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SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant |
Filed by a party other than the registrant | |
Check the appropriate box: |
Preliminary proxy statement |
Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2). |
Definitive proxy statement. | |
Definitive additional materials. | |
Soliciting material pursuant to §240.14a-12. |
Dura Automotive Systems, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
No fee required. |
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
(1) Title of each class of securities to which transaction applies: |
(2) Aggregate number of securities to which transaction applies: |
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
(4) Proposed maximum aggregate value of transaction: |
(5) Total fee paid: |
Fee paid previously with preliminary materials. |
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
(1) Amount Previously Paid: |
(2) Form, Schedule or Registration Statement No.: |
(3) Filing Party: |
(4) Date Filed: |
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DURA AUTOMOTIVE SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholders:
You are cordially invited to attend Dura Automotive Systems, Inc.’s 2005 Annual Meeting of the Stockholders to be held on May 18, 2005 at 1:00 p.m. at Dura’s headquarters located at 2791 Research Drive, Rochester Hills, Michigan 48309-3575. We are holding the meeting to:
1. Elect the Board of Directors; | |
2. Ratify Deloitte & Touche LLP as the independent registered public accounting firm of Dura; and | |
3. Transact any other business that may properly come before the meeting. |
If you owned Dura common stock at the close of business on Thursday, March 24, 2005, you may attend and vote at the meeting. If you cannot attend the meeting, you may vote by mailing the proxy card in the enclosed postage-paid envelope. Any stockholder attending the meeting may vote in person, even if you have already returned a proxy card. A list of stockholders eligible to vote at the meeting will be available for review during our regular business hours at our headquarters in Rochester Hills for the ten days prior to the meeting for any purpose related to the meeting.
We look forward to seeing you at the meeting.
Sincerely, | |
KEITH MARCHIANDO | |
Assistant Secretary |
April 14, 2005
IMPORTANT: For the Annual Meeting to be legally held, there must be a quorum (majority of the outstanding shares). Accordingly, you are urged to date, sign and return the proxy in the enclosed envelope. This will not prevent you from voting in person if you so desire.
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QUESTIONS AND ANSWERS ABOUT VOTING
Q: | Why did you send me this proxy statement? | |
A: | This proxy statement is being sent to you because the Company’s Board of Directors is soliciting your proxy to vote at the 2005 Annual Meeting of Stockholders. This proxy statement includes information required to be disclosed to you in connection with our solicitation of proxies in connection with the annual meeting. Stockholders of record as of the close of business on March 24, 2005 are entitled to vote. This proxy statement is being sent on or about April 14, 2005 to those persons who are entitled to vote at the annual meeting. | |
Q: | How many votes do I have? | |
A: | Each share of the Company’s Class A common stock that you own entitles you to one vote. | |
Q: | How do I vote? | |
A: | You can vote on matters presented at the annual meeting in two ways: | |
1. You can vote by filling out, signing and dating your proxy card and returning it in the enclosed envelope, OR | ||
2. You can attend the annual meeting and vote in person. | ||
Q: | How do I vote by proxy? | |
A: | If you properly fill out your proxy card and send it to us in time to vote, your shares will be voted as you have directed. If you do not specify a choice on your proxy card, the shares represented by your proxy card will be voted for the election of all nominees and for the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the 2005 fiscal year. | |
Whether or not you plan to attend the annual meeting, we urge you to complete, sign, date and return your proxy card in the enclosed envelope. Returning the proxy card will not affect your right to attend the annual meeting and vote in person. | ||
Q: | How do I vote in person? | |
A: | If you attend the annual meeting, we will give you a ballot when you arrive. | |
Q: | If my shares are held in “street name” by my broker, will my broker vote my shares for me? | |
A: | Your broker will vote your shares only if you provide instructions on how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. | |
Q: | Can I change my vote or revoke my proxy after I have mailed my proxy card? | |
A: | You can change your vote at any time before your proxy is voted at the annual meeting. You can do this in one of three ways. First, you can send a written notice to the Corporate Secretary of the Company at our headquarters stating that you would like to revoke your proxy. Second, you can complete and submit a new proxy card. Third, you can attend the annual meeting and vote in person. Simply attending a meeting, however, will not revoke your proxy. If you have instructed a broker to vote your shares, you must follow the directions you received from your broker to change your vote. |
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Q: | Will there be any matters voted upon at the annual meeting other than those specified in the Notice of Annual Meeting? | |
A: | The Company’s management does not know of any matters other than those discussed in this proxy statement that will be presented at the annual meeting. If other matters are properly brought before the meeting and the Company does not have notice of these matters a reasonable time prior to the annual meeting, all proxies will be voted in accordance with the recommendations of the Company’s management. | |
Q: | How are votes counted? | |
A: | Stockholders of record of the Company’s Class A common stock as of the close of business on March 24, 2005 are entitled to vote at the annual meeting. As of March 24, 2005, there were 18,665,225 shares of Class A common stock outstanding. The presence in person or by proxy of a majority of the outstanding shares of Class A common stock will constitute a quorum for the transaction of business. Each share of Class A common stock is entitled to one vote on each matter to come before the annual meeting. | |
Under Delaware law, if you have returned a valid proxy or attend the meeting in person, but abstain from voting, your stock will nevertheless be treated as present and entitled to vote. Your stock therefore will be counted in determining the existence of a quorum and, even though you have abstained from voting, will have the effect of a vote against any matter requiring the affirmative vote of a majority of the shares present and entitled to vote at the annual meeting, such as the ratification of the appointment of Deloitte & Touche LLP the Company’s independent registered public accounting firm for the 2005 fiscal year. | ||
Under Delaware law, broker “non-votes” are also counted for purposes of determining whether a quorum is present, but are not counted in determining whether a matter requiring a majority of the shares present and entitled to vote has been approved or whether a plurality of the vote of the shares present and entitled to vote has been cast. | ||
Q: | How are proxies being solicited and who pays for the solicitation of proxies? | |
A: | Initially, the Company will solicit proxies by mail. The Company’s directors, officers and employees may also solicit proxies in person or by telephone without additional compensation. The Company will pay all expenses of solicitation of proxies. |
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Dura Automotive Systems, Inc.
2005 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement and accompanying Proxy are being furnished to the holders of Class A common stock, par value $.01 per share, (the “Class A Stock”) of Dura Automotive Systems, Inc. (“Dura” or the “Company”) in connection with the solicitation of Proxies on behalf of the Board of Directors of Dura (the “Board of Directors”) for the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on May 18, 2005, at 1:00 p.m. local time, at Dura’s headquarters, 2791 Research Drive, in Rochester Hills, Michigan, and at any adjournments and postponements thereof. These Proxy materials are being mailed on or about April 14, 2005 to holders of record on March 24, 2005 of the Class A Stock.
SOLICITATION AND VOTING OF PROXY
When you sign and return the enclosed Proxy and if no direction is indicated, such proxy will be votedFORthe slate of directors described herein,FORthe proposal set forth in Item 2 in the Notice of Meeting and, as to any other business as may properly be brought before the Annual Meeting and any adjournments or postponements thereof, in the discretion of the Proxy holders.
Returning your completed Proxy will not prevent you from voting in person at the Annual Meeting should you be present and wish to do so. In addition, you may revoke your Proxy at any time before it is voted by written notice to the Secretary of Dura prior to the Annual Meeting or by submission of a later-dated Proxy or by the withdrawal of your Proxy and voting in person at the Annual Meeting.
