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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
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 Section 240.14a-12
TECUMSEH PRODUCTS COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
- --------------------------------------------------------------------------------
PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (04-05)
(TECUMSEH LOGO)
April 13, 2007
Dear Shareholder:
We cordially invite you to attend our 2007 annual meeting of shareholders
next month in Tecumseh, Michigan.
Only Class B shareholders will vote at the meeting. However, all
shareholders are most welcome to attend. Starting today, we are sending the
enclosed proxy statement to all our shareholders and a form of proxy to Class B
shareholders only.
If you are a Class B shareholder, your vote is very important. Even if you
plan to attend in person, please complete and mail the enclosed proxy card, or
vote by telephone or on the Internet, at your earliest convenience.
Thank you.
Sincerely,
/s/ David M. Risley
----------------------------------------
Chairman of the Board of Directors
/s/ James J. Bonsall
----------------------------------------
President
100 E Patterson St,
Tecumseh, MI 49286
www.tecumseh.com
(TECUMSEH LOGO)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date: Wednesday, May 2, 2007
Time: 9:00 a.m.
Location: Tecumseh Country Club
Tecumseh, Michigan
From the center of Tecumseh, go north on the Tecumseh-Clinton
Road about one mile to Burt Street. Turn right. Tecumseh
Country Club is on the south side of Burt Street about one mile
east of the Tecumseh-Clinton Road.
The purposes of this year's annual meeting are:
- To elect directors for the following year.
- To consider any other matters properly presented at the meeting.
All shareholders are most welcome to attend the meeting, but only those who
held Class B shares at the close of business on March 9, 2007 will be entitled
to vote.
If you are a Class B shareholder, you will find enclosed a form of proxy
solicited by our Board of Directors. Whether or not you plan to attend the
meeting, please take the time to vote by completing and mailing the enclosed
proxy or by voting by telephone or on the Internet. Even if you sign a proxy or
vote by telephone or on the Internet, you may still attend the meeting and vote
in person. You may revoke your proxy any time before the voting begins.
YOUR VOTE IS VERY IMPORTANT.
Thank you.
TECUMSEH PRODUCTS COMPANY
----------------------------------------
Daryl P. McDonald
General Counsel and Secretary
April 13, 2007
100 E Patterson St,
Tecumseh, MI 49286
www.tecumseh.com
PROXY STATEMENT
The Board of Directors of Tecumseh Products Company is soliciting proxies
to vote Class B shares at our 2007 annual meeting of shareholders. This proxy
statement contains information that may help you decide whether and how to vote.
Please read this proxy statement carefully. Appendices A, B, and C contain
important information about share ownership, executive compensation, and audit
fees. Appendix D is a copy of our corporate governance guidelines. You can
obtain more information about Tecumseh Products Company from our 2006 annual
report to shareholders on Form 10-K and from the other public documents that we
file with the SEC.
VOTING
We have two classes of common stock: Class B, which has full voting rights,
and Class A, which generally has no voting rights. Nothing on the agenda for
this year's annual meeting will require a vote by Class A shareholders so we are
only soliciting proxies from Class B shareholders.
At the close of business on March 9, 2007 (the record date for the
meeting), 5,077,746 Class B shares were outstanding and entitled to vote, and
13,401,938 Class A shares were outstanding.
To have a quorum, a majority of the outstanding Class B shares entitled to
vote must be present at the meeting--either in person or by proxy.
Instead of signing and returning a proxy, if you hold your shares in your
own name, you may vote by telephone or on the Internet by following the
instructions attached to your proxy. If your shares are held through a broker,
bank, or other nominee, you must contact the broker, bank, or other nominee to
find out whether you will be able to vote by telephone or on the Internet.
If you complete the enclosed proxy and return it before the meeting, or if
you vote by telephone or on the Internet, the persons named will vote your
shares as you specify.
You may revoke a proxy any time before voting begins at the meeting. A
later proxy by any means will cancel any earlier proxy. For example, if you vote
by telephone and later vote differently on the Internet, the Internet vote will
count, and the telephone vote will be canceled. If you wish to change your vote
by mail, you should write our Secretary to request a new proxy. The last proxy
we receive before the meeting will be the one we use. You also may change your
vote by voting in person at the meeting.
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE GUIDELINES
Our board of directors has adopted corporate governance guidelines. A copy
is available at the Investor Relations section of our website at
www.tecumseh.com.
DIRECTOR INDEPENDENCE
We determine director independence by applying the definition of
independence contained in the applicable rules of The Nasdaq Stock Market, both
for purposes of Nasdaq's rule requiring that a majority of our board consist of
independent directors and its rules requiring our Audit Committee and our
Governance, Compensation, and Nominating Committee to be made up entirely of
independent directors. Applying that definition, our board determined as
follows:
- Peter M. Banks and David M. Risley are independent directors and were
independent directors throughout 2006. Kevin E. Sheehan, who joined
our board earlier this year, is an independent director.
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- J. Russell Fowler, Jon E. Barfield, and Virginia A. Kamsky, each of
whom served on the board during a portion of 2006, were independent
directors throughout their respective periods of service.
- Todd W. Herrick, who served on the board during 2006 and a portion of
2007, was not an independent director.
- Albert A. Koch was an independent director throughout 2006 but ceased
being independent on January 1, 2007.
- Kent B. Herrick, who joined the board in 2007, is not an independent
director.
In determining that Mr. Koch was independent during 2006, our board
considered his relationship with his employer, AlixPartners, LLC (now
AlixPartners, LLP), and the service contracts we had with it and its affiliate.
Because Mr. Koch was not during 2006 a director, executive officer, or equity
owner of AlixPartners, LLC, and because he did not personally take part in
performing services for us under the contracts, our board did not believe that
his relationship with AlixPartners, LLC interfered with his exercise of
independent judgment. Mr. Koch became a partner in AlixPartners, LLP effective
January 1, 2007, and our board determined that he ceased being independent at
that time.
There were no transactions, relationships, or arrangements that were
considered by the board under the Nasdaq independence definition in determining
the independence of the directors identified above as independent other than Mr.
Koch.
All directors who are or at any time during 2006 were members of our Audit
Committee or our Governance, Compensation, and Nominating Committee were
independent throughout their respective periods of service on those committees.
DIRECTOR SHARE OWNERSHIP POLICIES
We have adopted share ownership policies that require each non-employee
director to achieve ownership of at least $50,000 worth of Tecumseh shares. Dr.
Banks, Mr. Risley, and Mr. Koch must attain this ownership level by 2010, Mr.
Sheehan and Mr. Herrick by 2012, and future directors within five years after
they join our board.
DIRECTORS' AND COMMITTEE MEETINGS; ANNUAL MEETING ATTENDANCE
We held 21 board meetings during 2006. The Audit Committee met 15 times,
and the Governance, Compensation, and Nominating Committee met 5 times.
Each incumbent director attended at least 75% of the total of all board
meetings and all meetings of board committees on which he served that were held
during his period of service.
We encourage our directors to attend our annual meetings of shareholders.
All of the directors who held office at that time attended last year's meeting
other than Virginia A. Kamsky.
COMMUNICATIONS WITH BOARD OF DIRECTORS
You can find information about sending communications to our Board of
Directors at the Investor Relations section of our website at www.tecumseh.com.
RELATED PARTY TRANSACTIONS
During 2007, we expect to make substantial payments to AP Services, LLC, an
affiliate of AlixPartners, LLP, for interim management services provided by AP
Services' personnel. The total amount we pay will depend on how quickly we are
able to replace the interim personnel provided by AP Services with new permanent
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employees. Albert A. Koch, a director, is a Managing Director of and partner in
AlixPartners, LLP.
We do not have any specific written policy for reviewing and approving of
transactions with directors or other related parties. The only such transactions
proposed in recent years were our contracts with AlixPartners and AP Services,
all of which were approved by majority vote of our board and by unanimous vote
of the disinterested directors.
GOVERNANCE, COMPENSATION, AND NOMINATING COMMITTEE
COMMITTEE FUNCTIONS; CHARTER
The overall mission of the Governance, Compensation, and Nominating
Committee is to assist the board in conducting our business successfully so as
to maximize long-term benefits to shareholders, including optimizing long-term
financial success. Its functions include:
- Actively developing and recommending to the board strategies for
achieving those goals.
- Monitoring and reporting to the board on the effectiveness of
management policies and decisions.
- Annually reporting to the board the committee's assessment of the
board's performance in light of the objectives described above.
- Annually reviewing with the board the appropriate skills and
characteristics required of board members in the context of the then
current composition and needs of the board, including issues of
diversity, age, and skills.
- Making recommendations to the board concerning candidates for
nomination to the board.
- Reviewing our policies for compensating outside directors and, if
appropriate, making recommendations for changes.
- Annually fixing the salaries of our principal executive officer and
other executive officers, considering, developing, reviewing, and
making recommendations about programs for annual and long-term
incentive compensation for those executives and for other key
employees, and administering those programs, including our Management
Incentive Plan and our Director Retention Phantom Stock Plan.
The board has adopted a written charter for the committee, a current copy
of which is available to security holders at the Investor Relations section of
our website at www.tecumseh.com.
