if it is exercised more than three months following termination of
employment.
The amount by which the fair market value of the Common Stock on the
exercise date of an ISO exceeds the exercise price generally will constitute an
item which increases the optionee's "alternative minimum taxable income."
Non-Qualified Stock Options. In general, an optionee will not be subject to
tax at the time an NQSO is granted. Upon exercise of an NQSO where the exercise
price is paid in cash, the optionee generally must include in ordinary income at
the time of exercise an amount equal to the excess, if any, of the fair market
value of the Common Stock at the time of exercise over the exercise price, and
will have a tax basis in such Shares equal to the cash paid upon exercise plus
the amount taxable as ordinary income to the optionee. The Company generally
will be entitled to a deduction in the amount of an optionee's ordinary income
at the time such income is recognized by the optionee upon the exercise of an
NQSO. Income and payroll taxes are required to be withheld on the amount of
ordinary income resulting from the exercise of an NQSO.
Approval of the 1996 Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock present at the Meeting in person or by
proxy and entitled to vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE 1996 PLAN.
PROPOSAL 3
AUTHORIZATION OF ISSUANCE OF COMMON STOCK UPON
CONVERSION OF THE SERIES A PREFERRED STOCK
BACKGROUNDCommittee. On June 30,
1997, the Company acquiredcompany consummated the Lemmerz for (i)Acquisition in which the Lemmerz
Shareholders, including Mr. Kukwa-Lemmerz, received $200 million in cash (the "Cash Consideration") and (ii) the issuance of a total of five million
shares of the Company's Series A Preferred Stock, which, following stockholder
approval, will automatically convert (the "Conversion") into five million shares
of Common Stock. Prior to such acquisition, Lemmerz was the leading full-line
designer and
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manufacturer of wheels for passenger cars, light trucks and commercial highway
vehicles in Europe. Lemmerz also produces a variety of non-wheel cast aluminum
products for the automotive, heating equipment and construction industries.
Neither Delaware law nor the Charter requires stockholder approval of the
Lemmerz Acquisition; however, the rules of The Nasdaq Stock Market require
stockholder approval of the issuance of Common Stock in connection with the
acquisition of the stock or assets of another company if the common stock to be
issued will have voting power equal to 20% or more of the total voting power
outstanding prior to the issuance. The aggregate number of shares of Common
Stock issuable upon the Conversion equaled approximately 22.5% of the voting
power outstanding immediately prior to the issuance of the Series A Preferred
Stock. Accordingly, the shares of Series A Preferred Stock issued to the
shareholders of Lemmerz may not be converted into Common Stock until the
issuance of Common Stock upon the Conversion is approved by the stockholders of
the Company.
THE SERIES A PREFERRED STOCK
The designations, amount, voting powers, preferences and rights of the
Series A Preferred Stock are set forth in the Certificate of Designations of the
Series A Convertible Participating Preferred Stock (the "Certificate of
Designations") filed with the Secretary of State of the State of Delaware on
June 24, 1997.
The Certificate of Designations provides for
five million shares of Series A Preferred Stock which rank senior to the Common Stock and all other classes of
capital stock of the Company upon liquidation. Holders of shares of the Series A
Preferred Stock are entitled to a liquidation preference of $.05 per share and
to share ratably in any further distributions to stockholders upon liquidation.
The Series A Preferred Stock has no voting rights except where specifically
required by law.
Holders of Series A Preferred Stock are entitled to receive dividends only
when, as and if declared by the Board of Directors, upon the Common Stock in an
amount equal to the dividend that would be received by such holder had the
shares of Series A Preferred Stock held by such Holder been(which were subsequently
converted into
Common Stock on the record date for such dividend.
The Certificate of Designations provides that each share of the Series A
Preferred Stock will be automatically converted into one share of Common Stock
immediately upon stockholder approval of the Conversion. The Certificate of
Designations provides for adjustments to the conversion ratio upon any stock
dividend, stock split, recapitalization or reorganization of the Company.
EFFECT OF THE CONVERSION
Upon stockholder approval, the shares of Series A Preferred Stock will
automatically convert into five million shares of Common Stock. Following the
Conversion, the Series A Preferred Stock will be retired and will no longer be
outstanding. Accordingly, the $.05 liquidation preference associated with each
share of Series A Preferred Stock will be eliminated. Upon the Conversion, the
holders of Series A Preferred Stock will automatically own one share of Common
Stock for each share of Series A Preferred Stock previously held by such holder,
and will have all rights and privileges of a holder of Common Stock.
The rights and privileges of current holders of Common Stock will not be
affected by the Conversion, except that there will be an additional five million
shares of Common Stock outstanding and, accordingly, the voting power of current
holders of Common Stock will be proportionately diluted.
The Conversion will not resultStock). In addition, in any changes to the Company's results of
operations, financial condition or method of calculating earnings per share,
except that the aggregate par value attributed to the Series A Preferred Stock
($50,000) will be transferred to the Common Stock account.
VOTE REQUIRED FOR THE ISSUANCE OF COMMON STOCK UPON THE CONVERSION
In connection
with the Lemmerz Acquisition, the Company agreedcompany entered into the Consulting Agreements
with Mr. Kukwa-Lemmerz and an affiliate of Mr. Kukwa-Lemmerz. See "Director
Compensation."
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the company's directors and certain officers to promptly
prepare and file
with the United States Securities and Exchange Commission this Proxy Statement, call(the "SEC") and the
MeetingNew York Stock Exchange (the "NYSE") initial reports of ownership and use its best effortsreports of
changes in ownership of the company's Common Stock. Copies of all such Section
16(a) reports are required to obtain stockholder approvalbe furnished to the company. These filing
requirements also apply to holders of 12
15
(i)more than ten percent of the issuancecompany's
Common Stock. To the company's knowledge, based solely on a review of the copies
of Section 16(a) reports furnished to the company during fiscal year 1998, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, all Section 16(a) filing requirements applicable to
the company's officers and directors and beneficial owners of more than 10% of
the Common Stock uponwere complied with on a timely basis.
EXECUTIVE COMPENSATION
This section provides summary information regarding the Conversioncompensation of
Ranko Cucuz, Chief Executive Officer, and (ii) the change infour most highly compensated
officers other than Mr. Cucuz: Giancarlo Dallera, Vice President -- President,
European Aluminum Wheels; Klaus Junger, Vice President -- President, European
Fabricated Wheels; Daniel M. Sandberg, Vice President -- President, Automotive
Brakes and Secretary; and William D. Shovers, Vice President -- Finance and
Chief Financial Officer (collectively, the Company's name to Hayes Lemmerz International, Inc. In addition, each of JLL,
TSG, Chase and Nomura (together, the "Consenting Shareholders""Named Executive Officers"), owning an
aggregate of 14,475,150 shares of Common Stock (or approximately 58%. This
section also includes a report of the outstanding shares of Common Stock onboard's Compensation Committee, which
discusses the Record Date), granted an irrevocable
proxy (the "Irrevocable Proxy")general compensation principles used by the committee, as well as
the specific factors used to determine Mr. Kukwa-Lemmerz or any of his designees to
attend any meeting of Company stockholdersCucuz's compensation.
SALARY AND BONUS
The Named Executive Officers had their salaries reviewed and to voteincreased in
fiscal year 1998. This is consistent with the shares of Common
Stock subject tocompany's compensation principles
for executive officers, since their salaries were last reviewed in fiscal year
1997. The Named Executive Officers also received bonuses for fiscal year 1998.
You will find additional information regarding the Irrevocable Proxy (A) in favorsalaries and bonuses of the
approval and adoption
of (i) the issuance of shares of Common Stock upon the ConversionNamed Executive Officers in Appendix C.
STOCK OPTIONS
None of the Series
A Preferred Stock and (ii) the amendment of the Charter to change the name of
the Company to Hayes Lemmerz International, Inc., and (B) as recommendedNamed Executive Officers received stock options during fiscal
year 1998. You will find additional information regarding stock options held by
the Board of Directors on allNamed Executive Officers in Appendix C.
OTHER COMPENSATION AND BENEFITS
The Named Executive Officers receive medical, group life insurance and
other matters brought beforebenefits (including matching contributions under the stockholders at such
meeting. In addition, pursuantcompany's 401(k)
plan) that are available generally to the Amended Stockholders Agreement, all of the stockholder parties thereto agreed not to sell, transfer or otherwise disposecompany's salaried employees.
The Named Executive Officers based in the United States participate in the
company's salaried employees pension plan, which is qualified under Section
401(a) of their shares of Common Stock until after the later of (a) the Conversion,Internal Revenue Code and (b) July 2, 1998, except for transfers to certain permitted transferees. For
information aboutreceive certain other transactions withperquisites and
they also participate in the Lemmerz Shareholders, see
"Compensation of Directors and Related Matters" and "Proposal 1 -- Election of
Directors."
Approvalcompany's supplemental employee retirement plan
(which is not qualified under Section 401(a) of the proposal to issue the Common Stock upon the Conversion
requires the affirmative vote of a majorityInternal Revenue Code). You
will find additional information regarding other compensation and benefits of
the votes cast on the proposal by
holders of Common StockNamed Executive Officers in person or by proxy at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
APPROVE THE ISSUANCE OF COMMON STOCK UPON THE CONVERSION.
PROPOSAL 4
AMENDMENT TO THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY'S NAME
In connection with the Lemmerz Acquisition, the Company agreed to use its
best efforts to cause a change in the Company's name to Hayes Lemmerz
International, Inc. The Board of Directors believes that this name change is in
the best interest of the Company, as it better reflects the Company's global
business and the long tradition of quality associated with the Lemmerz name.
Pursuant to the Irrevocable Proxies, the Consenting Shareholders have
granted Mr. Kukwa-Lemmerz or his designees an irrevocable proxy to vote their
shares (which, collectively, constitute approximately 58% of the outstanding
Common Stock on the Record Date) in favor of this proposal to amend the Charter
to change the Company's name to Hayes Lemmerz International, Inc. In addition,
pursuant to the Amended Stockholders Agreement, all of the stockholder parties
thereto agreed not to sell, transfer or otherwise dispose of their shares of
Common Stock until after the later of (a) the Conversion, and (b) July 2, 1998,
except for transfers to certain permitted transferees. See "Proposal 3:
Authorization of Issuance of Common Stock Upon Conversion of the Series A
Preferred Stock."
Approval of the amendment to the Charter to change the Company's name
requires the affirmative vote of a majority of the outstanding shares of Common
Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
AMEND THE CHARTER TO CHANGE THE COMPANY'S NAME TO HAYES LEMMERZ INTERNATIONAL,
INC.
PROPOSAL 5
AUTHORIZATION OF ADDITIONAL SHARES OF NONVOTING COMMON STOCK
The Charter currently authorizes the issuance of up to 1,000,000 shares of
Nonvoting Common Stock. At September 15, 1997, there were 159,026 shares of
Nonvoting Common Stock issued and outstanding.
The Nonvoting Common Stock is identical to the Common Stock in all
respects, except with respect to voting rights. Except as required by law, the
holders of Nonvoting Common Stock have no right to vote on any matter, and
shares of Nonvoting Common Stock are not included in the calculation of the
number of shares voting or entitled to vote on any matter. Each record holder of
Nonvoting Common Stock is entitled at its option to convert any or all of its
shares of Nonvoting Common Stock into an equal number of shares of
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Common Stock, provided that such conversion does not result in such holder or
its affiliates directly or indirectly owning, controlling or having the power to
vote or dispose of a greater quantity of securities of any kind issued by the
Company than such holder and its affiliates are permitted to own, control or
have power to vote or dispose of under any law or under any regulation, order,
rule or other requirement of any governmental authority applicable to such
holder and its affiliates. The Nonvoting Common Stock is intended to meet the
needs of certain stockholders which are subject to limitations under the Bank
Holding Company Act on their ability to hold more than five percent of the
voting stock of the Company.
Following approval by the Company's stockholders of this proposal to
increase the number of authorized shares of Nonvoting Common Stock to five
million shares, Argosy intends to exchange all of the 2,500,000 shares of Common
Stock which it currently owns for an equal number of shares of Nonvoting Common
Stock, so that it will own less than 5% of the outstanding voting Common Stock.
Upon such exchange, the voting agreement between Argosy and the Company will be
terminated. Although the Board of Directors has no present intent to issue any
other shares of Nonvoting Common Stock, the additional authorized shares of
Nonvoting Common Stock could be used for any proper purpose approved by the
Board of Directors, including for stock splits, stock dividends and other
corporate purposes.
Approval of the proposal to amend the Charter to increase the number of
authorized shares of Nonvoting Common Stock requires the affirmative vote of (i)
a majority of the outstanding shares of Common Stock and (ii) a majority of the
outstanding shares of Nonvoting Common Stock. All of the Nonvoting Common Stock
currently issued and outstanding is held by Chase Equity Associates, L.P., which
has informed the Company that it intends to vote its shares in favor of this
proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS TO THE STOCKHOLDERS THAT THEY
VOTE "FOR" THE AMENDMENT TO THE CHARTER TO INCREASE THE NUMBER OF AUTHORIZED
SHARES OF NONVOTING COMMON STOCK FROM 1,000,000 TO 5,000,000 SHARES.
PROPOSAL 6
APPOINTMENT OF AUDITORS
Subject to stockholder ratification, the Board of Directors has reappointed
the firm of KPMG Peat Marwick, as independent auditors of the Company, for
Fiscal 1997. KPMG Peat Marwick has served as the Company's independent auditors
since 1992.
A representative of KPMG Peat Marwick is expected to be present at the
Meeting and will have an opportunity to make a statement if the representative
desires to do so and to respond to questions by stockholders.
Approval of the proposal to ratify the appointment of KPMG Peat Marwick
requires the affirmative vote of the holders of a majority of the shares of
Common Stock present at the Meeting in person or by proxy and entitled to vote
at the Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK AS INDEPENDENT AUDITORS OF THE COMPANY
FOR FISCAL 1997.