On March 24, 2005, there were 18,665,225 shares of Class A Stock outstanding and no shares of Class B Stock. The Class A Stock is entitled to one vote per share. The presence in person or by proxy of a majority of such votes shall constitute a quorum for purposes of the Annual Meeting. Under Delaware law, abstentions are treated as present and entitled to vote and therefore have the effect of a vote against a matter. A broker non-vote on a matter is considered not entitled to vote on that matter and thus is not counted in determining whether a matter requiring approval of a majority of the shares present and entitled to vote has been approved. Votes cast at the meeting or submitted by proxy will be counted by inspectors of the meeting who will be appointed by the Company.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors is currently comprised of nine members. Two of the Company’s former directors (Messr. Brennan and Johnson) resigned their positions as of February 2005 and July 2004, respectively. The Board has established by resolution that the number of directors of Dura, effective as of May 18, 2005, will consist of nine members, and has nominated and recommends the election of each of the nine nominees set forth below as a director of Dura to serve until the next annual meeting of stockholders or until their successors are duly elected and qualified. All of the nominees (except Nick Preda and Walter Czarnecki) are incumbent directors of Dura, previously elected by Dura’s stockholders. Mr. Czarnecki and Mr. Preda were elected by the Board on March 31, 2005 to fill vacancies on the Board created by the resignations of Messrs. Johnson and Brennan. The Board of Directors expects all nominees named below to be available for
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Directors will be elected at the Annual Meeting by a plurality of the votes cast at the meeting by the holders of shares represented in person or by proxy. Accordingly, the nine individuals who receive the greatest number of votes cast by stockholders would be elected as directors of Dura. There is no right to cumulative voting as to any matter, including the election of directors.
The Board of Directors recommends a vote“FOR” the election of the nominees to the Board of Directors.
The following sets forth information as to each nominee for election at the Annual Meeting, including age as of March 24, 2005, principal occupation and employment for a minimum of the past five years, directorships in other public companies and period of service as a director of Dura.
Scott D. Rued, 48,has served as Chairman and Director of Dura since April 2002. From November 1990 until April 2002, Mr. Rued served as Vice President. Since September 2003, Mr. Rued has served as a Managing Partner of Thayer Capital Partners (“Thayer”). Prior to joining Thayer, Mr. Rued served as President and Chief Executive Officer of Hidden Creek Industries (“HCI”) from May 2001 to August 2003. From January 1994 through April 2001, Mr. Rued served as Executive Vice President and Chief Financial Officer of HCI and from June 1989 through 1993 he served as Vice President-Finance and Corporate Development. Mr. Rued is also the Chairman of Commercial Vehicle Group, Inc.
Walter P. Czarnecki, 61,has served as a director of Dura since March 2005. During the past five years, Mr. Czarnecki has served as an Executive Vice President of Penske Corporation. Mr. Czarnecki serves as a director of Penske Corporation, a privately held transportation services company, and as a director of various privately held subsidiaries of Penske Corporation.
Lawrence A. Denton, 54,joined Dura as President, Chief Executive Officer and Director in January 2003. From 1996 until 2002, Mr. Denton was President of Dow Automotive, a $1.3 billion business unit of The Dow Chemical Company. Prior to his employment at Dow Automotive, he spent 24 years with Ford Motor Company, where he held a variety of senior management positions with increasing responsibility in manufacturing, quality, sales and marketing, engineering and purchasing. Mr. Denton served as immediate past Chairman of the Board of the Original Equipment Suppliers Association, and serves on the boards of the Motor & Equipment Manufacturer’s Association, Kettering University, The Detroit Economic Club and Autotemp Company.
Jack K. Edwards, 60,has served as a Director of Dura since December 1996. Mr. Edwards joined Cummins Engine Co., Inc. in 1972 and served as Executive Vice President and Group President — Power Generation and International from March 1996 until his retirement in June 2003. Mr. Edwards is also a director of David J. Joseph Co.
James O. Futterknecht, Jr., 58,has served as a Director of Dura since May 1999. Mr. Futterknecht joined Excel Industries, Inc. (“Excel”) in 1970, was Vice President-Corporate Sales from 1976 until 1984, was Vice President-Automotive Products from 1984 until 1987, was Vice President-Automotive Sales and Engineering from 1987 to 1990 and was Executive Vice President from 1990 to 1992. He was elected as President and Chief Operating Officer and was appointed as an Excel director in 1992. In 1995, he was elected to the additional offices of Chairman of the Board and Chief Executive Officer and served those offices until Dura acquired Excel in March 1999. Mr. Futterknecht is currently a Partner of Hammond, Kennedy, Whitney & Company, Inc., a New York, New York private equity firm.
Yousif B. Ghafari, 52, has served as a director of Dura since August 2003. Since 1982, Mr. Ghafari has served as chairman of the Ghafari Companies: Ghafari Associates, L.L.C., a full service architectural, engineering, planning and project management firm; Ghafari ESG, L.L.C., a manufacturing and process-engineering firm; Elton Anderson Associates, L.L.C., an MBE and MMBDC certified architectural and engineering firm; and G-TECH Professional Staffing, Inc., a professional technical staffing services company.
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J. Richard Jones, 62,has served as a Director of Dura since May 1998. Prior to the acquisition of Trident Automotive plc (“Trident”) in April 1998, Mr. Jones served as Group President and Chief Executive Officer of Trident’s predecessor from June 1992 until December 1997 and as Chairman, Chief Executive Officer and Director of Trident from December 1997 until April 1998.
Nick G. Preda, 58,has served as a Director of Dura since March 2005. Mr. Preda is currently President of Nick G. Preda & Associates, L.L.C., a company which provides financial counseling services for clients primarily in the Midwest. From June 2001 through September 2003, Mr. Preda was a Principal with BBK, Ltd., an operational and financial consulting firm working with clients primarily in the automotive and other manufacturing industries. From October 1998 through February 2001, Mr. Preda was an Executive Vice President with Bank One, N.A., where he managed various areas working primarily with large corporate domestic clients.
Ralph R. Whitney, Jr., 70,has served as a Director of Dura since May 1999. Mr. Whitney was a director of Excel from 1983 to March 1999 and was Chairman of the Board of Excel from 1983 to 1985. Mr. Whitney is currently the Chairman of Hammond, Kennedy, Whitney & Company, Inc., a New York, New York private equity firm, and has been a principal since 1971. Mr. Whitney is also a director of Relm Communications, Inc., First Technology plc., Reinhold Industries, Inc. and Baldwin Technologies, Inc.
There are no family relationships between any of the directors or any of Dura’s executive officers.
Independence of Directors
Rules of the Nasdaq Stock Market require that a majority of the Board of Directors be independent directors, as defined in Nasdaq Rule 4200(a)(15). In March 2005, Dura reviewed the independence of its directors. During this review, the Board of Directors considered transactions and relationships between each director, or any member of his family, and Dura and its subsidiaries. As a result of this review, the Board of Directors has determined that a majority of the directors who have been nominated for re-election are independent under Nasdaq Rule 4200(a)(15): Mr. Czarnecki, Mr. Edwards, Mr. Futterknecht, Mr. Ghafari, Mr. Preda and Mr. Whitney.
Board and Committee Meetings
Effective March 23, 2004, Dura’s Board of Directors adopted a formal corporate governance policy with respect to the roles and responsibilities of the Board of Directors. A copy of this policy is available on Dura’s website atwww.duraauto.com.
The Board of Directors held nine meetings (exclusive of committee meetings) during the preceding fiscal year. During 2004, each incumbent director attended at least 75% of the meetings of the Board of Directors and any committees on which such director served.
The Board of Directors has established the following committees, the functions and current members of which are noted below.
