[LOGO]
WOLVERINE TUBE, INC.
200 CLINTON AVENUE WEST, SUITE 1000
HUNTSVILLE, ALABAMA 35801
April 12, 2001
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Wolverine Tube, Inc. (the "Company") on Wednesday, May 23, 2001, at 8:30
a.m., local time, at The Benjamin Hotel, 125 East 50th Street, New York, New
York 10022. We hope that many of the Company's stockholders will be able to
attend the meeting and we look forward to greeting those in attendance.
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 THIS 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/ Dennis Horowitz
---------------------------
Dennis Horowitz
Chairman, President and
Chief Executive Officer
WOLVERINE TUBE, INC.
200 CLINTON AVENUE WEST, SUITE 1000
HUNTSVILLE, ALABAMA 35801
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 23, 2001
To the Stockholders:
Please take notice that the Annual Meeting of the Stockholders of Wolverine
Tube, Inc., a Delaware corporation, will be held on Wednesday, May 23, 2001, at
8:30 a.m., local time, at The Benjamin Hotel, 125 East 50th Street, New York,
New York 10022 for the following purposes:
1. To elect two (2) Class II directors of the Company to each serve a
three-year term.
2. To ratify the appointment of Ernst & Young LLP as the independent
auditors of the Company for the fiscal year ending December 31, 2001.
3. To approve and adopt the Company's 2001 Stock Option Plan for Outside
Directors.
4. To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on March 31, 2001 are
entitled to notice of, and to vote at, the meeting and any adjournments thereof.
Order of the Board of Directors
/s/ James E. Deason
---------------------------------
James E. Deason
Secretary
Huntsville, Alabama
April 12, 2001
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 ALREADY SENT IN YOUR PROXY.
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 Stockholders to be held on Wednesday, May 23, 2001, at 8:30
a.m., local time, at The Benjamin Hotel, 125 East 50th Street, New York, New
York 10022, or at any adjournment thereof.
INFORMATION CONCERNING THE SOLICITATION AND VOTING
GENERAL
The principal executive offices of the Company are located at 200 Clinton
Avenue West, Suite 1000, Huntsville, Alabama 35801. The Company's telephone
number is (256) 353-1310. The date of this Proxy Statement is April 12, 2001,
the approximate date on which this Proxy Statement, the accompanying Proxy and
the Annual Report to Stockholders for the fiscal year ended December 31, 2000,
including financial statements, are first being sent or given to stockholders
entitled to vote at the meeting.
This solicitation of proxies is made on behalf of the Board of Directors of
the Company and the associated cost will be borne by the Company. The Company
has retained Corporate Investor Communications, Inc. (the "Solicitor") to assist
in the solicitation of proxies. The Company will pay approximately $5,000 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.
RECORD DATE, VOTING AND REVOCABILITY OF PROXIES
The Company had outstanding on March 31, 2001 (the "Record Date"),
12,037,198 shares of Common Stock, par value $0.01 per share (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 the holders of a majority of the
shares issued and outstanding, present in person or represented by proxy and
entitled to vote at the meeting, will constitute a quorum for the transaction of
business. Each stockholder is entitled to one vote for each share of Common
Stock 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 herein. In addition, by submitting the Proxy, the stockholder
authorizes the persons named on the Proxy to use their discretion in voting on
any other matter brought before the Annual Meeting. As of the date of this Proxy
Statement, the Company does not know of any other business to be considered at
the Annual Meeting.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy at the meeting and entitled to vote is required
for approval of all items being submitted to the stockholders for their
consideration, other than the election of directors, which is determined by a
plurality, if a quorum is present and voting. 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.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information as of March 31, 2001, with
respect to the beneficial ownership of the 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. The number of shares
of Common Stock outstanding as of March 31, 2001 was 12,037,198.
COMMON STOCK BENEFICIALLY OWNED
-------------------------------
NAME AND ADDRESS SHARES PERCENT
- ------------------ ----------- ----------
AXA Financial, Inc.1 ........................................ 1,512,200 12.6%
1290 Avenue of the Americas
New York, NY 10104
Ontario Teachers' Pension Plan Board2 ....................... 1,348,386 11.2
5650 Yonge Street
North York, Ontario M2M 4H5 Canada
Mellon Financial Corporation3 ............................... 1,257,018 10.4
One Mellon Center
Pittsburgh, PA 15258
Merrill Lynch & Co. Inc.4 ................................... 1,239,779 10.3
Merrill Lynch Investment Managers
ML Small Cap Value Fund
World Financial Center, North Tower
250 Versy Street
New York, NY 10381
Dimensional Fund Advisors5 .................................. 865,300 7.2
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Citigroup, Inc.6 ............................................ 425,835 3.5
399 Park Avenue
New York, NY 10043
Goldman Sachs Asset Management7 ............................. 416,800 3.5
32 Old Slip
New York, NY 10005
Dennis J. Horowitz8 ........................................ 238,175 2.0
James E. Deason9 ........................................... 89,983 *
Keith I. Weil10 ............................................ 48,566 *
Jan K. Ver Hagen11 ......................................... 41,410 *
Johann R. Manning12 ........................................ 38,575 *
John L. Duncan13 ........................................... 29,010 *
Thomas P. Evans14 .......................................... 23,011 *
Chris A. Davis15 ........................................... 21,010 *
Gail O. Neuman16 ........................................... 21,010 *
W. Barnes Hauptfuhrer17 .................................... 21,010 *
Charles E. Thompson18 ...................................... 16,205 *
All directors and executive officers as a group (11 persons) .. 587,965 4.9
- -----------
* Represents less than 1%
2
1 As set forth on Schedule 13G, filed with the Securities and Exchange
Commission on November 13, 2000.
2 As set forth on Form 3, filed with the Securities and Exchange Commission
on December 6, 1999.
3 As set forth on Amendment No. 2 of Schedule 13G, filed with the Securities
and Exchange Commission on January 18, 2001.
4 As set forth on Schedule 13G, filed with the Securities and Exchange
Commission on February 7, 2001.
5 As set forth on Schedule 13G, filed with the Securities and Exchange
Commission on February 2, 2001.
6 As set forth on Amendment No. 3 of Schedule 13G, filed with the Securities
and Exchange Commission on January 25, 2001.
7 As set forth on Amendment No. 1 of Schedule 13G, filed with the Securities
and Exchange Commission on February 14, 2001.
8 Includes 153,334 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
9 Includes 65,834 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
10 Includes 26,434 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
11 Includes 28,410 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
12 Includes 20,067 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
13 Includes 24,010 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
14 Includes 23,010 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
15 Includes 21,010 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
16 Includes 21,010 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
17 Includes 21,010 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
18 Includes 16,205 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2001.
3
PROPOSAL ONE - ELECTION OF DIRECTORS
The Board has nominated Messrs. Duncan and Ver Hagen to be reelected as
Class II directors, each for a three-year term expiring in 2004. 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 either 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 director as management may recommend in the place of such
nominee. THE BOARD RECOMMENDS VOTING "FOR" THE REELECTION OF THE TWO NOMINEES
LISTED BELOW.
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 is elected each year. The Class I directors are Ms. Davis and Messrs.
Horowitz and Hauptfuhrer; the Class II directors are Messrs. Duncan, Thompson
and Ver Hagen; and the Class III directors are Ms. Neuman and Messrs. Deason and
Evans. Directors hold office until their terms expire and their successors have
been elected and qualified. In accordance with the Company's Bylaws, the Board
reduced its size from nine to eight at the January 2001 Board meeting. The
change in the size of the Board did not impact the current term of any director
and will not be effective until the election of directors at the Annual Meeting.
Mr. Thompson has attained the mandatory age for retirement from the Board in
accordance with the Company's Bylaws and will not stand for reelection.
