SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
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-11(c) or 240.14a-12
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UNITED AUTO GROUP, INC.
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(I) 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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UNITED AUTO GROUP, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 1997
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The Annual Meeting of Stockholders of United Auto Group, Inc., a Delaware
corporation (the "Company"), will be held at the Hotel Inter-Continental, 111
East 48th Street, Astor Room, New York, New York, on Thursday, April 17,
1997, at 9:30 a.m., local time, for the purpose of considering and acting
upon the following matters, which are described more fully in the
accompanying Proxy Statement:
(a) To elect two Class I directors to serve until the 2000 annual meeting
of stockholders or until their respective successors are duly elected
and qualified;
(b) To ratify the selection of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the year ending December 31, 1997; and
(c) To transact such other business may properly come before the meeting
or any adjournment or postponement thereof.
Holders of Voting Common Stock of record at the close of business on March
17, 1997 (the "Record Date") are entitled to vote at the Annual Meeting and
any adjournment thereof. A list of stockholders of the Company as of the
Record Date will be available for inspection during business hours through
April 16, 1997, at the Company's offices, 375 Park Avenue, New York, New
York, and will also be available for inspection at the Annual Meeting.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHICH HAS BEEN PROVIDED
FOR YOUR CONVENIENCE AND WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. THE PROMPT RETURN OF PROXY CARDS WILL ENSURE A QUORUM. ANY
STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND
VOTE PERSONALLY ON ALL MATTERS BROUGHT BEFORE THE ANNUAL MEETING.
By Order of the Board of Directors,
/s/ Philip N. Smith, Jr.
Philip N. Smith, Jr.
Secretary
United Auto Group, Inc.
375 Park Avenue
New York, New York 10152
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of United Auto Group, Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders of
the Company (the "Annual Meeting") to be held on Thursday, April 17, 1997, at
9:30 a.m., local time, at the Hotel Inter-Continental, 111 East 48th Street,
Astor Room, New York, New York, or at any adjournment or postponement
thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. It is expected that the Notice of Annual Meeting of
Stockholders, this Proxy Statement and the enclosed proxy card will be mailed
to stockholders entitled to vote at the Annual Meeting commencing on or about
March 19, 1997.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her
to participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting United Auto Group, Inc.,
Investor Relations, 375 Park Avenue, New York, New York 10152, (212)
230-0400. To provide the Company sufficient time to arrange for reasonable
assistance, please submit all requests by April 7, 1997.
RECORD DATE AND VOTING SECURITIES
Stockholders can ensure that their shares are voted at the Annual Meeting
by signing and returning the enclosed proxy card in the envelope provided.
The submission of a signed proxy will not affect a stockholder's right to
attend the Annual Meeting and vote in person. Stockholders who execute
proxies retain the right to revoke them at any time before they are voted by
filing with the Secretary of the Company a written revocation or a proxy
bearing a later date. The presence at the Annual Meeting of a stockholder who
has signed a proxy does not itself revoke that proxy unless the stockholder
attending the Annual Meeting files written notice of revocation of the proxy
with the Secretary of the Company at any time prior to the voting of the
proxy.
Proxies will be voted as specified by the stockholders. Where specific
choices are not indicated, proxies will be voted FOR the proposals submitted
for approval. The proxy card provides space for a stockholder to withhold
voting for any or all nominees to the Board of Directors or to abstain from
voting for any proposal if the stockholder chooses to do so.
Under Delaware law and the Company's Bylaws, the presence of a quorum is
required to transact business at the Annual Meeting. A quorum is defined as
the presence, either in person or by proxy, of a majority of the shares
entitled to vote. Proxies marked "abstain" will be included in determining a
quorum. On routine matters, brokers who hold customer shares in "street name"
but have not timely received voting instructions from such customers have
discretion to vote such shares. Since all of the matters to be voted upon at
the Annual Meeting are routine, the presence of such shares will be included
in determining a quorum.
Under Delaware law and the Company's Bylaws, proposals must be approved by
the affirmative vote of a majority, or, in the case of the election of
directors, a plurality, of the shares present, either in person or by proxy,
at the Annual Meeting and entitled to vote. Accordingly, abstentions have the
same effect as votes "against" a proposal, whereas instructions to withhold
voting on the election of any nominee for director have no effect on the
outcome of the vote.
The Board of Directors has fixed the close of business on March 17, 1997
as the record date (the "Record Date") for the determination of the
stockholders of the Company who are entitled to receive notice of and to vote
at the Annual Meeting. At the close of business on the Record Date, the
Company had outstanding 16,700,640 shares of voting common stock, par value
$0.0001 per share (the "Common Stock"), excluding treasury shares. The
holders of Common Stock are entitled to one vote for each share held on the
Record Date.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors is responsible for the management and direction of
the Company and for establishing broad corporate policies. The Board of
Directors held five meetings during the year ended December 31, 1996 ("Fiscal
1996"). No director attended less than 75% of the board and committee
meetings scheduled during Fiscal 1996.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has four standing committees: the Executive
Committee, the Audit Committee, the Compensation Committee and the Stock
Option Committee. The Company does not have a standing committee on
nominations. The principal responsibilities of each committee are described
in the following paragraphs.
