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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant x | |
Filed by a Party other than the Registrant o | |
Check the appropriate box: |
o Preliminary Proxy Statement | |
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
x Definitive Proxy Statement | |
o Definitive Additional Materials | |
o Soliciting Material Pursuant to §240.14a-12 |
LEAR CORPORATION
(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):
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o 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. |
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1. elect four directors; |
3. approve the Lear Corporation Annual Incentive Compensation Plan; and | |
4. conduct any other business properly before the meeting. |
Robert E. Rossiter | |
Chairman and Chief Executive Officer |
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1. | elect four directors; | |
2. | ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2005; | |
3. | approve the Lear Corporation Annual Incentive Compensation Plan; and | |
4. | conduct any other business properly before the meeting. |
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• | delivering to Daniel A. Ninivaggi, our Senior Vice President, Secretary and General Counsel, a signed, written revocation letter dated later than the date of your proxy; | |
• | submitting a proxy to the Company with a later date; or | |
• | attending the meeting and voting either in person or by ballot. |
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Anne K. Bingaman | Age: 61 |
Ms. Bingaman has been a director of Lear since February 2004. She is the founder of VALOR Telecom, a telecommunications company serving the southwestern United States and a subsidiary of Valor Communications Group, Inc. She served as VALOR Telecom’s Chief Executive Officer from September 1999 to January 2002, and Chairman from September 1999 to February 2005. Prior to founding VALOR Telecom, Ms. Bingaman served as President of the Local Services Division of LCI International, Inc., the nation’s sixth largest long distance company, from January 1997 to June 1998. Prior to joining LCI International, Ms. Bingaman served as Assistant Attorney General and Head of the Antitrust Division of the United States Department of Justice from June 1993 to October 1996. |
Conrad L. Mallett, Jr. | Age: 52 |
Justice Mallett, who has been a director of Lear since August 2002, has been the President of Sinai Grace Hospital since August 2003. Prior to his current position, Justice Mallett served as the Chief Administrative Officer of the Detroit Medical Center since March 2003. Previously, he served as President and General Counsel of Hawkins Food Group LLC from April 2002 to March 2003, and Transition Director for Detroit Mayor Kwame M. Kilpatrick and Chief Operating Officer for the City of Detroit from January 2002 to April 2002. From August 1999 to April 2002, Justice Mallett was General Counsel and Chief Administrative Officer of the Detroit Medical Center. Justice Mallett was also a Partner in the law firm of Miller, Canfield, Paddock & Stone from January 1999 to August 1999. Justice Mallett was a Justice of the Michigan Supreme Court from December 1990 to January 1999 and served a two-year term as Chief Justice beginning in 1997. Justice Mallett also serves as a director of TechTeam Global, Inc. and serves on the Executive Board of the Metropolitan Detroit YMCA. |
Robert E. Rossiter | Age: 59 |
Mr. Rossiter is the Chairman of the Board, a position he has held since January 1, 2003. Mr. Rossiter also serves as our Chief Executive Officer, a position he has held since October 2000. Mr. Rossiter served as our President from 1984 until December 2002 and served as Chief Operating Officer from 1988 to April 1997 and from November 1998 to October 2000. Mr. Rossiter has been a director of Lear since 1988. Mr. Rossiter also served as our Chief Operating Officer — International Operations from April 1997 to November 1998. |
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James H. Vandenberghe | Age: 55 |
Mr. Vandenberghe is our Vice Chairman, a position he has held since November 1998. Mr. Vandenberghe has been a director of Lear since 1995. He served as our President and Chief Operating Officer — North American Operations from April 1997 to November 1998. He also served as our Chief Financial Officer from 1988 to April 1997 and as our Executive Vice President from 1993 to April 1997. |
David E. Fry | Age: 61 |
Dr. Fry, who has been a director of Lear since August 2002, has been the President and Chief Executive Officer of Northwood University, a university of business administration with campuses in Midland, Michigan, Dallas, Texas and Palm Beach, Florida, since 1982. Dr. Fry also serves as a director of Reynolds and Reynolds Company, Decker Energy International and Chemical Bank and Trust Co. (Midland, Michigan). Dr. Fry is also a director and member of the executive committee of the Automotive Hall of Fame and past Chairman of the Michigan Higher Education Facilities Authority. |
Larry W. McCurdy | Age: 69 |
Mr. McCurdy has been a director of Lear since 1988. In July 2000, Mr. McCurdy retired from Dana Corporation, a motor vehicle parts manufacturer and after-market supplier, where he served as President, Dana Automotive Aftermarket Group, since July 1998. Mr. McCurdy was Chairman of the Board, President and Chief Executive Officer of Echlin, a motor vehicle parts manufacturer, from March 1997 until July 1998 when it was merged into Dana Corporation. Prior to this, Mr. McCurdy was Executive Vice President, Operations of Cooper Industries, a diversified manufacturing company, from April 1994 to March 1997. Mr. McCurdy also serves as a director of American Axle and Manufacturing Holdings, Inc., General Parts, Inc. and Mohawk Industries, Inc., as well as the non-executive Chairman of Affinia Group Inc., a privately-held supplier of after-market motor vehicle parts. |
Roy E. Parrott | Age: 64 |
Mr. Parrott has been a director of Lear since February 1997. In January 2003, Mr. Parrott retired from Metaldyne Corporation where he served as President of Business Operations since December 2000. Metaldyne Corporation, an integrated metal solutions supplier, purchased Simpson Industries, Inc. in December 2000. Previously, Mr. Parrott was the Chief Executive Officer of Simpson Industries, Inc. from 1994 to December 2000 and Chairman of Simpson Industries, Inc. from November 1997 to December 2000. |
David P. Spalding | Age: 50 |
Mr. Spalding has been a director of Lear since 1991. Mr. Spalding has been a Vice Chairman of The Cypress Group L.L.C., a private equity fund manager, since 1994. Mr. Spalding is also a director of AMTROL, Inc., Republic National Cabinet Corporation and Cooper-Standard Automotive Inc. |
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James A. Stern | Age: 54 |
Mr. Stern has been a director of Lear since 1991. Mr. Stern is Chairman of The Cypress Group L.L.C., a private equity fund manager, a position he has held since 1994. He is also a director of Affinia Group Inc., AMTROL, Inc., WESCO International, Inc. and MedPointe Inc. |
Henry D.G. Wallace | Age: 59 |
Mr. Wallace has been a director of Lear since February 2005. Mr. Wallace worked for 30 years at Ford Motor Company until his retirement in 2001 and held several executive-level operations and financial oversight positions, most recently as Group Vice President, Mazda & Asia Pacific Operations in 2001, Chief Financial Officer in 2000 and Group Vice President, Asia Pacific Operations in 1999. Mr. Wallace also serves as a director of AMBAC Financial Group, Inc., Diebold, Inc. and Hayes-Lemmerz International, Inc. |
Richard F. Wallman | Age: 54 |