The following table sets forth certain information for each nominee, and
for 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 2004:
Name Age Principal Occupation During the Past Five Years
- ---- --- -----------------------------------------------
John L. Duncan ........ 67 Mr. Duncan has been a director of the Company
since December 1993. Mr. Duncan currently
serves as President and Chief Executive Officer
of Martin Industries, Inc. ("Martin"), a
position he has held since June 2000. Mr.
Duncan also has served as director of Martin
since May 1999. Martin manufactures and sells
pre-engineered fireplaces, gas heaters, gas
logs and related equipment. Mr. Duncan retired
as President and Chief Executive Officer of
Murray Ohio Manufacturing Co., a position he
held from 1987 to 1994.
Jan K. Ver Hagen ...... 63 Mr. Ver Hagen has been a director of the
Company since January 1996 and served as the
non-executive Chairman of the Board from May
1998 until December 2000. Mr. Ver Hagen
currently serves as Senior Vice President
reporting to the President of Emerson Electric
Co. ("Emerson"), a manufacturer and marketer of
electronic and electrical products. Prior to
rejoining Emerson, Mr. Ver Hagen was employed
by United Dominion Industries, Limited ("UDI")
as Vice Chairman in 1998, and as President and
Chief Operating Officer from 1994 to 1998. Mr.
Ver Hagen also serves as a director of Plexus
Corp and Trustee of the University of Wisconsin
Foundation and The Wisconsin Alumni Research
Foundation.
4
INCUMBENT DIRECTORS WHOSE TERMS WILL EXPIRE IN 2002:
Name Age Principal Occupation During the Past Five Years
- ---- --- -----------------------------------------------
James E. Deason ........ 53 Mr. Deason has been a director of the Company
since October 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
a partner with Ernst & Young LLP.
Thomas P. Evans ........ 44 Mr. Evans has been a director of the Company
since December 1995. Mr. Evans has served as
the Executive Vice President of Business
Development of Permal Asset Management
("Permal") since September 1999. Prior to
holding that position, Mr. Evans held the
positions of Senior Vice President and Chief
Operating Officer (1999) and President,
Emerging Markets (1994-1998), of Permal.
Gail O. Neuman ......... 54 Ms. Neuman has been a director of the Company
since November 1997. In 2000, Ms. Neuman
retired as the Vice President-Human Resources
and General Counsel of Nissan Motor
Manufacturing Corporation U.S.A. ("Nissan"),
a vehicle manufacturer. She had been employed
with Nissan since 1981.
INCUMBENT DIRECTORS WHOSE TERMS WILL EXPIRE IN 2003:
Name Age Principal Occupation During the Past Five Years
- ---- --- -----------------------------------------------
Chris A. Davis ........ 50 Ms. Davis has been a director of the Company
since October 1997. Ms. Davis has served as the
Executive Vice President, Chief Financial and
Administrative Officer of ONI Systems
Corporation ("ONI") since May 2000. ONI
develops, markets and sells all-optical
networking communications equipment. Prior to
holding that position at ONI, she served as the
Executive Vice President and Chief Financial
and Administrative Officer of Gulfstream
Aerospace Corporation ("Gulfstream") from 1993
to July of 1999, and as a Vice President of
General Dynamics Corporation after its
acquisition of Gulfstream in July 1999.
Ms. Davis also serves as a director of Cytec
Industries, Inc.
Dennis J. Horowitz ..... 54 Mr. Horowitz has been the President and Chief
Executive Officer and a director of the Company
since March 1998, and in January of 2001 he
also became Chairman of the Board of Directors.
Prior to joining the Company, Mr. Horowitz
served as Corporate Vice President and
President of the Americas of AMP Incorporated
("AMP"), a high technology electric connector
and interconnection systems company, since
September 1994. Mr. Horowitz also serves as a
director of Aerovox Incorporated and
Superconductor Technologies, Inc.
W. Barnes Hauptfuhrer ...46 Mr. Hauptfuhrer has been a director of the
Company since May 1998. Mr. Hauptfuhrer has
served as Co-Head of Capital Markets for First
Union Corporation, a financial services
corporation, since January 2000. Mr.
Hauptfuhrer previously served as Co-Head of
Investment Banking for First Union from January
1999 to December 1999, and prior to that time
he served as a Managing Partner of First Union
Capital Partners, a private equity investment
group within First Union, since 1988.
5
BOARD MEETINGS AND COMMITTEES
During 2000, the Board of Directors held five meetings and acted by written
consent in lieu of a meeting once. Each incumbent director attended at least 75%
of the aggregate number of meetings of the Board of Directors and the Committees
of which such director was a member during the last year.
At the March 2001 Board meeting, Ms. Neuman and Messrs. Duncan and Evans
were appointed to serve as members of the Compensation Committee. The
responsibilities of the Compensation Committee are described under "Compensation
Committee Report on Executive Compensation." In 2000, Ms. Neuman and Messrs.
Hauptfuhrer and Evans served as members of the Compensation Committee of the
Board of Directors. The Compensation Committee held two meetings and acted by
written consent in lieu of a meeting once during 2000.
Messrs. Horowitz, Hauptfuhrer and Ver Hagen 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 the
Company's Bylaws and within certain limits set by the Board, on matters that
require Board action between meetings of the Board of Directors. The Executive
Committee also performs the functions of a nominating committee and selects or
recommends to the Board of Directors the selection of nominees for election as
Directors of the Company and determines whether to nominate incumbent Directors
for reelection. The Executive Committee does not have any procedures established
for the consideration of nominees recommended by stockholders. The Executive
Committee held one meeting during 2000.
At the March 2001 Board meeting, Ms. Davis and Messrs. Ver Hagen and Haupt
fuhrer were appointed to serve as members of the Audit Committee. The Audit
Committee of the Board is responsible for providing independent, objective
oversight of the Company's accounting functions and internal controls. In 2000,
Ms. Davis and Messrs. Thompson and Duncan served as members of the Company's
Audit Committee. The Audit Committee held three meetings during 2000.
BOARD COMPENSATION
The Company's 1993 Stock Option Plan for Outside Directors (the "1993
Plan") provides for the granting of non-qualified stock options to independent
directors of the Company. The Company has reserved a total of 185,000 shares of
Common Stock for issuance pursuant to the 1993 Plan. The 1993 Plan is
administered by the Administration Committee, which is composed of all members
of the Board who are not outside directors. Under the 1993 Plan, each outside
director initially receives a non-qualified option to purchase 5,000 shares of
Common Stock on the date upon which such person first becomes a director. In
addition, each outside director is automatically granted a non-qualified option
to purchase 1,000 shares of Common Stock on each anniversary of such director's
election to the Board. Moreover, the Administration Committee may grant
additional options at its discretion and in lieu of other compensation otherwise
payable to the outside directors.
Options granted under the 1993 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 1993 Plan. No option under the 1993 Plan is
transferable or assignable by the non-employee director other than by the laws
of descent and distribution or to such director's spouse, lineal descendant,
lineal ancestors, a trust for the benefit of such persons or a partnership or
limited liability company whose only partners or members are the non-employee
director and/or such persons. The exercise price of each option under the 1993
Plan is equal to the fair market value (as defined in the 1993 Plan) of the
Common Stock on the date of grant. Options granted under the 1993 Plan upon
initial election to the Board vest at the rate of 33 1/3% per year. Options
which are granted upon the anniversary dates of such election vest immediately.
Unless sooner terminated, the 1993 Plan will terminate in 2003.
Employee directors do not receive additional compensation for serving on
the Board of Directors. In the past, the non-employee directors received a
quarterly cash retainer of $5,000 for service on the Board. Effective January 1,
2000, the non-employee directors began receiving an annual stock option
6
grant in lieu of the quarterly cash retainers. This change further aligns the
Board of Directors' interests with the stockholders and ties the Board of
Directors' financial rewards for serving on the Board to those of the
stockholders.
