SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
WOLVERINE TUBE, INC
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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/ / Fee paid previously with preliminary materials.
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0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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[LOGO] WOLVERINE TUBE, INC.
WOLVERINE TUBE, INC.
200 CLINTON AVENUE WEST, SUITE 1000
HUNTSVILLE, ALABAMA 35801
April 9, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Wolverine Tube, Inc. on Wednesday, May 14, 2003 at 8:30 a.m., local time, at
The American Conference Centers, 780 Third Avenue, New York, New York 10017. We
hope that many of Wolverine'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 Wolverine. The Board of Directors
and the management team look forward to seeing you at the meeting.
Sincerely,
/s/ Dennis J. Horowitz
Dennis J. 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 14, 2003
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 14, 2003 at
8:30 a.m., local time, at The American Conference Centers, 780 Third Avenue, New
York, New York 10017 for the following purposes:
1. To elect three (3) Class I directors to each serve a three-year term.
2. To ratify the appointment of Ernst & Young LLP as the independent
auditors of Wolverine for the fiscal year ending December 31, 2003.
3. To approve and adopt the Wolverine Tube, Inc. 2003 Equity Incentive
Plan.
4. To transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on March 31, 2003 are
entitled to notice of, and to vote at, the meeting and any adjournments thereof.
By Order of the Board of Directors
/s/ James E. Deason
James E. Deason Secretary
Huntsville, Alabama
April 9, 2003
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. of proxies for use at the Annual Meeting
of Stockholders to be held on Wednesday, May 14, 2003, at 8:30 a.m., local time,
at The American Conference Centers, 780 Third Avenue, New York, New York 10017,
or at any adjournment thereof.
INFORMATION CONCERNING THE SOLICITATION AND VOTING
GENERAL
Our principal executive offices are located at 200 Clinton Avenue West,
Suite 1000, Huntsville, Alabama 35801. Our telephone number is (256) 353-1310.
The date of this Proxy Statement is April 9, 2003, the approximate date on which
this Proxy Statement, the accompanying Proxy and the Annual Report to
Stockholders for the fiscal year ended December 31, 2002, 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
(the "Board") and the associated cost will be borne by Wolverine. We have
retained Georgeson Shareholder (the "Solicitor") to assist in the solicitation
of proxies. We will pay approximately $6,000 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 we may
reimburse them for reasonable out-of-pocket and clerical expenses incurred by
them.
RECORD DATE, VOTING AND REVOCABILITY OF PROXIES
We had outstanding on March 31, 2003 (the "Record Date"), 12,397,665 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. Our 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, we do 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 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 our Secretary 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, 2003, with
respect to the beneficial ownership of the outstanding Common Stock by (i)
stockholders known by us to own beneficially more than 5% of the outstanding
Common Stock, (ii) each director, (iii) each executive officer named in the
Summary Compensation Table herein, and (iv) all directors and executive officers
as a group. The number of shares of Common Stock outstanding as of March 31,
2003 was 12,397,665.
COMMON STOCK BENEFICIALLY OWNED
-------------------------------
NAME AND ADDRESS SHARES PERCENT
- ---------------- ------------ ----------
AXA Financial, Inc.(1). . . . . . . . . . . . . . . . . . . . . . 1,508,783 12.2%
1290 Avenue of the Americas
New York, NY 10104
Merrill Lynch & Co. Inc.(2) . . . . . . . . . . . . . . . . . . . 1,477,800 11.9
Merrill Lynch Investment Managers
ML Small Cap Value Fund
World Financial Center, North Tower
250 Vesey Street
New York, NY 10381
Ontario Teachers' Pension Plan Board(3) . . . . . . . . . . . . . 1,120,000 9.0
5650 Yonge Street
North York, Ontario M2M 4H5 Canada
Dimensional Fund Advisors(4). . . . . . . . . . . . . . . . . . . 969,500 7.8
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Mellon Financial Corporation(5) . . . . . . . . . . . . . . . . . 966,043 7.8
One Mellon Center
Pittsburgh, PA 15258
Dennis J. Horowitz(6) . . . . . . . . . . . . . . . . . . . . . . 339,601 2.7
James E. Deason(7). . . . . . . . . . . . . . . . . . . . . . . . 90,124 *
Keith J. Weil(8). . . . . . . . . . . . . . . . . . . . . . . . . 75,620 *
Jan K. Ver Hagen(9) . . . . . . . . . . . . . . . . . . . . . . . 64,511 *
Johann R. Manning, Jr.(10). . . . . . . . . . . . . . . . . . . . 59,361 *
John L. Duncan(11). . . . . . . . . . . . . . . . . . . . . . . . 55,111 *
Massoud Neshan(12). . . . . . . . . . . . . . . . . . . . . . . . 51,673 *
Thomas P. Evans(13) . . . . . . . . . . . . . . . . . . . . . . . 52,112 *
Gail O. Neuman(14). . . . . . . . . . . . . . . . . . . . . . . . 46,111 *
Chris A. Davis(15). . . . . . . . . . . . . . . . . . . . . . . . 46,111 *
W. Barnes Hauptfuhrer(16) . . . . . . . . . . . . . . . . . . . . 46,111 *
All directors and executive officers as a group (15 persons). . . 993,036 8.0%
- ----------------
* Represents less than 1%
(1) As set forth on Schedule 13G, filed with the Securities and Exchange
Commission on February 12, 2003.
2
(2) As set forth on Schedule 13G, filed with the Securities and Exchange
Commission on January 10, 2003.
(3) As set forth on Schedule 13D/A, filed with the Securities and Exchange
Commission on February 21, 2003.
(4) As set forth on Schedule 13G, filed with the Securities and Exchange
Commission on February 3, 2003.
(5) As set forth on Amendment 4 of Schedule 13G, filed with the Securities and
Exchange Commission on January 22, 2003.
(6) Includes 238,833 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
(7) Includes 67,298 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
(8) Includes 58,239 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
(9) Includes 52,511 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
(10) Includes 42,150 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
(11) Includes 50,111 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
(12) Includes 38,157 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
(13) Includes 47,111 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
(14) Includes 46,911 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
(15) Includes 46,111 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
(16) Includes 46,111 shares of Common Stock subject to options exercisable
within 60 days of March 31, 2003.
3
PROPOSAL ONE - ELECTION OF DIRECTORS
The Board has nominated Ms. Davis and Messrs. Hauptfuhrer and Horowitz to
be reelected as Class I directors, each for a three-year term expiring in 2006.
If elected, each nominee will hold office until her/his term expires and until
her/his successor is elected and qualified. Management knows of no reason why
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 THREE NOMINEES
LISTED BELOW.
INFORMATION REGARDING NOMINEES
Our Restated Certificate of Incorporation 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. Hauptfuhrer
and Horowitz; the Class II directors are Messrs. Duncan 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.
The following table sets forth certain information for each nominee, and
for each director whose term of office continues after the Annual Meeting:
NOMINEES FOR ELECTION AS CLASS I DIRECTORS WHOSE TERMS WILL EXPIRE IN 2006:
NAME AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- ---- --- -----------------------------------------------
Chris A. Davis. . . . . . . 52 Ms. Davis has been a director of Wolverine since October
1997. Since April 2002, Ms. Davis has served as the Chairman
of the Board and Chief Executive Officer of McLeodUSA
Incorporated ("McLeodUSA"), a provider of telecommunications
and related services. Ms. Davis also serves as a director
and a member of the executive committee of McLeodUSA. In
August 2001, Ms. Davis joined McLeodUSA as Chief Operating
and Financial Officer to effect a turnaround. On January 31,
2002, McLeodUSA filed for reorganization under Chapter 11 in
the U.S. Bankruptcy Court for the District of Delaware.
McLeodUSA's plan of reorganization was approved by the court
and the Company emerged from Chapter 11 on April 16, 2002.
Prior to joining McLeodUSA, Ms. Davis served as Executive
Vice President, Chief Financial and Administrative Officer
of ONI Systems Corporation ("ONI") from May 2000 through
July 2001. Prior to ONI, Ms. Davis served as Executive Vice
President, Chief Financial and Administrative Officer and a
director of Gulfstream Aerospace Corporation ("Gulfstream")
from July 1993 to July 1999, and as a Vice President of
General Dynamics Corporation after its acquisition of
Gulfstream in July 1999. Ms. Davis is a Special Limited
Partner of Forstmann Little & Co. and also serves as a
director of Cytec Industries, Inc. and Rockwell Collins,
Inc.
4
NAME AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- ---- --- -----------------------------------------------
W. Barnes Hauptfuhrer . . . 48 Mr. Hauptfuhrer has been a director of Wolverine since May
1998. Mr. Hauptfuhrer currently serves as Co-Head of the
Corporate & Investment Banking Division of Wachovia
Corporation (formerly, First Union Corporation ("First
Union")), a financial services corporation, since September
2001 and has served as Senior Executive Vice President of
Wachovia Corporation since February 2002. Mr. Hauptfuhrer
previously served as Co-Head of the Corporate & Investment
Banking Division of First Union from January 2000 to
September 2001, Co-Head of Investment Banking for First
Union from January 1999 to December 1999, and a Managing
Partner of First Union Capital Partners, a private equity
investment group within First Union from April 1988 to
December 1998.
Dennis J. Horowitz . . . . 56 Mr. Horowitz has been the President and Chief Executive
Officer and a director of Wolverine since March 1998, and in
January 2001 he also became Chairman of the Board of
Directors. Prior to joining Wolverine, Mr. Horowitz served
as Corporate Vice President and President of the Americas of
AMP Incorporated, 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.
INCUMBENT DIRECTORS WHOSE TERMS WILL EXPIRE IN 2004:
NAME AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- ---- --- -----------------------------------------------
John L. Duncan. . . . . . . 69 Mr. Duncan has been a director of Wolverine since December
1993. In October 2002, Mr. Duncan retired as President and
Chief Executive Officer of Martin Industries, Inc.
("Martin"), a position he held since June 2000. Mr. Duncan
also served as director of Martin from May 1999 through
October 2002. Martin manufactures and sells pre-engineered
fireplaces, gas heaters, gas logs and related equipment. On
December 27, 2002, Martin filed for reorganization under
Chapter 11 in the U.S. Bankruptcy Court for the Northern
District of Alabama. 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. . . . . . 65 Mr. Ver Hagen has been a director of Wolverine since January
1996 and served as the non-executive Chairman of the Board
from May 1998 until December 2000. In 2001, Mr. Ver Hagen
retired as Senior Vice President reporting to the President
of Emerson Electric Co. ("Emerson"), a manufacturer and
marketer of electronic and electrical products, a position
he had held since 1998. Prior to rejoining Emerson, Mr. Ver
Hagen was employed by United Dominion Industries, Limited 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.
5
INCUMBENT DIRECTORS WHOSE TERMS WILL EXPIRE IN 2005:
NAME AGE PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- ---- --- -----------------------------------------------
James E. Deason . . . . . . 55 Mr. Deason has been a director of Wolverine since October
1995, and Executive Vice President, Chief Financial Officer
and Secretary of Wolverine since September 1994. Prior to
joining the Company, Mr. Deason, a Certified Public
Accountant, spent 19 years with Ernst & Young LLP and was a
partner from 1988 until he joined Wolverine.
Thomas P. Evans . . . . . . 46 Mr. Evans has been a director of Wolverine since December
1995. Mr. Evans has served as the Executive Vice President
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 from
January 1999 to August 1999 and President, Emerging Markets
from March 1994 to December 1998, of Permal.
Gail O. Neuman. . . . . . . 56 Ms. Neuman has been a director of Wolverine 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.
BOARD MEETINGS AND COMMITTEES
During 2002, the Board of Directors held six meetings. 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.
Messrs. Hauptfuhrer, Horowitz and Ver Hagen currently serve as members of
the 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 our By-laws and
within certain limits set by the Board, on matters that require Board action
between meetings of the Board of Directors. The Executive Committee held one
meeting during 2002 and acted by written consent in lieu of a meeting once.
Ms. Neuman and Messrs. Duncan and Evans currently serve as members of the
Compensation Committee. The responsibilities of the Compensation Committee are
described under "Compensation Committee Report on Executive Compensation." The
Compensation Committee held two meetings during 2002.
Ms. Davis and Messrs. Hauptfuhrer and Ver Hagen currently serve as members
of the Audit Committee. The Audit Committee of the Board is responsible for
providing independent, objective oversight of Wolverine's accounting functions
and internal controls and procedures. The Audit Committee held four meetings
during 2002.
Ms. Newman and Mr. Hauptfuhrer currently serve as members of the Nominating
Committee which was established by the Board of Directors in May 2002. The
Nominating Committee is responsible for recommending to the Board of Directors
the selection of nominees for election as directors and determining whether to
nominate incumbent directors for reelection. The Nominating Committee does not
have any formal procedures established for the consideration of nominees
recommended by stockholders. The Nominating Committee did not hold any meetings
in 2002. In 2002, nominees for election as directors were nominated and approved
by the full Board of Directors.
CORPORATE GOVERNANCE
We have reviewed the provisions of the Sarbanes-Oxley Act of 2002
("Sarbanes-Oxley Act"), the proposed and final rules of the U.S. Securities and
Exchange Commission and the proposed new listing standards of the New York Stock
Exchange regarding corporate governance policies and processes.
6
In anticipation of the effectiveness or adoption of final rule changes, we are
reviewing Wolverine's corporate governance policies and practices, including the
charters of all committees of the Board. We will amend, to the extent necessary,
the standards, disclosures and charters applicable to the Board, its committees
and Wolverine as a whole as final rules are adopted and become effective.
BOARD COMPENSATION
Our 1993 Stock Option Plan for Outside Directors (the "1993 Outside
Director Plan") and 2001 Stock Option Plan for Outside Directors (the "2001
Outside Director Plan," and together with the 1993 Outside Director Plan, the
"Directors Plans") provide for non-qualified stock option grants to non-employee
directors. Under the Director Plans, each non-employee director initially
receives a non-qualified option to purchase 5,000 shares of Common Stock upon
first becoming a director, and is granted a non-qualified option to purchase
1,000 shares of Common Stock automatically on each anniversary of such
director's election to the Board. In order to further align directors' interests
with those of stockholders, in lieu of a cash retainer, each non-employee
director also receives an additional annual stock option grant under the
Director Plans with a value based upon a modified Black-Scholes model. On April
11, 2002, each non-employee director received a non-qualified stock option to
purchase 10,181 shares of Common Stock in lieu of a $30,000 cash retainer.
The Director Plans are administered by the Administration Committee, which
is composed of the members of the Board who are not outside directors. Options
granted under the Director Plans have an exercise price on the date of grant
equal to the fair market value of the Common Stock (as defined in the Director
Plans). Options granted upon initial election to the Board of Directors vest at
the rate of 33 1/3% per year, and options granted upon the anniversary dates of
such election or in lieu of cash retainers vest immediately. Director Plan
options have a term of ten years unless terminated sooner due to cessation of
director status or otherwise pursuant to the Director Plans. No option granted
under the Director Plans is transferable or assignable by the outside director
other than by the laws of descent and distribution or to certain of the
director's immediate family members or family entities. A total of 185,000
shares of Common Stock have been authorized for issuance under the 1993 Outside
Director Plan and a total of 250,000 shares of Common Stock have been authorized
for issuance under the 2001 Outside Director Plan.
The 2001 Outside Director Plan was adopted to replace our 1993 Outside
Director Plan, which expires on August 31, 2003. In 2002, stock options issued
to non-employee directors were granted under the 1993 Outside Director Plan to
the extent of the remaining shares available under that plan, and the balance of
such grants were made under the 2001 Outside Director Plan. No further option
grants may be made under the 1993 Outside Director Plan after its expiration;
however, stock options previously granted to non-employee directors under the
1993 Outside Director Plan will remain outstanding for the duration of each such
option's term. The 2001 Outside Director Plan will expire in 2011.
