SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
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Filed
by the Registrant /ü/
Filed
by a Party Other than the Registrant / /
Check
the appropriate box:
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[ü]
Preliminary Proxy Statement
[
] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
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[
] Definitive Proxy Statement
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[
] Definitive Additional Materials
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[
] Soliciting Material Pursuant to Section 240.14a-2.
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Modine
Manufacturing Company
(Name
of
Registrant as Specified In Its Charter)
_____________________________________________________________________________
(Name
of
Person(s) Filing Proxy Statement if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[ü]
No fee
required.
[
] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
(1)
Title
of each class of securities to which transaction applies:
______________________________________________________________________________
(2)
Aggregate number of securities to which transaction applies:
______________________________________________________________________________
(3)
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
______________________________________________________________________________
(4)
Proposed maximum aggregate value of transaction:
______________________________________________________________________________
(5)
Total
fee paid:
______________________________________________________________________________
[
] Fee paid previously with preliminary materials.
[
] Check box if any part of the fee is offset as proved by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
______________________________________________________________________________
(2)
Form,
Schedule or Registration Statement No.:
______________________________________________________________________________
(3)
Filing Party:
______________________________________________________________________________
(4)
Date
Filed:
June
15, 2005
1500
DeKoven Avenue
Racine,
Wisconsin 53403-2552
Notice
of Annual Meeting of Shareholders
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Date:
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Wednesday,
July 20, 2005
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Time:
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9:30
a.m.
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Place:
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1500
DeKoven Avenue
Racine,
WI 53403-2552
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Record
Date:
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May
31, 2005
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The
annual meeting is for the following purposes:
1. To
elect three directors;
2.
To
approve the amended and restated 2000 Stock Incentive Plan for Non-Employee
Directors;
3.
To
approve the Company’s amended and restated Articles of Incorporation;
4. To
ratify the appointment of the Company's independent auditors; and
5. To
consider any other matters properly brought before the shareholders at the
meeting.
By
order
of the Board of Directors,
D.
R.
ZAKOS, Secretary
June
15,
2005
PROXY
STATEMENT
Your
vote at the annual meeting is important to us.
Please
vote your shares of common stock by calling a toll-free telephone number,
logging onto the Internet or by completing the enclosed proxy card and returning
it to us in the enclosed envelope.
Table
of Contents
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Page
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Solicitation
of Proxies
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1
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General
Information About the Annual Meeting and Voting
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1-4
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Item
1 - Election of Directors
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4-6
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Stock
Ownership
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6
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Certain
Beneficial Owners of Common Stock
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6-7
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Directors’
and Officers’ Ownership of Common Stock
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7-9
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Corporate
Governance
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9
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Lead
Director
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9
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Code
of Ethics
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9
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Board
Meetings and Committees
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10
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Roles
of the Board’s Committees
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10
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Audit
Committee
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10
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Officer
Nomination and Compensation Committee
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11
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Pension
Committee
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11
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Corporate
Governance and Nominating Committee
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11
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Selection
of Nominees for the Board
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11-12
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Board
Independence
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12
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Shareholder
Communication with the Board
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12-13
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Compensation
of Directors
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13-14
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Attendance
at Annual Meeting
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14
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Report
of the Audit Committee
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14-15
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Report
of the Officer Nomination and Compensation Committee
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16-21
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Compensation
Committee Interlocks and Insider Participation
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21
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Executive
Compensation
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22
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Summary
Compensation Table
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22-23
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Stock
Options
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24
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Option
Grants in Last Fiscal Year
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24
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Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End
Option Values
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25
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Pension
Plan Table
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25-26
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Employment
Agreements, Termination and Change-in-Control
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26-27
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Arrangements
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Performance
Graph
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27-28
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Certain
Transactions
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29
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Equity
Compensation Plan Information
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29
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Item
2 - Approval of the Amended and Restated 2000 Stock Incentive
Plan for Non-Employee Directors
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29-33
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Item
3 - Approval of the Company’s Amended and Restated Articles of
Incorporation
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33-37
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Item
4 - Ratification of Appointment of Independent Auditors
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37
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Fees
to Independent Auditors for Fiscal 2005 and 2004
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38
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Section
16(a) Beneficial Ownership Reporting Compliance
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39
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Additional
Matters
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39
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Shareholder
Proposals for 2006
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39
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Annual
Report
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39
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Modine
Manufacturing Company 2000 Stock Incentive Plan for Non-Employee
Directors
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A-1
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Proposed
Amended and Restated Articles of Incorporation of Modine Manufacturing
Company
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B-1
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PROXY
STATEMENT
Annual
Meeting of Shareholders of Modine Manufacturing Company - 2005
SOLICITATION
OF PROXIES
This
proxy statement is solicited on behalf of the Board of Directors for use at
the
2005 Annual Meeting of Shareholders. The meeting will be held at 9:30 a.m.
on
Wednesday, July 20, 2005, at Modine’s headquarters, 1500 DeKoven Avenue, Racine,
Wisconsin. This proxy statement and accompanying card are first being mailed
to
shareholders on or about June 15, 2005.
GENERAL
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Who
may vote?
You
may
vote your shares of common stock if our records show that you owned the shares
at the close of business on May 31, 2005. A total of 34,747,209 shares of common
stock were outstanding as of the record date and entitled to vote at the annual
meeting. You get one vote for each share of common stock you own. The holders
of
common stock do not have cumulative voting rights. The enclosed proxy card
shows
the number of shares you may vote.
How
do I vote?
You
may
vote in person or by properly appointed proxy. Shareholders of record may give
a
proxy to be voted at the meeting by calling a toll-free telephone number,
logging onto the Internet or, if you prefer, mailing the enclosed proxy card.
Shareholders who hold their shares in "street name" which means that the shares
are held in the name of a broker, or other nominee, will give instructions
to
vote their shares in the manner required by the broker or other
nominee.
The
telephone and Internet voting procedures are for your convenience and are
designed to authenticate your identity, to allow you to give voting
instructions, and to confirm that those instructions have been recorded
properly.
The
enclosed proxy card contains instructions for telephone and Internet voting
and
voting by mail. Whichever method you use, the proxies identified on the back
of
the proxy card will vote your shares in accordance with your instructions.
If
you submit a proxy card without giving specific voting instructions, the proxies
will vote those shares as recommended by the Board of Directors.
What
are the Board's recommendations?
Unless
you give other instructions on your proxy card, the persons named as proxies
on
the proxy card will vote in accordance with the recommendations of the Board
of
Directors. The Board's recommendation is included with the description of each
item in this proxy statement. In summary, the Board recommends a
vote:
FOR
election
of the nominated slate of directors (see Item 1);
FOR
approval
of the amendment and restatement of the 2000 Stock Incentive Plan for
Non-Employee Directors (see Item 2);
FOR
approval
of the amendment and restatement of the Company’s Restated Articles of
Incorporation (see Item 3); and
FOR
ratification of the Company's independent auditors (see Item 4).
What
if other matters come up at the annual meeting?
The
matters described in this proxy statement are the only matters to our knowledge
that will be subject to a vote at the annual meeting. If other matters are
properly presented at the meeting, the persons appointed as proxies will vote
your shares on those other matters in accordance with their best
judgment.
May
I change my vote after I appoint a proxy?
You
may
revoke your proxy by:
● submitting
a new proxy;
● giving
written notice before the meeting to the Secretary of the Company, stating
that
you are revoking your previous proxy; or
● attending
the meeting and voting your shares in person.
If
you
decide to vote your shares in person, we prefer that you first revoke your
prior
proxy in the same way you initially submitted it -- that is, by telephone,
the
Internet or mail.
May
I vote in person at the annual meeting?
Although
we encourage you to complete and return the proxy card or vote by phone or
the
Internet to ensure that your vote is counted, you may attend the annual meeting
and vote your shares in person.
You
will
need to obtain a “legal proxy” from your broker if you hold your shares in
street name and want to vote your shares at the annual meeting in
person.
If
you plan on attending the annual meeting, please so indicate on the phone or
on
the Internet when you appoint your proxy or check the box on the enclosed proxy
card so that we may have an accurate count of the number of shareholders
attending the meeting.
How
are votes counted?
A
majority of the shares entitled to vote, represented in person or by proxy,
will
constitute a quorum at the annual meeting. Abstentions and broker "non-votes"
are counted as present for purposes of determining a quorum. A broker "non-vote"
occurs when a broker holding shares for a beneficial owner does not vote on
a
particular proposal because the broker does not have discretionary voting power
for that particular item and has not received voting instructions from the
beneficial owner.
Voting
on Election of Directors (Item 1)
Directors
are elected by a plurality of the votes cast by the shares entitled to vote
in
the election, as long as a quorum is present. This means that the individuals
who receive the largest number of votes are elected as directors. Therefore,
shares not voted have no effect in the election of directors. Votes attempted
to
be cast against a candidate are not given legal effect and are not counted
as
votes cast in an election of directors.
Voting
on Amending and Restating the 2000 Stock Incentive Plan for Non-Employee
Directors (Item 2)
Approval
of this proposal requires the affirmative vote of the holders of a majority
of
the shares represented at the meeting, in person or by proxy, and entitled
to
vote thereon, provided that the total vote cast on the proposal represents
over
50% in interest of all shares entitled to vote on the proposal. Abstentions
will
have the
same
effect as a vote against this proposal; broker non-votes will have no effect
on
the outcome of the voting on this proposal so long as enough votes are cast
to
satisfy the 50% requirement.
Voting
on Amending and Restating the Restated Articles of Incorporation (Item
3)
Approval
of this proposal requires the affirmative vote of at least two-thirds (66 2/3%)
of the shares of the Company’s common stock outstanding as of the Record Date
and entitled to vote on the proposal. Abstentions and broker non-votes will
have
the same effect as a vote against this proposal.