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EXECUTIVE COMPENSATIONAppendix C.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors submits the following
report on executive compensation for Fiscal 1996:fiscal year 1998:
This report provides an overview of the Company'scompany's compensation
philosophy and executive compensation programs. It also discusses
compensation-related decisions in general, and specifically those relating
to the Company'scompany's Chief Executive Officer, for Fiscal 1996.fiscal year 1998.
8
13
THE ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors is responsible
for all matters relating to the compensation of the executive officers of
the Company.company. It carries out these responsibilities by reviewing all
executive compensation and benefit plans, administering the Company'scompany's stock
option and other long-term incentive plans and overseeing succession
planning. To comply with regulations of the Securities and Exchange
CommissionSEC and to separate members of
management more completely from compensation decisions, only non-management
directors are eligible to serve as voting members of the Compensation
Committee (Messrs. Cucuz and effective as of June 30, 1997, Kukwa-Lemmerz serve as non-voting members of
the Compensation Committee).
OVERALL OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAMS
The Company'scompany's executive compensation programs have been designed to
support the Company'scompany's goal of enhancing stockholder value by providing
incentives that will attract, reward and retain highly qualified executives
critical to the long-term success of the Company.company. The Company'scompany's policy is
to establish overall compensation at median competitive levels. Median
competitive levels are determined by an independent consulting firm (in
Fiscal 1996, prior to the Motor Wheel Transactions, such consulting firm
was Hewitt Associates; after the Motor Wheel Transactions,fiscal year 1998, such consulting firm was Mercer & Associates), utilizing
several widely used published compensation surveys. These surveys included
several hundred companies, but the methodology under which compensation was
determined focused on compensation level data from approximately 25
companies in the automotive supply industry (the "Comparison Group").
However, as a result of the relationship between executive compensation and
corporate performance, the Company'scompany's executives may be paid more or less in
any particular year than the executives of companies included in the
Comparison Group, depending on the Company'scompany's performance. The companies in
the Comparison Group are not the same as those in the peer group utilized
in preparing the Peer Group Index (see "Stock Performance Graph") because
the Compensation Committee's independent consultant uses surveys of
publicly traded and privately owed companies in the automotive industry to
determine median compensation levels, whereas the Peer Group Index has been
chosen by the Companycompany to reflect publicly traded automotive parts and
accessories suppliers. The Compensation Committee believes that it would
not be practicable to prepare a compensation survey of the companies
included only in the Peer Group Index.
Following research and assistance from the independent consultant, the
Compensation Committee has determined to structure the Company'scompany's short-term
and long-term incentive compensation plans to emphasize corporate financial
performance which the Compensation Committee believes will enhance
stockholder value. To implement this approach, commencing in Fiscalfiscal year
1993, the Companycompany has utilized a compensation plan for its executive
officers which comprises an annual performance plan for its executive
officers, with earned short-term incentive awards being paid out in cash
(subject to maximum annual payouts) plus a stock-based incentive
compensation program under the Company's 1992
Stock Incentive Plan (the "1992 Plan") and, commencing in Fiscal 1996, the
1996 Plan.
15
18company's stock option plans.
AN OVERVIEW OF THE COMPANY'S EXECUTIVE COMPENSATION PLAN
As stated above, the Company'sThe company's executive compensation programs have three components:
base salary, annual incentive and long-term incentive. A discussion of the
Compensation Committee's decisions regarding executive compensation and an
overview of its various elements are presented below.
BASE SALARY PROGRAM
The Company'scompany's base salary program is intended to provide base salary
ranges that reflect the median salary levels of the Comparison Group. Base
salaries are periodically adjusted to reflect each executive's performance
and contribution to the overall financial results of the Company,company, the
executive's length of service with the Companycompany and changes in median salary
levels of the Comparison Group. The Compensation Committee, based upon
research and advice provided by its independent consultant, annually
reviews and compares each executive's salary level against comparable
executive'sexecutives' positions in the Comparison Group.
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14
ANNUAL PERFORMANCE PLAN
The Fiscal 1996fiscal year 1998 annual performance plan (the "Annual Performance
Plan") provided competitive variable pay opportunities to executive
officers based upon the achievement of established targets based on the
Company'scompany's earnings before interest and taxes ("EBIT") and, the company's cash
flow and the achievement of certain personal objectives by the executive.
In addition, with respect to those officers who are responsible for the
performance of the particular business units of the Company,company, their bonuses
are also based upon the achievement of certain EBIT and cash flow targets
for their respective business units. Thus, annual incentive compensation is
determined by the degree to which the Companycompany and, for certain officers,
the business units, achieve the annual EBIT and cash flow targets
established by the Compensation Committee and by the degree to which each
individual officer achieves his personal objectives. The aggregate bonus
amount isin fiscal year 1998 was established as a percentage of base salary,
which ranged from 40% towas 60% (except for all executive officers, except Mr. Cucuz, the Chief
Executive Officer, only, for whom thewhose percentage was 100%) in Fiscal 1996, with each
component of the annual performance plan comprising a portion of such
percentage. The normative amount to be received as a bonus if the EBIT and
cash flow targets and personal objectives are met, expressed as a
percentage of base salary, is established based upon levels of
responsibility for Company or business unit performance. This percentage
increases as the level of responsibility increases..
If the EBIT and cash flow targets are met and the personal objectives
are achieved, 100% of the normative bonus percentage is paid. If certain
minimum EBIT and cash flow targets are met (set at 75% of each such
target), but either of such amounts is less than the targeted amounts, or
if the individual performance objectives are not fully realized, the amount
paid for each component of the annual performance planAnnual Performance Plan which is not fully
achieved will be proportionally less than the normative amount. Similarly,
if either the EBIT or cash flow performance exceeds the EBIT or cash flow
targets, respectively, the amount of the bonus attributable to such
component of the annual performance planAnnual Performance Plan will be proportionally more than
the normative amount, up to a aggregate maximum of twice the normative
amount. Notwithstanding the foregoing, if the minimum cash flow target is
not met, no bonus is paid, even if the EBIT target and personal objectives
are achieved. The performance-based component may result in higher than
competitive compensation for superior EBIT and cash flow performance or
lower than competitive compensation for performance not reaching the EBIT
or cash flow targets.
LONG-TERM INCENTIVE PLAN
UnderIn the 1992 Plan, the Compensation Committee has emphasized premium
stock option grantsfiscal year ended January 31, 1997 ("Premium Options"fiscal year 1996") for its senior executives
(including the Named Executive Officers). In Fiscal 1996, this was
accomplished by granting Premium Options, for each recipient, at a ratio of
the number of shares of Common Stock covered thereby to the number of such
shares covered by the fair market value stock option ("FMV Options")
simultaneously granted to the same recipient of one and one-half to one,
except that in Fiscal 1996, the Chief Executive Officer was granted only
Premium Options. FMV Options have an exercise price equal to the closing
price on the New York Stock Exchange (the stock exchange on which the
Company's Common Stock traded on the date of grant) on the trading day
immediately
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19
prior to their grant. Premium Options were granted with the same exercise
price as the FMV Options, but such Premium Options are not exercisable
until the Company's Common Stock has traded at a premium to the exercise
price for ten consecutive trading days. The premium has historically been
the percentage resulting from five compoundings of the 5-year United States
government bond average annual percentage yield as of the date of grant of
the options, rounded up to the next full five percent. The emphasis on
Premium Options and the premium in their exercise price are intended to
align management and stockholder interests more closely and to lead to
higher prices for the Company's Common Stock. The terms of both the Premium
Options and the FMV Options provided, however, that they become exercisable
upon a change in control of the Company. As the Motor Wheel Transactions
constituted such a change in control, all such options are now exercisable.
On February 20, 1996, the Compensation Committee approved the grant of
stock options under the 1992 Plan to certain persons, including the Named
Executive Officers. These grants comprised both Premium Options and FMV
Options, in the ratio indicated above. The options that were granted as
Premium Options in Fiscal 1996 have a vesting price approximately 30% above
the closing price for the Company's Common Stock on the New York Stock
Exchange on the date such options were granted. This, combined with the
ten-year term of the options, was intended to ensure that the holders of
Common Stock would realize a significant return on their investment in a
relatively short period of time before the holders of these Premium Options
realized any financial gain therefrom. These options, however, all became
vested as a result of the change in control of the Company which occurred, in
connection with the Motor Wheel Transactions.
With respectTransactions, the Compensation Committee
approved stock option grants to the executive officers of the company under
the 1996 Stock Option Plan (the "1996 Plan"), which option grants were
significantly larger than those granted to the executive officers in prior
years. The options granted in fiscal year 1996 under the 1996 Plan although such
options are structured significantly differently than the options granted
under the 1992 Plan, such options also are intended to serve the
Compensation Committee's purpose of aligning management and stockholder
interests more closely in order to lead to higher prices for the Company's
Common Stock. As described in greater detail elsewhere in this Proxy
Statement (see "Proposal 2 -- Approval of the Company's 1996 Stock Option
Plan"), the options granted under the 1996 Plan must meet both a time and
performance condition in order to become exercisable. Thus, each such
option grant is
divided into five tranches (each, a "Tranche") of an equal number of
options. The options in each such Tranche vest (i.e., become exercisable by
the optionee) only when both of the
following conditions have been met: (a) 20% of each Tranche vests on the
last day of each fiscal year commencing on January 31, 1997a time condition and continuing
until January 31, 2001 if the employeea stock performance
condition tied to whom they were granted is then
still an employee of the Company; and (b) the average share price for any
twenty consecutive day period on the principal exchange upon which the
Common Stock is traded equals or exceeds certain specified prices (the
"Target Prices") ranging from $16.00 per share for the first Tranche and
increasing ratably to $80.00 per share for the fifth Tranche. As a result
of such vesting requirements, the Compensation Committee believes that such
options will encourage the recipients, which include all of the Company's
executive officers and certain other key management employees, to manage
the Company in a manner intended to result in substantial appreciation in the price of the Company'scompany's Common Stock thereby allowing such options to
become exercisable, while also benefiting the stockholders of the Company.
As of July 2, 1996, the Compensation Committee approved the grant of
stock options under the 1996 Plan to certain persons, including the Named
Executive Officers. The options under the 1996 Plan were granted at an
exercise price equal to the cash consideration payable for shares of the
Company's Common Stock in connection with the Motor Wheel Transactions. Thehave been met.
These time and performance conditions necessary for thesuch vesting of such options are intended to
ensure that the holdersstockholders of Common Stock realizethe company receive a significant return on
their investment before the holders of these optionsoptionees realize anya financial gain therefrom.
The number of shares covered bySubsequent stock options granted in the Lemmerz Transaction, and
thereafter, are similarly structured, but with different Tranches.
The Compensation Committee believes that the option grants under the
19921996 Plan, was determinedincluding the terms thereof which cause such options to vest
progressively as certain price and time conditions are met, will align the
interests of the company's executive officers with those of the
stockholders of the company by creating a long-term incentive for such
officers to achieve corporate performance which also enhances stockholder
value. As a result, and because of the size and significance of the option
grants made in fiscal year 1996, the Compensation Committee based uponelected not to
grant any additional stock options in fiscal year 1998 to the level of
responsibility and salary of eachcompany's
executive officer and option grantsofficers (except to those executive officers holding similarwho were promoted
into their positions at other companies, based upon the
independent consultant's survey of long-term incentive compensation
practices at such companies. Also considered in
17
20
setting the Premium Option awards was the risk and reward potential in that
no benefits will be received from these Premium Options unless the Common
Stock appreciates to more than the option price.as executive officers during fiscal year 1998).
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended,
effective for years beginning after 1993, generally limits to $1 million$1,000,000
the amounts deductible by a public company in respect of
10
15
annual compensation paid to a "covered employee" (i.e., the chief executive
officer and the four other most highly compensated executive officers of
the company), including, unless an exception applies, compensation
otherwise deductible upon the exercise of compensatory options. Qualifying
performance-based compensation and compensation, including stock options,
that meets other exceptions to the general limitation will not be subject
to the limitation. The Compensation Committee believes thatcompany's Annual Performance Plan meets the
foregoing requirements and was approved at the 1998 Annual Meeting of
Stockholders. Accordingly, all compensation paid to each of its "covered employees" will not exceed $1
million in non-excluded compensation. The Compensation Committee will
evaluatepayable under the Company's compensation policies with respect to qualifying
compensation paid to its executive officers for deductibility under Section
162(m).Annual
Performance Plan is deductible by the company.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
A key factor noted by the Compensation Committee in reviewing the base
salary of Mr. Cucuz was that Fiscal 1996year 1998 was a year of continued progress and growth for the
Company, to whichcompany, most notably the acquisition of CMI (which closed in fiscal year
1999), five other global acquisitions and the continued integration into
the company of the operations of Lemmerz and Motor Wheel. Based upon the
contributions made by Mr. Cucuz had made important
contributions. Based uponto these andmatters, as well as certain other
considerations, in early Fiscal
1996, the Compensation Committee approved an increase in Mr.
Cucuz's base salary for Fiscal 1996fiscal year 1998 from $322,000$550,000 to $354,000$600,000 per
year, but keptyear. In addition, the Compensation Committee continued the rate of
his normative bonus compensation for Mr. Cucuz under the annual performance plan
for Fiscal 1996 at 50%Annual Performance
Plan of 100% of his base salary, which wasis a higher rate at the
time than that for the other
executive officers. Subsequently, in July 1996
in connection with the Motor Wheel Transactions, and as a result of the
substantially greater responsibilities to be assumed by Mr. Cucuz resulting
from such transactions, the Compensation Committee approved an increase in
Mr. Cucuz's base salary to $425,000 and increased the rate of his normative
bonus compensation under the annual performance plan to 100% of his base
salary.
/s/ Paul S. Levy, Chairman
/s/ Cleveland A. Christophe
/s/ John S. Rodewig
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION11
16
OTHER MATTERS
AVAILABLE INFORMATION
The memberscompany is subject to the informational requirements of the Compensation CommitteeExchange
Act, and in accordance therewith files reports, proxy statements and other
information with the SEC. The reports, proxy statements and other information
filed by the company with the SEC can be inspected and copied at prescribed
rates at the following facilities of the SEC: 450 Fifth Street, N.W.,
Washington, D.C. 20549, Seven World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The SEC also maintains a Web site at http://www.sec.gov
that contains reports, proxy statements and other information. In addition, such
materials may be inspected at the offices of the NYSE, 20 Broad Street, New
York, New York 10012.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The company hereby incorporates by reference pursuant to the Exchange Act
the company's Annual Report on Form 10-K for the fiscal year ended January 31,
1999 as filed with the SEC.