In 2002, each non-employee director received $1,000 for each Board or
committee meeting such director attended, and an additional $1,000 for each
Board or committee meeting such director chaired. In addition, Mr. Duncan, who
serves as lead independent director, received an additional $1,000 per Board
meeting attended for serving in that capacity. Beginning in 2003, each
non-employee director will receive $1,500 for each Board or Committee meeting
attended and an additional $1,500 for each such meeting chaired, and Mr. Duncan
will receive an additional $1,500 per Board meeting attended for serving as lead
independent director. Employee directors do not receive additional compensation
for serving on the Board.
On April 11, 2002, non-employee directors were granted replacement options
to purchase the following shares of Common Stock in exchange for eligible
options cancelled on October 2, 2001 pursuant to a voluntary stock option
exchange offer: Ms. Davis -3,000; Mr. Duncan--2,000; Mr. Evans--4,000; Mr.
Hauptfuhrer--3,000; Ms. Neuman--3,000; Mr. Ver Hagen--4,000. See "Summary of
Stock Option Exchange Offer" and "Compensation Committee Report on Executive
Compensation--Stock Option Exchange Offer."
7
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to or accrued on
behalf of the Chief Executive Officer of Wolverine during 2002 and the four most
highly compensated executive officers other than the Chief Executive Officer
serving at December 31, 2002 (collectively, the "Named Executive Officers") for
services rendered in the years ended December 31, 2002, 2001 and 2000.
SUMMARY COMPENSATION TABLE
LONG-TERM INCENTIVE AWARDS
ANNUAL COMPENSATION ----------------------------
---------------------------------- RESTRICTED COMMON STOCK
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS (A) OPTIONS (SHARES) COMPENSATION (B)
- --------------------------- ---- --------- --------- ------------- ----------- ---------------- ----------------
Dennis J. Horowitz. . . . . . 2002 $550,876 $240,000 $ -- $279,500 92,500 (c) $49,003
Chairman, President 2001 553,229 110,000 -- -- 92,000 55,908
and Chief Executive Officer 2000 543,000 140,900 -- 228,273 85,000 63,680
and Director
James E. Deason . . . . . . . 2002 233,387 41,890 -- 26,591 57,308 (c) 18,283
Executive Vice President, 2001 234,384 28,725 -- -- 17,000 23,108
Chief Financial Officer and 2000 244,372 86,420 -- 63,411 16,600 27,307
Secretary and Director
Keith I. Weil . . . . . . . . 2002 214,793 41,857 -- 24,381 32,007 (c) 8,551
Senior Vice President, 2001 215,711 26,767 -- -- 24,400 14,560
Tubing Products 2000 209,800 68,825 -- 77,108 22,300 15,966
Johann R. Manning, Jr . . . . 2002 198,633 46,617 -- 20,425 26,249 (c) 6,681
Senior Vice President, 2001 188,184 25,945 -- -- 18,000 11,469
Fabricated Products and 2000 178,677 62,350 -- 66,724 13,400 12,919
General Counsel
Massoud Neshan. . . . . . . . 2002 190,223 29,265 -- 20,743 14,472 450
Senior Vice President, 2001 191,036 21,071 36,344 (d) -- 17,000 12,779
Technology 2000 189,210 62,070 -- 47,534 12,000 14,121
- -------------------
(a) 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 also will be
paid on the restricted stock according to the same vesting schedule. As of
December 31, 2002, the number of shares of restricted stock awarded to
Messrs. Horowitz, Deason, Weil, Manning and Neshan for the 2000 grant was
15,241, 4,174, 5,282, 4,579 and 3,156, respectively, and the value of those
shares as of December 31, 2002 was $87,026, $23,834, $30,160, $26,146 and
$18,021, respectively. As of December 31, 2002, the number of shares of
restricted stock awarded to Messrs. Horowitz, Deason, Weil, Manning and
Neshan for the 2002 grant was 32,500, 3,092, 2,835, 2,375 and 2,412,
respectively, and the value of those shares as of December 31, 2002 was
$185,575, $17,655, $16,188, $13,561 and $13,773, respectively.
(b) The 2002 amounts include the present value costs of Wolverine's portion of
2002 premiums for split-dollar life insurance above the term coverage level
provided generally to salaried employees for Messrs. Horowitz, Deason,
Weil, Manning and Neshan of $47,713, $17,293, $8,188, $6,381 and $0,
respectively.
(c) Includes replacement options granted to Messrs. Horowitz, Deason, Weil and
Manning to purchase 92,500, 38,750, 15,000 and 12,000 shares of Common
Stock, respectively, on April 11, 2002 in exchange for stock options
cancelled on October 2, 2001 pursuant to a voluntary option exchange offer.
See "Summary of Option Exchange Offer" and "Compensation Committee Report
on Executive Compensation--Stock Option Exchange Offer."
(d) This amount includes reimbursement for relocation of $24,019 and an auto
allowance of $10,500.
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,
2002.
POTENTIAL REALIZABLE VALUE AT
ASSUMED RATES OF STOCK PRICE
APPRECIATION FOR OPTION TERM
----------------------------------------
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 2002 SHARE DATE SHARE VALUE SHARE VALUE
- ----- ----------- ----------- --------- ------------ ------ ---------- -------- ----------
Dennis J. Horowitz. . . 62,500* 11.0% $8.60 3/23/08 $11.52 $182,500 $15.24 $415,000
30,000* 5.3 8.60 1/21/09 12.10 105,000 16.76 244,800
James E. Deason . . . . 1,500* 0.3 8.60 9/05/04 9.48 1,320 10.41 2,715
3,750* 0.7 8.60 3/21/05 9.96 5,100 11.45 10,688
6,000* 1.1 8.60 1/25/06 10.45 11,100 12.59 23,940
6,000* 1.1 8.60 2/13/07 10.96 14,280 13.85 31,500
2,500* 0.4 8.60 4/21/07 10.96 5,950 18.35 13,125
8,500* 1.5 8.60 2/25/08 11.52 24,820 15.24 56,440
10,500* 1.8 8.60 1/21/09 12.10 36,750 16.76 85,680
18,553 3.3 8.60 4/11/12 14.01 100,372 22.31 254,362
Keith I. Weil . . . . . 7,500* 0.5 8.60 11/30/08 11.52 21,900 15.24 49,800
7,500* 1.6 8.60 1/02/09 12.10 26,250 16.76 26,250
17,007 2.5 8.60 4/11/12 14.01 92,008 22.31 233,166
Johann R. Manning, Jr . 3,000* 1.3 8.60 5/28/08 11.52 8,760 15.24 19,920
9,000* 1.3 8.60 1/21/09 12.10 31,500 16.76 73,440
14,249 3.0 8.60 4/11/12 14.01 77,067 22.31 195,354
Massoud Neshan . . . . 14,472 2.5 8.60 4/11/12 14.01 78,294 22.31 198,411
- ----------------
(a) Includes replacement options (designated with an *) granted to the
first-four Named Executive Officers shown above to purchase 92,500, 38,750,
15,000 and 12,000 of Common Stock, respectively, on April 11, 2002 in
exchange for stock options cancelled on October 2, 2001 pursuant to a
voluntary stock option exchange offer. Replacement options granted under
the stock option exchange offer are vested to the same degree as the
exchanged options would have been vested had they not been cancelled. Stock
options granted in 2002 other than these replacement options vest in three
equal annual installments beginning on April 11, 2003. See "Summary of
Stock Option Exchange Offer" and "Compensation Committee Report on
Executive Compensation--Stock Option Exchange Offer."
9
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, 2002.
There were no stock options exercised during the year ended December 31, 2002
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, 2002.
NUMBER OF SHARES VALUE OF
OF COMMON STOCK UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT DECEMBER 31,
SHARES DECEMBER 31, 2002 2002 (A)
ACQUIRED ON VALUE ------------------------- -----------------------
NAME EXERCISE REALIZED VESTED UNVESTED VESTED UNVESTED
- ---- ----------- ---------- ---------- ---------- -------- ----------
Dennis J. Horowitz . . . . -- -- 198,167 71,333 -- --
James E. Deason. . . . . . -- -- 59,316 31,587 -- --
Keith I. Weil. . . . . . . -- -- 44,437 34,270 -- --
Johann R. Manning, Jr. . . -- -- 30,800 26,849 -- --
Massoud Neshan . . . . . . -- -- 27,667 25,805 -- --
- -----------------
(a) The fair market value at December 31, 2002 was $5.71 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.
SUMMARY OF STOCK OPTION EXCHANGE OFFER
In August 2001, the Compensation Committee approved a voluntary stock
option exchange offer to provide all of the U.S. and Canadian employees,
officers and directors of Wolverine and its subsidiaries the opportunity to
surrender certain then-outstanding stock options with an exercise price of
$20.00 or greater in exchange for replacement options to purchase one share of
Common Stock for every two shares underlying the cancelled options, such
replacement options to be granted six months and six business days after the
cancellation of the surrendered options. All eligible executive officers
accepted the offer to exchange their eligible options.
The replacement stock options were granted on April 11, 2002. Replacement
options granted to executive officers have an exercise price of $8.60, which was
the closing price of our Common Stock on April 11, 2002, and are vested to the
same degree as the original options would have been vested had they not been
cancelled. The expiration date of the replacement options is the same as the
surrendered options. Other terms and conditions of the replacement options are
substantially similar to those of the cancelled options. See "Compensation
Committee Report on Executive Compensation--Stock Option Exchange Offer."
The following table sets forth information concerning the stock option
exchange offer with respect to our executive officers. We have not previously
exchanged or repriced any options or SARs held by our executive officers or any
other persons.
10
STOCK OPTION EXCHANGE OFFER
TEN-YEAR OPTION REPRICINGS
LENGTH OF
CANCELLATION GRANT NUMBER OF MARKET PRICE EXERCISE ORIGINAL OPTION
DATE OF DATE OF SECURITIES OF STOCK PRICE OF TERM REMAINING
ORIGINAL REPLACEMENT UNDERLYING AT TIME OF ORIGINAL NEW AT DATE OF
STOCK STOCK REPLACEMENT REPLACEMENT STOCK EXERCISE REPLACEMENT
NAME OPTIONS OPTIONS STOCK OPTIONS (a) OPTION GRANT OPTIONS PRICE OPTION GRANT
- ---- ------------- ----------- ----------------- ------------ -------- -------- ----------------
Dennis J. Horowitz . . 10/02/01 04/11/02 62,500 $8.60 $40.25 $8.60 6 years
10/02/01 04/11/02 30,000 8.60 22.25 8.60 7 years
James E. Deason . . . 10/02/01 04/11/02 1,500 8.60 26.25 8.60 2 years
10/02/01 04/11/02 3,750 8.60 25.25 8.60 3 years
10/02/01 04/11/02 6,000 8.60 35.75 8.60 4 years
10/02/01 04/11/02 6,000 8.60 37.25 8.60 5 years
10/02/01 04/11/02 2,500 8.60 25.63 8.60 5 years
10/02/01 04/11/02 8,500 8.60 37.68 8.60 6 years
10/02/01 04/11/02 10,500 8.60 22.25 8.60 7 years
Keith I. Weil. . . . . 10/02/01 04/11/02 7,500 8.60 22.44 8.60 6 years
10/02/01 04/11/02 7,500 8.60 22.25 8.60 7 years
Johann R. Manning, Jr. 10/02/01 04/11/02 3,000 8.60 36.63 8.60 6 years
10/02/01 04/11/02 9,000 8.60 22.25 8.60 7 years
Garry K. Johnson . . . 10/02/01 04/11/02 640 8.60 20.88 8.60 2 years
10/02/01 04/11/02 400 8.60 25.25 8.60 3 years
10/02/01 04/11/02 1,500 8.60 35.75 8.60 4 years
10/02/01 04/11/02 1,500 8.60 37.25 8.60 5 years
10/02/01 04/11/02 1,750 8.60 37.68 8.60 6 years
10/02/01 04/11/02 3,750 8.60 22.25 8.60 7 years
Thomas A. Morton . . . 10/02/01 04/11/02 840 8.60 20.88 8.60 2 years
10/02/01 04/11/02 900 8.60 25.25 8.60 3 years
10/02/01 04/11/02 750 8.60 35.75 8.60 4 years
10/02/01 04/11/02 900 8.60 37.25 8.60 5 years
10/02/01 04/11/02 750 8.60 37.68 8.60 6 years
10/02/01 04/11/02 100 8.60 20.00 8.60 6 years
10/02/01 04/11/02 3,000 8.60 22.25 8.60 7 years
Samuel A. Patterson. . 10/02/01 04/11/02 500 8.60 7.68 8.60 6 years
10/02/01 04/11/02 150 8.60 20.00 8.60 6 years
10/02/01 04/11/02 750 8.60 22.25 8.60 7 years
- -----------------
(a) Replacement options granted pursuant to the stock option exchange offer
cover one share of Common Stock for every two shares underlying the
original, cancelled options.
LONG-TERM INCENTIVE PROGRAM - AWARDS IN THE LAST FISCAL YEAR
In January 1999, we established a Long-Term Incentive Program ("LTIP") as a
method of determining annual performance-based grants of restricted stock under
the 1993 Equity Incentive Plan to certain key executives, including the Named
Executive Officers. Under the LTIP, the Compensation Committee may grant to such
executives a fixed number of restricted shares within the first 90 days of a
three-year performance cycle. Achievement of the targeted three-year average
return on total capital determines whether the shares fail to vest, partially
vest or vest completely. Confirmation of vesting by the Compensation Committee,
if any, occurs as soon as practicable after the close of the final year of the
three-year cycle. Any shares not vested at such time are forfeited. Upon
expiration of the 1993 Equity Incentive Plan, the Compensation Committee intends
that any future LTIP awards be made under the 2003 Equity Incentive Plan if the
new plan is approved by the stockholders at the Annual Meeting.
In 2002, after careful consideration and taking into account the overall
economic environment, the Compensation Committee did not make any
performance-based grants to senior executives pursuant to the LTIP that would
have covered the 2002-2004 cycle.
11
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information with respect to shares of Common
Stock that may be issued under our equity compensation plans in effect as of
December 31, 2002, including our 1991 Stock Option Plan, 1993 Equity Incentive
Plan, 1993 Outside Director Plan and 2001 Outside Director Plan. The table does
not include information about the proposed 2003 Equity Incentive Plan which is
being submitted for stockholder approval at the Annual Meeting. No grants have
been made under the 2003 Equity Incentive Plan.
(a) (b) (c)
NUMBER OF SECURITIES
REMAINING AVAILABLE
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FOR FUTURE ISSUANCE UNDER
BE ISSUED UPON EXERCISE EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
- ------------- ----------------------- --------------------- ---------------------------
Equity Compensation
Plans Approved by
Security Holders. . . . . 910,359(1) $11.12 739,853(2)
Equity Compensation
Plans Not Approved by
Security Holders. . . . . -- -- --
Total. . . . . . . . . 910,359 $11.12 739,853
- -------------
(1) Includes 31,518 shares of Common Stock issuable upon exercise of
outstanding stock options under our 1991 Stock Option Plan as of December
31, 2002, all of which expired on April 1, 2003. The 1991 Stock Option Plan
terminated pursuant to its terms on August 7, 2001, after which no further
options were permitted to be granted thereunder. As of April 1, 2003, there
were no stock options outstanding under the expired 1991 Stock Option Plan.
(2) Includes 499,399 shares of Common Stock available for issuance under the
1993 Equity Incentive Plan as of December 31, 2002, which may be issued in
the form of restricted stock or other stock awards.
PLANS AND ARRANGEMENTS
RETIREMENT PLANS. Most of our U.S. employees, including our executive
officers, 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 of
employment, times (ii) years of service to Wolverine, 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 Wolverine, however, no executive is expected to receive a
benefit under this formula.
