SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant X
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Filed by a party other than the registrant
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Check the appropriate box:
Preliminary proxy statement
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X Definitive proxy statement
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Definitve additional materials
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Soliciting material pursuant to Rule 14a-11 (c) or Rule 14a-12
ARVIN INDUSTRIES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Poxy Statement)
Payment of filing fee (Check the appropriate box):
X $125 per Exchange Act Rule 0-11 (c) (1) (ii), 14a-6(i)1, or 14a-6(j)(2).
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$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
persuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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Check box if any part of fee is offset as provided by Exchange Act
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Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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ARVIN INDUSTRIES, INC.
NOTICE of
Annual Meeting of Shareholders To Be Held April 14, 1994
To the Shareholders of
ARVIN INDUSTRIES, INC.
The Annual Meeting of Shareholders of Arvin Industries,
Inc., an Indiana corporation, will be held at Columbus East
High School Auditorium, 230 South Marr Road, Columbus,
Indiana, on Thursday, April 14, 1994, at 10:30 a.m., for the
following purposes:
(1) To elect five directors for a term of three years;
(2) To ratify the Board of Directors' appointment of Price
Waterhouse as Arvin's independent certified public
accountants for the current year; and
(3) To transact such other business as may properly come
before the Annual Meeting and any adjournment thereof.
Shareholders of record at the close of business on February
24, 1994, are entitled to notice of and to vote at the
Annual Meeting.
Arvin's Annual Report for the year 1993 is enclosed.
IMPORTANT! TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT
THE MEETING, PLEASE SIGN, DATE AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED.
No postage is required if the proxy is mailed in the United
States. If you attend the Annual Meeting, you may vote your
shares in person even if you have previously submitted a
proxy.
Ronald R. Snyder
Secretary
Columbus, Indiana
March 11, 1994
ARVIN INDUSTRIES, INC.
One Noblitt Plaza, Box 3000, Columbus, Indiana 47202-3000
Proxy Statement For Annual Meeting of Shareholders
To Be Held April 14, 1994
This proxy statement and the enclosed proxy are being
furnished in connection with the solicitation of proxies by
the Board of Directors of Arvin Industries, Inc. ("Arvin")
from holders of Arvin's common shares, par value $2.50 per
share ("Common Shares"), for use at the Annual Meeting of
Shareholders to be held April 14, 1994, and at any
adjournment or postponement thereof, for the purposes set
forth in the accompanying Notice (the "Annual Meeting").
Arvin will bear all costs relating to the solicitation of
proxies from its shareholders. In addition to soliciting
proxies by mail, Arvin's officers and employees, without
receiving additional compensation therefor, may solicit
proxies by telephone, by telegram or in person. Arrangements
also will be made with brokerage firms and other custodians,
nominees and fiduciaries to forward solicitation materials
to the beneficial owners of Common Shares held of record by
such persons, and Arvin will reimburse such brokerage firms,
custodians, nominees and fiduciaries for reasonable out-of-
pocket expenses incurred by them in that connection. In
addition, Arvin has retained Hill and Knowlton, Inc. to
assist in soliciting proxies from shareholders, including
brokers' accounts, at a fee of $6,250 plus reasonable out-of-
pocket expenses.
This proxy statement is first being sent to shareholders on
or about March 11, 1994.
VOTING AT THE MEETING
The record date for the determination of shareholders
entitled to vote at the Annual Meeting is the close of
business on February 24, 1994, at which time Arvin had
issued and outstanding 22,134,813 Common Shares. Each
shareholder will be entitled to one vote for each Common
Share held with respect to all matters which may be properly
submitted to a vote of shareholders at the Annual Meeting.
All proxies that are properly signed and received by Arvin
prior to the meeting will be voted in accordance with the
instructions on such proxies unless they have been revoked.
If no instruction is indicated, the shares will be voted FOR
the election of the five nominees for director listed in
this proxy statement, FOR ratification of the appointment of
independent public accountants, and in the discretion of the
persons named in the proxy on such other matters as may
properly come before the meeting. Any shareholder who has
given a proxy may revoke such proxy at any time before it is
voted at the Annual Meeting by delivering to the Secretary
of Arvin written notice of revocation or a duly executed
proxy bearing a later date or by attending the meeting and
voting in person.
A quorum of shareholders is necessary to take action at the
Annual Meeting. A majority of the outstanding Common Shares,
presented in person or by proxy, will constitute a quorum of
shareholders at the Annual Meeting. The inspectors of
election appointed for the Annual Meeting will determine
whether a quorum is present and will treat abstentions as
Common Shares that are present and entitled to vote for
purposes of determining the presence of a quorum. If a
broker indicates on a proxy that it does not have the
discretionary authority as to certain Common Shares to vote
on a particular matter, those shares will not be considered
as present and entitled to vote with respect to that matter.
A plurality of the Common Shares voted in person or by proxy
is required to elect a director. Ratification of the
appointment of the independent public accountants will be
approved if the votes cast favoring the appointment of the
independent accountants exceeds the votes cast opposing such
action. Votes cast by proxy or in person at the meeting will
be tabulated by the inspectors of election appointed for the
Annual Meeting. For purposes of determining the approval of
the matters submitted to the holders of Common Shares for a
vote, abstentions will not be considered.