All documents and reports filed by the company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this proxy statement
and before the Annual Meeting shall be deemed to be incorporated by reference
into this proxy statement and to be a part hereof from the dates of filing of
such documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this proxy statement to the extent that a statement
contained herein or in any other subsequently filed document deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this proxy statement.
The company will provide without charge to each person, including any
beneficial owner, to whom a copy of this proxy statement is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents which are incorporated herein by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to the company, 38481 Huron
River Drive, Romulus, Michigan 48174, Attention: Director of Investor Relations,
telephone (313) 941-2000. These documents are also available in the investor
information section of the company's home page on the World Wide Web
(www.hayes-lemmerz.com).
By order of the Board of Directors,
are
Messrs. Christophe, Levy and Rodewig. In addition, Messrs. Cucuz and
Kukwa-Lemmerz are non-voting membersDaniel M. Sandberg
Daniel M. Sandberg
Secretary
Romulus, Michigan
May 12, 1999
12
17
APPENDIX A
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
company's Common Stock for the period from July 2, 1996 (the effective date of
the Compensation Committee. On June 30,Motor Wheel Transactions, on which date the company's Common Stock was
recapitalized) through January 31, 1999 with (i) the cumulative total return on
The NASDAQ National Market System market index through December 17, 1997 the Company consummated the Lemmerz Acquisition in(the
date on which the Lemmerz
Shareholders, including Mr. Kukwa-Lemmerz, received $200 millioncompany's Common Stock ceased trading on the NASDAQ National
Market System) and the NYSE market index from and after December 18, 1997 (the
date on which the company's Common Stock commenced trading on the NYSE)
(collectively "Market Index") and (ii) the cumulative total return of an
industry peer group composed of automotive parts and accessories suppliers
("Peer Group Index") for the same period. In accordance with the rules of the
SEC, the graph assumes an investment of $100 on July 2, 1996 in casheach of the
Common Stock, the stocks comprising the Market Index and the stocks comprising
the Peer Group Index, and assumes that all dividends were reinvested.
Stock Performance Graph
- --------------------------------------------------------------------------------------------------------------------------
7/2/96 7/31/96 10/31/96 1/31/97 4/30/97 7/31/97 10/31/97 1/30/98
- --------------------------------------------------------------------------------------------------------------------------
HAYES LEMMERZ INTERNATIONAL, INC. 100.00 97.94 109.47 133.33 151.44 204.12 222.22 157.23
- --------------------------------------------------------------------------------------------------------------------------
PEER GROUP INDEX 100.00 94.99 101.13 111.09 113.43 137.51 142.58 135.71
- --------------------------------------------------------------------------------------------------------------------------
MARKET INDEX 100.00 91.57 101.85 115.82 105.79 134.00 134.40 136.90
- --------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------ ------------------------------------------
4/30/98 7/31/98 10/31/98 1/31/99
- ------------------------------------------
HAYES LEMMERZ INTERNATIONAL, INC. 253.08 239.92 176.54 216.00
- ------------------------------------------
PEER GROUP INDEX 154.83 138.79 130.09 137.08
- ------------------------------------------
MARKET INDEX 155.16 152.08 147.65 164.41
- ------------------------------------------
13
18
Data respecting the following Companies was utilized in calculating the
Peer Group Index in the table above:
Aftermarket Tech Corp. Simpson Industries Inc.
American Axle & Manufacturing Inc. Smith AO Corp.
Amerigon Inc. SPX Corp.
Arvin Industries Inc. Standard Motor Products
Asha Corp. Standard Products Co.
Autocam Corporation Stoneridge Inc.
Autoliv Inc. Strattec Security CP
Barnes Group Inc. Superior Industries International
Bonded Motors Inc. T.J.T. Inc.
Borg Warner Automotive Tesma International
Clarcor Inc. Top Source Technologies
Collins Industries Inc. Transpro Inc.
Colonel's International Inc. TRW Inc.
Consulier Engineering U.S. Automotive Manufacturing Inc.
Dana Corp. Universal Manufacturing
Decoma International Inc. Unova Inc.
Delco Remy International Inc. Walbro Corp.
Desc S.A. De Cv Adr Westcast Industries Inc.
Detroit Diesel Corp. Westinghouse Air Brake
Donaldson Co. Inc. Williams Controls Inc.
Durakon Industries Inc. Wynn's International Inc.
Eaton Corp.
Edelbrock Corp.
Federal-Mogul Corp.
Gentex Corp.
Glas-Aire Industries Grp.
Hastings Manufacturing
Hilite Industries Inc.
IMPCO Technologies Inc.
ITT Industries Inc.
Jason Inc.
Johnson Controls Inc.
Kroll-O'Gara Company (The)
Lund International Holdings
Magna International Inc.
Mascotech Inc.
Meritor Automotive Inc.
Modine Manufacturing Co.
Motorcar Parts & Accessories
Noble International Ltd.
OEA Inc.
Orbital Engine Cp Ltd.
R&B Inc.
Safety Components Int.
14
19
APPENDIX B
STOCKHOLDINGS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
This Appendix B contains stockholding information for persons known to the
company to own five millionpercent or more of the company's Common Stock, the nominees
for election as directors, the directors continuing in office, and the company's
executive officers.
Ownership of the company's Common Stock is shown in terms of "beneficial
ownership." A person generally "beneficially owns" shares if he has either the
right to vote those shares or dispose of them. More than one person may be
considered to beneficially own the same shares.
In this proxy statement, unless otherwise noted, a person has sole voting
and dispositive power for those shares shown as beneficially owned by him.
Shares shown as beneficially owned by the company's executive officers include
shares that they have the right to acquire by exercising options on or before 60
days from the Record Date. The percentages shown in this proxy statement compare
the person's beneficially owned shares with the total number of shares of Series A Preferredthe
company's Common Stock outstanding on May 10, 1999 (30,333,455 shares).
As of the Record Date, the outstanding Common Stock was held by
approximately 112 stockholders of record.
PERCENT OF PERCENTAGE OF
OWNERSHIP OF OWNERSHIP OF
SHARES OF SHARES OF
COMMON STOCK COMMON STOCK
NAME AND ADDRESS SHARES OF (EXCLUDING (INCLUDING
OF BENEFICIAL OWNER COMMON STOCK WARRANTS(1) WARRANTS)(2) WARRANTS)(3)
------------------- ------------ ----------- ------------ -------------
Joseph Littlejohn & Levy Fund II,
L.P................................... 9,634,176 1,825,376 31.8% 34.8%
450 Lexington Avenue
Suite 3350
New York, New York 10017
Marianne Lemmerz........................ 3,000,002 -- 9.9% 9.1%
Ladestrasse
D-53639 Konigswinter
Germany
TSG Capital Fund II, L.P................ 2,812,500 67,500 9.3% 8.8%
177 Broad Street
12th Floor
Stamford, Connecticut 06901
CIBC WG Argosy Merchant Fund 2, L.L.C... 2,500,000(4) 60,000 8.2% 7.8%
425 Lexington Avenue, Third Floor
New York, New York 10017
Horst Kukwa-Lemmerz..................... 1,825,000(5) -- 6.0% 5.5%
Ladestrasse
D-53639 Konigswinter
Germany
- -------------------------
(1) Each Warrant allows the holder thereof to acquire one share of Common Stock
for a purchase price of $24.00. The Warrants are exercisable from July 2,
2000 through July 2, 2003.
(2) Excludes options to purchase Common Stock held by certain officers and
directors of the company and also excludes Warrants to purchase 2,600,000
shares of Common Stock.
In addition, in connection with15
20
(3) Excludes options to purchase Common Stock held by certain officers and
directors of the Lemmerz Acquisition,company, but includes Warrants to purchase 2,600,000 shares
of Common Stock.
(4) All of the Company entered intoshares of Common Stock owned by Argosy are Nonvoting Common
Stock. Does not include 713,000 shares (2.3% of the Consulting Agreements withCommon Stock) owned by
CIBC Oppenheimer Corp., an affiliate of Argosy; Argosy disclaims beneficial
ownership of all such shares.
(5) Consists of 1,800,000 shares of Common Stock owned by Mr. Kukwa-Lemmerz and
an affiliateaffiliated entity which he controls and 25,000 shares of Common Stock
owned by Renate Kukwa-Lemmerz, his wife. Such shares represent 6.0% of the
outstanding Common Stock. In addition, Mr. Kukwa-Lemmerz. See "CompensationKukwa-Lemmerz is the trustee of a
trust established by Marianne Lemmerz for the benefit of her grandchildren,
which trust owns 199,998 shares (less than 1%) of Common Stock. Mr.
Kukwa-Lemmerz disclaims beneficial ownership of all shares of Common Stock
owned by his wife and such trust.
SECURITY OWNERSHIP OF MANAGEMENT AND THE BOARD OF DIRECTORS
The following table sets forth, as of the Record Date, without giving
effect to the Warrants, the beneficial ownership of the company's Common Stock
by each of the Directors and Related Matters.the Named Executive Officers of the company and by
the Directors and executive officers of the company as a group:
NAME OF BENEFICIAL OWNER NUMBER OF SHARES (1)(2)
------------------------ -----------------------
Cucuz, Ranko 412,802
Dallera, Giancarlo 101,800
Junger, Klaus 15,208
Sandberg, Daniel M. 60,761
Shovers, William D. 119,554
Christophe, Cleveland A.(3) --
Grillo, Anthony(4) 9,634,176
Heyer, Andrew R.(5) --
Kukwa-Lemmerz, Horst(6) 1,825,000
Levy, Paul S.(4) 9,634,176
Lightcap, Jeffrey(4) 9,634,176
Meilicke, Wienand 200
Rodewig, John S. 1,310
Witt, Ray H. 5,000
Ying, David Y.(4) 9,644,936
All directors and executive officers as a group (22 persons) 12,457,291
- -------------------------
(1) Includes the following shares of Common Stock issuable upon the exercise of
options granted under the company's 1992 Stock Incentive Plan (the "1992
Plan") and the 1996 Plan which are exercisable within 60 days of the Record
Date (assuming that no additional options vest during that period) and
shares of Common Stock purchased under the company's 401(k) plan:
ISSUABLE UPON
ISSUABLE UPON EXERCISE OF
EXERCISE OF OPTIONS OPTIONS PURCHASED
GRANTED UNDER GRANTED UNDER UNDER
NAME 1992 PLAN 1996 PLAN 401(K) PLAN
---- ------------------- ------------- ---------------
Cucuz, Ranko 180,300 182,503 1,289
Dallera, Giancarlo 65,300 36,500 --
Junger, Klaus -- 15,208 --
Sandberg, Daniel M. 26,000 30,417 244
Shovers, William D. 62,000 36,500 --
All directors and officers as a Group 414,800 471,461 6,294
16
21
- -------------------------
(2) In each case, except as to Messrs. Kukwa-Lemmerz, Grillo, Levy, Lightcap and
Ying and "all directors and executive officers as a group," less than 1% of
the outstanding shares of Common Stock.
(3) Mr. Christophe is associated with TSG, which owns 9.3% of the Common Stock
of the company; he disclaims any beneficial ownership of such Common Stock.
(4) Messrs. Grillo, Levy, Lightcap and Ying are all associated with JLL Fund II,
which owns 31.8% of the Common Stock of the company. Messrs. Grillo, Levy,
Lightcap and Ying are general partners of JLL Associates II, L.P., the
general partner of JLL Fund II, and, as a result, each of them may be deemed
to beneficially own all of the shares of Common Stock of JLL Fund II. In
addition, Mr. Ying owns individually 10,760 shares of Common Stock.
(5) Mr. Heyer is associated with Argosy, which owns 8.2% of the Common Stock of
the company (all of which shares are Nonvoting Common Stock), and CIBC
Oppenheimer Corp., which owns 2.3% of the Common Stock of the company; he
disclaims any beneficial ownership of all such Common Stock.
(6) Consists of 1,800,000 shares of Common Stock owned by Mr. Kukwa-Lemmerz and
25,000 shares of Common Stock owned by Renate Kukwa-Lemmerz, his wife. Such
shares represent 6.0% of the outstanding Common Stock. In addition, Mr.
Kukwa-Lemmerz is the trustee of a trust established by Marianne Lemmerz for
the benefit of her grandchildren, which trust owns 199,998 shares of Common
Stock. Mr. Kukwa-Lemmerz disclaims beneficial ownership of all shares of
Common Stock owned by his wife and such trust.
As of the Record Date, all Directors and executive officers of the company
as a group may be deemed beneficially to own approximately 41.1% of the
outstanding Common Stock.