We also have a Supplemental Benefit Restoration Plan (the "Restoration
Plan") that covers most of our U.S. employees and was established effective as
of January 1, 1994, and was amended and restated as of January 1, 2002. This is
a non-qualified defined benefit pension plan that provides benefits to employees
whose compensation exceeds the amount recognized under the Retirement Plan. The
benefits provided under the Restoration 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 $200,000 pursuant to certain Internal Revenue Code of 1986,
as amended (the "Code") limits. Benefits under the Restoration Plan are not
subject to this limitation. However, Restoration Plan benefits are offset by any
benefits payable from the Retirement Plan.
12
The following table shows the estimated annual benefits payable upon normal
retirement at age 65 in 2002 under the Retirement Plan and Restoration Plan for
persons in specified remuneration and years of service classifications.
PENSION PLAN TABLE
RETIREMENT PLAN AND RESTORATION PLAN
AGE 65 ANNUAL RETIREMENT BENEFITS IN 2003 FOR VARIOUS SERVICE PERIODS
FINAL AVERAGE SALARY 5 10 15 20 25 30 35
- -------------------- ------- -------- -------- -------- -------- --------- --------
125,000. . . . . . . . . . . . . 8,408 16,815 25,223 33,631 42,039 50,446 59,821
150,000. . . . . . . . . . . . . 10,283 20,565 30,848 41,131 51,414 61,696 72,946
175,000. . . . . . . . . . . . . 12,158 24,315 36,473 48,631 60,789 72,946 86,071
200,000. . . . . . . . . . . . . 14,033 28,065 42,098 56,131 70,164 84,196 99,196
250,000. . . . . . . . . . . . . 17,783 35,565 53,348 71,131 88,914 106,696 125,446
300,000. . . . . . . . . . . . . 21,533 43,065 64,598 86,131 107,664 129,196 151,696
350,000. . . . . . . . . . . . . 25,283 50,565 75,848 101,131 126,414 151,696 177,946
400,000. . . . . . . . . . . . . 29,033 58,065 87,098 116,131 145,164 174,196 204,196
450,000. . . . . . . . . . . . . 32,783 65,565 98,348 131,131 163,914 196,696 230,446
500,000. . . . . . . . . . . . . 36,533 73,065 109,598 146,131 182,664 219,196 256,696
550,000. . . . . . . . . . . . . 40,283 80,565 120,848 161,131 201,414 241,696 282,946
600,000. . . . . . . . . . . . . 44,033 88,065 132,098 176,131 220,164 264,196 309,196
650,000. . . . . . . . . . . . . 47,783 95,565 143,348 191,131 238,914 286,696 335,446
700,000. . . . . . . . . . . . . 51,533 103,065 154,598 206,131 257,664 309,196 361,696
750,000. . . . . . . . . . . . . 55,283 110,565 165,848 221,131 276,414 331,696 387,946
800,000. . . . . . . . . . . . . 59,033 118,065 177,098 236,131 295,164 354,196 414,196
850,000. . . . . . . . . . . . . 62,783 125,565 188,348 251,131 313,914 376,696 440,446
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, Mr. Manning and Mr. Neshan had compensation of $660,876,
$262,112, $241,560, $224,578 and $211,294, respectively, for purposes of the
above table, as of December 31, 2002.
As of December 31, 2002, Mr. Horowitz had five years of credited service in
the Retirement Plan, Mr. Deason had eight years, Mr. Weil had four years, Mr.
Manning had five years and Mr. Neshan had three years.
In 2002, the Compensation Committee approved the establishment of the
Wolverine Tube, Inc. Supplemental Executive Retirement Plan (the "Executive
Plan") which was adopted effective as of January 1, 2002. The Executive Plan
provides retirement benefits to executives who are employed at the level of
senior vice president or above and who are approved for participation by the
Compensation Committee upon the recommendation of the Chief Executive Officer.
The Executive Plan provides a monthly benefit to a participant at the normal
retirement age of 65 of fifty-five percent (55%) of his final average pay
reduced by benefits under the Retirement Plan, the Restoration Plan, and the age
65 Social Security benefit. In the case of Mr. Horowitz, the annual benefit
payable is increased by $6,000 for each year of service. To be eligible for a
benefit the participant must have attained age fifty-five when he terminates
employment and complete twelve or more years of service, except that Mr. Deason
and Mr. Horowitz are exempted from the service requirement. Final average
compensation is based upon compensation in the highest three calendar years of
the last ten calendar years of employment. Compensation is based upon
13
compensation as defined under the Retirement Plan except (i) it is not subject
to the limitation applicable under the Retirement Plan (i.e., $200,000 in 2003);
(ii) the entire bonus is recognized and a bonus equal to 25% of base pay is
assumed if the actual bonus is less; (iii) bonuses are recognized in the year
earned rather than when paid; and (iv) base and bonus pay received after a
change in control is recognized in the Plan Years to which it is attributable
even if it is received in a lump sum. Benefits under the plan are payable in the
forms permitted under the Retirement Plan and in the form of a lump sum payment.
The benefit payable to a participant who retires before the normal retirement
age of 65 is reduced at a rate of 2.5% for each of the first ten years the
benefit payment date precedes the normal retirement age. The Social Security
benefit is not offset from the benefit until the participant reaches age 65. If
benefits become payable before age 55 following a change in control, the benefit
will be further reduced on an "actuarial equivalent" basis from age 55 to the
participant's age when benefits begin. Benefits become fully vested upon a
change in control and are immediately payable in the event of a termination of
employment following the change in control. In the case of Mr. Horowitz, in the
event of a change of control, it will be assumed his age is his actual age plus
the period following his termination of service for which he receives payments
under the change in control agreement (as described below). Previously, Mr.
Horowitz was entitled to supplemental retirement benefits under an individual
agreement. In consideration of his participation in the Executive Plan, Mr.
Horowitz released his rights under that individual agreement. Except that,
consistent with the prior individual agreement, upon Mr. Horowitz's retirement,
he will be provided retiree medical insurance coverage under Wolverine's group
health plan at the active employee rate as a result of completing five years of
service with Wolverine.
In February 2003, we transferred $4,275,000 to a rabbi trust in order to
have funds available to meet a portion of our vested benefit obligations to
Messrs. Horowitz and Deason under the Restoration Plan and the Executive Plan.
However, assets of the rabbi trust are subject to the claims of creditors of
Wolverine in the event of Wolverine's insolvency thereby deferring any tax
consequences to Messrs. Horowitz and Deason until the assets are distributed.
The estimated annual benefits payable at the normal retirement age of 65
for the Named Executive Officers under the Retirement Plan, Restoration Plan and
Executive Plan is as follows: Mr. Horowitz $456,505; Mr. Deason $147,388; Mr.
Weil $129,086; Mr. Manning $112,182 and Mr. Neshan $112,788.
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 in a form acceptable to Wolverine of
all claims against Wolverine, except claims in accordance with the provisions of
applicable benefit plans.
CHANGE IN CONTROL, SEVERANCE AND NON-COMPETITION AGREEMENTS. We have
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 we will make certain payments to the Named
Executive Officer if (i) 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, the Named Executive Officer will not
disclose or improperly use confidential information relating to Wolverine, (iii)
for a period of two years following termination of employment, the Named
Executive Officer will not solicit business from Wolverine's customers, and (iv)
during the term of employment and for a specified period of years following
termination of employment, the Named Executive Officer will not compete with
Wolverine 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 our 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
14
years) plus continuation of his medical and disability insurance benefits until
the earlier of the expiration of 36 months or the date on which he is covered
under any other comparable plan. After such medical and disability insurance
coverage is exhausted, we will provide Mr. Horowitz access to the medical and
disability group insurance coverage available to our employees at his expense
(based on the amount charged active employees) 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 our group life insurance
plan until the earlier of 36 months or when equivalent coverage is obtained
under another group life insurance plan. Mr. Horowitz would also be entitled to
reimbursement for outplacement services utilized by him for up to one year
following his termination or resignation or in lieu thereof, at his option, be
reimbursed the cost of his moving expenses to relocate from Huntsville. 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 lump sum amount equal to the greater of
the maximum percentage of annual base salary payable under our bonus plan but
not less than eighty-five 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 our fiscal year, then for purposes of calculating the first year of
the bonus amounts 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 our annual bonus plan for the year in which the termination occurred
or the amount to be paid him each of the years he is entitled to be paid the
substitute bonus amount.
The Severance Agreements with each of Messrs. Deason, Manning, Weil and
Neshan 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 our standard procedure and practice and payment of
his salary through the date of his termination or resignation. The Severance
Agreements with Messrs. Deason, Manning, Weil and Neshan provide that (i) if
such officer is terminated without cause or resigns for any reason within two
years following a change in control, he is entitled to three years' salary (two
years for Mr. Neshan) 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
(24 months for Mr. Neshan) 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, we will provide Messrs. Deason,
Manning, Weil and Neshan access to the medical and disability group insurance
coverage available to our employees at their expense (based on the amount
charged active employees) until they attain the age of sixty-five. The Severance
Agreements for Messrs. Deason, Manning, Weil and Neshan also provide they are to
be reimbursed the cost of maintaining life insurance coverage comparable to the
coverage under our group life insurance plan until the earlier of 24 months (36
months (24 months for Mr. Neshan) 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, Manning, Weil and Neshan 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 lump sum amount equal to the greater of the maximum percentage of
annual base salary payable to the officer under our bonus plan but no less than
forty-five percent (fifty percent for Mr. Deason) 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 our 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 our annual bonus plan for the year in which the
termination occurred or the amount to be paid the officer for the first of the
years he is to be paid a substitute bonus amount. 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.
15
In the case of Messrs. Manning and Weil, their Severance Agreements also
provide that if they are terminated by Wolverine without cause or resign from
employment for any reason within two years following a change in control and
they have not qualified for a benefit under the Executive Plan, we will pay them
a lump sum cash benefit equal to the actuarial equivalent of a single life
annuity payable over their lifetime equal to fifty-five percent of their final
average compensation reduced by two and half percent for each year the payment
date precedes their normal retirement date and reduced further by benefits under
the Retirement Plan, the Restoration Plan and the age 65 Social Security
benefit. If Messrs. Manning and Weil are eligible for a benefit under the
Executive Plan at the time of such resignation, they shall be entitled to the
greater of (i) the foregoing benefit less the benefit provided under the
Executive Plan as amended and (ii) the benefit then provided under the Executive
Plan as amended as of the date they terminated employment. The special
supplemental retirement benefit provided Messrs. Manning and Weil as described
in this paragraph is also payable if there is a change in control within a two
year period following their termination of employment without cause with such
benefit calculated as of the date of their termination of employment.
The Severance Agreements for each of Messrs. Deason, Manning, Weil and
Neshan provide that such officer may not compete with Wolverine in the United
States for a period of two years from termination of employment while the
Severance Agreement for Mr. Horowitz provides that he may not compete with
Wolverine in the United States for a period of three years from termination of
employment.
All the above-described Severance Agreements provide that payments made
under any change in control provision of any of our compensation or benefit
plans 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 our benefit plans also
contain change in control provisions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. In 2002, Ms.
Neuman and Messrs. Duncan and Evans served on the Compensation Committee. No
members of Wolverine'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
Wolverine from April 1992 to May 1994.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW. The Compensation Committee is responsible for Wolverine's general
compensation policies, and in particular is responsible for setting and
administering the policies that govern compensation of Wolverine'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 the Chief Executive Officer and those officers that
report directly to the Chief Executive Officer.
To assist in determining compensation policies, the Compensation Committee
from time to time retains management and compensation consulting firms to
evaluate Wolverine's various compensation programs. Additional information on
compensation has been derived in the course of recruiting senior executives to
Wolverine.
The objective of the Compensation Committee is to establish policies and
programs to attract, retain and motivate key executives, and to serve the
financial interests of Wolverine's stockholders while providing appropriate
incentives to its executive officers. The primary elements of executive and
senior officer compensation are base salary, annual cash bonus awards and
long-term incentive compensation awards, including 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 a comparison to similar
positions within Wolverine and in comparable companies. Annual cash bonus awards
are generally based on Wolverine'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 Wolverine's long-term growth, and
are determined based on the executive or senior officer's contributions to
Wolverine, scope of responsibilities, strategic and operational goals, salary
and previous grants of options and other equity awards. Further information on
each of these compensation elements is set forth below.
16
SALARIES. Base salaries for executive and certain senior officers (other
than the Chief Executive Officer) are subject to adjustment annually, following
a review by the Chief Executive Officer. In the course of the review,
performance of the individual with respect to specific objectives is evaluated,
as are any changes in responsibility, as well as salaries for similar positions
and levels of responsibility within Wolverine and in comparable companies. The
specific objectives for each officer that reports directly to the Chief
Executive Officer are set by the Chief Executive Officer, and will vary for each
executive position and for each year. Since this is a base salary review, the
overall performance of Wolverine is not weighed generally heavily in the result.
When all reviews are completed, the Chief Executive Officer makes a
recommendation to the Compensation Committee for its review and final approval.
With respect to the Chief Executive Officer, the Compensation Committee
reviews and establishes a base salary, which is influenced by feedback and input
by the non-employee members of the Board as to their assessment of the Chief
Executive Officer's performance and the Compensation Committee's expectations as
to his future contributions. Competitive compensation data is also a major
factor in establishing the Chief Executive Officer's salary, but no precise
formula is applied in considering this data.
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 Wolverine's financial performance. Pursuant to
Wolverine's annual management bonus plans, annual cash bonus objectives are
dependent on the financial performance of Wolverine and on individual
performance. The Board of Directors of Wolverine 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 Wolverine at analyst and investor meetings,
development of management personnel, individual objectives and other
considerations.
In measuring those objectives with respect to the Chief Executive Officer,
the Compensation Committee assesses such factors as executive management skills,
investor relations, leadership, Wolverine's performance in the context of market
conditions, and strategic planning and development.
LONG-TERM INCENTIVE AWARDS, INCLUDING STOCK OPTIONS AND RESTRICTED STOCK
AWARDS. Stock options and restricted stock grants are an integral part of each
executive's or senior officer's compensation. These equity awards are intended
to assist in executive and senior officer retention and align the interests of
the executive or senior officer with those of the stockholders by providing a
stake in Wolverine. All equity-based awards for management are granted pursuant
to Wolverine's 1993 Equity Incentive Plan, and upon expiration of the 1993
Equity Incentive Plan the Compensation Committee intends to continue granting
these awards under the 2003 Equity Incentive Plan if the new plan is approved by
the stockholders at the Annual Meeting. Grants of stock options to participants
have been made at fair market value on the date of the grant, vest over a period
of three to five years, and expire after ten years, except for the replacement
grants pursuant to the option exchange offer which expire pursuant to their
original terms. Except for the performance-based restricted stock awards
determined by the LTIP (as described below and under the heading "Long Term
Incentive Program--Awards in the Last Fiscal Year" above), restricted stock
awards 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 applicable plan, prior grants outstanding, and
estimated requirements for future grants. Individual awards take into account
the executive or senior officer's contributions to Wolverine, scope of
responsibilities, strategic and operational goals, salary and previous grants of
options and other equity awards.
In determining equity-based awards for the Chief Executive Officer, the
Compensation Committee weighs all of the above factors. However, in recognition
of the Chief Executive Officer's critical role in developing strategies for the
long-term benefit of Wolverine, 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 Chief
Executive Officer.
17
In addition to those equity incentives discussed above, since 1999, except
for 2002, the Compensation Committee implemented the LTIP, a program developed
in consultation with senior management and compensation consultants to govern
performance-based grants of restricted stock as allowed under the 1993 Equity
Incentive Plan to certain senior executive officers. Under the LTIP, the
Compensation Committee may choose to grant to the Chief Executive Officer and
key executives recommended by the Chief Executive Officer a fixed number of
shares of restricted stock within the first 90 days of a three-year performance
cycle. Performance objectives for all participants (including the Chief
Executive Officer) are based upon an incremental scale dependent upon achieving
a specified target return on total capital measured over a three-year period.