PROPOSAL 1 - ELECTION OF DIRECTORS
Arvin's Restated Articles of Incorporation, as amended,
provide that its By-Laws may divide the Board of Directors
into classes, with the terms of office of directors in each
class being more than one year. The By-Laws provide that the
Board of Directors shall be divided into three classes, each
class being as nearly equal in number as possible, and that
at each Annual Meeting of Shareholders the successors to the
directors whose terms expire that year shall be elected for
a term of three years.
In 1993, Mr. Richard Ringoen, former Chairman and CEO of
Ball Corporation, who had been a director of Arvin since
1984, passed away. The Board regrets his untimely passing
and expresses its gratitude and appreciation for his ten
years of service to Arvin. Effective January 1, 1994,
William D. George, Jr. was elected to the Board of Directors
to fill Mr. Ringoen's term expiring in 1996, and Ivan W.
Gorr was elected to the Board of Directors for a term
expiring in 1994. On February 10, 1994, Mr. Arthur R.
Velasquez was elected to the Board of Directors for a term
expiring in 1996.
Five incumbent directors whose terms expire at the 1994
meeting, including Mr. Gorr, are being nominated for a three-
year term. Mr. Thomas A. Holmes, whose term expires at the
1994 Annual Meeting, and who has served as a director of
Arvin since 1990, will retire at the Meeting.
Unless otherwise directed, proxies will be voted for the
election of the five nominees listed below who have been
designated by the Board of Directors. If, on account of
death or other unforeseen contingencies, any of these
persons is unavailable for election, the proxies will be
voted for a substitute nominee designated by the Board of
Directors.
The following sets forth certain information with respect to
the nominees and continuing directors of Arvin:
Number of
Common Shares
Beneficially
Owned as of
January 2, 1994
(1)
--------------
Nominees for Three-Year Terms:
James K. Baker, Chairman of the Board of Directors of
Arvin 269,530 (2)(3)(4)
Mr. Baker, 62, was graduated from DePauw University and
holds a Master of Business Administration degree from
Harvard University. Associated with Arvin since 1955, he was
elected a member of the Board of Directors in 1968, elected
President and appointed Chief Executive Officer in 1981, and
elected Chairman of the Board in 1986. Mr. Baker is also a
director of Amcast Industrial Corporation, Geon Company, NBD
Bancorp, PSI Resources, Inc., Space Industries
International, Inc. and Tokheim Corp., and is a former
Chairman of the United States Chamber of Commerce and the
Chairman of the NASA Commercial Programs Advisory Committee.
He also serves as Chairman of the Board of Trustees of
DePauw University and is Vice Chairman of the New American
Schools Development Corporation.
Robert E. Fowler, Jr., President and Chief Operating
Officer of The Vigoro Corporation 2,000
Mr. Fowler, 58, was graduated from Vanderbilt University
with a Bachelor's degree in Chemical Engineering. He served
as President and Chief Operating Officer of Rubbermaid
Incorporated from 1981 until 1987, at which time he became
Chairman, President and Chief Executive Officer of Josephson
Office Products, Inc., a distributor of office furnishings
and supplies. Mr. Fowler served Josephson in these
capacities until October 1990, when he became a private
investor. In 1991, Mr. Fowler became President of Silvestri
Corp., a distributor of Christmas decorations, and in July,
1993, he was elected President and Chief Operating Officer
of The Vigoro Corporation, a producer of agricultural
fertilizers and chemicals. Mr. Fowler was first elected an
Arvin director in 1987. He also serves as a director of
Alltrista Corporation, Manville Corporation, Riverwood
International and The Vigoro Corporation.
Number of
Common Shares
Beneficially
Owned as of
January 2, 1994
(1)
---------------
Nominees for Three-Year Terms:
Ivan W. Gorr, Chairman of the Board and Chief Executive
Officer of Cooper Tire & Rubber Company 1,500
Mr. Gorr, 64, is a graduate of the University of Toledo and
is a certified public accountant. Mr. Gorr began his career
with Cooper Tire in 1972 as corporate controller and, after
having served as executive vice president, treasurer and
chief financial officer, was elected president and chief
operating officer in 1982 and Chairman and Chief Executive
Officer in 1989. Cooper Tire, located in Findlay, Ohio,
specializes in the manufacture and marketing of rubber
products for consumers and industrial users. Mr. Gorr was
elected a director of Arvin in 1994. He also serves as a
director of Amcast Industrial Corporation, Fifth Third
Bancorp and OHM Corporation and is Chairman of the Board of
Directors of The U.S. Chamber of Commerce.
Richard W. Hanselman, Former Chairman and Chief
Executive Officer of Genesco, Inc. 1,200
Mr. Hanselman, 66, is a graduate of Dartmouth College. He
joined Genesco in 1980 and was named Chief Executive Officer
in 1981, serving in that capacity and as its Chairman until
1986. Genesco is a diversified manufacturer of footwear and
apparel located in Nashville, Tennessee. Mr. Hanselman was
first elected to Arvin's Board of Directors in 1983. He is
also a director of Becton, Dickinson & Co., Healthtrust
Inc., Bradford Funds, Inc., Foundation Health Corp., Gryphon
Holdings, Inc. and IMCO Recycling Inc.
Don J. Kacek, Chairman, President and Chief Executive
Officer of Advanced Automation Technologies, Inc. 1,000 (5)
Mr. Kacek, 57, holds a Bachelor of Science degree from
Illinois Institute of Technology. He became President and
Chief Executive Officer of Ransburg Corporation in 1977 and
was elected Chairman of its Board of Directors in 1978, in
which capacities he served until 1988. Mr. Kacek was self-
employed as a management consultant through 1990 and is now
Chairman, President and Chief Executive Officer of Advanced
Automation Technologies, Inc. (formerly S & J Automation,
Inc.), a manufacturer of factory automation equipment
located in Indianapolis, Indiana. He was first elected to
Arvin's Board of Directors in 1982.