17
22
APPENDIX C
EXECUTIVE COMPENSATION
SUMMARY OF COMPENSATION FOR FISCAL 1996YEAR 1998
The following summary compensation table sets forth certain information
concerning compensation for services in all capacities awarded to, earned by or
paid to the company's Named Executive Officers for Fiscal 1996, the
18
21
fiscal year ended January 31, 1996 ("Fiscal 1995") and the1998, fiscal year
ended
January 31, 1995 ("Fiscal 1994").1997 and fiscal year 1996.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION COMPENSATION
-------------------------------- ---------------------------
AWARDS PAYOUTS
-------------------------------------------- ---------- -------
OTHER ANNUAL SECURITIES LTIP ALL OTHER
FISCAL SALARY BONUS COMPENSATION UNDERLYING PAYOUTS COMPENSATION
NAME YEAR ($) ($) ($)(1) OPTIONS(2) OPTIONS ($) ($)(3)
---- ------ ------(1)
----- ------- ------- ------------ ---------------------------- ------- ------------
Cucuz, Ranko.............Ranko............ 1998 579,167 626,640 -- -- -- 121,167
Chief Executive
Officer............... 1997 497,918 774,150
1996 389,502 366,076
649,366 857,731Dallera, Giancarlo(2)... 1998 266,377 186,381 -- 3,000
CEO and President 1995 322,000 --
1994 244,000 109,941
Dallera, Giancarlo(4).... 1996 228,000 137,902 112,343 194,586 -- --
Vice President -........ 1997 240,833 220,000
President, European..... 1996 228,000 137,902
Aluminum Wheels
Junger, Klaus(3)........ 1998 216,084 185,366 -- 1995 215,000 -- -- --
Vice President -........ 1997 94,248 110,675
President, European
1994 182,927 88,960
Aluminum Wheels
Linski, William S. ...... 1996 188,000 107,706 205,145 185,586 -- 3,000
Vice President -- 1995 165,000 --
President, Fabricated 1994 135,000 52,563 Wheels
Sandberg, Daniel
M. .....(4)................. 1998 236,690 168,269 -- -- -- 28,099
Vice President -........ 1997 204,585 153,450
President, Automotive... 1996 168,000 88,240
71,851 145,239 -- 3,000
Vice President -- 1995 147,000 --
International 1994 114,457 26,404
Operations, General
CounselBrakes and Secretary
Shovers, William D. .....D...... 1998 258,763 150,346 -- -- -- 35,803
Vice
President - Finance... 1997 239,583 208,000
and Chief Financial
Officer............... 1996 208,667 129,896 336,226 190,086 -- 3,000
Vice President -- 1995 190,000 --
Chief Financial Officer 1994 172,000 70,902
- -------------------------
(1) In connection with the Motor Wheel Transactions, certain officersFor each Named Executive Officer (except Messrs. Dallera and Junger),
consists of the
Company (including all those listed above) were required by the New
Investors to exercise certain stock options which they held at the time. As
consideration for such requirement, the Company agreed to compensate such
officers for the tax liabilities to be incurred by them as a result of such
option exercise. The amounts listed above are the amounts paid to compensate
the listed officer for such tax liabilities.
(2) Shares of the Company's Common Stock. All amounts have been restated to
reflect the Stock Split. Includes options granted under the 1992 Plan and
the 1996 Plan. The options granted under the 1996 Plan are effective as of
July 2, 1996, pending approval of such plan by the Company's stockholders.
See "Stock Options Granted in Fiscal 1996" and "Proposal 2: Approval of the
Company's 1996 Stock Option Plan."
(3) Matchingmatching contributions accrued under the Company's Retirement Savings Plan.
(4)company's retirement
savings plan and contributions under the company's non-tax qualified
supplemental employee retirement plan for the benefit of the company's
executive officers based in the United States.
(2) Mr. Dallera's salary is paid in Italian liraLire and his bonus is paid in United
States dollars.Dollars. The U.S. dollarDollar amount for Mr. Dallera's salary for fiscal
year 1998 was calculated using the exchange rate of 1 liraLira = 0.00064 dollars.
190.0005766
Dollars, which was the average exchange rate of such currency during
calendar year 1998.
(3) Mr. Junger's salary and bonus is paid in German Deutschemarks. The U.S.
Dollar amount for Mr. Junger's salary and bonus for fiscal year 1998 was
calculated using the exchange rate of 1 Deutschemark = 0.5691 Dollars, which
was the average exchange rate of such currency during calendar year 1998.
Mr. Junger's employment with the company commenced on June 30, 1997 and,
accordingly, no compensation information is required for any earlier period.
(4) Mr. Sandberg was appointed to his current position in February 1999. Mr.
Sandberg was the company's Vice President -- International Operations,
General Counsel and Secretary during all periods for which his compensation
is presented.
18
2223
STOCK OPTIONS GRANTED IN FISCAL 1996
The following table sets forth certain information respectingYEAR 1998
There were no grants of stock options or stock appreciation rights during
Fiscal 1996 under the 1992 Plan. Information respecting
grants of stock options during Fiscal 1996 under the 1996 Plan is set forth
above; see "Proposal 2: Approval of Company's 1996 Stock Option Plan."
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS PER SHARE OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(1)
NAME OF OPTIONEE AND OPTIONS EMPLOYEES IN BASE EXPIRATION ---------------------------
TYPE OF OPTION(2) GRANTED (3) FISCAL 1996(4) PRICE(3) DATE 5% 10%
-------------------- ----------- -------------- ----------- ---------- -- ---
Cucuz, Ranko
Premium............. 97,300 21.54% $10.00 2/19/06 $611,044 $1,550,962
FMV................. -- -- -- -- -- --
Dallera, Giancarlo
Premium............. 17,000 3.76% $10.00 2/19/06 $106,760 $ 270,980
FMV................. 25,500 5.64% $10.00 2/19/06 $160,140 $ 406,470
Linski, William S.
Premium............. 13,400 2.97% $10.00 2/19/06 $ 84,152 $ 213,596
FMV................. 20,100 4.45% $10.00 2/19/06 $126,228 $ 320,394
Sandberg, Daniel M.
Premium............. 7,400 1.64% $10.00 2/19/06 $ 46,472 $ 117,956
FMV................. 11,100 2.46% $10.00 2/19/06 $ 69,708 $ 176,934
Shovers, William D.
Premium............. 15,200 3.36% $10.00 2/19/06 $ 95,456 $ 242,288
FMV................. 22,800 5.05% $10.00 2/19/06 $143,184 $ 363,432
- -------------------------
(1) Values are reported netfiscal year 1998 to any of the option's exercise price, but before taxes
associated with exercise. These values are calculated using assumed rates of
appreciation prescribed by the Securities and Exchange Commission.
(2) "FMV Options" were granted at an exercise price equal to the closing market
price per share of Common Stock on the trading day immediately prior to
their grant date and, at the time of grant, became cumulatively exercisable
in thirds on the first, second and third anniversaries of their grant date
or, if earlier, on the date on which the Premium Options granted on the same
date become exercisable. "Premium Options" have the same exercise price as
the FMV Options, but, at the time of grant, the Premium Options were not to
become exercisable until nine years after their grant date or, if earlier,
on the business day after the closing price for Common Stock, as reported on
the New York Stock Exchange, shall have equaled or exceeded $25.94 for ten
consecutive trading days. Notwithstanding the foregoing, in connection with
the Motor Wheel Transactions, on July 2, 1996, the Company exchanged all the
options granted during fiscal 1996 under the 1992 Plan for shares of Old
Common Stock for an equal number of options for shares of Common Stock. The
exercise price of such options remained unchanged at $10.00 per share and,
as the terms of such options provided that they became exercisable upon a
change in control of the Company, on such date, all such options became
immediately exercisable.
(3) All options granted during Fiscal 1996 under the 1992 Plan were granted on
February 20,1996 at the price of $20.00 per share. As described in footnote
(2) above, all such options were exchanged in connection with the Motor
Wheel Transactions for an equal number of shares of Common Stock at exercise
prices which remained unchanged. The number of options granted and the
exercise price, however, have been restated to reflect the Stock Split which
occurred on January 6, 1997.
(4) Percentages reflect percentage of options granted during Fiscal 1996 under
the 1992 Plan only.
20
23Named Executive Officers.
AGGREGATE OPTION EXERCISES IN FISCAL 1996YEAR 1998 AND JANUARY 31, 19971999 OPTION VALUE(1)
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT JANUARY 31, 1997 AT JANUARY 31, 1997
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
- ------------------------- --------------- --------------- ------------------- --------------------
Cucuz, Ranko............. 48,710 $ 779,383 210,717/730,014 $ 1,205,173/$547,511
Dallera, Giancarlo....... 21,064 $ 337,028 71,383/146,003 $ 486,438/$109,503
Linski, William S........ 15,388 $ 246,220 58,483/146,003 $ 390,746/109,503
Sandberg, Daniel M....... 5,388 $ 86,328 31,070/121,669 $ 223,155/$91,251
Shovers, William D....... 20,494 $ 327,924 68,083/146,003 $ 440,222/$109,503
- -------------------------
(1)VALUE
The following table shows the number of shares covered by both exercisable
and non-exercisable stock options held by the Named Executive Officers as of
January 31, 1999. This table also shows the value on that date of their
"in-the-money" options, which is the positive spread between the exercise price
of existing stock options and $32.8125 per share (the closing market price of
the Common Stock on January 31, 1999). No options were exercised in fiscal year
1998 by any of the Named Executive Officers and no stock appreciation rights
have been granted in connection with any stock options.
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISABLE OPTIONS AT IN-THE-MONEY OPTIONS
JANUARY 31, 1999 AT JANUARY 31, 1999
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
---- ------------------------ -----------------------
Cucuz, Ranko....................................... 362,803/577,927 $ 6,356,571/$9,716,398
Dallera, Giancarlo................................. 101,800/115,485 $ 1,876,726/$1,943,273
Junger, Klaus...................................... 15,208/106,460 $ 12,357/$86,499
Sandberg, Daniel M................................. 56,417/96,323 $ 1,031,851/$1,619,430
Shovers, William D................................. 98,500/115,585 $ 1,789,519/$1,943,273
- -------------------------
PENSION PLAN
The Companycompany maintains a defined benefit pension plan covering all persons
who were United States salaried employees of the Companycompany and its subsidiaries on
or before December 31, 1994. Pension income at normal retirement age is
calculated by averaging the participant's highest consecutive 60 months of
compensation out of the final 120 months of compensation and providing 1% of the
first $7,800 thereof and 1 1/3% of the remainder for each of the first 30 years
of service, and 1/2% and 2/3% of such compensation, respectively, for each of
the next 10 years of service. Benefits under the Company'scompany's pension plan are
limited by restrictions imposed by the Internal Revenue Code of 1986, as amended
(the "Code"). Prior to the company's initial public offering of the Company's Common Stock in December 1992
(the "IPO"), the eligible United States salaried employees of the Companycompany
participated in a pension plan sponsored by K-H Corporation ("K-H")., which at
the time was the parent corporation of the company. In connection with the IPO,
K-H is transferringtransferred the assets and liabilities of its plan relating to participants
employed in the Company'scompany's wheel business to the Company'scompany's pension plan, in
accordance with the requirements of the Employee Retirement Income Security Act
of 1974, as amended. Effective January 1, 1995, (1) certain provisions of the
plan that had frozen final average compensation for purposes of the plan as of
December 31, 1991, were rescinded, (2) no new participants may enter the plan
and (3) for purposes of calculating benefits payable under the plan, no
additional service may be credited under the plan; however, service continues to
be credited under the plan for vesting purposes and to determine eligibility for
retirement benefits under the plan. In addition, increases in compensation will
be recognized under the plan for purposes of determining pensions.
19
24
The following table illustrates the annual pension benefits payable from
the Company'scompany's defined benefit pension plan to a person in the specified earnings
and years of service classifications at normal retirement date.
PENSION PLAN TABLE
YEARS OF SERVICE
COVERED -------------------------------------------------------------------
COMPENSATION---------------------------------------------------------
10 15 20 25 30 35
- -------- ------------ ------- ------- ------- ------- -------
$50,000$50,000.................................. $ 6,407 $ 9,610 $12,813 $16,017 $19,220 $20,822
$100,000$100,000................................. $13,073 $19,610 $26,147 $32,683 $39,220 $42,488
$150,000$150,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
$200,000$200,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
$250,000$250,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
$300,000$300,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
$350,000$350,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
$400,000$400,000................................. $19,740 $29,610 $39,480 $49,350 $59,220 $64,155
Base salary is the only compensation upon which benefits under this plan
are determined.
21
24
All of the individuals named in the Summary Compensation Table, except Mr.
Dallera,Messrs. Cucuz, Sandberg and Shovers are participants in the pension plan
described above, and each had covered compensation and credited years of service
(which amounts were frozen as of December 31, 1994) as set forth below:
COVERED YEARS OF
NAME COMPENSATION SERVICE
- ---------------------------------------------------------------------
------------ --------
Cucuz, Ranko......................................................... $150,000 5
Linski, William S....................................................Ranko................................................ $150,000 4
Sandberg, Daniel M...................................................M.......................................... $150,000 32
Shovers, William D...................................................D.......................................... $150,000 42
The covered compensation amounts set forth in the above table differ from
the amounts set forth in the Summary Compensation Table because of limitations
contained in the Code on compensation permitted to be used for pension plan
purposes.
The Pension Plan Table shows amounts that are payable in the form of a
straight-life annuity; such amounts are not subject to offset for Social
Security or any other payments.
Effective January 1, 1995, the Companycompany adopted a defined contribution
pension plan for its United States salaried employees, under which, the Companycompany
contributes to a retirement account for each eligible employee 5% of his
compensation up to the amount of the Social Security wage base ($62,70068,400 in 1996)1998)
plus 8% of his compensation over the amount of the Social Security wage base.
Compensation, for purposes of this plan, includes salary, bonus and commissions,
but is limited to a maximum of $150,000$160,000 under provisions of the Code. The
retirement account is invested at the direction and risk of the employee, who is
entitled, subject to certain vesting requirements, to the contents of his
account when his employment terminates, at retirement or otherwise. The Companycompany
does not assure the employee of the amount of his retirement benefit or the
value of this account at any time.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS.ARRANGEMENTS
The Company'scompany, through its subsidiary, Hayes Wheels,Lemmerz, S.p.A. ("HWIHLI Italy"),
entered into an employment agreement with Mr. Dallera, dated February 1, 1993,
as amended on June 6, 1996, that provides for his employment as General Manager
of HWIHLI Italy at an initial base salary which automatically increases annually
following increases in an index commonly used to determine the cost of living
increases for senior managers in Italy. For Fiscal 1996,fiscal year 1998, Mr. Dallera's base
salary was $228,000$266,377 (translated from Italian Lirelire at the exchange rate of 1 Liralira
= 0.000640.0005766 US Dollar)Dollars). Under this agreement, Mr. Dallera is entitled to all
HWIHLI Italy employee benefits; his annual bonus, however, is paid under the Annual
Performance Plan and based upon the criteria established for the other executive
officers of the Company.company. The agreement expires by its terms on December 31,
2003, or in the event of Mr. Dallera's death.
