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:
(x) Preliminary Proxy Statement ( ) Confidential for Use of the
Commission Only (as Permitted
by Rule 14a-6(e)(2))
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to 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) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee Paid:
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( ) Fee paid previously with preliminary materials.
( ) 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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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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1
899 Cleveland Street
Elyria, Ohio 44035
April 12, 1996
To the Shareholders of
INVACARE CORPORATION:
This year's Annual Meeting of Shareholders will be held at 10:00 A.M.
(EDT), on Wednesday, May 22, 1996, at the Lorain County Community College,
Stocker Center, 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 of the Board,
President and Chief
Executive Officer
2
INVACARE CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 22, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Invacare
Corporation (the "Company") will be held at the Lorain County Community College,
Stocker Center, 1005 North Abbe Road, Elyria, Ohio on Wednesday, May 22, 1996,
at 10:00 A.M. (EDT), for the following purpose:
1. To approve and adopt an amendment to Article IV of the Company's Amended
and Restated Articles of Incorporation to increase the number of authorized
Common Shares, without par value, of the Company from Fifty Million (50,000,000)
to One Hundred Million (100,000,000);
2. To approve and adopt an amendment to Article III, Section 2 of the
Company's Code of Regulations which will (a) increase the maximum number of
Directors of the Company from nine to fifteen, (b) authorize the shareholders to
increase or decrease the total number of Directors within the limits of five and
fifteen, (c) authorize the Directors to increase or decrease the total number of
Directors within the limits of five and fifteen, by no more than two between
shareholders' meetings, and to fill vacancies created by any such increase, and
(d) clarify the method of dividing Directors among three classes;
3. Subject to the prior adoption of Proposal 2 above, to fix the total
number of Directors at ten;
4. To elect three Directors or, subject to the prior adoption of Proposals
2 and 3 above, four Directors, to the class whose three-year term of office will
expire in 1999; and
5. 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 Friday, March 29, 1996 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 Proxies and vote in person.
By order of the Board of Directors,
/S/ Thomas R. Miklich
-----------------------------------
Thomas R. Miklich
Secretary
April 13, 1996
3
INVACARE CORPORATION
PRELIMINARY PROXY STATEMENT
Mailed on or About April 12, 1996
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 22, 1996
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") to be used at the Annual Meeting of Shareholders of
the Company to be held on May 22, 1996 and any adjournments thereof. The time,
place and purpose 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 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. If either Proposal 2 or 3 (as described
below) is not approved, the Proxies will be voted "FOR" the election of the
three nominees who are currently directors.
VOTING RIGHTS
At the close of business on March 29, 1996, the Company had ________
Common Shares, without par value ("Common Shares"), and _______ 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 March 29, 1996 will be
entitled to one vote for each share held by them and the holders of the
outstanding Class B Common Shares as of March 29, 1996 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 March 29, 1996 are entitled
to notice of and to vote at the Annual Meeting.
4
SHARE OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
Share ownership of certain beneficial owners. The following table sets forth, as
of February 28, 1996, the share ownership of each person or group known by the
Company to beneficially own more than 5% of the total voting power of either
class of shares of the Company:
Class B
Common Shares Common Shares
beneficially owned beneficially owned *
------------------ -------------------- Percentage
Number Number of total
Name and business address of of voting
of beneficial owner shares Percentage shares Percentage power
- - -----------------------------------------------------------------------------------------------------------------
A. Malachi Mixon, III(1)........................ 1,444,298 5.1% 703,912 42.0% 19.0%
899 Cleveland Street, Elyria, Ohio 44035
Joseph B. Richey, II(2)......................... 789,482 2.8% 367.438 21.9% 10.0%
899 Cleveland Street, Elyria, Ohio 44035
Invacare Corporation Employees'
Stock Bonus Trust and Plan (3)................... 732,604 2.6% 261,746 15.6% 7.5%
899 Cleveland Street, Elyria, Ohio 44035
* 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, President and Chief
Executive Officer of the Company. 435,060 Common Shares beneficially owned by
Mr. Mixon consist of Common Shares which may be acquired upon the exercise of
stock options during the 60 days following February 28, 1996. 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. 15,986 of the Common Shares beneficially owned by Mr.
Mixon are owned by his son. In addition, included in the number of shares
beneficially owned by Mr. Mixon are 313,698 of Common Shares owned by a
Charitable Remainder Unitrust. The number of shares shown as beneficially owned
by Mr. Mixon does not include 251,376 Common Shares which have been transferred
into two trusts for the benefit of his two children. Mr. Mixon disclaims
beneficial ownership of such shares.
5
(2) Joseph B. Richey, II is President-Invacare Technologies, Senior Vice
President-Total Quality Management and is a Director of the Company. The
Common Shares beneficially owned by Mr. Richey include 285,670 Common
Shares which may be acquired upon the exercise of stock options during the
60 days following February 28, 1996. 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. In addition, included in the number of shares
beneficially owned by Mr. Richey are 51,734 of Common Shares owned by a
Charitable Remainder Unitrust.
(3) The Invacare Corporation Stock Bonus Trust and Plan is an employee benefit
plan established and operated as a trust for the benefit of the Company's
employees. The Charles Schwab Trust Company is the trustee of the Invacare
Corporation Stock Bonus Plan, with Invacare Corporation as Administrator of
the Plan. As such, the shares held by the Plan are voted at the Company's
direction.
