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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WOLVERINE TUBE, INC.
- --------------------------------------------------------------------------------
(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:
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WOLVERINE TUBE, INC.
1525 PERIMETER PARKWAY, SUITE 210
HUNTSVILLE, ALABAMA 35806
April __, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of the Stockholders of
Wolverine Tube, Inc. on Thursday, May 21, 1998, at 11:00 a.m., local time, at
the Huntsville Marriott, 5 Tranquility Base, Huntsville, Alabama 35805. We hope
that many Wolverine Tube, Inc. stockholders will be able to attend the meeting
and we look forward to greeting those able to attend.
The notice of annual meeting and proxy statement accompanying this letter
describe the specific business to be acted upon.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND IN PERSON, YOU ARE REQUESTED TO INDICATE YOUR VOTE, AND SIGN,
DATE, AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
On behalf of the Board of Directors, I would like to express our appreciation
for your continued interest in the Company. The Board of Directors and the
management team look forward to seeing you at the meeting.
Sincerely,
/s/ John M. Quarles
John M. Quarles
Chairman
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WOLVERINE TUBE, INC.
1525 PERIMETER PARKWAY, SUITE 210
HUNTSVILLE, ALABAMA 35806
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 21, 1998
To the Stockholders:
Please take notice that the Annual Meeting of the Stockholders of
Wolverine Tube, Inc., a Delaware corporation, will be held on May 21, 1998, at
the Huntsville Marriott, 5 Tranquility Base, Huntsville, Alabama 35805 at 11:00
a.m., local time, for the following purposes:
1. To elect three (3) Class II directors of the Company to serve
a three-year term.
2. To approve and adopt an amendment to the Company's Restated
Certificate of Incorporation to increase the number of
authorized shares of Common Stock of the Company from
20,000,000 shares to 40,000,000 shares.
3. To approve and adopt an amendment to the Company's 1993 Stock
Option Plan for Outside Directors to increase the aggregate
number of shares of Common Stock available for issuance
thereunder from 50,000 to 105,000.
4. To ratify the appointment of Ernst & Young LLP as the
independent auditors of the Company for the next fiscal year.
5. To transact such other business as may properly come before
the meeting.
Stockholders of record at the close of business on March 31, 1998 are
entitled to notice of, and to vote at, this meeting and any adjournments
thereof.
By Order of the Board of Directors
/s/ James E. Deason
James E. Deason
Secretary
Huntsville, Alabama
April __, 1998
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY IN
THE POSTAGE-PAID ENVELOPE TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO
EVEN THOUGH YOU HAVE SENT IN YOUR PROXY.
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WOLVERINE TUBE, INC.
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1998
TABLE OF CONTENTS
Page
INFORMATION CONCERNING THE SOLICITATION AND VOTING.............................1
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....................3
PROPOSAL ONE - ELECTION OF DIRECTORS...........................................4
EXECUTIVE COMPENSATION.........................................................8
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.......................14
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
OF 1934..............................................................18
PROPOSAL TWO - APPROVAL OF THE AMENDMENT TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION................................18
PROPOSAL THREE - APPROVAL OF THE AMENDMENT TO THE 1993
STOCK OPTION PLAN FOR OUTSIDE DIRECTORS..............................19
PROPOSAL FOUR - RATIFICATION OF APPOINTMENT OF INDEPENDENT
AUDITORS.............................................................21
OTHER BUSINESS................................................................21
STOCKHOLDER PROPOSALS TO BE PRESENTED AT THE NEXT
ANNUAL MEETING.......................................................22
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PROXY STATEMENT
------------
ANNUAL MEETING OF STOCKHOLDERS
OF
WOLVERINE TUBE, INC.
-------------
This Proxy Statement is furnished in connection with the solicitation
by the management of Wolverine Tube, Inc. (the "Company") of proxies for use at
the Annual Meeting of its Stockholders to be held on May 21, 1998, at the
Huntsville Marriott, 5 Tranquility Base, Huntsville, Alabama 35805 at 11:00
a.m., local time, or at any adjournment thereof.
INFORMATION CONCERNING THE SOLICITATION AND VOTING
GENERAL
The principal executive offices of the Company are located at 1525
Perimeter Parkway, Suite 210, Huntsville, Alabama 35806. The Company's telephone
number at that location is (205) 353-1310. The date of this Proxy Statement is
April __, 1998, the approximate date on which these proxy solicitation materials
and the Annual Report to Stockholders for the fiscal year ended December 31,
1997, including financial statements, were first sent or given to stockholders
entitled to vote at the meeting.
This solicitation of proxies is made on behalf of the management of the
Company and the associated cost will be borne by the Company. The Company has
retained Morrow & Company, Inc. (the "Solicitor") to assist in the solicitation
of proxies. The Company will pay $75,000 in fees for the Solicitor's services
and will reimburse the Solicitor for reasonable out-of-pocket expenses.
In addition to solicitation by mail and by the Solicitor, management
may use the services of its directors, officers and others to solicit proxies,
personally or by telephone. Arrangements may also be made with brokerage houses
and other custodians, nominees and fiduciaries to forward solicitation materials
to the beneficial owners of the stock held of record by such persons, and the
Company may reimburse them for reasonable out-of-pocket and clerical expenses
incurred by them in so doing.
RECORD DATE, VOTING AND REVOCABILITY OF PROXIES
The Company had outstanding on March 31, 1998 (the "Record Date"),
__________ shares of Common Stock, $.01 par value (the "Common Stock"), all of
which are entitled to vote on all matters to be acted upon at the meeting. The
Company's By-Laws provide that a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum for the transaction
of business. Each stockholder is entitled to one vote for each share of Common
Stock
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held on the Record Date. If no instructions are given on the executed Proxy, the
Proxy will be voted for all nominees and in favor of all proposals described.
An affirmative vote of a majority of shares present and voting at the
meeting is required for approval of all items being submitted to the
stockholders for their consideration, other than (a) the election of directors,
which is determined by a plurality if a quorum is present and voting and (b) the
amendment to the Restated Certificate of Incorporation, which requires approval
by the holders of a majority of the outstanding shares of Common Stock. An
automated system administered by the Company's transfer agent tabulates the
votes. Abstentions and broker non-votes are each included in the determination
of the number of shares present and voting for purposes of determining the
presence of a quorum. Each is tabulated separately. Neither abstentions nor
broker non-votes are counted in tabulations of the votes cast for purposes of
determining whether a proposal has been approved.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by filing with the Secretary of the
Company a written notice revoking it, by presenting at the meeting a duly
executed proxy bearing a later date, or by attending the meeting and voting in
person.
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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information as of March ___, 1998, with
respect to the beneficial ownership of the Company's outstanding Common Stock by
(i) stockholders known by the Company to own beneficially more than 5% of the
outstanding Common Stock, (ii) each director, (iii) each executive officer of
the Company named in the Summary Compensation Table below, and (iv) all
directors and executive officers of the Company as a group.
COMMON STOCK
NAME AND ADDRESS BENEFICIALLY OWNED
---------------------------
SHARES PERCENT
- --------------------------------------------------------------------------------
The Prudential Insurance Company of America(a) 1,805,885 12.7%
751 Broad Street
Newark, New Jersey 07102-3777
Smith Barney, Inc. (b) 1,003,082 7.0%
Salomon Smith Barney Holdings, Inc.
Travelers Group, Inc.
338 Greenwich Street
New York, New York 10013
Trinity I Fund, L.P. (c) 788,300 5.5%
TF Investors, L.P.
Trinity Capital Management, Inc.
Thomas M. Taylor
Portfolio X. Investors, L.P.
Portfolio Genpar L.L.C.