Mr. Wallman has been a director of Lear since November 2003. Mr. Wallman has more than 25 years of executive-level operations and financial oversight experience, most recently as Senior Vice President and Chief Financial Officer of Honeywell International, Inc. from 2000 to 2003 and of AlliedSignal, Inc. from 1995 to 1999. He has also held positions with International Business Machines Corporation, Chrysler Corporation and Ford Motor Company. Mr. Wallman also serves as a director of Hayes-Lemmerz International, Inc., Ariba, Inc., Avaya Inc. and ExpressJet Holdings, Inc. |
Corporate Governance |
Board Meetings |
Meetings of Non-Employee Directors |
Independence of Directors |
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Communications to the Board |
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Audit Committee |
Compensation Committee |
Executive Committee |
Nominating and Corporate Governance Committee |
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Recommendation of Directors by Stockholders |
Criteria for Selection of Directors |
• | Strong automotive background, with an understanding of Lear’s customers and markets. | |
• | Extensive general business background with a record of achievement. | |
• | Financial and accounting expertise. | |
• | Gender, racial and geographic diversity. | |
• | Strong international experience, particularly in those regions in which Lear seeks to conduct business. | |
• | Understands the potential role of technology in the development of Lear’s business. | |
• | Marketing or sales background in the automotive industry. | |
• | Schedule is sufficiently flexible to permit attendance at Board meetings at regularly scheduled times. |
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• | A contributor but accepting of opinions of others and supportive of decisions that are in the stockholders’ best interests. | |
• | Able to assimilate complex business problems and analyze them in the context of the Company’s strategic goals. | |
• | A team player yet possessing independence to appropriately question and challenge corporate strategy, as required. |
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• | credited to a notional account and bear interest at an annual rate equal to the prime rate (as defined in the Outside Directors Compensation Plan); or | |
• | credited to a stock unit account. |
• | the date elected by such director; | |
• | the date the director ceases to be a director; or | |
• | the date a change of control (as defined in the Outside Directors Compensation Plan) occurs. |
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Number of Shares | Percentage of | |||||||||||
of Common Stock | Common Stock | Number of | ||||||||||
Owned Beneficially | Owned Beneficially | Stock Units Owned(17) | ||||||||||
AXA Financial, Inc.(1) | 9,269,082 | 13.8 | % | N/A | ||||||||
Pzena Investment Management, LLC(2) | 3,793,512 | 5.7 | % | N/A | ||||||||
Wellington Management Company, LLP(3) | 3,781,735 | 5.6 | % | N/A | ||||||||
Janus Capital Management LLC(4) | 3,751,231 | 5.6 | % | N/A | ||||||||
Putnam, LLC(5) | 3,612,402 | 5.4 | % | N/A | ||||||||
Robert E. Rossiter(6)(7) | 189,557 | (8) | * | 204,784 | ||||||||
James H. Vandenberghe(6)(7) | 157,939 | (9) | * | 101,736 | ||||||||
Douglas G. DelGrosso(7) | 99,032 | (10) | * | 53,816 | ||||||||
Donald J. Stebbins(7) | 82,050 | (11) | * | 53,705 | ||||||||
David C. Wajsgras(7) | 4,082 | * | 59,135 | |||||||||
Anne K. Bingaman(6) | 0 | * | 1,670 | |||||||||
David E. Fry(6) | 1,103 | * | 1,774 | |||||||||
Conrad L. Mallett(6) | 475 | * | 2,889 | |||||||||
Larry W. McCurdy(6) | 9,500 | (12) | * | 8,979 | ||||||||
Roy E. Parrott(6) | 5,230 | (13) | * | 1,768 | ||||||||
David P. Spalding(6) | 12,250 | (14) | * | 7,039 | ||||||||
James A. Stern(6) | 11,400 | (15) | * | 8,705 | ||||||||
Henry D.G. Wallace(6) | 0 | * | 1,691 | |||||||||
Richard F. Wallman(6) | 1,500 | * | 1,670 | |||||||||
Total Executive Officers and Directors as a Group (18 individuals) | 630,240 | (16) | 1.0 | % | 580,123 | (18) |
* | Less than 1% | |
(1) | We have been informed by AXA Financial, Inc. and certain of its affiliates, in an amended report on Schedule 13G dated February 14, 2005, that (a) they are parent holding companies of (i) Alliance Capital Management L.P. and Boston Advisors, Inc., registered investment advisors which acquired the shares solely for investment purposes on behalf of client discretionary investment advisory accounts, and (ii) AXA Investment Managers Paris (France) and AXA Equitable Life Insurance Company which acquired the shares solely for investment purposes, (b) they exercise sole voting power over 5,047,267 shares and shared voting power over 1,261,071 shares, (c) they exercise sole dispositive power over 9,269,082 shares and shared dispositive power over no shares, and (d) they beneficially own the shares reported pursuant to (x) the investment advisory role of their subsidiaries, Alliance Capital Management L.P. and Boston Advisors, and (y) the direct holdings of their subsidiaries. The address of AXA Financial, Inc. is 1290 Avenue of the Americas, New York, New York 10104. | |
(2) | We have been informed by Pzena Investment Management, LLC (“PIM”), in a report on Schedule 13G dated February 11, 2005, that (a) PIM is a registered investment advisor, and (b) PIM exercises sole voting power over 2,730,167 shares, shared voting power over no shares, sole dispositive |
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power over 3,793,512 shares and shared dispositive power over no shares. The address of Pzena Investment Management, LLC is 120 West 45th Street, 34th Floor, New York, New York 10036. | ||
(3) | We have been informed by Wellington Management Company, LLP (“WMC”), on behalf of itself and its wholly-owned subsidiary Wellington Trust Company, NA, in an amended report on Schedule 13G dated February 14, 2005, that (a) WMC is a registered investment advisor and that WMC and its subsidiary may be deemed to beneficially own the shares held by its clients, and (b) WMC and its subsidiary exercise sole voting power over no shares, shared voting power over 3,434,860 shares, sole dispositive power over no shares and shared dispositive power over 3,781,735 shares. The address of Wellington Management Company, LLP is 75 State Street, Boston, Massachusetts 02109. | |
(4) | We have been informed by Janus Capital Management LLC (“Janus”), on behalf of itself and its indirect majority-owned subsidiary Enhanced Investment Technologies LLC (“Intech”), in an amended report on Schedule 13G dated February 14, 2005, that (a) Janus and Intech are registered investment advisors, each furnishing investment advice to various investment companies, individuals and institutional clients and that Janus and Intech may be deemed to beneficially own the shares held by their clients, and (b) Janus and Intech exercise sole voting power over 3,748,431 shares, shared voting power over 2,800 shares, sole dispositive power over 3,748,431 shares and shared dispositive power over 2,800 shares. The address of Janus Capital Management LLC is 151 Detroit Street, Denver, Colorado 80206. | |
(5) | We have been informed by Putnam, LLC d/b/a Putnam Investments and certain of its affiliates, in a report on Schedule 13G dated February 11, 2005, that (a) they are parent holding companies of (i) Putnam Investment Management, LLC and The Putnam Advisory Company, LLC, registered investment advisors, (b) they exercise sole voting power over no shares and shared voting power over 129,384 shares, (c) they exercise sole dispositive power over no shares and shared dispositive power over 3,612,402 shares, and (d) they beneficially own the shares reported pursuant to the investment advisory role of their subsidiaries, Putnam Investment Management, LLC and The Putnam Advisory Company, LLC. The address of Putnam, LLC d/b/a Putnam Investments is One Post Office Square, Boston, Massachusetts 02109. | |
(6) | The individual is a director. | |
(7) | The individual is a named executive officer. | |