Share ownership of management. The following table sets forth as of February 28,
1996, the share ownership of all Directors, each of the Named Executive Officers
(as defined below) and of all Directors and executive officers as a group:
Common Shares Class B Common Shares
beneficially owned beneficially owned * Percentage
------------------ -------------------- of total
Number Number voting
Name of beneficial owner of shares Percentage of shares Percentage power
------------------------ --------- ---------- --------- ---------- -----
Gerald B. Blouch (4)............. 157,050 * - - *
Francis J. Callahan,Jr........... 240,000 * - * *
Frank B.Carr..................... 99,700 * - - *
Michael F.Delaney................ 11,000 * - - *
Whitney Evans.................... 40,000 * - - *
Thomas R. Miklich(4)............. 43,550 * - - *
A. Malachi Mixon, III(1)......... 1,444,298 5.1% 703,912 40.0% 19.0%
Dan T. Moore, III ............... 593,520 2.1% - - 1.3%
E. P. Nalley(3).................. 206,054 * - - *
Joseph B. Richey, II(2).......... 789,482 2.8% 367,438 21.9% 10.0%
Louis F.J. Slangen(4)............ 196,160 * - - *
William M.Weber.................. 282,000 1.0% - - *
All executive officers and Directors
as a group (16 persons)(4)....... 5,576,468 20.0% 1,071,350 63.9% 36.4%
* Less than 1% of outstanding shares of such class.
** 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.
6
(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 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 1,381,920 Common Shares
which may be acquired upon the exercise of stock options during
the 60 days following February 28, 1996. 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 that
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, 157,050 shares; Mr. Miklich, 28,350
shares; and Mr. Slangen, 171,240 shares.
Based solely upon a review of the Forms 3, 4 and 5, and amendments
thereto, submitted to the Company during and with respect to its most recent
fiscal year, the Company is not aware of any person that is subject to Section
16 of the Securities Exchange Act of 1934 (the "Exchange Act") with respect to
the Company, that has failed to file, on a timely basis (as disclosed in the
aforementioned Forms), reports required by Section 16(a) of the Exchange Act
during fiscal 1995.
PROPOSAL 1
Amendment to Article IV of the Company's Amended
and Restated Articles of Incorporation
On February 2, 1996, the Board of Directors recommended the adoption
by the shareholders of a proposed amendment to Article IV of the Amended and
Restated Articles of Incorporation of the Company which would increase the
number of Common Shares which the Company shall have authority to issue from
Fifty Million (50,000,000) to One Hundred Million (100,000,000).
The proposed increase in the number of authorized Common Shares has
been deemed advisable by the Board of Directors in order to provide additional
authorized but unissued shares for issuance from time-to-time for such proper
corporate purposes as may be determined by the Board, without further action or
authorization by the shareholders. Such corporate purposes might include the
acquisition of additional capital funds through the issuance of shares, the
acquisition or merger into the Company of other companies or the declaration of
share splits and/or share dividends.
If this proposal is adopted, there will be ___________ authorized but
unissued Common Shares unreserved and available for future issuance (based on
information regarding outstanding Common Shares as of the record date of March
29, 1996). For every Class B Common Share that is issued and outstanding
(_________ as of the record date), the Company must have one Common Share
reserved for issuance in the event of the conversion of Class B Common Shares
into Common Shares. In addition, for every Common Share and Class B Common Share
that is issued and outstanding, the Company must have one-tenth of a Common
Share reserved for possible issuance pursuant to the Rights declared by the
Company's Board of Directors on [July 7, 1995], pursuant to a Rights Agreement
dated July 7, 1995 between the Company and a local bank that were issued to
every holder of record of Common Shares and Class B Common Shares at the close
of business on July 18, 1995. Further, ________ unissued Common Shares have been
reserved for outstanding unexercised stock option grants issued pursuant to the
Invacare Corporation Stock Option Plans as of the record date and, ___________
unissued Common Shares have been reserved for future issuance pursuant to the
Invacare Corporation 1994 Performance Plan as of the record date. An additional
Fifty Thousand (50,000) Common Shares have been reserved for issuance under the
1992 Non-Employee Director Stock Option Plan (none of which are outstanding
as of the record date).
7
The proposed increase in the number of authorized Common Shares will not
change the rights of holders of presently outstanding Common Shares. The newly
authorized shares will have the same rights as the present outstanding shares.
Present shareholders of the Company would not have any preemptive rights to
purchase any portion of the newly authorized shares.
The increase in authorized but unissued shares may have an
anti-takeover effect in that additional shares could be used to dilute the stock
ownership of persons seeking to obtain control of the Company. The resulting
effect may be to render more difficult or to discourage the possibility of
certain mergers, tender offers or proxy contests.
If the proposed amendment is approved, all or any part of the
authorized, but unissued shares may thereafter be issued without further
approval from the shareholders, except as required by law or the policies of any
stock exchange or registered securities association on which the shares of stock
of the Company may be listed, if any, for such purposes and on such terms as the
Board of Directors may determine. The Company is not presently subject to any
law or stock exchange or registered securities association policy which would
require further shareholder approval prior to issuance of the shares, except in
certain limited situations, including the issuance of a substantial block of
such shares.
The persons named in the accompanying proxy or their substitutes will vote
such proxy for this proposal unless it is marked to the contrary. The
affirmative vote of a majority of the total voting power of the Company,
represented by the holders of Common Shares and Class B Common Shares, voting as
one class, is required for the adoption of the proposal to approve and adopt the
amendment. Hence, abstentions and broker non-votes with respect to this proposed
amendment will have the same effect as votes against the amendment.