Voting
on Ratification of Auditors (Item 4)
Approval
of this proposal requires the affirmative vote of the holders of a majority
of
the shares represented at the meeting, in person or by proxy, and entitled
to
vote thereon, provided a quorum is present. Abstentions will have the same
effect as a vote against this proposal.
Who
will count the votes?
Wells
Fargo Minnesota, N.A., Shareowner Services, an independent tabulator, will
count
the votes. The Board appointed Wells Fargo as the Inspectors of
Election.
Who
pays for this proxy solicitation?
We
do.
Directors, officers and employees of Modine, who will receive no compensation
for their services, may solicit proxies in person or by mail, telephone,
facsimile transmission and other means. Modine also has retained Morrow &
Co., Inc., 445 Park Avenue, New York, NY 10022, to assist in such solicitation
for a fee of $11,500 plus expenses for its services. Brokers, banks, nominees,
fiduciaries and other custodians will be requested to solicit beneficial owners
of shares and will be reimbursed for their expenses.
How
may I help reduce mailing costs?
Eligible
shareholders who have more than one account in their name or the same address
as
other shareholders may authorize us to discontinue mailings of multiple annual
reports and proxy statements. Most shareholders can also view future annual
reports and proxy statements on the Internet rather than receiving paper copies
in the mail. See the next two questions and answers below and your proxy card
for more information.
Are
proxy materials and the annual report available
electronically?
Yes.
This
proxy statement and the fiscal 2005 annual report are available on our website
at www.modine.com.
In
addition, most shareholders may elect to view future proxy statements and annual
reports over the Internet instead of receiving paper copies in the mail. If
you
are a shareholder of record, you may choose this option and save us the cost
of
producing and mailing these documents by following the instructions provided
on
the proxy card to vote over the Internet. On the referenced website, you will
be
given instructions for choosing the option of receiving future proxy statements
and annual reports electronically.
If
you
choose to view future proxy statements and annual reports over the Internet,
you
will receive a proxy card in the mail next year with instructions containing
the
Internet address of those materials. Your choice will remain in effect until
you
call our transfer agent, Wells Fargo, at 1-877-602-7615 or give written notice
to the Secretary of the Company, 1500 DeKoven Avenue, Racine, Wisconsin
53403-2552 and tell us otherwise. You do not have to elect Internet access
each
year.
If
you
hold your stock in "street name," please refer to the information provided
by
the party in whose name the shares are held for instructions on how to elect
to
view future proxy statements and annual reports over the Internet.
What happens if multiple shareholders share the same
address?
We
adopted a procedure called "householding." As a result, we are sending only
one
annual report and proxy statement to those with the same last name at a single
address, unless we received instructions to do otherwise. This practice, known
as "householding," is designed to reduce our printing and postage costs. If
a
shareholder of record wishes to receive a separate copy of a proxy statement
or
annual report in the future, he or she may contact our transfer agent, Wells
Fargo, at 1-877-602-7615 or provide written notice to the Secretary of the
Company, 1500 DeKoven Avenue, Racine, WI 53403-2552 and tell us otherwise.
Shareholders of record sharing the same address and receiving multiple copies
of
our annual report and proxy statement may request householding by contacting
us
in the same manner. If you own your shares in street name, you may request
householding by contacting the entity in whose name the shares are held.
ITEM
1 - ELECTION
OF DIRECTORS
The
Board
of Directors currently consists of nine members.
The
terms
of Frank P. Incropera, Vincent L. Martin, and Marsha C. Williams expire at
the
2005 Annual Meeting. Dr. Incropera, Mr. Martin, and Ms. Williams have each
been
nominated by the Board of Directors for a new three-year term expiring at the
2008 Annual Meeting.
While
it
is not anticipated that any of the nominees will be unable to take office,
if
that happens, proxies will be voted in favor of such other person or persons
as
the Board of Directors may propose to fill the open directorship(s). In
accordance with our Restated By-Laws, a director shall hold office until the
annual meeting in the year in which his or her term expires and until his or
her
successor shall be elected and qualify, subject, however, to prior death,
resignation, retirement, disqualification, or removal from office. Vacancies
may
be filled by the remaining directors. See Selection
of Nominees for the Board below.
The
Company's Restated By-Laws provide that each Director shall retire at the close
of the term in which he or she attains the age of 70 years, except that the
provision shall not apply to any director who has been exempted from the
provision by a resolution passed by a two-third's vote of the Board of
Directors.
The
nominees for the Board of Directors, the directors whose terms will continue,
their ages, principal occupation (which they have been in for at least five
years unless otherwise indicated), other directorships, and their tenure and
expiration dates of their terms are as follows:
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Name
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Principal
Occupation and Directorships
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Age
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Director
of Company Since
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Nominees
to be Elected for Terms Expiring in 2008:
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Frank
P. Incropera
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McCloskey
Dean of the University of Notre Dame's College of Engineering, Notre
Dame,
Indiana. Dr. Incropera was with Purdue University from 1966 to 1998
with
the exceptions of research leaves spent at NASA-Ames (1969), U.C.
Berkeley
(1973-1974) and the Technical University of Munich (1988).
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65
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1999
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Vincent
L. Martin
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Retired
since October 2004. Mr. Martin was Chairman of the Board of Jason
Incorporated, a diversified manufacturing company based in Milwaukee,
Wisconsin from January 1986 to October 2004. He was Chief Executive
Officer of Jason from 1986 to 1999. Mr. Martin's business career
includes
experience with AMCA International, FMC Corporation and Westinghouse
Air
Brake. He continues to serve on the Jason Board.
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65
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1992
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Marsha
C. Williams
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Executive
Vice President and Chief Financial Officer of Equity Office Properties
Trust, a real estate investment trust located in Chicago, Illinois.
Previously, Ms. Williams was Vice President and Chief Administrative
Officer of Crate and Barrel; Vice President and Treasurer of Amoco
Corporation; Vice President and Treasurer of Carson Pirie Scott &
Company; and Vice President of The First National Bank of Chicago.
Ms.
Williams is also a director of Chicago Bridge & Iron Company N.V.,
Davis Funds and Selected Funds.
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54
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1999
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Directors
Continuing in Service for Terms Expiring in 2006:
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Frank
W. Jones
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Independent
management consultant in Tucson, Arizona. Mr. Jones's forty-five
year
career in business includes over twenty-five years of service with
Giddings & Lewis, Inc., a manufacturer of machine tools and, at that
time, a New York Stock Exchange listed company, the last five as
President
and Chief Executive Officer. Mr. Jones is also a director of Star
Cutter
Co., Gardner Publications, Inc., and GTC Incorporated.
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65
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1982
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Dennis
J. Kuester
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Chairman
of the Board (since January 2005) and Chief Executive Officer (since
January 2002) and President (from 1987 to April 2005) of Marshall
&
Ilsley Corporation, Chairman and Chief Executive Officer (since October
2001) and President (from 1989 to 2001) of M&I Marshall & Ilsley
Bank, and Chairman of Metavante Corporation, a Milwaukee, Wisconsin-based
bank holding company, bank, and banking services company, respectively.
Mr. Kuester is also a director of Marshall & Ilsley Corporation and
Wausau-Mosinee Paper Corporation.
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63
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1993
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Michael
T. Yonker
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Retired.
Prior to June 1998, Mr. Yonker was President and Chief Executive
Officer
of Portec, Inc., Lake Forest, Illinois, a manufacturer of material
handling equipment. Mr. Yonker is also a director of Woodward Governor
Company and EMCOR Group, Inc.
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62
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1993
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Directors
Continuing in Service for Terms Expiring in 2007:
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|||
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Richard
J. Doyle
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Retired.
Prior to April 1998, Mr. Doyle was Chief Executive Officer and a
director
of three private electrical contracting corporations. Prior to January
1989, Mr. Doyle was a Vice President of BorgWarner Corporation, Dearborn,
Michigan, a diversified manufacturing and services company, and President
and Chief Executive Officer of BorgWarner Automotive, Inc., Troy,
Michigan, a subsidiary of BorgWarner Corporation.
|
72
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1987
|
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Gary
L. Neale
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Chairman
and Chief Executive Officer, and a director of NiSource, Inc.,
Merrillville, Indiana, a holding company for gas and electric utilities
and other energy-related subsidiaries. Mr. Neale is also a director
of
Chicago Bridge & Iron Company N.V.
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65
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1977
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David
B. Rayburn
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President
and Chief Executive Officer of the Company since January 15, 2003.
Prior
to January 15, 2003, Mr. Rayburn was President and Chief Operating
Officer
and, prior to April 2002, Mr. Rayburn was Executive Vice President
of the
Company. Mr. Rayburn is also a director of Twin Disc, Incorporated
and
Jason Incorporated.
|
57
|
2003
|
The
Board of Directors recommends a vote FOR all of the director-nominees: Dr.
Incropera, Mr. Martin and Ms. Williams.
STOCK
OWNERSHIP
Certain
Beneficial Owners of Common Stock
The
following table shows the number of shares of common stock beneficially owned
by
each person or entity that we know beneficially owns 5% or more of our common
stock.
|
Name
and Address of Owner
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Common
Stock
Number
of Shares Owned and Nature of Interest
|
Percent
|
|
Administrative
Committee of Modine Employee Stock Ownership Plan ("ESOP")
1500
DeKoven Avenue
Racine,
Wisconsin 53403-2552
Members:
D.B. Spiewak, R.L. Hetrick
and
D.R. Zakos
|
1,761,154(a)(b)
|
5.05%
|
|
Mario
J. Gabelli and affiliates
One
Corporate Center
Rye,
New York 10580-1434
|
5,454,408(c)
|
15.66%
|
|
Lord,
Abbett & Co. LLC
90
Hudson Street
Jersey
City, New Jersey 07302
|
1,804,693
(d)
|
5.18%
|
|
|
(a)
|
The
ESOP was converted into a unitized fund in September 2004. Under
SEC Rule
13d-3, the Administrative Committee of the ESOP may be deemed to
be the
beneficial owner of the shares held in the ESOP, although Marshall
&
Ilsley Trust Company N.A. is trustee of the shares in the ESOP. Marshall
& Ilsley Trust Company N.A. is also the trustee of the Company’s
Employees’ Retirement Trusts (pension) and defined contribution plans
(including 401(k) plans) and is the escrow agent for participants’
restricted stock awards under the 1994 and 2002 Incentive Stock Plans.