Executive Committee. In Fiscal 1996, the Executive Committee was comprised
of Marshall S. Cogan, who served as its Chairman, Carl Spielvogel, Michael R.
Eisenson and John J. Hannan. The Executive Committee's primary function is to
assist the Board of Directors by acting upon matters when the Board is not in
session. The Executive Committee has the full power and authority of the
Board, except to the extent limited by law or the Company's Certificate of
Incorporation or Bylaws. It held no meetings in Fiscal 1996.
Audit Committee. In Fiscal 1996, the Audit Committee was comprised of
Richard Sinkfield, who served as its Chairman, John J. Hannon and Jules B.
Kroll. It is responsible for overseeing the Company's financial reporting
process. The Audit Committee consults with management and the Company's
independent accountants during the year on matters related to the annual
audit, internal controls, the published financial statements and the
accounting principles and auditing procedures being applied. The Audit
Committee also recommends a firm of certified independent accountants to
serve as the Company's independent accountants, authorizes all audit fees and
other professional services rendered by the accountants and periodically
reviews the independence of the accountants. It held no meetings in Fiscal
1996.
Compensation Committee. In Fiscal 1996, the Compensation Committee was
comprised of Marshall S. Cogan, who served as its Chairman, Michael R.
Eisenson, John J. Hannan and Robert H. Nelson. The Compensation Committee has
the authority to determine all matters relating to the compensation of the
Company's executive officers and management employees. It held no meetings
during Fiscal 1996.
Stock Option Committee. In Fiscal 1996, the Stock Option Committee was
comprised of Michael R. Eisenson, who served as its Chairman, and John J.
Hannan, each of whom is a non-employee director. The Stock Option Committee
administers and makes awards under the Company's Stock Option Plan. It held
one meeting during Fiscal 1996.
COMPENSATION OF DIRECTORS
The Company has adopted a compensation plan (the "Non-Employee Director
Compensation Plan") to provide compensation to the directors of the Company
who are not paid employees of the Company (the "Outside Directors"). Pursuant
to the Non-Employee Director Compensation Plan, each Outside Director
receives an annual retainer of $15,000, a $1,000 fee for each meeting of the
Board of Directors attended in person, $750 for each meeting of a committee
of the Board of Directors attended in person and $500 for each such meeting
participated in by telephone. Effective January 1, 1997, such fees will be
payable at the option of each Outside Director in cash or in Common Stock at
the current market price. All directors are entitled to reimbursement for
their reasonable out-of-pocket expenses in connection with their travel to
and attendance at meetings of the Board of Directors or committees thereof.
In Fiscal 1996, there were five Outside Directors of the Company and three
employee directors. In accordance with the internal policies of their
employers, certain directors assign their director compensation to the
organizations that employ them. Directors who are also employees of the
Company or its subsidiaries receive no cash compensation for serving as
Directors or as members of Board committees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised entirely of Outside Directors. The
Commission requires issuers to disclose the existence of any other
corporation in which both (i) an executive officer of the Company serves on
the board of directors and/or compensation committee and (ii) a director of
the Company serves as an executive officer. During Fiscal 1996, Marshall S.
Cogan, Chairman of the
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Company's Compensation Committee, also served as Chairman of the Board and
Chief Executive Officer of Foamex International Inc., on whose compensation
committee Carl Spielvogel, the Company's Chief Executive Officer, then
served.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes serving staggered
three-year terms, the term of one class of directors to expire each year. The
term of the present Class I directors expires at the Annual Meeting. At the
Annual Meeting, the stockholders will elect two Class I directors to hold
office, subject to the provisions of the Company's Bylaws, until the Annual
Meeting of Stockholders in 2000 and until their respective successors shall
have been duly elected and qualified.
Carl Spielvogel, the Company's Chairman of the Board and Chief Executive
Officer, has announced his resignation from the Company, effective as of the
Annual Meeting. He is to be succeeded by Marshall S. Cogan, the Company's
founder and Chairman of its Executive Committee. As of such resignation, the
size of the Company's Board of Directors will be reduced from eight to seven
directors.
Unless contrary instructions are given, the persons named in the enclosed
proxy or their substitutes will vote FOR the election of the two Class I
director nominees named below. The Board of Directors believes that both of
the nominees are willing to serve as directors. However, if any nominee at
the time of election is unable to serve or is otherwise unavailable for
election, and as a result other nominees are designated by the Board of
Directors, the persons named in the enclosed proxy or their substitutes
intend to vote for the election of such designated nominees.
