SCHEDULE 14A INFORMATION
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 ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential for Use of the
Commission Only (as Permitted
by Rule 14a-6(e)(2))
(x) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Invacare Corporation
--------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the Appropriate box):
(x) No fee required.
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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One Invacare Way
Elyria, OH 44035
April 16, 2001
To the Shareholders of
INVACARE CORPORATION:
This year's Annual Meeting of Shareholders will be held at 10:00 A.M.
(EDT), on Thursday, May 24, 2001, at the Lorain County Community College,
Spitzer Conference Center, Grand Room, 1005 North Abbe Road, Elyria, Ohio. We
will be reporting on your Company's activities and you will have an opportunity
to ask questions about our operations.
We hope that you are planning to attend the Annual Meeting personally and
we look forward to seeing you. Whether or not you expect to attend in person,
the return of the enclosed Proxy as soon as possible would be greatly
appreciated and will ensure that your shares will be represented at the Annual
Meeting. If you do attend the Annual Meeting, you may, of course, withdraw your
Proxy should you wish to vote in person.
On behalf of the Board of Directors and management of Invacare Corporation,
I would like to thank you for your continued support and confidence.
Sincerely yours,
/S/ A. Malachi Mixon, III
- - - - - - - - - - - - -
A. Malachi Mixon, III
Chairman and Chief
Executive Officer
INVACARE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Invacare
Corporation (the "Company") will be held at the Lorain County Community College,
Spitzer Conference Center, Grand Room, 1005 North Abbe Road, Elyria, Ohio on
Thursday, May 24, 2001, at 10:00 A.M. (EDT), for the following purposes:
1. To elect four Directors, to the class whose three-year term of office will
expire in 2004;
2. To transact such other business as may properly come before the Annual
Meeting and any adjournments thereof.
Holders of Common Shares and Class B Common Shares of record as of the
close of business on Monday, April 2, 2001 are entitled to receive notice of and
vote at the Annual Meeting. It is important that your shares be represented at
the Annual Meeting. For that reason, we ask that you promptly sign, date and
mail the enclosed Proxy card in the return envelope provided. Shareholders who
attend the Annual Meeting may revoke their Proxy and vote in person.
By order of the Board of Directors,
/S/ Thomas R. Miklich
- - - - - - - - - - - - -
Thomas R. Miklich
Secretary
April 16, 2001
1
INVACARE CORPORATION
PROXY STATEMENT
Mailed on or about April 16, 2001
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 24, 2001
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of Invacare Corporation (hereinafter called
"Invacare" or the "Company") for use at the Annual Meeting of Shareholders of
the Company to be held on May 24, 2001 and any adjournments or postponements
thereof. The time, place and purposes of the Annual Meeting are stated in the
Notice of Annual Meeting of Shareholders, which accompanies this Proxy
Statement. The expense of soliciting Proxies, including the cost of preparing,
assembling and mailing the Notice, Proxy Statement and Proxy, will be borne by
the Company. In addition to solicitation of Proxies by mail, solicitation may be
made by the Company's Directors, officers or employees, without additional
compensation, personally and by telephone, and the Company may pay persons
holding shares for others their expenses for sending proxy materials to their
principals. No solicitation will be made other than by Directors, officers and
employees of the Company.
Any person giving a Proxy pursuant to this solicitation may revoke it. The
General Corporation Law of Ohio provides that, unless otherwise provided in the
Proxy, a shareholder, without affecting any vote previously taken, may revoke a
Proxy not otherwise revoked by giving notice to the Company in writing or in
open meeting. All validly executed Proxies received by the Board of Directors of
the Company pursuant to this solicitation will be voted at the Annual Meeting,
and the directions contained in such Proxies will be followed in each instance.
If no directions are given, the Proxy will be voted "FOR" the election of the
four nominees listed in the Proxy.
VOTING RIGHTS
At the close of business on April 2, 2001, the Company had 29,429,378
Common Shares, without par value ("Common Shares"), and 1,112,441 Class B Common
Shares, without par value ("Class B Common Shares"), outstanding and entitled to
vote. The holders of the outstanding Common Shares as of April 2, 2001 will be
entitled to one vote for each share held by them and the holders of the
outstanding Class B Common Shares as of April 2, 2001 will be entitled to ten
votes for each share held by them. Except as otherwise provided by the Company's
Amended and Restated Articles of Incorporation or required by law, holders of
Common Shares and Class B Common Shares will at all times vote on all matters,
including the election of Directors, together as one class. Pursuant to the
Company's Amended and Restated Articles of Incorporation, no holder of shares of
any class has cumulative voting rights in the election of Directors. Only
shareholders of record at the close of business on April 2, 2001 are entitled to
notice of and to vote at the Annual Meeting.
2
SHARE OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
Share ownership of certain beneficial owners. The following table sets
forth, as of February 28, 2001, the share ownership of each person or group
known by the Company to beneficially own more than 5% of either class of shares
of the Company:
Class B
Common Shares Common Shares
beneficially owned beneficially owned*
------------------ -------------------
Number Number Percentage
Name and business address Of of of total
of beneficial owner Shares Percentage shares Percentage voting power
- --------------------------------------------- --------- ---------- ------ ---------- ------------
A. Malachi Mixon, III (1).................... 1,299,921 4.4% 703,912 51.3% 18.5%
One Invacare Way, Elyria, Ohio 44035
Joseph B. Richey, II (2)..................... 772,088 2.6% 376,262 27.4% 10.1%
One Invacare Way, Elyria, Ohio 44035
Invacare Corporation Employees'
Stock Bonus Trust and Plan (3)............... 927,091 3.2% 259,386 18.9% 7.8%
One Invacare Way, Elyria, Ohio 44035
Ariel Capital Management, Inc................ 2,961,130 10.1% - - 6.6%
200 E. Randolph Dr, Suite 2900,
Chicago, IL 60601 (4)(5)
Lazard Freres & Co. LLC...................... 1,966,996 6.7% - - 4.4%
30 Rockefeller Plaza New York, NY 10020 (4)(6)
* Pursuant to the Company's Amended and Restated Articles of Incorporation,
(i) all holders of Class B Common Shares are entitled to convert any or all
of their Class B Common Shares to Common Shares at any time, on a
share-for-share basis, and (ii) the Company may not issue any additional
Class B Common Shares unless such issuance is in connection with share
dividends on, or share splits of, Class B Common Shares.
(1) Mr. Mixon is Chairman of the Board of Directors and Chief Executive Officer
of the Company. The Common Shares beneficially owned by Mr. Mixon include
651,983 Common Shares which may be acquired upon the exercise of stock
options during the 60 days following February 28, 2001. For purposes of
calculating the percentage of outstanding Common Shares beneficially owned
by Mr. Mixon and his percentage of total voting power, the Common Shares
which he had the right to acquire during that period by exercise of stock
options are deemed to be outstanding. The number of shares shown as
beneficially owned by Mr. Mixon also includes 14,966 Common Shares held in
the name of Roundwood Capital L.L.P., which represent his ownership
interest in Roundwood Capital L.L.P. The number of shares shown as
beneficially owned by Mr. Mixon does not include 221,391 Common Shares
which have been transferred into two family trusts. The number of shares
shown as beneficially owned by Mr. Mixon also does not include 188,532
Common Shares which have been transferred into two trusts for the benefit
of his two adult children. Mr. Mixon disclaims beneficial ownership of such
shares.