The Board of Directors recommends a vote "FOR" approval and adoption of the
proposal to amend Article IV of the Company's Amended and Restated Articles of
Incorporation to increase the number of authorized Common Shares of the Company
from Fifty Million (50,000,000) to One Hundred Million (100,000,000).
PROPOSAL 2
Amendment to Article III of the Company's Code of Regulations
The Company's current Code of Regulations allows the shareholders, by a
vote of the holders of Common Shares and Class B Common Shares representing a
majority of the total voting power of the Company, to fix the number of
Directors at not less than five nor more than nine. The number of Directors is
currently fixed at nine. The members of the Board of Directors are divided into
three classes each having a term of office of three years, with the term of one
class expiring each year.
The Board of Directors is unanimously recommending the proposal to amend
Article III, Section 2 of the Company's Code of Regulations. The complete text
of Article III, Section 2, as it is proposed to be amended, is set forth in
Appendix A to this Proxy Statement, and the following summary of the proposed
amendment is qualified in its entirety by reference to the exact terms set forth
in Appendix A. The proposed amendment would:
8
(a) increase the maximum possible number of Directors from nine to fifteen;
(b) authorize the shareholders, by a vote of the holders of a majority of
the voting power represented at an Annual or Special Meeting at which
a quorum is present, to increase or decrease the total number of
Directors within the limits of five and fifteen;
(c) authorize the Directors, to increase or decrease the total number
of Directors by not more than two at any time between
shareholders' meetings and to fill vacancies created by any such
increase; and
(d) allow the shareholders or Directors, whichever have created the vacancy
by increasing the total number of Directors, to determine the class
or classes into which the newly elected Director or Directors will be
elected, so long as the three classes of Directors remain as nearly
equal in size as is possible.
If the proposed amendment is approved, the Board has recommended that the
shareholders fix the number of Directors at ten for the ensuing year and that
the class of Directors to be elected at this 1996 Annual Meeting be increased
from three to four. In the event of approval of the amendment and of the
recommendation to fix the number of Directors at ten, Dr. Bernadine Healy has
been proposed for election to the new position on the Board. The remaining three
nominees at this 1996 Annual Meeting, Messrs. A. Malachi Mixon, III, Frank B.
Carr and Michael F. Delaney, are currently serving a three-year term which will
expire at this 1996 Annual Meeting. If either Proposal 2, to amend the Code of
Regulations, or Proposal 3, to fix the number of Directors at ten, is not
approved, proxies solicited by the Board of Directors will be voted for the
election of Messrs. Mixon, Carr and Delaney.
The reasons for the Board's recommendation that the proposed amendment
be approved are to allow the Board of Directors to expand its size from time to
time to allow the election of additional, qualified nominees who may be brought
to the attention of the Company and to provide flexibility to the Company to add
these individuals as Directors, by action of the existing Board, without being
required to wait until the next Annual Meeting of Shareholders or to undergo the
expense of calling a Special Meeting to expand the Board and elect a new
Director (or Directors).
The proposed amendment to allow the Board of Directors to be increased
in size up to 15 members, and to allow the Directors to elect up to two
additional Directors to fill such vacancies between shareholder meetings may
have an antitakeover effect because it may lengthen, under certain conditions,
the time required for effecting a change in control of the Board. The resulting
effect may be to render more difficult or to discourage the possibility of
certain mergers, tender offers or proxy contests.
The persons named in the accompanying proxy or their substitutes will vote
such proxy for this proposal unless it is marked to the contrary. The
affirmative vote of the holders of a majority of the total voting power of the
Company, represented by the holders of Common Shares and Class B Common Shares,
voting as one class, is required for the adoption of the proposal to approve and
adopt the amendment. Hence, abstentions and broker non-votes with respect to
this proposed amendment will have the same effect as votes against the
amendment.
The Board of Directors recommends that shareholders vote "FOR" approval and
adoption of the proposed amendment to the Code of Regulations.
9
PROPOSAL 3
To Fix the Number of Directors at Ten
Subject to the prior adoption by the shareholders of Proposal 2 to amend
Article III, Section 2 of Invacare's Code of Regulations, the Board of Directors
is unanimously recommending to the shareholders that the number of Directors of
the Company be fixed at ten and that the additional Director resulting from this
proposal be placed in the class of Directors to be elected at this 1996 Annual
Meeting of Shareholders. By fixing the number of Directors at ten and placing
the new Director in the class to be elected at this Annual Meeting, the
shareholders will then be entitled to elect four Directors at this Annual
Meeting. As more fully described hereafter in the section entitled "Election of
Directors", management is proposing that Dr. Bernadine Healey be elected to the
new position on the Board. In the event that the proposed amendment to the Code
of Regulations is not adopted, the number of Directors of the Company will
remain at nine.
The persons named in the accompanying proxy or their substitutes will vote
such proxy for this proposal unless it is marked to the contrary. The
affirmative vote of the holders of a majority of the total voting power of the
Company represented at the meeting, with the holders of Common Shares and Class
B Common Shares voting as one class, is required for the adoption of the
proposal to fix the number of Directors at ten. Hence, abstentions and broker
non-votes with respect to this proposal will have the same effect as votes
against the proposal
The Board of Directors recommends that shareholders vote "FOR" approval and
adoption of the proposal to fix the number of Directors at ten.