The stock option grants in lieu of retainers are made in accordance with
the 1993 Plan and are made at fair market value (as defined in the 1993 Plan) on
the date of the grant, vesting immediately and expiring after ten years. The
value assigned to such grants is based upon a modified Black-Scholes model and
equated to $25,000 in 2000 and $30,000 in 2001. The grants resulted in each
non-employee director receiving, in 2000, 5,400 stock options on January 20,
2000, (except for Mr. Ver Hagen then Chairman of the Board, who received twice
that amount) and, in 2001, 7,610 stock options on January 2, 2001, (except for
Mr. Thompson who received half the amount given his pending retirement from the
Board). Each non-employee director continues to receive $1,000 for each and
every Board or committee meeting such director attends, and an additional $1,000
for each Board or committee meeting such director chairs. In addition, Mr.
Duncan, who serves as lead director, receives an additional $1,000 per Board
meeting attended for serving in that capacity.
In addition to the standard compensation program outlined above, Mr. Ver
Hagen was paid an additional $6,000 in 2000 for consulting services provided to
the Company beyond his regular duties as a director and Chairman of the Board.
7
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to or accrued on
behalf of the Chief Executive Officer of the Company during 2000 and the other
persons who were serving as executive officers of the Company at December 31,
2000 and whose total annual salary and bonus exceeded $100,000 for that year
(collectively, the "Named Executive Officers") for services rendered in the
years ended December 31, 2000, 1999, and 1998.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM INCENTIVE AWARDS
----------------------------------- -------------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSTION YEAR SALARY BONUS COMPENSATION(A) AWARDS(B)OPTIONS (SHARES)COMPENSATION(C)
- ------------------------- ------ --------- ---------- -------------- --------- -----------------------------
Dennis Horowitz .......... 2000 $543,000 $140,000 $ -- $228,273 85,000 $ 63,680
Chairman, President and 1999 527,347 42,300 77,074 -- 60,000 44,677
Chief Executive Officer 1998 373,880 50,000 146,930 306,563 125,000 490
James E. Deason .......... 2000 244,372 86,420 -- 63,411 16,600 27,307
Executive Vice President, 1999 238,248 -- 11,413 -- 21,000 20,556
Chief Financial Officer 1998 218,994 20,000 8,550 41,795 17,000 6,341
and Secretary and Director
Keith I. Weil ........... 2000 209,800 68,825 -- 77,108 22,300 15,966
Senior Vice President, 1999 201,137 8,100 157,953 -- 15,000 12,397
Tube Products 1998 16,667 -- 14,370 -- 15,000 182,492
Johann R Manning, Jr. ... 2000 178,677 62,350 -- 66,724 13,400 12,919
Senior Vice President, 1999 171,264 8,600 18,295 -- 18,000 10,406
Human Resources and 1998 88,443 10,000 50,764 27,877 6,000 2,415
General Counsel
- -----------------
(a) These amounts include reimbursement for relocation and tax-related expenses
thereto ($62,000 in 1999 and $139,718 in 1998 for Mr. Horowitz; $148,565 in
1999 and $13,695 in 1998 for Mr. Weil; and $7,211 in 1999 and $45,239 in
1998 for Mr. Manning).
(b) Amount of restricted stock awards based on market value on date of grant.
Fifty percent of the shares vest on each of the first and second
anniversaries of the date of grant. In the event that any dividends are paid
with respect to the Common Stock in the future, dividends will be paid on
the restricted stock at the same rate. As of December 31, 2000, the number
of shares of restricted stock awarded to Messrs. Horowitz, Deason and
Manning for the 1998 grant was 15,000, 2,045 and 1,364, respectively, and
the value of those shares as of December 31, 2000 was $179,850, $24,520 and
$16,354, respectively. As of December 31, 2000, the number of shares of
restricted stock awarded to Messrs. Horowitz, Deason, Weil and Manning for
the 2000 grant was 15,241, 4,174, 5,282 and 4,579, respectively, and the
value of those shares as of December 31, 2000 was $182,740, $50,046, $63,331
and $54,902, respectively.
(c) The 2000 amounts include 401(k) matching contributions made by the Company
for Messrs. Horowitz, Deason, Weil and Manning of $7,721, $6,596, $6,411 and
$5,712, respectively, and the present value costs of the Company's portion
of 2000 premiums for split-dollar life insurance above the term coverage
level provided generally to salaried employees for Messrs. Horowitz, Deason,
Weil and Manning of $55,959, $20,711, $9,555 and $7,207, respectively.
Additionally, the 1998 amount for Mr. Weil includes a tax-adjusted incentive
payment to accept employment with the Company, which would have been
repayable to the Company by Mr. Weil if he had left the Company within a
specified time frame.
8
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the stock option grants
made to the Named Executive Officers during the fiscal year ended December 31,
2000.
POTENTIAL REALIZABLE VALUE AT
ASSUMED RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERM(B)
---------------------------------------
INDIVIDUAL GRANTS 5% 10%
--------------------------------------------- ------------------- -------------------
NUMBER OF PERCENT OF
SHARES OF TOTAL
COMMON OPTIONS
STOCK GRANTED EXERCISE
UNDERLYING TO PRICE PRICE PRICE
OPTIONS EMPLOYEES PER EXPIRATION PER AGGREGATE PER AGGREGATE
NAME GRANTED(A) IN 2000 SHARE DATE SHARE VALUE SHARE VALUE
- ------- --------- ---------- -------- --------- ------ ---------- ------- ----------
Dennis J. Horowitz ......... 85,000 21.59% $13.69 1/20/2010 $22.30 $731,680 $35.50 $1,854,220
James E. Deason ............ 16,600 4.22 13.69 1/20/2010 22.30 142,893 35.50 362,118
Keith I. Weil .............. 22,300 5.66 13.69 1/20/2010 22.30 191,958 35.50 486,460
Johann R. Manning, Jr. ..... 13,400 3.40 13.69 1/20/2010 22.30 115,347 35.50 292,312
- --------------
(a) For Messrs. Horowitz, Deason, Weil and Manning, options vest in three equal
annual installments beginning on January 20, 2001.
(b) The assumed annual rates of appreciation of five and ten percent would
result in the Company's Common Stock increasing from $13.69 to $22.30 and
$35.50 per share, respectively for Messrs. Horowitz, Deason, Weil and
Manning.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
TABLE
The following table sets forth information with respect to the aggregate
number of unexercised options to purchase Common Stock granted in all years to
any of the Named Executive Officers and held by them as of December 31, 2000.
There were no stock options exercised during the year ended December 31, 2000
and no 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, 2000.
NUMBER OF SHARES VALUE OF
OF COMMON STOCK UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
SHARES OPTIONS AT DECEMBER 31,
ACQUIRED ON VALUE DECEMBER 31, 2000 2000(A)
-----------------
------------------------ ---------------------
NAME EXERCISE REALIZED VESTED UNVESTED VESTED UNVESTED
- ------ ----------- --------- --------- ---------- -------- ----------
Dennis J. Horowitz ........... -- -- 85,000 185,000 -- --
James E. Deason .............. -- -- 44,100 50,000 -- --
Keith I. Weil ................ -- -- 14,000 38,300 -- --
Johann R. Manning, Jr. ....... -- -- 8,400 29,000 -- --
- --------------
(a) For all unexercised in-the-money options, assumes a fair market value at
December 31, 2000 of $11.99 per share of Common Stock, which was the sales
price in the last transaction in the Common Stock on the New York Stock
Exchange as of that date.
9
LONG-TERM INCENTIVE PLAN - AWARDS IN THE LAST FISCAL YEAR
Effective January 1, 1999, the Company adopted the Long-Term Incentive Plan
("LTIP") for select key executives, including the Named Executive Officers.
Under the LTIP, the executives are granted a set number of restricted shares
within the first quarter of the three year cycle. Thereafter, the three year
average Return on Total Capital for the Company, based upon set targets,
determines whether the shares fail to vest, partially vest or vest completely.