The
participants in the ESOP are entitled to direct how the stock represented
by the units in their account will be voted and Marshall & Ilsley
Trust Company N.A. votes undirected shares in its sole discretion
as it
also does with undirected shares in the defined contribution plans.
Marshall & Ilsley Trust Company N.A., as custodian, may be viewed as
having voting or dispositive authority in certain situations pursuant
to
Department of Labor regulations or interpretations or federal case
law.
Pursuant to SEC Rule 13d-4, inclusion of such shares in this table
shall
not be construed as an admission that the reporting person or its
affiliates are, for purposes of Sections 13(d) or 13(g) of the Securities
Exchange Act of 1934, the beneficial owners of such securities. D.J.
Kuester, a director of the Company, is Chairman and CEO of Marshall
&
Ilsley Corporation and Chairman and CEO of M&I Marshall & Ilsley
Bank. Marshall & Ilsley Trust Company N.A. is a subsidiary of Marshall
& Ilsley Corporation. Marshall & Ilsley Corporation and its
subsidiaries specifically disclaim beneficial ownership of stock
held by
the ESOP and the related trusts.
|
(b) As
of
March 31, 2005.
|
(c)
|
Based
on Schedule 13D/A filed under the Securities Exchange Act of 1934,
dated
November 23, 2004. Each reporting person included in the Schedule
13D/A:
Gabelli Funds, LLC; GAMCO Investors, Inc.; MJG Associates, Inc. and
Gabelli & Company, Inc. Profit Sharing Plan, has the sole power to
vote or direct the vote and the sole power to dispose or direct the
disposition of the reported shares, except that (i) GAMCO Investors,
Inc.
does not have authority to vote 397,000 of the reported shares, and
(ii)
in certain circumstances, proxy voting committees may have voting
power
over the reported shares.
|
|
(d)
|
Based
on Schedule 13G filed under the Securities Exchange Act of 1934,
dated
December 31, 2004. The reporting person on the Schedule 13G has the
sole
power to vote or direct the vote and the sole power to dispose or
direct
the disposition of the reported shares.
|
Directors'
and Officers' Ownership of Common Stock
The
following table shows how many shares of Modine common stock each director,
nominee, executive officer listed in the Summary
Compensation Table
below
(the “Named Executive Officers”) and all officers and directors as a group
beneficially owned as of March 31, 2005. No director or Named Executive Officer
beneficially owns more than 1.0% of the common stock, and directors and
executive officers as a group beneficially own approximately 5.32% of the common
stock.
|
Name
|
Shares
Beneficially Owned (a)
|
|
R.
J. Doyle (b)
|
82,000
|
|
F.
P. Incropera (c)
|
35,000
|
|
F.
W. Jones (d)
|
88,819
|
|
D.
J. Kuester (e)
|
67,000
|
|
V.
L. Martin (f)
|
57,200
|
|
G.
L. Neale (g)
|
93,588
|
|
M.
C. Williams (h)
|
40,000
|
|
M.
T. Yonker (i)
|
68,655
|
|
D.
B. Rayburn (j)
|
292,427
|
|
B.
C. Richardson (k)
|
85,011
|
|
C.
R. Katzfey (l)
|
135,901
|
|
J.
R. Rulseh (m)
|
132,418
|
|
K.
A. Feldman (n)
|
121,860
|
|
All
directors and executive officers as a group (21 persons)
(o)
|
1,856,626
|
|
(a)
|
Except
as otherwise indicated, each person has the sole power to vote and
dispose
of all shares listed opposite his or her
name.
|
|
(b)
|
Includes
67,000 shares of common stock issuable upon the exercise of
options.
|
|
(c)
|
Includes
35,000 shares of common stock issuable upon the exercise of
options.
|
|
(d)
|
Includes
51,000 shares of common stock issuable upon the exercise of
options.
|
|
(e)
|
Includes
51,000 shares of common stock issuable upon the exercise of options
and
excludes the shares held of record by Marshall & Ilsley Trust Company
N.A. as described in the Certain
Beneficial Owners of Common Stock
table above.
|
(f) Includes
50,000 shares of common stock issuable upon the exercise of options and 200
shares held in trust for the benefit of his children for which Mr. Martin serves
as trustee.
(g) Includes
67,000 shares of common stock issuable upon the exercise of
options.
(h) Includes
40,000 shares of common stock issuable upon the exercise of
options.
(i) Includes
51,000 shares of common stock issuable upon the exercise of
options.
|
(j)
|
Includes
233,400 shares of common stock issuable upon the exercise of options,
26,800 shares of restricted stock and 17,295 units held in the form
of
Modine Stock Fund Units (Modine 401(k) Retirement Plan, Modine Deferred
Compensation Plan and Modine Employee Stock Ownership Plan with each
unit
consisting of common stock and a cash component (the
"Units")).
|
|
(k)
|
Includes
54,900 shares of common stock issuable upon the exercise of options,
23,800 shares of restricted stock and 711
Units.
|
|
(l)
|
Includes
104,600 shares of common stock issuable upon the exercise of options,
16,160 shares of restricted stock, and 6,649
Units.
|
|
(m)
|
Includes
102,600 shares of common stock issuable upon the exercise of options,
16,040 shares of restricted stock and 5,342
Units.
|
|
(n)
|
Includes
98,600 shares of common stock issuable upon the exercise of options
and
15,200 shares of restricted stock.
|
|
(o)
|
Includes
1,407,720 shares of common stock issuable upon the exercise of options,
158,230 shares of restricted stock and 69,146
Units.
|
The
above
beneficial ownership information is based on information furnished by the
specified persons and is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934, as required for purposes of this proxy
statement; accordingly, it includes shares of common stock that are issuable
upon the
exercise of stock options exercisable within 60 days of March 31, 2005. Such
information is not necessarily to be construed as an admission of beneficial
ownership for other purposes.
CORPORATE
GOVERNANCE
The
Company's business is managed under the direction of the Board of Directors,
pursuant to the laws of the State of Wisconsin, our Restated Articles of
Incorporation and Restated By-laws. Members of the Board of Directors are kept
informed of the Company's business through discussions with the President and
Chief Executive Officer, and with key members of management, by reviewing
materials provided to them and by participating in meetings of the Board of
Directors and its committees.
The
Company reviews and evaluates its corporate governance policies and practices,
particularly in light of the Sarbanes-Oxley Act of 2002 and rule changes made
by
the Securities and Exchange Commission and the New York Stock Exchange (NYSE),
to which we moved the listing of our common stock from the Nasdaq National
Market in fiscal 2005. We believe that our current policies and practices meet
these requirements. Our corporate governance policies, including our Guideline
on Corporate Governance and charters for committees of the Board, are available
on our website, www.modine.com,
and are
available in print to any shareholder upon request.
The
Board
of Directors has determined that all of the members of the Company’s Audit
Committee, Officer Nomination & Compensation Committee, and Corporate
Governance and Nominating Committee are independent, as defined under the NYSE
listing standards applicable to the respective committees. The Board of
Directors has determined that neither D.J. Kuester nor V.L. Martin were
independent during the 2005 fiscal year because of compensation committee
interlocks. The Board has determined that as of July 20, 2005, D.J. Kuester
will
be independent as defined under the NYSE listing standards for the Officer
Nomination and Compensation Committee. V.L. Martin cannot be deemed independent
before July 2007.
Lead
Director
In
June
2003, the Board created a new position of Lead Director, whose primary
responsibility is to preside over periodic executive sessions of the Board
in
which management directors and other members of management do not participate.
The Lead Director also chairs certain portions of Board meetings and performs
other duties that the Board may from time to time delegate to assist the Board
in the fulfillment of its responsibilities. Mr. Neale serves in this position
and does not receive any compensation in addition to his director fees to
perform his role as Lead Director. At least once annually, those directors
who
are “independent” in accordance with the criteria described below at
Board Independence
meet
without the other directors. Mr. Neale also serves as the presiding director
at
each of these meetings.
Code
of Ethics
Our
Guideline for Business Conduct (our "Guideline") summarizes the compliance
and
ethical standards and expectations we have for all our employees, officers
(including our principal executive officer, principal financial officer and
principal accounting officer) and directors with respect to their conduct in
furtherance of Company business. It contains procedures for reporting suspected
violations of the Guideline, including procedures for the reporting of
questionable accounting or auditing matters, or other concerns regarding
accounting, internal accounting controls or auditing matters. The Company has
established a Business Ethics Program through which employees and others may
report, anonymously and in confidence, concerns regarding such matters. A copy
of our Guideline, as well as further information regarding our Business Ethics
Program is available on our website at www.modine.com.
These
materials are also available in print to any shareholder upon request. If we
make any substantive amendment to the Guideline, we will disclose the nature
of
such amendment on our website or in a current report on Form 8-K. In addition,
if a waiver from the Guideline is granted to an executive officer or director,
we will disclose the nature of such waiver on our website at www.modine.com,
in a
press release, or in a current report on Form 8-K.