(2) Mr. Richey is President-Invacare Technologies, Senior Vice
President-Electronic & Design Engineering and a Director of the Company.
The Common Shares beneficially owned by Mr. Richey include 214,040 Common
Shares which may be acquired upon the exercise of stock options during the
60 days following February 28, 2001. For purposes of calculating the
percentage of outstanding Common Shares beneficially owned by Mr. Richey
and his percentage of total voting power, the Common Shares which he had
the right to acquire during that period by exercise of stock options are
deemed to be outstanding.
(3) The Invacare Corporation Employees' Stock Bonus Trust and Plan is an
employee benefit plan established and operated as a trust for the benefit
of the Company's employees. Fidelity Investments is the trustee of the
Invacare Corporation Employees' Stock Bonus Trust and Plan, with Invacare
Corporation as Administrator of the Plan. As such, the shares held by the
Plan are voted at the Company's direction.
(4) The number of Common Shares beneficially owned is based upon a Schedule 13G
filed to reflect share ownership as of December 31, 2000.
3
(5) The Schedule 13G was filed by Ariel Capital Management, Inc., which has
sole voting power with respect to 2,814,280 of the 2,961,130 Common Shares
held, and sole dispositive power with respect to all 2,961,130 of the
Common Shares held.
(6) The Schedule 13G was filed by Lazard Freres & Co. Inc., which has sole
voting power with respect to 1,678,565 of the 1,966,996 Common Shares held,
and sole dispositive power with respect to all 1,966,996 of the Common
Shares held.
Share ownership of management. The following table sets forth, as of
February 28, 2001, the share ownership of all Directors, each of the Named
Executive Officers (as defined below) and all Directors and executive officers
as a group:
Class B
Common Shares Common Shares
beneficially owned beneficially owned**
------------------ --------------------
Percentage
Number Number of total
Name of beneficial owner of shares Percentage of shares Percentage voting power
------------------------ --------- ---------- --------- ---------- ------------
Gerald B. Blouch (4)................ 362,018 1.2% - - *
James C. Boland (4)................. 13,916 * - - *
Frank B. Carr (4)................... 92,377 * - - *
Michael F. Delaney (4).............. 12,293 * - - *
Whitney Evans (4)................... 38,237 * - - *
Bernadine P. Healy (4)............. 19,538 * - - *
Thomas R. Miklich (4)............... 151,275 * - - *
A. Malachi Mixon, III (1)........... 1,299,921 4.4% 703,912 51.3% 18.5%
Dan T. Moore, III (4)............... 382,451 1.3% - - *
E. P. Nalley (3)(4)................. 138,993 * - - *
Joseph B. Richey, II (2)............ 772,088 2.6% 376,262 27.4% 10.1%
Louis F.J. Slangen (4).............. 156,770 * - - *
William M. Weber (4)................ 133,976 * - - *
All executive officers and Directors
as a group(18 persons) (4).......... 3,776,088 12.2% 1,080,174 78.8% 32.4%
* Less than 1%.
** Pursuant to the Company's Amended and Restated Articles of Incorporation,
(i) all holders of Class B Common Shares are entitled to convert any or all
of their Class B Common Shares to Common Shares at any time, on a
share-for-share basis, and (ii) the Company may not issue any additional
Class B Common Shares unless such issuance is in connection with share
dividends on, or share splits of, Class B Common Shares.
(1) See Footnote 1 to the preceding table.
(2) See Footnote 2 to the preceding table.
(3) Mr. Nalley is a Director of the Company. Of the Common Shares listed as
beneficially owned by Mr. Nalley, 135,576 are owned by trusts for the
benefit of Mr. Nalley.
(4) The Common Shares beneficially owned by the Company's executive officers
and Directors as a group include an aggregate of 1,668,802 Common Shares
which may be acquired upon the exercise of stock options during the 60 days
following February 28, 2001. For purposes of calculating the percentage of
outstanding Common Shares beneficially owned by the Company's executive
officers and Directors as a group and their percentage of total voting
power, Common Shares which they had the right to acquire during said period
by exercise of stock options are deemed to be outstanding. The number of
Common Shares that may be acquired during such period by the exercise of
stock options for the noted individuals is as follows: Mr. Blouch, 320,115
shares; Mr. Boland, 12,916 shares; Mr. Carr, 3,417 shares; Mr. Delaney,
1,293 shares; Mr. Evans, 4,424 shares; Dr. Healy, 14,538 shares; Mr.
Miklich, 146,875 shares; Mr. Moore, 6,359 shares; Mr. Nalley, 3,417 shares;
Mr. Slangen, 122,650 shares; and Mr. Weber, 750 shares.
4
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and Directors and persons who own 10%
or more of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission (the "Commission"). Executive officers,
Directors and beneficial holders of more than 10% of the Company's Common Shares
are required by the Commission regulations to furnish the Company with copies of
all Forms 3, 4 and 5 that they file.
Based solely upon the Company's review of the copies of such forms it has
received, the Company believes that all of its executive officers, Directors and
beneficial holders of more than 10% of the Company's Common Shares complied with
all filing requirements applicable to them with respect to transactions during
the fiscal year ended December 31, 2000, except that (i) the sales by Dan T.
Moore of: 12,000, 39,600, 3,000 and 3,400 Common Shares on February 2, 2000,
November 9, 2000, November 10, 2000, and November 14, 2000, respectively, which
were reported on a Form 5 dated February 6, 2001 and (ii) the sale by M. Louis
Tabickman of 5,000 Common Shares on May 12, 2000, which was reported on a Form 5
dated February 12, 2001.
ELECTION OF DIRECTORS
Under the Company's Code of Regulations, as amended, the authorized number
of Directors of the Company shall be not less than five, nor more than fifteen.
The members of the Company's Board of Directors are divided into three classes
with a term of office of three years, with the term of one class expiring each
year. The size of the Board is currently fixed at twelve. At the Annual Meeting,
four Directors will be elected to serve a three-year term until the Annual
Meeting in 2003 or until their successors have been elected and qualified. Under
Ohio law and the Company's Amended and Restated Articles of Incorporation, the
individuals receiving the greatest number of votes cast at the Annual Meeting
will be elected as Directors of the Company. Accordingly, assuming a quorum
exists, abstentions and broker non-votes will have no effect on the election of
Directors. Holders of shares entitling them to exercise a majority of the voting
power of the Company, present in person or by proxy at the Annual Meeting, will
constitute a quorum for such meetings.
The Proxy holders named in the accompanying Proxy or their substitutes will
vote such Proxy at the Annual Meeting or any adjournments thereof "FOR" the
election of the four nominees for Director as named below, unless the
shareholder provides instruction by marking the appropriate space on the Proxy
that authority to vote is withheld. Each of the nominees, is presently a
Director of the Company and has indicated his willingness to serve as a Director
if elected. If any nominee should become unavailable for election (which
contingency is not now contemplated or foreseen), it is intended that the shares
represented by the Proxy will be voted for such substitute nominee as may be
named by the Board of Directors. In no event will the accompanying Proxy be
voted for more than four nominees or for persons other than those named below
and any such substitute nominee for any of them.