(8) | Includes 126,250 shares of common stock issuable under options currently exercisable or exercisable within 60 days of the record date. | |
(9) | Includes 90,000 shares of common stock issuable under options currently exercisable or exercisable within 60 days of the record date. |
(10) | Includes 82,500 shares of common stock issuable under options currently exercisable or exercisable within 60 days of the record date. |
(11) | Includes 65,500 shares of common stock issuable under options currently exercisable or exercisable within 60 days of the record date. Also, includes 1,789 shares of common stock held in trust by Mr. Stebbins’ spouse. |
(12) | Includes 7,500 shares of common stock issuable under options currently exercisable or exercisable within 60 days of the record date. |
(13) | Includes 2,500 shares of common stock issuable under options currently exercisable or exercisable within 60 days of the record date. |
(14) | Includes 6,250 shares of common stock issuable under options currently exercisable or exercisable within 60 days of the record date. |
(15) | Includes 5,000 shares of common stock issuable under options currently exercisable or exercisable within 60 days of the record date. Also, includes 2,400 shares of common stock held in a revocable trust for the benefit of Mr. Stern’s children. Mr. Stern disclaims beneficial ownership of these shares. |
(16) | Includes 429,200 shares of common stock issuable under options currently exercisable or exercisable within 60 days of the record date. |
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(17) | Includes the restricted stock units owned by our executive officers and the restricted units and deferred stock units owned by our non-employee directors. These restricted stock units, restricted units and deferred stock units are subject to all the economic risks of stock ownership but may not be voted or sold and, therefore, ownership of such units is not deemed to constitute beneficial ownership of common stock. In addition, the restricted stock units and restricted units are subject to vesting provisions as set forth in the respective grant agreements. |
(18) | Consists of 543,938 restricted stock units owned by our executive officers in the aggregate, 15,051 restricted units owned by our non-employee directors in the aggregate and 21,134 deferred stock units owned by our non-employee directors in the aggregate. |
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Long-Term Compensation | |||||||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||||||
Annual Compensation | Securities | ||||||||||||||||||||||||||||||||
Restricted | Underlying | ||||||||||||||||||||||||||||||||
Name and | Other Annual | Stock Unit | Options/ | LTIP | All Other | ||||||||||||||||||||||||||||
Principal Positions | Period | Salary(1) | Bonus(1) | Compensation(2) | Awards(3) | SARs(4) | Payouts(5) | Compensation | |||||||||||||||||||||||||
Robert E. Rossiter, | 2004 | $ | 1,008,334 | $ | 1,506,000 | $ | 117,527 | $ | 2,852,586 | 0 | $ | 442,358 | $ | 84,071 | (6) | ||||||||||||||||||
Chairman and | 2003 | 1,000,000 | 1,638,750 | 82,244 | 2,977,895 | 0 | 660,858 | 73,648 | |||||||||||||||||||||||||
Chief Executive Officer | 2002 | 1,000,000 | 1,300,200 | 66,029 | 325,050 | 125,000 | 126,378 | 13,145 | |||||||||||||||||||||||||
James H. Vandenberghe, | 2004 | $ | 902,083 | $ | 813,240 | — | $ | 1,569,632 | 0 | $ | 364,952 | $ | 55,187 | (7) | |||||||||||||||||||
Vice Chairman | 2003 | 831,251 | 973,418 | — | 1,713,942 | 0 | 505,533 | 49,209 | |||||||||||||||||||||||||
2002 | 825,000 | 780,120 | — | 78,012 | 75,000 | 100,048 | 7,359 | ||||||||||||||||||||||||||
Douglas G. DelGrosso, | 2004 | $ | 677,083 | $ | 542,160 | $ | 748,058 | $ | 1,095,898 | 0 | $ | 254,296 | $ | 35,044 | (8) | ||||||||||||||||||
President and | 2003 | 629,168 | 655,500 | 388,079 | 1,151,526 | 0 | 317,192 | 29,272 | |||||||||||||||||||||||||
Chief Operating Officer — | 2002 | 591,668 | 559,479 | 164,919 | 25,000 | 50,000 | 60,173 | 1,320 | |||||||||||||||||||||||||
Americas | |||||||||||||||||||||||||||||||||
Donald J. Stebbins, | 2004 | $ | 677,083 | $ | 542,160 | $ | 422,574 | $ | 1,095,898 | 0 | $ | 254,296 | $ | 36,323 | (9) | ||||||||||||||||||
President and | 2003 | 629,168 | 655,500 | — | 1,151,526 | 0 | 290,780 | 32,412 | |||||||||||||||||||||||||
Chief Operating Officer — | 2002 | 591,668 | 559,479 | — | 25,000 | 50,000 | 54,140 | 1,320 | |||||||||||||||||||||||||
Europe, Asia and Africa | |||||||||||||||||||||||||||||||||
David C. Wajsgras, | 2004 | $ | 577,083 | $ | 461,840 | — | $ | 876,401 | 0 | $ | 185,828 | $ | 24,481 | (10) | |||||||||||||||||||
Senior Vice President and | 2003 | 506,251 | 458,850 | — | 1,012,092 | 0 | 198,276 | 13,456 | |||||||||||||||||||||||||
Chief Financial Officer | 2002 | 420,000 | 297,864 | — | 57,500 | 35,000 | 41,355 | 128,070 |
(1) | Under the Management Stock Purchase Plan, named executive officers elected to defer portions of their 2004 salaries and bonuses. Salaries and bonuses are reported without giving effect to any amounts deferred under the Management Stock Purchase Plan. The named executive officers deferred the following amounts of their total salary and bonus earned in 2004: Mr. Rossiter, $1,352,400; Mr. Vandenberghe, $757,944; Mr. DelGrosso, $168,750; Mr. Stebbins, $168,750; and Mr. Wajsgras, $497,840. For further information regarding the Management Stock Purchase Plan, see “Compensation Committee Report — Long-Term Incentives — Management Stock Purchase Plan” beginning on page 25. | |
(2) | This column includes the perquisites and personal benefits, including any associated tax gross-up payments, received by the named executive officers which exceeded the lesser of $50,000 or 10% of the named executive’s salary and bonus for the year. Of the amounts reported in this column, the following exceeded 25% of the value of the total perquisites and benefits provided in a given year: for Mr. Rossiter, personal use of the corporate aircraft in the amounts of $60,428 in 2004, $46,025 in 2003 and $29,439 in 2002, payments related to country club memberships of $31,831 in 2004, $11,075 in 2003 and $12,086 in 2002 and payments for expenses related to financial planning of $23,687 in 2004, $23,558 in 2003 and $22,919 in 2002; for Mr. DelGrosso, payments of $730,921 in 2004, $363,787 in 2003 and $142,418 in 2002 related to his overseas assignment which commenced on October 1, 2001 and ended July 31, 2004; and for Mr. Stebbins, payments of $383,176 in 2004 related to his overseas assignment which commenced on August 1, 2004. Overseas assignment compensation primarily reflects tax equalization payments, reimbursement for foreign housing costs, a cost-of-living differential, certain moving and relocation expenses, an international assignment allowance and certain associated tax gross-ups. |
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(3) | Restricted stock unit awards consist of (i) awards under the Management Stock Purchase Plan based on deferral elections with respect to salary and bonus earned in the respective years and (ii) restricted stock unit awards in 2004 and 2003 valued based on the price of our common stock on the grant date. With respect to the Management Stock Purchase Plan, the restricted stock unit awards reported reflect the premium portion (as a result of the discounted unit price) awarded to each named executive officer based on such officer’s deferral election, and the value of each such award is reported as of its respective grant date, as to 2004 and 2003 deferrals, and as of the date of determination, as to 2002 deferrals. Pursuant to deferral elections made under the Management Stock Purchase Plan relating to compensation earned in the year ending December 31, 2004, Mr. Rossiter, Mr. Vandenberghe, Mr. DelGrosso, Mr. Stebbins and Mr. Wajsgras received 30,041, 17,290, 3,767, 3,767, and 11,407 restricted stock units, respectively. The premium portions awarded to these individuals resulting from their deferrals were $247,086, $122,132, $53,698, $53,698 and $42,641 for Mr. Rossiter, Mr. Vandenberghe, Mr. DelGrosso, Mr. Stebbins and Mr. Wajsgras, respectively. On November 11, 2004, Mr. Rossiter, Mr. Vandenberghe, Mr. DelGrosso, Mr. Stebbins and Mr. Wajsgras received 45,000, 25,000, 18,000, 18,000 and 14,400 restricted stock units, respectively, under the Long-Term Stock Incentive Plan. Values in the table for such units are based on the per share closing price of $57.90 for our common stock on November 11, 2004. However, these restricted stock units are subject to vesting over a five-year time period with one-half vesting on the third anniversary of the grant date and one-half vesting on the fifth anniversary of the grant date. For additional information regarding the Management Stock Purchase Plan and the deferral elections thereunder as well as the grant of restricted stock units in 2004, see “Compensation Committee Report” beginning on page 22. |