ELECTION OF DIRECTORS
The number of Directors of the Company is currently fixed at nine,
subject to adoption of Proposal 2 and 3, the number of Directors of the Company
will be fixed at ten. 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. At the Annual Meeting, also subject to Proposal
2 and 3, four Directors will be elected to serve a three-year term until the
Annual Meeting in 1999 and 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.
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, subject to the prior adoption of Proposal 2 and
3, for the Directors as named below, unless the shareholder instructs by marking
the appropriate space in the Proxy that authority to vote is withheld. Each of
the nominees, except for Dr. Healy, who was approved for nomination by unanimous
action of the Board of Directors on February 2, 1996, is presently a Director of
the Company and has indicated their 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. If either Proposal 2 or 3 is
not approved, the Proxies will be voted for the election of Messrs., Mixon, Carr
and Delaney.
10
Nominees for Election
Name Age Position with the Company
---- --- -------------------------
A. Malachi Mixon, III (3)(4) 55 Chairman of the Board, President
and Chief Executive Officer
Frank B. Carr (1)(4) 68 Director
Michael F. Delaney (2)(4) 47 Director
Dr.Bernadine P. Healy, 51 Nominated for Director
Directors Continuing in Office
Francis J. Callahan, Jr. (2)(3)(6) 72 Director
Whitney Evans (2)(4)(5) 59 Director
Dan T. Moore, III (1)(3)(6) 56 Director
E.P. Nalley (1)(4)(5) 76 Director
Joseph B. Richey, II (6) 59 President - Invacare Technologies,
Senior Vice President - Total Quality
Management and a Director
William M. Weber (1)(2)(5) 56 Director
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Nominating Committee.
(4) Member of the Investment Committee.
(5) Term as Director expires in 1997.
(6) Term as Director expires in 1998.
A. Malachi Mixon, III has been President and Chief Executive Officer and a
Director of the Company since 1979 and Chairman of the Board since 1983. Mr.
Mixon also serves as a Director of The Lamson & Sessions Co., Cleveland, Ohio, a
New York Stock Exchange listed company and a supplier of engineered
thermoplastic products, The Sherwin-Williams Company, Cleveland, Ohio, a New
York Stock Exchange listed company and a manufacturer and distributor of
coatings and related products, and NSC Healthcare, Inc., a NASDAQ listed company
and a provider of pharmacy services to long term care institution. Mr. Mixon
also serves as a Trustee of The Cleveland Clinic Foundation, Cleveland, Ohio,
one of the world's leading teaching and health care institutions.
Frank B. Carr has been a Director since 1982. From 1983 to the present,
Mr. Carr has been a Managing Director (Investment Banking) of McDonald & Company
Securities, Inc., Cleveland, Ohio, an investment banking and brokerage firm, and
a partner in its predecessor firm (McDonald & Company) since 1968. Mr. Carr also
serves as a Director of Brush Wellman Inc., Cleveland, Ohio, a New York Stock
Exchange listed company and a producer of engineered materials containing
beryllium, and 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. Prior thereto, Mr. Delaney was a
self-employed Development Consultant.
Bernadine P. Healy, MD is currently being nominated for election as a
Director. From 1995 to the present, Dr. Healy has been the Dean and Professor of
Medicine of Ohio State University, Columbus, Ohio. From 1991 to 1993 Dr. Healy
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 also serves as
Trustee of the Battelle Memorial Institute in Columbus, Ohio. Dr. Healy also
serves as a director of Medtronic, Inc. a ______listed Company and provider of
cardiac pacemakers and National City Corporation, a _______listed Company and a
bank holding company
11
Francis J. Callahan, Jr. has been a Director since 1980. From 1980 to the
present, Mr. Callahan has been President of Crawford Fitting Company, Cleveland,
Ohio a manufacturer of tube fittings and valves. Mr. Callahan also serves as a
Trustee of The Cleveland Clinic Foundation, Cleveland, Ohio, one of the world's
leading teaching and health care institutions.
Whitney Evans has been a Director since 1980. From 1980 to the present, Mr.
Evans has been a private investor. From 1983 to present, Mr. Evans has been an
officer and a Director of Pine Tree Investments, Inc., Cleveland, Ohio, a
business and a real estate investment firm. From 1989 to 1995, Mr. Evans served
as the President of Harmony Group, Sonoma, California, a consultant to
non-profit organizations.
Dan T. Moore, III has been a Director since 1980. Since 1993, Mr. Moore
has served as President of Perfect Impression, Cleveland, Ohio, a manufacturer
of polymer footbed that molds to the exact contours of the foot using a brief
microwave heating system. Since 1993, Mr. Moore has served as Managing Partner
of Whiskey Island Partners, which is developing a marina complex on 35 acres of
land on Cleveland's Lakefront. Since March 1993, Mr. Moore has been Chairman and
Treasurer of Advanced Ceramics Corporation, a closely-held manufacturer of
industrial ceramic products. From 1979 to the present, Mr. Moore has been
President of Dan T. Moore Co., Cleveland, Ohio. Since 1988, Mr. Moore has also
served as President of Soundwich, Inc., Cleveland, Ohio, a closely-held company
that produces polymers for damping sheet metal engine components and since 1985
has served as President of Flow Polymers, Inc., a manufacturer of homogenizing
aids for rubber tire compounds.