See "Certain
Related Transactions."
In connection with20
25
On September 25, 1997, the company, through its subsidiary, Hayes Lemmerz
Acquisition, the CompanyHolding GmbH ("HLH"), entered into a managing director's service agreement with
Klaus Junger, the Consulting Agreements withcompany's Vice President -- President, European Fabricated
Wheels, that provides for his employment as Managing Director of HLH at an
initial base salary which is to be reviewed and adjusted annually based upon
market conditions and the performance of the company, HLH and Mr. Kukwa-LemmerzJunger. For
fiscal year 1998, Mr. Junger's annualized base salary was $216,084 (translated
from German Deutschemarks at the exchange rate of 1 Deutschemark = 0.5691 US
Dollars). Under this agreement, Mr. Junger is entitled to all HLH employee
benefits; his annual bonus, however, is paid under the Annual Performance Plan
and an affiliatebased upon the criteria established for the other executive officers of Mr.
Kukwa-Lemmerz. See "Compensation of Directors and Related Matters."the
company. The Companyagreement may be terminated at any time by either party upon six
months prior written notice.
The company entered into separate agreements (the "Company Severance
Agreements") with nine executive officers and three other employees of the
Companycompany (the "Covered Individuals"), including Messrs. Cucuz, Dallera, Linski, Sandberg
and Shovers on or about November 6, 1995, pursuant to which, upon a change of
control of the Companycompany (as defined therein), each Covered Individual
including Covered Individuals whose employment with the Company is terminated in
anticipation of a change of control, is entitled
to an immediate payment of all earned but unpaid compensation, including any
unpaid bonuses for previous fiscal years and a pro rata bonus payment (based on Highest Compensation (as defined
below) and the greater of normative bonus percentage and estimated projected
bonus percentage) for the
current fiscal year under any bonus plan for which he is then eligible.
In addition, the Company Severance Agreements provide that each Covered
Individual whose employment with the Companycompany is terminated (i) by the Companycompany
upon a change of control or in anticipation of a 22
25
change of control, (ii) by the
Company,company, other than for cause or as a result of death or disability, within
three years following a change of control, or (iii) voluntarily by such Covered
Individual, within three years following a change of control because of a change
in the material terms of his employment, (such as
compensation or responsibilities), is entitled to a lump sum cash payment
payable within 30 days of such termination, in the aggregate amount of: (a) for
all Covered Individuals, earned but unpaid compensation, less any payment
previously made in respect of such amount, (b) for all Covered Individuals, the product of the individual's
Highest Compensation (as defined in the Company Severance Agreements), his
highest normative bonus percentage in the immediately preceding three fiscal
years and the fraction of the current fiscal year expired at the time of such
termination, less any payments previously made in respect of such amounts upon
such change of control, (c) with respectup to eight Covered Individuals (including the five currently most
highly compensated executive officers) three times, with respect to one Covered
Individual two times and with respect to three Covered Individuals one times the sum of (x) the individual's
Highest Compensation and (y) the product of his Highest Compensation and his
highest normative bonus percentage in the immediately preceding three fiscal
years, (d) 20% of Highest Compensation with
respectup to three Covered Individuals, 40% of Highest Compensation with respect
to one Covered Individual and with respect to eight Covered Individuals
(including the five currently most highly compensated executive officers), the
greater of 60% of the individual'sa Covered Individual's Highest Compensation and $100,000 and (e) for
all Covered Individuals, an
amount equal to any accrued but unvested account balances as of the date of
termination and the actuarial present value of any accrued but unvested benefits
other than account balances that as a result of termination are forfeited under
any qualified or nonqualified Companycompany retirement or pension plan. The Company
Severance Agreements also provide that each suchthe Covered Individual is alsoIndividuals are entitled to
have the Companycompany (i) continue for at
leastup to three years for eight Covered Individuals (including the five currently
most highly compensated executive officers), at least two years for one Covered
Individual and at least one year for three Covered Individuals, all welfare benefit
programs, such as medical and life, provided by the Companycompany and its affiliated
companies, (ii) for eight Covered Individuals (including the five
currently most highly compensated executive officers), timely pay or provide any other amounts including reimbursable expenses incurred prior to the date of
termination, or benefits required or permitted under any plan, program policy,
practice, contract or agreement of
the Company and its affiliated companies
(subject to limitations),company, (iii) provide the title to the individual's Companyor use of a company automobile for eight Covered Individuals (including the five currently most
highly compensated executive officers), or make a cash payment equal to the
value of such automobile in certain cases and (iv) for all Covered Individuals,
provide key executive level outplacement services.
The Company Severance Agreements define Highest Compensation as twelve
times a Covered Individual's highest monthly cash compensation (not including
any bonus), whether current or deferred, at any time during the period
commencing on the first day of the calendar month containing the 365th day prior
to the day a change of control occurs and ending on the date of the termination
of such Covered Individual's employment with the Company.
The Company Severance Agreements also contain provisions regarding
termination of employment upon disability, death, and other certain
circumstances. In addition, if any payments or benefits paid to the Covered
Individuals under the Company Severance Agreements or any other plan,
arrangement or agreement with the Companycompany are subject to the federal excise tax
on excess parachute payments or any similar state or local tax, or any interest
or penalties are incurred with respect thereto, the Companycompany will pay to the
Covered Individuals an additional amount so that the net amount retained by the
Covered Individuals after deduction or payment of those taxes will be as if no
such tax, interest or penalty were imposed.
The Motor Wheel Transaction constituted a change of control under the
Company Severance Agreements. Consequently, the Covered Individuals received
cash payments consisting solely of a pro rata portion of the annual bonuses
which would otherwise have been payable to them in the following amounts: Mr.
Cucuz, $88,500; Mr. Dallera, $45,600; Mr. Linski, $35,798; Mr. Sandberg,
$31,999; Mr. Shovers, $40,800; and in the aggregate, $402,438.
23
26
CERTAIN RELATED TRANSACTIONS
Mr. Dallera is the President of Cromodora Wheels S.p.A. ("Cromodora").
Prior to June 6, 1996, the Company'scompany's subsidiary, Hayes WheelsLemmerz S.p.A., was a 30%
stockholder in Cromodora and Mr. Dallera was a 35% stockholder in Cromodora. On
June 6, 1996, Hayes WheelsLemmerz S.p.A. sold one-third of its equity interest in
Cromodora to Cromodora and two-thirds of its equity interest in Cromodora to Mr.
Dallera. The sale price for the Company'scompany's equity interest in Cromodora was an
aggregate of approximately $1,437,000, which amount
21
26
was offset by the Company'scompany's agreement to pay Cromodora and Mr. Dallera
approximately $562,000 for a five year non-competition agreement with the
Company,company, resulting in net sale proceeds to the Companycompany of approximately
$875,000. This sale price was established based upon an appraisal of Cromodora
performed by KPMG, Peat Marwick, the Company'scompany's independent public accountants. In connection
with this transaction, Mr. Dallera agreed to extend the term of his employment
agreement with the Companycompany so that it will not expire until December 31, 2003
(previously, the expiration date was April 30, 1998).
The Company is a party to certain business arrangements with Cromodora, as
follows: (a) the Companycompany manufactures and sells castings to Cromodora on a cost-plus
basis; (b) the Companybasis, licenses certain aluminum wheel technology from Cromodora and provides
certain marketing services to Cromodora relating to such technology; and (c) the Company has entered into agreements to purchase certain
aluminum wheel designs from Cromodora.technology. The Companycompany
does not believe that these arrangements have a material effect on the Company'scompany's
operations or financial condition. On July 24, 1997, Mrs. Inge Kruger-Pressl and Mrs. Renate Kukwa-Lemmerz
(collectively,In addition, for certain tax reasons,
Cromodora is the "Lemmerz Selling Stockholders"), the sister-in-law and wife,
respectively,owner of Mr. Kukwa-Lemmerz, purchased 1,628,800 shares0.01% of Common Stock
(the "Lemmerz Shares") from LucasVarity Inc. for $30 per share. The Lemmerz
Shares were to have been included in the Company's previously announced proposed
public offering of Common Stock and the Company expressed concern that the
failure to include the Lemmerz Shares in such offering could adversely affect
the public float and liquidity for the Company's stockholders. Shortly
thereafter, the Company requested that the Lemmerz Selling Stockholders include
the Lemmerz Shares in a public offering of the Common Stock. On July 30, 1997,
the Company entered into an option agreement with the Lemmerz Selling
Stockholders (the "Option Agreement") which provides, among other things, that
during the term of the Option Agreement, the Company has the right to require
the Lemmerz Selling Stockholders to sell the Lemmerz Shares (i) to the Company
for purposes of effecting a public offering of the Common Stock or (ii) at the
Company's option, directly into a public offering. Pursuant to the Option
Agreement, each of the parties thereto, including the Company, the Lemmerz
Selling Shareholders, Mr. Kukwa-Lemmerz, Marianne Lemmerz and an affiliate of
Mr. Kukwa-Lemmerz released each other party thereto and its respective
directors, officers, employees, representatives, agents, successors and assigns
from all liability relating to the purchase of the Lemmerz Shares by the Lemmerz
Selling Stockholders. Pursuant to the terms of the Option Agreement, the Company
directed the Lemmerz Selling Stockholders to sell all of the Lemmerz Shares
pursuant to a public offering of the Company's Common Stock in order to provide
for a more effective public offering and such shares were sold in the Company's
public offering which was consummated on August 26, 1997. Pursuant to the Option
Agreement, the Lemmerz Selling Stockholders received $30 per share for the
Lemmerz Shares in connection with such public offering.
24Lemmerz.
22
27
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Company's Common Stock for the period from July 2, 1996 (the effective date of
the Motor Wheel Transactions) through January 31, 1997 with the cumulative total
return on The Nasdaq National Market System market index ("NASDAQ Market Index")
and an industry peer group composed of automotive parts and accessories
suppliers ("Peer Group Index") for the same period. In accordance with the rules
of the Commission, the graph assumes an investment of $100 on July 2, 1996, in
each of the Common Stock, the stocks comparing the NASDAQ Market Index and the
stocks comparing the Peer Group Index, and assumes that all dividends were
reinvested.
MEASUREMENT PERIOD HAYES WHEELS PEER GROUP NASDQ
INT'L INDEX MARKET INDEX
07/03/96 100 100 100
08/30/96 101.65 98.65 96.31
09/30/96 103.70 101.13 103.04
10/31/96 109.47 101.13 101.85
11/29/96 111.93 107.69 108.18
12/31/96 126.75 109.87 107.93
01/31/97 133.33 111.09 115.82
Data respecting the following companies were utilized in calculating the
Peer Group Index in the table above:
Aftermarket Tech Corp.
Air Sensors Inc.
Amerigon Inc.
Arvin Industries Inc.
Barnes Group Inc.
Bonded Motors Inc.
Borg Warner Automotive
Boyds Wheels Inc.
Breed Technologies Inc.
Collins Industries Inc.
Colonels Internat Inc.
Cragar Industries Inc.
Dana Corp.
Defiance Inc.
Deflecta-Shield Corp.
Desc S.A. De Cv Adr
Detroit Diesel Corp.
Donaldson Co. Inc.
Durakon Industries Inc.
Eaton Corp.
Echlin Inc.
Edelbrock Corp.
Excel Industries Inc.
Federal-Mogul Corp.
Gentex Corp.
Glas-Aire Industries Grp
Hastings Manufacturing
Hilite Industries Inc.
Jason Inc.
JPE Inc.
Lund Internat Holding
Magna International
Mascotech Inc.
Memtec Ltd Adr
Modine Manufacturing Co.
Monro Muffler Brake Inc.
Motorcar Parts & Access
O'Gara Company (The)
Orbital Engine Cp Ltd.
R&B Inc.
Redlaw Ind Inc.
RT Industries Inc.
Safety Components International
Schawk Inc.
Simpson Industries Inc.
Smith Ao Corp.
Sparton Corp.
SPX Corp.
SRS Labs Inc.
Standard Motor Products
Standard Products Co.
Superior Industries International
Tesma International
Top Source Technologies
Transpro Inc.
TRW Inc.
Universal Manufacturing
Valley Forge Corp.
Westcast Industries Inc.
Westinghouse Air Brake
Williams Controls Inc.
Wynn's International Inc.
25[HAYES LEMMERZ LOGO]
28
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and certain officers to file
with the Commission and the NASDAQ Stock Market (as defined hereinafter) initial
reports of ownership and reports of changes in ownership of the Company's Common
Stock. Copies of all such Section 16(a) reports are required to be furnished to
the Company. These filing requirements also apply to holders of more than ten
percent of the Company's Common Stock. To the Company's knowledge, based solely
on a review of the copies of Section 16(a) reports furnished to the Company
during Fiscal 1996, or written representations from certain reporting persons
that no Forms 5 were required for those persons, all Section 16(a) filing
requirements applicable to the Company's officers and directors and beneficial
owners of more than 10% of the Common Stock were complied with on a timely
basis.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of September 8, 1997 the outstanding Common Stock was held of record by
103 stockholders. The following table sets forth, as of the Record Date, after
giving effect to the Conversion, certain information concerning the beneficial
ownership of Common Stock by each stockholder who is known by the Company (based
on filings with the Commission) to own beneficially in excess of 5% of the
outstanding Common Stock. Except as otherwise indicated, each stockholder listed
below has (i) sole voting power and investment power with respect to its shares
of Common Stock, except to the extent that authority is shared by
26
29
spouses under applicable law, and (ii) record and beneficial ownership with
respect to its shares of Common Stock.