DIRECTOR NOMINATIONS
One function of the Governance, Compensation, and Nominating Committee is
to make recommendations on nominations for the Board of Directors.
The committee will consider shareholder suggestions for nominees for
director (other than self-nominations). If you wish to make a suggestion, you
should submit it in writing to Daryl P. McDonald, General Counsel & Secretary,
Tecumseh Products Company, 100 E. Patterson Street, Tecumseh, Michigan 49286.
The committee will consider suggestions received before December 31, 2007 before
we mail the proxy materials for next year's annual meeting.
During 2006, we engaged Boardroom Consultants, Inc. to assist the committee
in identifying and evaluating potential director candidates.
In the past, the committee has identified potential nominees through
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recommendations made by executive officers, non-management directors, and
Boardroom Consultants, Inc. and has evaluated candidates based on their resumes
and through references and personal interviews. No shareholder other than an
officer or director has ever submitted a suggested nominee to the committee, but
if the committee were to receive such a suggestion, it expects it would evaluate
that potential nominee in substantially the same manner.
For additional information about the circumstances surrounding our
nomination of Kent B. Herrick and our possible future nomination of Steven J.
Lebowski, see "Proposal 1: Election of Directors--Settlement and Release
Agreement with Todd W. Herrick and Related Entities."
PROCEDURES FOR DETERMINING EXECUTIVE AND DIRECTOR COMPENSATION
The committee has authority to fix the salaries of our principal executive
officer and other executive officers and to administer our Management Incentive
Plan and our Director Retention Phantom Stock Plan. It also has authority to
make recommendations to the full board about programs for compensating
executives directors. There is no express authorization for it to delegate any
of its authority to others.
In determining the compensation of our executives other than the principal
executive officer, the committee considers recommendations made by the principal
executive officer.
The principal executive officer engaged Watson Wyatt Worldwide to provide
advice regarding 2007 executive compensation.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The directors who served on our Governance, Compensation, and Nominating
Committee during all or a portion of 2006 were: Jon E. Barfield, Peter Banks, J.
Russell Fowler, Virginia A. Kamsky, Albert A. Koch, and David Risley. No one who
served on the committee is or ever has been an officer or employee of Tecumseh
Products Company or any of its subsidiaries.
COMPENSATION COMMITTEE REPORT
This report is presented by the current members of the Governance,
Nominating and Compensation Committee. Our names appear at the end of our
report.
Our committee has reviewed and discussed the Compensation Discussion and
Analysis contained in Appendix B with management. Based on that review and those
discussions, our committee recommended to the board of directors that the
Compensation Discussion and Analysis be included in this proxy statement.
Presented by the members of the Governance, Compensation, and Nominating
Committee of the Board of Directors
Peter M. Banks, Chairman
David M. Risley
Kevin E. Sheehan
AUDIT COMMITTEE
CHARTER; MEMBERS' QUALIFICATIONS
The board has adopted a written charter specifying the powers and duties of
the Audit Committee. A copy is available to security holders at the Investor
Relations section of our website at www.tecumseh.com.
The Board of Directors has determined that the chairman of the committee,
David M. Risley, is an audit committee financial expert, as defined in the SEC's
rules. Mr. Risley and all of the other committee members are independent, as
independence
-5-
is defined in the applicable SEC rules and Nasdaq listing standards.
AUDIT COMMITTEE REPORT
Our committee oversees Tecumseh Products Company's financial reporting
process on behalf of the Board of Directors and is comprised of outside
directors who are independent within the meaning of, and meet the experience
requirements of, the applicable Nasdaq rules. Management has primary
responsibility for the financial statements, reporting processes, and system of
internal controls. In fulfilling our oversight responsibilities, we reviewed the
audited financial statements for the fiscal year ended December 31, 2006 and
discussed them with management, including a discussion of the quality, not just
the acceptability, of the accounting principles, reasonableness of significant
judgments, and clarity of disclosures in the financial statements.
In performing our oversight function, we also discussed with the
independent accountants the matters required to be discussed by the statement on
Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1 AU
section 380), as adopted by the Public Company Accounting Oversight Board in
Rule 3200T. In addition, we received from the independent accountants the
written disclosures and letter required by Independence Standards Board Standard
No. 1 (Independence Standards Board Standard No. 1, Independence Discussions
with Audit Committees), as adopted by the Public Company Accounting Oversight
Board in Rule 3600T, and we discussed their independence with them.
Based on the reviews and discussions referred to above and such other
considerations as we determined to be appropriate, we recommended to the Board
of Directors (and the board approved) that the audited financial statements for
the fiscal year ended December 31, 2006 be included in the annual report to
shareholders and Form 10-K for that year.
Mr. Risley and Dr. Banks served on our committee throughout 2006. J.
Russell Fowler was a member until his resignation from the board in February
2006, and Jon E. Barfield was a member until his resignation from the board in
December 2006. Mr. Sheehan joined our committee in February 2007.
Presented by the members of the Audit Committee of the Board of Directors
David M. Risley, Chairman
Peter M. Banks
Kevin E. Sheehan
PROPOSAL 1: ELECTION OF DIRECTORS
BACKGROUND
Our bylaws authorize the Board of Directors to determine the number of
directors that will make up the full board. Shareholders elected five directors
at last year's annual meeting.
In December 2006, Jon E. Barfield resigned, and in January, the board
appointed Kevin E. Sheehan to fill the vacancy. In April 2007, in accordance
with the settlement agreement described below, Todd W. Herrick resigned, and the
board appointed Kent E. Herrick to fill the vacancy.
SETTLEMENT AND RELEASE AGREEMENT WITH TODD W. HERRICK AND RELATED ENTITIES
On April 2, 2007, we signed a settlement and release agreement with Todd W.
Herrick, Kent B. Herrick, Toni L. Herrick, Herrick Foundation, Michael A.
Indenbaum, Peter M. Banks, Albert A. Koch, and David M. Risley settling
corporate governance disputes that had been the subject of two lawsuits. Under
the agreement, among other things:
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- - Board of directors
- There will continue to be five directors until we name a new permanent
CEO.
- Todd W. Herrick resigned from the board and became "Chairman
Emeritus," with the right to attend board meetings and to receive
materials distributed to the board, but with no vote. Todd W. Herrick
will continue as "Chairman Emeritus" during the term of the settlement
agreement, which continues until the earlier of the conclusion of our
2008 annual meeting of shareholders or April 30, 2008.
- The board appointed Kent B. Herrick to fill the vacancy created by
Todd Herrick's resignation. The board will continue to nominate Kent
B. Herrick for re-election to the board during the term of the
settlement agreement.
- A search committee is to be charged with immediately locating a new
director with restructuring experience reasonably acceptable to the
independent members of the board. Mr. Koch will resign from the board
by the earliest of: (1) the date this new director is appointed; (2)
60 days after we appoint our new CEO; or (3) July 31, 2007.
- When we name a new permanent CEO, the board will be expanded to seven
members. The new CEO will become a director and Chairman of the Board.
At that time, we also will appoint Steven Lebowski to the board if he
qualifies as an "independent director" under Nasdaq rules, and we will
continue to nominate Mr. Lebowski for re-election to the board during
the term of the settlement agreement. (If Mr. Lebowski does not
qualify as an independent director, we will follow a process set forth
in the settlement agreement to select and appoint another person
selected by Kent B. Herrick who does qualify.)
- - Management
- The search for a new permanent CEO will continue. Appointment of a new
CEO must be approved by majority vote of the full five-member board.
- Mr. Bonsall will continue as President and COO under our existing
contract with his employer, AP Services, LLC, while the CEO search is
in progress.
- Todd W. Herrick will serve as a consultant to the company in a
capacity to be determined by our new CEO. He will not receive any
compensation but will be entitled to reimbursement for reasonable and
documented expenses.
- When our new CEO is appointed, he will decide whether or not to rehire
Kent B. Herrick and, if so, in what capacity. If Mr. Herrick is
rehired, he will receive an agreement to provide him with a lump sum
severance payment on termination equal to one year's salary less any
salary paid to him from the date he is rehired through the date of his
termination. If the new CEO has not rehired Mr. Herrick within three
months after his appointment, Mr Herrick will be entitled to a lump
sum severance payment equal to one year's salary at the rate in effect
when he was terminated from his position with the company on January
19, 2007.
- - Other matters
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- The parties dismissed their lawsuits with prejudice. We and our
directors who were sued by Todd W. Herrick and related entities
(Messrs. Banks, Koch, and Risley) agreed not to challenge the right of
Mr. Herrick and those related entities to vote their shares and agreed
that they have the right to vote all of their shares.
- We agreed to reimburse Todd W. Herrick and related entities for their
reasonable and documented expenses in connection with the lawsuits,
the settlement agreement, and other specified matters, up to a maximum
of $300,000.
- Todd W. Herrick and related entities agreed to exercise their voting
rights in a manner consistent with the terms of the agreement.
- The various parties released each other and specified related persons
from claims in connection with the matters referenced in the
agreement.