Number of
Common Shares
Beneficially
Owned as of
January 2, 1994
(1)
---------------
Continuing Directors:
Joseph P. Allen, President and Chief Executive Officer of
Space Industries International, Inc. 3,390
Dr. Allen, 56, is a graduate of DePauw University with a
Bachelor of Arts degree and attended Christian Albrechts
Universitaet in Kiel, Germany as a Fulbright Scholar. He
also earned Master of Science and Doctor of Philosophy
degrees from Yale University. Dr. Allen was an astronaut
with NASA from 1967 to 1985, when he became Executive Vice
President of Space Industries, Inc., a designer of space
facilities located in Webster, Texas. Dr. Allen was elected
President of Space Industries International in 1988 and
Chief Executive Officer in 1991. Dr. Allen was first elected
to Arvin's Board of Directors in 1985, and his current term
on the Board of Directors expires in 1995. He is also a
director of Space Industries.
Steven C. Beering, President of Purdue University 1,000 (5)
Dr. Beering, 61, holds Bachelor of Science and Doctor of
Medicine degrees from the University of Pittsburgh. He was
named President of Purdue University and the Purdue
University Foundations in 1983. He is also a director of Eli
Lilly and Company, NIPSCO Industries, Inc., Space Industries
International, Inc. and American United Life Insurance Co.
He was first elected to Arvin's Board of Directors in 1983,
and his current term on the Board of Directors expires in
1995.
Joseph P. Flannery, Chairman, President and Chief Executive
Officer of Uniroyal Holdings, Inc. 1,000
Mr. Flannery, 60, holds a Bachelor of Science degree from
the University of Lowell and a Masters of Business
Administration degree from Harvard University. He joined
Uniroyal, Inc. in 1959 and, after holding a number of
positions with Uniroyal, Inc. and its Uniroyal Chemical
Division, was elected a director and President and Chief
Operating Officer of Uniroyal, Inc. in 1977 and its Chief
Executive Officer in 1980. Since 1986 Mr. Flannery has been
Chairman of the Board, President and Chief Executive Officer
of Uniroyal Holdings, Inc. He was first elected an Arvin
director in 1991 and his current term expires in 1995. Mr.
Flannery also serves on the boards of directors of APS
Holding Corporation, Ingersoll-Rand Company, K mart Corp.,
Newmont Mining Corp., Newmont Gold Co. and TheScotts
Company. He also serves on the national board of trustees of
Boys Clubs of America and The Little League Foundation.
Number of
Common Shares
Beneficially
Owned as of
January 2, 1994
(1)
---------------
Continuing Directors:
William D. George, Jr., President and Chief Executive
Officer of S.C. Johnson & Son Inc. -
Mr. George, 62, received a Bachelor of Science degree from
DePauw University and a Masters of Business Administration
degree from Harvard University. In 1981, he joined S.C.
Johnson Wax, a manufacturer of chemical specialty products
headquartered in Racine, Wisconsin, and, after holding a
number of positions, became Executive Vice President and
Chief Operating Officer, Worldwide Consumer Products in
1988. He was elected President in 1990 and Chief Executive
Officer and a member of the Board in 1993. Mr. George was
elected to the Arvin Board of Directors in 1994, and his
current term expires in 1996. He also serves on the board of
directors of Moorman Manufacturing Company.
V. William Hunt, Executive Vice President of Arvin 60,203 (2)(4)
Mr. Hunt, 49, holds Bachelor of Arts and Doctor of
Jurisprudence degrees from Indiana University. Mr. Hunt
joined Arvin in 1976 and was elected Vice President-
Administration in 1980, Secretary in 1982 and Executive Vice
President in 1990. He was first elected to the Board of
Directors in 1983 and his current term expires in 1995.
Frederick R. Meyer, Chairman and President of Aladdin
Industries, Inc. 13,100
Mr. Meyer, 66, was graduated from Purdue University and
holds a Master of Business Administration degree from
Harvard University. Mr. Meyer was named President and Chief
Operating Officer of Tyler Corporation in 1983, a position
which he held until his resignation in 1986. In 1985 he
became Chairman of the Board, and in 1987, President of
Aladdin Industries, Inc., a diversified company principally
engaged in the manufacture of children's lunch kits,
thermosware, insulated food delivery systems and related
products located in Nashville, Tennessee. Mr. Meyer was
first elected to Arvin's Board of Directors in 1980, and his
current term expires in 1996. He also serves as a director
of Tyler Corporation and Southwest Securities Group, Inc.
Number of
Common Shares
Beneficially
Owned as of
January 2, 1994
(1)
---------------
Continuing Directors:
Byron O. Pond, President and Chief Executive Officer of
Arvin 92,304 (2)(3)
Mr. Pond, 57, is a graduate of Wayne State University with a
Bachelor of Science degree in Business Administration. Mr.
Pond was first employed by Maremont Corporation as a
Director of Field Sales Planning in 1968. After serving
successively as Vice President, General Manager, Senior Vice
President and Executive Vice President, he became President
of Maremont Corporation in 1979 and Chief Executive Officer
in 1981. Mr. Pond became an Executive Vice President and
director of Arvin in 1990, was elected President in 1991 and
was appointed Chief Executive Officer in 1993. His current
term on the Board of Directors expires in 1996.