PERCENT OF PERCENT OF
OWNERSHIP OF OWNERSHIP OF
SHARES OF SHARES OF
COMMON STOCK COMMON STOCK
NAME AND ADDRESS SHARES OF (EXCLUDING (INCLUDING
OF BENEFICIAL OWNER COMMON STOCK WARRANTS(1) WARRANTS)(2) WARRANTS)(3)
------------------- ------------ ----------- ------------ ------------
Joseph Littlejohn & Levy Fund II,
L.P. .................................. 9,634,176 1,825,376 32.0% 35.0%
450 Lexington Avenue
Suite 3350
New York, New York 10017
Marianne Lemmerz......................... 3,200,000(4) -- 10.6% 9.8%
c/o Lemmerz Holding GmbH
Postfach 1125
53621 Konigswinter
Federal Republic of Germany
TSG Capital Fund II, L.P. ............... 2,812,500 67,500 9.3% 8.8%
177 Broad Street
12th Floor
Stamford, Connecticut 06901
CIBC WG Argosy Merchant.................. 2,500,000(5) 60,000 8.3% 7.8%
Fund 2, L.L.C.
425 Lexington Avenue
Third Floor
New York, New York 10017
Horst Kukwa-Lemmerz...................... 1,775,000(6) -- 5.9% 5.4%
c/o Lemmerz Holding GmbH
Postfach 1125
53621 Konigswinter
Federal Republic of Germany
- -------------------------
(1) Each warrant (a "Warrant") allows the holder thereof to acquire one share of
Common Stock for a purchase price of $24.00. The Warrants are exercisable
from July 2, 2000 through July 2, 2003.
(2) Excludes options to purchase Common Stock held by certain officers and
directors of the Company and also excludes Warrants to purchase 2,600,000
shares of Common Stock.
(3) Excludes options to purchase Common Stock held by certain officers and
directors of the Company, but includes Warrants to purchase 2,600,000 shares
of Common Stock.
(4) Consists of 3,200,000 shares of Series A Preferred Stock which will
automatically convert into an equal number of shares of Common Stock
following stockholder approval of the Conversion.
(5) Excludes 650,000 shares of Common Stock (2.2% of the outstanding Common
Stock) owned by CIBC Wood Gundy Securities Corp. ("CIBC Wood Gundy"), an
affiliate of Argosy; Argosy disclaims beneficial ownership of all such
shares.
(6) Consists of 1,750,000 shares of Series A Preferred Stock owned by Mr.
Kukwa-Lemmerz and 25,000 shares of Series A Preferred Stock owned by Mrs.
Kukwa-Lemmerz, which, in each case, following stockholder approval of the
Conversion, will automatically convert into an equal number of shares of
Common Stock. Mr. Kukwa-Lemmerz disclaims beneficial ownership of the shares
owned by Mrs. Kukwa-Lemmerz.
27
30
SECURITY OWNERSHIP OF MANAGEMENT AND THE BOARD OF DIRECTORS
The following table sets forth, as of the Record Date, after giving effect
to the Conversion but without giving effect to the Warrants, the beneficial
ownership (as defined by the Commission) of the Company's Common Stock by each
of the Directors, nominees for Directors and the Named Executive Officers and by
the Directors, nominees for Directors and executive officers of the Company as a
group:
NAME OF BENEFICIAL OWNER NUMBER OF SHARES(1)(2)
------------------------ ----------------------
Cucuz, Ranko............................................. 290,952
Dallera, Giancarlo....................................... 98,530
Linski, William S. ...................................... 76,324
Sandberg, Daniel M. ..................................... 41,790
Shovers, William D. ..................................... 95,220
Christophe, Cleveland A.(3).............................. --
Clark, Timothy J.(4)..................................... --
Heyer, Andrew R.(5)...................................... --
Joseph, Peter A.(4)...................................... 9,634,176
Kukwa-Lemmerz, Horst(6).................................. 1,775,000
Levy, Paul S.(4)......................................... 9,634,176
Lightcap, Jeffrey(4)..................................... --
Meilicke, Wienand........................................ 200
Rodewig, John S. ........................................ 60
Ying, David Y.(4)........................................ 9,644,936
All directors, nominees and officers as a group (20
persons)............................................... 12,138,883
- -------------------------
(1) Includes the following shares of Common Stock issuable upon the exercise of
options which are exercisable within 60 days of the Record Date (assuming
approval of the 1996 Plan at the Annual Meeting of Stockholders) and shares
of Common Stock purchased under the Company's Retirement Savings Plan (the
"Savings Plan"):
ISSUABLE UPON ISSUABLE UPON
EXERCISE OF EXERCISE OF
OPTIONS OPTIONS PURCHASED
GRANTED UNDER GRANTED UNDER UNDER
NAME 1992 PLAN 1996 PLAN SAVINGS PLAN
---- ------------- ------------- ------------
Cucuz, Ranko........................................ 180,300 60,834 548
Dallera, Giancarlo.................................. 65,300 12,166 --
Linski, William S. ................................. 52,400 12,166 1,000
Sandberg, Daniel M. ................................ 26,000 10,140 162
Shovers, William D. ................................ 62,000 12,166 --
All Directors and Executive Officers as a Group..... 452,100 146,002 4,283
(2) In each case, except as to Messrs. Kukwa-Lemmerz, Joseph, Levy and Ying and
"All Directors and Executive Officers as a Group," less than 1% of the
outstanding shares of Common Stock. Messrs. Levy and Ying may be deemed to
beneficially own 32.0% of the Common Stock of the Company (see footnote (4)
below). Mr. Kukwa-Lemmerz beneficially owns 5.9% of the Common Stock of the
Company.
(3) Mr. Christophe is associated with TSG, which owns 9.3%% of the Common Stock
of the Company; he disclaims any beneficial ownership of such Common Stock.
See "Security Ownership of Certain Beneficial Owners."
(4) Messrs. Clark, Joseph, Levy, Lightcap and Ying are all associated with JLL
Fund II, which owns 32.0% of the Common Stock of the Company. Messrs. Clark
and Lightcap disclaim any beneficial ownership of such Common Stock. Messrs.
Joseph, Levy and Ying are general partners of JLL Associates II, L.P., the
general partner of JLL Fund II and, as a result, each of them may be deemed
to beneficially own all of
28
31
the shares of Common Stock held directly or indirectly by JLL Fund II. See
"Security Ownership of Certain Beneficial Owners." In addition, Mr. Ying
directly owns an additional 10,760 shares of Common Stock.
(5) Mr. Heyer is associated with Argosy, which owns 8.3% of the Common Stock of
the Company, and CIBC Wood Gundy, which owns 2.2% of the Common Stock of the
Company; he disclaims any beneficial ownership of all such Common Stock. See
"Item 12. Security Ownership of Certain Beneficial Owners and Management --
Ownership of Certain Beneficial Owners."
(6) Consists of 1,750,000 shares of Series A Preferred Stock owned by Mr.
Kukwa-Lemmerz and 25,000 shares of Series A Preferred Stock owned by Mrs.
Kukwa-Lemmerz, which, in each case, following stockholder approval of the
Conversion, will automatically convert into an equal number of shares of
Common Stock. Such shares represent 5.9% of the outstanding Common Stock.
Mr. Kukwa-Lemmerz disclaims beneficial ownership of the shares owned by Mrs.
Kukwa-Lemmerz.
As of the Record Date, all Directors and executive officers as a group may
be deemed beneficially to own approximately 39.4% of the outstanding Common
Stock.
STOCKHOLDER PROPOSALS FOR THE 1998 MEETING
In accordance with Rule 14a-8 under the Exchange Act, any stockholder
proposals intended to be presented at the 1998 Annual Meeting of Stockholders
must be received by the Company no later than January 15, 1998 in order to be
considered for inclusion in the Proxy Statement and form of proxy relating to
that meeting.
Section 3 of Article III of the Company's By-Laws provides that, in order
for a stockholder to nominate a person for election to the Board of Directors at
an annual meeting of the Company, such stockholder must have given timely prior
written notice to the Secretary of the Company of such stockholders's intention
to make such nomination before the meeting. To be timely, notice must be
received by the Company not less than fifty days nor more than seventy-five days
prior to the date of the annual meeting; provided, however, that in the event
less than sixty-five days' notice or prior public disclosure of the date of the
meeting is given to stockholders, notice by the stockholder to be timely must be
so received not later than the close of business on the fifteenth day following
the date on which such notice of the date of the annual meeting was mailed or
such public disclosure of the date of the annual meeting was made, whichever
first occurs. Such notice must contain certain information about the person whom
the stockholder proposes to nominate and the stockholder giving the notice,
including the name, age, residence and business address, occupation, and class
and number of shares of Common Stock owned beneficially or of record by the
proposed nominee, and the name, record address and class and number of shares of
Common Stock beneficially owned by such stockholder. In addition, such notice
must contain any other information related to the proposed nominee or such
stockholder that would be required to be disclosed in a proxy statement.
In addition, Section 2 of Article II of the Company's By-Laws provides
that, in order for a stockholder to propose any matter for consideration at an
annual meeting of the Company, such stockholder must have given timely prior
written notice to the Secretary of the Company of such stockholder's intention
to bring such business before the meeting. To be timely, notice must be received
by the Company not less than fifty days nor more than seventy-five days prior to
the date of the annual meeting; provided, however, that in the event less than
sixty-five days' notice or prior public disclosure of the date of the meeting is
given to stockholders, notice by the stockholder to be timely must be so
received not later than the close of business on the fifteenth day following the
day on which such notice of the date of the annual meeting was mailed or such
public disclosure of the date of the annual meeting was made, whichever first
occurs. Such notice must contain certain information about such business and the
stockholder who proposes to bring the business before the meeting, including the
name and record address of such stockholder, a brief description of the business
the stockholder proposes to bring before the meeting, the reasons for conducting
such business at the annual meeting, the class and number of shares of the
Company beneficially or of record owned by such stockholder and any material
interest of such stockholder in the business so proposed.
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OTHER MATTERS
As of this date, the Board of Directors does not know of any business to be
brought before the Meeting other than as specified above. However, if any other
matters properly come before the Meeting, it is the intention of the persons
named as proxies in the enclosed form of proxy to vote such proxy in accordance
with their judgment on such matters.
SOLICITATION OF PROXIES
The Company intends to request banks and brokers who hold shares in their
names or custody, or in the name of nominees for others, to forward copies of
the proxy material to those persons for whom they hold such shares and to
request authority for the execution of proxies.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy statements and other
information with the Commission. The reports, proxy statements and other
information filed by the Company with the Commission can be inspected and copied
at the public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and are available at the Commission's Regional Offices
at Seven World Trade Center, 13th Floor, New York, New York 10048, and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and copies of such materials may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission also maintains a Web site at
http://www.sec.gov that contains reports, proxy statements and other
information. In addition, such materials may be inspected at the offices of the
National Association of Securities Dealers, Inc., Corporate Financing
Department, 1801 K Street, N.W., 8th Floor, Washington D.C. 20006.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference herein the following documents
filed with the Commission pursuant to the Exchange Act:
I. The Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1997;
II. The Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ended April 30, 1997 and July 31, 1997; and
III. The Company's Current Reports on Forms 8-K dated June 6, 1997,
June 20, 1997, June 30, 1997 and July 16,1997.
All documents and reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy Statement
and before the Meeting shall be deemed to be incorporated by reference into this
Proxy Statement and to be a part hereof from the dates of filing of such
documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Proxy Statement to the extent that a statement
contained herein or in any other subsequently filed document deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Proxy Statement.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROXY STATEMENT IS DELIVERED, UPON THE
WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE
DOCUMENTS WHICH ARE INCORPORATED HEREIN BY REFERENCE, OTHER THAN EXHIBITS TO
SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH DOCUMENTS). REQUESTS SHOULD BE DIRECTED TO THE COMPANY, 38481 HURON
RIVER DRIVE, ROMULUS, MICHIGAN 48174, ATTENTION: DIRECTOR OF INVESTOR RELATIONS,
TELEPHONE (313) 942-8716.
By order of the Board of Directors,
Daniel M. Sandberg
Daniel M. Sandberg
Secretary
Romulus, Michigan
September 18, 1997
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Hayes Wheels Logo
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EXHIBIT A
HAYES WHEELS INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
1. Purpose; Types of Awards; Construction.
The purpose of the Hayes Wheels International, Inc. 1996 Stock Option Plan
(the "Plan") is to afford an incentive to selected employees of and consultants
to Hayes Wheels International, Inc. (the "Company"), or any Subsidiary or
affiliate thereof which now exists or hereafter is organized or acquired, to
acquire a proprietary interest in the Company, to continue as employees or
consultants, to increase their efforts on behalf of the Company and to promote
the success of the Company's business through the grant of options ("Options")
pursuant to Section 6 hereof, which Options may be non-qualified stock options
or "incentive stock options" in accordance with Section 422 of the Code. The
Plan is intended to satisfy the requirements of Rule 16b-3 promulgated under
Section 16 of the Exchange Act and Section 162(m) of the Code and shall be
interpreted in a manner consistent with the requirements thereof.
2. Definitions.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "affiliate" means any Person that directly or indirectly controls,
is controlled by, or is under common control with, another Person.
(b) "Beneficial Owner" has the meaning ascribed to it in Rule 13d-3
promulgated under the Exchange Act.
(c) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Optionee in his most recent written beneficiary
designation filed with the Company to receive the benefits specified under
the Plan upon his or her death, or, if there is no designated Beneficiary
or surviving designated Beneficiary, then the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive
such benefits.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" shall have the meaning ascribed to it in the Form of
Severance Agreement filed as Exhibit 10(A) to the Company's Quarterly
Report on Form 10-Q for the quarter ended October 31, 1995.
(f) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Committee" means the committee established by the Board to
administer the Plan, the composition of which shall at all times satisfy
the provisions of Rule 16b-3 and Section 162(m).
(h) "Company" means Hayes Wheels International, Inc., a corporation
organized under the laws of the State of Delaware, or any successor
corporation.
(i) "Disability" means, as a result of the Optionee's incapacity due
to physical or mental illness, the absence from full-time performance of
the Optionee's duties with the Company or a Subsidiary or affiliate thereof
for a period of six (6) consecutive months, at which time the Company shall
have given the Optionee a notice of termination for Disability, and, within
sixty (60) days after such notice of termination is given, the Optionee
shall not have returned to the full-time performance of the Optionee's
duties.
(j) "Effective Date" means, subject to the provisions of Section 7(i)
hereof, the date upon which the Plan is adopted by the Board.