Execution of the settlement agreement was a condition precedent to the
effectiveness of the amendments to our First and Second Lien Credit Agreements
we recently signed.
PROXIES
If you return the enclosed proxy card or vote by telephone or on the
Internet, your shares will be voted for all five of the board's nominees unless
you withhold authority to vote for one or more of them. If a nominee becomes
unable to serve, which we do not expect to happen, your proxy will be voted for
a substitute determined in the best judgment of the proxy holders.
VOTING AND ELECTION PROCEDURES AT ANNUAL MEETING
From the persons duly nominated, directors will be elected by plurality
vote of the Class B shareholders present or represented at the meeting. This
means that, regardless of the number of Class B shares not voted for a nominee,
the nominees who receive the highest through fifth highest numbers of votes will
be elected.
THE BOARD'S NOMINEES FOR DIRECTOR
Peter M. Banks (director since 1991, age 69). General Partner (since 2006)
of Red Planet Capital Partners (private investment firm). Independent business
consultant (2005). President (2004 to 2005), Institute for the Future
(non-profit technology forecasting and research organization); Partner (2000 to
2004), XR Ventures, L.L.C. (investments); Senior Executive (January 2000 to
April 2000), Veridian Corporation (research and development); President and
Chief Executive Officer (1997 to 2000), ERIM International, Inc. (research and
development); President and Chief Executive Officer (1995 to 1997),
Environmental Research Institute of Michigan (government research and
development services); Professor and Dean of the College of Engineering (1990 to
1994), University of Michigan. Dr. Banks is a member of the Board of Directors
of X-Rite Corp. He is Chairman of our Governance, Compensation, and Nominating
Committee and of our Pension and Investment Committee and also serves on our
Audit Committee.
David M. Risley (director since 2003, age 62). Retired. Senior Vice
President and Chief Financial Officer (2001 to 2006), La-Z-Boy Incorporated
(residential furniture); self-employed consultant (2000 to 2001); Vice President
Finance and Chief Financial Officer (1991 through 1999), Aeroquip-Vickers, Inc.
(hydraulic pumps, motors, valves, hoses, and fittings for industrial,
automotive, and aerospace markets and plastic components for automotive). Mr.
Risley is Chairman of our Audit Committee. He also serves on our Governance,
Compensation, and Nominating Committee
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and our Pension and Investment and Finance Committees.
Albert A. Koch (director since 2004, age 64). Managing Director (since
1995) of and partner (since January 2007) in AlixPartners, LLP (corporate
turnaround, performance improvement and financial advisory services); Managing
Director (since 2002) of Questor Management Co. (private-equity firm); Chairman,
President, and Chief Executive Officer (since 2004) of Polar Corporation
(provider of tank trailers, light-duty trailer parts, and tank trailer repair
and maintenance services); President and Chief Executive Officer (2003 to 2004)
of Champion Enterprises Inc. (manufactured homes); interim Chief Financial
Officer (2002 to 2004) of Kmart Corporation (retailing). Mr. Koch serves on our
Pension and Investment Committee and is Chairman of our Finance Committee.
Kevin E. Sheehan (director since 2007, age 61). Partner (since 2007) in
Cambridge Ventures, L.P. (small business investment company); President (since
2006) of Glenbeigh Advisors (board and consulting services); Managing Director
(1994 to 2006) of CID Capital (investments). Mr. Sheehan is a member of the
Board of Directors of Flowserve Corporation, where he serves as non-executive
chairman. He is a member of the Board of Trustees of Canterbury School in New
Milford, Connecticut. Mr. Sheehan serves on our Governance, Compensation, and
Nominating Committee and our Audit Committee.
Kent B. Herrick (director since 2007, age 38). Vice President of Global
Business Development (2005 to 2007), Executive Vice President in the Office of
the Chairman (2005), Corporate Vice President (2002 to 2004), and General
Manager Applied Electronics (2001), Tecumseh Products Company.
RECOMMENDATION OF THE BOARD
OUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE NOMINEES
NAMED ABOVE.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP was our Independent Registered Public
Accounting Firm for the fiscal year ended December 31, 2006. The Audit Committee
has not yet selected an Independent Registered Public Accounting Firm for the
current fiscal year because it believes a different firm may be able to provide
the services we need at lower cost. It is in the process of interviewing and
obtaining bids from several firms.
ATTENDANCE AT ANNUAL MEETING
A representative of PricewaterhouseCoopers LLP will be present at the
annual meeting and available to respond to appropriate questions from
shareholders. The representative will have an opportunity to make a statement if
he or she so desires.
AUDIT AND NON-AUDIT FEES
Please see Appendix C for information about the fees billed by our
Independent Registered Public Accounting Firm for each of the last two fiscal
years.
OTHER MATTERS
We know of no business to be acted on at the annual meeting other than the
matters listed in the accompanying notice. If any other matter does properly
come before the meeting, the proxy holders will vote on it in accordance with
their judgment.
SHAREHOLDER PROPOSALS IN OUR 2008 PROXY STATEMENT
In order for shareholder proposals for the 2008 annual meeting of
shareholders to be eligible to be included in our proxy statement, they must be
received at our principal office no later than December 15, 2007. We retain the
right to omit any
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proposal if it does not satisfy the requirements of SEC Rule 14a-8.
ADVANCE NOTICE REQUIREMENTS
Our bylaws contain advance notice procedures which a shareholder must
follow to nominate a person for election to our board or to present any other
proposal at an annual meeting of shareholders. In general, these provisions
require notice of a nomination or other proposal expected to be made at an
annual meeting to be in writing, to contain specified information about the
nominee or other proposal and the shareholder proponent, and to be delivered or
sent by first class U.S. mail to our Secretary and received at our principal
office.
Except when an annual meeting is called for a date that is not within 20
days before or after the first anniversary of the prior year's annual meeting
(in which case other time limits apply), we must receive the nomination or
proposal no later than 60 days nor earlier than 90 days before the first
anniversary of the prior year's annual meeting. This means that any nomination
or proposal for next year's annual meeting must be received no later than March
3, 2008 and no earlier than February 2, 2008.
Management proxies for the 2008 annual meeting may confer discretionary
authority to vote on an untimely proposal without express direction from
shareholders giving the proxies.
PROXY SOLICITATION EXPENSES
We will pay the expenses of this solicitation. We have engaged Georgeson
Shareholder Communications Inc. to assist in soliciting proxies--including
providing consulting and advisory services, review and assistance with
shareholder communications, vote projections, institutional investor lists, and
contacts, and call center hiring, training, and supervision--for which we will
pay approximately $11,500 plus out-of-pocket expenses. We also may pay brokers,
nominees, fiduciaries, custodians, and other organizations performing similar
functions their reasonable expenses for sending proxy material to principals and
obtaining their instructions. In addition to solicitation by mail, our
directors, officers, and employees may solicit proxies in person or by
telephone, fax, email, or similar means.
YOUR VOTE IS VERY IMPORTANT.
If you are a Class B shareholder, please complete and return the enclosed
proxy card, or vote by telephone or on the Internet, as soon as possible, even
if you currently plan to attend the annual meeting in person.
By Order of the Board of Directors,
Daryl P. McDonald
General Counsel and Secretary
Tecumseh, Michigan
April 13, 2007
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APPENDIX A
SHARE OWNERSHIP
5% CLASS B SHAREHOLDERS
This table shows the Class B shares held by persons or groups we know to be
beneficial owners of more than 5% of the class. We obtained all of the
information in the table from Schedules 13D and 13G filed with the SEC, except
that no Schedule 13D or 13G acknowledges the existence of the group listed in
the last row of the table. Unless otherwise indicated, the other information is
as of December 31, 2006.
A-1
Amount and Nature of Beneficial Ownership
-----------------------------------------------
Sole Sole Shared Shared Percent
Voting Investment Voting Investment of
Power Power Power Power Total Class
--------- ---------- --------- ---------- --------- -------
Todd W. Herrick (1)
100 E. Patterson St.
Tecumseh, MI 49286 21,906 21,906 2,193,538 2,193,538 2,215,444 43.6%
Herrick Foundation
c/o Michael Indenbaum
2290 First National Bldg.
660 Woodward Ave.
Detroit, MI 48226 1,305,425 1,305,425 1,305,425 25.7%
Toni L. Herrick (2)
7028 Foxmoor Court E
P.O. Box 19555
Kalamazoo, MI 49009 888,113 888,113 888,113 17.5%
Tricap Partners II L.P. (3)
BCE Place, Suite 300, 181
Bay Street
P.O. Box 762
Toronto, Ont. M5J 2T3 500,000 500,000 500,000 9.8%
Donald Smith & Co., Inc.
152 W. 57th St.
New York, NY 10019 430,139 430,139 430,139 9.5%
Brandes Investment
Partners, L.P. (4)
11988 El Camino Real
Suite 500
San Diego, CA 92130 212,002 406,202 406,202 8.0%
Franklin Resources, Inc.
(5)
One Franklin Parkway
San Mateo, CA 94403 322,799 322,799 322,799 6.4%
Aegis Financial
Corporation (6)
1100 North Glebe Road
Suite 1040
Arlington, VA 22201 319,019 319,019 319,019 6.3%
(1) Todd W. Herrick is one three members of the Board of Trustees of Herrick
Foundation. The other two are Kent B. Herrick and Michael A. Indenbaum. Mr.