The vesting, if any, shall occur as soon as practical after the close of the
final year of the cycle. For a more detailed description of the LTIP, see the
section "Compensation Committee Report on Executive Compensation," contained in
this Proxy Statement.
The following table provides information regarding awards made in 2000 to
the Named Executive Officers pursuant to the Company's Long-Term Incentive Plan.
NUMBER OF PERFORMANCE OR OTHER ESTIMATED FUTURE PAYOUTS
SHARES, UNITS OR PERIOD UNTIL UNDER NON-STOCK PRICE-BASED PLANS
-----------------------------------------
NAME OTHER RIGHTS (#) MATURATION OR PAYOUT THRESHOLD (#) TARGET (#) MAXIMUM (#)
- ------ -------------- ------------------ ------------ --------- -----------
Dennis J. Horowitz ............. 16,000 2000 - 2002 13,600 16,000 16,000
James E. Deason ................ 6,400 2000 - 2002 5,440 6,400 6,400
Keith I. Weil .................. 5,650 2000 - 2002 4,803 5,650 5,650
Johann R. Manning, Jr. ......... 4,300 2000 - 2002 3,655 4,300 4,300
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 pension 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 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 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 currently capped at $170,000 pursuant
to certain Internal Revenue Code of 1986, as amended (the "Code") 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.
In 1999, an individual Supplemental Executive Retirement Plan (the
"Individual Plan") was established for Mr. Horowitz. The Individual Plan
provides that if Mr. Horowitz remains with the Company until March 31, 2004,
which will constitute six years of service with the Company, he shall be deemed
vested with an additional six years of service and thereafter shall be credited
two years for every one year of service. Additionally, the Individual Plan
provides that if prior to August 15, 2004, the date Mr. Horowitz attains age 58,
either (i) the Company experiences a change in control or (ii) Mr. Horowitz is
terminated without cause, Mr. Horowitz will be deemed to have reached age 58 as
of the date of such change in control or termination without cause and all
benefits under the Individual Plan shall be calculated as if Mr. Horowitz met
the eligibility requirements for early retirement and was fully vested in the
benefits payable as of such date. In such case, in determining final average
compensation, upon
10
which benefits are based, it will be assumed that Mr. Horowitz continued to
receive compensation at his then current level through August 15, 2004.
The following table shows the estimated annual benefits payable upon normal
retirement at age 65 in 2001 under the Retirement Plan, Executive Plan and
Individual Plan for persons in specified remuneration and years of service
classifications.
PENSION PLAN TABLE
AGE 65 ANNUAL RETIREMENT BENEFITS IN 2001 FOR VARIOUS SERVICE PERIODS
------------------------------------------------------------------------------
FINAL AVERAGE SALARY 5 10 15 20 25 30 35
- ------------------- -------- -------- -------- -------- -------- -------- --------
125,000 ..................... 8,556 17,113 25,669 34,225 42,782 51,338 60,713
150,000 ..................... 10,431 20,863 31,294 41,725 52,157 62,588 73,838
175,000 ..................... 12,306 24,613 36,919 49,225 61,532 73,838 86,963
200,000 ..................... 14,181 28,363 42,544 56,725 70,907 85,088 100,088
250,000 ..................... 17,931 35,863 53,794 71,725 89,657 107,588 126,338
300,000 ..................... 21,681 43,363 65,044 86,725 108,407 130,088 152,588
350,000 ..................... 25,431 50,863 76,294 101,725 127,157 152,588 178,838
400,000 ..................... 29,181 58,363 87,544 116,725 145,907 175,088 205,088
450,000 ..................... 32,931 65,863 98,794 131,725 164,657 197,588 231,338
500,000 ..................... 36,681 73,363 110,044 146,725 183,407 220,088 257,588
550,000 ..................... 40,431 80,863 121,294 161,725 202,157 242,588 283,838
600,000 ..................... 44,181 88,363 132,544 176,725 220,907 265,088 310,088
650,000 ..................... 47,931 95,863 143,794 191,725 239,657 287,588 336,338
700,000 ..................... 51,681 103,363 155,044 206,725 258,407 310,088 362,588
750,000 ..................... 55,431 110,863 166,294 221,725 277,157 332,588 388,838
800,000 ..................... 59,181 118,363 177,544 236,725 295,907 355,088 415,088
850,000 ..................... 62,931 125,863 188,794 251,725 314,657 377,588 441,338
The benefits described in the table above are calculated on a straight life
annuity basis and are not subject to any reduction for Social Security or other
offset amounts.
The covered compensation of participants used to calculate the retirement
benefits described above consists of base pay, overtime, commissions and
non-incentive bonus payments which is the amount in the Salary column of the
Summary Compensation Table and year-end bonuses or incentive compensation not in
excess of one-half of base pay received in the current year. Mr. Horowitz, Mr.
Deason, Mr. Weil and Mr. Manning had compensation of $585,300, $244,372,
$217,900 and $187,277, respectively, for purposes of the above table, as of
December 31, 2000.
As of December 31, 2000, Mr. Horowitz had three years of credited service
in the Retirement Plan, Mr. Deason had six years, Mr. Weil had two years and Mr.
Manning had three years.
SEVERANCE PAY PLAN. The Company's Severance Pay Plan (the "Severance Plan")
provides benefits to all eligible salaried 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 week's pay for each full year of
continuous service, not to exceed 26 weeks. Acceptance of severance benefits
requires the execution of a general release of all claims against the Company,
except claims in accordance with the provisions of applicable benefit plans.
CHANGE IN CONTROL, SEVERANCE AND NON-COMPETITION AGREEMENTS. The Company
has entered into Change in Control, Severance and Non-Competition Agreements
("Severance Agreements") with each of the Named Executive Officers. The
Severance Agreements generally provide that (i) certain
11
payments will be made by the Company to the Named Executive Officer if his
employment is terminated or he resigns in certain circumstances, (ii) during the
term of employment and for a period of three years following termination of
employment with the Company, the Named Executive Officer will not disclose or
improperly use confidential information relating to the Company, (iii) for a
period of two years following termination of employment with the Company, the
Named Executive Officer will not solicit business from the Company's customers,
and (iv) during the term of employment and for a specified period of years
following termination of employment with the Company, the Named Executive
Officer will not compete with the Company in the United States.
The Severance Agreement with Mr. Horowitz provides that if he is terminated
for cause or resigns, other than for certain enumerated reasons, he is entitled
to receive only the severance benefits, if any, provided by the Company's
standard procedure and practice, and payment of his salary through the date of
termination or resignation. If Mr. Horowitz is terminated without cause or
resigns for one of the enumerated reasons, he is entitled to three years'
salary, plus payment for any unused vacation time for the year of termination or
resignation (all payable either in a lump sum or in periodic payments over three
years) plus continuation of his medical and disability insurance benefits until
the earlier of the expiration of 36 months or the date on which the executive is
covered under any other comparable plan. After such medical and disability
insurance coverage is exhausted, the Company will provide Mr. Horowitz access to
the medical and disability group insurance coverage available to its employees
at his expense until he attains the age of sixty-five. Mr. Horowitz is also to
be reimbursed the cost of maintaining life insurance coverage comparable to his
coverage under the Company's group life insurance plan until the earlier of 36
months or when equivalent coverage is obtained under another group life
insurance plan. In the event that Mr. Horowitz is terminated without cause or
resigns for any reason within two years of a change in control (as defined in
the Severance Agreement), he would be entitled to an additional amount equal to
forty percent of his base salary for each year that continuing payments are made
to him pursuant to the Severance Agreement, except that, in the event the
termination or resignation occurs after the first six months of the Company's
fiscal year, then he would be entitled to receive the greater of the actual
amount of the annual bonus to which he would be actually entitled to be paid
pursuant to the Company's annual bonus plan for the year in which the
termination occurred or forty percent of his base salary for that year. In those
circumstances following a change in control, Mr. Horowitz would also be entitled
to reimbursement for outplacement services utilized by him for up to one year
following his termination or resignation. Mr. Horowitz's Severance Agreement
provides that he may not compete with the Company in the United States for a
period of three years from termination of employment.