Richard A. Smith, Vice President-Finance of Arvin 33,493 (2)(3)
Mr. Smith, 48, is a graduate of the University of Illinois,
was awarded a Master of Business Administration by
Northwestern University and earned a Doctor of Jurisprudence
degree from St. Louis University. He held a series of
executive financial positions with The May Department Stores
Company from 1981 until joining Arvin in 1989. May,
headquartered in St. Louis, Missouri, operates retail
department and specialty stores. Mr. Smith was elected Vice
President-Finance and a member of Arvin's Board of Directors
in 1990. His current term on the Board of Directors expires
in 1996.
Arthur R. Velasquez, President and Chief Executive Officer
of Azteca Foods, Inc. -
Mr. Velasquez, 55, is a graduate of the University of Notre
Dame with a Bachelor of Science degree in Electrical
Engineering and holds a Masters of Business Administration
from the University of Chicago. He was a founder of Azteca
Corn Products Corporation in 1970, now Azetca Foods, Inc.
Azteca is a manufacturer of Mexican foods located in
Chicago, Illinois. Mr. Velasquez is also co-founder and
principal owner of radio station WOPA in Chicago. He was
first elected an Arvin director in 1994, and his current
term expires in 1996. He also serves on the boards of
directors of LaSalle National Bank, Peoples Energy
Corporation, Chicago Metro Board of Junior Achievement, the
Maryville City of Youth, and serves on the Boards of
Trustees of the University of Notre Dame and St. Xavier
University.
(1) Except as otherwise noted, each person exercises sole
voting and investment power over the shares beneficially
owned by him. Other than Mr. Baker, who beneficially owns
approximately 1.2% of the outstanding Common Shares, no
nominee or director is individually the beneficial owner of
more than 1.0% of Arvin's outstanding Common Shares.
(2) Includes Common Shares subject to options which may be
exercised within 60 days after January 2, 1994, as follows:
Mr. Baker-101,773 shares; Mr. Hunt-46,250; Mr. Pond-84,306
shares; and Mr. Smith-25,250 shares.
(3) Includes Common Shares held in such participant's
accounts under certain Arvin employee benefit plans, as
follows: Arvin Savings Plan: Mr. Baker-17,471 shares, Mr.
Hunt-5,582 shares, Mr. Pond-522 shares, and Mr. Smith-1,257
shares; and Arvin Equity Account Plan: Mr. Baker-25,121
shares, and Mr. Hunt-1,292 shares. Common Shares held in the
Savings Plan and the Arvin Equity Account Plan are voted at
the direction of the participant.
(4) Includes Common Shares owned of record by members of
such director's immediate family. Mr. Baker has disclaimed
any beneficial interest in 33,648 of those Common Shares.
(5) Shared voting and investment power, as follows: Dr.
Beering-1,000 shares; and Mr. Kacek-1,000 shares.
Compensation of Directors
During 1993, non-employee members of the Board of Directors
were compensated for their service as directors as follows:
an annual fee of $20,000; a fee of $1,500 for membership on
any regular committee of the Board; attendance fees of
$1,500 and $1,000, respectively, for each Board and
committee meeting; and a fee of $1,000 for participating in
a telephonic Board or committee meeting. Non-employee Board
members are also paid fees of $500 for telephonic
consultation and $1,000 per day or half-day for special
assignments. Further, during 1993, Dr. Beering was paid
$4,750 for his services as a non-employee director of Space
Industries International, Inc., approximately a 70%-owned
subsidiary of Arvin.
Meetings of Directors and Committees
The Board of Directors met five times in 1993.
There are three standing committees of the Board of
Directors. The Audit Committee, the current members of which
are Messrs. Fowler (Chairman), Holmes and Smith (ex-
officio), has the responsibility to assess and oversee the
adequacy of internal controls and the integrity of Arvin's
financial statements. Its functions include: recommending
outside auditors; assessing the plan and scope of the audit;
reviewing the results of the annual audit and financial
statements before release (including disclosure
requirements); evaluating auditors' fees; overseeing the
effectiveness of the internal audit function; directing and
supervising any investigation into matters within the scope
of the foregoing duties (including compliance with the
Foreign Corrupt Practices Act); and performing such other
related functions as the Board of Directors may, from time
to time, delegate to the Audit Committee. The Audit
Committee met three times in 1993.
The Compensation Committee, which met five times during
1993, is currently comprised of Messrs. Kacek (Chairman),
Hanselman and Meyer. The Compensation Committee is
responsible for establishing and administering the
compensation policies of Arvin. See "Report of the
Compensation Committee on Executive Compensation."
The Committee on Directors makes recommendations to the
Board of Directors as to nominees for election as directors.
This committee will consider nominees recommended by Arvin
shareholders; any such recommendations may be submitted in
writing to the Chairman of the Committee on Directors, in
care of Arvin's executive offices in Columbus, Indiana. The
current members of the Committee on Directors, which met
five times last year, are Messrs. Beering (Chairman),
Flannery and Allen.