Herrick is one of three trustees of family trusts for the benefit of
himself, his sister, Toni L. Herrick, and their descendants. The other two
trustees are Toni M. Herrick and Michael A. Indenbaum. Under the terms of
the trust documents, as amended, Mr. Indenbaum possesses no voting or
investment power over the trusts' shares. The shares for which Mr. Herrick
is shown as having shared voting and investment power consist of 1,305,425
shares owned by Herrick Foundation and 888,113 shares owned by the Herrick
family trusts. The information about Mr. Herrick's beneficial ownership is
based on a Schedule 13D amendment he and Toni M. Herrick filed jointly on
February 23, 2007.
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(2) The shares for which Toni L. Herrick is shown as having shared voting and
investment power consist of the 888,113 shares owned by the Herrick family
trusts described in note (1). The information about Ms. Herrick's
beneficial ownership is based on a Schedule 13D amendment she and Todd W.
Herrick filed jointly on February 23, 2007.
(3) The shares for which Tricap Partners II L.P. is shown as beneficial owner
are owned by Herrick Foundation. Tricap Partners II L.P. has a currently
exercisable option to purchase them.
(4) The Schedule 13G filed by Brandes Investment Partners, L.P. was a joint
filing with its affiliates, Brandes Investment Partners, Inc., Brandes
Worldwide Holdings, L.P., Charles H. Brandes, Glenn R. Carlson, and Jeffrey
A. Busby.
(5) The Schedule 13G filed by Franklin Resources, Inc. was a joint filing with
its affiliates, Charles B. Johnson, Rupert H. Johnson, Jr., and Franklin
Advisory Services, LLC.
(6) The Schedule 13G filed by Aegis Financial Corporation was a joint filing
with William S. Berno, Paul Gambal, and Scott L. Barbee, each of whom
reported having shared voting and investment power over the shares shown in
the table. Mr. Barbee also reported having sole voting and investment power
over an additional 600 shares.
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MANAGEMENT'S BENEFICIAL OWNERSHIP
The table below shows the Class A and Class B shares beneficially owned by
each of our current directors and director nominees, each executive officer
named in the Summary Compensation Table, and all current directors and executive
officers as a group.
Shares Beneficially Owned as of March 9, 2007
-----------------------------------------------
Class of Sole Voting and Shared Voting and
Common Investment Investment
Stock Power Power Total Percentage
-------- --------------- ----------------- --------- ----------
Class B 600 -0- 600 *
Peter M. Banks Class A -0- -0- -0- -0-
Class B -0- -0- -0- -0-
Kent B. Herrick Class A 2,000 -0- 2,000 *
Class B -0- -0- -0- -0-
Albert A. Koch Class A 1,100 -0- 1,100 *
Class B -0- -0- -0- -0-
David M. Risley Class A 1,200 -0- 1,200 *
Class B -0- -0- -0- -0-
Kevin E. Sheehan Class A -0- -0- -0- -0-
Class B 21,906 2,193,538 2,215,444 43.6%
Todd W. Herrick (1) Class A -0- 785,788 785,788 5.9%
Class B -0- -0- -0- -0-
James J. Bonsall Class A -0- -0- -0- -0-
Class B 200 -0- 200 *
James S. Nicholson Class A -0- -0- -0- -0-
Class B -0- -0- -0- -0-
Eric L. Stolzenberg Class A -0- -0- -0- -0-
Class B -0- -0- -0- -0-
Ronald Pratt Class A -0- -0- -0- -0-
All current directors and
current executive officers as Class B 800 -0- 800 *
a group (9 persons) Class A 4,300 -0- 4,300 *
* less than 1%
(1) The shares for which Todd W. Herrick is shown as having shared voting and
investment power consist of 1,305,425 Class B shares and 331,347 Class A
shares owned by Herrick Foundation and 888,113 Class B shares and 454,441
Class A shares owned by the Herrick family trusts.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors, certain officers, and beneficial owners of more than 10% of the
Class B shares are required to file reports about their ownership of our equity
securities under Section 16(a) of
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the Securities Exchange Act of 1934 and to provide copies of the reports to us.
Based on the copies we received and on written representations from the persons
we know are subject to these requirements, we believe all 2006 filing
requirements were met, except that:
- Todd W. Herrick, a 10% beneficial owner and at that time director and
executive officer, filed one late Form 4 reporting one transaction.
- Toni L. Herrick, a 10% beneficial owner, filed a late Form 3 and one
late Form 4 reporting one transaction.
- Herrick Foundation, a 10% beneficial owner, filed one late Form 4
reporting two transactions.
A-5
APPENDIX B
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
General Principles and Objectives.
We follow a "pay for performance" philosophy designed to accomplish three
primary objectives:
- Encouraging teamwork among members of management and excellence in the
performance of individual responsibilities.
- Aligning the interests of key managers with the interests of
shareholders by offering an incentive compensation vehicle that is
based on growth in return on equity and shareholder value.
- Attracting, rewarding, and retaining strong management.
Our compensation philosophy is intended to enhance shareholder value:
- In the short term, by focusing management's attention on return on
equity, cash return on assets, and other measures of current financial
performance so as to challenge each business group to achieve and
maintain positions of market leadership, to reduce costs where
appropriate, and to continually seek to maintain and enhance Tecumseh
Products Company's reputation for excellence in product quality and
customer service.
- In the longer term, by causing a substantial portion of each
executive's potential compensation to be directly tied to market
performance of the Class A shares.
We do not employ outside consultants to advise us about compensation
matters.
The principal tool for implementing our pay for performance philosophy has
been the Management Incentive Plan. Other elements of compensation are: salary,
benefits under our pension plan, and matching contributions under our 401(k)
plan.
Management Incentive Plan.
We structured the Management Incentive Plan and our awards under it to
provide both a short-term incentive tied to achievement of company-wide,
business unit, and personal annual performance goals and a long-term incentive
tied to the market performance of the Class A shares.
Under the Management Incentive Plan, we have provided executives with the
opportunity to earn both awards payable immediately in cash and awards
denominated in phantom stock units economically equivalent to Class A shares.
The Management Incentive Plan authorizes us to determine the amounts of awards
granted, subject to a limitation setting the maximum number of phantom stock
units awardable during a given year at 2% of the number of Class A shares
outstanding at the end of the year, and to establish criteria under which
otherwise eligible employees may receive awards. We have based awards under the
plan on the achievement of objective, verifiable performance goals. Accordingly,
before or early in each year, we have established objective company-wide,
business group, and individual performance criteria, and after year-end we have
used actual performance, measured against these criteria, as the basis for
granting awards for that year.
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The criteria we established for 2006 are described in the discussion of the
Management Incentive Plan that follows the Summary Compensation Table below.
Evaluating actual 2006 performance against those criteria resulted in the plan
awards shown in the table.
Key Employee Bonus Plan.
We have adopted a new Key Employee Bonus Plan to replace the Management
Incentive Plan for 2007 and future years. Participation will be discretionary
and determined or approved by the Board of Directors. We structured this plan to
provide monetary incentives for key management employees to increase their
performance levels and improve our financial results. The Key Employee Bonus
Plan sets forth goals for its participants (at the employer level and at the
individual level in some cases) and, typically, specific weights and
measurements related to the goals. Although a potential bonus can be forfeited
under certain circumstances, the participants in the plan will be rewarded with
a monetary bonus if the goals (or portions of goals, in some cases) are
achieved.
Salary.
We believe executive officers should receive salaries that are reasonable,
but modest, in light of their experience, skills, and responsibilities, and that
the opportunity to achieve significantly greater total compensation should be
tied to short- and long-term performance through the potential for awards under
the Management Incentive Plan. When we considered 2006 executive salaries, it
was our shared perception, based on our general business knowledge and without
review of any data specifically collected by us for that purpose, that existing
salary levels for executive officers other than Mr. Herrick were too low given
their responsibilities. We gave considerable weight to Mr. Herrick's
recommendations for increases for other executive officers and also considered
his recommendation that his own salary not be increased in light of 2005
performance. Based on these considerations, we decided to establish the 2006
salary for each executive officer named in the Summary Compensation Table at the
level reported in the table.
Pension Benefits.
We have not changed executives' pension benefits for many years. Recently,
however, we concluded that the rate at which those benefits accrue is more
generous than is appropriate given recent trends in employer-funded retirement
arrangements and in light of our disappointing financial performance in recent
years. Accordingly, we announced a restructuring of our salaried employees'
pension plan that we will begin implementing on May 1, 2007. The existing plan
is substantially over-funded, and we expect that this restructuring will make
approximately $55 million in cash available to us, while still fully securing
the benefits under the old plan and funding the new plan for several future
years.
401(k) Plan Matching Contributions.
We make matching contributions under the 401(k) plan to executive officers
under the same plan-established formula that applies to all plan participants.
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SUMMARY COMPENSATION TABLE
This table provides compensation information for our principal executive
officer during 2006, our principal financial officer, and the three other
executive officers who served during 2006 who had the highest total
compensation.