Nominees for Election
Name Age Position with the Company
- ---- --- -------------------------
Gerald B. Blouch 54 President, Chief Operating Officer and
a Director
John R. Kasich 48 Director
Dan T. Moore, III (1)(3) 61 Director
Joseph B. Richey, II 64 President - Invacare Technologies,
Senior Vice President - Electronic and
Design Engineering and a Director
5
Directors Continuing in Office
A. Malachi Mixon, III (3)(4)(5) 60 Chairman, Chief Executive Officer and
a Director
Frank B. Carr (1)(4)(5) 73 Director
Michael F. Delaney (4)(5) 52 Director
Dr. Bernadine P. Healy (2)(3)(5) 56 Director
James C. Boland (2)(6) 61 Director
Whitney Evans (2)(6) 64 Director
E.P. Nalley (4)(6) 81 Director
William M. Weber (1)(2)(6) 61 Director
- ----------
(1) Member of the Audit Committee. (5) Term as Director expires in 2002.
(2) Member of the Compensation Committee. (6) Term as Director expires in 2003.
(3) Member of the Nominating Committee.
(4) Member of the Investment Committee.
Gerald B. Blouch has been President and a Director of the Company since
November 1996. Mr. Blouch has been Chief Operating Officer since December 1994
and Chairman-Invacare International since December 1993. Previously, Mr. Blouch
was President-Homecare Division from March 1994 to December 1994 and Senior Vice
President-Homecare Division from September 1992 to March 1994. Mr. Blouch served
as Chief Financial Officer of the Company from May 1990 to May 1993 and
Treasurer of the Company from March 1991 to May 1993.
John R. Kasich was elected as a Director of the Company by the Board of
Directors, pursuant to the Company's Amended Code of Regulations, in March 2001.
Mr. Kasich is the managing director of Lehman Brothers' investment banking
group. He spent 18 years as a member of the House of Representatives of the
United States Congress, and served as head of the House Budget Committee from
1995 to 2000. He was the chief architect of the Balanced Budget Act of 1997,
which eliminated the federal budget deficits. As a committee chairman, he was
the House's top negotiator with the White House over details of the plan,
setting spending limits for all federal government agencies and cutting taxes.
Dan T. Moore, III has been a Director since 1980. Mr. Moore was the founder
and has been the owner of Dan T. Moore Co. since 1979; the principal owner and
Chairman of Soundwich, Inc. since 1988, Flow Polymers, Inc. since 1985, Perfect
Impression since 1984 and Advanced Ceramics since 1993, all of which are
manufacturing companies. He has been a Director of U.S. Enrichment Corporation
(NYSE) since 1998. Mr. Moore is also a Trustee of the Cleveland Clinic
Foundation, and is Chairman of Cleveland Clinic Home Care.
Joseph B. Richey, II has been a Director since 1980, and in 1992 was named
President-Invacare Technologies and Senior Vice President-Electronic & Design
Engineering. Previously, Mr. Richey was Senior Vice President-Product
Development from 1984 to 1992, and Senior Vice President and General
Manager-North American Operations from September 1989 to September 1992. Mr.
Richey also serves as a Director of Steris Corporation (NYSE), Cleveland, Ohio,
a manufacturer and distributor of medical sterilizing equipment, a Director of
Royal Appliance Manufacturing Co. (NYSE), Cleveland, Ohio, a manufacturer of
vacuum cleaners, a Director of Unique Mobility Inc. (AMEX), Golden, Colorado, an
engineering concern and manufacturer of high efficiency permanent magnet motors
and electronic controls, and Chairman of the Board of Directors of NeuroControl
Corporation, Cleveland, Ohio, a privately held company, which develops and
markets electromedical stimulation systems restoring function to paralyzed limbs
and muscles.
A. Malachi Mixon, III has been Chief Executive Officer since 1979 and
Chairman of the Board since 1983. Mr. Mixon has been a Director of the Company
since 1979 and also served as President until 1996, when Gerald B. Blouch, the
Company's Chief Operating Officer, was elected President by the Company's Board
of Directors. Mr. Mixon serves as a Director of The Lamson & Sessions Co.
(NYSE), Cleveland, Ohio, a supplier of engineered thermoplastic products and The
Sherwin-Williams Company (NYSE), Cleveland, Ohio, a manufacturer and distributor
of coatings and related products. Mr. Mixon also serves as Chairman of the Board
of Trustees of The Cleveland Clinic Foundation, Cleveland, Ohio, one of the
world's leading academic medical centers.
6
Frank B. Carr, a private investor, has been a Director since 1982. From
1983 to 1996, Mr. Carr was a Managing Director of McDonald & Company Securities,
Inc., Cleveland, Ohio, an investment banking and brokerage firm, and a partner
in its predecessor firm (McDonald & Company) from 1968. Mr. Carr also serves as
a Director of Preformed Line Products Company, Cleveland, Ohio, a supplier of
supports and connectors for electric power and communications lines.
Michael F. Delaney has been a Director since 1986. From 1983 to the
present, Mr. Delaney has been the Associate Director of Development of the
Paralyzed Veterans of America, Washington, D.C.
Dr. Bernadine P. Healy has been a Director since 1996. Dr. Healy has been
President and CEO, American Red Cross since September 1999. From 1995 to August
1999, Dr. Healy served as the Dean and Professor of Medicine of the College of
Medicine and Public Health of The Ohio State University, Columbus, Ohio. From
1994 to 1995, Dr. Healy served as Director of Health and Science Policy at The
Cleveland Clinic Foundation, Cleveland, Ohio; and from 1991 to 1993, she served
as Director of the National Institutes of Health in Bethesda, Maryland. From
1985 to 1991, Dr. Healy served as the Chairman of the Research Institute of The
Cleveland Clinic Foundation, Cleveland, Ohio. Dr. Healy is a Trustee of the
Battelle Memorial Institute in Columbus, Ohio. Dr. Healy also serves as a
Director of Medtronic, Inc. (NYSE), a producer of cardiac pacemakers; National
City Corporation (NYSE), Cleveland, Ohio, a bank holding company; and Ashland,
Inc. (NYSE), Covington, Kentucky, a company in oil and gas operations. Dr. Healy
also has been a Medical Contributor for CBS News.
James C. Boland has been a Director since 1998. Mr. Boland has served as
President and Chief Executive Officer of CAVS/Gund Arena Company (the Cleveland
Cavaliers and the Cleveland Rockers professional teams and Gund Arena) since
January 1998. Prior to his retirement from Ernst & Young in 1998, Mr. Boland
served for 22 years as a partner of Ernst & Young in various roles including
Vice Chairman and Regional Managing Partner, as well as a member of the firm's
Management Committee from 1988 to 1996, and as Vice Chairman of National
Accounts from 1997 to his retirement. Mr. Boland is a Director of The
Sherwin-Williams Company (NYSE), Cleveland, Ohio, a manufacturer and distributor
of coatings and related products, and is a Trustee of Leadership Cleveland, the
Great Lakes Science Center, Bluecoats, Inc. and The 50 Club of Cleveland.
Whitney Evans has been a Director since 1980. From 1980 to the present, Mr.
Evans has been a private investor. From 1998 to 2000, Mr Evans was a Director of
Victory Technology, Inc. and was Chairman of the Board of Directors. Victory
Technology, Inc. is an internet based distance learning company based in Sonoma,
Ca. From 1983 to 1997, Mr. Evans was an officer and a Director of Pine Tree
Investments, Inc., Cleveland, Ohio, a business and real estate investment firm.