EXECUTIVE COMPENSATION
Summary
The following table summarizes the annual and long-term
compensation for services to Arvin and its subsidiaries for
fiscal years 1993, 1992 and 1991 awarded or paid to or
earned by the persons who served as chief executive officer
of Arvin during 1993 and to each of the four other most
highly compensated executive officers of Arvin (the "Named
Officers") during 1993.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------------------- ------------
Awards
Name and principal Other annual ---------- All other
position Year Salary Bonus Compensation(2) Compensation(3)
- -------------------- ---- ------ ------- --------------- ---------------
Securities
underlying
options (#)
-----------
Byron O. Pond 1993 $438,269 $112,347 $ 6,226 171,500 $7,075
President & Chief 1992 325,000 211,250 10,839 20,000 6,866
Executive Officer(1) 1991 325,000 9,425 1,942 10,000 4,667
James K. Baker 1993 $381,731 $ 97,341 $ 2,432 11,000 $7,075
Chairman(1) 1992 475,000 308,750 2,069 28,500 6,866
1991 475,000 13,775 2,224 15,000 6,667
V. William Hunt 1993 $276,500 $ 70,508 $ 3,991 10,000 $7,075
Executive Vice President 1992 265,000 172,250 2,550 13,250 6,866
1991 265,000 7,685 2,530 7,500 6,667
Richard A. Smith 1993 $222,608 $ 56,765 $ 3,601 8,000 $7,075
Vice President Finance & 1992 215,000 139,750 2,703 10,750 6,866
Chief Financial Officer 1991 215,000 6,235 1,668 7,000 6,188
Joe T. Atkins 1993 $198,846 $171,008 $ 1,823 7,200 $7,075
Senior Vice President 1992 190,000 107,350 1,598 7,600 6,866
1991 190,000 68,172 1,761 5,000 6,188
<FN>
(1) On June 17, 1993, Mr. Pond was elected Chief Executive
Officer of Arvin, succeeding Mr. Baker who served as Chief
Executive Officer until that date. An employment agreement
between Arvin and Mr. Pond, effective June 17, 1993,
provides, among other things, for his full time employment
until June 16, 1996, with automatic one-year extensions
commencing June 17, 1994, and continuing each June 17
thereafter, unless terminated by Arvin or Mr. Pond, at an
annual salary of not less than $500,000. The agreement also
provides that it will be binding upon a successor
corporation in the event that Arvin is merged into any other
corporation or that any other corporation acquires
substantially all of the assets of Arvin..
(2) The compensation reported is the amount reimbursed by
Arvin for the payment of certain taxes.
(3) The compensation reported represents Arvin matching
contributions to the Arvin Savings Plan.
Options Granted in 1993
The following table sets forth certain information as to
options to purchase Common Shares of Arvin granted to each
of the Named Officers under the 1988 Stock Benefit Plan
during the fiscal year ended January 2, 1994 and the
potential realizable value, assuming certain annual rates of
appreciation.
Option Grants In Last Fiscal Year
Potential realizable value at
Individual Grants assumed annual rates of stock
price appreciation for option term(3)
- ------------------------------------------------- -------------------------------------
Number of Percent of
securities total options
underlying granted to Exercise
options employees in price ($ Expiration
Name granted(#)(1) fiscal year per Sh)(2) date 5% ($) 10% ($)
- ------------- ------------- ------------- ----------- ----------- -------- ---------
Byron O. Pond 21,500 4.6% $29.1250 09/08/2003 $393,872 $998,143
50,000 10.7% $29.9600 09/08/2003 $942,242 $2,387,812
50,000 10.7% $34.6850 09/08/2003 $1,090,843 $2,764,395
50,000 10.7% $38.2400 09/08/2003 $1,202,648 $3,047,728
James K. Baker 11,000 2.4% $29.1250 09/08/2003 $201,516 $510,678
V. William Hunt 10,000 2.1% $29.1250 09/08/2003 $183,196 $464,253
Richard A. Smith 8,000 1.7% $29.1250 09/08/2003 $146,557 $371,402
Joe T. Atkins 7,200 1.5% $29.1250 09/08/2003 $131,901 $334,262
All Optionees 466,000 100.0% $30.7892 09/08/2003 $9,024,735 $22,870,314
<FN>
(1) All options granted to the Named Officers were granted
on September 9, 1993 and will first become exercisable
September 9, 1994, except for options to purchase 150,000
Arvin Common Shares granted to Mr. pond, 50,000 of which
first become exercisable on each of September 9, 1996, 1997
and 1998, and which may be exercised only if Mr. Pond is
Chief Executive Officer of Arvin on those respective dates.
Vesting may be accelerated as a result of certain changes in
control of Arvin.
(2) All options were granted at market value (the average
of the high and low prices of the Arvin Common Shares) on
the date of grant except for options to purchase 150,000
Common Shares granted to Mr.
Pond, which were granted in
excess of the current market value on the date of grant..
(3) The potential realizable value illustrates the value
that might be recognized upon the exercise of the options
immediately prior to the expiration of their term, assuming
the specified compounded rates of stock price appreciation
over the ten-year term of the option. For the Named
Officers, potential realizable value is presented net of the
option exercise price, but before taxes associated with the
exercise. Actual gains, if any, on stock option exercises
and Common Stock holdings are dependent on the future
performance of the Common Stock and overall market
conditions as well as the optionholders' continued
employment through the ten-year term of the option. There
can be no assurance that the amounts reflected in this table
will be achieved.
Option Exercises in 1993
The table below sets forth certain information concerning
the exercise of options to purchase Common Shares under the
1988 Stock Benefit Plan and the 1978 Stock Option Plan
during fiscal year 1993 by each of the Named Officers and
the value of unexercised options held by each of the Named
Officers as of January 2, 1994.