2006 SUMMARY COMPENSATION TABLE
CHANGE IN
PENSION VALUE
NON-EQUITY AND
INCENTIVE NONQUALIFIED
PLAN DEFERRED
COMPENSATION COMPENSATION ALL OTHER
NAME AND PRINCIPAL SALARY (5) BONUS (6) EARNINGS COMPENSATION TOTAL
POSITION YEAR ($) ($) ($) ($) ($) ($)
- ------------------ ----- ---------- ------- ------------ ------------- ------------ ----------
Todd W. Herrick 2006 $475,000 -- -- -- $ 6,622(8) $ 481,622
President and Chief
Executive Officer
(principal executive
officer) (1)
James S. Nicholson 2006 $280,000 $20,000(7) $36,400 $15,583 $ 7,500(8) $ 359,483
Vice-President,
Treasurer and Chief
Financial Officer
(principal financial
officer)
James J. Bonsall 2006 -- -- -- -- $1,760,540(9) $1,760,540
President of Engine
and Power Train
Business Unit (2)
Eric L. Stolzenberg 2006 $280,000 -- -- $16,969 $ 56,422(10) $ 353,391
President of Compressor
Business Unit (3)
Ronald E. Pratt 2006 $210,000 -- $ 7,875 $20,100 $ 6,300(8) $ 244,275
President of Electrical
Components Business
Unit (4)
(1) Mr. Herrick's employment terminated January 19, 2007.
(2) Mr. Bonsall became an executive officer March 29, 2006 as President of our
Engine and Power Train Business Unit. He became President and Chief
Operating Officer (and acting principal executive officer) January 19,
2007. He ceased serving as President of our Engine and Power Train Business
Unit on March 1, 2007.
(3) Mr. Stolzenberg became an executive officer January 1, 2006. He resigned
effective March 6, 2007.
(4) Mr. Pratt became an executive officer January 1, 2006.
(5) Salary includes any amounts deferred at the officer's election and
contributed on his behalf to our Retirement Savings Plan (a 401(k) plan).
(6) Non-equity incentive plan compensation consists of cash awards under
Management Incentive Plan.
(7) Bonus paid in 2006 for 2005 services and not reported in last year's table.
(8) Matching contribution to the Retirement Savings Plan.
(9) Mr. Bonsall is not a Tecumseh Products Company employee. AP Services, LLC,
an affiliate of AlixPartners, LLP, provides his services to us under
contract. The amount shown is the amount we accrued in 2006 for fees to AP
Services, LLC for Mr. Bonsall's services.
(10) Reimbursement for relocation expenses.
The material assumptions we used in computing the changes in pension value
shown in the Summary Compensation Table are listed after the Pension Benefits
Table below.
MANAGEMENT INCENTIVE PLAN
Under the Management Incentive Plan as implemented for 2006, our executive
officers (other than Mr. Bonsall, who is not a company employee) and other plan
participants had the opportunity to earn awards valued at up to 80% of their
2006 salaries. Early in 2006, our Governance, Compensation, and Nominating
Committee established two sets of criteria for awards that would be made to
executive officers and other plan participants in 2007 based on 2006
performance, one for executives in the corporate office group, which included
Mr. Herrick
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and Mr. Nicholson, and another for business unit executives, which included Mr.
Stolzenberg and Mr. Pratt.
Under these criteria, executives in the corporate office group had the
opportunity to earn:
- phantom stock awards valued at up to 20% of salary based on
company-wide return on equity, both in absolute terms and in relation
to historical performance;
- phantom stock awards valued at up to 40% of salary based on a basket
of four functional metrics (achievement of purchase savings target,
improvement in net days of accounts receivable less accounts payable,
improvement in total cost of quality, and successful implementation of
schedule Oracle go-live sites); and
- cash awards of up to 20% of salary based on achievement of individual
goals and objectives.
Executives in business units had the opportunity to earn:
- phantom stock awards valued at up to 5% of salary based on
company-wide return on equity in relation to historical performance;
- phantom stock awards valued at up to 40% of salary based on the
business unit's cash return on assets, both in absolute terms and in
relation to historical performance, and business plan attainment;
- cash awards of up to 25% of salary based on reporting unit criteria
measuring quality, growth, and a basket of other strategic scorecard
metrics (revenue per employee, productivity, days of inventory on
hand, and on-time delivery); and
- cash awards of up to 10% of salary based on achievement of individual
goals and objectives.
Half of any phantom stock units granted under each 2006 award would have
vested after three full fiscal years, and the remaining units would have vested
after five full fiscal years. Phantom stock units granted under the plan are
settled in cash at the end of the vesting period. Except in cases of earlier
employment termination due to death, disability, or retirement, or in the event
of a "change in control" (as defined in the plan), phantom stock units awarded
under the plan are subject to forfeiture if the grantee does not remain with us
until the units vest. As cash dividends are paid on Class A shares, additional
phantom stock units (also subject to forfeiture), equal in value to the
dividends paid, are credited to employee accounts under the plan. For purposes
of computations under the plan, units are valued at the average of the closing
prices for the Class A shares on the first trading day of the month over the
eleven months preceding the valuation date.
Applying the performance criteria established at the beginning of the year
to the measures of actual 2006 performance resulted in the cash awards shown in
the Summary Compensation Table and no phantom stock awards.
The table below shows information about the phantom stock units awarded in
previous years to executive officers named in the Summary Compensation Table
that remained outstanding at the end of 2006.
B-4
OUTSTANDING PHANTOM STOCK AWARDS AT 2006 FISCAL YEAR-END
PHANTOM STOCK AWARDS
---------------------------------
NUMBER OF UNITS MARKET VALUE OF
THAT HAVE NOT UNITS THAT HAVE
VESTED (1) NOT VESTED
NAME (#) ($)
---- --------------- ---------------
Todd W. Herrick 234.8 $4,640
James S. Nicholson 69.2 $1,368
James J. Bonsall -- --
Eric L. Stolzenberg -- --
Ronald E. Pratt -- --
(1) Units will vest on December 31, 2007.
There were no phantom stock units awarded to executive officers named in
the Summary Compensation Table in previous years that vested and were paid out
during 2006.
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RETIREMENT PLANS
Our retirement plan, which is a broad-based defined benefit and (since
1985) noncontributory plan, and our supplemental retirement plan (commonly
referred to as a SERP), which covers certain executives, provide benefits in the
event of normal (i.e., at age 65), early, deferred, or disability retirement.
Upon a participant's death, these plans provide a surviving spouse pension and a
refund of any pre-1985 employee contributions. Participants are vested after
five years of credited service.
These plans provide retirement benefits to a vested participant in the form
of a life-time pension, the amount of which is equal to a percentage of the
participant's average base salary over the 60 months immediately before his or
her retirement date, multiplied by years of credited service (up to a maximum of
35 years), and reduced in the case of some benefits payable under the
supplemental retirement plan by a percentage of Social Security benefits.
The automatic form of benefit for a married participant is the joint and
50% survivor benefit or the joint and 100% survivor benefit as selected by the
participant. However, the participant, with the consent of his or her spouse,
may elect to have his benefit paid in the form of an annuity with 120 payments
certain. The financial effect of these alternate payment forms on the amount of
the participant's monthly benefit payment depends upon the ages of the
participant and his or her spouse.
The automatic payment form for an unmarried participant is the single life
annuity. Alternatively, the participant may elect to have his benefit paid in
the form of an annuity with 120 payments certain. If the benefit is paid in the
form of an annuity with 120 payments certain rather than a single life annuity,
the monthly benefit will be reduced.
Todd W. Herrick is eligible for an early retirement benefit under the plan.
Any participant who has reached age 55 with 10 years of service is eligible for
an early retirement benefit. Mr. Herrick's early retirement benefit is equal to
his benefit at age 65, unreduced for early commencement..
The table below shows benefit information under the plans for each
executive officer named in the Summary Compensation Table. Mr. Bonsall is not an
employee and does not participate in the plans.
B-6
2006 PENSION BENEFITS TABLE
PRESENT VALUE PAYMENTS
NUMBER OF YEARS OF ACCUMULATED DURING LAST
CREDITED SERVICE BENEFIT FISCAL YEAR
NAME PLAN NAME (#) ($) ($)
---- ------------ ---------------- -------------- -----------
Todd W. Herrick Pension Plan 42.6 $ 978,916 --
SERP 42.6 $1,267,389 --
James S. Nicholson Pension Plan 4.9 $ 47,573 --
SERP 4.9 $ 4,971 --
James J. Bonsall Pension Plan -- -- --
SERP -- -- --
Eric L. Stolzenberg Pension Plan 1.1 $ 18,563 --
SERP 1.1 -- --
Ronald E. Pratt Pension Plan 2.2 $ 40,344 --
SERP 2.2 -- --
The material assumptions we used in computing the present values of pension
benefits shown in the table above and the changes in pension value shown in the
Summary Compensation Table were:
- Pre-retirement Assumptions
- FAS 87 Discount Rate: 5.71% for 2006, 5.50% for 2005
- Turnover: None
- Post-retirement Assumptions
- Interest Rate: 5.71% for 2006, 5.50% for 2005
- Mortality Table: RP-2000 Combined Healthy Participant Table
We intend to terminate the defined benefit plan as of April 30, 2007 and to
replace it with a new defined benefit plan with a new benefit formula. The
proposed new plan will provide a retirement benefit in the form of a lifetime
pension, the amount of which will be equal to the lump sum value of 10.5% of the
participant's average base salary over the 60 months immediately before his or
her retirement date, multiplied by years of credited service (up to a maximum of
35 years), actuarially adjusted to an equivalent annuity payable at age 65. A
second part of the retirement benefit under the proposed new plan will provide a
continuation of the old benefit formula based on pay increases after termination
of the old plan.