Board Meetings and Committees
The
Board
of Directors held seven regular meetings and one special meeting during the
fiscal year and had four standing committees consisting of an Audit Committee,
an Officer Nomination & Compensation Committee, a Pension Committee and a
Corporate Governance and Nominating Committee. All directors attended
at least 75% of the Board meetings and meetings of committees of which they
were
members. The following chart describes the membership of each committee as
of
March 31, 2005 and the number of times it met in fiscal 2005:
|
Name
|
Audit
|
Officer
Nomination &Compensation
|
Pension
|
Corporate
Governance and Nominating
|
|
R.
J. Doyle
|
Chair
|
X
|
X
|
|
|
F.
P Incropera
|
X
|
X
|
X
|
|
|
F.
W. Jones
|
X
|
Chair
|
X
|
|
|
D.
J. Kuester
|
X
|
|||
|
V.
L. Martin
|
X
|
|||
|
G.
L. Neale
|
X
|
Chair
|
X
|
|
|
D.
B. Rayburn
|
||||
|
M.
C. Williams
|
X
|
X
|
X
|
|
|
M.
T. Yonker
|
X
|
X
|
Chair
|
|
|
Number
of Meetings in fiscal 2005
|
4
|
3
|
2
|
2
|
Roles
of the Board's Committees
Audit
Committee.
The
Audit Committee is a separately designated committee of the Board, established
in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934.
The functions of the Audit Committee are described below in the
Report of the Audit Committee
on pages
14 and 15 of this proxy statement. The charter of the Audit Committee is
available on the Company's website, www.modine.com.
In
July
of each year, the Board selects the members of the Audit Committee. The Board
of
Directors has determined that each of the members of the Audit Committee is
“independent,” as defined in the corporate governance listing standards of the
NYSE relating to audit committees. The Board of Directors has determined that
each Audit Committee member satisfies the financial literacy and experience
requirements of the NYSE, and that Mr. Doyle (the Chair of the Committee)
qualifies as an “audit committee financial expert” within the meaning of the SEC
rules.
Officer
Nomination & Compensation Committee.
The
Officer Nomination & Compensation Committee:
● reviews
the performance of the President and CEO;
● reviews
candidates for positions as Company officers;
● makes
recommendations to the Board on officer candidates;
● makes
recommendations to the Board on compensation for officers;
● considers
recommendations made by management relating to director compensation
and
presents
those recommendations to the Board; and
● administers
the 1994 and 2002 Incentive Compensation Plans.
The
charter of the Officer Nomination & Compensation Committee is available on
the Company's website, www.modine.com.
The
Officer Nomination & Compensation Committee Report is included in this proxy
statement below on pages 16 through 21. The Board selects the members of the
Officer Nomination & Compensation Committee in July of each year.
Pension
Committee.
The
Pension Committee:
● reviews
and monitors performance of the defined benefit pension plans and the
defined
contribution
plans offered by the Company;
● monitors
the objectives, membership and activities of the Company's Pension
Investment
Committee;
and
● provides
oversight for pension trust investments and defined contribution
plans.
The
directors serving on the Pension Committee are not required to be independent.
The charter of the Pension Committee is available on the Company's website,
www.modine.com.
Corporate
Governance and Nominating Committee.
The
Corporate Governance and Nominating Committee is responsible for developing
and
implementing policies and practices relating to corporate governance, including
reviewing and monitoring implementation of the Company's Guideline on Corporate
Governance. In addition, the Committee develops and reviews background
information on prospective nominees to the Board and makes recommendations
to
the Board regarding such persons. The Committee also prepares and supervises
the
Board's annual review of director independence and the Board's self-evaluation.
The charter of the Corporate Governance and Nominating Committee is available
on
the Company's website, www.modine.com.
The
Board selects members of the Corporate Governance and Nominating Committee
in
July of each year.
Selection
of Nominees for the Board
The
Corporate Governance and Nominating Committee considers prospective candidates
for Board membership recommended by its members, as well as management and
shareholders. Shareholders who wish to recommend a prospective nominee for
the
Board should notify the Company's Corporate Secretary in writing with whatever
supporting material the shareholder considers appropriate. The Committee
requests that it receive any such recommendations by October 1, 2005 for the
2006 Annual Meeting. The Company has not received any shareholder
recommendations of director candidates with regard to the election of directors
covered by this proxy statement or otherwise. The Corporate Governance and
Nominating Committee intends to evaluate candidates recommended by shareholders
in the same manner that it evaluates other candidates.
Once
the
Committee identifies a prospective nominee, it makes an initial determination
as
to whether to conduct a full evaluation of the candidate. The Committee makes
its initial determination based on the information provided to the Committee
with the recommendation of the prospective candidate, as well as the Committee's
own knowledge of the prospective candidate, which may be supplemented by
inquiries to the person making the recommendation or others. The Committee’s
preliminary determination is based primarily on the need for additional Board
members to fill vacancies or expand the size of the Board and the likelihood
that the prospective nominee satisfies the evaluation factors described
below.
If
the
Committee determines that additional consideration is warranted, it may request
a third-party search firm to gather additional information about the prospective
nominee's background and experience and to report its findings to the Committee.
The Committee then evaluates the prospective nominee. The Committee considers
relevant factors as it deems appropriate, including the current composition
of
the Board, the need for Audit Committee expertise and the evaluations of other
prospective nominees. In assessing candidates, the Board considers issues such
as education, experience, diversity, knowledge and understanding of matters
such
as finance, manufacturing, technology and others frequently encountered by
a
global business.
Every
effort is made to complement and supplement skills within the existing Board
and
strengthen any identified areas. Further criteria include a candidate's personal
and professional ethics, integrity and values, as well as his or her willingness
and ability to devote sufficient time to attend meetings and participate
effectively on the Board. The Committee has not established minimum
qualifications for director nominees.
In
connection with this evaluation, the Committee determines whether to interview
the prospective nominee, and if warranted, one or more members of the Committee,
and others as appropriate, will interview prospective nominees in person or
by
telephone. After completing the evaluation and interview, the Committee makes
a
recommendation to the full Board as to the persons who should be nominated
by
the Board, and the Board determines who should be nominated for a position
on
the Board after considering the recommendation and report of the
Committee.
Board
Independence
The
Board
has determined that the following directors are independent within the meaning
of the SEC regulations, the listing standards of the NYSE and the Company's
Guideline on Corporate Governance: Messrs. Doyle, Neale, Jones and Yonker,
Dr.
Incropera and Ms. Williams. The Board concluded that none of these directors
possessed the categorical relationships set forth in the NYSE listing standards
that prevent independence and had no other business or other relationships
with
the Company relevant to a determination of their independence.
The
Company requires, as set forth in its Guideline on Corporate Governance, that
a
majority of the Board members be independent directors. However, the Company
is
not opposed to having members of the Company's management, including the CEO,
serve as directors.
At
a
minimum, to qualify as "independent," a director must so qualify under governing
rules, regulations and standards, including those issued by the SEC and the
NYSE. The Corporate Governance and Nominating Committee assesses independence
on
an ongoing basis, and each director is responsible for bringing to the attention
of the Corporate Governance and Nominating Committee any changes to his or
her
status that may affect independence. In addition, the directors complete, on
an
annual basis, a questionnaire prepared by the Company that is designed to elicit
information that relates to the independence assessment. At least annually,
the
Board reviews the relationships that each director has with the Company. Only
those directors who the Board affirmatively determines have no material
relationship with the Company, and who do not have any of the relationships
that
prevent independence under the NYSE listing standards, are considered to be
independent directors. A majority of the Company's current directors are
independent directors.
Shareholder
Communication with the Board
Shareholders
wishing to communicate with the Board of Directors or with a Board member
(including the Lead Director) should address communications to the Board or
to
the particular Board member, c/o Corporate Secretary, Modine Manufacturing
Company, 1500 DeKoven Avenue, Racine, Wisconsin 53403-2552. Under the process
approved by the Board, the Corporate Secretary reviews all such correspondence
and regularly forwards to the Board a summary of all such correspondence and
copies of all correspondence that, in the opinion of the Corporate Secretary,
deal with the functions of the Board or Committees thereof or that he otherwise
determines requires their attention. Concerns relating to accounting, internal
controls or auditing matters are immediately brought to the attention of the
Company's Business Ethics Committee and handled in accordance with procedures
established by the Audit Committee with respect to such matters. From time
to
time, the Board may change the process by which shareholders may communicate
with the Board or its members. Please refer to the Company's website,
www.modine.com,
for any
changes to this process.
Compensation
of Directors
Employees
of Modine do not receive any compensation for serving on the Modine board.
Non-employee directors, including the Lead Director, receive the
following:
● a
retainer fee of $6,250 per quarter;
● $1,750
for each Board meeting attended, effective January 19, 2005 (previously the
attendance
fee was
$1,143 (effective January 1, 2004 to July 20, 2004) and $1,500 (effective July
21, 2004
to
January 18, 2005));
● $1,500
for each committee meeting attended, effective July 21, 2004 (previously was
$1,000);
● a
retainer fee of $4,000 per year for acting as Chair of a committee;
● reimbursement
for travel, lodging, and related expenses incurred in attending meetings;
and
● travel-accident
and director and officer liability insurance.
The
fees
for Board meeting attendance changed from $1,500 to $1,750 during the 2005
fiscal year although the aggregate regular meeting attendance fees were the
same
as those paid in fiscal 2004. The number of regular board meetings during the
2005 fiscal year was seven versus eight in the prior year.
In
May
2004, the Board of Directors meeting was held at the Company’s European
headquarters in Bonlanden, Germany. The Company paid the travel, meal and
lodging expenses of the directors and their spouses who attended the
meeting.
Since
July 1, 2000, directors of the Company who are not employees have participated
in the 2000 Stock Option Plan for Non-Employee Directors (the "2000 Directors'
Plan") which authorizes the grant of non-qualified stock options through May
16,
2010, exercisable for up to 500,000 shares of common stock. These options are
granted at 100% of the fair market value of the common stock on the grant date.