The Severance Agreements with each of Messrs. Deason, Weil and Manning
provide that if such officer is terminated for cause or he resigns other than
for certain enumerated reasons, he is entitled to only the severance benefits,
if any, provided by the Company's standard procedure and practice and payment of
his salary through the date of his termination or resignation. The Severance
Agreements with Messrs. Weil and Manning provide that if such officer is
terminated without cause or resigns for one of the enumerated reasons, or
resigns for any reason within two years following a change in control (as
defined in the Severance Agreement), he is entitled to two years salary plus
payment for any unused vacation time for that year (payable either in a lump sum
or in periodic payments over two years) plus continuation of such officer's
medical and disability insurance benefits until the earlier of the expiration of
24 months or the date on which the executive is covered under any other
comparable plan. The Severance Agreement with Mr. Deason provides that (i) if he
is terminated without cause or resigns for any reason within two years following
a change in control, he is entitled to three years' salary or (ii) if such
termination or resignation for any of the enumerated reasons occurs in any other
circumstances, he is entitled to two years' salary plus, in either case, payment
for any unused vacation time for that year (payable either in a lump sum or in
periodic payments over two or three years, as applicable) plus continuation of
his medical and disability insurance benefits until the earlier of the
expiration of 24 months (36 months for Mr. Deason in the event of a change in
control) or the date on which the executive is covered under any other
comparable plan. After such medical and disability coverage is exhausted, the
Company will provide Messrs. Deason, Weil and Manning access to the medical and
disability group
12
insurance coverage available to its employees at their expense until they attain
the age of sixty-five. The Severance Agreements for Messrs. Deason, Weil and
Manning also provide they are to be reimbursed the cost of maintaining life
insurance coverage comparable to the coverage under the Company's group life
insurance plan until the earlier of 24 months (36 months for Mr. Deason in the
event of a change in control) or when equivalent coverage is obtained under
another group life insurance plan. The Severance Agreements with each of Messrs.
Deason, Weil and Manning also provide that, in the event such officer is
terminated without cause or resigns for any reason within two years of a change
in control, he would be entitled to an additional amount equal to thirty percent
of his base salary for each year that continuing payments are made pursuant to
the Severance Agreement, except that, in the event the termination or
resignation occurs after the first six months of the Company's fiscal year, then
he would be entitled to receive the greater of the actual amount of the annual
bonus to which he would be actually entitled to be paid pursuant to the
Company's annual bonus plan for the year in which the termination occurred or
thirty percent of his base salary for that year. In those circumstances
following a change in control, each officer would also be entitled to
reimbursement for outplacement services utilized by him for up to one year
following termination or resignation. The Severance Agreements for each of
Messrs. Deason, Weil and Manning provide that such officer may not compete with
the Company in the United States for a period of two years from termination of
employment.
All the above described Severance Agreements provide that payments made
under any change in control provision of a Company compensation or benefit plan
which are subject to an "excess parachute payment" tax will be increased so that
the individual will receive a net payment equal to that which would have been
received if such tax did not apply. Certain of the Company's benefit plans also
contain change in control provisions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. In 2000, Ms.
Neuman and Messrs. Hauptfuhrer and Evans served on the Compensation Committee.
No members of the Company's Compensation Committee had any relationships which
are reportable under this section except that Mr. Evans was the Executive Vice
President, Finance and Administration Secretary and Treasurer and a director of
the Company from April 1992 to May 1994.
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 compensation of the Company's
executive officers. The Compensation Committee, which is comprised of three
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
from time to time retains management and compensation consulting firms 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, retain and motivate key executives, and to reward
performance by those executives that benefits the stockholders. The primary
elements of executive and senior officer compensation are base salary, annual
cash bonus awards, long-term incentive compensation awards, and stock option and
restricted stock awards. Base salary is based on factors such as the individual
executive or senior officer's level of responsibility and comparison to similar
positions in the Company and in comparable companies. Annual cash bonus awards
are generally based on the Company's performance measured against the attainment
of financial and other objectives established annually by the Board of
Directors, and on achieving individual performance objectives. Long-term
incentive awards, which are paid in the form of restricted stock and stock
option awards, are intended to align the executive or senior officer's interests
with those of the stockholders in promoting the long-term growth of the Company,
and are determined based on the executive or senior officer's salary, level of
responsibility, number of awards previously
13
granted, competitive benchmarks established in comparisons to similarly situated
companies, 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 and certain 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
within the Company and in comparable companies. The specific objectives for each
executive or designated senior officer (other than the CEO) are set by 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 and the Chairman of the
Board review and establish a base salary, which is influenced primarily by the
Compensation Committee's and Chairman of the Board's assessment of the CEO's
performance and the Compensation Committee's and the Chairman of the Board'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. In future years, the chairman of the
Compensation Committee will recommend to the Compensation Committee the CEO's
base salary. The Compensation Committee will then establish the CEO's base
salary.
BONUSES. The Compensation Committee believes that the executive officers
should be entitled to receive cash bonus awards based upon both individual
achievement as well as the financial performance of the Company. Pursuant to the
Company's annual management bonus plans, annual cash bonus objectives are more
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, capital expenditure plans and other factors developed by
management and then approves the objectives for the year and sets financial
targets. The Compensation Committee then incorporates these targets into the
bonus plans. Thresholds are then derived below which no cash bonus would be
paid, except for that portion tied to individual performance. Performance
factors are considered, such as attainment of objectives in financial
performance, product development, market share, representation of the Company at
analyst and investor meetings, development of management personnel, individual
objectives and other considerations.
In measuring those objectives with respect to the CEO, the Compensation
Committee assessed such factors as executive management skills, investor
relations, leadership, company performance in the context of market conditions,
and strategic planning and development.
LONG-TERM INCENTIVE PLANS, STOCK OPTIONS AND RESTRICTED STOCK AWARDS.
Long-term incentive plans have been established by the Compensation Committee in
consultation with senior management and with compensation consultants and the
CEO. Selected senior executives designated by the CEO, and approved by the
Compensation Committee, are eligible for awards under the plans based upon the
Company's return on total capital measured over a three-year period. Performance
objectives for all participants (including the CEO) under the long-term
incentive plans are based upon an incremental scale dependent upon achieving the
specified target return rate. Payments under the plans may be in cash,
restricted stock or a combination of cash and restricted stock at the discretion
of the Compensation Committee.
Stock options and restricted stock awards are an integral part of each
executive or senior officer's compensation and are intended to provide an
incentive to continue as employees of the Company over the long term, and to
align the interests of the executive or senior officer with those of the
stockholders by providing a stake in the Company. All equity based awards for
management are generally granted pursuant to the Company's 1993 Equity Incentive
Plan (the "Equity Plan"). Grants of stock options to participants generally are
made at fair market value on the date of the grant, vest over a period of three
14
years, and expire after ten years; restricted stock awards, granted other than
under the Long-Term Incentive Plan, generally vest over a two year period of
time. In making grants of equity awards, 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 or senior officer's contributions to the
Company, scope of responsibilities, strategic and operational goals, salary and
number of unvested options and other equity awards.
In determining equity based awards for the CEO, the Compensation Committee
weighed all of the above factors. However, in recognition of the CEO's critical
role in developing strategies for the long-term benefit of the Company, awards
may be granted that are greater than may be indicated by comparisons of relative
salary amounts. Stock options and restricted stock are important elements in
attracting and retaining capable executives at all levels, and this is
particularly so in the case of the CEO.