Achievement of the target determines whether the shares fail to vest, partially
vest or vest completely. Confirmation of vesting by the Compensation Committee,
if any, occurs as soon as practicable under the close of the final year of the
three-year cycle. Restricted stock which does not vest at such time is
forfeited. Upon expiration of the 1993 Equity Incentive Plan, the Compensation
Committee intends to make any future LTIP awards under the 2003 Equity Incentive
Plan if the new plan is approved by the stockholders at the Annual Meeting.
In 2002, after careful consideration and taking into account the overall
economic environment, the Compensation Committee did not make any
performance-based grants to senior executives pursuant to the LTIP that would
have covered the 2002-2004 three-year cycle.
STOCK OPTION EXCHANGE OFFER. In August 2001, based on management's review
of the status of stock options previously awarded to employees, officers and
directors of Wolverine and its subsidiaries, the Compensation Committee
considered that a large number of outstanding stock options had exercise prices
that were significantly higher than the then current trading price of the Common
Stock. Because these "out-of-the-money" options were not likely to be exercised
in the foreseeable future, the Compensation Committee concluded that these
options did not adequately align optionees' interests with those of stockholders
and no longer offered significant retention value to Wolverine. The Compensation
Committee further determined that these out-of-the-money options did not provide
the incentive to acquire and maintain stock ownership in Wolverine and to
participate in the Wolverine's long-term growth and success that the
Compensation Committee intended. As a result, the Compensation Committee
approved a voluntary stock option exchange offer to provide eligible employees,
officers and directors the benefit of owning options that, over time, may create
better performance and retention incentives and may have greater potential to
increase in value, thereby maximizing stockholder value.
Under the option exchange offer, all U.S. and Canadian employees, officers
and directors of Wolverine and its subsidiaries were provided the opportunity to
surrender certain outstanding stock options under Wolverine's 1993 Equity
Incentive Plan and 1993 Outside Director Plan having an exercise price of $20.00
or greater in exchange for replacement options to purchase one share of Common
Stock for every two shares underlying the cancelled options, such replacement
options to be granted six months and six business days after the cancellation of
the surrendered options. The option exchange offer was announced on August 23,
2001 and expired on October 1, 2001. On October 2, 2001, options to purchase
836,860 shares of Common Stock were cancelled, representing approximately 97.5%
of the options eligible to be exchanged under the offer. On April 11, 2002,
replacement options to purchase 383,075 shares of Common Stock were granted
pursuant to the terms of the exchange offer. At the time of the exchange offer,
all ten of Wolverine's then designated executive officers and directors
participated in the option exchange offer, surrendering in the aggregate options
to purchase 354,500 shares and receiving replacement grants covering an
aggregate of 177,250 option shares.
Replacement options granted under the 1993 Equity Incentive Plan have an
exercise price of $8.60 per share, which was the closing price of Wolverine's
Common Stock on April 11, 2002. Replacement options granted under the 1993
Outside Director Plan have an exercise price of $8.84 per share, which was the
average market price of Wolverine's Common Stock on April 11, 2002 and the four
preceding trading days. The replacement stock options are vested to the same
degree as the original options would have been vested had they not been
cancelled. The expiration date of the replacement options is the same as the
surrendered options, except that outside directors' replacement options have a
new 10-year term as required by the 1993 Outside Director Plan. Other terms and
conditions of the replacement options are substantially similar to those of the
cancelled options.
18
SUMMARY. In 2002, as it relates to base pay compensation for the Named
Executive Officers, the Compensation Committee implemented no merit pay
increases and one Named Executive Officer received a market rate adjustment due
to an increase in the scope of responsibilities for that executive. Wolverine
imposed a ten percent reduction in base pay for the final ten weeks of 2001 and
the first twelve weeks of 2002 for the Named Executive Officers as well as other
salary exempt employees. Additionally, Wolverine's matching for its 401(k)
program was suspended for the executive officers for the last four months of
2001 and all of 2002 which was consistent with the action taken by Wolverine for
all "highly compensated individuals" as defined by federal regulations. As for
annual bonus awards for 2002, the Compensation Committee weighed heavily the
difficult industry and global economic conditions that are and have been
occurring in its decision to award bonuses for the Chief Executive Officer and
other Named Executive Officers. An overall economic recovery which was expected
by many companies and economists to occur in 2002 and which factored in the
development of Wolverine's budget for 2002 did not occur and therefore the range
of corporate financial performance metrics set by the Board of Directors, and
administered by the Compensation Committee, for bonus pay-out in 2002 were not
achieved. However, certain individual performance metrics were achieved and
these metrics are in some cases more objectively based but others are subjective
assessments allowing appropriate discretion by the Compensation Committee in
considering pay-outs. Some of these performance metrics considered by the
Compensation Committee included the refinancing of the capital structure of
Wolverine in early 2002, the paying down of debt during the year, the generation
of free cash flow during the year, continuing commitment to cost control and
efficiency throughout Wolverine, global diversification and market penetration
in certain markets as well as other relevant criteria. Thus, bonuses paid for
2002 are noted within the Summary Compensation Table of this proxy and were
based on the individual performance metrics as partially outlined above for the
Chief Executive Officer and other Named Executive Officers.
Based on available information, the Compensation Committee believes that
the executive compensation policies and programs described in this report serve
the interests of Wolverine's stakeholders, that Wolverine's level of base
salaries is generally competitive and that the potential pay-out under
Wolverine's bonus program as adjusted from time to time will cause bonus levels
to be competitive as well. The Compensation Committee continually reviews
Wolverine's compensation programs to ensure that the overall package is
competitive, balanced, and the proper incentives and rewards are provided.1
Compensation Committee
John L. Duncan
Thomas P. Evans
Gail O. Neuman
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 2002, Wolverine made a short-term bridge loan to Mr. Allen Dillard,
an executive officer, in the principal amount of $100,000 to assist with
relocation expenses. The loan was repaid in full. One of our directors, Mr. W.
Barnes Hauptfuhrer, serves as Co-Head of the Corporate and Investment Banking
Division and Senior Executive Vice President of Wachovia Corporation, the parent
company of First Union Securities, Inc., Wachovia Bank, National Association and
First Union National Bank. First Union Securities, Inc., acting under the trade
name Wachovia Securities, was one of the initial purchasers of our 10.5% Senior
Notes (the "2002 Notes") due 2009, issued on March 27, 2002. Wachovia Bank
serves as trustee under the indenture governing the 2002 Notes and is a lender
in our $37.5 million revolving credit facility. Wachovia Bank, National
Association also serves as indenture trustee for Wolverine's 7-3/8% Senior Notes
due 2008, transfer agent for our Common Stock, and administrator of our stock
option plans. We believe that the services performed by these certain
subsidiaries of Wachovia Corporation and the compensation we pay to these
subsidiaries for such services are on terms comparable for similar transactions
of this type with third parties and are otherwise fair to us.
- ---------------
1 Section 162(m) of the Code limits the deductibility of certain executive
officers' compensation that exceeds $1 million per year and that does not
qualify as performance-based compensation as defined in the Code. The 2003
Equity Incentive Plan includes provisions that would enable the
Compensation Committee to structure future executive compensation as
performance-based compensation within the meaning of Section 162(m), if
such plan is approved by stockholders at the Annual Meeting. 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 is rendered nondeductible by reason of Section 162(m).
19
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, 1997, 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
12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
-------- -------- -------- -------- -------- --------
Wolverine Tube, Inc. . . . . . 100 68 46 39 37 18
S&P Industrials. . . . . . . . 100 132 164 136 119 90
NYSE Composite . . . . . . . . 100 117 127 128 115 93
Russell 2000 . . . . . . . . . 100 97 115 111 112 88
20
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
The members of the Board of Directors, our 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 our securities on Form 3 and transactions in our
securities on Forms 4 or 5. Based solely on our review of the copies of such
forms received by us and written representations from our executive officers and
directors, for the fiscal year ended December 31, 2002, we believe that required
reports were timely filed except the following: Mr. Neshan's Form 3 contained
typographical errors regarding the amount of common stock and option shares
beneficially owned and omitted a restricted stock grant and an option grant; the
Form 3s for each of Messrs. Johnson, Morton and Patterson omitted an option
grant and Mr. Johnson's Form 3 omitted a restricted stock grant; and Mr.
Dillard's Form 3 omitted a restricted stock grant and an option grant. The Form
5s for 2001 for Messrs. Horowitz and Manning failed to report the surrender of
restricted stock in connection with tax withholding upon vesting of the
restricted stock. All of these transactions were filed or corrected on
subsequent amended Form 3s or Form 5s.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board reviews and approves the scope of the
audit performed by Wolverine's independent auditors and our 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. In May 2002, the Board of Directors amended
the Audit Committee Charter. A copy of the amended Audit Committee Charter is
attached as Appendix A. Each of the members of the Audit Committee is
independent as defined under the New York Stock Exchange listing standards.
The Audit Committee has reviewed the relevant requirements of the
Sarbanes-Oxley Act, the proposed and final rules of the U.S. Securities and
Exchange Commission and the proposed new listing standards of the New York Stock
Exchange regarding audit committees. As those rules and standards are finalized,
the Audit Committee plans to take all additional actions necessary to comply
with such requirements.
The Audit Committee has reviewed and discussed the audited financial
statements for the year ended December 31, 2002 (the "Audited Financial
Statements") with Wolverine's management and independent auditors. In addition,
the Audit Committee has discussed with Ernst & Young LLP, Wolverine's
independent auditors, 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 has discussed the written report with Ernst & Young LLP and
its independence from Wolverine. The Audit Committee has discussed with
management and Ernst & Young LLP such other matters and received such assurances
from them as the Audit Committee deemed appropriate.
Based on the foregoing review and discussions and relying thereon,
Wolverine recommended to the Board of Directors the inclusion of the Audited
Financial Statements in the Annual Report for the year ended December 31, 2002
on Form 10-K, to be filed with the Securities and Exchange Commission.
The Audit Committee
Jan K. Ver Hagen
Chris A. Davis
W. Barnes Hauptfuhrer
21
PROPOSAL TWO - RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP as our independent
auditors for the fiscal year ending December 31, 2003, and recommends that the
stockholders vote for ratification of such appointment. Ernst & Young LLP has
audited our 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 Wolverine 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
Our independent auditors, Ernst & Young LLP, billed us approximately
$657,000 in 2002 and $317,000 in 2001 for professional services rendered for the
audit of our annual financial statements and for the review of our financial
statements contained in our Forms 10-Q and statutory audits required
internationally. In addition, the 2002 fees include professional services in
conjunction with our senior note offering in 2002 and related SEC filings.
AUDIT RELATED FEES
Our independent auditors billed us approximately $32,000 in 2002 and
approximately $64,000 in 2001 for audit related services. Audit related services
principally include benefit plan audits.
TAX FEES
Our independent auditors billed us approximately $643,000 in 2002 and
$474,000 in 2001 for tax services. Tax services principally include tax
compliance, tax advice and tax planning.
ALL OTHER FEES
There were no other services provided in 2002 or 2001.
PROPOSAL THREE - APPROVAL AND ADOPTION OF THE WOLVERINE TUBE, INC.
2003 EQUITY INCENTIVE PLAN
The 1993 Equity Incentive Plan, which provides for awards of long-term
incentive compensation to key officers and employees of Wolverine and our
subsidiaries, was approved by our stockholders and will terminate by its terms
in June 2003. The Board of Directors believes that it is in the best interest of
Wolverine and our stockholders to adopt a new plan, approved by stockholders,
that will allow us to continue to provide long-term incentives to officers,
employees and other eligible persons after the expiration of the 1993 Equity
Incentive Plan.
Accordingly, on March 25, 2003, the Board adopted the Wolverine Tube, Inc.
2003 Equity Incentive Plan (the "2003 Plan"), subject to stockholder approval.
In addition to enhancing our ability to attract, retain, motivate and reward
officers, employees and other eligible persons, the 2003 Plan will provide such
persons an opportunity to obtain a proprietary interest in Wolverine, thereby
encouraging commitment to our long-term growth and success and further aligning
such persons' interests with those of our stockholders. Approval of the 2003
Plan, which will permit awards during a ten-year period, will give us needed
certainty and flexibility in designing and managing equity-based compensation to
meet the needs of our business over an extended period of time.
If the 2003 Plan is approved, the 1993 Equity Incentive Plan will be
terminated (except with respect to awards then outstanding) and no further
awards will be made thereunder. Shares subject to outstanding awards under the
1993 Equity Incentive Plan will not be available for regrant if the awards are
forfeited or cancelled after the 2003 Plan is approved. There are currently
approximately 138,000 shares
22
available under the 1993 Equity Incentive Plan.
Wolverine does not intend to make any awards under the 1993 Equity Incentive
Plan between the date hereof and the date of the Annual Meeting of Stockholders.
The 2003 Plan permits Wolverine to make grants of stock options, stock
appreciation rights, restricted shares, restricted share units, performance
shares, performance units and other stock-based and cash-based grants and awards
to officers, employees, consultants and independent contractors of Wolverine and
our subsidiaries. The 2003 Plan contains a number of provisions that the Board
believes are consistent with the interests of stockholders and sound corporate
governance practices. These include:
NO STOCK OPTION REPRICINGS. The 2003 Plan prohibits the repricing of stock
options without the approval of stockholders. This provision applies to both
direct repricings--lowering the exercise price of a stock option--and indirect
repricings--canceling an outstanding stock option and granting a replacement
stock option with a lower exercise price.
NO ANNUAL "EVERGREEN" PROVISION. The 2003 Plan does not contain an
automatic provision that replenishes the number of shares reserved under the
2003 Plan based on the number or percentage of shares of our outstanding common
stock. Rather, a fixed number of shares are allocated for issuance under the
2003 Plan, requiring stockholder approval of any additional allocation of shares
under the 2003 Plan.
NO DISCOUNT STOCK OPTIONS. The 2003 Plan prohibits the grant of a stock
option with an exercise price of less than the fair market value of Wolverine
common stock on the date the stock option is granted.
INDEPENDENT COMMITTEE. The 2003 Plan will be governed by the Compensation
Committee, which consists of "outside directors" within the meaning of Rule
16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and meets the current New York Stock Exchange standard of directors'
independence. We also believe that such directors would meet the new
independence criteria proposed by the New York Stock Exchange.
SUMMARY OF THE 2003 PLAN
The material features of the 2003 Plan are briefly summarized below. This
summary does not contain all information that may be important to you. The
complete text of the 2003 Plan is set forth at Appendix B to this Proxy
Statement.
PLAN ADMINISTRATION
The 2003 Plan is administered by the Compensation Committee of the Board.
To the extent necessary or desirable to satisfy applicable regulatory, tax or
national securities exchange requirements, the 2003 Plan requires the
Compensation Committee (or a subcommittee of the Compensation Committee) to
consist of two or more members of the Board who, during the time of their
service as members of the Compensation Committee, qualify as "Non-Employee
Directors" within the meaning of Rule 16b-3 under the Exchange Act, "outside
directors" within the meaning of Section 162(m) of the Code, and "independent
directors" within the meaning of applicable standards of any national securities
exchange upon which shares of common stock are traded or quoted (currently, the
New York Stock Exchange).
The Compensation Committee has full and final authority to, among other
things, (i) interpret and construe the provisions of the 2003 Plan; (ii) adopt
rules, guidelines and practices governing the 2003 Plan; (iii) select
participants and make awards; and (iv) establish the terms and conditions of
awards.
The Compensation Committee may delegate any of its authority and
responsibility under the 2003 Plan to one or more executive officers, except
with respect to awards made to those executive officers who are subject to
Section 16 of the Exchange Act.