201 Main Street, Suite 2600
Fort Worth, Texas 76102
Chris A. Davis -- --
John L. Duncan (d) 11,000 *
Thomas P. Evans (e) 5,334 *
Jan K. Ver Hagen (f) 7,333 *
Gail O'Sullivan Neuman -- --
John M. Quarles (g) 222,401 1.6%
Thomas B. Roller (h) -- --
James E. Deason (i) 14,500 *
Alan L. Smith (j) 2,200 *
Thomas J. Ruble (k) 5,200 *
Gregory M. Trickey(1) 10,001 --
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COMMON STOCK
NAME AND ADDRESS BENEFICIALLY OWNED
---------------------
SHARES PERCENT
- --------------------------------------------------------------------------------
All directors and executive officers as a group (16 407,670 2.9%
persons)
- -----------------------------
* REPRESENTS LESS THAN 1%.
(a) This information was provided to the Company pursuant to Amendment No.
2 to Schedule 13G filed with the Securities and Exchange Commission
(the "Commission") on February 10, 1998. According to such filing, the
Prudential Insurance Company of America owns the shares directly or
indirectly, and has sole voting and dispositive power with respect to
935,100 shares and shared voting and dispositive power with respect to
870,785 shares.
(b) This information was provided to the Company pursuant to a Schedule 13G
filed with the Commission on February 6, 1998. According to such
filing, the holders listed own the shares of Common Stock, directly or
indirectly, with Smith Barney, Inc. having sole voting and dispositive
power with respect to an aggregate of 935,465 shares and Salomon Smith
Barney Holdings, Inc. ("SSB") and Travelers Group, Inc. ("TRV") having
shared voting and dispositive power with respect to an aggregate of
1,003,082 shares. SSB and TRV disclaim beneficial ownership of all the
shares of the Common Stock deemed to be beneficially owned by them.
(c) This information was provided to the Company pursuant to a Schedule 13D
filed with the Commission on February 10, 1998. According to such
filing, the holders listed own the shares of Common Stock directly or
indirectly, and collectively have sole voting and dispositive power
with respect to an aggregate of 788,300 shares of Common Stock.
(d) Includes 9,000 shares subject to options exercisable within 60 days of
March 31, 1998.
(e) Includes 5,333 shares subject to options exercisable within 60 days of
March 31, 1998.
(f) Includes 4,333 shares subject to options exercisable within 60 days of
March 31, 1998.
(g) Includes 42,400 shares subject to options exercisable within 60 days of
March 31, 1998.
(h) Based upon information known to the Company as of March 31, 1997. Mr.
Roller served as President and Chief Executive Officer of the Company
from September 16, 1996 until March 31, 1997.
(i) Includes 14,500 shares subject to options exercisable within 60 days of
March 31, 1998.
(j) Includes 1,800 shares subject to options exercisable within 60 days of
March 31, 1998.
(k) Includes 4,700 shares subject to options exercisable within 60 days of
March 31, 1998.
(l) Mr. Trickey retired as Chief Operations Officer and resigned all
positions as an officer and director of the Company effective December
31, 1997.
PROPOSAL ONE - ELECTION OF DIRECTORS
The Board has nominated Messrs. Duncan, Quarles and Ver Hagen to be
reelected as Class II directors, each for a three-year term expiring in 2001. If
elected, each nominee will hold office until his term expires and until his
successor is elected and qualified. Management knows of no reason why any of
these nominees would be unable or unwilling to serve, but if any nominee should
be unable or unwilling to serve, the proxies will be voted for the election of
such other persons for the office of director as management may recommend in the
place of such nominee. THE BOARD RECOMMENDS VOTING "FOR" THE THREE NOMINEES
LISTED BELOW.
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INFORMATION REGARDING NOMINEES
The Restated Certificate of Incorporation of the Company provides for
the Board of Directors to be divided into three classes of directors serving
staggered three-year terms. Each class shall consist, as nearly as may be
practicable, of one-third of the total number of directors constituting the
entire Board of Directors. As a result, approximately one-third of the Board of
Directors will be elected each year. The Class I directors are composed of Ms.
Davis; the Class II directors are composed of Messrs. Duncan, Quarles and Ver
Hagen; and the Class III directors are composed of Ms. Neuman and Messrs. Deason
and Evans. Directors hold office until their terms expire and their successors
have been elected and qualified.
The following table sets forth certain information for each nominee,
and each director of the Company whose term of office continues after the Annual
Meeting:
NOMINEES FOR ELECTION AS CLASS II DIRECTORS WHOSE TERMS WILL EXPIRE IN 2001:
Principal Occupation During
Name the Past Five Years Age
- ---------------------------------------------------------------------------------------------
John L. Duncan Mr. Duncan has been a director of the Company since December 64
1993. Mr. Duncan previously served as President and Chief
Executive Officer of Murray Ohio Manufacturing Co., a position
he held from 1987 to 1994.
John M. Quarles Mr. Quarles currently serves as Chairman and Interim Chief 57
Executive Officer of the Company. He has been a director since
January 1991 and Chairman since May 1994. Mr. Quarles had
served as President and Chief Executive Officer since October
1990, until his retirement from those positions in September
1996. In March 1997 he was appointed to serve as Interim Chief
Executive Officer until a new Chief Executive Officer is
appointed.
Jan K. Ver Hagen Mr. Ver Hagen has been a director of the Company since January 60
1996. Mr. Ver Hagen is the President, Chief Operating Officer
and a Director of United Dominion Industries, Limited. Prior
to his election to his current position at United Dominion in
October 1994, Mr. Ver Hagen was Executive Vice President of
that company. Prior to joining United Dominion in May 1994,
Mr. Ver Hagen was Vice Chairman of Emerson Electric Co. from
1988 to 1994.
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INCUMBENT DIRECTORS WHOSE TERMS WILL EXPIRE IN 1999:
Principal Occupation During
Name the Past Five Years Age
- ---------------------------------------------------------------------------------------------
James E. Deason Mr. Deason has been a director of the Company since October 50
1995. Mr. Deason has been the Executive Vice President, Chief
Financial Officer and Secretary of the Company since September
1994. Prior to joining the Company, Mr. Deason, a Certified
Public Accountant, was most recently a partner with Ernst &
Young LLP, in Birmingham, Alabama.
Thomas P. Evans Mr. Evans has been a director since December 1995. Mr. Evans 40
is the President, Emerging Markets, of Permal Asset
Management. Prior to joining Permal in May 1994, Mr. Evans was
the Executive Vice President, Finance and Administration,
Secretary and Treasurer and a director of Wolverine Tube, Inc.
since April 1992. From July 1989 to April 1992, Mr. Evans was
Vice President, Treasurer and Chief Financial Officer of Mr.
Coffee, Inc.
Gail O. Neuman Ms. Neuman has been a director of the Company since November 51
1997. Ms. Neuman serves as the Vice President-Human Resources
and General Counsel of Nissan Motor Manufacturing Corporation
U.S.A. since 1981. Ms. Neuman also serves as a director of
First Union National Bank of Tennessee.
INCUMBENT DIRECTORS WHOSE TERMS WILL EXPIRE IN 2000:
Principal Occupation During
Name the Past Five Years Age
- ---------------------------------------------------------------------------------------------
Chris A. Davis Ms. Davis has been a director of the Company since 47
October 1997. Ms. Davis is the Executive Vice
President and Chief Financial Officer and a director
of Gulfstream Aerospace Corporation since July
1993. Ms. Davis previously served as Chief
Financial Officer for General Electric Co.'s
Electronic Systems Division from 1990 to 1993.
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BOARD MEETINGS AND COMMITTEES
Mr. Evans and Ms. Neuman currently serve as members of the Compensation
Committee of the Board of Directors (the "Compensation Committee"). The
Compensation Committee held two meetings during 1997. The responsibilities of
the Compensation Committee are described under "Compensation Committee Report on
Executive Compensation."