The options expire no later than ten years after the grant date and terminate
no
later than three years after termination of director status for any reason
other
than death. Within 30 days after election and each re-election to the Board,
each non-employee director so elected or re-elected is automatically granted
an
option for the number of shares equal to the product of 6,000 times the number
of years in the term to which such director has been so elected or re-elected.
The 2000 Directors' Plan may be administered by the Board or by a committee
of
two or more directors of the Company if deemed necessary or advisable in order
to comply with the exemptive rules promulgated pursuant to Section 16(b) of
the
Securities Exchange Act of 1934. Neither the Board nor any such committee has
authority to administer the 2000 Directors' Plan with respect to the selection
of participants under such plan or the timing, pricing, or amount of any grants.
The Company is submitting the amendment and restatement of the 2000 Directors’
Plan to the shareholders for approval in this proxy statement (Item 2). Please
see the discussion of the changes to that plan described on pages 29 through
33
in this proxy statement.
Prior
to
July 1, 2000, directors of the Company who were not employees were eligible
to
participate in the 1994 Stock Option Plan for Non-Employee Directors (the "1994
Directors' Plan") which authorized the grant of non-qualified stock options
through July 20, 2004, exercisable for up to 500,000 shares of common stock.
These options were granted at 100% of the fair market value of the stock on
the
grant date and expire no later than ten years after the grant date and terminate
no later than three years after termination of director status for any reason
other than death. Within 30 days after election or re-election to the Board,
each director so elected or re-elected was automatically granted an option
for
the number of shares equal to the product of 5,000 times the number of years
in
the term to which such director had been so elected or re-elected. The 1994
Directors' Plan was administered by the Board or by a committee of two or more
directors of the Company if deemed necessary or advisable in order to comply
with the exemptive rules promulgated pursuant to Section 16(b) of the Securities
Exchange Act of 1934. Neither the Board nor any such committee had authority
to
administer the 1994 Directors' Plan with respect to the selection of
participants under the plan or the timing, pricing, or amount of any grants.
The
1994 Directors' Plan was terminated at the end of June 2000 and no additional
grants have been made since that time.
The
Board
of Directors adopted the Modine Manufacturing Company Director Emeritus
Retirement Plan (the "Director Emeritus Retirement Plan") pursuant to which
any
person, other than an employee of the Company, who is or becomes a director
of
Modine on or after April 1, 1992, and who retires from the Board will be paid
a
retirement benefit equal to the annualized sum directors are being paid for
their service to the Company as directors (including Board meeting attendance
fees but excluding any applicable committee attendance fees) as in effect at
the
time such director ceases his or her service as a director. The retirement
benefit continues for a duration equal to the duration of the director's Board
service. If a director dies before retirement or after retirement during such
period, his or her spouse or other beneficiary will receive the applicable
retirement benefit. In the event of a change in control (as defined in the
Director Emeritus Retirement Plan) of Modine, each eligible director, or his
or
her spouse or other beneficiary entitled to receive a retirement benefit through
him or her, would be entitled to receive a lump-sum payment equal to the present
value of the total of all benefit payments that would otherwise be payable
under
the Director Emeritus Retirement Plan. The retirement benefit is not payable
if
the director directly or indirectly competes with the Company or if the director
is convicted of fraud or a felony and such fraud or felony is determined by
disinterested members of the Board of Directors to have damaged Modine.
Effective July 1, 2000, the Director Emeritus Retirement Plan was frozen with
no
further benefits accruing under it. All eligible directors who retired prior
to
July 1, 2000 continue to receive benefits pursuant to the Director Emeritus
Retirement Plan. All current directors eligible for participation accrued
pension benefits pursuant to the Director Emeritus Retirement Plan until July
1,
2000.
Attendance
at Annual Meeting
The
Company does not have a formal policy that its directors attend the Annual
Meeting of Shareholders because it expects them to do so and because the
Company's directors historically have attended these meetings. All of the
members of the Board of Directors attended last year's annual meeting. The
Board
of Directors conducts its annual meeting directly after the Annual Meeting
of
Shareholders at the Company's headquarters.
Report
of the Audit Committee
The
Audit
Committee of the Board of Directors operates under a written charter adopted
by
the Board of Directors. The charter was most recently revised on May 4, 2004.
As
set forth in the charter, the Audit Committee's purpose is to assist the Board
of Directors in monitoring the:
● Integrity
of the Company's financial statements;
● Independent
auditor's qualifications and independence;
● Performance
of the Company's internal audit function and independent auditors;
and
● Company's
compliance with legal and regulatory requirements.
The
full
text of the Committee's revised charter is available on the Company's website,
www.modine.com.
In
carrying out these responsibilities, the Audit Committee, among other
things:
|
●
|
Appoints
the independent auditor for the purpose of preparing and issuing
an audit
report and to perform related work, and discuss with the independent
auditor appropriate staffing and
compensation;
|
|
●
|
Retains,
to the extent it deems necessary or appropriate, independent legal,
accounting or other advisors;
|
|
●
|
Oversees
management's implementation of systems of internal controls, including
review of policies relating to legal and regulatory compliance, ethics
and
conflicts of interests; and reviews the activities and recommendations
of
the Company's internal auditing
program;
|
|
●
|
Monitors
the preparation of quarterly and annual financial reports by the
Company's
management, including discussions with management and the Company's
outside auditors about draft annual financial statements and key
accounting and reporting matters;
|
|
●
|
Determines
whether the outside auditors are independent (based in part on the
annual
letter provided to the Company pursuant to Independence
Standards Board Standard No. 1);
and
|
● Annually
reviews management's programs to monitor compliance with the Company's Guideline
on Business Ethics.
The
Committee met four times during fiscal 2005. The Committee has an appropriate
number of meetings to ensure that it devotes appropriate attention to all of
its
responsibilities. The Committee's meetings include, whenever appropriate,
executive sessions with the Company's independent auditors and with the
Company's internal auditors, in each case without any member of the Company's
management being present.
In
overseeing the preparation of the Company's financial statements, the Committee
met with both management and the Company's outside auditors to review and
discuss all financial statements prior to their issuance and to discuss
significant accounting issues. Management advised the Committee that all
financial statements were prepared in accordance with generally accepted
accounting principles. The Committee's review included discussion with the
outside auditors of matters required to be discussed pursuant to Statement
on Auditing Standards No. 61 (Communication
With Audit Committees),
including the quality of the Company's accounting principles, the reasonableness
of significant judgments and the transparency of disclosures in the financial
statements.
With
respect to the Company's outside auditors, the Committee, among other things,
discussed with PricewaterhouseCoopers LLP matters relating to its independence,
after receiving the written disclosures and the letter from
PricewaterhouseCoopers LLP required by the Independence
Standards Board Standard No. 1 (Independence
Discussions with Audit Committees).
Finally,
the Committee continued to monitor the scope and adequacy of the Company's
internal auditing program, including proposals for adequate staffing and to
strengthen internal procedures and controls where appropriate.
On
the
basis of these reviews and discussions, the Committee recommended to the Board
of Directors that the Board approve the inclusion of the Company's audited
financial statements in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2005, for filing with the Securities and Exchange
Commission.
Members
of the Audit Committee:
|
R.
J. Doyle, Chair
|
M.
C. Williams
|
|
F.
P. Incropera
|
M.
T. Yonker
|
|
G.
L. Neale
|
Report
of the Officer Nomination & Compensation Committee
The
Committee's Role and Purpose of this Report: The
responsibilities of the Officer Nomination & Compensation Committee are
included under the caption Corporate
Governance -- Roles of the Board's Committees -- Officer Nomination &
Compensation Committee
on pages
10 and 11 of this proxy statement. The Committee reports to the entire
Board.
The
purpose of this report is to summarize the philosophical principles, specific
program objectives and other factors the Committee considers in determining
the
compensation of Modine's executive officers, including the Named Executive
Officers.
Compensation
Philosophy: The
Committee has approved principles for the executive compensation program
that:
|
●
|
Recognize
Modine's goals can only be achieved by the retention and attraction
of
competent, highly skilled people and that compensation is a primary
factor
in retaining and attracting such
people;
|
|
●
|
Encourage
strong financial and operational performance of Modine by preserving
and
enhancing our shareholders' investment over time without experiencing
undue risk in the process;
|
|
●
|
Emphasize
performance-based compensation that balances rewards for short-term
and
long-term results for the Company;
|
|
●
|
Link
compensation to the interests of our shareholders by using stock
incentives, both stock awards and stock
options;
|
|
●
|
Place
all elements of executive compensation (base pay), annual incentives
(cash
bonus), and long-term incentives (stock-based) at the median of the
market
with the market defined by industrial companies with revenue of such
companies adjusted to be comparable to that of
Modine;
|
● Align
performance incentives in the short-term with return on assets employed (ROAE)
and in the long-term with earnings per share (EPS); and
● Emphasize
corporate results rather than independent performance of operating units given
the interdependence of the operating units.
Compensation
Methodology: Modine’s
executive compensation program is designed to achieve median market compensation
for each executive when target goals for cash and stock incentive plans are
achieved. When our targets are exceeded total compensation will exceed the
market median.
Modine’s
executive compensation program consists of many components including base pay,
cash bonus, and stock incentives. The goals we establish within our program,
though, are tailored to Modine’s culture and operational challenges. Modine
provides a comprehensive executive compensation program that aligns payment
with
the performance of the Company. Our aim is to provide compensation that is
competitive with other comparable manufacturing companies and with those
companies from which we seek to attract new, highly competent employees and
with
which we compete to retain such employees. Compensation packages of companies
in
the performance peer group and others are taken into consideration in
establishing executive compensation at Modine. This information is supplemented
by general industry compensation information with adjustments for relative
revenue.