CHANGE IN CONTROL AGREEMENTS
We have entered into change in control agreements with some of our
executives, including all current executive officers named in the Summary
Compensation Table other than Mr. Bonsall. All of the agreements are
substantially identical. Among other things, each provides that if we terminate
the executive's employment, except for cause, within six months before or one
year after a "change in control" (as defined), or if the executive resigns
within one year after a change in control following any of specified adverse
changes in the terms of his employment, he will be entitled to benefits that
include:
- a cash payment equal to one year's salary plus the average of his last
three years' bonus;
B-7
- one year of medical insurance coverage and, if this coverage is
taxable to the employee, a cash payment equal to the employee's
corresponding federal income tax obligation;
- reimbursement for outplacement services up to $50,000; and
- credit for one additional year of service under our defined benefit
pension plan or, if the credit is not permitted under the terms of the
plan, a cash payment in an amount actuarially equivalent to the
credit.
Each agreement also provides that the executive's outstanding phantom share
awards under our Management Incentive Plan will become vested and payable
following a change in control in accordance with the change in control terms of
that plan notwithstanding the somewhat different definition of "change in
control" in the change in control agreements.
Each agreement has a three-year term and will renew automatically for
successive three-year terms unless we give the executive notice of non-renewal
at least one year before the scheduled expiration date.
The table below shows the estimated amounts of benefits each executive
officer named in the Summary Compensation Table would have received if a change
in control had occurred on December 31, 2006.
2006 CHANGE IN CONTROL BENEFITS TABLE
COST OF ONE VALUE OF ONE PAYMENT
YEAR OF YEAR CREDIT FOR
MEDICAL OUTPLACEMENT UNDER PENSION PHANTOM
NAME CASH PAYMENT INSURANCE (1) SERVICES PLAN (2) SHARE UNITS TOTAL
---- ------------ ------------- ------------ ------------- ----------- --------
Todd W. Herrick $579,018 $8,208 $50,000 $64,180 $4,640 $706,046
James S. Nicholson $281,121 $8,208 $50,000 $12,402 $1,368 $353,099
James J. Bonsall -- -- -- -- -- --
Eric L. Stolzenberg $280,000 $8,208 $50,000 $16,875 -- $355,083
Ronald E. Pratt $210,000 $8,208 $50,000 $18,338 -- $286,546
(1) Medical insurance coverage would not have been taxable to employees so no
tax gross-up would have been payable.
(2) For Mr. Herrick, consists $27,969 value of credit under qualified pension
plan plus $36,211 value of credit under SERP. For Mr. Nicholson, consists
of $9,908 value of credit under qualified pension plan plus $2,494 value of
credit under SERP. Messrs. Stolzenberg and Pratt do not participate in the
SERP.
CONTINGENT SEVERANCE AGREEMENT WITH MR. NICHOLSON
We have an agreement with James S. Nicholson under which he would be
entitled to one year's continuation of salary and benefits if his employment is
terminated, contingent upon his executing a release. Mr. Nicholson would not be
entitled to benefits under the agreement in some circumstances, including if he
resigns, if we sell our compressor business and he is offered employment by the
buyer, if he becomes entitled to receive benefits under another agreement
triggered by a change in control of the company, if his employment is terminated
for specified causes, or if he dies or becomes disabled. The agreement contains
confidentiality and noncompetition provisions.
SEVERANCE AGREEMENT WITH MR. STOLZENBERG
Mr. Stolzenberg resigned from his position as President of our Compressor
Business Unit effective March 6, 2007. Under the severance agreement, waiver,
and release we signed with him, we have agreed to continue his salary and other
benefits in effect until June 15, 2007.
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SEVERANCE ARRANGEMENTS WITH KENT B. HERRICK UNDER SETTLEMENT AGREEMENT
For information about our severance arrangements with Kent B. Herrick, see
"Proposal 1: Election of Directors--Settlement and Release Agreement with Todd
W. Herrick and Related Entities."
NO OTHER SEVERANCE AGREEMENTS
Except for the pension benefits, change in control agreements, and
severance agreement described above, we do not have any contracts, agreements,
plans, or arrangements providing for payments to executive officers on
retirement, resignation, or other termination of their employment.
AGREEMENTS WITH ALIXPARTNERS AND AP SERVICES
We had a contract with AlixPartners, LLP (formerly known as AlixPartners,
LLC) under which it provided financial and operational consulting services
during 2006 to improve the operating performance of our Engine and Power Train
Group. AlixPartners' work under that contract was completed in 2006. We also
have a contract with AP Services, LLC, an affiliate of AlixPartners, under which
its personnel provided during 2006 and are continuing to provide interim
management services, including the services of James Bonsall, who serves as
President of our Engine and Power Train Business Unit and since January 19, 2007
has served as our President and Chief Operating Officer. For 2006, we paid
AlixPartners and AP Services a total of approximately $21.1 million under those
contracts, including $1,760,540 for Mr. Bonsall's services. We expect to make
substantial payments to AP Services for interim management services provided
during 2007 by its personnel, including Mr. Bonsall. The total amount we pay for
2007 will depend on how quickly we are able to replace the interim personnel
provided by AP Services with new permanent employees, if any, and the extent to
which we continue to use the services of AP Services personnel after our new CEO
is appointed. Albert A. Koch, a director, is a Managing Director of and partner
in AlixPartners, LLP.
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DIRECTOR COMPENSATION
Cash Compensation
We do not pay employees any separate compensation for serving as directors.
We pay all other directors a monthly retainer ($2,800 for the Chair of our Audit
Committee, $2,700 for the Chair of our Governance, Compensation, and Nominating
Committee, and $2,500 for all others), a $1,500 fee for each board meeting
attended, and a $1,200 fee ($1,400 for committee chairs) for each committee
meeting attended. We also reimburse our directors for travel expenses.
Phantom Share Awards
Our non-employee directors are eligible for phantom share awards under our
Director Retention Phantom Share Plan, which is administered by the Governance,
Compensation, and Nominating Committee. Under the plan, each non-employee
director receives an annual award denominated in phantom Class A shares. The
minimum award is $5,000, and the maximum is 100% of the director's annual
retainer fee. The Board of Directors makes the awards at its organizational
meeting following each annual meeting of shareholders on the basis of our actual
return on equity for the preceding year as compared to a target established by
the committee for that year. We credit awards to directors' accounts, together
with deemed dividends on the phantom shares in the accounts. Subject to some
limitations, the plan provides that one-half of each award will be paid out
three years after grant and the other half five years after grant, except that
if a director leaves the board, or if there is a "change in control" of Tecumseh
Products Company, we will pay the director cash in an amount equal to the fair
market value of the phantom shares in his or her account at that time. We
compute all dollar amounts using the average of the high and low sales prices of
our Class A shares on the Nasdaq Stock Market on the date of computation.
In 2006, based on our return on equity for 2005, each non-employee director
received the minimum $5,000 phantom share award, and in 2007, based on our
return on equity for 2006, each will again receive only the $5,000 minimum
award.
Deferred Compensation Plan
Our non-employee directors can elect to defer receipt of a portion of their
retainers and meeting fees under our Outside Directors' Voluntary Deferred
Compensation Plan. The plan provides that deferred amounts are to be recorded in
bookkeeping accounts we maintain and that the amount in each account will be
adjusted from time to time to reflect the results of a hypothetical investment
in our Class A shares or based on the current yield of the Dow Jones Corporate
Bond Index, as selected by the director. Amounts payable to directors under the
plan are general unsecured claims against the company. No director had any
balance in an account under the plan at any time during 2006.
Director Compensation Table
The table below shows the compensation received by each director who served
during 2006 other than Todd W. Herrick, whose compensation for service as a
director is fully reflected in the Summary Compensation Table and other
executive compensation information provided above.
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2006 DIRECTOR COMPENSATION TABLE
FEES EARNED OR
PAID IN CASH (1) STOCK AWARDS (2) TOTAL
NAME ($) ($) ($)
---- ---------------- ---------------- --------
J. Russell Fowler (3) $27,000 $5,000 $ 32,000
Peter M. Banks $83,600 $5,000 $ 88,600
Jon E. Barfield (4) $85,000 $5,000 $ 90,000
David M. Risley $96,600 $5,000 $101,600
Virginia A. Kamsky (5) $12,700 -- $ 12,700
Albert A. Koch $84,300 $5,000 $ 89,300
(1) Retainer and meeting fees
(2) Phantom share awards under Director Retention Phantom Share Plan, valued at
amount recognized for financial statement reporting purposes
(3) Director until February 2006
(4) Director until December 2006
(5) Director until April 2006
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APPENDIX C
AUDIT AND NON-AUDIT FEES
The table below shows the fees billed to us by PricewaterhouseCoopers LLP,
our Independent Registered Public Accounting Firm for the last two fiscal years.