The nominees for election as Class I directors to serve until the Annual
Meeting of Stockholders in 2000 and the Class II and Class III directors,
whose terms of office continue until the Annual Meeting of Stockholders in
1998 and 1999, respectively, together with certain information about them,
are set forth below:
CLASS I DIRECTORS
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MARSHALL S. COGAN Marshall S. Cogan, 59, has served as a director of the Company
Chairman of the Board and since December 1990. Since 1974, Mr. Cogan has been the
Chief Executive Officer of principal stockholder, Chairman or Co-Chairman of the Board of
Trace International Holdings, Directors and Chief Executive Officer or Co-Chief Executive
Inc. Officer of Trace International Holdings, Inc. Trace International
Holdings, Inc. has acquired many companies in various
consolidating industries and conceived the concept for the
Company, which it founded in December 1990. He has been the
Chairman of the Board of Directors and Chairman of the Executive
Committee of Foamex International Inc. and its predecessor
company since September 1993 and Chief Executive Officer since
January 1994. He has also been a director of Recticel s.a. since
February 1993. Mr. Cogan served as Chairman and a director of
other companies formerly owned by Trace International Holdings,
Inc., including General Felt Industries, Inc., Knoll International,
Inc. and Sheller-Globe Corporation. Prior to forming Trace
International Holdings, Inc., he was a senior partner at Cogan,
Berlind, Weill & Levitt and subsequently CBWL-Hayden Stone,
Inc., both predecessor companies to Lehman Brothers Inc.
Additionally, Mr. Cogan serves on the Board of Trustees of The
Museum of Modern Art, the Boston Latin School and New York
University Medical Center and the Board of Directors of the
American Friends of the Israel Museum. He also serves on several
committees of Harvard University.
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JOHN M. SALLAY John M. Sallay, 41, has served as a director of the Company since
Managing Director of Harvard December 1993. He is a Managing Director of Harvard Private
Private Capital Group, Inc. Capital Group, Inc., which he joined in 1990. Mr. Sallay is also a
director of E-Z Serve Corporation.
CLASS II DIRECTORS
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JULES B. KROLL Jules B. Kroll, 55, has served as a director of the Company since
Chairman of Kroll Associates December 1993. He founded Kroll Associates, an international
corporate investigation and consulting firm, in 1972 and is presently
its Chairman. Mr. Kroll is also a director of Presidential Life
Corporation.
ROBERT H. NELSON Robert H. Nelson, 51, has served as a director of the Company
Executive Vice President and since January 1996 and as Executive Vice President and Chief
Chief Financial Officer of the Financial Officer of the Company since January 1997. He has also
Company and Senior Vice served as Vice Chairman of Atlantic Auto Finance Corporation
President, Chief Financial since March 1996, Chief Financial Officer and Treasurer of Trace
Officer, Chief Operating International Holdings, Inc. since 1987 and Senior Vice President,
Officer and Treasurer of Trace Chief Operating Officer and a director of Trace International
International Holdings, Inc. Holdings, Inc. since 1994.
RICHARD SINKFIELD Richard Sinkfield, 54, has served as a director of the Company
Senior Partner with the law since December 1993. He is a Senior Partner with the law firm of
firm of Rogers & Hardin Rogers & Hardin in Atlanta, Georgia, which he joined in 1976. Mr.
Sinkfield is also a director of Weyerhaeuser Company.
CLASS III DIRECTORS
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MICHAEL R. EISENSON Michael R. Eisenson, 40, has served as a director of the Company
President and Chief Executive since December 1993. He is the President and Chief Executive
Officer of Harvard Private Officer of Harvard Private Capital Group, Inc., which he joined in
Capital Group, Inc. 1986. Harvard Private Capital Group, Inc. manages the private
equity and real estate portfolios of the Harvard University
endowment fund. Mr. Eisenson is also a director of Harken Energy
Corporation, ImmunoGen, Inc., NHP Incorporated, Playtex
Products, Inc. and Somatix Therapy Corporation.
JOHN J. HANNAN John J. Hannan, 43, ha served as a director of the Company since
Principal of Apollo Advisors, December 1993. Mr. Hannan is one of the founding principals of
L.P. and of Apollo Real Estate Apollo Advisors, L.P., which together with an affiliate has acted
Advisors, L.P. since 1991 as managing general partner of Apollo Investment
Fund, L.P., AIF II, L.P. and Apollo Investment Fund III, L.P.,
private securities investment funds, and of Apollo Real Estate
Advisors, L.P., which since 1993 has acted as managing general
partner of the Apollo Advisors, L.P. real estate investment funds,
and of Lion Advisors, L.P., which since 1991 has acted as financial
advisor to and representative for certain institutional investors
with respect to securities investments. Mr. Hannan is also a
director of Aris Industries, Inc., Converse, Inc., The Florsheim
Shoe Company, Inc. and Furniture Brands International, Inc.
VOTE REQUIRED
The affirmative vote of a plurality of the shares of Common Stock present,
either in person or by proxy, at the Annual Meeting and entitled to vote is
required for the election of Class I directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE NOMINEES
LISTED ABOVE.
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EXECUTIVE OFFICERS
Executive officers are elected by the Board of Directors and hold office
until their successors have been duly elected and qualified or until their
earlier resignation or removal from office. A brief biography of each
executive officer of the Company as of February 28, 1997 is provided below
(other than Mr. Nelson, whose biography is set forth above).
George G. Lowrance, 52, served as Executive Vice President, Secretary and
General Counsel of the Company from January 1993 to June 1996 and has served
as Executive Vice President -- Development and Industry Relations since June
1996. Prior to joining the Company, Mr. Lowrance was the general manager of
Ed Hicks Company, an automobile dealership group, which he joined in January
1991. Prior thereto, he was a dealer principal for 13 years, representing
Pontiac, Chevrolet, Volvo, Nissan, Saab, Range Rover, Porsche, Audi,
Volkswagen, Peugeot, Rolls Royce and Maserati. He also co-authored the
current dealer agreements for Volkswagen and Porsche. Mr. Lowrance served as
Chairman of the National Dealer Council for Audi from 1984 to 1987 and served
in the same role for Porsche from 1987 to 1990.