E. P. Nalley has been a Director since 1983. From 1987 to 1991 when he
retired, Mr. Nalley was the Company's Senior Vice President - Sales and
Assistant to the President. Mr. Nalley is now a private investor. Mr. Nalley
also serves as a Director of Royal Appliance Manufacturing Co. (NYSE),
Cleveland, Ohio, a manufacturer of vacuum cleaners.
William M. Weber has been a Director since 1988. In 1994, Mr. Weber became
President of Roundcap L.L.C. and a principal of Roundwood Capital L.L.P., a
partnership that invests in public and private companies. From 1968 to 1994, Mr.
Weber was President of Weber, Wood, Medinger, Inc., Cleveland, Ohio, a
commercial real estate brokerage and consulting firm.
7
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the fiscal year ended
December 31, 2000. The Board of Directors has an Audit Committee, a Compensation
Committee, a Nominating Committee and an Investment Committee. The Audit
Committee reviews the activities of the Company's independent and internal
auditors and various company policies and practices. The members of the Audit
Committee are Frank B. Carr, Dan T. Moore, III and William M. Weber. Each of the
members of the Audit Committee satisfies the independence and financial literacy
requirements of the New York Stock Exchange. The Audit Committee met twice
during the last fiscal year. The Compensation Committee approves the grant of
stock options and reviews and determines the compensation of certain key
executives. The Compensation Committee met one time during the last fiscal year.
The Nominating Committee recommends candidates for election as Directors of the
Company and will consider all qualified nominees recommended by shareholders.
Such recommendations should be sent to Bernadine P. Healy, Chairman of the
Nominating Committee, Invacare Corporation, One Invacare Way, P.O. Box 4028,
Elyria, Ohio 44036-2125. The Nominating Committee met one time during the last
fiscal year. The Investment Committee, which met once during 2000, monitors the
status of investments by the Company's Profit Sharing Plan and investments made
by the Company's captive insurance subsidiary. During the last fiscal year, each
Director attended at least 75% of the aggregate of (i) the total number of
meetings of the Board of Directors held during the period he or she served as a
Director and (ii) the total number of meetings held by Committees of the Board
on which he or she served.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for reviewing the Company's existing and proposed executive
compensation plans and making determinations regarding the contents of these
plans and the awards to be made thereunder. The current members of the Committee
are James C. Boland (Chairman), Whitney Evans, Jr., Dr. Bernadine P. Healy and
William M. Weber, all of whom are non-employee Directors of the Company.
Set forth below is a discussion of the Company's compensation
philosophy, together with a discussion of the factors considered by the
Committee in determining the 2000 compensation of the Company's named executive
officers.
The Committee has determined, as a performance-driven business, that the
Company should reward outstanding financial results with commensurate
compensation. The Committee's strategy for carrying out this philosophy is to
link both annual and long-term executive compensation with the Company's
financial and operating performance. The Committee also recognizes the
importance of maintaining compensation at competitive levels in order to attract
and retain talented executives.
In order to gauge the competitiveness of the Company's executive
compensation levels, the Committee receives market data from an independent
consulting firm regarding executive compensation paid by other companies having
similar annual revenues, as well as larger employers with which the Company must
compete for talent ("Comparable Employers"). The Committee relies on its
independent consultant to identify a representative group of potentially
competitive employers. In determining the group of Comparable Employers, the
independent consultant assembled market data on companies having similar
projected revenues, with particular emphasis on durable goods manufacturers. In
addition, larger employers are surveyed, as the Committee believes they are also
significant competitors for executive talent. Thus, the Committee and its
independent consultant believe the Company's most direct competitors for
executive talent are not necessarily the companies that would be included in the
peer group established to compare shareholder returns. The data is then reviewed
and adjusted for the scope of the position within Invacare as compared to the
equivalent responsibilities of the survey data. Accordingly, the Comparable
Employers are not necessarily the same as those included in the industry indices
utilized in the Comparison of Five-Year Cumulative Total Return graph included
in this Proxy Statement.
8
The Committee also utilizes recommendations from the consulting firm on
various facets of the Company's executive compensation program. In general, base
salaries are established at market median levels for comparable positions but an
opportunity for significantly higher compensation is provided through annual
cash bonuses. These opportunities are dependent upon material year-to-year
improvement in earnings per share. In addition, long-term compensation is
awarded in the form of stock options or in other forms deemed appropriate by the
Committee in order to provide key executives with competitive financial
benefits, to the extent that shareholder value is enhanced.
Annual Base Salary. Because the Company has determined to link overall
compensation with financial performance, the base salary ranges for its
executives are targeted on an annual basis at approximately the 50th percentile
of ranges established by Comparable Employers for executives having similar
responsibilities. The Committee receives annual survey information from the
independent consultant and also reviews annual recommendations from the Chief
Executive Officer in order to establish appropriate salary levels for each of
the executive officers (other than the CEO). The Committee takes into account
whether each executive met key objectives in both financial and operating
categories, as well as potential future contributions. A determination is also
made as to whether the base salary provides an appropriate reward and incentive
for the executive to sustain and enhance the Company's long-term superior
performance. Important financial performance objectives (some of which may not
be applicable to all executives) include net sales, income from operations, cost
controls, earnings before income tax, earnings per share and return on assets.
Operating objectives vary for each executive and may change from year-to-year.
Financial and operating objectives are considered subjectively in the aggregate
and are not specifically weighted in assessing performance. Increases in 2000
base salaries were based on the subjective judgment of the Committee taking into
account the CEO's input regarding each executive's achievement of applicable
1999 operating and financial objectives and the targeted salary ranges as
determined by the market study received from the independent consultant.
Resulting base salaries for the Company's executives, when adjusted for the
change of responsibilities within Invacare, were at or near the targeted range
(including the CEO).
In determining the CEO's base salary for 2000, the Committee took into
account the survey results regarding a 50th percentile salary range of chief
executive officers at Comparable Employers and larger employers who may be
competing for executive talent, as well as the financial performance objectives
described above. The Committee noted that key acquisition activity occurred in
the United States, Europe, and Australia, from 1996 through 1999 under the CEO's
leadership. These acquisitions allowed the Company to grow market share and
extend current product lines, complement existing businesses, utilize its
distribution strength and expand its geographic presence. The CEO is the leading
industry spokesperson on behalf of the home medical equipment industry, putting
Invacare in a position to help shape public policy instead of being forced to
react to change in policy. The Committee noted the favorable legislation that
resulted from the activities of the CEO in this area. Substantial progress was
also made in meeting the Company's long-term strategic objectives that are set
by management and reviewed by the Board each year. It is the Committee's opinion
that these objectives are a key to the ongoing success of the Company. They also
reflect the CEO's strong understanding of the industry and what is required to
continue to sustain superior financial and operating performance. The Committee
also believes that the CEO has instituted actions that keep the Company's
strategic direction in line with the ever-changing marketplace in which the
Company operates. This includes his leadership role in identifying strategic
initiatives that need to be accelerated to keep the Company competitive and
recognizing the costs and benefits associated with these initiatives.
9
Annual Cash Bonus. Consistent with its philosophy that executive
compensation should be linked with the Company's financial performance, the
Committee has determined that annual total cash compensation (salary plus bonus)
should be targeted at the 75th market percentile of Comparable Employers when
the Company meets commensurately challenging financial goals, as previously
outlined, in addition to subjective factors as the Committee deems appropriate.