Holders of restricted stock units are entitled to dividend equivalents if and when cash dividends are declared and paid on our common stock, which dividend equivalents are calculated by multiplying the dividend amount by the number of restricted stock units held. These dividend equivalents are credited to an account established by the Company for bookkeeping purposes only and credited monthly with interest at the prime rate, with respect to the 2004 and 2003 restricted stock units, and at the prime rate plus one percent, with respect to the 2002 restricted stock units. Dividend equivalents vest in accordance with the vesting schedule of the restricted stock units to which they relate. As of December 31, 2004, Mr. Rossiter held 180,771 restricted stock units with an aggregate value of $11,028,839, Mr. Vandenberghe held 84,155 restricted stock units with an aggregate value of $5,134,297, Mr. DelGrosso held 54,051 restricted stock units with an aggregate value of $3,297,652, Mr. Stebbins held 51,565 restricted stock units with an aggregate value of $3,145,981, and Mr. Wajsgras held 50,534 restricted stock units with an aggregate value of $3,083,079. The aggregate value of restricted stock units is based on the per share closing price of $61.01 for our common stock on December 31, 2004. |
(4) | No options were granted to our named executive officers in 2003 or 2004. | |
(5) | The value for 2004 is based on the average of the high and low prices of our common stock on February 10, 2005, the date of issuance of the underlying shares, which was $53.20 per share. | |
(6) | Represents: Executive Supplemental Savings Plan matching contributions of $66,027; Retirement Savings Plan matching contributions of $3,450; life insurance premiums paid by Lear of $11,808; and imputed income of $2,786 with respect to life insurance coverage. The amount for 2003 was adjusted to include Executive Supplemental Savings Plan matching contributions in the amount of $36,625 for the 2003 bonus paid in 2004. | |
(7) | Represents: Executive Supplemental Savings Plan matching contributions of $44,829; Retirement Savings Plan matching contributions of $2,916; and life insurance premiums paid by Lear of $7,442. The amount for 2003 was adjusted to include Executive Supplemental Savings Plan matching contributions in the amount of $23,210 for the 2003 bonus paid in 2004. | |
(8) | Represents: Executive Supplemental Savings Plan matching contributions of $29,364; Retirement Savings Plan matching contributions of $4,449; life insurance premiums paid by Lear of $751; and imputed income of $480 with respect to life insurance coverage. The amount for 2003 was adjusted to include Executive Supplemental Savings Plan matching contributions in the amount of $13,907 for the 2003 bonus paid in 2004. |
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(9) | Represents: Executive Supplemental Savings Plan matching contributions of $32,014; Retirement Savings Plan matching contributions of $1,798; life insurance premiums paid by Lear of $1,251; and imputed income of $1,260 with respect to life insurance coverage. The amount for 2003 was adjusted to include Executive Supplemental Savings Plan matching contributions in the amount of $15,803 for the 2003 bonus paid in 2004. |
(10) | Represents: Executive Supplemental Savings Plan matching contributions of $21,449; Retirement Savings Plan matching contributions of $941; life insurance premiums paid by Lear of $1,251; and imputed income of $840 with respect to life insurance coverage. The amount for 2003 was adjusted to include Executive Supplemental Savings Plan matching contributions in the amount of $5,736 for the 2003 bonus paid in 2004. |
Number of Securities | ||||||||||||
Available for Future | ||||||||||||
Number of | Weighted Average | Issuance Under | ||||||||||
Securities to be | Exercise Price of | Equity | ||||||||||
Issued Upon | Outstanding | Compensation Plans | ||||||||||
Exercise of | Options, | (Excluding | ||||||||||
Outstanding Options, | Warrants and | Securities Reflected | ||||||||||
Warrants and Rights | Rights | in Column (a)) | ||||||||||
As of December 31, 2004 | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders(1) | 5,334,856 | (2) | $ | 29.43 | (3) | 1,896,625 | ||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 5,334,856 | $ | 29.43 | 1,896,625 |
(1) | Includes the 1994 Stock Option Plan, the 1996 Stock Option Plan and the Long-Term Stock Incentive Plan. |
(2) | Includes 3,294,680 outstanding options, 1,831,149 outstanding restricted stock units and 209,027 outstanding performance shares. |
(3) | Reflects outstanding options at a weighted average exercise price of $40.57, outstanding restricted stock units at a weighted average price of $12.75 and outstanding performance shares at a weighted average price of zero. |
Stock Option Grants |
Restricted Stock Unit Grants |
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Number of Unexercised | Value of Unexercised | |||||||||||||||
Options at | In-the-Money Options | |||||||||||||||
Shares Acquired | Value | December 31, 2004 | at December 31, 2004(1) | |||||||||||||
on Exercise | Realized | |||||||||||||||
Name | (#) | ($) | Exercisable/Unexercisable | Exercisable/Unexercisable | ||||||||||||
Robert E. Rossiter | 0 | 0 | 126,250/125,000 | $ | 2,343,300/2,397,500 | |||||||||||
James H. Vandenberghe | 48,750 | 1,418,625 | 90,000/75,000 | $ | 1,372,100/1,438,500 | |||||||||||
Douglas G. DelGrosso | 0 | 0 | 82,500/50,000 | $ | 1,611,200/959,000 | |||||||||||
Donald J. Stebbins | 0 | 0 | 65,500/50,000 | $ | 1,184,840/959,000 | |||||||||||
David C. Wajsgras | 0 | 0 | 0/35,000 | $ | 0/671,300 |
(1) | Based on the closing price of $61.01 per share for our common stock on December 31, 2004, as reported by the New York Stock Exchange. |
Estimated Future Payouts under | ||||||||||||||||
Performance or | Non-Stock Price-Based Plans(1) | |||||||||||||||
Other Period until | ||||||||||||||||
Maturation or | Threshold | Target | Maximum | |||||||||||||
Name | Payout | (#) | (#) | (#) | ||||||||||||
Robert E. Rossiter | 1/1/2004—12/31/06 | 2,031/2,031 | 4,061/4,061 | 6,092/6,092 | ||||||||||||
James H. Vandenberghe | 1/1/2004—12/31/06 | 914/914 | 1,828/1,828 | 2,742/2,742 | ||||||||||||
Douglas G. DelGrosso | 1/1/2004—12/31/06 | 686/686 | 1,371/1,371 | 2,056/2,056 | ||||||||||||
Donald J. Stebbins | 1/1/2004—12/31/06 | 686/686 | 1,371/1,371 | 2,056/2,056 | ||||||||||||
David C. Wajsgras | 1/1/2004—12/31/06 | 584/584 | 1,168/1,168 | 1,752/1,752 |
(1) | Represents performance share awards under our Long-Term Stock Incentive Plan. The threshold column refers to the amount payable for a specific minimum level of performance under the plan, the target column refers to the amount payable if the specified targets are reached, and the maximum column refers to the maximum payout under the plan. The first number in each column represents the number of shares under the performance share awards that a named executive officer may receive based upon satisfaction of the return on invested capital performance criteria. The second number in each column represents the number of shares under the performance share award that a named executive officer may receive based upon satisfaction of the relative return to shareholders performance criteria. See “Compensation Committee Report — Long-Term Incentives — Performance Share Awards” beginning on page 24. |