Mr. Duncan and Ms. Davis currently serve on the Company's Audit
Committee. The Audit Committee (which reviews and approves (i) the scope of the
audit performed by the Company's independent auditors and (ii) the Company's
accounting principles and internal accounting controls) held one meeting during
1997.
Messrs. Quarles and Deason currently serve on the Company's Executive
Committee. The purpose of the Executive Committee is to act in the place and
stead of the Board, to the extent permitted by law and within certain limits set
by the Board, on matters that require Board action between meetings of the Board
of Directors. The Executive Committee did not hold any meetings during 1997.
Messrs. Quarles, Evans and Ver Hagen currently serve on the Company's
Nominating Committee, which has the principal purpose of selecting, or
recommending to the Board of Directors the selection of, nominees for election
as Directors of the Company and determining whether to nominate incumbent
Directors for reelection. The Nominating Committee, which did not meet during
1997, does not have any procedures established for the consideration of nominees
recommended by stockholders.
During 1997, the Board of Directors held meetings or acted by written
consent ten times. Each incumbent director attended at least 75% of the
aggregate number of meetings of the Board of Directors and the Committees of
which they were a member during the last year except for Mr. Evans who was
excused from certain board meetings due to other business commitments.
BOARD COMPENSATION
The Company's 1993 Stock Option Plan for Outside Directors (the "Plan")
provides for the granting of nonqualified stock options to independent directors
of the Company. The Company has reserved a total of 50,000 shares of Common
Stock for issuance pursuant to the Plan. The Plan is currently administered by
the Board of Directors. Under the Plan, each independent director initially
receives a nonqualified option to purchase 5,000 shares of the Company's Common
Stock on the date upon which such person first becomes a director. In addition,
each independent director is automatically granted a nonqualified option to
purchase 1,000 shares of Common Stock on the anniversary of such director's
election to the Board. On January 25, 1997, Mr. Ver Hagen was granted 1,000
options with an exercise price of $36.38 per share. On October 29, 1997, Ms.
Davis was granted 5,000 options with an exercise price of $31.125 per share. On
November 11, 1997, Ms. Neuman was granted 5,000 options with an exercise price
of $31.813 per share. On December 7, 1997, Mr. Evans received 1,000 options with
an exercise price at $31.938 per share. On December 14, 1997, Mr. Duncan
received 1,000 options with an exercise price of $31.313 per share. As of
December 31, 1997, options to purchase an aggregate of 40,000 shares were
outstanding under the Plan at an average per share exercise price of $29.36.
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Options granted under the Plan have a term of 10 years unless
terminated sooner upon termination of the optionee's status as a director or
otherwise pursuant to the Plan. Such options are not transferable by the
optionee other than by will or the laws of descent or distribution, and each
option is exercisable during the lifetime of the director only by such director.
The exercise price of each option under the Plan is equal to the fair market
value of the Common Stock on the date of grant. Initial Options granted under
the Plan vest at the rate of 33 1/3% per year and subsequent options vest
immediately. All initial options must be held at least one year prior to
exercise. Unless sooner terminated, the Plan will terminate in 2003.
Directors who are not officers or employees of the Company receive an
annual retainer of $20,000, plus $1,000 each for every board or committee
meeting they attend, and $1,000 for each board or committee meeting such
director respectively chairs.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to or accrued on
behalf of each person who served as the Chief Executive Officer of the Company
during 1997 and each of the four other most highly compensated executive
officers of the Company (collectively, the "Named Executive Officers") for
services rendered in all capacities for the years ended December 31, 1997, 1996
and 1995.
SUMMARY COMPENSATION TABLE
AWARDS
---------------
ANNUAL COMPENSATION COMMON STOCK
------------------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (SHARES) COMPENSATION(A)
- ---------------------------------------------------------------------------------------------------------------------------
John M. Quarles 1997 $317,424 $120,000 -- $5,469
Chairman and Interim Chief 1996 387,803 -- 10,000 3,692
Executive Officer (b) 1995 335,000 -- 10,000 3,601
Thomas B. Roller 1997 112,500 -- -- 710,000
Former President and 1996 131,250 -- 30,000 70
Chief Executive Officer (c)
Gregory M. Trickey 1997 241,020 -- 15,000 3,958
Retired Chief Operations 1996 203,220 -- 10,000 2,937
Officer (d) 1995 173,750 -- 10,000 2,470
James E. Deason 1997 205,839 65,000 17,000 4,203
Executive Vice President, Chief 1996 178,158 -- 12,000 2,351
Financial Officer and Secretary 1995 153,690 -- 7,500 1,817
Thomas J. Ruble 1997 168,207 42,500 4,500 3,319
Senior Vice President, 1996 157,161 -- 5,000 2,317
Operations 1995 116,250 -- 3,000 1,445
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AWARDS
---------------
ANNUAL COMPENSATION COMMON STOCK
------------------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (SHARES) COMPENSATION(A)
- ---------------------------------------------------------------------------------------------------------------------------
Alan L. Smith 1997 163,202 45,000 5,000 2,180
Senior Vice President and 1996 140,730 -- 2,000 1,800
General Manager, Fabricated
Products Group
(a) The amounts hereunder include insurance premiums paid by the Company
for term life insurance policies for the benefit of the Named Executive
Officers. The 1995 amounts include 401(k) matching contributions made
by the Company of $2,310, $1,612, $2,266 and $1,445 to Messrs. Quarles,
Trickey, Deason and Ruble, respectively. The 1996 amounts include
401(k) matching contributions made by the Company of $2,671, $2,733,
$2,147, $2,276 and $1,594 to Messrs. Quarles, Trickey, Deason Ruble and
Smith respectively. The 1997 amounts include 401(k) matching
contributions made by the Company of $4,150, $3,753, $3,550, $3,114 and
$1,976 for Messrs. Quarles, Trickey, Deason, Ruble and Smith,
respectively. With respect to Mr. Roller, the 1997 amounts reflect
compensation in connection with his resignation from all positions with
the Company. See "Plans and Arrangements - Severance Agreements."
(b) Mr. Quarles has served as Chairman of the Company since May 1994, and
served as President and Chief Executive Officer until his retirement
from those positions in September 1996. On March 31, 1997, Mr. Quarles
was appointed to serve as Interim Chief Executive Officer. Mr. Quarles'
compensation is established pursuant to an Employment Agreement with
the Company. See "Plans and Arrangements -- Employment Agreement with
John M. Quarles."
(c) Mr. Roller resigned from all positions with the Company effective March
31, 1997, and all options granted to Mr. Roller were terminated at that
time.
(d) Mr. Trickey retired as Chief Operations Officer and resigned all
positions as an officer and director of the Company effective December
31, 1997. See "Plans and Arrangements - Severance Agreements."
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OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the stock option
grants made to all Named Executive Officers during the fiscal year ended
December 31, 1997.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
----------------------------------------------------------------- AT ASSUMED RATES OF
NUMBER OF PERCENT OF STOCK PRICE APPRECIATION
SHARES OF TOTAL FOR OPTION TERM(B)
COMMON STOCK OPTIONS --------------------------
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE PRICE
NAME GRANTED(A) IN 1997 PER SHARE EXPIRATION DATE 5% 10%
- ------------------------------------------------------------------------------------------------------------------
Gregory M. Trickey 10,000 5.6 37.25 02/13/07 234,262 593,668
5,000 2.8 25.63 04/21/97 80,592 204,238
James E. Deason 12,000 6.8 37.25 02/13/07 281,114 712,402
5,000 2.8 25.63 04/21/07 80,592 204,238
Thomas J. Ruble 4,500 2.5 37.25 02/13/07 105,418 267,151
Alan L. Smith 5,000 2.8 37.25 02/13/07 117,131 296,834
(a) Options vest at the rate of 20% per year for five years starting on
February 13, 1997 for Messrs. Trickey, Deason, Ruble and Smith and on
April 21, 1997 for Messrs. Trickey and Deason.