(k) "Effective Time of the Merger" means July 2, 1996.
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(l) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and as now or hereafter construed,
interpreted and applied by regulations, rulings and cases.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and as now or hereafter construed, interpreted
and applied by regulations, rulings and cases.
(n) "Fair Market Value" means (i) the closing sales price per share of
Stock on the national securities exchange or other trading market on which
the Stock is principally traded, for the most recent date on which there
was a sale of such Stock on such exchange, or (ii), in the event that there
has not been any sale of Stock on any such exchange or other trading market
during any of the twenty (20) trading days immediately preceding the
applicable date, such value as the Committee, in good faith consultation
with the senior management of the Company, shall determine within 90 days
of the last sale of the Stock.
(o) "Incentive Stock Option" means any Option intended to be and
designated as an incentive stock option within the meaning of Section 422
of the Code.
(p) "Initial Option" shall have the meaning ascribed to it in Section
4 hereof.
(q) "Initial Optionee" shall have the meaning ascribed to it in
Section 4 hereof.
(r) "Merger" means the transactions contemplated by that certain
Agreement and Plan of Merger, dated March 28, 1996, between MWC Holdings,
Inc. and the Company.
(s) "Optionee" means a person who, as an employee of or consultant to
the Company or any Subsidiary or affiliate thereof, has been granted an
Option under the Plan.
(t) "Option" means a right, granted to a Optionee under Section 6, to
purchase shares of Stock.
(u) "Option Agreement" means any written agreement, contract, or other
instrument or document evidencing an Option.
(v) "Person" has the meaning ascribed to it in Section 13(d)(3) or
14(d)(2) of the Exchange Act.
(w) "Plan" means this Hayes Wheels International, Inc. 1996 Stock
Option Plan, as amended from time to time.
(x) "Rule 16b-3" means Rule 16b-3, as from time to time in effect
promulgated by the Securities and Exchange Commission under Section 16 of
the Exchange Act, including any successor to such Rule.
(y) "Section 162(m)" means Section 162(m) of the Code and the
regulations promulgated thereto, as amended from time to time, including
any successor to such Section.
(z) "Stock" means shares of the voting common stock, par value $.01
per share, of the Company.
(aa) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with the Company if, at the time of granting of an
Option, each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in
the chain.
3. Administration.
The Plan shall be administered by the Committee. The Committee shall have
the authority, in its reasonable discretion, subject to and not inconsistent
with the express provisions of the Plan, to administer the Plan and to exercise
all the powers and authorities either specifically granted to it under the Plan
or as may be reasonably necessary or advisable in the administration of the
Plan, including, without limitation, the authority to grant Options; to
determine the persons to whom and the time or times at which Options shall be
granted; to determine the type and number of Options to be granted, the number
of shares of Stock to which an Option may relate and the terms, conditions,
restrictions and performance criteria relating to any Option (including, without
limitation, acceleration of such Option's exercisability in the event of a
change in control of the Company); and to determine whether, to what extent, and
under what circumstances an Option may be
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settled, cancelled, forfeited, exchanged, or surrendered; to make adjustments in
the terms and conditions of, and the criteria and performance objectives (if
any) included in, Options in recognition of unusual or non-recurring events
affecting the Company or any Subsidiary or affiliate thereof or the financial
statements of the Company or any Subsidiary or affiliate thereof, or in response
to changes in applicable laws, regulations, or accounting principles; to
construe and interpret the Plan and any Option; to prescribe, amend and rescind
rules and regulations relating to the Plan; to determine the terms and
provisions of the Option Agreements (which need not be identical for each
Optionee); and to make all other determinations deemed necessary or advisable
for the administration of the Plan; provided, however, that no such amendment,
modification or adjustment shall adversely affect any then outstanding Option
without the prior written consent of the holder thereof.
The Committee may appoint a chairperson and a secretary and may make such
rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Committee shall be made by a majority of its members either present in person or
participating by conference telephone at a meeting or by written consent. The
Committee may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, and any Subsidiary, affiliate thereof or Optionee (or any
person claiming any rights under the Plan from or through any Optionee) and any
stockholder.
No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
made hereunder.
4. Eligibility.
On the Effective Date and subject to the approval of the stockholders of
the Company, each of the individuals listed on Schedule I hereto (each such
individual, an "Initial Optionee") shall be granted an Option (each, an "Initial
Option") to purchase the number of shares of Stock set forth opposite his name
on Schedule I hereto. Following the Effective Date, Options may be granted to
selected employees of or consultants to the Company and its present or future
Subsidiaries and affiliates, in the discretion of the Committee. In determining
the persons (other than the Initial Optionees) to whom Options shall be granted,
the Committee shall take into account such factors as the Committee shall deem
relevant in connection with accomplishing the purposes of the Plan; provided,
however, that no person shall be granted an Incentive Stock Option unless he or
she is an employee of or consultant to the Company or a Subsidiary at the time
the Incentive Stock Option is granted.
5. Stock Subject to the Plan.
The maximum number of shares of Stock reserved for the grant of Options
under the Plan shall be 3,000,000, subject to adjustment as provided herein;
provided, however, that the maximum number of allotted shares that any Optionee
may receive during the term of the Plan may not exceed 1,200,000, subject to
adjustment as provided herein. Such shares may, in whole or in part, be
authorized but unissued shares or shares that shall have been or may be
reacquired by the Company in the open market, in private transactions or
otherwise. If any shares subject to an Option are forfeited, cancelled,
exchanged or surrendered or if an Option otherwise terminates or expires without
a distribution of shares to the Optionee, the shares of Stock with respect to
such Option shall, to the extent of any such forfeiture, cancellation, exchange,
surrender, termination or expiration, again be available for Options under the
Plan.
In the event that any dividend or other distribution (whether in the form
of cash, Stock, or other property), recapitalization, Stock split, reverse
split, reorganization, merger, consolidation, spin-off, combination, repurchase,
or share exchange, or other similar corporate transaction or event shall occur
after the date hereof which the Committee, in its reasonable discretion,
determines affects the Stock such that an adjustment is appropriate in order to
prevent dilution or enlargement of the rights of Optionees under the Plan, then
the Committee shall make such equitable changes or adjustments as it deems
necessary or appropriate to any or all of (i) the number and kind of shares of
capital stock which may thereafter be issued upon exercise
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of Options, (ii) the number and kind of shares of capital stock issued or
issuable in respect of outstanding Options, and (iii) the exercise price, grant
price, or purchase price relating to any Option; provided, that, with respect to
Incentive Stock Options, such adjustment shall be made in accordance with the
provisions of Section 424(h) of the Code (or any successor thereto); and further
provided, that no such change or adjustment shall be made in the event that (x)
capital stock is issued by the Company in exchange for cash or property or
pursuant to any employee benefit plan (as defined in Section 3(3) of ERISA) of
the Company and (y) no change or adjustment is made for the benefit of holders
of the outstanding Stock as a result thereof.
6. Terms of Options. Options may be granted on such terms as may be
determined by the Committee, provided that such terms and conditions are
consistent with the following:
(a) Exercise Price. The exercise price per share of Stock purchasable
under an Initial Option shall be $16.00; provided, that, in the case of an
Incentive Stock Option, such exercise price shall be not less than the Fair
Market Value of a share on the date of grant of such Option. The exercise
price per share of Stock purchasable under an Option that is not an Initial
Option shall be determined by the Committee.
(b) Term of Options. An Option granted under the Plan shall expire no
later than ten (10) years from the Effective Date.
7. General Provisions.
(a) Compliance with Local and Exchange Requirements. The Plan, the
granting and exercising of Options thereunder, and the other obligations of
the Company under the Plan and any Option Agreement or other agreement
shall be subject to, and the Company shall take all reasonable steps to
comply with, all applicable federal and state laws, rules and regulations,
and to such approvals by any regulatory or governmental agency as may be
required. The Company, in its discretion, may postpone the issuance or
delivery of Stock under any Option until completion of such stock exchange
listing or registration or qualification of such Stock or other required
action under any state, federal or foreign law, rule or regulation as the
Company may consider appropriate, and may require any Optionee to make such
representations and furnish such information as it may consider appropriate
in connection with the issuance or delivery of Stock in compliance with
applicable laws, rules and regulations.
(b) Nontransferability of Incentive Stock Options. Options shall not
be transferable by an Optionee except by will or the laws of descent and
distribution, and shall be exercisable during the lifetime of a Optionee
only by such Optionee or his guardian or legal representative.
(c) No Right to Continued Employment, etc. Nothing in the Plan or in
any Option granted or any Option Agreement or other agreement entered into
pursuant hereto shall be construed as a contract of employment with any
Optionee or confer upon any Optionee the right to continue in the employ
of, or the affiliation with, the Company, any Subsidiary or any affiliate
thereof or to be entitled to any remuneration or benefits not set forth in
the Plan or such Option Agreement or other agreement or to interfere with
or limit in any way the right of the Company or any such Subsidiary or
affiliate thereof to terminate such Optionee's employment or affiliation
with the Company.
(d) Taxes. The Company or any Subsidiary or affiliate thereof is
authorized to withhold from any payment relating to an Option under the
Plan, including from a distribution of Stock, or any other payment to a
Optionee, amounts of withholding and other taxes due in connection with any
transaction involving an Option, and to take such other action as the
Committee may deem advisable to enable the Company and Optionees to satisfy
obligations for the payment of withholding taxes and other tax obligations
relating to any Option. This authority shall include authority to withhold
or receive Stock or other property and to make cash payments in respect
thereof in satisfaction of a Optionee's tax obligations.
(e) Amendment and Termination of the Plan. The Board may at any time
and from time to time alter, amend, suspend, or terminate the Plan in whole
or in part. Notwithstanding the foregoing, no amendment shall affect
adversely any of the rights of any Optionee, without such Optionee's
consent, under any Option previously granted under the Plan.
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(f) No Rights to Options; No Stockholder Rights. Except for the
Initial Optionees with respect to the Initial Options, no Optionee shall
have any claim to be granted any Option under the Plan, and there is no
obligation for uniformity of treatment of Optionees. Except as provided
specifically herein, a Optionee or a transferee of an Option shall have no
rights as a stockholder with respect to any shares covered by the Option
until the date of the issuance of a stock certificate to him for such
shares.
(g) No Fractional Shares. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Option. The Committee shall
determine whether cash, other Options, or other property shall be issued or
paid in lieu of such fractional shares.
(h) Governing Law. The Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of
Delaware without giving effect to the conflict of laws principles thereof.
(i) Effective Date; Plan Termination. The Plan shall take effect upon
the Effective Date, but the Plan shall be subject to the approval of the
holder(s) of a majority of the issued and outstanding shares of voting
securities of the Company entitled to vote, which the Company shall use its
reasonable best efforts to obtain as soon as practicable after the
Effective Date and which approval must occur within twelve months of the
date the Plan is adopted by the Board. In the absence of such approval,
such Options shall be null and void.
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EXHIBIT B
FORM OF
HAYES WHEELS INTERNATIONAL, INC.
1996 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, entered into as of , 1996, pursuant
to the Hayes Wheels International, Inc. 1996 Stock Option Plan (the "Plan"),
between Hayes Wheels International, Inc., a Delaware corporation (the
"Company"), and (the "Optionee"), an employee of
or consultant to the Company or a Subsidiary. Capitalized terms used but not
defined herein shall have the meaning ascribed to such terms in the Plan.
WHEREAS, the Company desires, by affording the Optionee an opportunity to
purchase shares of its Stock as hereinafter provided and subject to the terms
and conditions hereof, to carry out the purpose of the Plan;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto have
agreed and do hereby agree as follows:
1. Number of Shares. The Company hereby grants to the Optionee an option
(the "Option") to purchase an aggregate of [ ] shares of Stock, subject to
adjustment as provided in Section 2 hereof, on the terms and conditions herein
set forth. The Option consists of five (5) equal portions, each of which relates
to [ ] shares of Stock (each such portion of [ ] shares, a
"Tranche"; and the Tranches designated "A", "B", "C", "D" or "E").
2. Certain Adjustments. In the event that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, Stock split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event occurs after the date hereof, which the
Committee, in its reasonable discretion, determines affects the Stock such that
an adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Optionees under the Plan, then the Committee shall make such equitable
changes or adjustments as it deems necessary or appropriate to (a) the number
and kind of shares of Stock issued or issuable in respect of this Option and (b)
the exercise price, grant price, purchase price or Target Price (as defined
herein) relating to this Option; provided, that no such change or adjustment
shall be made in the event that (x) capital stock is issued by the Company in
exchange for cash, services, or property or pursuant to any employee benefit
plan (as defined in Section 3(3) of ERISA) of the Company and (y) no change or
adjustment is made for the benefit of holders of the outstanding Stock as a
result thereof.
3. Exercise Price. The purchase price of the Stock subject to the Option
shall be $ per share, subject to adjustment as provided in Section 2 hereof.
4. Term and Exercisability of Option.
(a) Unless the Option is previously cancelled pursuant to this
Agreement, the term of the Option and of this Agreement shall commence on
the date hereof (the "Date of Grant") and terminate on July 2, 2006. Upon
the termination of the Option, all rights of the Optionee hereunder shall
cease.
(b) Exercisability of Option. The Option shall become fully
exercisable on July 2, 2005, provided that the Optionee is employed by or
is affiliated with the Company or any Subsidiary or affiliate thereof on
such date. Notwithstanding the foregoing, the Option or any portion thereof
shall become exercisable if the conditions set forth in each of clauses (i)
and (ii) are satisfied:
(i) Time Condition: The Optionee shall be deemed to have satisfied
the condition set forth in this clause (i) with respect to 20% of the
shares of Stock covered by each of Tranches A through E if the Optionee
is an employee of or a consultant to the Company or any Subsidiary or
affiliate
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thereof on January 31, 1997, and the Optionee shall be deemed to have
satisfied the condition set forth in this clause (i) with respect to an
additional 20% of the shares of Stock covered by each of Tranches A
through E on January 31 of each successive year so long as the Optionee
remains an employee of or a consultant to the Company or any Subsidiary
or affiliate thereof on such dates; and
(ii) Performance Condition: The Optionee shall be deemed to have
satisfied the condition set forth in this clause (ii) with respect to
100% of the shares of Stock covered by each of Tranches A through E if,
during any consecutive twenty (20) trading days, the sum of the Fair
Market Value of the Stock on each such trading day divided by twenty
equals or exceeds the applicable target price set forth below (each such
price, a "Target Price"):
- Tranche A: $16 per Share
- Tranche B: $32 per Share
- Tranche C: $48 per Share
- Tranche D: $64 per Share
- Tranche E: $80 per Share
; it being understood that the Optionee may satisfy the condition set
forth in this clause (ii) with respect to any Tranche at any time during
the term of the Option and shall only be required to satisfy this
condition on one occasion, whether or not the Optionee has satisfied the
condition set forth in clause (i) above with respect to all or any
portion of such Tranche at the time the condition set forth in this
clause (ii) is satisfied. Each Target Price shall be subject to
adjustment as provided in Section 2 hereof.