Qualified Pension Plan |
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• | (a) 1.10% times final average annual earnings times years of credited service before 1997 (to a maximum of 35 years), plus (b) 1.00% times final average annual earnings times years of credited service after 1996 (with a maximum of 35 years reduced by years of credited service before 1997), plus (c) 0.65% times final average annual earnings in excess of covered compensation (as defined in I.R.S. Notice 89-70) times years of credited service (with a maximum of 35 years); and | |
• | $360.00 times years of credited service. |
Pension Equalization Plan |
Executive Supplemental Savings Plan |
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Years of Credited Service | ||||||||||||||||||||||||||||
Covered | ||||||||||||||||||||||||||||
Annual Compensation | Compensation* | 10 | 15 | 20 | 25 | 30 | 35 | |||||||||||||||||||||
$ 500,000 | $ | 61,872 | $ | 78,978 | $ | 120,717 | $ | 162,457 | $ | 204,196 | $ | 245,935 | $ | 287,674 | ||||||||||||||
600,000 | 61,872 | 95,578 | 146,067 | 196,557 | 247,046 | 297,535 | 348,024 | |||||||||||||||||||||
700,000 | 61,872 | 112,178 | 171,417 | 230,657 | 289,896 | 349,135 | 408,374 | |||||||||||||||||||||
800,000 | 61,872 | 128,778 | 196,767 | 264,757 | 332,746 | 400,735 | 468,724 | |||||||||||||||||||||
900,000 | 61,872 | 145,378 | 222,117 | 298,857 | 375,596 | 452,335 | 529,074 | |||||||||||||||||||||
1,000,000 | 61,872 | 161,978 | 247,467 | 332,957 | 418,446 | 503,935 | 589,424 | |||||||||||||||||||||
1,200,000 | 61,872 | 195,178 | 298,167 | 401,157 | 504,146 | 607,135 | 710,124 | |||||||||||||||||||||
1,400,000 | 61,872 | 228,378 | 348,867 | 469,357 | 589,846 | 710,335 | 830,824 | |||||||||||||||||||||
1,600,000 | 61,872 | 261,578 | 399,567 | 537,557 | 675,546 | 813,535 | 951,524 | |||||||||||||||||||||
1,800,000 | 61,872 | 294,778 | 450,267 | 605,757 | 761,246 | 916,735 | 1,072,224 | |||||||||||||||||||||
2,000,000 | 61,872 | 327,978 | 500,967 | 673,957 | 846,946 | 1,019,935 | 1,192,924 | |||||||||||||||||||||
2,200,000 | 61,872 | 361,178 | 551,667 | 742,157 | 932,646 | 1,123,135 | 1,313,624 | |||||||||||||||||||||
2,400,000 | 61,872 | 394,378 | 602,367 | 810,357 | 1,018,346 | 1,226,335 | 1,434,324 | |||||||||||||||||||||
2,600,000 | 61,872 | 427,578 | 653,067 | 878,557 | 1,104,046 | 1,329,535 | 1,555,024 | |||||||||||||||||||||
2,800,000 | 61,872 | 460,778 | 703,767 | 946,757 | 1,189,746 | 1,432,735 | 1,675,724 | |||||||||||||||||||||
3,000,000 | 61,872 | 493,978 | 754,467 | 1,014,957 | 1,275,446 | 1,535,935 | 1,796,424 | |||||||||||||||||||||
3,200,000 | 61,872 | 527,178 | 805,167 | 1,083,157 | 1,361,146 | 1,639,135 | 1,917,124 | |||||||||||||||||||||
3,400,000 | 61,872 | 560,378 | 855,867 | 1,151,357 | 1,446,846 | 1,742,335 | 2,037,824 | |||||||||||||||||||||
3,600,000 | 61,872 | 593,578 | 906,567 | 1,219,557 | 1,532,546 | 1,845,535 | 2,158,524 |
* | Indicates the covered compensation for Mr. Rossiter who has the lowest covered compensation of all the named executive officers. The covered compensation for each of the other named executive officers will be higher and their number of years of credited service at the 1.10% formula will be fewer than Mr. Rossiter’s, resulting in a slightly lower payout amount for comparable compensation levels and years of credited service. Such differences are not expected to be material. |
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• | following the death of the employee, we will pay to his estate or designated beneficiary his full base salary and a pro rata portion of any bonus earned prior to the date of death; | |
• | upon termination for incapacity (as defined in the employment agreement), the employee will receive all compensation payable under our disability and medical plans and programs plus an additional payment from us so that the aggregate amount received by the employee from all sources equals, for the remainder of such calendar year, his base salary at the rate in effect on the date of termination plus any bonus and other amounts the employee would have been entitled to if his employment continued until the end of the calendar year, and so that the aggregate amount received by the employee from all sources equals, for the period from the end of such calendar year until the date two years after the date of termination, his base salary at the rate in effect on the date of termination; |
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• | upon termination by the employee for good reason (as defined in the employment agreement) or by us other than for cause or incapacity (each as defined in the employment agreement), if the employee executes a release, in form and substance satisfactory to us, he will receive severance payments for two years after the termination date, extended an additional year if the termination date is before the first anniversary of the employment agreement, equal to the sum of the base salary (at the highest rate received during the term of the agreement) and aggregate bonus he would have received for the same period (based on the highest annual bonus received during the period of two calendar years preceding the termination, or, if the termination date is before the first anniversary of the employment agreement, then during the period of three calendar years preceding the termination); | |
• | in addition to the foregoing, upon termination by the employee for good reason (as defined in the employment agreement) or by us other than for cause or incapacity (each as defined in the employment agreement), (i) all outstanding equity-based awards and other benefits that are subject to time-based vesting criteria will continue to vest during the severance period and, following the conclusion of the severance period, unvested awards will vest on a pro rata basis, and (ii) all benefits that would vest under compensation and benefit plans based on the satisfaction of specific performance measures would be paid to the employee after the end of the performance period on a pro rata basis, if and to the extent all relevant performance targets are actually achieved; | |
• | upon termination by the employee without good reason or by us for cause, the employee is entitled to receive only unpaid salary and benefits, if any, accrued through the effective date of the employee’s termination; | |
• | the Company may generally reduce the employee’s base salary or bonus, defer payment of his compensation, or eliminate or modify his benefits, without giving rise to a claim of constructive termination, so long as such changes are made across-the-board and affecting all executive officers of the Company; however, any such actions by the Company within one year after a change in control (as defined in the employment agreement) would give the employee a basis for termination for good reason; | |
• | the employee agrees to comply with certain confidentiality covenants both during employment and after termination; | |
• | the employee agrees to comply with certain non-compete and non-solicitation covenants during his employment and for two years after the date of termination, unless the employee is terminated by us for cause, pursuant to a notice of non-renewal from us, or if the employee terminates employment for other than good reason, in which cases the employee agrees to comply with such covenants for one year after the date of termination; and | |
• | upon transfer of all or substantially all of our assets to a successor entity, we will require the successor entity expressly to assume performance of the employment agreement. |