23
ELIGIBILITY
Any officer, employee, consultant or independent contractor providing
services to Wolverine or one of its subsidiaries may be designated by the
Compensation Committee to receive an award under the 2003 Plan. Currently,
approximately 200 persons would be eligible to participate under the 2003 Plan.
AWARDS
The 2003 Plan provides for awards of stock options (either incentive stock
options or non-qualified stock options), stock appreciation rights, restricted
shares, restricted share units, performance shares, performance units and
supplemental cash payments, as well as other equity-based or equity-related
awards as determined by the Compensation Committee. Awards other than stock
options and restricted shares generally may be settled in cash, in shares of
common stock or in a combination of cash and shares of common stock, in the
discretion of the Compensation Committee.
Subject to the limitations set forth in the 2003 Plan, the Compensation
Committee will have sole authority to determine the terms and conditions of all
awards, including the size or amount of the award, the exercise price or initial
value, the vesting and exercisability terms, the payment terms, and the
termination, cancellation or forfeiture provisions.
SHARES AVAILABLE FOR GRANT
The 2003 Plan authorizes the issuance of up to 850,000 shares of Wolverine
common stock, provided that no more than 250,000 shares may be issued in the
form of restricted shares or restricted share units.
In addition, in any one calendar year, no participant may be granted (i)
stock options to purchase more than 200,000 shares of common stock; (ii) stock
appreciation rights covering more than 200,000 shares of common stock; (iii)
performance shares covering more than 200,000 shares of common stock or (iv)
performance units covering more than $300,000.
If any award under the 2003 Plan is cancelled or forfeited, or the award
otherwise terminates, expires or lapses for any reason without delivery of
shares of common stock to a participant (or resulting in forfeiture of shares of
common stock to Wolverine), or if any award is settled in cash rather than by
issuance of shares of common stock, then those shares will not count against the
aggregate number of shares that may be issued under the 2003 Plan. Likewise, if
a participant pays the exercise price of any stock option or satisfies any
withholding amount by tendering to Wolverine shares of common stock, only the
net number of shares of common stock actually issued or transferred by Wolverine
to the participant in satisfaction of the award will be deemed to have been
issued under the 2003 Plan.
The shares of common stock issued under the 2003 Plan may be authorized and
unissued shares or issued and re-acquired shares, as the Compensation Committee
may from time to time determine.
ADJUSTMENTS
In the case of (i) any stock dividend, stock split, combination of shares,
recapitalization or other change in our capital structure, (ii) any merger,
consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of rights or
warrants to purchase securities, or (iii) any other corporate transaction or
event having a similar effect, the Board in its sole discretion may provide for
certain equitable adjustments in the dollar value of outstanding awards, the
number of shares of common stock covered by outstanding awards, the kind of
shares covered by outstanding awards, the prices per share applicable to stock
options and stock appreciation rights and the number of shares issuable under
the 2003 Plan, or the Board may substitute such alternative consideration as it
may determine to be equitable in the circumstances.
24
OPTIONS
Options to purchase shares of Wolverine common stock may be granted under
the 2003 Plan in the form of incentive stock options (intended to qualify for
deferred tax treatment under Section 422 of the Code) or non-qualified stock
options.
The exercise price at which a share of common stock may be purchased under
an option will be determined at the time of grant by the Compensation Committee
in its discretion, but will not be less than the fair market value of a share of
common stock on the date the option is granted, and in the case of an incentive
stock option granted to a 10% stockholder, will not be less than 110% of the
fair market value of a share of common stock on the grant date. Fair market
value means the closing price of Wolverine common stock in the principal market
in which our common stock is traded (currently, the New York Stock Exchange) on
the relevant date of determination.
The 2003 Plan permits the Compensation Committee to establish the term of
each option, but no incentive stock option will be exercisable after ten years
(five years if the participant is a 10% stockholder) from the grant date.
Options will be exercisable as determined by the Compensation Committee, and the
Compensation Committee has the right to accelerate the vesting of any
outstanding option.
In certain circumstances, the Compensation Committee may permit the payment
of the exercise price of an option with previously-owned shares of common stock
or pursuant to a cashless exercise procedure. The Compensation Committee may
provide for automatic grants of reload options in the event that the participant
exercises a prior option by paying some or all of the exercise price (or tax
withholding liability in connection with such exercise) with previously-held
shares of common stock.
STOCK APPRECIATION RIGHTS
Stock appreciation rights entitle a participant to receive upon exercise an
amount equal to the number of shares of common stock subject to the award
multiplied by the excess of the fair market value of a share at the time of
exercise over the grant price of such a share. Stock appreciation rights granted
to participants may relate to a specific option granted under the 2003 Plan (a
tandem stock appreciation right), but may also be granted without relation to an
option (a free-standing stock appreciation right). The Compensation Committee
also may grant tandem stock appreciation rights or free-standing stock
appreciation rights in the form of limited stock appreciation rights, which
entitle the participant to receive a cash payment only in connection with a
change in control of Wolverine.
A free-standing stock appreciation right may be granted by the Compensation
Committee at any time and will become exercisable as determined by the
Compensation Committee. The initial value per share of a free-standing stock
appreciation right will be determined at the time of grant by the Compensation
Committee, but will not be less than the fair market value of a share of common
stock on the grant date.
A tandem stock appreciation right related to a non-qualified stock option
may be granted at the same time the option is granted or at any time prior to
the exercise, termination or expiration of the option. A tandem stock
appreciation right related to an incentive stock option must be granted at the
same time the option is granted. The number of shares of common stock covered by
a tandem stock appreciation right cannot exceed the number of shares covered by
the related option. A tandem stock appreciation right will be exercisable only
when the related option is exercisable, will be forfeited when the related
option is forfeited and may expire no later than the expiration of the related
option. In addition, a tandem stock appreciation right granted in connection
with an incentive stock option may be exercised only if and when the fair market
value of the common stock subject to such option exceeds the exercise price of
the option. The exercise of a tandem stock appreciation right will automatically
result in the cancellation of the related option on a share-for-share basis;
conversely, the exercise of an option will result in the cancellation of any
related tandem stock appreciation right on a share-for-share basis.
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RESTRICTED SHARES AND RESTRICTED SHARE UNITS
Restricted shares of common stock, or restricted share units that entitle
the participant to receive shares of common stock in the future, may be granted
or offered for sale to any participant under the 2003 Plan. Transferability and
other restrictions applicable to any grant of restricted shares or restricted
share units will lapse as determined by the Compensation Committee according to
time-based, performance-based or other vesting provisions. Except to the extent
that any grant of restricted shares or restricted share units is intended to be
a qualifying performance-based award within the meaning of Section 162(m) of the
Code, the Compensation Committee may accelerate the vesting of any such grant.
PERFORMANCE SHARES AND PERFORMANCE UNITS
The 2003 Plan authorizes awards of both performance shares and performance
units. A performance share is any right to receive the fair market value (on the
grant date) of a share of common stock that is contingent on the achievement of
one or more performance goals during a specified period. A performance unit is
the right to receive a designated dollar amount that is contingent on the
achievement of such performance goals. The performance goals to be achieved
during any performance period, the length of such performance period, the
proportion of payments, if any, to be made for performance between the minimum
and full performance levels for any performance goal, and, if applicable, the
relative percentage weighting given to each of the selected performance goals
will be determined by the Compensation Committee in its discretion.
The Compensation Committee may designate certain awards, including awards
of performance shares and performance units, as qualifying performance-based
awards within the meaning of Section 162(m) of the Code, in which case the award
must be conditioned on the achievement of performance goals in a specified
period based upon one or more of the following objective criteria, as described
in Section 10(a) of the 2003 Plan: net earnings; earnings per share; net sales
growth; net income (before or after taxes); net operating profit; return
measures (including return on assets, capital, equity or sales); cash flow
(including operating cash flow and free cash flow); cash flow return on
investments, which equals net cash flows divided by stockholders' equity;
earnings before or after taxes, interest, depreciation and/or amortization;
internal rate of return or increase in net present value; gross margins;
operating margin; share price (including growth measures and total stockholder
return); expense targets; working capital targets relating to sales, inventory
and/or accounts receivable; planning accuracy (as measured by comparing planned
results to actual results); and key operational measures (including delivery
performance, quality measurements, employee safety metrics and market share
expansion). Performance goals may be designed to measure, for any specified
period, the performance of Wolverine on a consolidated basis, or any one or more
subsidiaries, divisions or business units, relative to any standards determined
by the Compensation Committee, including performance compared to prior periods
on an absolute basis and performance compared to other companies, subsidiaries,
divisions or business units.
OTHER AWARDS
Under the 2003 Plan, the Compensation Committee is authorized to specify
the terms and provisions of other equity-based or equity-related awards not
described above (including the grant or offer for sale of unrestricted shares of
common stock). Such awards may provide for the acquisition of shares of common
stock by participants or payment in cash or otherwise of amounts based on the
value of such shares and may include, without limitation, awards designed to
comply with or take advantage of applicable local laws of jurisdictions other
than the United States.
SUPPLEMENTAL CASH PAYMENTS
Under the 2003 Plan, the Compensation Committee may provide for a limited
supplemental cash payment after the exercise of an option or stock appreciation
right, at the end of the restriction period of an award of restricted shares or
restricted share units or after payment of an award of performance
26
shares or performance units. In no event may the amount of any supplemental cash
payment exceed the value of the award to which it relates.
TRANSFERABILITY
Awards granted under the 2003 Plan are not transferable by participants
except by will or the laws of descent and distribution. The Compensation
Committee may, in its discretion, permit certain transfers of awards (other than
incentive stock options) to immediate family members or certain family entities,
or to a spouse upon divorce.
CHANGE IN CONTROL
The 2003 Plan provides that all options (and therefore any tandem stock
appreciation rights related thereto), free-standing stock appreciation rights,
restricted shares and restricted share units will immediately vest and become
exercisable upon a change in control of Wolverine. In addition, limited stock
appreciation rights will only become exercisable in connection with a change in
control.
A "change in control" of Wolverine is defined in the 2003 Plan to include,
under specified circumstances, the merger or consolidation of Wolverine into
another company, the sale of all or substantially all of Wolverine's assets,
certain acquisitions of Wolverine's voting stock and certain changes in Board
composition.
EFFECTIVE DATE, DURATION AND AMENDMENT
The Board adopted the 2003 Plan on March 25, 2003, and the 2003 Plan became
effective on that date, subject to stockholder approval within twelve months
thereafter. The 2003 Plan will remain in effect until the earlier of (i) the
date that no additional shares are available for issuance, (ii) the date the
2003 Plan is terminated by the Board in accordance with its terms or (iii) March
25, 2013, the tenth anniversary of the effective date. After such date, no
further awards may be granted under the 2003 Plan, but awards then outstanding
may continue to be exercised, vest or be paid in accordance with the terms of
the 2003 Plan.
The Board may at any time and from time to time alter, amend, suspend or
terminate the 2003 Plan, except that stockholder approval will be required for
the Board to (i) increase the maximum number of shares issuable under the 2003
Plan; (ii) change the class of persons eligible to receive awards; (iii) extend
the period during which any award may be exercised; (iv) extend the term of the
2003 Plan; (v) change the minimum option exercise price or (vi) reprice
outstanding options either directly by reducing the exercise price or indirectly
by canceling an outstanding option and granting a replacement option with a
lower exercise price. The Compensation Committee also may amend the 2003 Plan to
conform with local rules and regulations in any jurisdiction outside the United
States. Moreover, the Compensation Committee may waive, amend, suspend or
terminate any outstanding award, prospectively or retroactively, except that
such waiver, amendment, suspension or termination cannot impair the rights of
any participant without his or her consent.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief description of the material U.S. federal income
tax consequences associated with awards under the 2003 Plan. This general
summary is based on existing U.S. laws and regulations, and there can be no
assurance that those laws and regulations will not change in the future. State
and local tax consequences, or tax consequences in other countries, may vary.
STOCK OPTIONS. There will be no federal income tax consequences to either
Wolverine or the participant upon the grant of a stock option. If the option is
a non-qualified stock option, the participant will realize ordinary income at
exercise equal to the fair market value of the stock acquired over the exercise
price and Wolverine will receive a corresponding deduction. Any gain (or loss)
realized upon a subsequent disposition of the stock will generally constitute
capital gain (or loss).
27
If the option is an incentive stock option, the participant will not
realize taxable income on exercise, but the excess of the fair market value of
the stock acquired over the exercise price may give rise to "alternative minimum
tax." When the stock is subsequently sold, the participant will recognize income
equal to the difference between the sales price and the exercise price of the
option. If that sale occurs after the expiration of two years from the date of
the grant and one year from the date of exercise, the income will constitute
long-term capital gain. If the sale occurs prior to that time, the participant
will recognize ordinary income to the extent of the lesser of the gain realized
upon the sale or the difference between the fair market value of the acquired
stock at the time of exercise and the exercise price; any additional gain will
constitute capital gain. Wolverine will be entitled to a deduction in an amount
equal to the ordinary income, if any, that the participant recognizes.
RESTRICTED STOCK. Generally, restricted stock is not taxable to a
participant at the time of grant, but instead is included in ordinary income (at
its then-fair market value) when the restrictions lapse. A participant may elect
to recognize income at the time of grant, in which case the fair market value of
the stock at the time of grant is included in ordinary income and there is no
further income recognition when the restrictions lapse. Wolverine is entitled to
a tax deduction in an amount equal to the ordinary income, if any, recognized by
the participant.
OTHER AWARDS. In the case of other awards, the participant will generally
recognize ordinary income in an amount equal to any cash received and the fair
market value of any shares received on the date of payment or the date of
delivery of the underlying shares, although the taxable event may be delayed if
there is receipt of property title to which has not vested in the recipient.
Wolverine will generally be entitled to a corresponding tax deduction.
SECTION 162(m) LIMITATION. The 2003 Plan is designed to enable Wolverine to
provide certain forms of performance-based compensation to executive officers
that will meet the requirements for tax deductibility under Section 162(m) of
the Code. Section 162(m) of the Code provides that, subject to certain
exceptions, Wolverine may not deduct compensation paid to any one of certain
executive officers in excess of $1 million in any one year. Section 162(m)
excludes performance-based compensation meeting certain requirements from the $1
million limitation on tax deductibility. If the 2003 Plan is approved by
stockholders, we expect that stock options, stock appreciation rights and
performance awards paid in accordance with the 2003 Plan, and certain grants of
restricted shares and other stock-based grants made under the 2003 Plan, may be
(but are not required to be) structured to be deductible as performance-based
compensation not subject to the $1 million limitation on deductibility.
NEW PLAN BENEFITS
No benefits or amounts have been granted, awarded or received under the
2003 Plan. The awards that will be granted to eligible participants under the
2003 Plan are subject to the discretion of the Compensation Committee and,
therefore, are not determinable at this time. See the Summary Compensation Table
and the Option Grants in Last Fiscal Year Table for information about awards
made under the 1993 Equity Incentive Plan during fiscal year 2002 to the
executive officers named in those tables.
THE BOARD RECOMMENDS VOTING "FOR"THIS PROPOSAL.
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OTHER BUSINESS
Wolverine 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 2004 Annual Meeting of Stockholders, such
proposal must be received by Wolverine at its principal executive office no
later than December 13, 2003. In accordance with the rules of the SEC, Wolverine
may exclude from the proxy statement any proposals that are not timely. In
accordance with our Bylaws, in order for a stockholder proposal to be brought
before the annual meeting, a proposal must be received by Wolverine no later
than 60 days prior to the annual meeting. However, if Wolverine 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 Wolverine.
By Order of the Board of Directors
Dennis J. Horowitz
Chairman, President and
Chief Executive Officer
April 9, 2003
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APPENDIX A
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, outside legal counsel and the financial and legal 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.
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.