With the assistance of the independent consultant, the Committee has
determined (and annually reviews) the appropriate bonus targets for each
executive officer (as a percentage of his or her salary) so that annual total
cash compensation for such executive officer will reach the 75th market
percentile if targeted earnings per share objectives are achieved, but with
unlimited potential. During this process, the Committee may also determine that
an executive's performance (taking into account the same factors discussed above
with respect to base salary) and level of responsibilities warrant a change in
the bonus target percentage from the market norm.
Each year, the Committee considers the recommendation from the CEO
regarding the appropriate target for that year's earnings per share at which
target bonuses will be earned. Under normal conditions, no bonuses are payable
if earnings per share before unusual or non-recurring charges does not improve
over the prior year and bonuses increase on a linear basis if earnings per share
exceeds the targeted level. Targeted earnings per share before unusual items is
generally set at a level which the Committee believes is challenging but
achievable and when achieved the executives are deserving of compensation at the
75th market percentile.
The CEO's annual cash bonus was targeted to approximate the 75th percentile
of total cash compensation paid to chief executive officers by Comparable
Employers if the Company's earnings per share objective set by the Committee was
achieved. In determining the level of total cash compensation to be targeted for
the CEO in 2000, the Committee took into account the same factors and events
described above under "Annual Base Salary". Actual earnings per share improved
over 1999 and exceeded the internal targets established for the year. The total
cash compensation paid for 2000, including bonus, was at the targeted 75th
market percentile as determined by the Committee.
Survey data from the independent consultant indicates that the Company's
annual executive bonuses as a percent of net income at target levels remain
competitive with Comparable Employers.
Long-Term Compensation Program. The Company's long-term compensation
program is based on the award of stock options as well as other forms deemed
appropriate by the Committee. Total long-term compensation is targeted at
approximately the 75th percentile for long-term compensation by Comparable
Employers but with unlimited potential. Stock options generally are issued as
non-qualified options under the Invacare Corporation 1994 Performance Plan, are
granted at market price, vest in accordance with a schedule established by the
Committee and expire after ten (10) years.
Each year, the Committee determines the appropriate percentage of each
executive's salary which should be targeted as long-term compensation. The
targeted percentage of salary and the number of options proposed for each
executive officer may also be affected by the factors previously described in
establishing base salaries. The number of options granted to each executive
officer is determined based upon the previously agreed upon target level for
long-term compensation and upon the projected value of options as reflected by a
valuation formula recommended by the independent consultant. The number of
options granted to each executive in 2000 was based on the subjective judgment
of the Committee, taking into account the CEO's comments regarding the
executive's achievement of the applicable 1999 operating and financial
objectives (as described above under "Annual Base Salary") and the targeted
range for long-term compensation. No particular weight was assigned to any one
operating or financial objective. Outstanding options held by an executive
officer are generally not considered when the Committee determines the number of
new options to be granted. Utilizing the valuation formula recommended by the
Company's independent consultant, options granted to the Company's executives
(including the CEO) resulted in a value of long-term compensation at or near the
targeted range for each executive.
10
The Committee awarded options to the CEO in 2000 based upon the foregoing
targets and formula and taking into account the same factors and events utilized
in establishing the CEO's base salary for the year.
The Company made option grants in August 2000 with respect to long-term
compensation payable with respect to 2001. This was consistent with the
Committee's prior year determination to make option grants in August or
September of each year relating to the long-term compensation payable with
respect to the following fiscal year in order that the options will be in place
and will have the first annual incremental vesting date occur during the fiscal
year for which the long-term compensation is payable. In March 2000, the Company
also made a special stock option grant to the CEO, COO and CFO. The grants to
the COO and CFO vest 100% in 2005 and were made by the Committee as a retention
tool for these executives. The grant to the CEO vests over four years depending
upon the completion of specific goals related to succession planing.
Other Matters. The Committee believes that all long-term compensation
awarded to key executives in 2000 is "performance-based" and, therefore, will be
deductible notwithstanding Section 162(m) of the Internal Revenue Code of 1986.
However, the Committee has not adopted a policy with respect to whether all
future long-term or other compensation will satisfy the requirements of Section
162(m). The Committee intends to make a determination with respect to this issue
on an annual basis.
The Compensation Committee of the
Board of Directors of Invacare Corporation
James C. Boland, Chairman
Whitney Evans
Dr. Bernadine P. Healy
William M. Weber
11
SHAREHOLDER RETURN PERFORMANCE GRAPHS
The following graph compares the yearly cumulative total return on the
Company's Common Shares against the yearly cumulative total return of the
companies listed on the Standard & Poor's 500 Stock Index, the Russell 2000
Stock Index and the Standard & Poor's Midcap Health Services Index.
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Invacare 100 161 128 141 118 202
S&P 500 100 121 158 200 238 214
Russell 2000 100 115 138 133 160 153
Peer Group 100 90 82 77 50 86
* The Standard & Poor's Midcap Health Services Index is a
capitalization-weighted index that measures the performance of the medical
services sector of the Standard & Poor's Midcap Index. This index contains
companies that are affected by many of the same health care trends as
Invacare.
The above graph assumes $100 invested on December 31, 1995 in the Common Shares
of Invacare Corporation, S&P 500 Index, Russell 2000 Index and the S&P Midcap
Health Services Index, including reinvestment of dividends, through December 31,
2000.
12
COMPENSATION OF EXECUTIVE OFFICERS
The table below shows information for the three years ended December 31,
2000 concerning the annual and long-term compensation for services in all
capacities to the Company of the Chief Executive Officer and the four other most
highly compensated executive officers of the Company (the "Named Executive
Officers") for the year ended December 31, 2000.
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
---------------------------------------------- --------------------- -------------
Other All Other
Annual Securities Compen-
Name and Salary Bonus Compen- Underlying sation (1)
Principal Position Year ($) ($) sation ($) Options (#) ($)
-------------------------------- ------- ------------ ------------ ------------ --------------------- --------------
A. Malachi Mixon, III 2000 770,000 760,958 - 391,300 (2) 91,532
Chairman and Chief 1999 700,000 525,000 - 326,100 82,969
Executive Officer 1998 635,000 594,400 - 120,750 76,225
Gerald B. Blouch 2000 475,000 451,250 - 163,300 (2) 156,679
President and 1999 430,000 306,590 - 139,000 152,481
Chief Operating Officer 1998 392,000 367,000 - 57,600 131,135
Thomas R. Miklich, 2000 340,000 308,898 - 143,300 (2) 84,680
Chief Financial Officer, 1999 310,000 221,030 - 100,100 76,302
General Counsel, 1998 281,000 263,000 - 41,300 76,597
Corporate Secretary and
Interim V.P.-H.R.