Philip N. Smith, Jr., 54, has served as Vice President, Secretary and
General Counsel of the Company since June 1996. Mr. Smith has also served as
Vice President or Senior Vice President and as General Counsel of Trace
International Holdings, Inc. since January 1988 and as Vice President,
Secretary and General Counsel of Foamex International Inc. since October
1993. Prior to joining such companies, he was the sole stockholder of a
professional corporation that was a partner of the law firm of Akin, Gump,
Strauss, Hauer & Feld, L.L.P.
Robert W. Thompson, 45, has served as Vice President -- Finance of the
Company since August 1994. Prior to joining the Company, Mr. Thompson was
Vice President and Controller of Hanlin Group, Inc., where he worked for 11
years.
COMPENSATION
The following Summary Compensation Table contains information concerning
annual and long-term compensation of the Chief Executive Officer and each of
the other four most highly compensated executive officers of the Company who
were serving as executive officers at the end of Fiscal 1996 (the "Named
Executive Officers") for services rendered in all capacities during the
fiscal years 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
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ANNUAL COMPENSATION
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SECURITIES
NAME AND UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONIS(#)
- ---------------------------------- ------ --------- --------- --------------
Carl Spielvogel (1)................ 1996 750,000 375,000 500,000
Chairman of the Board 1995 750,000 250,000 --
and Chief Executive Officer 1994 155,946 -- 70,017(2)
Arthur J. Rawl (3)................. 1996 308,265 50,000 34,000
Executive Vice President 1995 255,300 70,000 --
and Chief Financial Officer 1994 160,000 60,000 --
George G. Lowrance................. 1996 251,846 57,880 34,000
Executive Vice President--
Development and Industry 1995 207,677 20,000 --
Relations 1994 172,244 5,000 --
Robert W. Thompson (4)............. 1996 150,000 25,000 3,500
Vice President--Finance 1995 107,600 10,000 --
1994 42,619 -- --
Philip N. Smith, Jr.(5)............ 1996 100,000 50,000 10,000
Vice President, Secretary 1995 -- -- --
and General Counsel 1994 -- -- --
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(1) Mr. Spielvogel's employment commenced on October 18, 1994.
(2) Represents the number of shares of Common Stock subject to options on
October 18, 1994, the date of grant, which number was subject to
increase from time to time to a total of 170,095 shares upon the
issuance of shares under the Equity Facility (as defined herein).
These options were canceled and replaced with new options on April 3,
1996.
(3) Mr. Rawl's employment commenced on May 1, 1994. He resigned from the
Company in January 1997.
(4) Mr. Thompson's employment commenced on August 1, 1994.
(5) Mr. Smith's employment commenced on July 1, 1996.
5
CONSULTING AGREEMENT
On March 7, 1997, the Company and Mr. Spielvogel entered into a Consulting
Agreement, pursuant to which Mr. Spielvogel is to provide consulting services
to the Company during the period beginning on April 17, 1997 and ending on
December 31, 2000 in exchange for a monthly fee in the amount of $83,333,
certain welfare benefits and an expense allowance. Pursuant to the Consulting
Agreement, the Company agreed to grant to Mr. Spielvogel on April 17, 1997 an
additional 100,000 stock options and accelerated the vesting schedule of his
500,000 existing stock options. Accordingly, all of his options will become
fully vested and exercisable on April 17, 1997 and will terminate on April
17, 2001. The Consulting Agreement also contains customary covenants relating
to non-competition and confidentiality.
STOCK OPTION PLAN
The Company's Stock Option Plan (the "Stock Option Plan") has been adopted
by the Board of Directors and the stockholders of the Company. The Stock
Option Plan provides for the grant of non-qualified options and incentive
stock options as defined in Section 422 of the Internal Revenue Code of 1986;
only non-qualified options have been granted to date. The Stock Option Plan
is administered by the Stock Option Committee of the Board of Directors. All
full-time employees of the Company and its subsidiaries, as well as employees
of its affiliates who perform services for the Company and its subsidiaries,
are eligible to participate in the Stock Option Plan.
The aggregate number of shares of Common Stock as to which stock options
may be granted under the Stock Option Plan may not exceed 1,500,838, subject
to adjustment as provided in the Stock Option Plan. As of December 31, 1996,
options to purchase up to 673,000 shares had been granted under the Stock
Option Plan, of which 626,500 were still outstanding.
The following table sets forth information concerning individual grants of
options to purchase Common Stock made to the Named Executive Officers during
Fiscal 1996. No options were exercised by the Named Executive Officers during
Fiscal 1996.