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o Inquire of management, the internal auditor 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 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,
particularly, the degree of aggressiveness of 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
Chairman 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.
o Have a clear understanding with the Company's outside legal counsel
that they are accountable to the Board of Directors and the Audit
Committee, and as such, must bring matters of disagreement between the
Company and the legal counsel to the Board of Directors through the
Audit Committee.
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.
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APPENDIX B
WOLVERINE TUBE, INC.
2003 EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE.
The Wolverine Tube, Inc. 2003 Equity Incentive Plan (the "Plan") is
intended to promote the long-term success of Wolverine Tube, Inc., a Delaware
corporation (the "Company") and maximize stockholder value by enhancing the
ability of the Company to (i) attract, retain and motivate officers and
employees of the Company and its Subsidiaries (as defined herein) and other
eligible persons who make substantial contributions to the Company through their
ability, loyalty, industry and invention, (ii) reward such persons for their
contributions to the Company, and (iii) provide such persons an opportunity to
obtain a proprietary interest in the Company, thereby encouraging commitment to
the Company's long-term growth and success and further aligning such persons'
interests with those of the Company's stockholders.
SECTION 2. DEFINITIONS.
As used in the Plan, the following terms shall have the respective meanings
set forth below:
(a) "AWARDS" means Options, Stock Appreciation Rights, Restricted Shares,
Restricted Share Units, Performance Shares, Performance Units or the additional
awards referred to in Section 11 below.
(b) "BENEFICIARY" or "Beneficiaries" means the person or persons
designated by a Participant pursuant to the provisions of the Agreement (as
defined in Section 5) to receive payments or rights pursuant to such Agreement
upon the Participant's death. If no Beneficiary is so designated by a
Participant or if no Beneficiary is living at the time a payment is due pursuant
to such Agreement, payments shall be made to the estate of such Participant.The
Agreement shall provide a Participant with the right to change the designated
Beneficiaries from time to time by written instrument executed by the
Participant and filed with the Committee in accordance with such rules as may be
specified by the Committee; provided, however, that no Beneficiary designation
shall be effective unless it is received by the Committee prior to the date of
death of the Participant.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CHANGE IN CONTROL" of the Company means any of the following events:
(i) The Company is merged or consolidated or reorganized into or
with another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
Voting Stock of the Company immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or substantially
all of its assets to any other corporation or other legal person, and as a
result of such sale or transfer less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such sale or transfer is held in the aggregate by the holders
of Voting Stock of the Company immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to the
Exchange Act, disclosing that:
(A) any person (as the term "person" is used in Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities representing 15% or
more of the Voting Stock of the Company; or
(B) any person has, during any period, increased the number of
shares of Voting Stock beneficially owned by such person by an amount equal to
or greater than 5% of the outstanding
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shares of Voting Stock; provided, however, that transfers of shares of Voting
Stock between a person and the affiliates or associates (as such terms are
defined under Rule 12b-2 or any successor rule or regulation promulgated under
the Exchange Act) of such person shall not be considered in determining any
increase in the number of shares of Voting Stock beneficially owned by such
person;
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a change in control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction;
(v) If during any period of two consecutive years, individuals who
at the beginning of any such period constitute the Directors of the Company
cease for any reason to constitute at least a majority thereof, unless the
election, or the nomination for election by the Company's stockholders, of each
Director of the Company first elected during such period was approved by a vote
of at least two-thirds of the Directors of the Company then still in office who
were Directors of the Company at the beginning of any such period; or
(vi) The Board approves, or the Company enters into an agreement
providing for, a transaction, event or development that constitutes (or would
constitute if consummated) a Change of Control pursuant to any of the foregoing.
(vii) Notwithstanding the foregoing provisions of (iii) and (iv)
above, unless otherwise determined in a specific case by a majority vote of the
Board, a "Change in Control" shall not be deemed to have occurred for purposes
of this Plan (A) solely because (1) the Company, (2) a Subsidiary or (3) any
Company-sponsored employee stock ownership plan or other employee benefit plan
either files or becomes obligated to file a report or proxy statement under or
in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange Act,
disclosing beneficial ownership by it of shares of Voting Stock of the Company,
whether in excess of 15% or otherwise, or because the Company reports that a
change of control of the Company has or may have occurred or will or may occur
in the future by reason of such beneficial ownership or (B) solely because of a
change in control of any Subsidiary.
(e) "CODE" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
(f) "COMMITTEE" means the Compensation Committee of the Board, or such
other committee or subcommittee appointed by the Board or the Committee to
administer the Plan as set forth in Section 4(a).
(g) "COMMON STOCK" means the common stock of the Company, par value $.01
per share, or such other class or kind of shares or other securities as may be
applicable under Section 14.
(h) "EFFECTIVE DATE" means the date the Plan is adopted by the Board,
subject to the approval of the stockholders of the Company as described in
Section 13.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, as such law, rules or regulations may
be amended from time to time.
(j) "FAIR MARKET VALUE" means, as of any given date, the closing price of
the Common Stock (or if no transactions were reported on such date on the next
preceding date on which transactions were reported) in the principal market in
which such Common Stock is traded on such date.
(k) "FREE-STANDING STOCK APPRECIATION RIGHT" means a Stock Appreciation
Right not granted in tandem with an Option.
(l) "GRANT DATE" means, with respect to any Award, the date on which such
Award was granted.
(m) "IMMEDIATE FAMILY" means a Participant's spouse, children and
grandchildren, and, to the extent applicable, the Participant.
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(n) "INCENTIVE STOCK OPTION" means an Option which is intended to qualify
as an incentive stock option under Section 422 of the Code.
(o) "INITIAL VALUE" means the initial value, if any, of a Free-Standing
Stock Appreciation Right as determined at the time of grant by the Committee in
its discretion and as set forth in the applicable Agreement; provided, however,
that the Initial Value per share of Common Stock covered by the Free-Standing
Stock Appreciation Right shall not be less than the Fair Market Value of a share
of Common Stock as of the Grant Date.
(p) "LIMITED STOCK APPRECIATION RIGHT" means a Tandem Stock Appreciation
Right or a Free-Standing Stock Appreciation Right that entitles the Participant
to receive a cash payment only in connection with a Change in Control, subject
to the terms and conditions provided for in Section 7(e).
(q) "NON-QUALIFIED STOCK OPTION" means an Option which is not intended to
qualify as an Incentive Stock Option.
(r) "OPTION" means an option to purchase shares of Common Stock, subject
to the terms and conditions provided for in Section 6.
(s) "OPTION PRICE" means the exercise price per share of Common Stock
purchasable under an Option, as determined at the time of grant by the Committee
in its discretion and as set forth in the applicable Agreement, which shall not
be less than the Fair Market Value of a share of Common Stock as of the Grant
Date; provided, however, that the Option Price for an Incentive Stock Option
granted to a Ten Percent Stockholder shall be no less than 110% of the Fair
Market Value of a share of Common Stock as of the Grant Date.
(t) "PARTICIPANT" means an officer, employee, consultant or independent
contractor providing services to the Company or one of its Subsidiaries who is
designated by the Committee to receive an Award under the Plan.
(u) "PERFORMANCE GOAL" means those goals described in Section 10, the
attainment of which may determine the degree of payout and/or vesting with
respect to an Award.
(v) "PERFORMANCE PERIOD" means any period for which one or more
Performance Goals have been established.
(w) "PERFORMANCE SHARE" means any right to receive the Fair Market Value
(on the Grant Date) of a share of Common Stock, which right is contingent on the
achievement of one or more Performance Goals during a specified Performance
Period, subject to the terms and conditions provided for in Section 9.
(x) "PERFORMANCE UNIT" means any right to receive a designated dollar
value amount, which right is contingent on the achievement of one or more
Performance Goals during a specified Performance Period, subject to the terms
and conditions provided for in Section 9.
(y) "QUALIFYING PERFORMANCE-BASED AWARD" means any Award intended to
result in "qualified performance-based compensation" within the meaning of
Section 162(m) of the Code.
(z) "RESTRICTED SHARES" means restricted shares of Common Stock, subject
to the terms and conditions provided for in Section 8.
(aa) "RESTRICTED SHARE UNIT" means any right to receive shares of Common
Stock in the future, subject to the terms and conditions provided for in Section
8.
(bb) "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder, as such law, rules or regulations may be
amended from time to time.
(cc) "STOCK APPRECIATION RIGHT" means a right to receive the appreciation,
if any, in the Fair Market Value of shares of Common Stock, subject to the terms
and conditions provided for in Section 7.
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(dd) "SUBSIDIARY" means a corporation, limited liability company, limited
partnership, joint venture or other entity in respect of which the Company
directly or indirectly beneficially owns or controls a majority of the voting
securities or voting interests.
(ee) "TANDEM STOCK APPRECIATION RIGHT" means a Stock Appreciation Right
granted in tandem with an Option.
(ff) "TEN PERCENT STOCKHOLDER" means a person who owns (after taking into
account the attribution rules of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company.
(gg) "VOTING STOCK" means at any time, the then-outstanding securities
entitled to vote generally in the election of directors of a corporation.
SECTION 3. SHARES AVAILABLE FOR GRANT.
(a) Subject to adjustment as provided in Section 14 of this Plan, the
number of shares of Common Stock that may be issued or transferred under the
Plan shall not exceed 850,000 shares; provided, however, that no more than
250,000 of such shares may be issued or transferred under the Plan in the form
of Restricted Shares or Restricted Share Units. Notwithstanding the foregoing:
(i) upon the payment of any Option Price or satisfaction of any
withholding amount by the delivery to the Company, or attestation to the
ownership, of Common Stock pursuant to Section 6(b)(i), or share withholding
pursuant to Section 18(h), there shall be deemed to have been issued or
transferred under this Plan only the net number of shares of Common Stock
actually issued or transferred by the Company; and
(ii) if any Award (A) is cancelled or forfeited, or terminates,
expires or lapses for any reason without delivery of shares of Common Stock or
resulting in forfeiture of shares of Common Stock to the Company, or (B) is
settled in cash rather than by issuance of shares of Common Stock, then any
shares of Common Stock relating to such Award (to the extent of such
cancellation, forfeiture, termination, expiration, lapse or settlement) shall
not count against the aggregate number of shares of Common Stock that may be
issued or transferred under the Plan.
(b) Shares of Common Stock issued under the Plan may be authorized and
unissued shares or issued and re-acquired shares, as the Committee may from time
to time determine.
(c) Notwithstanding anything in this Section 3 or elsewhere in this Plan
to the contrary, and subject to adjustment as provided in Section 14 of this
Plan, no Participant shall be granted during any one calendar year: (i) Options
to purchase more than 200,000 shares of Common Stock, (ii) Stock Appreciation
Rights covering more than 200,000 shares of Common Stock, (iii) Performance
Shares covering more than 200,000 shares of Common Stock or (iv) Performance
Units covering more than $300,000. In all cases, determinations under this
Section 3(c) shall be made in a manner that is consistent with the exemption for
performance-based compensation provided by Section 162(m) of the Code.
SECTION 4. ADMINISTRATION.
(a) The Plan shall be administered by the Committee, which shall be
appointed by the Board. To the extent necessary or desirable to satisfy the
requirements for exemption from Section 16(b) of the Exchange Act, the
requirements for exemption from Section 162(m) of the Code, or the applicable
standards of any national securities exchange upon which shares of Common Stock
are traded or quoted, the Committee shall consist of two or more members of the
Board who, during the time of their service as members of the Committee, qualify
as "Non-Employee Directors" within the meaning of Rule 16b-3 under the Exchange
Act (or any successor definition thereto), "outside directors" within the
meaning of Section 162(m) of the Code (or any successor definition thereto), and
"independent directors" within the meaning of applicable standards of any
national securities exchange upon which shares of Common Stock are traded or
quoted. Notwithstanding the foregoing, the Committee shall have full authority
to delegate to a subcommittee any and all powers and duties of the Committee
with respect
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to this Plan, such subcommittee to be constituted and to have such authority as
may be necessary to satisfy any and all requirements of Section 16(b) of the
Exchange Act, Section 162(m) of the Code or any applicable standards of any
national securities exchange upon which shares of Common Stock are traded or
quoted.
(b) The Committee shall have full and final authority to:
(i) interpret and construe the provisions of the Plan and of any
agreements or instruments relating to the Plan and to decide all questions of
fact arising in its application;
(ii) designate Participants;
(iii) make Awards to Participants under the Plan;
(iv) determine the type of Award to be made and the amount, size,
terms and conditions of each such Award;
(v) determine and establish additional terms and conditions not
inconsistent with the Plan for any Agreements entered into with Participants in
connection with the Plan;
(vi) determine the time when Awards will be granted and when rights
may be exercised, which may be after termination of employment;
(vii) to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable; and
(viii) make all other determinations necessary or advisable for the
administration of the Plan and otherwise supervise the administration of the
Plan.
(c) Each interpretation, determination or other action made or taken
pursuant to the Plan by the Committee shall be final, conclusive and binding on
all persons; provided, however, that any such decision made or action taken may
be reviewed by the Board, in which case the determination of the Board shall be
final and conclusive. This provision shall not be construed to grant to any
person any right to review by the Board of any decision made or action taken by
the Committee.
(d) Neither the Board, the Committee nor any member thereof shall be
liable for any act, omission, interpretation, construction or determination made
in connection with the Plan in good faith, and the members of the Board and the
Committee may be entitled to indemnification and reimbursement by the Company in
respect of any claim, loss, damage or expense (including attorneys' fees)
arising therefrom to the full extent permitted by law and under any directors'
and officers' liability insurance that may be in effect from time to time. In
addition, no member of the Board or the Committee, and no officer or employee,
shall be liable for any act, or failure to act hereunder, by any other member or
other officer or employee or by any agent to whom duties in connection with the
administration of this Plan have been delegated or for any act or failure to act
by such member or officer or employee, in all events except for his or her own
willful misconduct or as expressly provided by statute.
(e) To the extent permitted by applicable law, the Committee may delegate
to one or more executive officers of the Company any or all of the authority and
responsibility of the Committee with respect to the Plan, other than with
respect to persons who are subject to Section 16 of the Exchange Act. To the
extent the Committee has so delegated to one or more executive officers the
authority and responsibility of the Committee, all references to the Committee
herein shall include such officer or officers.
SECTION 5. AGREEMENT.
The terms and conditions of each grant or sale of Awards shall be embodied
in a written agreement (the "Agreement") in a form approved by the Committee
which shall contain terms and conditions not inconsistent with the Plan and
which shall incorporate the Plan by reference. Each Agreement shall:
(a) state the Grant Date of the Award, the number of shares of Common
Stock issuable in connection with the Award, the number of Free-Standing Stock
Appreciation Rights (including Limited Stock Appreciation Rights), Restricted
Shares or Restricted Share Units related to the Award, or the dollar value of
the Award, as the case may be, and:
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(i) in the case of Options (and any related Tandem Stock
Appreciation Rights, including Limited Stock Appreciation Rights), the Option
Price;
(ii) in the case of Restricted Shares or Restricted Share Units, the
purchase price, if any, for such Restricted Shares or Restricted Share Units; or
(iii) in the case of Free-Standing Stock Appreciation Rights
(including Limited Stock Appreciation Rights), the Initial Value thereof and the
maximum number of shares of Common Stock that may be issued in connection
therewith;
(b) specify any applicable vesting schedule, including any Performance
Goals;
(c) in the case of Options, state whether the Option is intended to
qualify as an Incentive Stock Option;
(d) specify the limitations on transfer of Awards consistent with the
terms of the Plan;
(e) provide for the treatment of Awards in the event of the termination of
the Participant's employment;
(f) provide such other additional or alternative terms as may, in the
Committee's discretion, be advisable to comply with the exemptive relief
provided by Rule 16b-3 under the Exchange Act;
(g) provide such other terms and conditions, not inconsistent with the
Plan, as the Committee may deem advisable;
(h) be signed by the recipient of the Award and a person designated by the
Committee; and
(i) be delivered to the recipient of the Award.