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 Company, Cleveland,
Ohio, a New York Stock Exchange listed manufacturer of vacuum cleaners.
Joseph B. Richey, II has been a Director since 1980. In 1992 he was named
President-Invacare Technologies and Senior Vice President-Total Quality
Management. From 1989 to 1992, he was Senior Vice President and General Manager
- - - North American Operations and was Senior Vice President - Product Development
from 1984 to 1992. Mr. Richey also serves as a Director of Steris Corporation,
Cleveland, Ohio, a NASDAQ listed manufacturer and distributor of medical
sterilizing equipment, a Director of Royal Appliance Manufacturing Company,
Cleveland, Ohio, a New York Stock Exchange listed manufacturer of vacuum
cleaners, and a Director of Unique Mobility Inc., Golden, Colorado an American
Stock Exchange listed engineering concern and manufacturer of high efficiency
permanent magnet motors and electronic controls.
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, 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.
INFORMATION REGARDING MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during the fiscal year ended
December 31, 1995. 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 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 Francis J. Callahan, Jr., Chairman of the
Nominating Committee, Invacare Corporation, P.O. Box 4028, 899 Cleveland Street,
Elyria, Ohio 44036. The Nominating Committee did not meet during 1995. The
Investment Committee, which met one time during 1995, 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 served as a
Director and (ii) the total number of meetings held by Committees of the Board
on which he served.
12
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 Whitney Evans, Francis J. Callahan, Jr., Michael F. Delaney 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 1995 compensation of the Company's executive
officers named in this Proxy Statement.
The Committee has determined, as a performance driven business, 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 ("Comparable Employers"). The Committee believes that
the Company must compete for executive talent with a diverse group of businesses
and 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 employees in the local area 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 a peer group established to compare shareholder
returns. Accordingly, the Comparable Employers are not necessarily the same as
the peer group utilized in the Comparison of Five Year Cumulative Total Return
graph included in this Proxy Statement.
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 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 pre-tax income. In addition, long-term compensation is awarded
exclusively in the form of stock options in order to provide key executives with
significant financial benefits to the extent that shareholder value is similarly
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 ("CEO") and from the Vice President - Human Resources 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, and 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 sales, operating profit, cost
controls, pre-tax income 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 1995 base salaries were based on
the subjective judgment of the Committee taking into account the CEO's comments
regarding each executive's achievement of applicable 1994 financial and
operating objectives and the targeted salary ranges. Resulting base salaries for
the Company's executives (including the CEO) were at or near the targeted range.
13
In determining the CEO's base salary for 1995, the Committee took into
account the survey results regarding a 50th percentile salary range of chief
executive officers at Comparable Employers and the financial performance
objectives described above. In particular, the Committee noted that the Company
had substantially exceeded its earnings objectives during 1994. The CEO named a
chief operating officer as part of an ongoing plan to place top talent in the
most critical leadership positions, strengthened the overall management team for
continued growth and provide for continuity of management. The CEO continued to
be the leading industry spokesperson on behalf of home health care and presented
input to Congress and other government representatives relative to health care
legislation particularly related to oxygen reimbursement. Key acquisition
activity also occurred in Canada, Sweden and Spain during 1994 under the CEO's
leadership, which allowed the Company to expand its international presence and
additional candidates were identified for 1995. Substantial progress was 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 Committees 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
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.
With the assistance of the Vice President - Human Resources and 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 pre-tax income 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 pre-tax income at which target
bonuses will be earned. Under normal conditions, no bonuses are payable if
pre-tax income does not improve over the prior year and bonuses increase on a
linear basis if pre-tax income exceeds the targeted level. Targeted pre-tax
income is generally set at a level which the Committee believes is challenging
but achievable.
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 Committee's pre-tax income objective is achieved. In
determining the level of total cash compensation to be targeted for the CEO in
1995, the Committee took into account the same factors and events described
above under the Annual Base Salary. Actual pre-tax income was in excess of the
targeted objective, thereby resulting in 1995 cash bonuses to all executive
officers above targeted levels. This is consistent with the Compensation
Committee's philosophy as in a very competitive and challenging business
environment the Company exceeded its targets and outperformed the competition.
14
Survey data from the independent consultant shows annual executive
bonuses as a percent of net income at target levels remain competitive with
companies of similar size.
Long-Term Compensation Program. The Company's long-term compensation
plan is based exclusively on the award of stock options. 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 Employee Stock
Option 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 1995 was based on the subjective judgment
of the Committee, taking into account the CEO's comments regarding the
executive's achievement of the applicable 1994 financial and operating
objectives (as described above under Annual Base Salary) and the targeted range
for long-term compensation. No particular weight was assigned to any one
financial or operating 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.
The Committee awarded options to the CEO in 1995 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.
Other Matters. The Committee believes that all long-term compensation
awarded to the Named Executive Officers in 1994 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
Whitney Evans, Chairman
Francis J. Callahan, Jr.
Michael F. Delaney
William M. Weber
15
SHAREHOLDER RETURN PERFORMANCE TABLE
The following table 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 and a Peer Group of
companies selected on a line-of-business basis.
Comparison of Five Year Cumulative Total Return
Among Invacare Corporation, S&P 500 Index and
Line-of-Business Peer Group*
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
Invacare 100 269 234 265 331 487
S&P 500 100 131 140 154 156 214
Peer Group 100 154 192 143 156 207
The above table assumes $100 invested on December 31, 1990 in the Common Shares
of Invacare Corporation, S&P 500 Index and the respective Line-of-Business Peer
Group, including reinvestment of dividends through December 31, 1995 .