(b) The assumed annual rates of appreciation of five and ten percent for
option term would result in the price of the Company's stock increasing
from $37.25 to $60.68 and $96.92 per share, respectively, for Messrs.
Trickey, Deason, Ruble and Smith and from $25.63 to $41.75 and $66.48
per share, respectively, for Messrs. Trickey and Deason.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information with respect to stock options
exercised during the year ended December 31, 1997, the aggregate number of
unexercised options to purchase Common Stock granted in all years to the Named
Executive Officers and held by them as of December 31, 1997, and the value of
unexercised in-the-money options (i.e., options that had a positive spread
between the exercise price and the fair market value of the Common Stock) as of
December 31, 1997:
NUMBER OF
SHARES OF
COMMON STOCK VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE DECEMBER 31, 1997 DECEMBER 31, 1997 (B)
ACQUIRED REALIZED --------------------------------------------------
NAME ON EXERCISE (A) VESTED UNVESTED VESTED UNVESTED
- ----------------------------------------------------------------------------------------------------
John M. Quarles -- -- 31,600 10,800 $532,764 $254,988
Gregory M. Trickey(c) -- -- 12,518 -- 244,950 --
James E. Deason -- -- 7,200 32,300 25,800 58,425
Thomas J. Ruble -- -- 2,200 10,300 6,000 9,900
Alan L. Smith -- -- 400 6,600 -- --
(a) Value realized equals the amount of the excess of the fair market value of
the Common Stock acquired on exercise of the stock options over the
relevant exercise price paid by the holder of such options, and does not
constitute any disbursement of the Company's funds.
(b) For all unexercised in-the-money options, assumes a fair market value at
December 31, 1997 of $31.00 per share of Common Stock, which is the last
transaction in the Common Stock on the New York Stock Exchange as of that
date.
(c) Mr. Trickey retired as Chief Operating Officer and resigned from all
positions as an officer and director of the Company effective December 31,
1997.
PLANS AND ARRANGEMENTS
RETIREMENT PLANS. Executive employees of the Company are eligible to
participate in the Wolverine Tube, Inc. Retirement Plan (the "Retirement Plan").
This funded noncontributory defined benefit plan provides an annuity benefit,
upon retirement at normal retirement age of 65, of (i) 1.5% of average monthly
compensation, averaged over the 60 month period that produces the highest
average during the last 120 months, times (ii) years of service to the Company,
minus (iii) an adjustment for Social Security benefits as described in the
Retirement Plan. Upon early retirement prior to age 60, a reduction will be made
to the foregoing benefit equal to 4% for each year by which such retirement
precedes age 60, ending at age 55, the minimum age to receive
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pension benefits. A minimum of five years of service is needed for eligibility
for an early retirement benefit. There is a minimum benefit of 1.25% of average
monthly base compensation multiplied by years of service with the Company.
However, no Company executive is expected to receive a benefit under this
formula.
The covered compensation of participants used to calculate the
retirement benefits described above consists of base pay, overtime, commissions,
non-incentive bonus payments and year-end bonuses or incentive compensation not
in excess of one-half of base pay.
The Company has a Supplemental Executive Retirement Plan (the
"Executive Plan"). This defined benefit pension plan is nonfunded and provides
benefits to certain eligible executives of the Company. The benefits provided
under the Executive Plan are identical to the benefits provided by the
Retirement Plan, except that under the Retirement Plan final average annual
compensation for purposes of determining plan benefits is capped at $160,000
pursuant to certain Internal Revenue Service limits. Benefits under the
Executive Plan are not subject to this limitation. However, Executive Plan
benefits are offset by any benefits payable from the Retirement Plan.
The following table shows the estimated approximate annual benefits
payable upon normal retirement at age 65 in 1997 under both the Retirement Plan
and Executive Plan for persons in specified remuneration and years of service
classifications.
PENSION PLAN TABLE
FINAL
AVERAGE
SALARY YEARS OF SERVICE
- --------------------------------------------------------------------------------
15 20 25 30 35
- --------------------------------------------------------------------------------
$125,000 26,071 34,761 43,451 52,141 61,516
150,000 31,696 42,261 52,826 63,391 74,641
175,000 37,321 49,761 62,201 74,641 87,766
200,000 42,946 57,261 71,576 85,891 100,891
250,000 54,196 72,261 90,326 108,391 127,141
300,000 65,446 87,261 109,076 130,891 153,391
350,000 76,696 102,261 127,826 153,391 179,641
400,000 87,946 117,261 146,576 175,891 205,891
450,000 99,196 132,261 165,326 198,391 232,141
500,000 110,446 147,261 184,076 220,891 258,391
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As of December 31, 1997, Mr. Quarles had 25 years of credited service
in the Retirement Plan, Mr. Trickey had 24 years, Mr. Smith had 2 years, and
each of Mr. Deason and Mr. Ruble had 3 years. Mr. Quarles, Mr. Trickey, Mr.
Deason, Mr. Ruble and Mr. Smith had compensation of $317,424, $241,020,
$205,839, $168,207 and $163,202, for purposes of the above table, as of December
31, 1997. Mr. Trickey retired as Chief Operations Officer and resigned from all
positions as an officer and director of the Company effective December 31, 1997.
EMPLOYMENT AGREEMENT WITH JOHN M. QUARLES. In connection with Mr.
Quarles' retirement as President and Chief Executive Officer of the Company in
September 1996, the Company entered into an Employment Agreement, dated
September 16, 1996 (the "Agreement"), with Mr. Quarles, which replaced and
superseded his then existing employment agreement. Pursuant to the Agreement,
Mr. Quarles agreed to continue to serve as Chairman of the Company following his
retirement as President and Chief Executive Officer, and in such capacity, from
and after January 1, 1997, to devote at least 60 days per year to the
performance of his duties thereunder. The Agreement provides that commencing
January 1, 1997 Mr. Quarles will receive a base salary of $100,100 per year
(subject to periodic adjustment by the Board) plus an amount equal to 1/60 of
such base salary for each day in excess of 60 days per year that Mr. Quarles
devotes to his duties thereunder. In addition, Mr. Quarles is eligible to
receive an annual bonus under the Company's key manager bonus plan. The
Agreement also provides that if Mr. Quarles is terminated for cause or if he
resigns, other than for certain enumerated reasons, he is entitled to receive
only the severance benefits provided by the Company's standard severance plan
and to payment of his salary through the date of his termination or resignation.
If he is terminated without cause or resigns for one of the enumerates reasons,
he is entitled to receive an amount equal to his salary through the term of the
Agreement plus continuance of medical and life insurance benefits. In addition,
the Agreement provides that Mr. Quarles will have the right to receive medical
and insurance benefits, to retain all his stock options and to exercise those
options as they vest or until they terminate pursuant to their terms. In Mr.
Quarles' role as Interim Chief Executive Officer, effective March 31, 1997, Mr.
Quarles is compensated in accordance with the terms of the Agreement.
SEVERANCE PAY PLAN. The Company's Severance Pay Plan (the "Severance
Plan") provides benefits to all eligible employees who have at least one year of
service and who are terminated for reasons other than for cause. Severance
benefits include payment of all accrued vacation and two weeks pay at the
employee's current base salary plus one-half of one week's pay for each full
year of continuous service, not to exceed 26 weeks. Acceptance of severance
benefits constitutes a release of all claims against the Company, except claims
in accordance with the provisions of applicable benefit plans.
SEVERANCE AGREEMENTS. The Company has entered into severance agreements
with each of Messrs. Deason, Ruble and Smith (the "Severance Agreements"). The
Severance Agreements provide that if the officer is terminated for cause or if
he resigns other than for certain enumerated good reasons, he is entitled to
only the severance benefits provided by the Company's standard procedure and
practice and payment of his salary through the date of his termination or
resignation. If he is terminated without cause or resigns for good reason, then
he is entitled to certain enumerated benefits.