All of the services either were performed under engagements approved by our
Audit Committee before we entered into them. The fees included in the Audit
category are fees billed for the fiscal years for the audit of our annual
consolidated financial statements included in our annual report to shareholders
on Form 10-K and review of our consolidated financial statements included in
Forms 10-Q and related matters within that category. The fees included in each
of the other categories are fees billed in the fiscal years.
2005 2006
---------- ----------
Audit fees.................................. $2,881,000 $3,773,000
Audit-related fees.......................... 16,000 16,000
Tax fees.................................... 148,000 79,000
All other fees.............................. 3,000 45,000
---------- ----------
Total.................................... $3,048,000 $3,913,000
Audit fees were for professional services rendered for the audits of our
consolidated financial statements, quarterly reviews of the financial statements
included in our quarterly reports on Form 10-Q, for auditing our internal
controls, and assistance with and review of documents we filed with the SEC.
Audit-related fees were for foreign pension and other regulatory services.
Tax fees were for services related to U.S. customs law and foreign tax
compliance and consulting services.
All other fees were for software licensing fees for accounting research
software.
The Audit Committee's current policy requires pre-approval of all audit and
non-audit services provided by the Independent Registered Public Accounting Firm
before the engagement of the Independent Registered Public Accounting Firm to
perform them. Audit, tax, and some types of audit-related and other services may
be pre-approved generally, through approval of frameworks of services to be
rendered. Services not covered by a general pre-approval require specific
pre-approval. The committee may delegate authority to its chairman to
pre-approve the engagement of the Independent Registered Public Accounting Firm
when the entire committee is unable to do so. The chairman must report all such
pre-approvals to the entire committee at the next committee meeting.
C-1
APPENDIX D
TECUMSEH PRODUCTS COMPANY
CORPORATE GOVERNANCE GUIDELINES
The guidelines are subject to future refinement or changes as the Board may
find necessary or advisable for the Company.
GENERAL PHILOSOPHY AND FUNCTIONS
1. Board Philosophy. The business of Tecumseh Products Company is conducted
by its employees and officers, under the direction of the Chief Executive
Officer and the oversight of the Board, to enhance the long-term value of the
Company for its shareholders. The Board of Directors is elected by the
shareholders to oversee management and to assure that the long-term interests of
the shareholders are being served. To fulfill its responsibilities and to
discharge its duties, the Board of Directors follows the procedures and
standards set forth in these guidelines.
2. Board Functions. In addition to its general oversight of management, the
Board also performs a number of specific functions, including:
- selecting, evaluating, and compensating the CEO and overseeing CEO
succession planning;
- providing counsel and oversight on the selection, evaluation,
development, and compensation of senior management;
- reviewing, monitoring, and, where appropriate, approving fundamental
financial and business strategies and major corporate actions;
- assessing major risks facing the Company--and reviewing options for
their mitigation; and
- ensuring processes are in place for maintaining the integrity of the
Company--the integrity of the financial statements, the integrity of
compliance with law and ethics, the integrity of relationships with
customers and suppliers, and the integrity of relationships with other
stakeholders.
- Board Composition and Selection
3. Board Size. The Board believes five to ten members is an appropriate
size based on the Company's present circumstances. The Board periodically
evaluates whether a larger or smaller slate of directors would be preferable.
4. Selection of Board Members. All Board members are elected annually by
the Company's shareholders, except for Board action to fill vacancies. The
Governance, Compensation, and Nominating Committee is responsible for
recommending to the Board director candidates for nomination and election. The
Governance, Compensation, and Nominating Committee annually reviews with the
Board the applicable skills and characteristics required of Board nominees in
the context of current Board composition and Company circumstances. In making
its recommendations to the Board, the Governance, Compensation, and Nominating
Committee considers, among other things, the qualifications of individual
director candidates in light of the Board membership criteria described below.
The Governance, Compensation, and Nominating Committee will consider
candidates recommended by shareholders. Shareholders wishing to suggest director
candidates should
D-1
submit their suggestions in writing to the attention of the Corporate Secretary
of the Company, providing the candidate's name and qualifications for service as
a Board member, a document signed by the candidate indicating the candidate's
willingness to serve if elected, and evidence of the shareholder's ownership of
Company shares. Recommendations received before December 31 will be considered
for the following year's annual meeting. The Governance, Compensation, and
Nominating Committee will evaluate any candidates recommended by shareholders in
the same manner that it evaluates candidates recommended by others.
5. Board Membership Criteria. The Governance, Compensation, and Nominating
Committee works with the Board to determine the appropriate characteristics,
skills, and experience for Board members with the objective of having a Board
with diverse backgrounds and experience. In evaluating the suitability of
individual Board members, the Board takes into account many factors, including
general understanding of disciplines relevant to the success of a publicly
traded company, understanding of the Company's business, and the individual's
educational and professional background and personal accomplishment. In
determining whether to recommend a director for reelection, the Governance,
Compensation, and Nominating Committee also considers the director's past
attendance at meetings and participation in and contributions to the activities
of the Board.
6. Board Composition-Majority of Independent Directors. The Board intends
that a substantial majority of its directors will be independent. In determining
the independence of a director, the Board will apply the definition of
"independent director" in the listing standards for the Nasdaq Stock Market and
applicable laws and regulations.
7. Term Limits. The Board does not believe it should limit the number of
terms for which an individual may serve as a director.
8. Retirement Policy. The Company's Bylaws provide that a director must
retire from the Board at the annual meeting following his or her 70th birthday.
The Board does not believe that directors should expect to be renominated
automatically until they reach the mandatory retirement age. The Governance,
Compensation, and Nominating Committee's evaluation process described below will
be an important determinant for Board tenure.
9. Director Who Changes Employment Status. The Company's Bylaws provide
that any director who ceases to have the same employment he or she had when
elected must submit a resignation from the Board within 60 days and that the
Governance, Compensation, and Nominating Committee (excluding that director if
he or she is a member of the committee) will decide whether or not to accept it.
If the Governance, Compensation, and Nominating Committee does not accept the
resignation within 60 days after it is submitted, the resignation is deemed
rejected.
10. Selection of CEO and Chairman; Lead Director. The Board selects the
Company's CEO and Chairman in the manner it determines to be in the best
interests of the Company's shareholders. The Board does not have a policy as to
whether the Chairman should be a non-management director or a member of
management. When the Chairman is a member of Company management, the Board
generally will designate a non-management director as Lead Director, as provided
in the Company's Bylaws, who will be responsible for calling, establishing an
agenda for, and moderating executive sessions of independent directors.
11. Other Boards and Audit Committees. Without specific approval from the
Board, no director may serve on more than five public company boards (including
the Company's
D-2
Board), and no member of the Audit Committee may serve on more than three public
company audit committees (including the Company's Audit Committee). In addition,
a director who also serves as CEO or in an equivalent position of a public
company generally should not serve on more than two public company boards,
including the Company's Board, in addition to his or her employer's board. In
calculating service on a public company board or audit committee, service on a
board or audit committee of a parent and its substantially owned subsidiary
counts as service on a single board or audit committee. Any Audit Committee
member's service on more than three public company audit committees will be
subject to the Board's determination that the member is able to serve
effectively on the Company's Audit Committee, and the disclosure of that
determination in the Company's annual proxy statement. The Governance,
Compensation, and Nominating Committee and the Board will take into account the
nature of and time involved in a director's service on other boards in
evaluating the suitability of individual directors and making its
recommendations to Company shareholders. Service on boards and/or committees of
other organizations should be consistent with the Company's conflict of interest
policies.
BOARD MEETINGS; ACCESS TO SENIOR MANAGEMENT AND INDEPENDENT ADVISORS
12. Board Meetings-Frequency. The Board will generally have at least six
regularly scheduled meetings per year and hold additional special meetings as
necessary. Each director is expected to attend both scheduled and special
meetings of the Board and of committees on which he or she serves, except if
unusual circumstances make attendance impractical.
13. Board Meetings-Agenda. The Chairman of the Board will set the agenda
for each Board meeting, taking into account suggestions from the Lead Director
and other members of the Board. The agenda will be distributed in advance to
each director.
14. Advance Distribution of Materials. All information relevant to matters
to be discussed at an upcoming Board meeting should be distributed in writing or
electronically to all members in advance whenever feasible and appropriate. Each
director is expected to review this information before the meeting to facilitate
the efficient use of meeting time. The Board recognizes that certain items to be
discussed at Board meetings are of an extremely sensitive nature and that the
distribution of materials on these matters before meetings may not be
appropriate.
15. Access to Employees. The Board should have access to Company employees
in order to ensure that directors can ask all questions and obtain all
information necessary to fulfill their duties. Management is encouraged to
invite Company personnel to any Board meeting at which their presence and
expertise would help the Board have a full understanding of matters being
considered.