Joseph B. Richey, II 2000 325,000 243,750 - 21,000 74,477
President-Invacare 1999 310,000 174,530 - 47,100 77,752
Technologies and Senior 1998 296,000 219,000 - 17,900 70,961
Vice President-Electronic
& Design Engineering
Louis F.J. Slangen 2000 265,000 165,625 - 21,000 83,220
Senior Vice President - 1999 250,000 117,250 - 45,800 70,412
Sales & Marketing 1998 239,000 147,000 - 18,600 67,165
-------------------------------- ------- ------------ ------------ ------------- ---------------- -- ---------------
(1) The amounts disclosed in this column include: (a) Company contributions in
the amount of $3,400 for each of Messrs. Mixon, Blouch, Richey, Miklich and
Slangen under the Company's 401(k) plan, a defined contribution plan; (b)
Company contributions in the amounts of $25,900, $15,632, $9,991, $6,121
and $7,645 for Messrs. Mixon, Blouch, Richey, Miklich and Slangen,
respectively, under the Company's 401(k) Plus Benefit Equalization Plan, a
defined contribution plan; (c) Company contributions in the amounts of
$6,800, for each of Messrs. Mixon, Blouch, Richey, Miklich and Slangen,
under the Company's Profit Sharing Plan, a defined contribution plan; (d)
Company contributions in the amounts of $45,380, $25,480, $14,760, $16,520
and $9,480 for Messrs. Mixon, Blouch, Richey, Miklich and Slangen,
respectively, under the Company's Profit Sharing Benefit Equalization Plan,
a defined contribution plan; (e) the payment of premiums on group term life
insurance policies of $2,322, $2,879, $4,150, $1,911 and $1,166 for Messrs.
Mixon, Blouch, Richey, Miklich and Slangen, respectively; (f) the dollar
value of compensatory split-dollar life insurance benefits, under the
Company's Executive Life Insurance Plan, in the amounts of $94,041,
$33,348, $45,500 and $51,492 for Messrs. Blouch, Richey, Miklich and
Slangen, respectively (Mr. Mixon is not covered by a split-dollar life
insurance benefit); (g) payments by the Company, related to premiums under
the Company's Executive Disability Income Plan, in the amounts of $8,447,
$2,028, $4,428 and $3,237 for Messrs. Blouch, Richey, Miklich and Slangen,
respectively (Mr. Mixon does not participate in the Company's Executive
Disability Income Plan); and (h) payment by the Company for the premium of
a disability insurance policy for Mr. Mixon amounting to $7,730.
(2) As described under "Compensation Committee Report on Executive
Compensation," the Company made two sets of stock option grants in 2000:
one in March of 2000 that related to special long-term compensation, and
one in August of 2000 that related to 2001 long-term compensation, both of
which have been aggregated for purposes of the above Table.
13
COMPENSATION OF DIRECTORS
The Company paid all Directors who were not employees ("Non-employee
Directors") a $19,500 annual retainer plus $2,000 per Board meeting attended.
Further, Non-employee Directors are eligible to defer compensation payable by
the Company for their services as a Director pursuant to the Invacare
Corporation 1994 Performance Plan. Messrs. Boland, Delaney, Evans, Healy and
Moore elected to defer $28,500, $2,950, $14,250, $29,500 and $30,500
respectively of their 2000 compensation and were issued stock options at a 25%
discount in accordance with the Plan. In addition, the Non-employee Directors
were eligible for a bonus of $4,000 based on profit objectives for 2000. Based
on 2000 operating results, each of the Non-employee Directors have been paid
$6,000 as the Company's profit exceeded the target level set at the beginning of
the year. For 2001, the Non-employee Directors are eligible to receive a bonus
of $4,000 if certain profit objectives are met. The bonus amount can be
increased if those objectives are exceeded.
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows, for the Named Executive Officers, the stock
options granted in 2000 under the Invacare Corporation 1994 Performance Plan. As
described under "Compensation Committee Report on Executive Compensation," the
Company made two sets of stock option grants in 2000: one in August of 2000 that
related to 2000 long-term compensation, and a special stock option grant to the
CEO, COO and CFO in March of 2000 that related to 2001 special long-term
compensation, both of which are set forth in the table below:
- --------------------------------------------------------------------------------
Individual Grants
- --------------------------------------------------------------------------------
Number % of
of Total
Securities Options Exercise
Underlying Granted to Price Potential Realizable Value
Options Employees (3) at Assumed Annual Rates
Granted (2) in Fiscal ($ per Expiration of Share Price Appreciation
Name (#) Year Share) Date for Option Term (1)
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
5% ($) 10%($)
- ------------------------------------------------------------------------------------------------------------------------
A. Malachi Mixon, III 250,000 37.0% 23.44 3/7/10 3,685,000 9,339,000
141,300 25.13 8/24/10 2,233,000 5,659,000
Gerald B. Blouch 100,000 15.4% 23.44 3/7/10 1,474,000 3,736,000
63,300 25.13 8/24/10 1,000,000 2,535,000
Thomas R. Miklich 100,000 13.5% 23.44 3/7/10 1,474,000 3,736,000
43,300 25.13 8/24/10 684,000 1,734,000
Joseph B. Richey, II 21,000 2.0% 25.13 8/24/10 332,000 841,000
Louis F.J. Slangen 21,000 2.0% 25.13 8/24/10 332,000 841,000
All Shareholders (4) N/A N/A N/A N/A 915,200,000 2,328,700,000
- -------------------------- ---------------- ------------ ----------- ------------- ---------------- -- -----------------
(1) Potential Realizable Value is based on assumed annual growth rates for the
term of the option. The assumed rates of 5% and 10% are set by the
Securities and Exchange Commission and are not intended to be a forecast of
the Company's Common Share price. There is no assurance that the value
realized will be at or near the value estimated in the Potential Realizable
Value applied to value the stock options. Actual gains, if any, on stock
options exercised are dependent on the actual performance of the stock.
(2) Options become 100% exercisable on March 5, 2005 (with respect to the
grants in March 2000) and September 30 (with respect to the grants in
August 2000), over four years at a rate of 25% per year, commencing in
2001.
(3) The exercise price is equal to the fair market value of the Company's
Common Shares on the date of grant.
(4) The potential gain realizable by all shareholders (based on 28,575,687
Common Shares and 1,432,599 Class B Common Shares as of March 7, 2000 and
28,726,480 Commons Shares and 1,412,031 Class B Common Shares as of August
24, 2000 outstanding, at the fair market value exercise prices of $23.44
and $25.13 per share as of the grant dates of March 7 and August 24, 2000,
respectively) at 5% and 10% assumed annual rates over a term of 10 years is
provided as a comparison to the
potential gain realizable by the Named Executive Officers at the same
assumed annual rates of appreciation in share value over the same 10-year
term. The value of a Common Share would appreciate to approximately $38.00
and $61.00 per share for the March 2000 grants and $41.00 and $65.00 per
share for the August 2000 grants at the assumed 5% and 10% annual growth
rates, respectively.
14
Each of the options issued under the Stock Option Plans includes a
provision which provides that the option shall become immediately exercisable
(notwithstanding any vesting schedule otherwise contained in the option) upon
the commencement of a tender for the Company's Common Shares or at any time
within 90 days prior to a dissolution, liquidation or certain mergers or
consolidations of the Company. Upon the occurrence of such a merger or
consolidation, the option shall be subject to such adjustment or amendment as
the Compensation Committee of the Board of Directors deems appropriate and
equitable. Under the terms of the Stock Option Plans, the Committee may also
grant reload options under such circumstances as it deems appropriate.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The table below shows information with respect to options exercised by, and
the value of unexercised options under the Stock Option Plans for, the Named
Executive Officers.