The
Committee engages an outside consultant to assist in the annual review of all
elements of executive compensation: base salary; annual incentives and long-term
incentive compensation. The consultant annually conducts surveys of executive
compensation to determine the competitiveness of all elements of executive
compensation. The Committee also seeks counsel from the consultant on trends
in
plan design to ensure that the Company's executives are appropriately paid
in
accordance with the Committee's principles. The goal is to compensate executives
at the median range for all elements of compensation paid by companies to
persons in substantially similar positions in a group determined by the
Committee, after adjustments for relative revenue, to represent an accurate
benchmark for Modine. The Committee also considers the cumulative compensation
of executive officers in relation to the above-described group of
companies.
Components
of Compensation:
|
●
|
Base
Salary:
We target median or “market” base pay which is the median base salary for
like positions based on broad industry surveys. A competitive base
salary
target is part of all salaried employees’ compensation. Annual base salary
is designed to compensate executives for their level of responsibility
and
sustained individual performance. The Committee annually reviews
base
salary to ensure, on the basis of responsibility and performance,
that
executive compensation is substantially meeting the Committee's
principles. The Committee approves in advance all salary increases
for the
officers. In determining salary increases, the Committee reviews
data
presented by its outside consultant. Superior performance is recognized
through above market merit increases. Individual performance is the
key
component in determining base salary increases.
|
| ● |
Annual Incentives:
|
Modine
Management Incentive Plan (MIP). The
Management Incentive Plan is our annual cash bonus plan. One corporate financial
measure is used for all participants. Using one measure fosters cooperation
among our divisions and plants and keeps managers focused on the performance
of
the corporation overall.
The
plan
has a short term focus (one year) and is based on the fiscal results of the
Company using the Return on Assets Employed (ROAE) measure. ROAE is determined
by dividing net earnings by average net assets. Modine moved to this measure
from a Return on Equity measure several years ago when we first focused on
Value
Based Management. ROAE drives performance by focusing the organization on asset
utilization, working capital management and earnings improvement.
The
plan
originally included only top level managers that directly impacted the Company’s
performance. We expanded this plan in the United States a few years ago to
include many of our middle managers and plant management staff since they
influence performance through their actions and decisions. We also use this
plan
globally. The top management in Europe and Asia participate in the
MIP.
Overall
Company performance is the key component in determining bonuses and bonus
increases. The Committee believes that the focus on the Company's performance
versus the performance of an individual in determining an annual bonus is
appropriate given the interdependence of operations, the mobility of employees
within the organization and the desire of management to attract talented people
to underperforming divisions to improve performance.
Cash
bonuses increase in a linear fashion with the Company's ROAE. The incentive
is
set at a percentage of base salary and the incentive levels are greater for
more
highly compensated officers to reflect the level of responsibility of the
executive.
Since
2001, the Modine MIP ROAE Performance Schedule has been as follows: to earn
the
Threshold bonus, the Company must achieve ROAE of 4%; to earn the Target bonus,
the Company must achieve ROAE of 8%; and to earn the Maximum bonus, the Company
must achieve ROAE of 16%. The percentage of base pay paid as a bonus under
the
MIP varies based upon job responsibility with the Company having eight levels
with increasing percentage of salary earned as a bonus with increasing levels
of
job responsibility. If the Company achieves the Threshold ROAE (4%), an initial
level participant in the MIP would receive 3% of his or her salary with levels
increasing to 37.5% of salary as a bonus for the CEO. If the Company achieves
the Target ROAE (8%), an initial level participant in the MIP would receive
6%
of his or her salary and the CEO 75% and if the Maximum ROAE (16%) is achieved,
an initial level participant in the MIP would receive 12% of his or her salary
and the CEO would receive 150%. For ROAE between the Threshold and the Maximum,
the percentage of salary that may be earned as a bonus increases with each
100th%
change
in ROAE. For the 2005 fiscal year the Committee determined that participants
in
the 2002 Incentive Plan would receive the Target level of awards in the event
that earnings per share were $1.50.
| ● |
Long-Term
Incentive Compensation:
|
Long
Term
Incentive Plans are used to attract, retain and motivate key employees that
directly impact the performance of the Company. These plans are intended to
reward performance over a period greater than one year. These plans are
typically stock based plans so that stock price directly impacts the amount
of
compensation the executive receives.
There
are
two levels of Long Term Incentive Plan participation. Top managers are eligible
to participate in the Stock Option component of the program. Officers and key
executives participate in the Stock Option component, Retention Restricted
Stock
component and the Performance Stock component of the Plan.
| Ø |
Top
Managers Plan. Under
the Top Managers Plan, the Committee awards stock options based on
the
competitive long term incentive value for the position (for example
an
operations manager will receive a greater number than a plant manager)
and
the stock price at the time of grant.
|
| Ø |
Officers
and Key Executives Plan.
In fiscal 2005, the Long Term Incentive Plan for Officers and Key
Executives was administered with the number of options and restricted
stock awards available for grant fixed or pre-determined based on
position.
|
The
following describes the types of incentive awards granted in fiscal
2005:
| Ø |
Stock
Options:
Stock options have an exercise price equal to the fair market value
of the
common stock on the date of grant, are immediately exercisable after
one
year of service with the Company (therefore, for an employee who
has been
employed by the Company for at least one year, the option is immediately
exercisable) and have a term of ten years from the date of grant.
|
Individual
stock option grants are determined based upon the Committee's subjective
assessment of individual performance, contribution and potential. The Committee
determines the number of shares of stock that will be subject to an option
grant
based upon many factors, including the Company's and the individual's
performance, previous grants of stock options and awards and the competitive
market for long-term compensation.
| Ø |
Restricted
Stock Awards:
The Committee grants awards of common stock, at no cost to the employee,
for retention and to reward performance. The Committee selects a
target
number of shares that relates to market competitive pay for each
participant. A retention increment equal to one-third of the target
is
granted in January. The performance portion, earned on the basis
of EPS,
is granted in May following the end of the fiscal year in addition
to the
retention portion so that the participant receives a restricted stock
award upon the Company achieving pre-determined EPS. An executive
officer
may receive stock awards ranging from one-third of his or her Target
award
to 150% of his or her Target award. The shares vest in 20% increments
over
five years.
|
For
fiscal 2005, the performance schedule for the issuance of Restricted Stock
Awards was as follows: to earn the Threshold number of stock awards the
Company’s EPS must be $1.20; to earn the Target number of stock awards, the
Company’s EPS must be $1.50 and to earn the Maximum number of stock awards, the
Company’s EPS must be $1.75. The Company’s EPS for fiscal 2005 was $1.79 so
participants in the plan received the Maximum number of Restricted Stock Awards.
Other
Discretionary Bonuses
The
Committee, at its October 2004 meeting, approved a request from the CEO to
grant
shares of unrestricted stock to certain employees (officers and non-officers)
in
recognition of their performance. Messrs Richardson and Rulseh, two of the
Named
Executive Officers, each received a grant of 1,000 shares of unrestricted
stock.
Benefit
Plans for Highly Compensated Employees
In
addition to the employee benefits applicable to employees in general, more
highly compensated employees of Modine are eligible to participate in the
Deferred Compensation Plan and an Executive Supplemental Retirement Plan.
Deferred
Compensation Plan:
The
Deferred Compensation Plan is a non-qualified plan. It allows an employee to
defer salary in an amount that exceeds the statutory limitations applicable
to
401(k) plans. For the 2004 calendar year, an employee could contribute no more
than $13,000 to a 401(k) plan. The Deferred Compensation Plan allows a highly
compensated employee to defer an amount of salary that exceeds $13,000 but
in no
event can the deferral into the Deferred Compensation Plan exceed 10% of base
salary. Salary deferred pursuant to the Deferred Compensation Plan is placed
into a rabbi trust that is invested by the committee administering the plan.
Payments out of the Deferred Compensation Plan are deferred until termination
of
service or retirement.
Executive
Supplemental Retirement Plan (“SERP”):
The
SERP is a non-qualified pension plan. The SERP supplements the Company’s
qualified pension plan by allowing salary and bonus that is in excess of
statutory limits to be taken into account in determining pension benefits
payable to an employee.
Chief
Executive Compensation
The
Chief
Executive Officer participates in the same programs and receives compensation
based on the same factors as the other executive officers. However, Mr.
Rayburn's overall compensation reflects a greater degree of policy and
decision-making authority and a higher level of responsibility with respect
to
the strategic direction and financial and operational results of the Company.
For fiscal 2005, the Chief Executive Officer's compensation components
were:
Base
Salary:
The
Committee evaluated Mr. Rayburn's individual performance during fiscal 2005
based on certain criteria. These criteria included the following: the qualities
of leadership, ability to instill confidence in others, the ability to inspire
confidence from others, development of Modine's long-term strategic plan and
annual goals and objectives, development of an effective senior management
team
and provision for management succession, effective communications with
stakeholders and his relationship with the Board. As a result of this evaluation
and comparison with compensation norms, Mr. Rayburn's salary, which was $625,000
for the 2005 fiscal year, increased to $675,000 effective on April 1,
2005.
Annual
Incentive:
As
noted above, the Company’s ROAE for fiscal 2005 was 7.52% which is just short of
the Target level described above. Accordingly, under the MIP formula, Mr.
Rayburn earned a bonus of $440,625 representing 67.50% of his base
salary.
Long-Term
Incentive Awards:
Restricted
Stock: Prior
to
the beginning of the 2005 fiscal year, the Committee set the stock award Target
for Mr. Rayburn at 15,000 shares, including both retention and performance
portions of the award. Mr. Rayburn's award under the terms of the plan was
22,500 shares, 150% of the Target, given the Company's results of $1.79 for
earnings per share. In addition, in January 2005, the Committee determined
that
Mr. Rayburn’s long-term incentive compensation is substantially below market
level and, to partially rectify that situation, granted Mr. Rayburn an
additional 14,000 shares of restricted stock.