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• | the compensation committee of another entity in which one of the executive officers of such entity served on our Compensation Committee; | |
• | the board of directors of another entity, one of whose executive officers served on our Compensation Committee; or | |
• | the compensation committee of another entity in which one of the executive officers of such entity served as a member of our Board. |
• | optimize profitability and growth; | |
• | link the interests of management with those of stockholders; | |
• | provide management with incentives for excellence in individual performance; | |
• | promote teamwork among managers; and | |
• | attract and retain highly qualified and effective officers, key employees and directors. |
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• | approved stock ownership guidelines for members of senior management; | |
• | granted restricted stock units to certain members of senior management; |
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• | granted performance share awards to certain members of senior management; and | |
• | permitted certain members of senior management to defer a portion of their base salary and annual incentive bonus under the Management Stock Purchase Plan. |
Management Stock Ownership Requirements |
Multiple of | ||||
Position | Base Salary | |||
Chief Executive Officer | 5x | |||
Vice Chairman | 4x | |||
Chief Operating Officers/ Chief Financial Officer | 3x | |||
Senior Vice Presidents and Division Presidents | 2.5x | |||
Corporate Vice Presidents | 2x |
Restricted Stock Units |
Performance Share Awards |
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Management Stock Purchase Plan |
Total Dollar Amount of Salary and Bonus | Value of Restricted Stock Units | |||
Deferrals, Expressed as a Percentage of | Applicable | Received as a Percentage of | ||
the Participant’s Base Salary | Discount Rate | the Amount Deferred | ||
15% or less | 20% | 125% | ||
Over 15% and up to 100% | 30% | 143% | ||
Over 100% | 20% | 125% |
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Retirement Benefits |
Estate Preservation Plan |
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David P. Spalding, Chairman | |
Anne K. Bingaman | |
Larry W. McCurdy |
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12/31/99 | 12/31/00 | 12/31/01 | 12/31/02 | 12/31/03 | 12/31/04 | |||||||||||||||||||
LEAR CORPORATION | $ | 100.00 | $ | 77.53 | $ | 119.19 | $ | 104.00 | $ | 192.28 | $ | 193.79 | ||||||||||||
S&P 500 | $ | 100.00 | $ | 90.97 | $ | 80.15 | $ | 62.54 | $ | 80.28 | $ | 88.88 | ||||||||||||
PEER GROUP | $ | 100.00 | $ | 87.07 | $ | 120.32 | $ | 110.75 | $ | 162.46 | $ | 179.50 | ||||||||||||
(1) | We do not believe that there is a single published industry or line of business index that is appropriate for comparing stockholder returns. The peer group that we have selected is comprised of representative independent automobile suppliers of comparable products whose common stock is traded on a U.S. stock exchange. Our peer group consists of ArvinMeritor, Inc., Borg-Warner Automotive, Inc., Collins & Aikman Corporation, Dana Corporation, Delphi Corporation (f/k/a Delphi Automotive Systems Corporation), Eaton Corp., Gentex Corp., Johnson Controls, Inc., Magna International, Inc., Superior Industries International, Tower Automotive and Visteon Corporation. |
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Larry W. McCurdy, Chairman | |
David E. Fry | |
James A. Stern | |
Richard F. Wallman |
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Fiscal Year Ended December 31, | ||||||||
2004 | 2003 | |||||||
Audit fees(1) | $ | 9,342,000 | $ | 4,707,000 | ||||
Audit-related fees(2) | 339,000 | 694,000 | ||||||
Tax fees(3) | 2,238,733 | 3,720,000 | ||||||
All other fees | — | — |
(1) | Audit fees include services related to the annual audit of our consolidated financial statements, the 2004 audit of our internal controls over financial reporting, the reviews of our quarterly reports on Form 10-Q, international statutory audits and other services that are normally provided by the independent accountants in connection with our regulatory filings. |
(2) | Audit-related fees include services related to the audits of U.S. employee benefit plans, accounting consultations, 2003 advisory services related to our preparation for Sarbanes-Oxley Act Section 404 and other assurance and related services that are reasonably related to the performance of the audits of our financial statements. |
(3) | Tax fees include services related to tax compliance, tax advice and tax planning. |
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Name and Position | Annual Bonus(1) | |||
Robert E. Rossiter, Chairman and Chief Executive Officer | $ | 1,506,000 | ||
James H. Vandenberghe, Vice Chairman | $ | 813,240 | ||
Douglas G. DelGrosso, President and Chief Operating Officer — Americas | $ | 542,160 | ||
Donald J. Stebbins, President and Chief Operating Officer — Europe, Asia and Africa | $ | 542,160 | ||
David C. Wajsgras, Senior Vice President and Chief Financial Officer | $ | 461,840 | ||
Executive Group | $ | 4,533,763 | ||
Non-Executive Director Group | None | (2) | ||
Non-Executive Officer Employee Group | $ | 56,595,503 |
(1) | Represents the amount earned in 2004 under the existing Annual Incentive Compensation Plan based on actual performance. |
(2) | Non-employee directors are not eligible to participate in the existing Annual Incentive Compensation Plan or the Annual Plan. |
2004 Target | ||||
Opportunity | ||||
Name and Position | (as % of base salary) | |||
Robert E. Rossiter, Chairman and Chief Executive Officer | 150% | |||
James H. Vandenberghe, Vice Chairman | 90% | |||
Douglas G. DelGrosso, President and Chief Operating Officer — Americas | 80% | |||
Donald J. Stebbins, President and Chief Operating Officer — Europe, Asia and Africa | 80% | |||
David C. Wajsgras, Senior Vice President and Chief Financial Officer | 80% | |||
Executive Group | 40%-150% | |||
Non-Executive Director Group | None | |||
Non-Executive Officer Employee Group | 5%-40% |
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By Order of the Board of Directors | |
Daniel A. Ninivaggi | |
Senior Vice President, Secretary & General Counsel |
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(1) the director, or his or her immediate family member(1), is affiliated with an entity with which the Company does business, unless the amount of purchases or sales of goods and services from or to the Company, in any of the three fiscal years preceding the determination and for which financial statements are available, has exceeded 1% of the consolidated gross revenues of such entity; | |
(2) the director, or his or her immediate family member, serves as a trustee, director, officer or employee of a foundation, university, non-profit organization or tax-exempt entity to which the Company has made a donation, unless the Company’s aggregate annual donations to the organization, in any of the three fiscal years preceding the determination and for which financial statements are available, have exceeded the greater of $250,000 or 1% of that organization’s consolidated gross revenues; | |
(3) the director, or his or her immediate family member, is a director, officer or employee of an entity with which the Company or any officer of the Company has a banking or investment relationship, unless (x) the amount involved, in any of the three fiscal years preceding the determination, exceeds the lesser of $1 million or 1% of such entity’s total deposits or investments or (y) such banking or investment relationship is on terms and conditions that are not substantially similar to those available to an unaffiliated third party; or | |