STOCK OPTION GRANTS
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL RATES
OF
STOCK PRICE APPRECIATION
FOR
OPTION TERM (1)
------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS EXERCISE OR
OPTIONS GRANTED TO BASE PRICE EXPIRATION
NAME GRANTED EMPLOYEES ($/SHARE) DATE 5%($) 10%($)
- -------------------- ------------ ------------ ------------- ------------ ----------- -----------
400,000(2) 35.3% 10.00 10/18/04 2,067,595 5,027,210
Carl Spielvogel...... 100,000(3) 8.8 30.00 10/22/06 1,855,239 4,701,540
Arthur J. Rawl....... 34,000(4) 3.0 10.00 4/23/06 213,824 541,872
George G. Lowrance .. 34,000(5) 3.0 10.00 4/23/06 213,824 541,872
Philip N. Smith,
Jr.................. 10,000(6) 0.9 10.00 7/2/06 62,889 159,374
Robert W. Thompson .. 3,500(7) 0.3 10.00 4/23/06 22,011 55,781
- ------------
(1) Amounts reflect certain assumed rates of appreciation set forth in
the Commission's executive compensation disclosure rules. Actual
gains, if any, on stock option exercises will depend on future
performance of the Common Stock. No assurance can be made that the
amounts reflected in these columns will be achieved. The values in
these columns assume that the fair market value on the date of grant
of each option was equal to the exercise price thereof.
(2) Options were granted on April 3, 1996 in replacement of options
granted on October 18, 1994 and were to vest and become exercisable
in four equal annual installments beginning on October 18, 1995. See
"--Consulting Agreement" for recent modification of terms.
(3) Options were granted on October 22, 1996 and were to vest and become
exercisable in four equal annual installments beginning on October
22, 1997. See "--Consulting Agreement" for recent modification of
terms.
(4) Options were granted on April 23, 1996 were to vest and become
exercisable in five equal annual installments beginning on May 1,
1995. Upon Mr. Rawl's resignation from the Company in January 1997,
such options became fully vested and exercisable.
(5) Options were granted on April 23, 1996 and vest and become
exercisable in five equal annual installments beginning on December
29, 1994.
(6) Options were granted on July 2, 1996 and vest and become exercisable
in five equal annual installments beginning on June 1, 1997.
(7) Options were granted on April 23, 1996 and vest and become
exercisable in five equal annual installments beginning on August 1,
1995.
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Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended (the "Securities Act"),
or the Securities Exchange Act or 1934, as amended (the "Exchange Act"), that
might incorporate filings by reference, including this Proxy Statement, in
whole or in part, the following Report of the Compensation Committee (the
"Compensation Committee") and Stock Option Committee (the "Stock Option
Committee") on Executive Compensation and the Performance Graph shall not be
incorporated by reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK OPTION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee's responsibilities include establishing the
Company's policies governing the compensation of officers and other key
executives of the Company. The Compensation Committee approves all elements
of compensation for executive officers. The Stock Option Committee is
responsible for the administration of the Stock Option Plan.
EXECUTIVE COMPENSATION The Company's compensation program consists of base
salary, annual incentive payments, stock options and employee benefits. The
goal of the Company's compensation program is to motivate and reward its
executive officers and other key employees to improve long-term stockholder
value and to attract and retain the highest quality executive and key
employee talent available. The Company's executive compensation program is
designed to align executive compensation practices with increasing the value
of the Company's Common Stock and to foster adherence to, and promotion of,
the Company's business mission, values, strategic goals and annual
objectives.
The Compensation Committee will meet at least annually to review salary
increases for the current year and incentive payments to be made in
connection with the previous year's performance. The Compensation Committee
will consider an executive's scope of responsibilities, level of experience,
individual performance and attainment of pre-established goals as well as the
Company's business plan and general economic factors. In making its
decisions, and to maintain the desired levels of competitiveness and
congruity with the Company's long-term performance goals, the Compensation
Committee will receive input from the Company's Chief Executive Officer and
Chief Financial Officer.
BASE SALARY AND BONUS The salary levels for executive officers are
determined by such officer's level of job responsibility and experience, job
performance and attainment of pre-established goals. Additional consideration
is given to salaries for a comparable position within the industry and the
Company's ability to pay. Bonus payouts to executive officers and other key
employees of the Company are based on the attainment of corporate earnings
goals.
OPTIONS The Stock Option Committee believes strongly that the interests of
senior management must be closely aligned with those of the stockholders.
Long-term incentives in the form of stock options provide a vehicle to reward
executive officers only if there is an increase in stockholder value. Stock
options are granted on a discretionary basis within a guideline range that
takes into account the position responsibilities of executive officers and
key employees of the Company whose contributions and skills are important to
the long-term success of the Company. Stock options to purchase Common Stock
providing long-term incentives may be granted to executive officers with a
maximum term of ten years.
In April 1996 and July 1996, the Stock Option Committee granted 436,500
and 36,500 options, respectively, to purchase Common Stock to officers or key
employees of the Company or its affliates. Such options were granted at an
exercise prices of $10.00 per share, which price represents the fair market
value of the Common Stock on the dates of grant. In addition, on the
effective date of the Company's intital public offering in October 1996, the
Stock Option Committee granted 100,000 options to purchase Common Stock at an
exercise price of $30.00 per share to each of Messrs. Spielvogel and Cogan.
Mr. Spielvogel will be granted an additional 100,000 options on April 17,
1997 at the then current market price.