Aggregated Option Exercises In Last Fiscal Year And Fiscal Year-End Option Values;
Value of unexercised
Shares acquired Value realized Number of unexercised in-the-money options at
Name on exercise (#) ($) 1 options at fiscal year-end(#) fiscal year-end ($)2
- ----------------- ----------------- -------------- ----------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
Byron O. Pond 6,694 $95,808 84,306 171,500 $913,846 $163,813
James K. Baker 5,000 97,188 101,773 12,000 723,638 31,625
V. William Hunt -0- -0- 46,250 10,000 275,547 28,750
Richard A. Smith 4,000 66,281 25,250 8,000 260,672 23,000
Joe T. Atkins 5,000 53,438 36,600 7,200 198,850 20,700
<FN>
(1) Represents the difference between the closing price of
the Arvin Common Shares on the New York Stock Exchange on
the business day preceding date of exercise and the option
exercise price.
(2) Represents the difference between $32.00, the closing
price of the Arvin Common Shares on the New York Stock
Exchange on December 31, 1993, and the option exercise
price.
Retirement Plan
The table below shows the estimated annual benefits payable
upon retirement to persons, including the Named Officers,
covered under Arvin's Retirement Plan for Exempt Salaried
Employees (the "Retirement
Plan") and Arvin's Supplemental
Retirement Plan (the "Supplemental Retirement Plan") (based
on the benefit formulas in effect and calculated on a
straight life annuity basis, as described below), in the
specified compensation and years of service classifications.
The table assumes that the last five years of service occur
after October 1, 1991. The amounts reflected in the table
are not subject to any deduction for Social Security
benefits or other offset amounts except for the Arvin Equity
Account described below.
Annual Compensation
Average of 5 Highest
Consecutive Years Annual Life Income With Years of Service at
in last 10 Age 65 (Single Life Annuity)
- ------------------------ -----------------------------------------------------------------------------------------
15 20 25 30 35 40
-------------- -------------- -------------- -------------- -------------- --------------
$250,000 $ 40,160 $ 52,660 $ 65,160 $ 77,660 $ 90,160 $102,660
$350,000 56,410 73,910 91,410 108,910 126,410 143,910
$450,000 72,660 95,160 117,550 140,160 162,660 185,160
$550,000 88,910 116,410 143,910 171,410 198,910 226,410
$650,000 105,160 137,660 170,160 202,660 235,160 267,660
$750,000 121,410 158,910 196,410 233,910 271,410 308,910
$850,000 137,660 180,160 222,660 265,160 307,660 350,160
$950,900 153,910 201,410 248,910 296,410 343,910 391,410
The Retirement Plan is a defined benefit plan, based on
total years of service, which provides a life annuity
determined by the average of the five highest consecutive
years' annual earnings in the last ten years of service.
For credited service earned prior to October 1, 1991, the
benefit is calculated by multiplying 1% for each year of
credited service times the average annual earnings figure.
Effective October 1, 1991 the Retirement Plan and certain
other defined benefit pension plans covering domestic
salaried employees of Arvin and its subsidiaries (including
the Maremont Corporation Pension Plan for Salaried
Employees, discussed below) adopted a new unified benefit
formula for service credited after that date. With respect
to credited service earned on or after October 1, 1991, the
benefit is calculated by (i) multiplying 1% for each year of
credited service times the average annual earnings figure
and (ii) adding to that amount an amount determined by
multiplying 0.25% for each year of credited service (up to a
maximum of 35 years) times the amount by which the average
annual earnings figure exceeds a portion of the social
security wage base (for 1993, $37,200). Five years of
service are required for vesting under the Plan. Employees
may qualify for full benefits at age sixty-five, subject to
certain exceptions under the Employee Retirement Income
Security Act of 1974, though provisions are made within the
Plan for early retirement at reduced benefits and for
disability retirement. The compensation covered by the Plan
includes salaries, bonuses and compensation deferred at the
option of the employees resulting from contributions to the
Arvin Savings Plan. For the calendar year ended December 31,
1993, credited years of service for the Named Officers are
as follows: Mr. Pond-2 years (for determination of benefits;
25 years for vesting purposes); Mr. Baker-37 years; Mr. Hunt-
17 years; Mr. Smith-4 years and Mr. Atkins-45 years. With
respect to the period prior to October 1, 1991, Mr. Pond is
covered under the Maremont Pension Plan discussed below.
In 1983, the Arvin Retirement Plan was amended to allow
investment of up to 10% of Plan funds in Common Shares which
may be acquired from time to time in private or market
purchases or by contribution of original issue or treasury
shares. In 1993, the Plan acquired 18,935 Common Shares.
As of September 1, 1985, the Retirement Plan was further
amended to transfer to the Arvin Equity Account of the Arvin
Savings Plan assets and liabilities for the accrued benefits
of active Retirement Plan participants, and a provision was
added which credits the benefit payable under the Arvin
Equity Account against the benefit payable under the
Retirement Plan. The 1985 amendment also added provisions
prohibiting termination of the Retirement Plan and recovery
of any excess assets ("overfunding") in the Plan unless
approved by a majority of the "Continuing Directors" (as
defined in the Retirement Plan) and providing that, in the
event of a change of control of Arvin without Continuing
Director approval, the percentage for each year of credited
service used in the Retirement Plan's benefit formula would
be increased as necessary so that all Plan assets would be
needed to provide benefits to participants and any
overfunding would be eliminated.