Stock
Options.
In
January 2005, the Committee awarded Mr. Rayburn options to purchase 26,000
shares of Common Stock at the closing market price on the date of the
award.
Changes
for Fiscal 2006
Going
forward, target annual long term incentive grants for each eligible position
will be determined based on the competitive market value of long term incentive
for the position. This value is determined by market surveys that look at
competitive practice for like positions across a broad spectrum of industries.
Target long term incentive will be a dollar value expressed as a percentage
of
base salary. Modine is continuing to move its long term incentive awards to
restricted stock.
The
long
term incentive compensation program in fiscal 2006 will have three components:
| · |
Stock
options - performance focused, wealth is created by the appreciation
of
Modine stock over time. Stock options may be exercised within a 10
year
period after grant. Options will continue to be granted in January
of each
year.
|
| · |
Retention
Restricted Stock Awards - retention focused. A portion of the award
vests
each year. In fiscal 2006 Modine is reducing the vesting period for
future
awards from five years to four years. Retention Restricted Stock
Awards
will continue to be granted in January of each year.
|
| · |
Performance
Stock Awards - performance focused. Awards will be earned based on
the
attainment of corporate financial goals over a three year period
and will
be granted after the end of the performance period.
|
The
grant
value for each component of the long term incentive program is allocated as
follows:
| · |
Stock
Options will comprise 20% of target long term incentive dollars;
|
| · |
Restricted
Stock will comprise 20% of target long term incentive dollars;
and
|
| · |
Performance
Stock Awards will comprise 60% of target long term incentive
dollars.
|
The
Performance Stock Award element of the program is being changed for fiscal
2006.
In prior years the performance portion of restricted stock awards was earned
based on achievement of the annual EPS goal which, like our bonus goal, has
a
one year focus. Contemporary long term incentive plans are expanding the time
horizon for performance based plans. Starting with fiscal 2006, Performance
Stock Awards will be earned based on performance over a three year period.
Once
earned, they are fully vested and will be granted immediately. Like prior years,
the award amounts will vary based on performance. There will be a Threshold,
Target and Maximum performance share award. The Maximum has been increased
this
year from 150% of target awards to 175% of target awards.
Two
measures will be used to determine the Performance Stock Awards - an EPS measure
and a Total Shareholder Return (TSR) measure. These two measures gauge
performance relative to other companies and focus management on driving
differentiation in Modine’s earnings and stock performance. The EPS goal is
measured on a three year period, which ensures that management makes decisions
with the intermediate term in mind versus trying to maximize a given year’s
performance to the detriment of future periods.
Achievement
and payout for each measure will be calculated and paid out independently of
the
other measure. EPS achievement is weighted at 60% of the target performance
shares and TSR is weighted at 40% of the target performance shares. The EPS
achievement is based on cumulative three year EPS achievement and the target
is
set at a cumulative EPS that reflects 10% annualized growth during the three
year period. The 10% annualized EPS growth goal was set at the average EPS
growth of the S&P 500 over a ten year period.
The
performance measure for TSR is Modine’s performance relative to the performance
of the S & P 500 over a three year period. The calculation of TSR includes
both the stock price change over the three year period as well as dividends
granted during the period.
A
new
performance period will begin each year so there will be multiple performance
share periods, with separate goals, operating simultaneously.
Compliance
with Internal Revenue Code Section 162(m):
Section
162(m) of the Internal Revenue Code of 1986, as amended, generally disallows
a
tax deduction to public companies for compensation over $1,000,000 paid to
a
company's CEO and the four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to the deduction
limit if certain requirements are met.
The
Committee believes that it is generally in the Company's best interest to
attempt to structure performance-based compensation, including stock option
grants and annual bonuses, to executive officers who may be subject to Section
162(m) in a manner that satisfies the statute's requirements. However, the
Committee also recognizes the need to retain flexibility to make compensation
decisions that may not meet Section 162(m) standards when necessary to enable
the Company to meet its overall objectives, even if the Company may not deduct
all of the compensation. Accordingly, the Board and the Committee have expressly
reserved the authority to award non-deductible compensation in appropriate
circumstances. Further, because of ambiguities and uncertainties as to the
application and interpretation of Section 162(m) and the regulations issued
thereunder, no assurance can be given, notwithstanding the Company's efforts,
that compensation intended by the Company to satisfy the requirements for
deductibility under Section 162(m) will do so.
Respectfully
submitted by the member of the Officer Nomination & Compensation Committee
of the Board of Directors:
|
G.
L. Neale Chair
|
M.
C.Williams
|
|
R.
J. Doyle
|
M.
T. Yonker
|
|
F.W.
Jones
|
Compensation
Committee Interlocks and Insider Participation: There
are none.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth compensation awarded to, earned by, or paid to the
Company's Chief Executive Officer and the four most highly compensated executive
officers other than the Chief Executive Officer who were serving as executive
officers as of March 31, 2005 (the "Named Executive Officers"), for services
rendered to the Company and its subsidiaries during fiscal 2005. Also included
is compensation information for the same individuals for the fiscal years ended
March 31, 2004, and March 31, 2003. Because Mr. Richardson joined the Company
as
Vice President and Chief Financial Officer on May 12, 2003 and was therefore
not
an executive officer for all periods being reported, information for Mr.
Richardson is given for fiscal years 2004 and 2005.
|
Annual
Compensation
|
Long
Term Compensation
|
||||||
|
Awards
|
|||||||
|
Name
and Principal Position
|
Fiscal
Year
|
Salary
($)(a)
|
Bonus
($)(b)
|
Other
Annual
Compensation($)(c)
|
Restricted
Stock
Awards($)(d)
|
Securities
Underlying
Options
(#)
|
All
Other Compensation ($)(e)
|
|
D.
B. Rayburn
|
2005
|
625,000
|
440,625
|
24,808
|
1,013,075
|
26,000
|
23,330
|
|
President
and CEO
|
2004
|
553,333
|
276,667
|
6,050
|
234,540
|
30,000
|
18,360
|
|
|
2003
|
412,414
|
155,313
|
11,763
|
277,315
|
22,400
|
14,319
|
|
B.
C. Richardson
|
2005
|
352,000
|
193,990
|
9,915
|
379,785
|
13,900
|
13,645
|
|
V.P.
Finance and CFO
|
2004
|
299,061(f)
|
200,000(f)
|
57,769(g)
|
661,924(f)
|
41,000(f)
|
9,259
|
|
C.
R. Katzfey
|
2005
|
286,000
|
134,371
|
5,457
|
379,785
|
10,400
|
11,158
|
|
Group
Vice President
|
2004
|
272,000
|
90,658
|
9,406
|
140,724
|
12,000
|
10,656
|
|
|
2003
|
262,500
|
76,563
|
8,807
|
166,389
|
11,200
|
9,674
|
|
J.
R. Rulseh
|
2005
|
273,000
|
156,861
|
3,915
|
379,785
|
10,400
|
7,292
|
|
Group
Vice President
|
2004
|
255,500
|
85,158
|
9,431
|
140,724
|
12,000
|
4,841
|
|
|
2003
|
243,000
|
70,875
|
175
|
163,391
|
11,200
|
7,228
|
|
K.
A. Feldmann
|
2005
|
€253,000/
$327,933
|
€118,910/
$154,128
|
€36,941/
$47,882
|
379,785
|
10,400
|
0
|
|
Group
Vice President
|
2004
|
€242,000/
$297,736(h)
|
€80,659/
$99,236(h)
|
€19,490/
$23,979(h)
|
140,724
|
12,000
|
0
|
|
|
2003
|
€230,081/
$250,769(h)
|
€67,115/
$73,150(h)
|
€18,894/
$20,593(h)
|
142,405
|
11,200
|
0
|
(a) The
salary amounts set forth above include amounts deferred at the Named Executive
Officer's option through contributions to the Modine 401(k) Retirement
Plan
for Salaried Employees and the Modine Deferred Compensation Plan.
(b) The
bonus
amounts include amounts paid in May of the next fiscal year under the Company's
Management Incentive Plan (“MIP”) attributable to the Company's performance
during the then prior fiscal year. By way of example, the MIP bonus paid in
May
2005 is attributable to the Company’s performance for the fiscal year ended
March 31, 2005. The bonus amounts also include for Messrs. Richardson and Rulseh
the market value on the date of grant of an award of 1,000 shares each of
unrestricted stock which is described above in the Report
of the Officer Nomination & Compensation Committee.
(c) Includes
perquisites, except where the total amount of perquisites received by the Named
Executive Officer was less than $50,000 or 10% of the named Executive Officers’
salary and bonus. Perquisites provided to some or all of the Named Executive
Officers were as follows: estate and financial planning services; executive
physical examinations and travel, meals and lodging to attend the Board of
Directors meeting in May 2004 at the Company’s European headquarters in
Bonlanden, Germany, as well as a tax “gross up” for the compensation
attributable to such trip.
(d) The
dollar values shown are based on the number of shares awarded multiplied by
the
closing market price of Company common stock on the date of grant. The 2005
restricted stock awards consists of awards made in January 2005 and May 2005
pursuant to the 2002 Incentive Compensation Plan (the “2002 Plan”), as follows:
Mr. Rayburn - 36,500 shares; Mr. Richardson - 13,500 shares; Mr. Katzfey -
13,500 shares; Mr. Rulseh - 13,500 shares; and Mr. Feldman - 13,500 shares.
The
total number of restricted shares outstanding and the aggregate market value
at
March 31, 2005 for the Named Executive Officers were: Mr. Rayburn - 26,800
shares valued at $786,044; Mr. Richardson - 23,800 shares valued at $698,054;
Mr. Katzfey - 16,160 shares valued at $473,973; Mr. Rulseh - 16,040 shares
valued at $470,453; and Mr. Feldmann - 15,200 shares valued at $445,816.