16. Access to Independent Advisors. The Board and its committees have the
right at any time to retain independent outside auditors and financial, legal,
or other advisors, and the Company will provide appropriate funding, as
determined by the Board or any committee, to compensate those independent
outside auditors or advisors, as well as to cover the ordinary administrative
expenses incurred by the Board and its committees in carrying out their duties.
17. Executive Sessions of Non-Management Directors. The non-management
directors of the Company will meet regularly in executive session, i.e., with no
management directors or management present, at least four times each year.
Executive sessions of the independent directors will be called and chaired by
the Lead Director if there is a Lead Director.
D-3
Executive session discussions may include such topics as the non-management
directors determine.
COMMUNICATIONS WITH SHAREHOLDERS
18. Shareholder Communications to the Board. Shareholders may send
communications to the Board of Directors by mailing them to:
Board of Directors
c/o General Counsel & Secretary
100 East Patterson Street
Tecumseh, Michigan 49286
The General Counsel & Secretary will review each communication and, after
consulting with the Chairman if he thinks it advisable, will forward the
communication to the person he deems appropriate to deal with it. He also will
provide a copy of each communication to the Lead Director.
Concerns about questionable accounting or auditing matters or possible
violations of the Company's Code of Conduct or Code of Ethics for Financial
Managers should be reported using the procedures described in the Ethics
Reporting Policy available on the Company's web site.
19. Attendance at Annual Meeting. Each director is encouraged to attend the
Company's annual meeting of shareholders.
PERFORMANCE EVALUATION; SUCCESSION PLANNING
20. Annual Evaluation of Board Performance by Governance, Compensation, and
Nominating Committee. The Governance, Compensation, and Nominating Committee
annually reports to the Board of Directors the committee's assessment of the
Board's performance. The Committee provides this report after the financial
statements for each fiscal year have been completed and at the same time as it
presents its review of Board membership needs. The report is discussed with the
full Board and addresses the Board's contribution as a whole (rather than
criticizing any particular directors), including discussion of specific areas
where the committee believes the Board's contribution could be improved.
21. Succession Planning. As part of the annual officer evaluation process,
the Governance, Compensation, and Nominating Committee should work with the CEO
to plan for CEO succession, as well as to develop plans for interim succession
for the CEO in the event of an unexpected occurrence.
COMPENSATION
22. Board Compensation Philosophy. The Company believes in establishing a
conservative, but market competitive, non-employee director compensation
program. Compensation should consist partly of guaranteed elements and partly of
elements providing an opportunity to earn additional compensation based on the
Company's performance.
23. Non-Employee Director Stock Ownership. The Company believes
non-employee directors should attain meaningful levels of share ownership in the
Company. The Company expects each non-employee director to achieve, within the
time set forth below, the goal of investing at least $50,000 in the Company's
common shares. In the absence of special circumstances, the Company will not
nominate a director for reelection if he or she does not
D-4
comply with this requirement. Both Class A shares and Class B shares count
toward fulfillment of the requirement. Phantom shares acquired or awarded under
any plan maintained by the Company do not count. Each person who was a director
on February 23, 2005 is expected to achieve the $50,000 investment goal no later
than February 23, 2010. Each person who becomes a director after February 23,
2005 is expected to achieve the goal within five years after becoming a
director.
COMMITTEES
24. Number and Types of Committees. The Board has four standing committees:
the Audit Committee, the Governance, Compensation, and Nominating Committee, the
Finance Committee, and the Pension and Investment Committee. The Board may add
new committees or remove existing committees as it deems advisable. Each
committee performs the duties assigned to it in the Board resolution
establishing the committee.
The duties of the Audit Committee and the Governance, Compensation, and
Nominating Committee are described in their charters, which can be viewed on the
Company's web site.
The Finance Committee is responsible for advising the Board of Directors
about strategies, plans, policies, and actions related to corporate finance. The
Pension and Investment Committee is responsible for the control and management
of all pension and retirement plans the Company sponsors.
25. Composition of Committees; Committee Chairs. The Audit Committee and
the Governance, Compensation, and Nominating Committee consist solely of
independent directors. The Board is responsible for the appointment of committee
members and committee chairs.
26. Committee Meetings and Agendas. The chair of each committee, working in
cooperation with the appropriate members of management, is responsible for
setting the agendas for committee meetings. The chair and committee members
determine the frequency and length of committee meetings consistent with the
Board resolutions establishing each committee.
MISCELLANEOUS
27. Director Orientation and Continuing Education. The Governance,
Compensation, and Nominating Committee is responsible for new-director
orientation programs and for director continuing education programs to assist
directors in maintaining skills necessary or appropriate for the performance of
their responsibilities.
28. Insurance and Indemnification. The Company will purchase reasonable
directors' and officers' liability insurance, as determined by the Board after
consulting with management, for the benefit of its directors and management. In
addition, directors and management are entitled to indemnification to the
fullest extent permitted by Michigan law and the Company's Articles of
Incorporation.
29. Review of Governance Guidelines. The practices memorialized in these
guidelines have developed over a period of years. The Board expects to review
these guidelines from time to time as appropriate.
D-5
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
TECUMSEH PRODUCTS COMPANY
THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD MAY 2, 2007
PROXY
By signing on the reverse, I (or, if more than one person signs, we) --
- - authorize either of David M. Risley or James S. Nicholson to act as my (or
our) proxy at the Annual Meeting of Shareholders of Tecumseh Products
Company to be held on Wednesday, May 2, 2007 and at any adjournments of
that meeting,
- - give each proxy full power to name another person to substitute for him as
proxy,
- - authorize each proxy to vote any and all shares of Tecumseh Products
Company Class B Common Stock, $1.00 par value, registered in my name (or
our names) or which for any reason I (or we) may be entitled to vote, and
- - direct the proxies to vote as specified on the reverse side and to vote in
their discretion on any other matters that may come before the meeting.
CONTINUED AND TO BE VOTED AND SIGNED ON REVERSE
(TECUMSEH LOGO) 2007 ANNUAL MEETING OF SHAREHOLDERS
TECUMSEH PRODUCTS COMPANY WEDNESDAY, MAY 2, 2007
Tecumseh Country Club
5200 Milwaukee Road
Tecumseh, MI 49286
INSTRUCTIONS FOR VOTING YOUR PROXY
This proxy covers all Class B Shares of Tecumseh Products Company held of
record.
THERE ARE THREE WAYS TO VOTE YOUR PROXY
TELEPHONE VOTING INTERNET VOTING VOTING BY MAIL
---------------- ------------------------------------ ------------------------------------
This method of voting is available for Visit the Internet voting Web site Simply mark, sign and date your
residents of the U.S. and Canada. On a at HTTP://PROXY.GEORGESON.COM. Enter proxy card and return it in the
touch tone telephone, call TOLL FREE the COMPANY NUMBER AND CONTROL postage-paid envelope. If you are
1-800-786-5219, 24 hours a day, 7 days NUMBER shown below and follow the voting by telephone or the Internet,
a week. You will be asked to enter instructions on your screen. You please do not mail your proxy card.
ONLY the CONTROL NUMBER shown below. will incur only your usual Internet
Have this proxy card ready, then charges. Available 24 hours a day, 7
follow the prerecorded instructions. days a week until 5:00 p.m. Eastern
Your vote will be confirmed and cast Daylight Time on May 1, 2007.
as you directed. Available 24 hours a
day, 7 days a week until 5:00 p.m.
Eastern Daylight Time on May 1, 2007.
COMPANY NUMBER CONTROL NUMBER
TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
To elect the following persons to the FOR ALL If you sign and return this proxy, the
Board of Directors of the Corporation FOR WITHHOLD EXCEPT proxies will vote your shares as specified
to hold office until the next Annual above. IF YOU DO NOT SPECIFY HOW TO VOTE, THE
Meeting of Shareholders or until their [ ] [ ] [ ] PROXIES WILL VOTE YOUR SHARES FOR THE ELECTION
successors are elected and qualified. AS DIRECTORS OF ALL NOMINEES LISTED ABOVE AND IN
THEIR DISCRETION ON ANY OTHER MATTERS THAT MAY
COME BEFORE THE MEETING.
Peter M. Banks, David M. Risley, Albert A. Koch, WE APPRECIATE YOUR PROMPT ACTION
Kevin E. Sheehan, Kent B. Herrick IN SIGNING AND RETURNING THIS PROXY.
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, check the "For All Except" box and write that nominee's
name in the space provided below.
-------------------------------------------
Signature
-------------------------------------------
Signature
DATED: ______________________________, 2007
NOTE: Please sign exactly as your name(s)
appear above. Joint owners should each
sign. When signing as attorney, executor,
administrator, trustee, or guardian, please
give your full title.
PLEASE PROMPTLY COMPLETE, DATE, SIGN, AND RETURN THIS PROXY CARD USING THE
ENCLOSED ENVELOPE.
If you have any questions or need assistance, please contact Georgeson Inc., our
Proxy Solicitor at 1-866-541-3550.