7
CHIEF EXECUTIVE OFFICER All aspects of Mr. Spielvogel's compensation were
governed by his Employment Agreement, pursuant to which he was appointed
Chairman and Chief Executive Officer in 1994. The Employment Agreement was
approved based upon the consideration of the importance of hiring a chairman
and chief executive officer with a business record who could provide the
leadership necessary to improve the Company's competitiveness and
profitability. The amount of Mr. Spielvogel's annual bonus was based on the
Company's attainment of corporate earnings goals.
POLICY REGARDING QUALIFYING COMPENSATION Section 162(m) of the Internal
Revenue Code imposes a $1,000,000 ceiling on tax-deductible remuneration paid
to any one of the five most highly compensated executive officers of a
publicly-held corporation, unless the compensation is treated as performance
related or is otherwise exempt from the provisions of Section 162(m). The
Compensation Committee does not anticipate the compensation paid to any the
Named Executive Officers to be affected by Section 162(m) in the near term
and therefore expects that all such compensation will be fully deductible.
Because of the current inapplicability of Section 162(m) to the compensation
paid to the Named Executive Officers, the Compensation Committee has not yet
made any policy decisions with respect to the Section 162(m) limit.
COMPENSATION COMMITTEE STOCK OPTION COMMITTEE
Marshall S. Cogan, Chairman Michael R. Eisenson, Chairman
Michael R. Eisenson John J. Hannan
John J. Hannan
Robert H. Nelson
8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 7, 1997,
regarding the beneficial ownership of Common Stock by (i) each stockholder
who is known by the Company to own more than 5% of the outstanding shares of
Common Stock, (ii) each director, (iii) each executive officer named in the
Summary Compensation Table and (iv) all directors and executive officers as a
group.
SHARES BENEFICIALLY
OWNED
----------------------
BENEFICIAL OWNER NUMBER(1) PERCENT
- --------------------------------------------------------------------- ----------- ---------
Trace International Holdings, Inc. ................................... 3,531,156 21.1
75 Park Avenue
New York, New York 10152
Aeneas Venture Corporation ........................................... 2,843,656 17.0
(an affiliate of Harvard Private Capital Group, Inc.)
600 Atlantic Avenue
Boston, Massachusetts 02210
AIF II, L.P. ......................................................... 1,843,656 11.0
c/o Apollo Advisors, L.P.
Two Manhattanville Road
Purchase, New York 10577
Carl Spielvogel (2) .................................................. 644,118 3.7
Arthur J. Rawl (3) ................................................... 34,000 *
George G. Lowrance (4) ............................................... 31,400 *
Robert W. Thompson (5) ............................................... 1,500 *
Marshall S. Cogan (6) ................................................ 3,547,256 21.2
Michael R. Eisenson (7) .............................................. 2,843,656 17.0
John J. Hannan (8) ................................................... 1,843,656 11.0
Jules Kroll .......................................................... 104,474 *
Robert H. Nelson (9) ................................................. 24,400 *
John M. Sallay (10) .................................................. 2,843,656 17.0
Richard Sinkfield .................................................... 10,400 *
Philip N. Smith, Jr. ................................................. 5,000 *
All directors and executive officers, without duplication (12
persons).............................................................. 9,089,860 52.2
- ------------
* Less than 1%.
(1) Pursuant to the regulations of the Securities and Exchange Commission
(the "Commission"), shares are deemed to be "beneficially owned" by a
person if such person directly or indirectly has or shares the power
to vote or dispose of such shares, whether or not such person has any
pecuniary interest in such shares, or the right to acquire the power
to vote or dispose of such shares within 60 days, including any right
to acquire through the exercise of any option, warrant or right.
(2) Includes 600,000 shares issuable upon exercise of options that are
vested and exercisable within 60 days, after giving effect to the
Consultant Agreement between Mr. Spielvogel and the Company, and
18,000 shares held by Mr. Spielvogel's wife. Mr. Spielvogel disclaims
beneficial ownership of all shares owned by his wife.
(3) Represents the shares issuable upon exercise of options granted under
the Company's stock option plan that are vested and exercisable
within 60 days.
(4) Includes 20,400 shares issuable upon exercise of options granted
under the Company's stock option plan that are vested and exercisable
within 60 days and 10,000 shares held by Mr. Lowrance's wife. Mr.
Lowrance disclaims beneficial ownership of all shares owned by his
wife.
(5) Includes 1,400 shares issuable upon exercise of options granted under
the Company's stock option plan that are vested and exercisable
within 60 days.
(6) Includes 3,531,156 shares held by Trace International Holdings, Inc.,
of which Mr. Cogan is the principal stockholder, Chairman of the
Board and Chief Executive Officer, and 1,000 shares held by Mr.
Cogan's wife. Mr. Cogan disclaims beneficial ownership of all shares
held by Trace International Holdings, Inc. or his wife.
(7) Represents the shares held by Aeneas Venture Corporation. Mr.
Eisenson is the Managing Director, President and Chief Executive
Officer of Harvard Private Capital Group, Inc., the investment
advisor of Aeneas Venture Corporation. Mr. Eisenson disclaims
beneficial ownership of all shares held by Aeneas Venture
Corporation.