SUMMARY. In 2000, the range of performance metrics set by the Board of
Directors, and administered by the Compensation Committee for bonus pay-out,
were achieved given the performance of the Company in 2000 and the individual
performance of certain executives and senior officers (including the CEO). As a
result, cash bonuses were awarded as noted within the Summary Compensation Table
and also awarded was a mid-year grant of restricted stock. Additionally, and as
discussed in last year's proxy, the Compensation Committee made restricted stock
awards in January of 2000 to certain executive and senior officers (including
the CEO) based upon the desire to further align stockholder and executive
interests, to continue to motivate key executives and to provide a long term
incentive for executives to continue as employees of the Company. Based on
available information, the Compensation Committee believes that the executive
compensation policies and programs described in this report serve the interests
of stockholders and the Company, the Company's level of base salaries is
competitive, and the Company's bonus programs will cause bonus levels to be
competitive as well. The Compensation 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
Gail O. Neuman
Thomas P. Evans
W. Barnes Hauptfuhrer
- -----------------
1 Due to the historical compensation levels of the Company's executive
officers, the Compensation Committee has not yet formulated a policy on
qualifying executive officer compensation for tax deductibility under
Section 162(m) of the Code. The Compensation Committee will continue to
monitor this issue with a view towards maximizing compliance with Section
162(m) while maintaining the flexibility to provide competitive compensation
even if a portion of such compensation was rendered nondeductible by reason
of Section 162(m).
15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no transactions with management and others, business
relationships, indebtedness of management to the Company or transactions with
promoters that are required to be disclosed in this Proxy Statement.
COMPANY STOCK PRICE PERFORMANCE
Set forth below is a line graph comparing the five-year cumulative total
stockholder return on the Common Stock since December 31, 1995, with the
cumulative total stockholder return of the S&P Industrials Index, the NYSE
Composite Index and the Russell 2000 Index, assuming reinvestment of any
dividends.
COMPOSITE PRICE CHART
[PERFORMANCE GRAPH]
TOTAL CUMULATIVE RETURNS
12/31/95 2/31/96 12/31/97 12/31/98 12/31/99 12/31/00
------- ------ ------- ------- ------- -------
Wolverine Tube, Inc. ............. 100 94 83 56 38 32
S&P Industrial ................... 100 121 155 205 255 212
NYSE Compostie ................... 100 119 155 181 181 199
Russel 2000 ...................... 100 115 138 134 134 153
16
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 of
1934, as amended (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, 2000, the Section 16(a) filing
requirements were complied with by all incumbent executive officers, directors
and director nominees and beneficial holders of more than 10% of the Common
Stock during the year.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board reviews and approves the scope of the
audit performed by the Company's independent auditors and the Company's
accounting principles and internal accounting controls. The Audit Committee is
composed of three independent directors, and operates under a written charter
adopted and approved by the Board of Directors. Each of the members of the Audit
Committee is independent as defined under the New York Stock Exchange listing
standards. A copy of the Audit Committee Charter is attached to this Proxy
Statement as Appendix A.
The Audit Committee has reviewed and discussed the audited financial
statements of the Company for the year ended December 31, 2000 (the "Audited
Financial Statements") with management of the Company and the Company's
independent auditors. In addition, we have discussed with Ernst & Young LLP, the
independent auditors of the Company, the matters required by Codification of
Statements on Accounting Standards No. 61 ("SAS 61").
The Audit Committee also has received the written report, disclosure and
the letter from Ernst & Young LLP required by the Independence Standards Board
Statement No. 1, and we have discussed the written report with Ernst & Young LLP
and its independence from the Company. We also have discussed with management of
the Company and Ernst & Young LLP such other matters and received such
assurances from them as we deemed appropriate.
Based on the foregoing review and discussions and relying thereon, we have
recommended to the Company's Board of Directors the inclusion of the Audited
Financial Statements in the Company's Annual Report for the year ended December
31, 2000 on Form 10-K, to be filed with the Securities and Exchange Commission.
The Audit Committee
Chris A. Davis
John L. Duncan
Charles E. Thompson
17
PROPOSAL TWO - 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, 2001, 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 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. Representatives of the firm of Ernst & Young LLP are expected to
be present at the Annual Meeting and will have the opportunity to make a
statement if they so desire and be available to respond to appropriate
questions. THE BOARD RECOMMENDS VOTING "FOR" THIS PROPOSAL.
AUDIT FEES
The Company's independent auditors, Ernst & Young LLP, billed the Company
approximately $282,000 for professional services rendered for the audit of the
Company's annual financial statements in 2000 and for the review of the
Company's financial statements contained in the Company's Forms 10-Q for 2000.
ALL OTHER FEES
The Company's independent auditors billed the Company approximately
$587,000 in 2000 for all other services performed in 2000 in addition to the
fees disclosed above. Such services included audit related services of
approximately $260,000 and non-audit related services of approximately $327,000.
Audit related services generally included fees for pension and statutory audits,
business acquisitions, accounting consultation and assistance with issues
relating to the Securities and Exchange Commission.
The Company's Audit Committee considered whether the provision of the
services of Ernst & Young LLP, other than the audit services described above
under "Audit Fees," was compatible with maintaining such accounting firm's
independence.
PROPOSAL THREE - APPROVAL AND ADOPTION OF THE COMPANY'S
2001 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
On March 22, 2001, the Board of Directors of the Company adopted a 2001
Stock Option Plan for Outside Directors of the Company (the "2001 Plan") to
provide for the issuance of options for the purchase of no more than 250,000
shares of Common Stock. The purposes of the 2001 Plan are to promote the
long-term success of the Company by creating a long-term mutuality of interests
between non-employee directors and the 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 who are not employees of the Company to serve as directors
of the Company. The Company currently has in place the 1993 Plan, which was last
amended in March 2001 and which terminates in 2003.
The provisions of the 2001 Plan 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 2001 Plan as proposed, a copy of which is attached to this
Proxy Statement as Appendix B.
ADMINISTRATION OF THE 2001 PLAN
The 2001 Plan is administered by the members of the Board of Directors who
are employee directors (the "Administration Committee").
18
ELIGIBLE PARTICIPANTS IN THE 2001 PLAN
All non-employee directors are eligible to receive awards under the 2001
Plan. There are currently seven directors eligible to participate in the 2001
Plan.
ISSUANCE OF OPTIONS
A total of 250,000 shares of Common Stock has been reserved for issuance
under the 2001 Plan.
Unless otherwise determined by the Administration Committee, each
non-employee director receives an option to purchase 5,000 shares of Common
Stock on the date of such individual's initial election or appointment to the
Board of Directors (the "Initial Option"). On each anniversary of the
non-employee directors' election to the Board of Directors, 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"). Further, each non-employee
director may be granted additional options in lieu of any retainer or other
compensation payable to such director (the "Additional Options").
Subject to the expiration or earlier termination, the Initial Option shall
vest at the rate of 33 1/3% per year. The Subsequent Option and Additional
Options are fully vested on the date of grant unless the Administration
Committee determines otherwise. All options under the 2001 Plan terminate on the
earlier of the tenth anniversary of the date of grant, the first anniversary of
the date of such non-employee director's resignation, removal or other
termination (or such later date as the Administration Committee may determine),
or the date of such non-employee director's termination for cause. No option
under the 2001 Plan is transferable or assignable by the non-employee director
other than by the laws of descent and distribution or to such director's spouse,
lineal descendant, lineal ancestors, a trust for the benefit of such persons or
a partnership or limited liability company whose only partners or members are
the non-employee director and/or such persons. The options may be exercised
during the lifetime of the non-employee director, only by the non-employee
director or a permitted transferee, or, in the event of the director's death, by
a beneficiary designated by the non-employee director, provided that the option
has not been terminated.
The exercise price of any option granted to a non-employee director shall
be equal to the fair market value (as defined in the 2001 Plan) of the Common
Stock on the date of grant. The option exercise price is payable in cash,
previously owned shares of Common Stock or a combination thereof. The terms and
provisions of an option will be set forth in an option certificate.