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The Company's Severance Agreements with Messrs. Deason, Ruble and Smith
provide that if the officer is terminated without cause or resigns for good
reason (i) he is entitled to one year salary plus any unused vacation time for
that year (payable either in a lump sum or in periodic payments over one year)
plus temporary continuance of his medical and life insurance benefits, or (ii)
at his option, to continue working for the Company for one year, for the same
salary as he would receive under (i) above, in a different position designated
by the Company.
The Company had also entered into a Severance Agreement with Mr.
Trickey, on April 29, 1991, and in connection with his retirement from the
Company Mr. Trickey was paid $280,006 on January 30, 1998 in satisfaction of all
obligations of the Company under his Severance Agreement.
The Company had entered into a Severance Agreement with Mr. Roller in
September 1996. In connection with Mr. Roller's resignation from the Company in
March 1997, the Company entered into an agreement with Mr. Roller, pursuant to
which, among other things, Mr. Roller will be paid an aggregate of $675,000 in a
series of payments through September 30, 1998, and will be entitled to certain
medical benefits, payment for accrued vacation time, and reimbursement for up to
a maximum of $70,000 in certain other expenses. In 1997, Mr. Roller was paid
$372,500 in connection with that agreement. The agreement also contains certain
confidentiality covenants, and provides for the discharge of any other
obligations of the Company or rights of Mr. Roller, including those that would
have been provided under the Severance Agreement and under outstanding options.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW
The Compensation Committee is responsible for the general compensation
policies of the Company, and in particular is responsible for setting and
administering the policies that govern executive compensation. The Compensation
Committee, which is comprised of two non-employee directors, evaluates the
performance of management and determines the compensation levels for all
executive officers.
To assist in determining compensation policies, the Compensation
Committee has in the past retained the services of Buck Consultants, a
management and compensation consulting firm, to evaluate the Company's various
compensation programs. Additional information on compensation has been derived
in the course of recruiting senior executives for the Company.
The objective of the Compensation Committee is to establish policies
and programs to attract and retain key executives, and to reward performance by
these executives which benefits the stockholders. The primary elements of
executive officer compensation are base salary, annual cash bonus awards, and
stock option awards. The salary is based on factors such as the individual
executive officer's level of responsibility and comparison to similar positions
in the Company and in comparable companies. Annual cash bonus awards are based
on the Company's performance measured against the attainment of financial and
other objectives established annually by the Board
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of Directors, and, to a lesser extent, on individual performance. Stock option
awards are intended to align the executive officer's interests with those of the
stockholders in promoting the long-term growth of the Company, and are
determined based on the executive officer's salary, level of responsibility,
number of options previously granted, and contributions toward achieving the
objectives of the Company. Further information on each of these compensation
elements is set forth below.
SALARIES
Base salaries for executive officers (other than the Chief Executive
Officer (the "CEO")) are adjusted annually, following a review by the CEO. In
the course of the review, performance of the individual with respect to specific
objectives is evaluated, as are any increases in responsibility, and salaries
for similar positions and levels of responsibility. The specific objectives for
each executive officer are set by the individual's manager, sometimes with
advice from the CEO, and will vary for each executive position and for each
year. Since this is a base salary review, performance of the Company is not
weighed heavily in the result. When all reviews are completed, the CEO makes a
recommendation to the Compensation Committee for its review and final approval.
With respect to the CEO, the Compensation Committee generally reviews
and establishes a base salary, which is influenced primarily by the Compensation
Committee's assessment of the individual's performance and the Compensation
Committee's expectations as to his future contributions. Competitive
compensation data is also a major factor in establishing the CEO's salary, but
no precise formula is applied in considering this data. Mr. Roller served as CEO
until his resignation effective March 31, 1997, at which time Mr. Quarles was
appointed to serve as interim CEO until a new CEO is appointed. During his
tenure as CEO, Mr. Roller was compensated pursuant to the terms of his
employment and the Compensation Committee had not made any assessment regarding
future compensation prior to his resignation. In Mr. Quarles' role as interim
CEO, Mr. Quarles was compensated pursuant to the terms of his existing
employment agreement. Accordingly, the Compensation Committee did not undertake
any review of the CEO's salary for 1997. See "Plans and Arrangements --
Employment Agreement with John M. Quarles."
BONUSES
Annual cash bonus objectives are generally governed by the management
bonus plan, and are heavily dependent on the financial performance of the
Company, and less so on individual performance. The Board of Directors of the
Company reviews the business plan developed by management and then approves the
objectives for the year, capital expenditure plans and other factors, and sets a
target amount of earnings. The Compensation Committee then incorporates this
target into the bonus plans as a threshold below which no bonus would be paid.
With respect to the bonus objectives for the CEO, the Compensation Committee
reviews this separately, with the amount allocated by salary ratio as a base.
Performance factors are considered, such as attainment of objectives in product
development, market share, representation of the Company at analyst and investor
meetings, development of management personnel, and other considerations. During
the fiscal year 1997, the Compensation Committee did not perform a review of the
bonus objectives for the CEO. The
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Company's long-term incentive plans for 1996 and 1997 were developed in
consultation with senior management and Buck Consultants, and the Company's
senior executive officers are eligible for awards under each plan based upon the
Company's return on total capital measured over a four year period.
STOCK OPTION AWARDS
Stock options are an integral part of each executive officer's
compensation and are intended to provide an incentive to continue as employees
of the Company over a long term, and to align the interests of the executive
with those of the stockholders by providing a stake in the Company. All equity
based awards for management are granted pursuant to the Company's 1993 Equity
Incentive Plan. Grants to participants are made at fair market value on the date
of the grant, vest over a period of five years, and expire after ten years. In
making grants the Compensation Committee takes into account the total number of
shares available for grant under the plan, prior grants outstanding, and
estimated requirements for future grants. Individual awards take into account
the executive officer's contributions to the Company, scope of responsibilities,
strategic and operational goals, salary and number of unvested options.
In determining an option grant for the CEO, the Compensation Committee
weighs all of the above factors, but, recognizing the CEO's critical role in
developing strategies for the long-term benefit of the Company, may award grants
greater than would have been indicated by considerations of proportional
salaries. Stock options are an important element in attracting and retaining
capable executives at all levels, and this is particularly so in the case of the
CEO, who must constantly act in the stockholders' interest. During 1997, no
stock options were granted to Mr. Roller prior to resignation as CEO on
March 31, 1997 or to Mr. Quarles in his role as interim CEO.
SUMMARY
The Company's 1997 earnings fell short of the target set by the Board
of Directors, which governs the management bonus program. Therefore, there were
no bonus payments under that program made for 1997; however, the Compensation
Committee did determine to award discretionary bonuses to certain management
personnel (including the interim CEO) based upon individual performance during
1997. Long term incentive plans were adopted in 1996 and 1997 and target
performance under each plan is measured over a four-year period. Based on
available information, the Compensation Committee believes that the Company's
level of base salaries is competitive, and that the Company's bonus programs
will cause bonus levels to be competitive as well. The Committee continually
reviews the Company's compensation programs to ensure that the overall package
is competitive, balanced, and that proper incentives and rewards are provided.
(1)
Compensation Committee
T. P. Evans
G. O. Neuman
- --------
(1) The Compensation Committee has not yet formulated a policy on
qualifying executive officer compensation under new Section 162(m) of the Code
(adopted under the Omnibus Budget and Reconciliation Act of 1993).
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COMPANY STOCK PRICE PERFORMANCE
Set forth is a line graph comparing the cumulative total stockholder
return on the Common Stock since August 13, 1993, the date the Common Stock
first commenced trading, with the cumulative total stockholder return of the S&P
Industrials Index, and the NYSE Composite Index assuming reinvestment of any
dividends.