Executive Committee. As of March 24, 2005, the Executive Committee of the Board of Directors consists of Scott D. Rued (Chairman), Lawrence A. Denton and J. Richard Jones. The Executive Committee has all the power and authority vested in or retained by the Board of Directors and may exercise such power and authority in such manner as it shall deem for the best interest of Dura in all cases in which specific direction shall not have been given by the Board of Directors and subject to any specific limitations imposed by law or a resolution of the Board of Directors. The Executive Committee did not meet during the preceding fiscal year.
Compensation Committee. As of March 24, 2005, the Compensation Committee of the Board of Directors consists of Jack K. Edwards (Chairman), Yousif B. Ghafari and J. Richard Jones. During the last fiscal year, the Compensation Committee made recommendations to the Board of Directors with respect to salaries, compensation and benefits of directors and executive officers of Dura, including the grant of options under the 1998 Stock Incentive Plan (the “Stock Plan”). The Compensation Committee has adopted a
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Mr. Edwards and Mr. Ghafari are independent directors, as defined by Nasdaq Rule 4200(a)(15). Mr. Jones is not independent due to his receipt of consulting payments from the Company. Such payments were agreed to as part of the Company’s acquisition of Trident in April 1998. Under the Nasdaq rules and the terms of the Compensation Committee’s charter, if the Committee is comprised of at least three members, one director who is not independent and is not a current officer or employee or a family member of an officer or employee may be appointed to the Compensation Committee if the Board, under exceptional and limited circumstances, determines that such individual’s membership on the Committee is required for the best interests of the Company and its shareholders. A member appointed under this exception may not serve longer than two years.
The Board has determined to appoint Mr. Jones as a member of the Compensation Committee under this exception because (i) Mr. Jones served as a member of the Compensation Committee since May 2000 and as its chairman for the period from May 2002 to March 2004, and as such has a high degree of familiarity with Dura’s executive compensation practices, plans and philosophy; (ii) Mr. Jones has more than 25 years experience in the manufacturing industry, including more than five years as an executive officer of Trident and its predecessor company, an automotive supplier, most recently as its chairman and CEO with responsibility for attracting and retaining key executives; and (iii) Mr. Jones has had significant experience consulting with corporate executive compensation advisors such as Towers Perrin.
Nominating and Corporate Governance Committee. As of March 24, 2005, the members of the Nominating and Corporate Governance Committee were James O. Futterknecht, Jr. (Chairman), Ralph R. Whitney, Jr. and Yousif B. Ghafari. The Nominating and Governance Committee identifies individuals qualified to become Board members, consistent with criteria approved by the Board; oversees the organization of the Board to discharge the Board’s duties and responsibilities properly and efficiently; and identifies best practices and recommends corporate governance principles, including giving proper attention and making effective responses to shareowner concerns regarding corporate governance. The Nominating and Corporate Governance Committee is responsible for making recommendations to the Board of Directors as to its size and composition, and evaluating and recommending to the Board of Directors candidates for election as directors at Dura’s annual meetings. The Nominating and Corporate Governance Committee has a charter, which is available on Dura’s website atwww.duraauto.com. Each member of the Nominating and Corporate Governance Committee is independent, as independence for Nominating and Corporate Governance Committee members is defined in the listing standards of the Nasdaq Stock Market. The Nominating and Corporate Governance Committee met one time during the preceding fiscal year.
The Nominating and Corporate Governance Committee will consider as potential nominees individuals properly recommended by shareholders. Recommendations concerning individuals proposed for consideration by the Nominating and Corporate Governance Committee should be addressed to Keith Marchiando, Vice President and Chief Financial Officer of Dura Automotive Systems, Inc., 2791 Research Drive, Rochester Hills, Michigan 48309-3575. Each recommendation should include a personal biography of the suggested nominee, an indication of the background or experience that qualifies the person for consideration, and a statement that the person has agreed to serve if nominated and elected. Shareholders who themselves wish to effectively nominate a person for election to the Board of Directors, as contrasted with recommending a potential nominee to the Nominating and Corporate Governance Committee for its consideration, are required to comply with the advance notice and other requirements set forth in Dura’s bylaws.
The Nominating and Corporate Governance Committee has used an informal process to identify potential candidates for nomination as directors. Candidates for nomination have been recommended by an executive officer or director, and considered by the Nominating and Corporate Governance Committee and the Board of Directors. Generally, candidates have significant industry experience and have been known to one or more of the Board members. As noted above, the Nominating and Corporate Governance Committee considers properly submitted shareholder recommendations for candidates for the Board. In evaluating candidates for nomination, the Nominating and Corporate Governance Committee will consider the factors it
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In 2005, searches were conducted for candidates to serve on the Board of Directors. Among other potential candidates, Walter Czarnecki and Nick G. Preda were recommended by the Nominating and Corporate Governance Committee. Upon completion of a screening and review process conducted in accordance with the practices of the Nominating and Corporate Governance Committee, the Committee recommended to the Board that they be elected as Directors. Messrs. Czarnecki and Preda were duly elected by the Board in March 2005 and will stand for election by the Company’s shareholders at the Annual Meeting of Shareholders on May 18, 2005.
Audit Committee. As of March 24, 2005, the Audit Committee of the Board of Directors consists of James O. Futterknecht, Jr. (Chairman), Yousif B. Ghafari and Ralph R. Whitney, Jr. The Board of Directors has determined that Mr. Futterknecht is qualified as an “audit committee financial expert” as that term is defined in the rules of the Securities and Exchange Commission (“SEC”).
Dura’s Class A Stock is quoted on the Nasdaq National Market. Pursuant to Nasdaq rules and Dura’s audit committee charter, the Audit Committee is to be comprised of three or more directors as determined by the Board of Directors, each of whom shall be “independent”; provided, however, that under Nasdaq rules and Dura’s charter, any director who is determined not to be “independent”, but is not a current employee of Dura or an immediate family member of an employee of Dura, may be appointed to the Audit Committee under exceptional and limited circumstances, if the Board of Directors determines that membership on the Audit Committee is required by the best interests of Dura and its stockholders. All of the members of the Audit Committee are independent, as defined in the listing standards of the Nasdaq Stock Market and the rules of the SEC.
The Audit Committee is responsible for reviewing as it shall deem appropriate, and recommending to the Board of Directors, internal accounting and financial controls for Dura and accounting principles and auditing practices and procedures to be employed in the preparation and review of Dura’s financial statements. The Audit Committee is also responsible for appointing the independent registered public accounting firm to audit the annual financial statements of Dura. The Audit Committee met nine times during the preceding fiscal year.
Effective May 25, 2000, Dura’s Board of Directors adopted a written charter with respect to the roles and responsibilities of the Audit Committee, which has been filed with the SEC. The written charter was subsequently amended, most recently on March 1, 2004. A copy of the amended charter is available on the Company’s website atwww.duraauto.com. The Audit Committee has reviewed, discussed and reassessed the adequacy of the Company’s written charter, and has determined that the charter, as amended, is adequate and in full compliance with applicable rules and requirements. The Audit Committee has certified to Dura’s Board of Directors that it has satisfied its responsibilities as set forth in Dura’s written charter.
Audit Committee Report
The following Audit Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Exchange Act, except to the extent that Dura specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
On March 7, 2005, the Audit Committee submitted to the Board the following report:
We have reviewed and discussed with management Dura’s audited financial statements as of and for the years ended December 31, 2004, December 31, 2003 and December 31, 2002.
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We have discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61,Communication with Audit Committees, as amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by Independence Standard No. 1,Independence Discussions with Audit Committees, as amended, by the Independence Standards Board, and have discussed with the registered public accounting firm the firm’s independence.
Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the financial statements referred to above be included in Dura’s Annual Report on Form 10-K for the year ended December 31, 2004.
Audit Committee: | |
James O. Futterknecht, Jr. (Chairman) | |
Yousif B. Ghafari | |
Ralph R. Whitney, Jr. |
Communications with Directors and Attendance at Annual Meetings
Shareholders and other interested parties may communicate with the Board of Directors, including the independent directors, by sending written communications to the directors c/o Keith Marchiando, Vice President and Chief Financial Officer, Dura Automotive Systems, Inc., 2791 Research Drive, Rochester Hills, Michigan 48309-3575. All such communications will be forwarded to the directors.
The Board of Directors has a policy of expecting members of the Board of Directors to attend the annual meetings of the shareholders. All of the incumbent directors who are nominated for re-election attended last year’s annual meeting.
Compensation of Directors
For service in 2004, directors who are not employees of Dura or any of its affiliates (“Outside Directors”) each received an annual retainer of $75,000. All or a portion of the retainer, but not less than 25%, may be deferred and credited to an account maintained for the Outside Director under the Dura Automotive Systems, Inc. Director Deferred Stock Purchase Plan. Dura will credit to the Outside Director’s account an additional amount equal to one-third of the amount deferred. Deferred amounts are payable only in shares of the Company’s Class A Stock. Outside Directors were not paid for attendance at Board or committee meetings, but were reimbursed for out-of-pocket expenses incurred to attend such meetings.
Codes of Conduct
The Board of Directors has adopted a Conflict of Interest and Code of Conduct Policy applicable to all directors, officers, employees and agents of Dura. Dura operates its worldwide business in accordance with the highest ethical standards and relevant laws. The Company places the highest value on the integrity of each of its employees. Dura’s corporate culture demands not only legal compliance but also responsible and ethical behavior.
The Board of Directors has also adopted a Code of Ethics for Senior Financial Employees applicable to Dura’s Chief Executive Officer, Chief Financial Officer and all senior financial employees. The Code of Ethics for Senior Financial Employees is designed to promote honest and ethical conduct; full, fair, accurate, timely and understandable disclosure in Dura’s periodic reports filed with the SEC; compliance with laws; prompt internal reporting of violations of the code; and accountability for adherence to the code.
The Conflict of Interest and Code of Conduct Policy and the Code of Ethics for Senior Financial Employees are available on Dura’s website atwww.duraauto.com. Dura intends to satisfy the disclosure requirement under Item 10 of Form 8-K relating to amendments to or waivers from any provisions of the Code of Ethics for Senior Financial Employees by posting such information on Dura’s website atwww.duraauto.com.
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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires Dura’s officers, directors and persons who beneficially own more than ten percent of a registered class of Dura’s equity securities to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors and greater than ten percent beneficial owners also are required by rules promulgated by the SEC to furnish Dura with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to Dura, or written representations that no Form 5 filings were required, Dura believes that during the period from January 1, 2004 through December 31, 2004, all Section 16(a) filing requirements applicable to its officers, directors and greater than ten percent beneficial owners were complied with, except that Karl F. Storrie, a former director, filed a Form 4 reporting a sale of stock two days after the due date.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
The Audit Committee has reappointed the firm of Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates (collectively, “Deloitte”), 400 One Financial Plaza, 120 South Sixth Street, Minneapolis, MN 55402, to examine Dura’s financial statements and internal controls over financial reporting for the current fiscal year ending December 31, 2005.
A proposal will be presented at the Annual Meeting to ratify the appointment of Deloitte as Dura’s independent registered public accounting firm. A representative of Deloitte will be present at the Annual Meeting to respond to appropriate questions or to make a statement if he or she so desires. If the stockholders do not ratify this appointment by the affirmative vote of a majority of the voting power of the shares represented in person or by Proxy at the meeting, other independent registered public accounting firm will be considered by the Audit Committee.
Audit and Other Fees
The aggregate fees billed by Deloitte to the Company for the years ended December 31, 2004 and 2003 are:
Year Ended December 31, | |||||||||
2004 | 2003 | ||||||||
Audit Fees(1) | $ | 5,323,000 | $ | 3,889,000 | |||||
Audit-Related Fees(2) | 258,000 | 760,000 | |||||||
Tax Fees(3) | 1,363,000 | 1,694,000 | |||||||
All Other Fees | — | — | |||||||
Total | $ | 6,944,000 | $ | 6,343,000 | |||||
(1) | Fees for audit services billed in 2004 and 2003 consisted of (i) audit of the Company’s annual financial statements; (ii) reviews of the Company’s quarterly financial statements; (iii) comfort letters, statutory audits, consents and other services related to SEC matters; and (iv) consultations on financial accounting and reporting matters arising during the course of the audit. In addition, 2004 fees for audit services billed included the audit of the Company’s internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act. Fees for audit services billed in 2003 included $1.7 million associated with the re- audit of the Company’s annual financial statements for the years ended December 31, 2002 and 2001. |
(2) | Fees for audit-related services billed in 2004 and 2003 consisted of (i) Sarbanes-Oxley Act, Section 404 advisory services and internal accounting controls related services; and (ii) due diligence and consultation on acquisitions or other business transactions. |
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(3) | Fees for tax services billed in 2004 and 2003 consisted of tax compliance and tax planning and advice. Tax compliance and planning services consisted of (i) tax return assistance; (ii) assistance with tax return filings in certain foreign jurisdictions; (iii) assistance with tax audits and appeals; (iv) preparation of expatriate tax returns; (v) tax advice related to structuring certain proposed transactions; (vi) tax services with regards to research and development; and (vii) general tax planning matters. |
Pre-Approval Policies
The Audit Committee has adopted the following policy regarding the approval of audit and non-audit services provided by the Company’s independent registered public accounting firm. Pre-approved services in the following areas may be authorized by Company financial personnel, without approval of any Audit Committee member, if the proposed or expected fee is not greater than $500,000:
(1) Consents, comfort letters, reviews of registration statements and similar services that incorporate or include the audited financial statements of the Company;
(2) Employee benefit plans;
(3) Accounting consultations and support related to Generally Accepted Accounting Principles (“GAAP”);
(4) Tax compliance and related support for any tax returns filed by the Company, and returns filed by any executive or expatriate under a Company-sponsored program; and
(5) Merger and acquisition due diligence services.
Company financial personnel will update the Audit Committee on a regular basis with respect to previously approved tax projects and other non-audit services. The Chairman of the Audit Committee may approve (a) services for projects that have been pre-approved by the Audit Committee and for which the fees are proposed or expected to be greater than $500,000 and (b) services for projects which have not been pre-approved and for which the proposed fees are greater than $100,000. The Audit Committee has authorized Company financial personnel to proceed with non-audit services for projects that have not been pre-approved, but which will not involve fees greater than $100,000 in the aggregate, and then make full reports concerning such projects to the Audit Committee at its next meeting. All of the 2004 audit and non-audit services were approved in accordance with the Company’s pre-approval policies.
In making its recommendation to appoint Deloitte as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2005, the Audit Committee has considered whether the provision of the non-audit services rendered by Deloitte is compatible with maintaining that firm’s independence.
The Board of Directors recommends a vote“FOR”the ratification of the appointment of Deloitte as Dura’s independent registered public accounting firm.
OTHER BUSINESS
At the date of this Proxy Statement, Dura has no knowledge of any business other than that described above that will be presented at the Annual Meeting. If any other business should properly be brought before the Annual Meeting and any adjournments or postponements thereof, the Proxies will be voted in the discretion of the Proxy holders.