SECTION 6. TERMS OF OPTIONS.
(a) TERMS OF OPTIONS GENERALLY. Options may be granted to any Participant
to purchase such number of shares of Common Stock as the Committee shall
determine in its discretion. Options granted under the Plan shall comply with
the terms and conditions set forth in this Section 6.
(i) VESTING.
(A) Each Option shall vest and become exercisable as determined
by the Committee and as set forth in the applicable Agreement; provided,
however, that the Committee shall have the right at any time to accelerate the
vesting of any Option previously granted under the Plan, and all Options shall
immediately vest and become exercisable upon a Change in Control.
(B) An Option shall be exercisable following a Participant's
termination of employment with the Company or any of its Subsidiaries at such
times and in such manner as determined by the Committee, which the Committee may
specify in the applicable Agreement or determine at the time of such termination
of employment.
(C) The aggregate Fair Market Value (determined at the time of
grant) of the Common Stock for which Incentive Stock Options are exercisable for
the first time by a Participant during any calendar year under the Plan (and/or
any other stock option plans of the Company or any Subsidiary) shall not exceed
$100,000.
(ii) DURATION OF OPTIONS. Each Option shall be effective for such
term as shall be determined by the Committee and set forth in the Agreement;
provided, however, that no Incentive Stock Option shall be exercisable more than
ten years after the date such Incentive Stock Option is granted, and provided
further, that that no Incentive Stock Option granted to a Ten Percent
Stockholder shall be exercisable more than five years after the date such
Incentive Stock Option is granted.
(iii) INCENTIVE STOCK OPTIONS. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify either the Plan or
any Incentive Stock Option under Section 422 of the Code. Notwithstanding the
foregoing, in the event a
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Participant voluntarily disqualifies an Option as an Incentive Stock Option
within the meaning of Section 422 of the Code, the Committee may, but shall not
be obligated to, make such additional grants, awards or bonuses as the Committee
shall deem appropriate, to reflect the tax savings to the Company which result
from such disqualification. To the extent that an Option is disqualified as an
Incentive Stock Option within the meaning of Section 422 of the Code, such
Option shall constitute a Non-Qualified Stock Option.
(b) PAYMENT OF OPTION PRICE. Payment of the Option Price shall be made in
full at the time the notice of exercise of the Option is delivered to the
Committee and shall be in cash, bank certified or cashier's check or personal
check (unless at the time of exercise the Committee in a particular case
determines not to accept a personal check) for the Common Stock being purchased.
The Committee may determine at the time the Option is granted for Incentive
Stock Options, or at any time before exercise for Non-Qualified Stock Options,
that additional forms of payment will be permitted. To the extent permitted by
the Committee and applicable laws and regulations (including, but not limited
to, federal tax and securities laws and regulations and state corporate law), an
Option may be exercised by:
(i) delivery to the Company of shares of Common Stock owned by the
Participant having a Fair Market Value equal to the Option Price and, at the
discretion of the Committee, any federal, state or local withholding tax
obligations that may arise in connection with the exercise, provided that:
(A) at the discretion of, and subject to procedures satisfactory
to, the Committee, whenever a Participant is permitted to exercise an Option by
delivering to the Company shares of Common Stock owned by the Participant, such
delivery requirement may be satisfied by presenting attestation of record
ownership of such shares of Common Stock, or, to the extent permitted by the
Committee, beneficial ownership of such shares of Common Stock, in which case
the Company shall treat the Option as exercised without further payment and
shall withhold such number of shares of Common Stock from those shares acquired
by the exercise of the Option, and
(B) unless otherwise provided by the Committee, an Option may
not be exercised by delivery to the Company, or attestation to the ownership, of
shares of Common Stock unless such shares either have been owned by the
Participant (with good title, free and clear of all liens and encumbrances) for
more than six months (and not used for another Option exercise by attestation
during such period) or were not acquired, directly or indirectly, from the
Company; or
(ii) delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker selected or approved by the Committee, all
in accordance with the regulations of the Federal Reserve Board, to deliver
promptly to the Company the amount of the sale or loan proceeds to pay the
Option Price and, at the discretion of the Committee, any federal, state or
local withholding tax obligations that may arise in connection with the
exercise.
(c) RELOAD OPTIONS. The Committee may provide in the applicable Agreement
that the Participant will automatically be granted a new Option (the "Second
Option") in the event that the Participant exercises a prior Option (the "First
Option") by paying some or all of the exercise price of the First Option with
shares of Common Stock or by satisfying some or all of the Participant's tax
liability incurred in connection with the First Option by having shares of
Common Stock withheld to satisfy such liability. The number of shares of Common
Stock subject to the Second Option and the other terms and conditions thereof
shall be determined by the Committee and set forth in the Agreement applicable
to the First Option.
(d) EFFECT OF EXERCISE ON RELATED TANDEM STOCK APPRECIATION RIGHTS. The
exercise of an Option shall result in the cancellation of any related Tandem
Stock Appreciation Rights on a share-for-share basis.
(e) LIMITATION ON EXERCISE. The Options shall not be exercisable unless
either the Common Stock subject to the Options has been registered under the
Securities Act and qualified under applicable state "blue sky" laws in
connection with the offer and sale thereof, or the Participant has furnished the
Company with an investment representation satisfactory to the Company that such
registration and qualification is not required as a result of the availability
of an exemption from registration under such laws.
(f) DELIVERY OF CERTIFICATE. As soon as practicable following the exercise
of an Option, a certificate in the Participant's name evidencing the appropriate
number of shares of Common Stock issued in connection with such exercise shall
be delivered to the Participant.
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SECTION 7. TERMS OF STOCK APPRECIATION RIGHTS.
(a) TERMS OF STOCK APPRECIATION RIGHTS GENERALLY. Each Stock Appreciation
Right granted under the Plan shall comply with the terms and conditions set
forth in this Section 7.
(i) GRANTS OF STOCK APPRECIATION RIGHTS. Each Tandem Stock
Appreciation Right shall relate to a specific Option granted under the Plan and
in the case of Incentive Stock Options may be granted only concurrently with the
Option to which it relates. In the case of Non-Qualified Stock Options, Tandem
Stock Appreciation Rights may be granted at any time prior to the exercise,
termination or expiration of such Option. Free-Standing Stock Appreciation
Rights may be granted by the Committee at any time to any Participant.
(ii) VESTING, EXERCISE AND DURATION OF STOCK APPRECIATION RIGHTS. A
Tandem Stock Appreciation Right shall be exercisable by a Participant only at
such times as the Option to which it relates may be exercised, shall be
forfeited when the related Option is forfeited and may expire no later than the
expiration of the related Option. A Tandem Stock Appreciation Right granted in
connection with an Incentive Stock Option may be exercised only if and when the
Fair Market Value of the Common Stock subject to the Incentive Stock Option
exceeds the Option Price. Each Free-Standing Stock Appreciation Right shall vest
and become exercisable as determined by the Committee and as set forth in the
applicable Agreement; provided, however, that all Free-Standing Stock
Appreciation Rights shall immediately vest and become exercisable upon a Change
in Control.
(iii) VALUE OF STOCK APPRECIATION RIGHTS. A vested Stock Appreciation
Right shall entitle a Participant to receive from the Company, upon exercise of
the right, an amount (payable in the manner described in Section 7(c)) equal to
the Fair Market Value on the exercise date of the Stock Appreciation Right of
the total number of shares of Common Stock for which the Stock Appreciation
Right is exercised, less (A) in the case of Tandem Stock Appreciation Rights,
the Option Price that the Participant would have otherwise been required to pay
to purchase such shares had the Option been exercised with respect to such
shares or (B) in the case of a Free-Standing Stock Appreciation Right, the
Initial Value.
(iv) NUMBER OF SHARES COVERED BY A TANDEM STOCK APPRECIATION RIGHT. In
no case may the number of shares of Common Stock covered by a Tandem Stock
Appreciation Right exceed the number of shares of Common Stock covered by the
related Option.
(b) EFFECT OF EXERCISE OF TANDEM STOCK APPRECIATION RIGHT ON RELATED
OPTION. The exercise of a Tandem Stock Appreciation Right shall automatically
result in the cancellation of the related Option on a share-for-share basis.
(c) PAYMENT. Payment to a Participant upon the exercise of a Stock
Appreciation Right shall be made as soon as practicable following such exercise
and, in the discretion of the Committee, may be made in cash, in shares of
Common Stock or in a combination of cash and shares of Common Stock; provided,
however, that payment shall not be made in Common Stock unless Common Stock has
been registered under the Securities Act, or the Company has determined that an
exemption under the Securities Act is available and applicable to such exercise
and payment in Common Stock.
(d) DELIVERY OF CERTIFICATE. As soon as practicable following the exercise
of a Stock Appreciation Right that is paid in whole or part in Common Stock, a
certificate evidencing the appropriate number of shares of Common Stock issued
in connection with such exercise shall be delivered to the Participant.
(e) LIMITED STOCK APPRECIATION RIGHTS. In its discretion, the Committee
may grant Tandem Stock Appreciation Rights or Free-Standing Stock Appreciation
Rights in the form of Limited Stock Appreciation Rights, which entitle the
Participant to receive a cash payment only in connection with a Change in
Control. To the extent provided by the Committee, a Limited Stock Appreciation
Right may be automatically exercisable at a time or upon an event determined by
the Committee at the time of grant or thereafter, or it may be exercised by the
Participant during the period beginning not earlier than the date of a Change in
Control, and ending not later than ninety days following the date of the Change
in Control. As soon as practicable following the exercise of a Limited Stock
Appreciation Right, except as otherwise provided in the applicable Agreement,
the Participant shall receive in cash, in shares of Common Stock or in a
combination of cash and shares of Common Stock, in the discretion of the
Committee, the amounts set forth in Section 7(a)(iii).
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SECTION 8. TERMS OF RESTRICTED SHARES AND RESTRICTED SHARE UNITS.
(a) TERMS OF RESTRICTED SHARES AND RESTRICTED SHARE UNITS GENERALLY.
Restricted Shares and/or Restricted Share Units may be granted or offered for
sale to any Participant, may be granted solely in consideration for services
rendered or to be rendered to the Company, or its Subsidiaries or affiliates,
and may also be granted in substitution and exchange for "restricted property"
(within the meaning of Section 83 of the Code) held by a Participant. If
Restricted Shares or Restricted Share Units are offered for sale hereunder, the
purchase price shall be payable in cash, or, in the discretion of the Committee
and to the extent provided in the applicable Agreement, in shares of Common
Stock already owned by the Participant, in other property, or in any combination
of cash, shares of Common Stock or such other property. Restricted Shares or
Restricted Share Units offered for sale shall be sold at a purchase price
determined at the time of offering by the Committee in its discretion and as set
forth in the applicable Agreement. Restricted Shares or Restricted Share Units
granted or offered for sale under the Plan shall comply with the terms and
conditions set forth in this Section 8.
(i) RESTRICTIONS. In addition to the transferability restrictions set
forth in Section 18(a), Restricted Shares and Restricted Share Units granted to
Participants shall be subject to such additional restrictions as the Committee
may impose in its discretion, as set forth in the applicable Agreement.
(ii) VESTING.
(A) The restrictions applicable to any grant of Restricted
Shares and/or Restricted Share Units shall lapse as determined by the Committee
and as set forth in the applicable Agreement. Such vesting provisions may
include, without limitation, vesting based upon time-based restrictions, the
achievement of specific Performance Goals with respect to a Performance Period,
time-based restrictions on vesting following the attainment of specific
Performance Goals with respect to a Performance Period, and/or restrictions
under applicable federal or state securities laws; provided, however, that,
except to the extent that any grant of Restricted Shares or Restricted Share
Units is intended to be a Qualifying Performance-Based Award, the Committee
shall have the right at any time to accelerate the vesting of any Restricted
Shares or Restricted Share Units previously granted under the Plan, and all
Restricted Shares and Restricted Share Units shall immediately vest upon a
Change in Control.
(B) To the extent that any Award of Restricted Shares or
Restricted Share Units vest based on achievement of any Performance Goals, as
soon as is reasonably practicable following the end of any applicable
Performance Period, the Committee shall determine the extent to which
Performance Goals have been attained for such Performance Period and what, if
any, vesting or payment is due with respect to the Award of Restricted Shares or
Restricted Share Units. Subject to the Committee certifying in writing as to the
satisfaction of the requisite Performance Goals if such certification is
required in order to qualify the Award as a Qualifying Performance-Based Award
or otherwise under the applicable Agreement, vesting or payment of Restricted
Shares or Restricted Share Units shall occur as promptly as practicable
following such Committee determination unless deferred subject to such terms and
conditions as may be prescribed by the Committee and set forth in the applicable
Agreement.
(b) DELIVERY OF CERTIFICATE FOR RESTRICTED SHARES. At the time of grant or
sale of Restricted Shares to a Participant, a certificate evidencing the
appropriate number of shares of Common Stock granted or sold to the Participant
as Restricted Shares shall be issued in the Participant's name but shall be held
by the Company for the account of the Participant until such time as such
Restricted Shares vest hereunder. As soon as reasonably practicable after such
vesting or the Committee's determination of vesting, as applicable, the
certificate evidencing such Restricted Shares shall be delivered to the
Participant.
(c) Settlement of Restricted Share Units. No shares of Common Stock shall
be issued at the time of grant or sale of Restricted Share Units to a
Participant. Any Restricted Share Units that vest in accordance with the terms
and conditions of the applicable Agreement shall be settled in cash, in shares
of Common Stock, or in a combination of cash and shares of Common Stock as
determined by the Committee in its discretion or as otherwise provided for under
the Agreement; provided, however, that settlement shall not be made in Common
Stock unless Common Stock has been registered under the Securities Act, or the
Company has determined that an exemption under the Securities Act is available
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and applicable to such exercise and payment in Common Stock. With respect to
Restricted Share Units that are payable in whole or in part in shares of Common
Stock, the Company shall issue and deliver to the Participant as soon as
reasonably practicable after vesting or the Committee's determination of
vesting, as applicable, a certificate evidencing the appropriate number of
shares of Common Stock payable to the Participant.
(d) VOTING AND DIVIDEND RIGHTS. A Participant shall have all rights of a
stockholder as to any Restricted Shares sold or granted to the Participant,
including the right to receive dividends and the right to vote for directors and
upon other matters in accordance with the Company's charter. There shall be no
voting rights with respect to Restricted Share Units. The Committee, in its
discretion, may grant dividend equivalent rights with respect to earned but
unpaid Restricted Share Units as evidenced by the applicable Agreement.
SECTION 9. PERFORMANCE SHARES AND PERFORMANCE UNITS.
(a) TERMS OF PERFORMANCE SHARES AND PERFORMANCE UNITS GENERALLY.
Performance Shares and/or Performance Units may be granted to any Participant in
such amounts and upon such terms and conditions as the Committee shall determine
in its discretion, subject to the provisions of this Section 9.
(i) VALUATION. Each Performance Share shall have an initial value
equal to the Fair Market Value of a share of Common Stock on the Grant Date.
Each Performance Unit shall have an initial value that is established by the
Committee on the Grant Date.
(ii) PERFORMANCE PERIOD. The Performance Period for each grant of
Performance Shares or Performance Units shall be established by the Committee.
(iii) PERFORMANCE GOALS. For each grant of Performance Shares or
Performance Units, the Committee in its discretion shall determine the
Performance Goals to be achieved during any Performance Period, the proportion
of payments, if any, to be made for performance between the minimum and full
performance levels for any Performance Goal, and, if applicable, the relative
percentage weighting given to each of the selected Performance Goals.