ABILITY OF EXERCISE OPTIONS
Options are fully exercisable (subject to the vesting requirements) until
termination of the option. However, in the event of a change in control of the
Company (as defined in the 2001 Plan), all options shall be immediately
exercisable. No option is exercisable, and no transfer of shares may be made to
a non-employee director, unless a registration statement has been filed or the
Board determines that such registration is not required. Further, if the Board
should determine that the listing, registration or qualification of the
underlying Common Stock is necessary as a condition of the granting of options
or delivery of shares, such options may not be granted or exercised unless such
listing, registration or qualification shall have been obtained. If the Board
should determine at any time 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 otherwise.
ADJUSTMENT OF SHARES
In the event of a merger, consolidation, recapitalization,
reclassification, stock dividend, distribution of 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 of shares of Common Stock granted or authorized to be
granted under the 2001 Plan.
19
AMENDMENTS TO THE 2001 PLAN
The Board of Directors of the Company can alter, amend, suspend or
terminate the 2001 Plan at any time. However, the provisions of the 2001 Plan
regarding eligibility to participate or the timing or amount of grants cannot be
amended more than once every six months other than to make changes required by
Federal income tax laws, the Employee Retirement Income Security Act of 1974, or
any rules or regulations thereunder. Further, any amendment which must be
approved by the stockholders of the Company shall not be effective until such
approval is obtained. Any amendment which must be approved by the stockholders
of the Company in order to maintain the 2001 Plan's qualification under Rule
16b-3(d)(2) of the Exchange Act shall not be effective unless such stockholder
approval is obtained in compliance with such rule.
TERMINATION OF THE 2001 PLAN
Unless earlier terminated, the 2001 Plan shall terminate on the tenth
anniversary of the effective date of the 2001 Plan. No further options shall be
granted after that time, although awards granted prior to such date may extend
beyond that date.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain of the Federal income tax
consequences of certain transactions under the 2001 Plan based on Federal income
tax laws in effect on January 1, 2001. This summary is not intended to be
complete and does not describe state or local tax consequences.
CONSEQUENCES TO PARTICIPANTS. Options granted under the 2001 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).
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.
AWARDS TO BE GRANTED UNDER 2001 PLAN
Under the 2001 Plan, option awards will be made to non-employee directors
only. Set forth in the Proxy Statement under the section entitled "Board
Compensation" is information concerning the amount of grants made in 2000 to
non-employee directors under the 1993 Plan. The exact amount of the option
awards to be made in the future under the 2001 Plan is in the discretion of the
Administration Committee. As a result of the discretionary nature of the 2001
Plan, it is not possible to state the exact amount of option awards that will be
made under the 2001 Plan.
EFFECTIVE DATE OF THE 2001 PLAN
The 2001 Plan shall not take effect unless it is approved by a majority
vote of the Company's Common Stock. If the 2001 Plan is approved at the Annual
Meeting, it will be effective immediately.
THE BOARD RECOMMENDS VOTING "FOR" THIS PROPOSAL.
20
OTHER BUSINESS
The Company knows of no other matters to be submitted at the Annual
Meeting. By submitting the Proxy, the stockholder authorizes the persons named
on the Proxy to use their discretion in voting on any matter brought before the
Annual Meeting.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT THE NEXT ANNUAL MEETING
In order for a stockholder proposal to be considered for inclusion in the
proxy statement for the Company's 2002 Annual Meeting of Stockholders, such
proposal must be received by the Company at its principal executive office no
later than December 13, 2001. In accordance with the rules of the Securities and
Exchange Commision, the Company may exclude from the proxy statement any
proposals that are not timely. In accordance with the Company's Bylaws, in order
for a stockholder proposal to be brought before the annual meeting, a proposal
must be received by the Company no later than 60 days prior to the annual
meeting. However, if the Company does not publicly announce the date of the
annual meeting at least 75 days before such meeting, a stockholder has 10 days
from the date of the public announcement to deliver any proposal to the Company.
By Order of the Board of Directors
/s/ Dennis Horowitz
-----------------------------------------------
Dennis Horowitz
Chairman, President and Chief Executive Officer
April 12, 2001
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APPENDIX A
WOLVERINE TUBE, INC.
AUDIT COMMITTEE CHARTER
STATEMENT OF POLICY
The Audit Committee of the Board of Directors shall assist the directors in
fulfilling their oversight responsibilities. The Audit Committee will review the
financial reporting process, the system of internal controls, the audit process
and the Company's process for monitoring compliance with laws and regulations.
In performing its duties, the Audit Committee will maintain free and open
communication between the directors, the independent auditors, the internal
auditors and the financial management of the Company.
ORGANIZATION
The Audit Committee shall be comprised of at least three directors who are
independent of management and the Company. Members of the Audit Committee shall
be considered independent if they have no relationship to the Company that, in
the opinion of the Board, may interfere with the exercise of their independence
from management and the Company. All Audit Committee members will have the
ability to read and understand financial statements and at least one member will
have or have had prior experience in accounting or related financial management.
The audit committee will meet a minimum of twice a year.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible in order to be able to best react
to changing conditions and to ensure that the corporate accounting and reporting
practices of the Company are in accordance with all requirements and are of the
highest quality.
In carrying out these responsibilities, the Audit Committee will:
o Obtain the approval of the full Board of Directors of this Charter,
and review and reassess this Charter at least annually or as
conditions dictate.
o Review and recommend to the directors the independent auditors to
be selected to audit the financial statements of the Company and
its divisions and subsidiaries.
o Have a clear understanding with the independent auditors that they
are ultimately accountable to the Board of Directors and the Audit
Committee, as the shareholders' representatives, who have the
ultimate authority in deciding to engage, evaluate and, if
appropriate, terminate their services.
o Review and concur with management's appointment, termination or
replacement of the Director, Internal Audit and, if applicable, any
outsourced internal audit functions.
o Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit, including the
timing of the audit, the procedures to be utilized and the
adequacy of the independent auditors' compensation. At the
conclusion of the audit process, review with the independent
auditors their findings.
o Review with the independent auditors the performance of the
Company's internal auditor and the financial and accounting
personnel, as well as the adequacy and effectiveness of the
accounting and financial controls of the Company. Elicit any
recommendations for the improvement of such internal controls or
particular areas where new or more detailed controls or procedures
are desirable.
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o Review communications received by the Company from regulators and
other legal and regulatory matters that may have a material effect
on the financial statements or on the Company's compliance
policies.
o Review the activities and organizational structure of the internal
audit function of the Company, including the independence and
authority of its reporting obligations, the proposed audit plans
for the coming year and the coordination of such plans with the
independent auditors.
o Inquire of management, the internal auditors and the independent
auditors about significant areas of risk or exposure and assess the
steps management has taken to minimize such risks.
o Receive prior to each meeting a summary of findings from completed
internal audit reviews and a progress report on the proposed
internal audit plan.
o Review the financial statements contained in the annual report to
shareholders and other SEC filings with management and the
independent auditors to determine that the independent auditors are
satisfied with the disclosure and content of the financial
statements to be presented to the shareholders. Review with
financial management and the independent auditors the results of
their analysis of significant financial reporting issues and
practices, including changes in or adoptions of accounting
principles and disclosure practices, and discuss any other matters
required to be communicated to the Committee by the auditors. Also
review with the financial management and the independent auditors
their judgments about the quality, not just acceptability, of
accounting principles and the clarity of the financial disclosure
practices used or proposed to be used and, in particularly, the
degree of aggressiveness or conservatism of the Company's
accounting principles and underlying estimates and other
significant decisions made in preparing the financial statements.
o Management and the independent auditors will review with the
Committee Chairperson and the Director of Internal Auditing the
interim financial reports before they are filed with the Securities
and Exchange Commission or other regulators.
o Provide opportunity for the internal and independent auditors to
meet with the members of the Audit Committee without members of
management present. Among the items to be discussed in these
meetings are the independent auditors' evaluation of the Company's
financial, accounting and auditing personnel and the cooperation
that the independent auditors received during the course of the
audit.
o Review accounting and financial, human resources and succession
planning within the Company.
o Report the results of the annual audit to the Board of Directors
and, if requested by the Board, invite the independent auditors to
attend the full Board of Directors' meeting to assist in reporting
the results of the annual audit or to answer the directors'
questions.
o On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional
services, as required by Independence Standards Board Standard
No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES. In addition,
review with the independent auditors the nature and scope of any
disclosed relationships or professional services and take, or
recommend that the Board of Directors take, appropriate action to
ensure the continuing independence of the auditors.
o Submit the minutes of all meetings of the Audit Committee to, or
discuss the matters discussed at each committee meeting with, the
Board of Directors.