--------------------------------------------------------------------------------------------------------------------
Aggregated Option Exercises in 2000 and Option Value at Year-End 2000
--------------------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised In-the-
Number of Underlying Unexercised Money Options at
Shares Value Options at 12/31/00 (#) 12/31/00 (2)($)
Acquired on Realized ---------------------------- -------------------------------
Name Exercise (#) (1) ($) Exercisable Unexercisable Exercisable Unexercisable
-------------------------- --------------- ------------ ---------------------------- -------------------------------
A. Malachi Mixon, III 140,400 3,425,400 552,521 728,149 8,225,759 8,161,247
Joseph B. Richey, II 57,200 1,476,475 214,715 75,525 3,898,204 848,995
Louis F.J. Slangen 40,940 785,401 107,425 69,775 1,720,950 790,025
Gerald B. Blouch 40,000 907,500 297,490 313,850 4,765,967 3,508,066
Thomas R. Miklich 22,800 282,818 118,575 253,525 1,336,920 2,824,311
--------------------------- ------------- -------------- ------------ ----------- ---------------- -----------------
(1) Represents the difference between the option exercise price and the closing
price of the Common Shares on the NYSE on the date of exercise.
(2) The "Value of Unexercised In-the-Money Options at 12/31/00" is equal to the
difference between the option exercise price and the closing price of
$34.25 of a Common Share on the NYSE on December 31, 2000.
PENSION PLANS
The Company has established a Supplemental Executive Retirement Plan for
certain executive officers to supplement other savings plans offered by the
Company to provide a specific level of replacement compensation for retirement.
The annual benefit is a single-life annuity in an amount equal to a portion of
final earnings (maximum is 50% at 15 years of service). This annual benefit is
reduced by the annual value of the Company contributions to the qualified Profit
Sharing Plan, Company contributions to the nonqualified 401(k) Plus and Profit
Sharing Equalization Plans, and one-half of the annual Social Security benefit
plus other offsets. The plan is a nonqualified plan and therefore the benefits
accrued under this plan are subject to the claims of the Company's general
creditors in the event of bankruptcy. The benefits will be paid (i) from an
irrevocable grantor trust funded from the Company's general funds or (ii)
directly by the Company from general funds.
15
The following table reflects the estimated annual single-life annuity
payment, without reductions for applicable offsets, payable to a participant
retiring in 2000 at age 65.
Pension Table
---------------------------- ---------------------------------------
Years of Service (2)
------------ ------------- ------------
Remuneration (1) 5 10 15
---------------------------- ------------ ------------- ------------
200,000 33,333 66,667 100,000
300,000 50,000 100,000 150,000
400,000 66,667 133,333 200,000
500,000 83,333 166,667 250,000
600,000 100,000 200,000 300,000
700,000 116,667 233,333 350,000
800,000 133,333 266,667 400,000
900,000 150,000 300,000 450,000
1,000,000 166,667 333,333 500,000
1,100,000 183,333 366,667 550,000
1,200,000 200,000 400,000 600,000
---------------------------- ------------ ------------- ------------
(1) Remuneration for purposes of calculating pension benefit based on final
base salary and target bonus.
(2) The pension benefits represent annual single-life annuity values subject to
reduction by applicable offsets (as described above). For purposes of
estimating a pension benefit as of December 31, 2000, the current years of
service credited for the Named Executive Officers are 20, 15, 16, 15 and 15
years for Messrs. Mixon, Blouch, Richey, Miklich and Slangen, respectively.
TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
Severance Pay Agreements. To ensure continuity and the continued dedication
of key executives during any period of uncertainty caused by the possible threat
of a takeover, the Company has entered into severance pay agreements with
certain key executives, including each of the Named Executive Officers. In the
event there is a Change of Control (as that term is defined in the agreements)
of the Company and the employment of the contracting executive terminates under
certain conditions described in the agreements at any time during the three year
period following a Change of Control of the Company, the executive will receive
an agreed upon amount of severance pay.
For all of the Named Executive Officers, the severance pay agreements
provide that upon termination for any reason other than death, Disability, by
the Company for Cause or by the executive for other than Good Reason (as such
terms are defined in the agreements), the executive will receive, in addition to
accrued salary, bonus and vacation pay: (a) a lump sum cash amount equal to
three times annual base salary plus the executive's target bonus; (b) continued
participation in the Company's employee welfare benefit plans and other benefit
arrangements for a period of three years following termination; (c) 401(k),
401(k) Plus, profit sharing and retirement benefits so that the total retirement
benefits received will be equal to the retirement benefits which would have been
received had such executive's employment with the Company continued during the
three year period following termination; and an additional amount which will
offset, on an after-tax basis, the effect of any excise tax which the executive
is subject to under Section 4999 of the Code relating to his receipt of "excess
parachute payments."
The salary and other benefits provided by the severance pay agreements will
be payable from the Company's general funds. The Company has agreed to indemnify
such executives for any legal expense incurred in the enforcement of their
rights under the severance pay agreements.
16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors during
2000 were James C. Boland, Whitney Evans, Dr. Bernadine P. Healy and William M.
Weber.
During 1996, the Company became an investor in Unique Mobility, Inc., a
world leader in the development of high performance DC Motors. Mr. Richey serves
on the Unique Mobility board of directors. During 2000, the Company purchased
Gearless/Brushless motors from Unique Mobility for approximately $2,100,000.
During 2000, the Company purchased travel services from a third party
private aircraft charter company. One of the aircrafts available to be used by
the charter company is owned by Messrs. Mixon and Richey. The Company paid
approximately $453,000 to the charter company for use of the aircraft owned by
Messrs. Mixon and Richey. Invacare believes that the prices and terms charged
are no less favorable than those which could be obtained from unrelated parties.
As of March 2001, Mr. Miklich was indebted to the Company based on a loan
approved by the Compensation Committee pursuant to its executive compensation
philosophy and the Company's overall compensation program. The amount
outstanding as of March 2001, was approximately $1.3 million and is interest
bearing and payable upon demand of the Company.
AUDIT COMMITTEE AND RELATED MATTERS
Report of the Audit Committee
The Audit Committee oversees the Company's financial reporting process on
behalf of the Board of Directors. The Audit Committee's activities are governed
by a written charter adopted by the Board of Directors, a copy of which is
attached to this Proxy Statement as Appendix A.
Management has the primary responsibility for the Company's financial
statements and the reporting process, including the system of internal controls.
The independent auditors audit the annual financial statements prepared by
management and express an opinion on the conformity of those financial
statements with accounting principles generally accepted in the United States.
The Audit Committee monitors these processes.
In this context, the Audit Committee met and held discussions with
management and the independent auditors. Management represented to the Audit
Committee that the Company's financial statements were prepared in accordance
with accounting principles generally accepted in the United States, and the
Audit Committee reviewed and discussed the audited financial statements with
management and the independent auditors, including a discussion of the quality,
not just the acceptability, of the accounting principles, the reasonableness of
specific judgments and the clarity of disclosures in the financial statements.
The Audit Committee also discussed with the independent auditors such other
matters as are required to be discussed with the Audit Committee under generally
accepted auditing standards.
In addition, the independent auditors provided to the Audit Committee
the written disclosures and letter required by Independence Standards Board
Standard No. 1 (Independence Discussions With Audit Committees), related to the
auditors' independence. The Audit Committee discussed with the independent
auditors the auditors' independence from the Company and its management and
considered the compatibility of non-audit services with the auditors'
independence.