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OWNERSHIP OF DURA COMMON STOCK
Unless otherwise noted, the following table sets forth certain information regarding ownership of the Common Stock as of March 24, 2005 by (i) the beneficial owners of more than 5% of each class of Common Stock of Dura, (ii) each director, director nominee and named executive officer of Dura and (iii) all directors and executive officers of Dura as a group. To the knowledge of Dura, each of such stockholders has sole voting and investment power as to the shares shown unless otherwise noted. Beneficial ownership of the Common Stock listed in the table has been determined in accordance with the applicable rules and regulations promulgated under the Exchange Act.
Class A Stock | ||||||||
Number | Percent | |||||||
Directors, Officers and 5% Stockholders | of Shares | of Class | ||||||
Scott D. Rued(1) | 51,250 | * | ||||||
Lawrence A. Denton(1) | 201,513 | 1.1 | % | |||||
David R. Bovee(1) | 229,535 | 1.2 | % | |||||
Jurgen von Heyden(1) | 102,560 | * | ||||||
John J. Knappenberger(1) | 234,233 | 1.2 | % | |||||
Milton D. Kniss(1) | 202,617 | 1.1 | % | |||||
Jack K. Edwards(1) | 42,428 | * | ||||||
James O. Futterknecht, Jr. | 24,541 | * | ||||||
Yousif B. Ghafari | 3,964 | * | ||||||
J. Richard Jones(1) | 83,988 | * | ||||||
Ralph R. Whitney, Jr.(1) | 56,067 | * | ||||||
FMR Corp.(2) | 2,400,174 | 12.9 | % | |||||
Dimensional Fund Advisors(3) | 1,463,361 | 7.8 | % | |||||
Strong Capital Management, Inc.(4) | 1,172,725 | 6.3 | % | |||||
Barclays Global Investors, N.A.(5) | 1,361,604 | 7.3 | % | |||||
Tontine Capital Partners, L.P.(6) | 1,622,522 | 8.7 | % | |||||
SG Americas Securities, LLC(7) | 938,600 | 5.0 | % | |||||
All Directors and Officers as a group (14 persons) | 1,374,947 | 7.4 | % |
(1) | Includes shares as to which the officer or director has the right to acquire within 60 days through the exercise of stock options, as follows: Mr. Rued — 51,250 shares; Mr. Bovee — 207,500 shares; Mr. Denton — 170,000 shares; Mr. von Heyden — 102,560 shares; Mr. Knappenberger — 212,373 shares; Mr. Kniss — 180,000 shares; Mr. Edwards — 10,500 shares; Mr. Jones – 50,000 shares; and Mr. Whitney — 4,000 shares. |
(2) | FMR Corp. reported as of February 14, 2005 sole dispositive power with respect to 2,400,174 shares of Class A Stock, representing 12.9% of the outstanding shares of Class A Stock at that time. The address for FMR Corp. is 82 Devonshire Street, Boston, Massachusetts 02109. |
(3) | Dimensional Fund Advisors reported as of February 9, 2005 sole voting and dispositive power with respect to 1,463,361 shares of Class A Stock, representing 7.9% of the outstanding shares of Class A Stock at that time. The address for Dimensional Fund Advisors Inc. is 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401. |
(4) | Strong Capital Management, Inc. reported as of February 11, 2005 sole voting and dispositive power with respect to 1,172,725 shares of Class A Stock, representing 6.3% of the outstanding shares of Class A Stock at that time. The address for Strong Capital Management, Inc. is 100 Heritage Reserve, Menomonee Falls, Wisconsin 53051. |
(5) | Barclays Global Investors, N.A. reported as of February 14, 2005 sole voting power with respect to 1,302,474 shares of Class A Stock and dispositive power with respect to 1,361,604 shares of Class A |
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Stock, representing 7.3% of the outstanding shares of Class A Stock at that time. The address for Barclays Global Investors, N.A. is 45 Fremont Street, San Francisco, California 94105. | |
(6) | Tontine Capital Partners, L.P. reported as of February 7, 2005 shared voting and dispositive power with respect to 1,622,522 shares of Class A Stock, representing 8.7% of the outstanding shares of Class A Stock at that time. The address for Tontine Capital Partners, L.P. is 55 Railroad Avenue, 3rd Floor, Greenwich, Connecticut 06830. |
(7) | SG Americas Securities, LLC reported as of November 5, 2004 shared voting and dispositive power with respect to 938,600 shares of Class A Stock, representing 5.1% of the outstanding shares of Class A stock at that time. The address for SG Americas Securities, LLC is 1221 Avenue of the Americas, New York, New York 10020. |
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation packages for the years ended December 31, 2004, 2003 and 2002 for the Chief Executive Officer and the four most highly compensated executive officers other than the Chief Executive Officer (the “Named Executive Officers”).
Long-Term | |||||||||||||||||||||||||
Annual Compensation | Compensation | ||||||||||||||||||||||||
Other Annual | Options | All Other | |||||||||||||||||||||||
Name and | Salary | Bonus | Compensation | Granted | Compensation | ||||||||||||||||||||
Principal Position | Year | ($)(1) | ($)(1) | ($) | (#) | ($)(2) | |||||||||||||||||||
Lawrence A. Denton | 2004 | $ | 735,000 | $ | 404,800 | (4) | 180,000 | $ | 8,890 | ||||||||||||||||
President and Chief | 2003 | 673,526 | 1,318,751 | (4) | 250,000 | 8,547 | |||||||||||||||||||
Executive Officer(3) | |||||||||||||||||||||||||
Jurgen von Heyden | 2004 | 485,453 | 135,670 | — | 80,000 | — | |||||||||||||||||||
Vice President | 2003 | 395,275 | 276,106 | — | 25,000 | — | |||||||||||||||||||
2002 | 355,954 | 232,563 | — | 20,000 | — | ||||||||||||||||||||
Milton D. Kniss | 2004 | 371,307 | 115,478 | (4) | 80,000 | 9,490 | |||||||||||||||||||
Vice President | 2003 | 356,125 | 271,688 | (4) | 25,000 | 9,290 | |||||||||||||||||||
2002 | 340,000 | 286,125 | (4) | 20,000 | 9,247 | ||||||||||||||||||||
David R. Bovee | 2004 | 311,436 | 96,858 | (4) | 80,000 | 9,490 | |||||||||||||||||||
Former Chief Financial | 2003 | 295,920 | 227,880 | (4) | 25,000 | 8,690 | |||||||||||||||||||
Officer(5) | 2002 | 274,000 | 235,440 | (4) | 20,000 | 8,667 | |||||||||||||||||||
John J. Knappenberger | 2004 | 278,448 | 77,800 | (4) | 80,000 | 9,490 | |||||||||||||||||||
Vice President | 2003 | 271,005 | 189,757 | (4) | 25,000 | 9,290 | |||||||||||||||||||
2002 | 261,000 | 184,069 | (4) | 20,000 | 9,247 |
(1) | Includes amounts deferred by employees under Dura’s 401(k) employee savings plan, pursuant to Section 401(k) of the Internal Revenue Code. |
(2) | The amounts disclosed in this column include amounts contributed by Dura to Dura’s 401(k) employees savings plan and profit sharing plan and dollar value of premiums paid by Dura for term life insurance on behalf of the named executive officers. |
(3) | Mr. Denton was appointed President and Chief Executive Officer on January 15, 2003. |
(4) | Except as otherwise disclosed, none of the perquisites or other benefits paid to each of the Named Executive Officer exceeded the lesser of $50,000 or 10% of the total annual salary and bonus received by such Named Executive Officers. |
(5) | Effective March 1, 2005, Mr. Bovee resigned as the Company’s Chief Financial Officer. Mr. Bovee will retire from the Company on April 30, 2005. |
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Option Grants Table
The following table shows all grants of options to acquire shares of Dura Class A Stock granted to the Named Executive Officers under the Stock Plan during the last fiscal year.