16
COMPENSATION OF EXECUTIVE OFFICERS
The table below shows information for the three years ended December
31, 1995 concerning the annual and long-term compensation for services in all
capacities to the Company of the Chief Executive Officer and the four other most
highly compensated executive officers of the Company (the "Named Executive
Officers") for the year ended December 31, 1995.
SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation Compensation
-------------------------------------------------------------------------------------------------------------------
Other All Other
Annual Securities LTIP Compen-
Name and Salary Bonus Compen- Underlying Payouts sation (3)
Principal Position Year ($) (1) ($) sation ($) Options (#) (2) ($) ($)
---------------------------- -------- ---------- ----------- ----------- ------------- ------------- --------------
A. Malachi Mixon, III 1995 481,000 734,487 - 73,400 - 52,489
Chairman of the Board, 1994 420,875 604,890 - 48,600 214,000 54,506
President and Chief 1993 390,000 409,500 - 48,600 217,334 15,776
Executive Officer
Gerald B. Blouch 1995 280,000 337,680 - 34,200 - 89,769
Chief Operating Officer 1994 240,000 235,200 - 21,400 - 19,594
1993 200,000 145,800 - 19,600 27,006 12,131
Joseph B. Richey, II 1995 255,000 307,530 - 23,400 - 91,171
President-Invacare 1994 243,000 238,140 - 21,800 104,000 25,221
Technologies and Senior 1993 227,000 165,483 - 22,400 124,742 15,245
Vice President-Total
Quality Management
Thomas R. Miklich, (4) 1995 215,000 259,290 - 19,800 - 54,795
Chief Financial Officer, 1994 187,000 183,260 - 16,800 - 7,536
Treasurer and Corporate 1993 113,333 66,438 - 20,000 - 713
Secretary
Louis F.J. Slangen 1995 196,000 196,980 - 12,000 - 58,689
Senior Vice President 1994 187,000 183,260 - 16,800 13,761
Sales & Marketing 1993 170,000 123,930 - 16,800 20,576 11,523
---------------------------- -------- ---------- ----------- ----------- ------------- ------------ ---------------
17
(1) Salary and Bonus amounts for 1995 may include amounts deferred under
the 401(k) feature of the Company's Profit Sharing Plan or the
non-qualified 401(k) Plus Benefit Equalization Plan.
(2) LTIP payouts reflect cash payments for awards previously made under a
three-year cumulative formula that was included as a component of the
Company's long-term compensation plan. The Company now makes awards
under its long-term compensation plan exclusively in stock options.
(3) The amounts disclosed in this column include: (a) Company contributions in
the amount of $3,000 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 $12,968, $7,304, $5,946, $4,965 and
$4,585 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
$6,375 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 $26,096, $14,459, $18,645, $8,512 and
$9,063 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 in group term life
insurance policy of $4,050 for Mr. Mixon, which only Mr. Mixon participated
in at December 31, 1995 (f) the dollar value of compensatory split-dollar
life insurance benefits, under the Company's Executive Life Insurance Plan,
in the amounts of $50,184, $55,177, $26,075 ad $31,181 for Messrs. Blouch,
Richey, Miklich and Slangen, respectively. Mr. Mixon is not covered by a
split-dollar life insurance benefit; and (g) payment made by the
Company,related to premiums under the Company's Executive Disability
Income, 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.
(4) Mr. Miklich joined the Company in May 1993. His annualized salary was
$170,000.
COMPENSATION OF DIRECTORS
The Company paid all Directors who were not employees ("Non-employee
Directors") a $12,000 annual retainer plus $2,000 per Board meeting attended.
Further, Non-employee Directors are eligible to participate in a Deferred
Compensation Plan adopted in 1992, pursuant to which they may elect to defer
receipt of the compensation payable by the Company for their services as a
Director, and if such compensation is elected by the Director in the form of
Common Shares, the Company will deposit an additional 25% of such deferred
compensation into the applicable trust. None of the Non-employee Directors had
an effective election to defer 1995 compensation. In addition, the Non-employee
Directors were eligible for a bonus of $5,000 based on profit objectives for
1995 and a greater amount if the objectives were exceeded. Based on 1995
operating results, each of the Non-employee Directors have been paid $6,897 as
the profit objectives for the year were exceeded. For 1996, the Non-employee
Directors are eligible to receive a bonus of $5,000, if certain profit
objectives are met. The bonus amount can be increased if those objectives are
exceeded.
18
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows, as to the Named Executive Officers, the stock
options granted in 1995 under the Stock Option Plan.
- - ------------------------------------------------------------------------------- ---------------------------------
Individual Grants
- - ------------------------------------------------------------------------------- ---------------------------------
% of
Total
Options Exercise
Number of Granted or base
Securities to Price Potential Realizable Value
Underlying Employees ($ per at Assumed Annual Rates
Options in Fiscal Share) (3) Expiration of Share Price Appreciation
Name Granted Year Date for Option Term (1)
- - ----------------------------- ------------- ------------ ----------- ----------- ---------------------------------
5% ($) 10%($)
- - ----------------------------- ------------- ------------ ----------- ----------- ---------------------------------
A. Malachi Mixon, III 73,400(2) 15.1% 17.00 2/17/05 785,000 1,989,000
Gerald B. Blouch 34,200(2) 7.0% 17.00 2/17/05 366,000 927,000
Joseph B. Richey, II 23,400(2) 4.8% 17.00 2/17/05 250,000 634,000
Thomas R. Miklich 19,800(2) 4.1% 17.00 2/17/05 212,000 536,000
Louis F.J. Slangen 12,000(2) 2.5% 17.00 2/17/05 128,000 325,000
All Shareholders (4) N/A N/A N/A N/A 319,800,000 785,100,000
- - -----------------------------------------------------------------------------------------------------------------------
(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. Actual gains, if any, on stock options
exercised are dependent on the actual performance of the stock.