(4) the director or his or her immediate family member is an officer of a company that is indebted to the Company, or to which the Company is indebted, and the total amount of either company’s indebtedness to the other does not exceed 2% of the other company’s total consolidated assets as of the end of the fiscal year immediately preceding the date of determination and for which financial statements are available. |
(1) | As used herein, an “immediate family member” includes a person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than any domestic employee) who shares such person’s home. Upon death, incapacity, legal separation or divorce a person shall cease to be an immediate family member. |
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• | shall be directly responsible for the appointment, compensation, retention and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work or performing other audit, review or attest services for the Company, and the independent auditor shall report directly to the Committee | |
• | shall have the authority to obtain advice and assistance from outside legal, accounting or other advisors and shall be provided with appropriate funding to compensate such advisors and to compensate the independent auditor for rendering or issuing an audit report or performing other audit, review or attest services |
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• | shall have the authority to conduct any investigation appropriate to fulfilling its responsibilities and have direct access to the independent auditor as well as anyone in the Company | |
• | shall pre-approve all auditing services and permitted non-audit services to be performed for the Company by its independent auditor, other than de minimis services provided that the requirements pertaining to de minimis exceptions for non-audit services described in Section 10A of the Exchange Act are otherwise satisfied | |
• | shall not engage, or otherwise permit the Company to engage, the independent auditor to provide any of the following non-audit services and arrangements: (1) the performance of any internal audit services; (2) the performance of information technology design and implementation services; (3) any arrangement pursuant to which the independent auditor provides personnel to the Company on a temporary basis; and (4) any non-audit services prohibited under Section 10A of the Exchange Act (Section 10A of the Exchange Act currently prohibits (a) bookkeeping or other services related to the accounting records or financial statements of the audit client, (b) financial information systems design and implementation, (c) appraisal or valuation services, fairness opinions, or contribution-in-kind reports, (d) actuarial services, (e) internal audit outsourcing services, (f) management functions or human resources, (g) broker or dealer, investment adviser, or investment banking services, (h) legal services, (i) expert services unrelated to the audit, and (j) any other service that the Public Company Accounting Oversight Board, which was established under Section 101 of the Sarbanes-Oxley Act of 2002, determines, by regulation, is impermissible) |
• | shall review at least annually a report by the independent auditor regarding: (1) the independent auditor’s internal quality control procedures; (2) any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditor, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the independent auditor, and any steps taken to deal with any such issues; and (3) all relationships between the independent auditor and the Company | |
• | shall review the independent auditor’s audit plan for completeness of coverage, reduction of redundant efforts, and effective use of audit resources and shall discuss scope, staffing, locations, reliance upon management, and internal audit and the general audit approach, with the independent auditor | |
• | shall annually evaluate the independent auditor’s qualifications, performance and independence, including the review and evaluation of such auditor’s lead partner, and shall consider the opinions of management, the internal auditors and the independent auditor while performing these responsibilities | |
• | shall ensure the rotation of the independent auditor’s lead partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by applicable laws and regulations | |
• | shall consider whether the Company should rotate the independent auditor on a regular basis | |
• | shall present its conclusions regarding the independent auditor to the full Board |
• | shall discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including any significant changes in the Company’s selection or application of accounting principles | |
• | shall review and discuss, at least annually, reports from the independent auditor on (1) all critical accounting policies and practices to be used, (2) all alternative treatments of financial information with generally accepted accounting principles that have been discussed with management, ramifications of |
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the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor, (3) other material written communications between the independent auditor and management, such as any management letter or schedule of unadjusted differences, and (4) any other matters required to be communicated to the Committee by the independent auditor under professional standards | ||
• | shall examine the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company | |
• | shall discuss the quarterly financial information included in the Company’s earnings press release, prior to the release of earnings, with management and the independent auditor | |
• | shall meet to review and discuss the quarterly financial statements, prior to the statements’ filing or distribution, with management and the independent auditor, including reviewing the Company’s specific disclosures under the Management Discussion and Analysis section | |
• | shall meet to review and discuss annual audited financial statements, prior to the statements’ filing or distribution, including reviewing the Company’s specific disclosures under the Management Discussion and Analysis section, with management and the independent auditor | |
• | shall review management’s assessment of the effectiveness of internal control over financial reporting as of the end of the most recent fiscal year (beginning in 2004) and the independent auditors’ opinion and report thereon | |
• | shall, prior to release of the year end earnings, discuss the results of the audit with the independent auditor | |
• | shall review, with management and the independent auditor, filings with the Commission and other published documents containing the Company’s financial statements and consider whether the information contained in the documents is consistent with the information contained in the financial statements |
• | shall regularly report to the Board and review with the full Board any issues that arise concerning: (1) the quality or integrity of the Company’s financial statements; (2) the Company’s compliance with legal or regulatory requirements; (3) the performance and independence of the Company’s independent auditor; or (4) the performance of the internal audit function | |
• | shall ensure that the Company has an internal audit function, that at a minimum consists of an appropriate control process for reviewing and approving its internal transactions and accounting | |
• | shall assess issues regarding the adequacy of the Company’s internal controls and any special audit steps adopted in light of material control deficiencies | |
• | shall periodically and separately meet with management, internal auditors and the independent auditor to discuss auditing issues | |
• | shall provide an avenue of communication among the Board, the independent auditor, management, and internal auditors | |