TOTAL CUMULATIVE RETURNS
- --------------------------------------------------------------------------------
8/13/93 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- --------------------------------------------------------------------------------
Wolverine Tube, Inc. 100 127 153 242 227 200
S&P Industrials 100 108 112 151 185 242
NYSE Composite 100 106 106 143 174 231
- --------------------------------------------------------------------------------
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COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
The members of the Board of Directors, the executive officers of the
Company and persons who hold more than ten percent of the Common Stock are
subject to the reporting requirements of Section 16(a) of the Exchange Act,
which require them to file reports with respect to their ownership of the
Company's securities on Form 3 and transactions in the Company's securities on
Forms 4 or 5. Based solely on its review of the copies of such forms received by
it and written representations from the Company's executive officers and
directors, the Company believes that, for the fiscal year ended December 31,
1997, the Section 16(a) filing requirements were complied with by all incumbent
executive officers, directors and director nominees during the year.
PROPOSAL TWO - AMENDMENT TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION
On March ___, 1998, the Board of Directors unanimously approved, and
recommends that the stockholders adopt, an amendment to the Company's Restated
Certificate of Incorporation (the "Restated Certificate") to increase the number
of authorized shares of Common Stock from 20,000,000 to 40,000,000 (the
"Authorized Stock Amendment"). The full text of the Authorized Stock Amendment
is included in Annex A to this Proxy Statement.
AUTHORIZED STOCK AMENDMENT
The Board of Directors believes that it is in the Company's best
interests to increase the number of authorized shares of Common Stock in order
to have additional authorized but unissued shares available for issuance to meet
business needs as they arise. The Board of Directors believes that the
availability of such additional shares will provide the Company with greater
flexibility in considering potential future actions involving the issuance of
stock identified by the Board of Directors, without the possible expense and
delay of having to convene a special stockholders' meeting.
SUMMARY OF AUTHORIZED STOCK AMENDMENT
The Authorized Stock Amendment would amend the Restated Certificate to
provide for an increase in the number of authorized shares of Common Stock from
20,000,000 to 40,000,000. The Authorized Stock Amendment will not increase or
otherwise affect the number of authorized shares of preferred stock which may be
issued by the Company. If approved by the stockholders, the proposed amendment
will become effective upon the filing of an amendment to the Restated
Certificate with the Secretary of State of Delaware, which will occur as soon as
reasonably practicable following such approval.
The authorized shares of Common Stock in excess of those issued will be
available for issuance at such times and for such corporate purposes as the
Board of Directors may deem advisable, without further action by the Company's
stockholders, except as may be required by applicable law or by the rules of any
stock exchange or national securities association trading
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system on which the securities may be listed or traded. Upon issuance, such
shares will have the same rights as the outstanding shares of Common Stock.
Holders of Common Stock have no preemptive rights.
Other than with respect to the reservation of Common Stock in
connection with the Company's stock options plans, the Company has no other
plans, or existing or proposed arrangements, agreements or understandings to
issue, or reserve for future issuance, and of the additional shares of Common
Stock which would be authorized by the Authorized Stock Amendment. The Board of
Directors does not intend to issue any Common Stock except on terms which the
Board deems to be in the best interests of the Company and its then existing
stockholders. Any future issuance of Common Stock will be subject to the rights
of holders of outstanding shares of any preferred stock which the Company may
issue in the future.
VOTE REQUIRED TO APPROVE THE AUTHORIZED STOCK AMENDMENT
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock is required to approve the Authorized Stock Amendment.
THE BOARD RECOMMENDS VOTING "FOR" THIS PROPOSAL.
PROPOSAL THREE - APPROVAL OF THE AMENDMENT
TO THE 1993 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
On March ___, 1998, the Board of Directors of the Company adopted an
amendment of the Company's 1993 Stock Option Plan for Outside Directors (the
"Plan") to provide for an increase in the maximum number of shares of Common
Stock that may be issued and sold thereunder from 50,000 shares to 105,000
shares. The purposes of the Plan are to promote the long-term success of the
Company by creating a long-term mutuality of interests between the directors and
stockholders of the Company, to provide an additional inducement for such
directors to remain with the Company, to reward such directors by providing an
opportunity to acquire shares of Common Stock on favorable terms and to provide
a means through which the Company may attract able persons to serve as directors
of the Company.
The provisions of the Plan, as amended, are summarized below. Such
summaries do not purport to be complete, and are qualified in their entirety by
reference to the full text of the Plan, as amended, a copy of which is attached
to this Proxy Statement as Annex B.
SUMMARY OF THE AMENDED PLAN
The Plan is administered by the members of the Board of Directors who
are not non-employee directors. All non-employee directors are eligible to
receive awards under the Plan. A total of 50,000 shares of Common Stock have
been reserved for issuance under the Plan, of which 40,000 are subject to
outstanding options as of December 31, 1997. Each non-employee director receives
an option to purchase 5,000 shares of Common Stock on the date of such
individual's election or appointment to the Board of Directors (the "Initial
Option"). On the first through the fourth anniversaries of the non-employee
director's election to the Board of Directors,
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each non-employee director, who is a member of the Board of Directors on such
anniversary date, shall receive an option, effective on the anniversary date, to
purchase 1,000 shares of Common Stock (the "Subsequent Option"). The exercise
price of any option granted to a non-employee director shall be equal to the
fair market value of the Common Stock on the date of grant.
Subject to the expiration or earlier termination, the Initial Option
shall vest at the rate of 331/3% per year while the Subsequent Option is fully
vested on the date of grant. All options under the Plan terminate on the earlier
of the tenth anniversary of the date of grant unless terminated sooner upon
termination of the optionee's status as a director or otherwise pursuant to the
Plan. No option under the Plan is transferable or assignable by the non-employee
director other than by the laws of descent and distribution and may be
exercised, during the lifetime of the non-employee director, only by the
non-employee director, or in the event of his or her death, by a beneficiary
designated by the non-employee director, provided, that, the option has not been
terminated.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain of the Federal income tax
consequences of certain transactions under the Plan based on Federal income tax
laws in effect on January 1, 1998. This summary is not intended to be complete
and does not describe state or local tax consequences.
TAX CONSEQUENCES TO PARTICIPANTS
Options. Options stated under the Plan will be nonqualified options. In
general, (i) no income will be recognized by an optionee at the time a
nonqualified option is granted; (ii) at the time of exercise of a nonqualified
option, ordinary income will be recognized by the optionee in an amount equal to
the difference between the option price paid for the shares and the fair market
value of the shares, if unrestricted, on the date of exercise; and (iii) at the
time of sale of shares acquired pursuant to the exercise of a nonqualified
option, appreciation (or depreciation) in value of the shares after the date of
exercise will be treated as a short-term or long-term capital gain (or loss).
Restricted Shares. The recipient of Restricted Shares generally will be
subject to tax at ordinary income rates on the fair market value of the
Restricted Shares (reduced by any amount paid by the participant for such
Restricted Shares) at such time as the shares are no longer subject to
forfeiture or restrictions on transfer for purposes of Section 83 of the Code
("Restrictions"). However, a recipient who so elects under Section 83(b) of the
Code within 30 days of the date of transfer of the shares will have taxable
ordinary income on the date of transfer of the shares equal to the excess of the
fair market value of such shares (determined without regard to the Restrictions)
over the purchase price, if any, of such Restricted Shares. If a Section 83(b)
election has not been made, any dividends received with respect to Restricted
Shares that are subject to the Restrictions generally will be treated as
compensation that is taxable as ordinary income to the participant.
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TAX CONSEQUENCES TO THE COMPANY
To the extent that a participant recognizes ordinary income in the
circumstances described above, the Company will be entitled to a corresponding
deduction provided that, among other things, the income meets the test of
reasonableness, is an ordinary and necessary business expense and is not an
"excess parachute payment" within the meaning of Section 280G of the Code.
PLAN BENEFITS
The table below shows the option awards that have been granted to each
of the following persons or groups under the Plan from the inception of the Plan
through December 31, 1997.