(8) Represents the shares held by AIF II, L.P. Mr. Hannan is a director
of Apollo Capital Management, Inc., which is the general partner of
Apollo Advisors, L.P., which is the managing general partner of AIF
II, L.P. Mr. Hannan disclaims beneficial ownership of all shares held
by AIF II, L.P.
(9) Includes 20,400 shares issuable upon exercise of options granted
under the Company's stock option plan that are vested and exercisable
within 60 days.
(10) Represents the shares held by Aeneas Venture Corporation. Mr. Sallay
is a Managing Director of Harvard Private Capital Group, Inc., the
investment advisor of Aeneas Venture Corporation. Mr. Sallay
disclaims beneficial ownership of all shares held by Aeneas Venture
Corporation.
9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Jules B. Kroll, a director of the Company, is Chairman of Kroll
Associates, a corporate investigation and consulting firm which performs
services for the Company from time to time.
Richard Sinkfield, a director of the Company, is a member of the law firm
of Rogers & Hardin, which represents the Company in connection with various
business transactions.
Pursuant to Stock Purchase Agreements, dated October 15, 1993 (as amended,
the "Equity Facility"), among the Company and the investors named therein
(the "Initial Stockholders"), the Initial Stockholders purchased an aggregate
of 8,504,750 shares of Common Stock in multiple closings between 1993 and
1996 and were granted registration rights in respect of such shares. Such
registration rights also apply to an additional 306,346 shares of Common
Stock subsequently purchased by the Initial Stockholders and to 10,000 shares
of Common Stock held by Richard Sinkfield, a director of the Company. Among
the Initial Stockholders are Carl Spielvogel, former Chairman of the Board
and Chief Executive Officer of the Company, Jules Kroll, a director of the
Company, Trace International Holdings, Inc., Aeneas Venture Corporation and
AIF II, L.P. In January 1997, Trace International Holdings, Inc. was also
granted the right, subject to certain conditions, to have its shares of
Common Stock registered in connection with a pledge of such shares to a
lender. In addition, as of December 31, 1996, the Company owes Trace
International Holdings, Inc. approximately $1.2 million, which was incurred
for services provided.
The Company is the tenant under a number of lease agreements with
employees of the Company. All such leases are on terms no less favorable to
the Company than would be obtained in arm's-length negotiations with
unaffiliated third parties. In addition, the Company has entered into a
Broker's Agreement with an entity controlled by Steven Knappenberger,
President of the Company's Sun Automotive division, which provides for
payment by the Company of brokerage fees for assistance in acquiring or
opening automobile dealerships in Arizona, Colorado, New Mexico, Utah and
certain counties in California.
Immediately prior to the consummation of the initial public offering on
October 28, 1996, the holders of minority interests (the "Minority
Interests") in certain of the Company's subsidiaries, who are also senior
officers of such subsidiaries, exchanged their Minority Interests for shares
of Common Stock of the Company. Such shares are subject to registration
rights. The consideration paid by the Company for the Minority Interest in
the Company's DiFeo division also included (i) an option to purchase up to
50,000 shares of Common Stock at an exercise price of $30.00 per share, (ii)
the settlement of certain advances made by the Company for the benefit of the
holders of that Minority Interest for certain business acquisitions and for
working capital for dealerships owned solely by the DiFeo division minority
holders, and (iii) the minority interests owned by the Company in a group of
dealerships in New Jersey. The following table sets forth certain information
with respect to each division of the Company whose Minority Interest was
exchanged:
SHARES OF COMMON
MINORITY STOCK ISSUED IN
DIVISION INTEREST MINORITY EXCHANGE
- -------------- ---------- -----------------
DiFeo
Division...... 30% 216,079
Landers Auto .. 20% 750,808
Atlanta
Toyota........ 5% 146,954
On October 4, 1996, the Company granted to the three senior officers of
Atlantic Auto Finance Corporation options to purchase an aggregate of 5% of
the outstanding common stock of Atlantic Auto Finance Corporation at an
aggregate exercise price of $500 per share, or $400,000 in the aggregate.
Such options will be immediately exercisable in full and will terminate on
the seventh anniversary of the date of grant. Upon the termination date (or
upon the termination of an option holder's employment, with respect to such
holder's options), the option holders will have the right to sell to the
Company, and the Company will have the right to purchase from the option
holders, the options (or any shares of common stock issued upon exercise
thereof) at the then fair market value thereof, payable in cash or Common
Stock of the Company at the option of the Company. In addition, the Company
has granted such officers options to purchase common stock of Atlantic Auto
Finance Corporation in such amounts as to enable them to retain their
percentage ownership of Atlantic Auto Finance Corporation after the Company's
contribution out of the proceeds of its initial public offering. Such options
will vest and become exercisable in five equal annual installments beginning
on October 28, 1997 at an exercise price increasing at a rate equal to $500
plus an amount equal to 10% per year, compounded annually from the date of
grant, on $500.
10
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Subject to stockholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has appointed the firm of Coopers &
Lybrand L.L.P. as the independent accountants of the Company for Fiscal 1997.