Annual benefits payable upon retirement under the Retirement
Plan are subject to limitation imposed by law in prescribed
circumstances. To the extent that an individual employee's
retirement benefit would exceed such limit, the pension
benefit payable upon retirement set forth in the above table
will be paid pursuant to the Supplemental Retirement Plan.
As noted above, prior to October, 1991 Mr. Pond was
President and Chief Executive Officer of Maremont
Corporation. Mr. Pond became a participant in the Arvin
Retirement Plan effective October 1, 1991, and his pension
for the period prior to that date will be provided under the
Maremont Corporation Pension Plan for Salaried Employees in
lieu of the Arvin Retirement Plan. The Maremont Pension Plan
is a defined benefit plan, based on total years of service,
which provides a life annuity determined by the average of
the five highest consecutive years' annual earnings in the
last fifteen years of service. With respect to service
earned prior to October 1, 1991, the benefit is calculated
by multiplying 1.5% for each year of credit service times
the average annual earnings figure and is reduced by a
portion of expected primary Social Security payments.
Vesting schedules and early retirement and disability
retirement benefits are substantially similar to those under
the Arvin Retirement Plan. The compensation covered by the
Maremont Plan includes salaries, bonuses and employee
contributions to the Maremont Thrift Plan. As of October 1,
1991, Mr. Pond was credited with 22 3/4 years of service
under the Maremont Pension Plan. Subsequent to that date,
Mr. Pond will not be credited with any additional years of
service under the Maremont Pension Plan as Mr. Pond will be
covered by the Arvin Retirement Plan. The estimated annual
benefits payable to Mr. Pond upon his retirement under
Maremont's Pension Plan, assuming continued employment until
age 65, would be $49,500 for every $100,000 of annual
compensation, or $246,084 (based on the average of his five
highest consecutive years of compensation in his last
fifteen years of service with Maremont), and in each case is
subject to reduction to reflect Social Security benefits. To
the extent that the retirement benefit under the Maremont
Pension Plan exceeds certain limitations imposed by law, the
excess will be paid pursuant to a Supplemental Retirement
Plan similar to the one maintained by Arvin.
In addition, upon retirement at age 65, Mr. Pond will be
entitled to receive $30,000 per year under a Maremont
insurance-funded retirement program for a period of ten (10)
years. In the event of Mr. Pond's death prior to retirement
or during the ten (10) years following retirement, such
annual benefits will be paid to his beneficiary.
Report of the Compensation Committee of the Board of
Directors on Executive Compensation
The Compensation Committee of the Board of Directors (the
"Compensation Committee") establishes the general
compensation policies of Arvin, makes recommendations to the
Board of Directors with respect to the specific compensation
levels for the Chairman and the President/CEO, reviews and
approves the annual cash bonus incentive plan for
executives, including the Named Officers who are members of
the Office of the Chief Executive, administers the 1988
stock benefit plan, reviews the remuneration of other
officers and considers and recommends the adoption of
compensation plans for officers and directors.
Arvin's compensation philosophy is to provide a total
compensation program which will attract, retain and motivate
superior performance. The Compensation Committee and
management of Arvin are committed to the principle that pay
should be commensurate with performance and attainment of
predetermined financial and strategic objectives. As a
consequence, pay is more heavily influenced by Company
performance.
The compensation program consists of three components: base
salary, annual cash incentive opportunities and long-term
incentive opportunities in the form of stock options. The
compensation philosophy for base salary is to set executive
base salaries slightly below industry norms, with the
proportion of total cash compensation that can be earned
based on variable incentive compensation above industry
norms. Industry norms are determined by gathering
competitive compensation information from the companies
comprising the Dow Jones auto parts and equipment index as
well as from other manufacturing companies selected on the
basis of similar sales volume, level of employment and
international scope.
The Arvin philosophy for variable cash bonus incentive
compensation is to provide rewards when financial objectives
are achieved. In 1993, these objectives, designed to
increase shareholder value, were earnings per share, labor
cost as a percentage of net sales, cost of quality as a
percentage of cost of sales and stock price performance. The
relative weights assigned to these objectives were equal
except for earnings per share which was weighted more by a
multiple of five. Maximum bonuses that can be earned with
respect to each of these objectives are set as a percentage
of the executive's base salary. Minimum achievement levels
against each of the financial objectives are required before
bonuses can be earned.
Long-term incentives are based on the grant of stock
options. The number of options granted is determined
subjectively by considering the executive's ability to
influence Arvin's long-term growth and profitability.
Options are granted at the current market price and are
exercisable commencing one year after the date of grant, or
are granted in excess of the current market price and are
exercisable more than one year after the date of grant.
Since the value of an option is directly related to Arvin's
stock price, it provides an incentive to create value for
shareholders. Stock options are an important component of
the Compensation Committee's long-term performance based
compensation philosophy.
The compensation for both Mr. Pond, the CEO from June 1993
and Mr. Baker, the CEO prior to that time, was consistent
with this philosophy and exemplifies the performance
oriented nature of the compensation program. The base
salaries of Messrs. Baker and Pond were adjusted in June,
1993 to reflect their change in responsibilities. The cash
bonus incentive was determined in accordance with the 1993
cash bonus incentive plan. In 1993, due in large part to the
continuing economic recession in Europe and the unsettled
U.S. replacement market, several of the financial objectives
of the cash bonus incentive plan were not fully achieved
and the minimum achievement level on one of the financial
objectives was not met. As a result, the cash bonus paid to
Mr. Pond, as CEO for 1993, was substantially less than that
paid to Mr. Baker, as CEO, in the prior year. The stock
options granted to the CEO during 1993 are consistent with
the design and philosophy of the overall program and are
shown above in the summary compensation table.