(c) Subject to Section 6 hereof, the right of the Optionee to purchase
shares with respect to which this Option has become exercisable as herein
provided may be exercised in whole or in part at any time or from time to
time, prior to July 2, 2006.
5. Payment. Upon the exercise of all or any portion of the Option, the
exercise price of the shares being purchased (the "Exercise Price") shall be
paid in full either (a) in cash or its equivalent, (b) by tendering previously
acquired shares of Stock having an aggregate Fair Market Value at the time of
exercise equal to the total Exercise Price, or (c) with the approval of the
Committee, cashless exercise under the Federal Reserve Board's Regulation T or
under any other method approved by the Committee, or (d) by a combination of
(a), (b), and (c).
6. Termination of Employment, Etc.
(a) Except as provided in this Section 6, the Option may not be
exercised after the Optionee has ceased to be employed by or affiliated
with the Company or any Subsidiary.
(b) If the Optionee's employment or affiliation with the Company or a
Subsidiary is terminated by the Company or such Subsidiary for Cause, the
Option shall be cancelled as of the date of such termination.
(c) If the Optionee's employment or affiliation with the Company or a
Subsidiary is terminated for any reason other than for Cause, the Optionee
(or his Beneficiary or representative) shall have the right to exercise the
Option, to the extent exercisable as of the date of such termination of
employment or affiliation (i) in the case of a termination because of the
Optionee's death or Disability, for a period of one (1) year following the
date of such termination, and (ii) in the case of any other termination
other than for Cause or as provided in clause (i), for a period of seven
(7) months following the date of such termination.
(d) Notwithstanding anything to the contrary in this Section 6, the
Option shall not be exercisable later than July 2, 2006.
(e) Notwithstanding the foregoing provisions of this Section 6, the
Committee may, in connection with the termination of the Optionee's
employment or affiliation, accelerate the exercisability of the Option or
extend the exercisability of the Option, subject to subsection (d) of this
Section 6.
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(f) For purposes of this Section 6, the transfer of employment of an
Optionee between the Company and any one of its Subsidiaries (or between
Subsidiaries) shall not be deemed a termination of employment.
7. Change in Control. In the event of a Change in Control (as defined
below):
(a) all then unexercisable Tranches shall become immediately
exercisable in full to the extent that the Optionee has satisfied the
condition set forth in Section 4(b)(ii) above with respect to such Tranche,
without regard to whether the Optionee has satisfied the condition set
forth in Section 4(b)(i) above with respect to such Tranche. Whether any
Tranche becomes so exercisable shall be based on the average Fair Market
Value of the Stock during the thirty (30) calendar day period immediately
preceding such Change in Control; and
(b) the Tranche immediately following the last Tranche which becomes
exercisable in full pursuant to Section 7(a) hereof shall become
immediately exercisable in an amount (rounded up to the next whole share)
equal to the product of (i) the total number of shares covered by such
Tranche and (ii) a fraction, the numerator of which shall be the average
Fair Market Value of the Stock during the thirty (30) calendar day period
immediately preceding such Change in Control and the denominator of which
shall be the applicable Target Price for such Tranche; provided, however,
that in the event that a Change in Control occurs within thirty (30) months
following the Effective Time of the Merger, the next three (3) Tranches (if
applicable) immediately following the last Tranche which becomes
exercisable in full pursuant to Section 7(a) hereof shall become
immediately exercisable in an amount (rounded up to the next whole share),
with respect to each such Tranche, equal to the product of (x) the total
number of shares underlying such Tranche and (y) a fraction, the numerator
of which shall be the average Fair Market Value of the Stock during the
thirty (30) calendar day period immediately preceding such Change in
Control and the denominator of which shall be the applicable Target Price
for each such Tranche.
For purposes of this Agreement, a "Change in Control" shall be deemed to
have occurred upon the occurrence of any of the following:
(i) any Person, other than Joseph Littlejohn & Levy Fund II, L.P.
(or any affiliate thereof), TSG Capital Fund II, L.P. (or any affiliate
thereof), or Canadian Imperial Bank of Commerce (or affiliate thereof),
is or becomes the Beneficial Owner of fifty percent (50%) or more of
either (i) the then-outstanding Stock or (ii) the combined voting power
of the then-outstanding voting securities of the Company entitled to
vote generally in the election of directors; or
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who,
immediately following the Effective Time of the Merger, constitute the
Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose appointment
or election by the Board or nomination for election by the Company's
stockholders was approved or recommended by a vote of at least a
majority of the directors then still in office who either were directors
on the date hereof or whose appointment, election or nomination for
election was previously so approved or recommended; or
(iii) there is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation, other than a merger or consolidation which would result in
the voting securities of the Company outstanding immediately prior to
such merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity or any parent thereof) at least fifty percent (50%)
of the combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately after
such merger or consolidation; or
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(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
8. Rights of Optionee.
(a) The Optionee shall have none of the rights of a stockholder with
respect to the shares covered by the Option until the shares are issued or
transferred to such Optionee upon exercise of the Option.
(b) The Option shall not interfere with or limit in any way the right
of the Company to terminate any Optionee's employment or affiliation with
the Company at any time, nor confer upon any Optionee any right to continue
in the employ of, or the affiliation with, the Company or any Subsidiary.
9. Nontransferability of Option. The Option shall not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution and shall be exercisable during the
Optionee's lifetime only by him or his legal representative.
10. Notification.
(a) The Option shall be exercised by written notification of exercise
substantially in the form of Exhibit A hereto and delivered to the
Secretary of the Company in accordance with subsection (b) of this Section
10. Such notification shall specify the number of shares of Stock to be
purchased and the manner in which payment is to be made.
(b) Any notification required or permitted hereunder shall be in
writing and shall be deemed to have been given when personally delivered,
or when sent if sent via facsimile (with receipt confirmed) or on the first
business day after sent by reputable overnight courier or on the third
business day after sent registered or certified first-class mail (with
receipt confirmed). Such notice shall be addressed to the Company, to the
attention of the Secretary, at 38481 Huron River Drive, Romulus, Michigan,
48174, or to the Optionee at the address set forth below, as the case may
be, and deposited, postage prepaid, in the United States mail; provided,
however, that a notification of exercise pursuant to subsection (a) of this
Section 10 shall be effective only upon receipt by the Secretary of the
Company of such notification and all necessary documentation, including
full payment for the Shares, or, if applicable, instructions with respect
to cashless exercise pursuant to Section 5(c) hereof. Either party may, by
notification to the other given in the manner aforesaid, change the address
for future notices.
11. Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Optionee to remit to the Company, an amount
sufficient to satisfy any Federal, state, and local taxes (including the
Optionee's FICA obligation) required by law to be withheld as a result of any
taxable event arising in connection with the Option, in accordance with the
terms of the Plan.
12. Conditions to Issuance; Restrictions on Transferability.
(a) The sale and delivery of any shares hereunder are subject to
approval of any governmental agency which may, in the opinion of counsel,
be required in connection with the authorization, issuance or sale of
Stock. No shares of Stock shall be issued under the Option prior to
compliance with such requirements and with the Company's listing agreement
with the New York Stock Exchange (or other exchange upon which the Stock
may then be listed).
(b) The Committee may impose such restrictions on any shares of Stock
acquired pursuant to the exercise of the Option as is required by
applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such shares are then listed and/or traded,
and under any blue sky or state securities laws applicable to such shares.
13. Cancellation and Reissuance. The Committee shall have the authority to
provide for the cancellation of the Option and the reissuance of a replacement
Option upon such terms as the Committee, in its sole discretion, deems
appropriate, provided that such terms shall not adversely affect the Optionee in
any material way.
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44
14. Incorporation of Plan; Governing Law; Interpretation.
(a) The Plan is hereby incorporated by reference and made a part
hereof, and the Option and this Agreement are subject to all terms and
conditions of the Plan. To the extent that any provision in this Agreement
is inconsistent with the Plan, the provisions of the Plan shall control.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
(c) The Committee shall have final authority to interpret and construe
the Plan and this Agreement and to make any and all determinations under
them, and its determination and decisions shall be final, conclusive and
binding upon the Optionee and his legal representative in respect of any
questions arising under the Plan or this Agreement.
15. Miscellaneous.
(a) This Agreement shall bind and inure to the benefit of the Company,
its successors and assigns, and the Optionee and his personal
representatives and assigns.
(b) The failure of the Company to enforce at any time any provision of
this Agreement shall in no way be construed to be a waiver of such
provision or of any other provision hereof.
16. Amendment. This Agreement may be amended or modified at any time by an
instrument in writing signed by the parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunder duly authorized and the Optionee has hereunto
set his hand, all as of the day and year set forth above.
HAYES WHEELS INTERNATIONAL, INC.
By
--------------------------------------
Name:
Title:
ACCEPTED:
- --------------------------------------
Optionee Date
- --------------------------------------
- --------------------------------------
Address
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EXHIBIT 99.1
HAYES WHEELSLEMMERZ INTERNATIONAL, INC.
38481 HURON RIVER DRIVE
ROMULUS, MICHIGAN 48174
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON WEDNESDAY, OCTOBER 22, 1997THURSDAY, JUNE 17, 1999
The undersigned holder of shares of Common Stock of Hayes WheelsLemmerz
International, Inc. hereby appoints Daniel M. Sandberg and Patrick B. Carey,
and each of them, with full power of substitution, as proxies to vote all
shares owned by the undersigned at the Annual Meeting of Stockholders to be
held at The Dearborn Inn, 20301 Oakwood Boulevard, Dearborn,Crowne Plaza, Detroit Metro Airport, 8000 Merriman Road, Romulus,
Michigan on Wednesday, October
22, 1997Thursday, June 17, 1999 at 10:00 a.m., local time, and any
adjournment or postponement thereof. A majority of said proxies, or any
substitute or substitutes, who shall be present and act at the meeting (or if
only one shall be present and act, then that one) shall have all the powers of said
proxies hereunder.
Please mark, date and sign the proxy and return it promptly in the accompanying
business reply envelope, which requires no postage if mailed in the United
States. If you plan to attend the meeting, please so indicate in the space
provided on the reverse side.
This Proxy, if signed and returned, will be voted as specified on the reverse
side. If no specification is made, your shares will be voted FOR approval of
all matters listed on the reverse side of this Proxy Card.
IMPORTANT: PLEASE MARK AND SIGN ON THE REVERSE SIDE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF ALL MATTERS LISTED ON
THE REVERSE SIDE OF THIS PROXY CARD.
(SEE REVERSE SIDE)
4629
/X/ Please mark
your vote as
in this
example[X] PLEASE MARK
YOUR VOTE AS
IN THIS
EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL ITEMS 1 THROUGH 6.AND 2
FOR WITHHELD FOR AGAINST ABSTAIN
1. To elect the following three (3)four (4) nominees / / / / 4. To approve an amendment to / / / / / / as Class 13 [ ] [ ]
directors of the Company, each to the Company's Restated serve for a term of
three years: TIMOTHY J. CLARK; CertificateCleveland A. Christophe, Paul S. Levy,
Wienand Meilicke and John S. Rodewig [Authority to vote
for any of Incorporation
HORST KUKWA-LEMMERZ; AND JEFFREY LIGHTCAP. changingthe nominees listed above may be withheld by
striking out the name of the Company
(AUTHORITY TO VOTE FOR ANY OF THE NOMINEES to Hayes Lemmerz International,
LISTED ABOVE MAY BE WITHHELD BY STRIKING OUT Inc.such nominee(s).);
THE NAME OF SUCH NOMINEES(S))
5. To approve an amendment to the / / / / / /
FOR AGAINST ABSTAIN
Company's Restated Certificate
2. To approve the adoption of the Company's / / / / / / of Incorporation increasing
1996 Stock Option Plan; the number of authorized shares
of the Company's Nonvoting
Common Stock from 1,000,000 to
3. To authorize the issuance of shares of / / / / / / 5,000,000 shares;
the Company's Common Stock upon conversion
of shares of the Company's Series A Convertible 6. To ratify the appointment of / / / / / /
Participating Preferred Stock issued in KPMG Peat Marwick LLP [ ] [ ] [ ]
as the connection with the acquisition by the Company Company's independent auditors
of Lemmerz Holding GmbH; for the fiscal
year ending January 31, 1998; and
7.2000.
3. To transact such other business as may properly
come before the Meeting or any adjournments or
postponements thereof.
MARK HERE IF YOU PLAN TO ATTEND THE / /
______[ ]
MEETING
|
|
The undersigned acknowledges receipt of the
Notice of Annual Meeting of Stockholders to
be held on Wednesday, October 22, 1997Thursday, June 17, 1999 and the
related Proxy Statement.
Please sign exactly as name(s) appear hereon.
Joint owners should each sign. Executors,
administrators, trustees, etc., should give
full title as such. If signer is a corporation,
please sign full corporate name by duly
authorized officer.offer. PLEASE SIGN, DATE AND MAIL
THIS PROXY PROMPTLY whether or not you expect
to attend the meeting. You may nevertheless
vote in person if you do attend.
SIGNATURE(S) __________________________________________________________________________ DATE __________________Signature(s)____________________________________________________________________ Date___________________