The Audit Committee discussed with the Company's financial management
and independent auditors the overall scope and plans for the audit. The Audit
Committee also met with the independent auditors, with and without management
present, to discuss the results of the examinations, their evaluation of the
Company's internal controls and the overall quality of the Company's financial
reporting. In addition, the Audit Committee considered other areas of its
oversight relating to the financial reporting process that it determined
appropriate.
17
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board of Directors has
approved, that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2000 for filing with
the Securities and Exchange Commission.
AUDIT COMMITTEE
Frank B. Carr
Dan T. Moore, III
William M. Weber
INDEPENDENT AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
re-appointed Ernst & Young L.L.P. as independent auditors to audit the financial
statements of the Company for the fiscal year ending December 31, 2001. Fees for
services rendered by Ernst & Young L.L.P. for the last fiscal year were:
Financial Information Systems
Audit Fees Design and Implementation Fees All Other Fees
---------- ------------------------------ --------------
$611,000 $0 $1,822,000
Fees for all other services included audit related services of $335,000,
primarily for statutory audits and business acquisitions, and nonaudit services
of $1,487,000, primarily for tax compliance and tax consulting services.
Representatives of Ernst & Young L.L.P. are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they so
desire and are expected to be available to respond to appropriate questions.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented at the
Annual Meeting other than those stated in the Notice of Annual Meeting of
Shareholders. However, if other matters properly come before the Annual Meeting,
it is the intention of the persons named in the accompanying Proxy to vote in
accordance with their best judgment on such matters in the absence of
instructions to the contrary. Any shareholder who wishes to submit a proposal
for inclusion in the proxy material to be distributed by the Company in
connection with its Annual Meeting of Shareholders to be held in 2002 must do so
no later than December 17, 2001. To be eligible for inclusion in the 2002 Proxy
material of the Company, proposals must conform to the requirements set forth in
Regulation 14A under the Exchange Act.
The Company may use its discretion in voting Proxies with respect to
Shareholder proposals not included in the Proxy Statement for the Annual Meeting
of Shareholders to be held in 2002, unless the Company receives notice of such
proposals prior to March 1, 2002.
Upon the receipt of a written request from any shareholder, the Company
will mail, at no charge to the shareholder, a copy of the Company's
2000 Annual Report on Form 10-K, including the financial statements and
schedules required to be filed with the Securities and Exchange
Commission pursuant to Rule 13a-1 under the Exchange Act, for the
Company's most recent fiscal year. Written requests for such Report
should be directed to:
Shareholder Relations Department
Invacare Corporation
One Invacare Way, P.O. Box 4028
Elyria, Ohio 44036-2125
18
You are urged to sign and return your Proxy promptly in the enclosed return
envelope to make certain your shares will be voted at the Annual Meeting.
By order of the Board of Directors
/S/ Thomas R. Miklich
---------------------------
Thomas R. Miklich,
Secretary
19
Appendix A
Audit Committee Charter
Mission Statement
Assist the Board of Directors in fulfilling its oversight responsibilities
related to internal control, financial reporting, compliance with laws and
regulations, compliance with the Company's legal and ethical conduct policy and
the conduct of internal and external audit activities.
Functions
Review the Company's independent auditors, the scope of the upcoming annual
audit procedures to be utilized, and the cost of audit.
Review with the chief financial officer and/or corporate controller the
annual internal audit plan for the coming year and the coordination of such
programs with the independent auditors.
Review with the independent auditors the results of the annual audit, any
deviations in the proposed audit procedures, and any recommendations for
improvement of internal control.
Review with the chief financial officer and/or corporate controller the
progress on the proposed internal audit plan for the year, a summary of
findings, and reasons for any deviation from the original plan.
Review with the independent auditors any matters or recommendations
regarding the Company which the independent auditors may wish to bring to the
attention of the Board of Directors.
Review of the Company's annual financial statements and footnotes thereto
with the independent auditors and management of the Company prior to the release
of the annual report to determine that the independent auditors are satisfied
with the content and disclosure of the financial statements, be informed of
procedures involved in developing quarterly financial information, and the
extent of external auditor involvement in quarterly reviews.
Make available at all Committee meetings sufficient opportunity for the
independent auditors to meet with the Committee without management of the
Company present.
Sufficient opportunity will likewise be made available for management to
meet confidentially with the Committee and for the chief financial officer
and/or corporate controller to meet confidentially with the Committee. The
independent auditors have private and confidential access to the Committee at
all times. If the Company has an internal audit function, the internal auditors
will also have such access.
Make inquiries of management, independent auditors and the chief financial
officer and/or corporate controller so the Committee can report to the Board of
Directors that the Company's accounting and reporting practices are in
accordance with all applicable requirements.
20
Evaluate whether management is setting appropriate tone at the top with
respect to internal control and is communicating the importance of internal
control throughout the organization.
Review systems in place for monitoring compliance with laws and regulations
and obtain periodic updates from the general counsel.
Review and ensure that the legal and ethical conduct policy is communicated
throughout the organization and that management has set the appropriate tone at
the top by stressing the importance of the policy and compliance thereto.
Members
The Committee shall be appointed by the Board of Directors and shall be
comprised of at least three directors; each of who is independent of management
and the Company. Members of the Committee shall be considered independent if
they have no relationship that may interfere with the exercise of the
independence from management and the Company. All Committee members shall be
financially literate and at least one member shall have accounting or related
financial management experience.
Quorum
A majority of the members.
Chairman
Elected annually by the Board of Directors.
Term
Shall serve until their successors are elected.
Reports
All action shall be reported to the Board of Directors at the Board's first
regular meeting thereafter.
21
INVACARE CORPORATION
PROXY FOR COMMON SHARES AND CLASS B COMMON SHARES
Annual Meeting of Sareholders --- May 24, 2001
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby (i) appoints A. MALACHI MIXON, III, WHITNEY EVANS
and JOSEPH B. RICHEY, II, and each of them, as Proxy holders and attorneys, with
full power of substitution, to appear and vote all the Common Shares and Class B
Common Shares of INVACARE CORPORATION, which the undersigned shall be entitled
to vote at the Annual Meeting of Shareholders of the Company, to be held at the
Lorain County Community College, Spitzer Conference Center, 1005 North Abbe
Road, Elyria, Ohio on Thursday, May 24, 2001 at 10:00 A.M. (EDT) and at any
adjournments thereof, hereby revoking any and all Proxies heretofore given, and
(ii) authorizes and directs said Proxy holders to vote all the Common Shares and
Class B Common Shares of the Company represented by this Proxy as follows, with
the understanding that if no directions are given below, said shares will be
voted "FOR" the election of the four Directors nominated by the Board of
Directors.
(1) ELECTION OF DIRECTORS.
( ) FOR all nominees listed (except as ( ) WITHHOLD AUTHORITY to vote for
marked to the contrary below) all nominees listed
Gerald B. Blouch, John R. Kasich, Joseph B. Richey, II, and Dan T. Moore
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the following line.)
________________________________________________________________________________
(Continued and to be signed on other side)
(Proxy --- continued from other side)
(2) In their discretion to act on any other matters which may properly come
before the Annual Meeting.
Dated____________________________ , 2001
______________________________________
Your signature to the Proxy form should be exactly the same
as the name imprinted hereon. Persons signing as executors,
administrators, trustees or in similar capacities should so
indicate. For joint accounts, the name of each joint owner
must be signed.
Please date, sign and return promptly in the accompanying envelope.