The Compensation Committee believes this philosophy and
practice encourages outstanding individuals to achieve
levels of performance that otherwise would not have been
reached and to maintain their employment and personal
commitment to Arvin. Arvin shareholders and customers are
also beneficiaries.
This report is submitted on behalf of the Compensation
Committee:
Don J. Kacek, Chairman
Richard W. Hanselman
Frederick R. Meyer
Compensation Committee Interlocks And Insider Participation
The current members of the Compensation Committee are
Messrs. Kacek, Hanselman and Meyer. Until April, 1993, Dr.
Allen and Messrs. Holmes and Meyer served as members of the
Compensation Committee. Dr. Allen is a director and
President and CEO of Space Industries International, Inc.
("Space Industries").
Arvin owns approximately 70% of Space Industries. Arvin and
Space Industries are parties to a variety of agreements. Mr.
Baker is Chairman of the Board and Dr. Beering, a director
of Arvin, also serves as a director of Space Industries.
COMMON SHARE PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return of the
Arvin Common Shares with the S&P 500 Index and the Dow Jones
Auto Part and Equipment Index during the years 1989 through
1993, assuming the investment of $100 on December 31, 1988
and the reinvestment of dividends.
Comparison of Five Year Cumulative Total Return
Among Arvin Industries, The S & P 500 Index
And The Dow Jones Auto Parts & Equipment Index
The following table reflects the data points of the Performance
Graph included in the proxy statement:
YEAR
--------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- ----
ARVIN INDUSTRIES, INC. 84 95 125 181 193
S & P 500 INDEX 132 128 166 179 197
DOW JONES AUTO PARTS & EQUIPMENT INDEX 96 76 114 147 182
CERTAIN BENEFICIAL OWNERS
As of February 24, 1994, the only persons or groups known to
Arvin to be the beneficial owners of more than 5% of the
Common Shares, as reported in a Statement on Schedule 13G
filed by such person with the Securities and Exchange
Commission, was:
Amount and nature of Percent
Name and address of beneficial owner beneficial ownership of class
- ------------------------------------ -------------------- --------
J.P. Morgan & Co., Inc., 1,303,965(1) 5.9 %
6 Wall Street
New York New York 10260
<FN>
(1) Includes 844,550 shares with sole voting power and
459,415 shares with shared voting power.
On January 2, 1994, Mr. Atkins beneficially owned 80,832
Arvin Common Shares, which includes 36,600 Common Shares
subject to options which may be exercised within 60 days
after January 2, 1994, 4,174 shares held in the Arvin
Savings Plan and 15,625 shares held in the Arvin Equity
Account Plan. This number also includes 3,912 shares owned
of record by Mr. Atkins' wife, with respect to which he
disclaims beneficial ownership.
All directors and executive officers as a group (15 persons)
beneficially own 560,552 Arvin Common Shares, or 2.53% of
the outstanding Common Shares.
COMPLIANCE WITH FORMS 3, 4 AND 5 REPORTING
REQUIREMENTS
Based solely upon its review of Forms 3, 4 or 5 and any
amendments thereto furnished to the Company pursuant to
Section 16 of the Securities Exchange Act of 1934, as
amended, all of such Forms were filed on a timely basis by
reporting persons, except that Mr. Baker failed to report
two gift transactions on his Form 5. Mr. Baker subsequently
amended his Form 5 to report these transactions.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
Based upon the recommendation of the Audit Committee, at its
February, 1994 meeting, the Board of Directors approved the
engagement of the accounting firm of Price Waterhouse as
Arvin's independent certified public accountants for the
fiscal year beginning January 3, 1994.
Representatives from Price Waterhouse will be present at the
Annual Meeting and will be afforded the opportunity to make
a statement if they so desire and to respond to appropriate
shareholder questions.
Although not required to do so, the Board of Directors is
submitting its appointment of auditors for shareholder
ratification. In the event the appointment of Price
Waterhouse is not ratified by the shareholders, it will be
reconsidered by the Board of Directors. The Board recommends
that its appointment of Price Waterhouse be ratified by the
shareholders.
SHAREHOLDER NOMINATIONS AND PROPOSALS
Pursuant to the rules under the Securities Exchange Act of
1934, proposals of shareholders intended to be presented at
the 1995 Annual Meeting must be received at Arvin's
executive offices no later than November 11, 1994 to be
considered for inclusion in next year's proxy materials.
Further, Arvin's By-Laws set forth certain additional
procedures regarding shareholder nominations of persons for
election to the Board of Directors and shareholder proposals
of business to be considered at meetings of the
shareholders. Pursuant to these provisions, written notice
of any shareholder nominations or proposals relating to the
1995 Annual Meeting of Shareholders must also be received by
the Secretary of Arvin at its executive offices in Columbus,
Indiana, no earlier than January 14, 1995 and no later than
February 13, 1995.
BUSINESS TO BE TRANSACTED
At the date of this statement, the Board of Directors does
not know of any business to be brought before the Annual
Meeting other than the matters described in this proxy
statement. In the event that any other matters properly
shall come before the meeting, it is the intention of the
persons named in the accompanying proxy to vote in
accordance with their judgment on such matters.
By the order of the Board of Directors.
Ronald R. Snyder
Secretary
ARVIN INDUSTRIES, INC.
Columbus, Indiana
March 11, 1994