Number of | Potential Realizable Value At | |||||||||||||||||||||||
Securities | % of Total | Assumed Annual Rates of | ||||||||||||||||||||||
Underlying | Options | Stock Price Appreciation for | ||||||||||||||||||||||
Options | Granted to | Option Term(2) | ||||||||||||||||||||||
Granted | Employees in | Exercise Price | Expiration | |||||||||||||||||||||
Name | (#)(1) | Fiscal Year | (Per Share) | Date | 5% | 10% | ||||||||||||||||||
L.A. Denton | 180,000 | 16.2 | % | $ | 9.52 | 5/19/14 | $ | 1,077,674 | $ | 2,731,037 | ||||||||||||||
J. von Heyden | 80,000 | 7.2 | % | 9.52 | 5/19/14 | 478,966 | 1,213,794 | |||||||||||||||||
M.D. Kniss | 80,000 | 7.2 | % | 9.52 | 5/19/14 | 478,966 | 1,213,794 | |||||||||||||||||
D.R. Bovee | 80,000 | 7.2 | % | 9.52 | 5/19/14 | 478,966 | 1,213,794 | |||||||||||||||||
J.J. Knappenberger | 80,000 | 7.2 | % | 9.52 | 5/19/14 | 478,966 | 1,213,794 |
(1) | These options vest ratably over four years commencing one year from the date of grant. |
(2) | Amounts reflect certain assumed rates of appreciation set forth in the executive compensation disclosure rules of the SEC. Actual gains, if any, on stock option exercises depend on future performance of Dura’s Class A Stock and overall stock market conditions. No assurances can be made that the amounts reflected in these columns will be achieved. |
Option Exercises and Year-End Value Table
During the year ended December 31, 2004, no options were exercised by any Named Executive Officers. The following table shows the aggregate number and value of unexercised options held by each Named Executive Officer as of December 31, 2004.
Aggregated Option Exercises in Last Fiscal
Year-End(#) | Year-End($)(1) | |||||||
Name | Exercisable/Unexercisable | Exercisable/Unexercisable | ||||||
L.A. Denton | 62,250/367,500 | $ | 238,125/$950,175 | |||||
J. von Heyden | 141,250/126,250 | 132,263/226,263 | ||||||
M.D. Kniss | 63,810/126,250 | 157,437/226,263 | ||||||
D.R. Bovee | 168,750/126,250 | 173,888/226,263 | ||||||
J.J. Knappenberger | 173,623/126,250 | 132,263/226,263 |
(1) | Values are based on the difference between the closing bid price of Dura’s Class A Stock on December 31, 2004 ($10.83) and the exercise prices of the options. |
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Pension Plan Table
The following table shows the estimated annual benefits payable upon normal retirement to persons in specified compensation and years of service classifications under Dura’s Supplemental Executive Retirement Plan, effective as of January 1, 2003 (the “SERP”). The SERP is intended to supplement benefits provided to eligible executive officers under the Company’s qualified and other non-qualified retirement plans.
Benefits Based Upon Years of Service at | ||||||||||||||||||||
Normal Retirement Age(2)(3) | ||||||||||||||||||||
Final Average Annual Compensation(1) | 15 | 20 | 25 | 30 | 35 | |||||||||||||||
$125,000 | $ | 14,063 | $ | 18,750 | $ | 23,438 | $ | 28,125 | $ | 32,813 | ||||||||||
$150,000 | 16,875 | 22,500 | 28,125 | 33,750 | 39,375 | |||||||||||||||
$175,000 | 19,688 | 26,250 | 32,813 | 39,375 | 45,938 | |||||||||||||||
$200,000 | 22,500 | 30,000 | 37,500 | 45,000 | 52,500 | |||||||||||||||
$225,000 | 25,313 | 33,750 | 42,188 | 50,625 | 59,063 | |||||||||||||||
$250,000 | 28,125 | 37,500 | 46,875 | 56,250 | 65,625 | |||||||||||||||
$300,000 | 33,750 | 45,000 | 56,250 | 67,500 | 78,750 | |||||||||||||||
$400,000 | 45,000 | 60,000 | 75,000 | 90,000 | 105,000 | |||||||||||||||
$500,000 | 56,250 | 75,000 | 93,750 | 112,500 | 131,250 | |||||||||||||||
$600,000 | 67,500 | 90,000 | 112,500 | 135,000 | 157,500 | |||||||||||||||
$700,000 | 78,750 | 105,000 | 131,250 | 157,500 | 183,750 | |||||||||||||||
$800,000 | 90,000 | 120,000 | 150,000 | 180,000 | 210,000 | |||||||||||||||
$900,000 | 101,250 | 135,000 | 168,750 | 202,500 | 236,250 | |||||||||||||||
$1,000,000 | 112,500 | 150,000 | 187,500 | 225,000 | 262,500 |
(1) | Final average annual compensation is the average of a participant’s compensation for the three calendar years of employment, selected from the last five calendar years of employment, which produce the highest average. “Compensation” includes salary and bonus payments as referenced in the Summary Compensation Table, amounts deferred under a salary reduction agreement, and bonus payments deferred into the Company’s Deferred Income Leadership Stock Purchase Plan. |
(2) | The Named Executive Officers have credited years of service under the SERP as of December 31, 2004 as follows: L.A. Denton — 4.0 years; M.D. Kniss — 23.8 years; D.R. Bovee — 32.4 years; and J.J. Knappenberger — 9.1 years. Mr. von Heyden is not a participant in the SERP. |
(3) | Benefits shown in the table are computed as a straight life annuity (with a 10-year certain term) beginning at age 65 and are not subject to any deduction for social security benefits or other offset amounts. |
In connection with Mr. Keith Marchiando’s appointment as the Company’s Chief Financial Officer on March 1, 2005, he is eligible to participate in the SERP.
Employment and Change in Control Agreements
Lawrence A. Denton. The Board of Directors appointed Mr. Larry Denton as President and Chief Executive Officer effective as of January 15, 2003. Pursuant to the terms and conditions of Mr. Denton’s offer letter, Dura will pay to Mr. Denton an annual base salary of $700,000 and perquisites of up to $40,000 per year. Effective as of January 1, 2004, the Compensation Committee approved a 5% increase in Mr. Denton’s salary and an increase in perquisites of up to $44,000 per year. The Compensation Committee subsequently approved an increase in Mr. Denton’s base salary to $800,000 in January 2005. Like other executive officers, Mr. Denton is eligible to receive a bonus that is determined in part on the performance of Dura and in part on his own performance. Mr. Denton’s target bonus is 100% of his base salary. In January 2003, Dura also paid Mr. Denton a signing bonus of $400,000. Mr. Denton was granted 250,000 stock options on February 20, 2003 with an exercise price equal to the fair market value of Class A Stock on the grant date. The options vest on a
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Jurgen von Heyden. Dura has entered into an employment agreement with Jurgen von Heyden. Under the agreement, Mr. von Heyden will serve as President of Dura’s Body and Glass Division and Vice President of Dura for a period beginning on January 1, 2004 and ending on December 31, 2006. At least 12 months before the end of the contract term, the parties will decide whether to extend the employment relationship. The agreement will automatically terminate at the end of the month in which Mr. von Heyden attains age 65 or when it is finally determined that he is incapable of work. In addition, Dura may dispense with Mr. von Heyden’s services at any time but his annual fixed salary continues for the remaining contract term.