NAME DOLLAR VALUE OUTSTANDING
OPTION RIGHTS
All non-employee directors as (1) 40,000
a group (5 persons)
- -------------------
(1) Stock options were granted under the Plan at exercise prices equal to
the fair market value of the Common Stock on the date of grant. The
actual value, if any, a person may realize will depend on the excess of
the stock price over the exercise price on the date the option is
exercised. On December 31, 1997, the last reported sale price for the
Common Stock on the New York Stock Exchange was $31.00.
THE BOARD RECOMMENDS VOTING "FOR" THIS PROPOSAL.
PROPOSAL FOUR - RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as the
independent auditors for the Company for the fiscal year ending December 31,
1998, and recommends that the stockholders vote for ratification of such
appointment. Ernst & Young LLP has audited the Company's financial statements
since 1989. Notwithstanding the selection, the Board, in its discretion, may
direct the appointment of a new independent auditors at any time during the year
if the Board feels that such a change would be in the best interests of the
Company and its stockholders. A representative of Ernst & Young LLP is expected
to be present at the Annual Meeting with the opportunity to make a statement if
he or she so desires and be available to respond to appropriate questions. THE
BOARD RECOMMENDS VOTING "FOR" THIS PROPOSAL.
OTHER BUSINESS
The Company knows of no other matters to be submitted at the Annual
Meeting. If any other matters are properly brought before the meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares they
represent in accordance with their judgment.
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STOCKHOLDER PROPOSALS TO BE PRESENTED
AT THE NEXT ANNUAL MEETING
Proposals of stockholders intended to be presented by such stockholders
at next year's Annual Meeting must be received by the Company at its principal
office no later than December 17, 1998, and must satisfy the conditions
established by the Securities and Exchange Commission for stockholder proposals
to be included in the Company's proxy statement for that meeting.
By Order of the Board of Directors
/s/ John M. Quarles
John M. Quarles
Chairman and Interim
Chief Executive Officer
April ___, 1998
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ANNEX A
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
WOLVERINE TUBE, INC.
Wolverine Tube, Inc.(hereinafter called the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, does hereby certify:
1. That the Board of Directors of the Corporation has determined
that it is advisable and in the best interests of the Corporation that the
Restated Certificate of Incorporation of the Corporation be hereby amended by
deleting the current text of Article FOURTH, Section 1 in its entirety and by
substituting in lieu thereof the following:
FOURTH. Section 1. Authorized Capital Stock. The
Corporation is authorized to issue two classes of capital
stock, designated Common Stock and Preferred Stock. The total
number of shares of capital stock that the Corporation is
authorized to issue is 40,500,000 shares, consisting of
40,000,000 shares of Common Stock, par value $0.01 per share,
and 500,000 shares of Preferred Stock, par value $1.00 per
share.
2. That upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, a majority of all the shares of
capital stock entitled to vote as a class voted in favor of such amendment.
3. The amendment of the Certificate of Incorporation herein
certified has been duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Amendment to be executed by its duly authorized officer as of the
____ day of May, 1998.
WOLVERINE TUBE, INC.
-------------------------------
Name:
Title:
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ANNEX B
1993 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
OF
WOLVERINE TUBE, INC.
ARTICLE I
PURPOSE
The purpose of the Wolverine Tube, Inc. 1993 Stock Option Plan
for Outside Directors of the Company (the "Plan") is to retain the services of
qualified persons who are not employees of the Company to serve as members of
the Board of Directors of the Company and to secure for the Company the benefits
of the incentives inherent in increased stock ownership by paying such persons a
portion of their compensation for such service through the grant of stock
options to purchase shares of Common Stock.
ARTICLE II
DEFINITIONS
"Beneficiary" means the person or persons designated by an Outside
Director to exercise an Option in the event of an Outside Director's death or,
if no such person is designated, the Outside Director's estate.
"Board" means the Board of Directors of the Company.
"Change in Control of the Company" has the meaning set forth in Section
15.03 below.
"Common Stock" means the common stock of the Company, par value $.01
per share.
"Company" means Wolverine Tube, Inc., a Delaware corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to the Common Stock the average
of the closing bid and asked prices as reported on the New York Stock Exchange
Composite Trading Tape for the date of determination and the four preceding
trading days.
"Option" means an option to purchase shares of Common Stock granted
under the Plan to an Outside Director.
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"Outside Director" means a member of the Board who is not an employee
of the Company or any of its subsidiaries.
ARTICLE III
SHARES AVAILABLE
Subject to the provisions of Article XII of the Plan, no more than
105,000 shares of Common Stock shall be issued pursuant to the exercise of
Options granted under the Plan. If an Option is forfeited or expires without
being exercised, the shares of Common Stock subject to the Option shall be
available for additional Option grants under the Plan. Either authorized and
unissued shares of Common Stock or treasury shares may be delivered pursuant to
the exercise of Options granted under the Plan.
ARTICLE IV
PARTICIPATION
All Outside Directors shall participate in the Plan. Grants of Options
to purchase Common Stock may be made pursuant to the Plan only to Outside
Directors.
ARTICLE V
GRANTS OF OPTIONS
5.01 Initial Grants. Each individual who is or becomes an Outside
Director after the date hereof shall be granted an Option to purchase 5,000
shares of Common Stock, effective as of the date of such individual's election
or appointment to the Board (the "Initial Options").
5.02 Periodic Grants. On each of the first through the fourth
anniversaries of each Outside Director's election to the Board, each Outside
Director who is a member of the Board on such anniversary date shall receive a
grant, effective as of such anniversary date, of an additional Option to
purchase 1,000 shares of Common Stock (the "Subsequent Options").
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ARTICLE VI
TERMS AND CONDITIONS OF OPTION GRANTS
6.01 Vesting. Initial Options granted to an Outside Director shall
vest in accordance with the following schedule: 1/3 on the first anniversary of
grant; 1/3 on the second anniversary of grant; and 1/3 on the third anniversary
of grant. Subsequent Options shall be fully vested when granted.
6.02 Exercisability. Options shall not be exercisable until the
expiration of one year from the date of grant, at which point they will be fully
exercisable (subject to the vesting requirements of Section 6.01) until
termination of the Option pursuant to Section 6.03 below; provided, however,
that, in the event of a Change in Control of the Company, all outstanding
Options shall be immediately exercisable as of the date of such Change in
Control of the Company.
6.03 Termination of Option. Options shall terminate on the earliest
to occur of (i) the tenth anniversary of the Date of Grant of the Option, (ii)
the first anniversary of the date of an Outside Director's resignation, removal
or termination as a member of the Board, and (iii) the date of the Outside
Director's removal from the Board for "cause." Whether an Outside Director has
been removed from the Board for "cause" shall be determined in accordance with
the ByLaws of the Company.
6.04 Exercise Price. The per share exercise price of each Option
shall be the Fair Market value of a share of Common Stock as of the date of
grant of the Option.
6.05 Payment Of Option Exercise Price. An Outside Director may pay
the exercise price of an Option by tendering to the Company cash (including a
certified check, teller's check or wire transfer of funds), previously owned
shares of Common Stock or any combination thereof.
6.06 Certificate. The terms and provisions of an Option shall be
set forth in an option certificate which shall be delivered to the Outside
Director reasonably promptly following the date of grant of the Option.
6.07 Nontransferable. Options shall be nontransferable other than
by will or the laws of descent and distribution and, during the life of the
Outside Director, such Options shall be exercisable only by the Outside
Director; provided, however, that this sentence shall not preclude the Outside
Director from designating a Beneficiary who shall be entitled to exercise the
Option in the event of the Outside Director's death during the exercise period
specified in Section 6.03 above.