• | shall regularly review with the independent auditor, any problems or difficulties the independent auditor encounters in the course of the audit work, and management’s response thereto, including any restrictions on the scope of the independent auditor’s activities or access to requested information and any significant disagreement with management | |
• | shall review the integrity of the Company’s financial reporting process and controls, including computerized information systems controls and security with the management, the independent auditor, and the internal auditors |
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• | shall review and discuss earnings press releases, paying particular attention to any use of pro forma or adjusted non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies, with management or the Board | |
• | shall discuss certain matters requiring communication to the Committee in accordance with the American Institute of Certified Public Accountants SAS 61 including, without limitation, (1) the auditor’s responsibility in an audit and the nature of the assurance provided, (2) initial selection of and changes in significant accounting policies or their application and (3) any disagreements with management about matters that could be significant to the Company’s financial statements or the auditor’s report | |
• | shall discuss policies and guidelines to govern the process by which risk assessment and risk management is undertaken by management, including the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures | |
• | shall set hiring policies governing the Company’s hiring of employees or former employees of the Company’s independent auditor | |
• | shall obtain from the independent auditor assurance that the independent auditor has not been engaged by the Company to provide services in violation of Section 10A of the Exchange Act (prohibition on certain non-audit services and pre-approval by the Committee of any legally permitted non-audit services) | |
• | shall annually review the adequacy of this charter and submit any recommended changes to the Board for approval and publication in accordance with Commission regulations | |
• | shall annually review its own performance |
• | shall annually review with management and the director of the internal audit department: (1) the internal audit department’s responsibilities; (2) the internal audit department’s budget, staffing and audit plan; (3) the independence and qualifications of the internal audit department staff; (4) any difficulties encountered in the course of their audits, including any restrictions on the scope of their work or access to required information; and (5) any changes required in the planned scope of their audit plan | |
• | shall review and concur in the appointment, replacement, reassignment, or dismissal of the director of the internal audit department | |
• | review significant reports prepared by the internal audit department together with management’s responses and follow-up to the reports |
• | shall review disclosures made to the Committee by the Company’s CEO and CFO during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Company’s internal controls | |
• | shall establish procedures for (1) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and (2) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters | |
• | shall review with the Company’s general counsel, on at least an annual basis, any legal matters that could have a significant impact on the organization’s financial statements, the Company’s compliance with applicable laws and regulations, and inquiries received from regulators or government agencies and advise the Board of its findings |
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• | shall review with the Company’s general counsel the results of the review of the Company’s monitoring of compliance with the Company’s Code of Business Conduct and Ethics and advise the Board of its findings | |
• | shall prepare any Commission required reports to the shareholders and such reports should be included in the Company’s annual proxy statement | |
• | shall maintain minutes of meetings and periodically report to the Board on significant results of the foregoing activities |
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ADMISSION TICKET
LEAR CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 2005 AT 10:00 A.M. (MOUNTAIN TIME)
CAMINO REAL HOTEL
101 SOUTH EL PASO STREET
EL PASO, TEXAS 79901
ADMITS ONE STOCKHOLDER AND UP TO TWO GUESTS
DETACH PROXY CARD HERE
Mark, Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope. | x Votes must be indicated (x) in Black or Blue Ink. | ||
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES IN PROPOSAL NO. 1 AND “FOR” PROPOSAL NO. 2 AND PROPOSAL NO. 3. |
1. | Election of Directors | |||||||||||||||
FOR | AGAINST | ABSTAIN | ||||||||||||||
FOR all nominees listed below | o | WITHHOLD AUTHORITY to vote for all nominees listed below | o | *Exceptions | o | 3. | Approve the Lear Corporation Annual Incentive Compensation Plan. | o | o | o | ||||||
Nominees: Anne K. Bingaman, Conrad L. Mallett Jr., Robert E. Rossiter, and James H. Vandenberghe | YES | NO | ||||||||||||||
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the “Exceptions” box and write that nominee’s name in the space provided below). | 4. | Do you plan to attend the Meeting? | o | o | ||||||||||||
*Exceptions: _______________________________________________ | To change your address, please mark this box. | o |
FOR | AGAINST | ABSTAIN | ||||||||||
2. | Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2005. | o | o | o |
Please sign this proxy and return it promptly whether or not you expect to attend the meeting. You may nevertheless vote in person if you attend. Please sign exactly as your name appears herein. Give full title if an Attorney, Executor, Administrator, Trustee, Guardian, etc. For an account in the name of two or more persons, each should sign, or if one signs, he should attach evidence of his authority. | ||||||||||||||||
Date Share Owner sign here | Co-Owner sign here |
Table of Contents
Dear Stockholder:
The Annual Meeting of Stockholders (the “Meeting”) of Lear Corporation (the “Company”) will be held at 10:00 a.m. (Mountain time) on Thursday, May 5, 2005 at the Camino Real Hotel, 101 South El Paso Street, El Paso, Texas 79901.
To be sure that your vote is counted, we urge you to complete and sign the proxy/voting instruction card below, detach it from this letter and return it in the postage paid envelope enclosed in this package. The giving of such proxy does not affect your right to vote in person if you attend the Meeting. The prompt return of your signed proxy will aid the Company in reducing the expense of additional proxy solicitation.
In order to assist the Company in preparing for the Meeting, please indicate in item 4 on the proxy whether you currently plan to attend the Meeting.
If you attend the Meeting in person, detach and bring this letter to the Meeting as an admission ticket for you and up to two of your guests.
March 23, 2005
LEAR CORPORATION
PROXY/VOTING INSTRUCTION CARD
This proxy is solicited on behalf of the Board of Directors of Lear Corporation for the Annual Meeting of Stockholders on May 5, 2005 or any adjournment or postponement thereof (the “Meeting”).
The undersigned appoints Daniel A. Ninivaggi and David C. Waisgras, and each of them, with full power of substitution in each of them, the proxies of the undersigned, to vote for and on behalf of the undersigned all shares of Lear Corporation Common Stock which the undersigned may be entitled to vote on all matters properly coming before the Meeting, as set forth in the related Notice of Annual Meeting and Proxy Statement, both of which have been received by the undersigned.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no direction is given, this proxy will be voted FOR proposals 1, 2 and 3.
Change of address | ||||
LEAR CORPORATION P.O. BOX 11211 NEW YORK, NY 10203-0211 |