Mr. von Heyden will receive a fixed annual salary of€354,276. He will be considered for salary increases at the same time as other executive officers and is eligible for a bonus on the same basis as other executive officers. In the event of sickness, Dura will continue Mr. von Heyden’s salary for a period of six months. For a further three months, Dura will pay the difference between the net income and the sickness pay that is payable as the maximum amount as the result of participation in Dura’s health insurance plan, but not extending beyond the end of the contract term. In the event of death, Mr. von Heyden’s salary will continue to be paid to his dependents that are entitled to support for the month in which death occurs and for six months thereafter. At the expiration of the contract, Mr. von Heyden will enter into a non-competition agreement, at the request of Dura, which meets legal requirements.
Change in Control Agreements. In June 2004, Dura entered into a Change in Control Agreement with each of Mr. Denton, Mr. Bovee, Mr. Kniss and Mr. Knappenberger. The Agreements provide protection in the form of severance and other benefits to such executives in the event of termination of employment within six months preceding (in contemplation of a change of control) or two years following a change of control (a) by Dura for a reason other than “cause”, disability or death or (b) by the executive, after a reduction in compensation or a mandatory relocation or after the executive determines in good faith that his ability to carry out his responsibilities has been substantially impaired. The severance generally consists of (i) a lump sum payment equal to three times total compensation (including base salary and average annual incentive compensation), (ii) incentive compensation under the Management Incentive Compensation Plan (for the prior year, if unpaid at the time of termination, and pro-rata for the year in which the termination occurs) and (iii) a special SERP payment (described below). Health and dental continuation coverage for up to 36 months is also available to the terminated executive at reduced cost.
If an executive becomes entitled to a lump sum severance benefit, Dura will also pay to the executive a lump sum payment equal to the executive’s SERP benefit, assuming that the executive had 10 additional years of service under the SERP (but not more than 35 years). The benefit will be the lump sum actuarial equivalent of a single life annuity (with a 10-year certain term) payable over the lifetime of the executive, not discounted due to commencement before age 65.
In addition, if an executive becomes entitled to a lump sum severance payment, the period in which the executive may exercise any options granted to him under the Stock Plan that are exercisable as of his termination of employment will be extended for up to three successive 30 day periods following the date such options would otherwise expire if the executive was precluded from selling shares of Dura common stock issuable upon exercise of such options in the public market for a majority of the business days during any such period because the executive was in possession of material non-public information.
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If any payment to an executive is an “excess parachute payment,” which is not deductible by Dura and is subject to an excise tax payable to the executive, Dura will “gross up” the severance benefit payment to make the executive whole.
From and after a change in control, Dura agreed to indemnify each executive against any claims brought against him by reason of his service as a director, officer or employee of Dura.
Dura may condition the payment of benefits upon the execution by the executive of a waiver and release of claims.
Each Agreement was effective in June 2004 and applies to any subsequent change in control of Dura. In addition, in March 2005, Dura entered into a Change of Control Agreement with Mr. Marchiando in substantially the same form as that described above.
Compensation Committee Interlocks and Insider Participation
Messrs. Jack K. Edwards, Yousif B. Ghafari and J. Richard Jones served as members of Dura’s Compensation Committee during its last completed fiscal year. Mr. Jones was an executive officer of Trident prior to its acquisition by Dura in April 1998.
Compensation Committee Report on Executive Compensation
This Compensation Committee report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Exchange Act, except to the extent that Dura specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
The following has been submitted by the Compensation Committee:
General Executive Officer Compensation Policies |
The Compensation Committee is responsible for developing and recommending Dura’s executive compensation policies to the Board of Directors. The executive officer compensation program has been designed to attract and retain highly qualified and motivated employees and to reward superior performance.
The combination of both cash compensation (salary and performance bonus) and equity-based compensation are intended to encourage and reward near-term objectives, such as financial performance, and Dura’s long-term goals, such as continuous improvement in customer and employee satisfaction, and the growth and prosperity of Dura and its stakeholders.
Salary and Bonus |
In general, the base salaries of Dura’s executive officers are established at levels believed to be at market rates. Each year, the Committee reviews compensation data from outside consultants, available survey information and data from companies of comparable size and performance in ascertaining comparable salary rates. To provide performance incentives, Dura provides for annual cash awards that are payable if Dura meets or exceeds certain predetermined goals established and approved by the Board of Directors.
Dura’s bonus program is comprised of three principal factors. First, the Committee establishes a target for each officer expressed as a percentage of salary. Second, a financial performance factor is determined that creates a minimum performance requirement and recognition of performance related to expectations. Third, a team performance factor relating to progress toward company goals and an individual leadership initiative are established. The bonus is payable only if the minimum financial performance, the team performance and the individual leadership initiative are achieved.
In addition to the above-referenced objective factors, the Compensation Committee has the right to adjust bonus payments based upon its evaluation of Dura’s performance relative to the overall economy and
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Long-Term Equity Incentives |
The long-term equity incentives consist of awards under the Stock Plan and the Company’s Deferred Income Leadership Stock Purchase Plan, which is administered by the Compensation Committee. Pursuant to the terms of the Stock Plan, options are granted at an exercise price equal to Dura’s Class A Stock price on the date the options are granted. The Compensation Committee believes the Stock Plan aligns management’s long-term interests with stockholder interests, as the ultimate compensation is based upon Dura’s stock performance. The Compensation Committee also believes the Stock Plan is a cost effective method of providing key management with long-term compensation. The Compensation Committee approves the employees who participate in the Stock Plan based upon recommendations by the Chairman of the Board of Directors and the Chief Executive Officer. During 2004, the Compensation Committee approved the number of options to be issued to each employee based upon individual performance, responsibility and level of cash compensation and the Board of Directors approved the issuance of options to participants. The Compensation Committee may also, based on the recommendation of the Board of Directors, approve the issuance of stock option agreements not in connection with the Stock Plan. Pursuant to the Deferred Income Leadership Stock Purchase Plan, senior management is permitted to defer and invest all or part of his or her annual cash bonus in restricted stock units equivalent to shares of Dura’s Class A Stock. The Compensation Committee also believes that this Deferred Income Leadership Stock Purchase Plan aligns management’s long-term interests with stockholder interests.
The income tax laws of the United States limit the amount the Company may deduct for compensation paid to the Company’s Named Executive Officers. Certain compensation that qualifies as “performance-based” under IRS guidelines is not subject to this limit. Stock options granted under the Company’s Stock Plan are designed to qualify as performance-based compensation thereby permitting the Company to deduct the related expenses. The Compensation Committee believes that these limitations should not cause the Company to be denied a deduction for 2004 compensation paid to the Named Executive Officers. The Compensation Committee will continue to work to structure components of its executive compensation to achieve the maximum deductibility under the Internal Revenue Code in a manner consistent with its compensation goals and the Company’s values.
Chief Executive Officer Compensation |
The 2004 base salary of Lawrence A. Denton, Dura’s CEO, of $735,000, was based upon market and competitive factors. The CEO’s annual cash bonus is determined based in part on whether pre-determined financial objectives are met by Dura and in part on the performance of the CEO. The pre-determined performance objectives for 2004 were to achieve designated levels of earnings per share, net debt reduction and gross annual revenue awards. For 2004, the Compensation Committee determined that Dura partially met the pre-determined objectives. With regard to individual performance, the Committee determined that Mr. Denton had met or exceeded performance expectations. Based on this performance, Mr. Denton earned a bonus of $404,800 in 2004. In addition, the Committee granted Mr. Denton 180,000 options during 2004.