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o Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel for this
purpose if, in its judgment, that is appropriate.
o Confirm in writing to the New York Stock Exchange annually or with
respect to any changes on the Audit Committee regarding
independence, financial capabilities and the annual review and
reassessment of the Audit Committee Charter.
o Disclose in the Company's Proxy Statement the Audit Committee
Charter and affirmation as to the Committee satisfying their
responsibilities during the year in compliance with the Charter.
The Charter will be included in the Proxy Statement every three
years or when significant amendments are made to it.
A-3
APPENDIX B
2001 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
OF WOLVERINE TUBE, INC.
ARTICLE I
PURPOSE
The purpose of the Wolverine Tube, Inc. 2001 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
"ADMINISTRATION COMMITTEE" means the committee of the Board, which is
composed of the members of the Board who are not Outside Directors, that
administers the Plan in accordance with Article VIII hereof.
"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
14.03 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 price 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 which is not intended to be an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986.
"OUTSIDE DIRECTOR" means a member of the Board who is not an employee of
the Company or any of its subsidiaries.
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ARTICLE III
SHARES AVAILABLE
Subject to the provisions of Article X of the Plan, no more than 250,000
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 be eligible to 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 AND PERIODIC GRANTS. Unless otherwise determined by the
Administration Committee, each Outside Director shall be granted the following
options: (a) each individual who initially 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"); (b) on each anniversary 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 "Periodic Options").
5.02 ADDITIONAL GRANTS. In addition to the Options granted pursuant to
Section 5.01 above, each Outside Director may be granted additional Options in
lieu of any retainer or other compensation otherwise payable to the Outside
Director (the "Additional Options").
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. Unless otherwise determined by the Administration Committee, Periodic
Options and Additional Options shall be fully vested when granted.
6.02 EXERCISABILITY. Options 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, or such later date as the Administration
Committee may determine, 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 By-Laws of the
Company.
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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 TRANSFERABILITY. 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 (i) 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, (ii) transferring Options to a revocable trust
under circumstances where the grantor Outside Director is the trustee or
co-trustee of such revocable trust and the trust beneficiaries are limited to
the grantor Outside Director and, in the event of the Outside Director's death,
the grantor's spouse, lineal descendants and lineal ancestors, or (iii)
transferring Options to, or for the benefit of, the Outside Director's Immediate
Family (including, without limitation, to a trust for the benefit of the Outside
Director's Immediate Family or to a partnership or limited liability company
whose only partners or members are the Outside Director and/or the Outside
Director's Immediate Family). The transferee shall remain subject to all the
terms and conditions applicable to the Option prior to such transfer. The term
"Immediate Family" shall mean the Outside Director's spouse, children, and
grandchildren (and, for those purposes, shall also include the Outside
Director). Written notice of the Outside Director's intent to transfer Options
under this Section 6.07 must be delivered to the Administration Committee prior
to such transfer. Any transfer is subject to such limits as the Administration
Committee may establish.
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.
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ARTICLE VIII
ADMINISTRATION
The Plan shall be administered by the Administration Committee, which shall
be composed of all of the members of the Board who are not Outside Directors.
All questions or 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 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 IX
AMENDMENTS AND TERMINATION
9.01 AMENDMENTS. Subject to Section 9.02 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(d)(2) 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.
9.02 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.
9.03 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, the tenth anniversary of the effective date of the Plan, but
awards granted prior to such date may extend beyond that date.
ARTICLE X
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.
ARTICLE XI
NO RIGHT TO REFLECTION
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.
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ARTICLE XII
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 XIII
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 XIV
MISCELLANEOUS
14.01 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.
14.02 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.
14.03 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 in 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 in 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 14a-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
B-5
(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
(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.
14.04 SECTION 16. It is intended that the Plan and any grants made to a
person subject to Section 16 of the Securities Exchange Act of 1934 meet all of
the requirements of Rule 16b-3. If any provision of the Plan or any award
hereunder would disqualify the Plan or such award, or would otherwise not comply
with Rule 16b-3, such provision or award shall be construed or deemed amended to
conform to Rule 16b-3.
14.05 PAYMENT OF TAXES. An Outside Director shall, no later than the date
as of which the value of any portion of the Option first becomes includable in
the Outside Director's gross income for federal income tax purposes, make
arrangements satisfactory to the Administration Committee regarding payment of
any federal, state, local or FICA taxes of any kind required by law to be
withheld with respect to the Option.
14.06 EFFECTIVE DATE OF PLAN. The Plan shall be effective on the date it
is approved by a majority vote of the holders of the Company's Common Stock.
14.07 SEVERABILITY. If any provision of this Plan shall for any reason be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision hereby, and this Plan shall be construed as if
such invalid or unenforceable provision were omitted.
14.08 SUCCESSORS AND ASSIGNS. This Plan shall inure to the benefit of and
be binding upon each successor and assign of the Company. All obligations
imposed upon an Outside Director, and all rights granted to the Company
hereunder, shall be binding upon the Outside Director's heirs, legal
representatives, successors and assigns.
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FOLD AND DETACH HERE
- --------------------------------------------------------------------------------
WOLVERINE TUBE, INC.
200 CLINTON AVENUE WEST, SUITE 1000, HUNTSVILLE, ALABAMA 35801
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder of Wolverine Tube, Inc. ("Wolverine") hereby
appoints Dennis Horowitz and James E. Deason, and each of them individually,
with full power of substitution, as Proxies of the undersigned, and hereby
authorizes them to represent and to vote and act for the undersigned, at the
Annual Meeting of Stockholders of Wolverine to be held on Wednesday, May 23,
2001, at 8:30 a.m., local time, at The Benjamin Hotel, 125 East 50(th) Street,
New York, New York 10022, and at any adjournment or postponement thereof,
according to the number of votes which the undersigned is now, or may then be,
entitled to cast. This proxy revokes all prior proxies given by the undersigned
with respect to the matters covered hereby. The undersigned acknowledges receipt
of the Proxy Statement, dated April 12, 2001, and the related Notice of Annual
Meeting of Stockholders.
The Board of Directors recommends that you vote FOR the following proposals.
1. Election of Directors:
Nominees: John L. Duncan and Jan K. Ver Hagen
[ ] VOTE FOR all nominees listed, [ ] VOTE WITHHELD
except as marked to the contrary above for all nominees
INSTRUCTION: TO WITHHOLD YOUR VOTES FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE
THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.
2. Ratify the appointment of Ernst & Young LLP as the independent auditors of
Wolverine for the fiscal year ending December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approve and Adopt Wolverine's 2001 Stock Option Plan for Outside Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(continued on reverse side)
(continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER AND AT THE DISCRETION OF THE PROXY HOLDERS
AS TO ANY OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1, PROPOSAL 2 AND
PROPOSAL 3 AND AT THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER BUSINESS
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
Dated: , 2001
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Signature
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Signature
Please sign exactly as name (s) appear (s) herein. When
shares are held by joint tenants, both should sign. When
signing as attorney-in-fact, executor, administrator, or
trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president
or other authorized corporate officer. If a partnership,
please sign the partnership name by authorized person(s).
PLEASE MARK, DATE AND SIGN YOUR NAME AS IT APPEARS ON THIS CARD AND
RETURN IN THE ENCLOSED ENVELOPE