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ARTICLE VII
REGISTRATION OF SHARES; LIMITS ON EXERCISABILITY
7.01 Securities Act. No Option shall be exercisable and no transfer
of the shares of Common Stock underlying such Option (the "Underlying Shares")
may be made to any Outside Director, and any attempt to exercise any Option or
to transfer any Underlying Shares to any Outside Director shall be void and of
no effect, unless and until (i) a registration statement under the Securities
Act of 1933, as. amended (the "Securities Act"), has been duly filed and
declared effective pertaining to the Underlying Shares and the Underlying Shares
have been duly qualified under applicable state securities or blue sky laws or
(ii) the Board, in its sole discretion after securing the advice of counsel,
determines, or the Outside Director provides an opinion of counsel satisfactory
to the Board, that such registration or qualification is not required as a
result of the availability of an exemption from registration or qualification
under such laws.
7.02 Limit on Exercise. Without limiting the foregoing, if at any
time the Board shall determine in its discretion that the listing, registration
or qualification of the Underlying Shares under any state or federal law or on
any securities exchange, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of Options or the delivery or purchase of Underlying Shares,
such Options may not be granted or exercised unless such listing, registration,
qualification,, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board. In addition, if at any time the
Board shall determine in its discretion that the grant or exercise of Options
would violate any securities laws, then such Options may not be granted or
exercised until such time as the Board shall determine that such grant or
exercise may be effected other than in violation of such laws. Any restrictions
imposed on the exercise of Options under this Section 7.02 shall be effective
immediately upon notice to the Outside Director.
ARTICLE VIII
EFFECTIVE DATE
Effective Date and First Grants. The Plan shall become effective only
if approved by the affirmative vote of a majority of the shares of Common Stock
present or represented by proxy at the next annual on special meeting of
stockholders of the Company.
ARTICLE IX
ADMINISTRATION
The Plan shall be administered by the members of the Board who are not
Outside Directors. All questions of interpretation, administration and
application of the Plan shall be determined by the Board. The Board may
authorize any officer of the Company to execute and
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deliver an option certificate on behalf of the Company to an Outside Director.
No member of the Board shall be liable for anything whatsoever in connection
with the administration of the Plan except such member's own willful misconduct.
ARTICLE X
AMENDMENTS AND TERMINATION
10.01 Amendments. Subject to Section 10.02 below, the Plan may be
altered, amended, suspended, or terminated at any time by the Board; provided,
however, that in no event may the provisions of the Plan respecting eligibility
to participate or the timing or amount of grants be amended more frequently than
once every six months, other than to comport with changes in the Internal
Revenue Code of 1986, as amended, the Employee Retirement Income Security Act of
1974, as amended, or any rules or regulations thereunder; and provided, further,
that any amendment which under the requirements of applicable law must be
approved by the stockholders of the Company shall not be effective unless and
until such stockholder approval has been obtained in compliance with such law;
and provided, further, that any amendment that must be approved by the
stockholders of the Company in order to maintain the continued qualification of
the Plan under Rule 16b-3(c)(2)(ii) under the Exchange Act, or any successor
provision, shall not be effective unless and until such stockholder approval has
been obtained in compliance with such rule.
10.02 Consents To Plan Changes. No termination or amendment of the
Plan may, without the consent of the Outside Director, affect any such
individual's rights under the provisions of the Plan with respect to awards of
Options which were made prior to such action.
10.03 Termination. Unless terminated earlier in accordance with
Section 10.01 above, the Plan shall terminate on, and no further Options may be
granted hereunder after, August 31, 2003.
ARTICLE XI
ADJUSTMENTS AFFECTING THE COMMON STOCK
In the event of any merger, consolidation, recapitalization,
reclassification, stock dividend, distribution or property, special cash
dividend or other change in corporate structure affecting the Common Stock,
adjustments shall be made by the Board to prevent dilution or enlargement of
rights in the number and class of shares of Common Stock, granted or authorized
to be granted hereunder.
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ARTICLE XII
NO RIGHT TO REELECTION
Nothing in the Plan shall be deemed to create any obligation on the
part of the Board to nominate any of its members for reelection by the Company's
stockholders, nor confer upon any Outside Director the right to remain a member
of the Board for any period of time, or at any particular rate of compensation.
ARTICLE XIII
GOVERNING LAW
The Plan and all rights hereunder shall be construed in accordance with
and governed by the laws of the State of Delaware.
ARTICLE XIV
NO RESTRICTION ON RIGHT OF COMPANY
TO EFFECT CORPORATE CHANGES
The Plan shall not affect in any way the right or power of the Company
or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
ARTICLE XV
MISCELLANEOUS
15.01 Expenses. All expenses and costs in connection with the
administration of the Plan or the issuance of Options hereunder shall be borne
by the Company.
15.02 Headings. The headings of sections herein are included solely
for convenience of reference and shall not affect the meaning of any of the
provisions of the Plan.
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15.03 Change in Control. A "Change in Control of the Company" means:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of 50
percent or more of either (i) the then outstanding shares of Common Stock (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
of Control: (A) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege), (B) any
acquisition by the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (D) any acquisition by any corporation pursuant to
a reorganization, merger or consolidation which would not be a Change of Control
under paragraph (c) below; or
(b) Individuals who, as of the effective date of the Plan,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the effective date of the Plan whose election,
or nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board will
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule l4a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a person other than the Board; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless following such
reorganization, merger or consolidation, (i) more than 50 percent of the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such reorganization,
merger or consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger or consolidation, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, and (ii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation; or
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(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other disposition, (A)
more than 50 percent of the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, and (B) at least a
majority of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition of
assets of the Company.
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APPENDIX A
WOLVERINE TUBE, INC.
1525 PERIMETER PARKWAY, SUITE 210
HUNTSVILLE, ALABAMA 35806 PROXY
- ---------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints John M. Quarles and James E. Deason, and each of them, with
power of substitution in each, proxies to appear and vote, as designated below,
all Common Stock of Wolverine Tube, Inc. held of record on March 31, 1998 by
the undersigned, at the Annual Meeting of Stockholders to be held on May 21,
1998, and at all adjournments thereof (the "Meeting"). Management recommends a
vote in favor of all nominees listed in item 1 and in favor of Proposals 2
through 4.
1. ELECTION OF DIRECTORS
Nominees: John L. Duncan, John M. Quarles and Jan K. Ver Hagen
FOR all nominees listed above WITHHOLD AUTHORITY
--- ---
(except as marked to the contrary) to vote for all nominees listed above
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THAT NOMINEE'S NAME IN THE LAST ABOVE.
2. PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES FROM 20,000,000 SHARES TO 40,000,000 SHARES AS
DESCRIBED IN THE PROXY STATEMENT FOR THE MEETING.
FOR AGAINST ABSTAIN
--- --- ---
3. PROPOSAL TO ADOPT THE AMENDMENT TO THE COMPANY'S 1993 STOCK OPTION PLAN FOR
OUTSIDE DIRECTORS TO INCREASE THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK
AVAILABLE FOR ISSUANCE FROM 50,000 TO 105,000 AS DESCRIBED IN THE PROXY
STATEMENT FOR THE MEETING.
FOR AGAINST ABSTAIN
--- --- ---
4. PROPOSAL TO SELECT ERNST & YOUNG LLP AS INDEPENDENT ACCOUNTANTS FOR THE
COMPANY FOR FISCAL YEAR 1998.
FOR AGAINST ABSTAIN
--- --- ---
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
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* * * * * * * *
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED. IF NO
INDICATION IS MADE, IT WILL BE VOTED IN FAVOR OF ALL DIRECTOR-NOMINEES AND IN
FAVOR OF PROPOSALS 2 THROUGH 4.
Dated : 1998
____________________________,
________________________________________
________________________________________
Signature(s)
(Please sign exactly as name appears on
this proxy. When shares are held by
joint tenants, both should sign. When
signing in a fiduciary or representative
capacity, give full title as such.)