(b) PAYMENT. As soon as is reasonably practicable following the end of any
applicable Performance Period, the Committee shall determine the extent to which
Performance Goals have been attained for such Performance Period and what, if
any, payment is due with respect to the Award of Performance Shares or
Performance Units. Subject to the Committee certifying in writing as to the
satisfaction of the requisite Performance Goals if such certification is
required in order to qualify the Award as a Qualifying Performance-Based Award
or otherwise under the applicable Agreement, payment of earned Performance
Shares or Performance Units shall be made as promptly as practicable following
such Committee determination unless deferred subject to such terms and
conditions as may be prescribed by the Committee and set forth in the applicable
Agreement. The Committee, in its sole discretion and as set forth in the
applicable Agreement, may pay earned Performance Shares and Performance Units in
the form of cash, shares of Common Stock (which may be Restricted Shares),
Restricted Share Units or a combination of cash, shares of Common Stock (which
may be Restricted Shares) and Restricted Share Units, which have an aggregate
Fair Market Value equal to the value of the earned Performance Shares or
Performance Units at the close of the applicable Performance Period. In the
event that Restricted Shares or Restricted Share Units are to be received upon
payment, in whole or in part, of Performance Shares or Performance Units, the
Committee shall also determine the restrictions applicable to such Restricted
Shares or Restricted Share Units, which restrictions shall be set forth in the
applicable Agreement. Any Restricted Shares or Restricted Share Units payable in
connection with Performance Shares or Performance Units shall, pending the
vesting thereof, be evidenced in the manner set forth in Section 8 hereof.
(c) VOTING AND DIVIDEND RIGHTS. Participants shall have no voting rights
with respect to any shares of Common Stock underlying a grant of Performance
Shares or Performance Units held by them during the applicable Performance
Period. The Committee, in its discretion, may grant dividend equivalent rights
with respect to any earned but unpaid shares of Common Stock underlying a grant
of Performance Shares or Performance Units during the applicable Performance
Period.
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SECTION 10. PERFORMANCE GOALS.
(a) To the extent permitted by the Plan, the Committee may make Awards
that are intended to be Qualifying Performance-Based Awards. The Performance
Goals relating to any Qualifying Performance-Based Award shall be
pre-established and objective within the meaning of Code Section 162(m).
Accordingly, the Performance Goals relating to any Qualifying Performance-Based
Award shall be established within the first ninety (90) days of the Performance
Period (or such earlier or later date as may be required or permitted by Section
162(m)), and shall be based on one or more of the following objective criteria:
(i) Net earnings;
(ii) Earnings per share;
(iii) Net sales growth;
(iv) Net income (before or after taxes);
(v) Net operating profit;
(vi) Return measures (including return on assets, capital, equity or
sales);
(vii) Cash flow (including operating cash flow and free cash flow);
(viii) Cash flow return on investments, which equals net cash flows divided
by stockholders' equity;
(ix) Earnings before or after taxes, interest, depreciation and/or
amortization;
(x) Internal rate of return or increase in net present value;
(xi) Gross margins;
(xii) Operating margin;
(xiii) Share price (including growth measures and total stockholder
return);
(xiv) Expense targets;
(xv) Working capital targets relating to sales, inventory and/or accounts
receivable;
(xvi) Planning accuracy (as measured by comparing planned results to
actual results);
(xvii) Key operational measures (including delivery performance, quality
measurements, employee safety metrics and market share expansion).
Performance Goals may be designed to measure, for any Performance Period, the
performance of the Company on a consolidated basis, or any one or more
Subsidiaries, divisions or business units of the Company, relative to any
standards determined by the Committee, including performance compared to prior
periods on an absolute basis and performance compared to other companies,
Subsidiaries, divisions or business units; provided that it shall only be
appropriate to measure net earnings per share and market price per share on a
consolidated basis. At the discretion of the Committee, multiple Performance
Goals may be established and may have the same or different weighting.
(b) At any time prior to vesting or payout of any performance-based Award,
the Committee may adjust previously established Performance Goals or other terms
or conditions to reflect major unforeseen events such as changes in laws,
regulations or accounting policies or procedures, mergers, acquisitions or
divestitures or extraordinary, unusual or nonrecurring items or events, subject
to the limitations of Code Section 162(m) with respect to those Awards that are
structured to be Qualifying Performance-Based Awards.
(c) In the event that applicable tax and/or securities laws change to
permit Committee discretion to alter the Performance Goal criteria listed in
Section 10(a) without obtaining stockholder approval of such changes, the
Committee shall have sole discretion to make such changes without obtaining
stockholder approval.
(d) In the event that the Committee determines that it is advisable to
grant performance-based Awards that do not qualify as Qualifying
Performance-Based Awards, the Committee may make such grants without satisfying
the requirements of Code Section 162(m).
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SECTION 11. OTHER AWARDS.
The Committee shall have the authority to specify the terms and provisions
of other equity-based or equity-related Awards not described above (including
the grant or offer for sale of unrestricted shares of Common Stock) which the
Committee determines to be consistent with the purpose of the Plan and the
interests of the Company, which Awards may provide for the acquisition or future
acquisition of shares of Common Stock by Participants or payment in cash or
otherwise of amounts based on the value of such shares and may include, without
limitation, Awards designed to comply with or take advantage of applicable local
laws of jurisdictions other than the United States.
SECTION 12. SUPPLEMENTAL CASH PAYMENTS.
Subject to the Committee's discretion, Agreements may provide for the
payment by the Company of a supplemental cash payment after the exercise of an
Option or Stock Appreciation Right, at the end of the restriction period of an
Award of Restricted Shares or Restricted Share Units, or after payment of an
Award of Performance Shares or Performance Units. Supplemental cash payments
shall be subject to such terms and conditions as shall be provided by the
Committee, provided that in no event shall the amount of each payment exceed:
(a) In the case of an Option, the excess of the Fair Market Value of a
share of Common Stock on the date of exercise over the Option Price multiplied
by the number of shares for which such Option is exercised; or
(b) In the case of a Stock Appreciation Right or Award of Restricted
Shares, Restricted Share Units, Performance Shares or Performance Units, the
value of the shares and/or other consideration issued in payment of such Award.
SECTION 13. EFFECTIVENESS OF THE PLAN.
The Plan is effective on the date the Plan is adopted by the Board (the
"Effective Date"), subject to the approval of the stockholders of the Company in
the manner required by the Company's charter, its Bylaws and the laws of the
State of Delaware within twelve months following the date of adoption of the
Plan by the Board. Any Awards granted under the Plan after the Effective Date
but before the date of stockholder approval of the Plan automatically shall be
granted subject to such approval.
SECTION 14. CERTAIN ADJUSTMENTS.
The Board may make or provide for such adjustments in the dollar value of
outstanding Awards, in the numbers of shares of Common Stock covered by
outstanding Awards, in the prices per share applicable to Options and Stock
Appreciation Rights and in the kind of shares covered by outstanding Awards, as
the Board, in its sole discretion, exercised in good faith, may determine is
equitably required to prevent dilution or enlargement of the rights of
Participants that otherwise would result from (a) any stock dividend, stock
split, combination of shares, recapitalization or other change in the capital
structure of the Company, or (b) any merger, consolidation, spin-off, split-off,
spin-out, split-up, reorganization, partial or complete liquidation or other
distribution of assets, issuance of rights or warrants to purchase securities,
or (c) any other corporate transaction or event having an effect similar to any
of the foregoing. Moreover, in the event of any such transaction or event, the
Board, in its discretion, may provide in substitution for any or all outstanding
Awards under this Plan such alternative consideration as it, in good faith, may
determine to be equitable in the circumstances and may require in connection
therewith the surrender of all Awards so replaced. The Board may also make or
provide for such adjustments in the numbers and kind of shares specified in
Section 3 of this Plan as the Board in its sole discretion, exercised in good
faith, may determine is appropriate to reflect any transaction or event
described in this Section 14.
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SECTION 15. AMENDMENT.
(a) AMENDMENT OF THE PLAN. The Board may at any time and from time to time
alter, amend, suspend or terminate the Plan in whole or in part; provided,
however, that without stockholder approval, the Board may not increase the
maximum number of shares which may be issued under the Plan (except increases
pursuant to Section 14 hereof), change the class of persons eligible to receive
Awards, extend the period during which any Award may be exercised, extend the
term of the Plan or change the minimum Option Price; and provided further, that
any amendment which must be approved by the stockholders of the Company in order
to comply with applicable law or the rules of any national securities exchange
upon which the shares of Common Stock are traded or quoted shall not be
effective unless and until such approval has been obtained. The termination or
any modification, suspension or amendment of the Plan shall not adversely affect
a Participant's rights under an Award previously granted without the consent of
such Participant. Presentation of the Plan or any amendment thereof for
stockholder approval shall not be construed to limit the Company's authority to
offer similar or dissimilar benefits in plans or other arrangements that do not
require stockholder approval. The Committee also may amend the Plan in such
manner as may be necessary so as to have the Plan conform with local rules and
regulations in any jurisdiction outside the United States.
(b) AMENDMENTS TO AWARDS. The Committee may waive any conditions or rights
under, amend the terms of, or suspend or terminate any Award theretofore
granted, prospectively or retroactively; provided, however, that (i) no such
waiver, amendment, suspension or termination shall impair the rights of any
Participant or permitted transferee without his or her consent and (ii) except
as permitted by the provisions of Section 14 hereof, neither the Board nor the
Committee shall, without stockholder approval, amend the terms of previously
granted Options to reduce the Option Price per share subject to such Options or
cancel such Options and grant substitute Options with a lower price per share
than the cancelled Options.
SECTION 16. DURATION OF THE PLAN.
Unless previously terminated pursuant to Section 15, the Plan shall
terminate on the tenth anniversary of the Effective Date, and no further Awards
may be granted hereunder after such date. Awards then outstanding may continue
to be exercised, vest or be paid in accordance with their terms.
SECTION 17. USE OF PROCEEDS.
The proceeds received by the Company from the sale of Common Stock pursuant
to the sale or exercise of Awards under the Plan shall be added to the Company's
general funds and used for general corporate purposes.
SECTION 18. MISCELLANEOUS.
(a) LIMITATIONS ON TRANSFER. No Award shall be transferable by a
Participant otherwise than by will or the laws of descent and distribution, and
during the Participant's lifetime shall only be exercisable by or paid to the
Participant; provided, however, that this sentence shall not preclude the
Participant from designating a Beneficiary. Notwithstanding the preceding
sentence, the Committee, in its discretion, may permit the following transfers
of any Award except for Incentive Stock Options, which permitted transfers shall
be subject to any terms, conditions and prior notice requirements established by
the Committee and reflected in the applicable Agreement:
(i) transfers pursuant to a domestic relations order in settlement
of marital property rights;
(ii) transfers to a revocable trust under circumstances where the
Participant is the trustee or co-trustee of such revocable trust and the trust
beneficiaries are limited to the Participant, and in the event of the
Participant's death, the Participant's spouse, lineal descendants and lineal
ancestors; or
(iii) transfers to or for the benefit of the Participant's Immediate
Family (including, without limitation, to a trust for the benefit of the
Participant's Immediate Family or to a partnership or limited liability company
whose only partners or members are the Participant and/or the Participant's
Immediate Family).
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Any such permitted transferee shall remain subject to all the terms and
conditions applicable to the Award prior to such transfer.
(b) CONSTRUCTION OF THE TERM "PARTICIPANT". Whenever the word
"Participant" is used in this Plan under circumstances where the provision
should logically be construed to apply to the executors, the administrators, the
Beneficiary, or any other person or persons to whom an Award may be transferred
as permitted by the terms of this Plan and any applicable Agreement, the word
"Participant" shall be deemed to include such person or persons.
(c) NO RIGHTS TO GRANTS OR CONTINUED SERVICE. Except as expressly provided
for in the Plan, no Participant shall have any claim or right to be granted an
Award under the Plan. Neither the Plan nor any action taken hereunder shall be
construed as giving any Participant any right to be retained in the employ or
service of the Company or any of its Subsidiaries.
(d) NO RESTRICTION ON RIGHT OF COMPANY TO EFFECT CORPORATE CHANGES.
Nothing in the Plan shall affect 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 or any Subsidiary's capital
structure or business, or any merger or consolidation of the Company or any
Subsidiary, or any issue of stock or of options, warrants or rights to purchase
stock or of bonds, notes, 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 Subsidiary, or any sale or transfer of all or
any part of the Company's or any Subsidiary's assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
(e) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Subsidiary and a Participant or any
other person. To the extent that any person acquires a right to receive payments
from the Company pursuant to an Award, such right shall be no greater than the
right of any unsecured general creditor of the Company.
(f) GOVERNING LAW. The Plan and all agreements entered into under the Plan
shall be construed in accordance with and governed by the law of the State of
Delaware.
(g) GOVERNMENTAL OR OTHER REGULATIONS. Each Award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or federal law, (ii) the consent or approval of any government regulatory
authority, or (iii) an agreement by the recipient of an Award with respect to
the disposition of shares of Common Stock, is necessary or desirable as a
condition of, or in connection with, the granting of such Award or the issue or
purchase of shares of Common Stock thereunder, such Award may not be consummated
in whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee. A Participant shall agree, as a
condition of receiving any Award under the Plan, to execute any documents, make
any representations, agree to restrictions on stock transferability and take any
actions which in the opinion of legal counsel to the Company are required by any
applicable law, ruling or regulation.
(h) WITHHOLDING. As a condition to the making of any Award, the vesting or
exercise of any Award or the lapse of the restrictions pertaining thereto, the
Company may, in the discretion of the Committee, require the Participant to pay
such sum to the Company as may be necessary to discharge the Company's
obligations with respect to any taxes, assessments or other governmental charges
imposed on property or income received by a Participant pursuant to the Plan. In
the discretion of the Committee, such payment may be in the form of cash or
other property. In the discretion of the Committee, the Company may:
(i) cause any such withholding obligation to be satisfied by
withholding shares otherwise available for delivery to the Participant that have
a Fair Market Value on the date the tax is to be determined equal to the minimum
statutory total tax which could be imposed on the transaction; or
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(ii) deduct or withhold from any payment or distribution to a
Participant whether or not pursuant to the Plan.
(i) STOCKHOLDER RIGHTS. Except as otherwise set forth herein, a
Participant shall have no rights as a stockholder with respect to any shares of
Common Stock issued or issuable with respect to an Award until a certificate or
certificates evidencing such shares shall have been issued to or for the benefit
of such Participant, and no adjustment shall be made for dividends or
distributions or other rights in respect of any share for which the record date
is prior to the date upon which the Participant shall become the holder of
record thereof.
(j) STOCK CERTIFICATES AND BOOK-ENTRY STOCK RECORDS. Notwithstanding
anything in the Plan to the contrary, shares of Common Stock issued under this
Plan to a Participant may be evidenced in such manner as the Committee may deem
appropriate in its discretion, including, without limitation, book-entry
registration or issuance of a stock certificate or certificates. For purposes of
this Plan, all references to the issuance, legending, escrow or delivery of
stock certificates shall include equivalent book-entry registration procedures
or comparable means of recording stock ownership in the Company's books and
records.
(k) EXCHANGE ACT SECTION 16. It is intended that the Plan and any grants
made to a person subject to Section 16 of the Exchange Act meet all of the
requirements of Rule 16b-3 thereunder. 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.
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o FOLD AND DETACH HERE o
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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 J. 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 14, 2003 at 8:30 a.m.,
local time, at The American Conference Centers, 780 Third Avenue, New York, New
York 10017, 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 9, 2003, 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: Davis, Hauptfuhrer and Horowitz
/ / 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, 2003.
/ / FOR / / AGAINST / / ABSTAIN
3. Approve and adopt the Wolverine Tube, Inc. 2003 Equity Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
(continued on reverse side)
o FOLD AND DETACH HERE o
(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 AND PROPOSAL 2 AND AT
THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER BUSINESS THAT MAY PROPERLY
COME BEFORE THE ANNUAL MEETING.
Dated: 2003
--------------------------------,
-------------------------------------------
Signature
-------------------------------------------
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