The foregoing report has been approved by all members of the Compensation Committee.
Compensation Committee: | |
Jack K. Edwards, Chairman | |
Yousif B. Ghafari | |
J. Richard Jones |
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PERFORMANCE GRAPH
The following graph compares Dura’s cumulative total stockholder return since December 31, 1999 with the NASDAQ National Market Index and with the OEM Automotive Supplier Composite Index. The OEM Automotive Supplier Composite Index consists of the following: Autoliv, Inc., ArvinMeritor, Inc., American Axle & Manufacturing Holdings, Borg-Warner Automotive, Inc., Collins & Aikman Corporation, Dana Corporation, Decoma International Inc., Delphi Automotive Systems, Dura Automotive Systems, Inc., Eaton Corporation, Gentex Corporation, Johnson Controls, Inc., Lear Corporation, Methode Electronics, Inc., Magna International Inc., Modine Manufacturing Company, Shiloh Industries, Inc., Stoneridge Inc., STRATTEC Security Corporation, Superior Industries International Inc., Tesma International Inc., TRW Automotive Holdings Corp. and Visteon Corporation. The comparison is based on the assumption that $100.00 was invested on December 31, 1999 in each of the Class A Stock, the NASDAQ National Market Index and the OEM Automotive Supplier Composite Index with dividends reinvested.
COMPARISON OF TOTAL RETURN
Dura paid fees to HCI of approximately $0.3 million in 2004 for services provided in connection with the acquisition of Creation Group from Heywood Williams Group PLC and other business development services. Certain officers and employees of HCI continue to provide such services to Dura.
In 2001, Dura loaned approximately $1.2 million to Automotive Aviation Partners, LLC (“AAP”) to enable it to make a principal and interest payment to its lending institution. At that time, Dura owned 25 percent of AAP and S.A. Johnson, who was a director of Dura, owned the remaining 75 percent. AAP’s sole asset is a corporate airplane. Mr. Johnson had personally guaranteed repayment of 75 percent of this loan. This loan was due and payable in October 2002. Subsequently, Dura and Mr. Johnson established a repayment schedule with respect to Mr. Johnson’s guarantee, for which payments are current. As of April 1, 2005, Mr. Johnson owed approximately $0.6 million to Dura under this arrangement. In March 2004, a wholly-owned subsidiary of Dura acquired Mr. Johnson’s 75% interest in AAP in exchange for nominal consideration. Dura has repaid the loan to AAP’s lending institution and Mr. Johnson has been released from his guaranty to such lender. Mr. Johnson remains liable under his guaranty to Dura. Mr. Johnson resigned as a director of Dura in July 2004.
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In connection with Dura’s acquisition of Trident Automotive plc in April 1998, Dura entered into a consulting agreement with Mr. J. Richard Jones on April 8, 1998. Mr. Jones was subsequently appointed to the Board of Directors of Dura in May 1998 and currently serves as a director. Upon the execution of the consulting agreement, Mr. Jones received a cash payment of $2.0 million in connection with the termination of Mr. Jones’ prior employment agreement with Trident and noncompete agreements and received options to purchase 50,000 shares of Class A Stock at an exercise price of $38.63 per share. The consulting agreement as amended has a term ending on May 5, 2007, and provides that Mr. Jones is entitled to consulting payments of $300,000 per annum for the first four years of the agreement and $60,000 per annum thereafter. In addition, Mr. Jones was entitled to certain other benefits under the agreement through the first five years of the agreement, including health care coverage, automobile and country club allowances, life insurance coverage and a lifetime annuity contract purchased by Dura. In the aggregate, Mr. Jones has subsequently received payments and other benefits under the consulting agreement through December 31, 2004 equal to $1,559,582. Mr. Jones received payments and other benefits under the consulting agreement equal to $64,262, $64,231 and $145,637 in 2004, 2003 and 2002, respectively. Dura also reimburses Mr. Jones for his expenses incurred from time to time in providing consulting services to Dura.
SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Annual Meeting in 2006 must be received by the assistant secretary of Dura Automotive Systems, Inc., 2791 Research Drive, Rochester Hills, Michigan, 48309, not later than December 15, 2005 to be considered for inclusion in Dura’s 2006 proxy materials. As of March 24, 2005, no proposals to be presented at the 2005 Annual Meeting had been received by Dura. For any proposal that is not submitted for inclusion in Dura’s 2005 proxy materials, but instead sought to be presented directly at the 2006 Annual Meeting of Stockholders, SEC rules permit management to vote proxies in its discretion if: (i) Dura receives notice of a stockholder proposal after March 14, 2006, or (ii) Dura receives notice of a stockholder proposal before March 14, 2006, and advise stockholders in the 2006 proxy materials about the nature of the matter and how management intends to vote on such matter. All proposals made by stockholders must be done in accordance with Dura’s By-laws.
ADDITIONAL INFORMATION
This solicitation is being made by Dura. All expenses of Dura in connection with this solicitation will be borne by Dura. Dura will request brokerage firms, nominees, custodians and fiduciaries to forward proxy materials to the beneficial owners of shares held of record by such persons and will reimburse such persons and Dura’s transfer agent for their reasonable out-of-pocket expenses in forwarding such materials.
Dura will furnish without charge to each person whose proxy is being solicited, upon the written request of any such person, a copy of Dura’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004, as filed with the SEC, including the financial statements. Requests for copies of such Annual Report on Form 10-K should be directed to: Dura Automotive Systems, Inc., 2791 Research Drive, Rochester Hills, MI 48309-3575.
Please complete the enclosed Proxy and mail it in the enclosed postage-paid envelope as soon as possible.
By order of the Board of Directors, | |
Keith Marchiando, Assistant Secretary |
April 14, 2005
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6FOLD AND DETACH HERE6
DURA AUTOMOTIVE SYSTEMS, INC.
The undersigned, a stockholder of Dura Automotive Systems, Inc., (the “Company”), hereby appoints Scott D. Rued and Lawrence A. Denton and each of them, as proxies, each with the power to appoint his substitute, and hereby authorizes each or either of them to represent and to vote, as designated below, all the shares of the Class A Common Stock of the Company held of record by the undersigned on March 24, 2005 at the 2005 Annual Meeting of Stockholders of the Company to be held on May 18, 2005 at 1:00 p.m., Eastern Time, and at any and all adjournments thereof. The Board of Directors recommends a vote FOR the following items:
1. | Election of Directors | |||||||
o | FORall nominees listed (except as written on the line below) | o | WITHHOLD AUTHORITYto vote for all nominees listed below |
Walter P. Czarnecki, Lawrence A. Denton, Jack K. Edwards, James O. Futterknecht, Jr., Yousif B. Ghafari, J. Richard Jones, Nick G. Preda, Scott D. Rued, Ralph R. Whitney, Jr.
(INSTRUCTION: to withhold authority to vote for any individual nominee, write that nominee’s name on the space provided below)
2. | To ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of Dura. | |||||||
o FOR | o AGAINST | o ABSTAIN | ||||||
3. | To transact any other business that may properly come before the meeting. |
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6FOLD AND DETACH HERE6
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED “FOR” THE ELECTION OF ALL NOMINEES FOR DIRECTOR AND “FOR” THE PROPOSAL SET FORTH IN ITEM 2.
Dated: | ||||
Signature | ||||
Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person. |