This firm has examined the accounts of the Company since 1992. If the
stockholders do not ratify this appointment, the Board will consider other
independent accountants. One or more members of Coopers & Lybrand L.L.P. is
expected to be present at the Annual Meeting, will have the opportunity to
make a statement if they so desire and will be available to respond to
questions.
VOTE REQUIRED
The affirmative vote of a majority of the shares of Common Stock present,
either in person or by proxy, at the Annual Meeting and entitled to vote is
required for the ratification of the independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT ACCOUNTANTS.
SHARE INVESTMENT PERFORMANCE
The following graph compares the cumulative total stockholder returns on
the Common Stock based on an investment of $100 after the close of the market
on (i) October 23, 1996, the date of commencement of the Company's initial
public offering and (ii) the close of the market on December 31, 1996 against
the Standard & Poor's Index ("S&P 500") and an industry peer group consisting
of the following companies: Cross-Continent Auto Retailers, Inc., Ugly
Duckling Corporation and Republic Industries Inc.
[THE TABULAR INFORMATION BELOW IS A FAIR AND ACCURATE DESCRIPTION
OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE PURPOSE OF ELECTRONIC
FILING.]
COMPARISON OF 2-MONTH CUMULATIVE TOTAL RETURN*
AMONG THE COMPANY, THE S&P 500 AND A PEER GROUP
December 31, 1996
-----------------
The Company $ 86
S&P 500 105
Peer Group 107
* $100 invested on 10/23/96 in stock or index--including reinvestment
of dividends.
11
FILINGS UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires executive officers, directors
and persons who beneficially own more than 10% of the Common Stock to file
initial reports of ownership and reports of changes of ownership with the
Commission and the New York Stock Exchange. Executive officers, directors and
greater than 10% beneficial owners are required by Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on the Company's review of the copies of such forms furnished
to the Company and written representations from the executive officers,
directors and greater than 10% beneficial owners, the Company believes that
all Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% owners were complied with during Fiscal 1996.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR 1997
Any proposals intended to be presented to stockholders at the Company's
1997 Annual Meeting of Stockholders must be received by the Company for
inclusion in the proxy statements for such annual meeting by, December 15,
1997. Such proposals must also meet other requirements of the rules of the
Commission relating to stockholders' proposals.
OTHER BUSINESS
It is not anticipated that there will be presented to the Annual Meeting
any business other than the election of directors and the ratification of
accountants, and the Board of Directors was not aware, a reasonable time
before this solicitation of proxies, of any other matters which might
properly be presented for action at the meeting. If any other business should
come before the Annual Meeting, the persons named on the enclosed proxy card
will have discretionary authority to vote all proxies in accordance with
their best judgment.
Proxies in the form enclosed are solicited by or on behalf of the Board of
Directors. The cost of this solicitation will be borne by the Company. In
addition to the solicitation of the proxies by use of the mails, some of the
officers and regular employees of the Company, without extra remuneration,
may solicit proxies personally, or by telephone or otherwise. In addition,
arrangements will be made with brokerage houses and other custodian, nominees
and fiduciaries to forward proxies and proxy material to their principals,
and the Company will reimburse them for their expenses in forwarding
soliciting materials, which are not expected to exceed $5,000.
It is important the proxies be returned promptly. Therefore, stockholders
are urged to sign, date and return the enclosed proxy card in the
accompanying stamped and addressed envelope.
By Order of the Board of Directors
/s/ Philip N. Smith, Jr.
Philip N. Smith, Jr.
March 18, 1997
12
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
UNITED AUTO GROUP, INC.
The undersigned hereby revokes all prior proxies and appoints Robert H.
Nelson and Philip N. Smith, Jr., and each of them, as proxies with full power
of substitution, to vote on behalf of the undersigned the same number of
shares of Voting Common Stock of United Auto Group, Inc. which the
undersigned is then entitled to vote, at the Annual Meeting of Stockholders
to be held on Thursday, April 17, 1997 at 9:30 a.m., at the Hotel
Inter-Continental, 111 East 48th Street, Astor Room, New York, New York, and
at any adjournments thereof, on any matter properly coming before the
meeting, and specifically the following:
Date: ___________________, 1997.
(Please sign exactly as your name
appears hereon)
--------------------------------
(Signature of Stockholder)
---------------------------------
(Signature of Stockholder)
Note: Please sign your name
exactly as it is shown at the
left. When signing as attorney,
executor, administrator, trustee,
guardian or corporate officer,
please give your full title as
such. EACH joint owner is
requested to sign.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE PAID ENVELOPE. (Continued on reverse side)
1
Please mark
your votes as [X]
indicated in
this example
1. To elect two Class I directors to serve until the 2000 annual meeting of
stockholders or until their respective successors are duly elected and
qualified;
[] FOR all nominees listed below [] WITHHOLD AUTHORITY
(except as marked to the contrary) (to vote for all nominees listed below)
Marshall S. Cogan, John M. Sallay
(Instructions: To withhold authority to vote for any nominee, write that
nominee's name in the space provided below:)
- ----------------------------------------------------------------------------
2. To ratify the selection of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the year ended December 31, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
THE PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, IT WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES NAMED HEREIN AND FOR THE RATIFICATION
OF ACCOUNTANTS.