(2) Options become exercisable on March 31 of each year at 25% per year
commencing in 1996.
(3) The exercise price is equal to the fair market value of the Company's
Common Stock on the date of grant
(4) The potential gain realizable by all shareholders based on (22,475,808
Common Shares and 6,601,396 Class B Common Shares outstanding at a base
price of $17.00 per share as of the grant date of February 17, 1995) 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 $28.00 and $44.00 per share at the assumed 5% and 10%
annual growth rates, respectively.
19
Each of the options issued under the Stock Option Plan includes a
provision which provides that the option shall become immediately exercisable
(notwithstanding any vesting schedule otherwise contained in the option) upon
the commencement of a tender for the Company's Common Shares or at any time
within 90 days prior to a dissolution, liquidation or certain mergers or
consolidations of the Company. Upon the occurrence of such a merger or
consolidation, the option shall be subject to such adjustment or amendment as
the Compensation Committee of the Board of Directors deems appropriate and
equitable. Under the terms of the Stock Option Plan, the Committee may also
grant reload options under such circumstances as it deems appropriate.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The table below shows information with respect to options exercised by, and
the value of unexercised options under the Stock Option Plan for, the Named
Executive Officers.
------------------------------------------------------------------------------------------------------------------
Aggregated Option Exercises in 1995 and Option Value at Year-End 1995
------------------------------------------------------------------------------------------------------------------
Number of Number of Securities Value of Unexercised In-the-
Shares Value Underlying Unexercised Money Options at
Acquired on Realized Options at 12/31/95 (#) 12/31/95 (2) ($)
---------------------- --------------------------
Name Exercise (#) (1) ($) Exercisable Unexercisable Exercisable Unexercisable
------------------------ --------------- ------------ ---------------------------- -------------------------------
A. Malachi Mixon, III None - 376,690 155,630 7,476,579 1,672,856
Gerald B. Blouch None - 126,740 76,300 2,341,147 842,676
Joseph B. Richey, II 21,350 220,172 260,180 62,360 5,364,211 705,294
Thomas R. Miklich None - 14,200 42,400 176,525 435,425
Louis F.J. Slangen None - 150,650 46,090 3,058,695 552,748
------------------------------------------------------------------------------------------------------------------
(1) Represents the difference between the option exercise price and the closing
price of the Common Shares on the NASDAQ National Market System on the date
of exercise.
(2) The "Value of Unexercised In-the-Money Options at 12/31/95" is equal to the
difference between the option exercise price and the closing price of a
Common Share on the NASDAQ National Market System on December 29, 1995.
20
PENSION PLANS
The Company has established a Supplemental Executive Retirement Plan for
Executive officers to supplement other savings plans offered by the Company to
provide a specific level of replacement of 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 Plan, and one-half of the annual Social Security benefit. The plan
is a nonqualified plan, and 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 from an irrevocable grantor trust funded from the
Company's general funds or by the Company from the Company's general funds.
The following table reflects the estimated annual single-life annuity payment,
without reductions for applicable offsets, payable to a participant retiring in
1995 at age 65.
Pension Table
Years of Service (2)
-------------------------- --------------- --------------- --------------
Renumeration (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) Compensation for purposes of calculating pension benefit based on final
base salary and target bonus.
(2) The amounts represents annual single-life annuity amounts subject to
reduction by applicable offsets (as described above). For purposes of estimating
a pension benefit as of December 31, 1995, the current years of service credited
are 15, 6, 11, 3 and 8 years for Messrs. Mixon, Blouch, Richey, Miklich and
Slangen, respectively.
21
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. 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. The Company has entered into severance pay agreements with each
of the Named Executive Officers.
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 and 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; and (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.
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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors during
1995 were Whitney Evans, Francis J. Callahan, Jr., Michael F. Delaney and
William M. Weber.
During 1995, 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 Mr. Mixon, Mr. Richey and Mr. Callahan. The
Company paid approximately $600,000 to the charter company for use of the
aircraft owned by Messrs. Mixon, Richey and Callahan. Invacare believes that the
prices and terms charged are no less favorable than those which could be
obtained from unrelated parties.
During 1995, the company used the services of Cencor Temporary Services
which is owned by Messrs. Mixon, Callahan and Blouch. The Company paid
approximately $67,000 for temporary labor services. Invacare believes that the
prices and terms charged are no less favorable than those which could be
obtained from unrelated parties.
In March, 1996 the Company purchased 90,000 shares of Invacare Common Stock
from the A. Malachi Mixon, III Charitable Remainder Unitrust, in which Mr. Mixon
has a reversionary interest. The total cost for the shares was $2,250,000 or
$25.00 per share. Invacare believes the price for this purchase were no less
favorable than could have been obtained from unrelated parties. The shares will
be added to the treasury stock and used for benefit plan contributions or other
corporate purposes.
CERTAIN TRANSACTIONS
During 1995, the Company purchased wheelchair tires from Dan T. Moore Co.,
of which Dan T. Moore, III is President and sole shareholder, for an aggregate
cost of approximately $121,000. Mr. Moore is a Director and shareholder of
Invacare. Invacare believes that the prices and terms of these purchases were no
less favorable than those which could have been obtained from unrelated parties.
22
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected the firm of Ernst &
Young LLP, independent public accountants, to examine and audit the annual
financial statements of the Company and its subsidiaries for the fiscal year
ending December 31, 1996. Representatives of Ernst & Young LLP are expected to
be present at the Annual Meeting and they will have an opportunity to make a
statement should they so desire. In addition, they will also be available to
respond to appropriate questions from shareholders.
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 1997 must do so
no later than December 13, 1996. To be eligible for inclusion in the 1997 Proxy
material of the Company, proposals must conform to the requirements set forth in
Regulation 14A under the Exchange Act.
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
1995 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
.........P.O. Box 4028, 899 Cleveland Street
.........Elyria, Ohio 44036
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
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APPENDIX A
Section 2 of Invacare Corporation Amended Code of regulations
Section 2. Number, Classification, Election and Qualification of Directors.
(a) Number. The Board of Directors shall consist of not less than five nor
more than fifteen members. At any Shareholders meeting called for the purpose of
electing Directors, the Shareholders, by a vote of the holders of a majority of
the voting power represented at the meeting, may fix or change the total number
of Directors within the above limitation. In the event that the Shareholders
fail to fix or change the number of Directors, the number of Directors then
serving in office shall constitute the total number of Directors until further
changed in accordance with this Section. In addition to the authority of the
Shareholders to fix or change the number of Directors, the total number of
Directors so determined may be increased or decreased by not more than two
between Shareholders' meetings by the Board of Directors at a meeting or by
action without a meeting, and the total number of Directors as so changed shall
be the total number of Directors until further changed in accordance with this
Section. In the event that the Directors increase the total number of Directors,
the Directors who are then in office may fill any vacancy created thereby. No
reduction in the total number of Directors shall of itself have the effect of
shortening the term of any incumbent Director.
(b) Classification. The Directors shall be classified in respect of the
time for which they shall severally hold office by dividing them into three
classes, each class to be as nearly equal in number as possible. Subject to the
preceding sentence, in the event the total number of Directors (whether
determined by the Shareholders or by the Directors in accordance with Section
2(a) is not divisible by three (3), the extra Director or Directors shall be
assigned to a particular class or classes, at the time of election of such
Director or Directors, by the Shareholders or by the Directors, whichever have
elected the new Director or Directors. The term of any Director elected to fill
a vacancy in a class, however created, shall end at the expiration of the term
of such class and upon the election and qualification of the successor of such
Director.
(c) Election. Subject to the rights of Directors to elect additional
Directors in accordance with Section 2(a) or Section 3(d), the Directors of the
appropriate class shall be elected at the Annual Meeting of Shareholders, or if
not so elected, at a Special Meeting of Shareholders called for that purpose.
The Directors to be elected at each such Annual or Special Meeting of
Shareholders shall be the class whose term of office then expires; provided,
however, that the Shareholders may, in their discretion, also elect Directors to
fill any vacancies in other classes without regard to how such vacancies were
created. At any meeting of Shareholders at which Directors are to be elected,
only persons nominated as candidates shall be eligible for election, and the
candidates receiving the greatest number of votes shall be elected.
(d) Qualification. Directors need not be Shareholders of the Corporation.
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APPENDIX B
INVACARE CORPORATION
PROXY FOR COMMON SHARES AND CLASS B COMMON SHARES
Annual Meeting of Shareholders -- May 22, 1996
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, Stocker Center, 1005 North Abbe
Road, Elyria, Ohio on Wednesday, May 22, 1996 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. If either proposal 2 or 3 is not approved, the Proxies will be voted
"FOR" the election of the three nominees who are currently directors.
(1) PROPOSAL to approve and adopt an amendment to Article IV of the
Company's Amended and Restated Articles of Incorporation to increase the number
of authorized Common Shares, without par value, of the Company from Fifty
Million (50,000,000) to One Hundred Million (100,000,000);
( ) FOR the Proposal ( ) AGAINST the Proposal ( ) ABSTAIN from the Proposal
(2) PROPOSAL to approve and adopt an amendment to Article III, Section 2 of
the Company's Code of Regulations to increase the maximum number of Directors of
the Company from nine to fifteen, (as more fully described in the enclosed Proxy
statement);
( ) FOR the Proposal ( ) AGAINST the Proposal ( ) ABSTAIN from the Proposal
(3) PROPOSAL to fix the total number of Directors at ten. Subject to the
prior adoption of Proposal 2 above;
( ) FOR the Proposal ( ) AGAINST the Proposal ( ) ABSTAIN from the Proposal
(4) ELECTION OF DIRECTORS.
( ) FOR all nominees listed (except as ( )WITHHOLD AUTHORITY to vote for
marked to the contrary below) all nominees listed
A. MALACHI MIXON,III, FRANK B. CARR, MICHAEL F. DELANEY AND DR. BERNADINE
P. HEALY
(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)
(5) In their discretion to act on any other matters which may properly come
before the Annual Meeting.
Dated ________________________, 1996
__________________________________
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.
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