Dividends are paid on the restricted shares at the same time and the same rate
as dividends are paid to all shareholders.
The
awards under the 2002 Plan are subject to restrictions that lapse annually
in
fifths over a period commencing at the end of the first year from the date
of
grant. In the event of retirement, the shares may, if authorized by the Officer
Nomination & Compensation Committee of the Board, be released at an earlier
date. In the event of a change in control the share restrictions
lapse.
(e) Includes
employer matching contributions to the Modine 401(k) Retirement Plan for
Salaried Employees (“401(k) Co. Match”) and the Modine Deferred Compensation
Plan (“DC Co. Match”) and payments of premiums for disability insurance (“LTD
Ins.”) and life insurance (“Life Ins.”) as follows:
|
Name
|
401(k)
Co. Match
|
DC
Co. Match
|
LTD
Ins.
|
Life
Ins.
|
|
Mr.
Rayburn
|
$5,172
|
$15,177
|
$900
|
$1,080
|
|
Mr.
Richardson
|
$1,279
|
$10,386
|
$900
|
$1,080
|
|
Mr.
Katzfey
|
$3,210
|
$6,166
|
$856
|
$925
|
|
Mr.
Rulseh
|
$5,138
|
$454
|
$817
|
$883
|
|
Mr.
Feldman
|
$0
|
$0
|
$0
|
$0
|
(f) Mr.
Richardson joined the Company on May 12, 2003. In connection with his joining
the Company, the Company paid Mr. Richardson a hiring bonus of $75,000,
guaranteed him a bonus for the fiscal year ended March 31, 2004 of $125,000
and
granted him 20,000 shares of restricted common stock at no cost to him and
options for the purchase of 25,000 shares of common stock with an exercise
price
of $21.47 per share. The restricted stock and the options were granted pursuant
to the terms of the 2002 Plan.
(g) Includes
$25,144 for relocation expenses (including tax gross up payments) and $26,387
for club membership (including tax gross up payments).
(h) The
salary, bonus and other annual compensation for Mr. Feldmann, who works and
lives in Germany, were paid to him in Euros in the amounts shown in the table
above. The amounts shown in U.S. dollars in the table above were converted
from
the Euro at the following exchange rates in effect at March 31 in the years
indicated: 2005 - $1=0.7715€; 2004- $1=0.8128€ and 2003 -
$1=0.9175€.
Stock
Options
The following table sets forth information about stock option grants during
the
last fiscal year to the Named Executive Officers.
Option
Grants in Last Fiscal Year
|
Individual
Grants
|
Potential
Realizable
Value
at Assumed
Annual
Rates of Stock
Price
Appreciation for Option
Term (b)(c)
|
|||||
|
Name
|
Number
of
Securities
Underlying
Options
Granted(#)(a)
|
Percent
of Total
Options
Granted
to
Employees in
Fiscal
Year
|
Exercise
or
Base
Price
($/sh)
|
Expiration
Date
|
5%
($)
|
10%
($)
|
|
D.
B. Rayburn
|
26,000
|
8.32%
|
31.57
|
1/18/2015
|
514,020
|
1,306,500
|
|
B.
C. Richardson
|
13,900
|
4.45%
|
31.57
|
1/18/2015
|
274,664
|
698,475
|
|
C.
R. Katzfey
|
10,400
|
3.33%
|
31.57
|
1/18/2015
|
205,608
|
522,600
|
|
J.
R. Rulseh
|
10,400
|
3.33%
|
31.57
|
1/18/2015
|
205,608
|
522,500
|
|
K.
A. Feldmann
|
10,400
|
3.33%
|
31.57
|
1/18/2015
|
205,608
|
522,600
|
(a)
Consists of incentive and non-qualified stock options to purchase shares of
Modine common stock granted on January 18, 2005 pursuant to the 2002 Plan.
All
options granted are immediately exercisable except within the first year of
employment. Up to 3,000,000 shares of common stock may be issued pursuant to
grants of awards under the 2002 Plan. The ability to grant awards under the
2002
Plan expires on July 17, 2012. All options are granted at 100% of the fair
market value of common stock on the date of the grant and expire no later than
ten years after the date of the grant. Grants pursuant to the 2002 Plan may
be
made to officers and certain other employees as is determined by the Committee.
Upon the exercise of an option, the optionee may pay the purchase price in
cash,
stock, optioned stock, or a combination thereof. The optionee may also satisfy
any tax withholding obligation by using optioned stock.
(b) The
dollar amounts under these columns are the result of calculations at the 5%
and
10% rates set by the SEC and, therefore, are not intended to forecast possible
future appreciation, if any, of the Company's stock price.
(c)
No
gain
to the optionee is possible without stock price appreciation, which will benefit
all shareholders commensurately.
The
following table sets forth information with respect to the Named Executive
Officers concerning option exercises during and the value of options outstanding
at the end of the last fiscal year.
Aggregated
Option Exercises in Last Fiscal Year
and
Fiscal Year-End Option Values
|
Number
of Securities Underlying
Unexercised
Options
at FY-End (#) (a)
|
Value
of Unexercised In-the
Money
Options at FY-End ($) (a)
|
|||||
|
Name
|
Shares
Acquired
on
Exercise
(#)
|
Value
Realized
($)
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|
D.
B. Rayburn
|
11,000
|
38,060
|
233,400
|
0
|
928,870
|
0
|
|
B.
C. Richardson
|
0
|
0
|
54,900
|
0
|
199,060
|
0
|
|
C.
R. Katzfey
|
9,605
|
57,878
|
104,600
|
0
|
445,837
|
0
|
|
J.
R. Rulseh
|
9,000
|
31,500
|
102,600
|
0
|
428,520
|
0
|
|
K.
A. Feldmann
|
0
|
0
|
98,600
|
0
|
421,520
|
0
|
(a) All
options granted are immediately exercisable except within the first year of
employment. Value is determined by subtracting the exercise price from the
year-end closing price of the Company common stock and multiplying by the number
of shares underlying the options.
The
Named
Executive Officers participate on the same basis as other salaried employees
in
the non-contributory Modine Manufacturing Company Pension Plan for Non-Union
Hourly-Paid Factory Employees and Salaried Employees (the "Salaried Pension
Plan")(with the exception of K.A. Feldmann, who is a German citizen and receives
an annual contribution of five percent of his annual base salary for his
personal pension planning purposes, and an additional five percent of his annual
base salary on the basis of a reinsured support fund). Because the Company's
contributions to the Salaried Pension Plan are actuarially based on all eligible
salaried employees and are not allocated to individual employee accounts,
expenses for a specific person cannot readily be separately or individually
calculated. Retirement benefits are based on an employee's earnings for the
five
highest consecutive of the last ten calendar years proceeding retirement and
on
years of service. Applicable earnings include salary, bonus, and any deferred
amount under the Modine 401(k) Retirement Plan and the Deferred Compensation
Plan which is approximately the same as cash compensation reported in the
Summary Compensation Table, but on a calendar year rather than a fiscal year
basis. A minimum of five years of service is required for the benefits to vest.
The principal benefit under the Salaried Pension Plan is a lifetime monthly
benefit for the joint lives of a participant and his/her spouse based on the
employee's earnings and period of employment, and is not subject to offset
by
Social Security benefits. Employees may retire with unreduced early retirement
benefits at age sixty-two or may be eligible for disability, deferred, or other
early retirement benefits depending on age and years of service upon retirement
or termination. In addition, an employee may elect to receive a lump-sum pension
benefit if, upon retirement, the sum of the employee's age plus years of
eligible service with the Company equals least 85. Furthermore, if employed
on
and before March 31, 2001, an employee who reaches age sixty-two and who has
accumulated thirty or more years of eligible service may request that the
accrued benefit be paid immediately in a lump-sum amount, even if he/she elects
not to retire at that time.
In
March
2004, the Board of Directors passed a resolution that freezes credited service
under the Salaried Pension Plan as of April 1, 2006. After April 1, 2006,
participants in the Salaried Pension Plan will not earn additional credited
service; however, changes in compensation will be considered in any pension
calculation. While credited service is frozen at April 1, 2006, eligibility
service for employees hired on or before December 31, 2003 continues to
accrue.
The
following table sets forth the estimated annual benefits payable upon retirement
at normal retirement age for the years of service indicated under a combination
of the Salaried Pension Plan and the Executive Supplemental Retirement Plan,
a
non-qualified defined benefit pension plan, at the indicated remuneration levels
(average of five years' earnings).
|
Representative
Years of Service
|
|||||
|
Average
Annual Earnings
|
15
Years
|
20
Years
|
25
Years
|
30
Years
|
35
Years
|
|
$350,000
|
$84,468
|
$112,624
|
$140,780
|
$168,936
|
$197,092
|
|
450,000
|
109,593
|
146,124
|
182,655
|
219,186
|
255,717
|
|
550,000
|
134,718
|
179,624
|
224,530
|
269,436
|
314,342
|
|
650,000
|
159,843
|
213,124
|
266,405
|
319,686
|
372,967
|
|
750,000
|
184,968
|
246,624
|
308,280
|
369,936
|
431,592
|
|
850,000
|
210,093
|
280,124
|
350,155
|
420,186
|
490,217
|
|
950,000
|
235,218
|
313,624
|
392,030
|
470,436
|
548,842
|
|
1,050,000
|
260,343
|
347,124
|
433,905
|
520,686
|
607,467
|
|
1,150,000
|
285,468
|
380,624
|
475,780
|
570,936
|
666,092
|
|
1,250,000
|
310,593
|
414,124
|
517,655
|
621,186
|
724,717
|
|
1,350,000
|
335,718
|
447,624
|
559,530
|
671,436
|
783,342
|
|
1,450,000
|
360,843
|
481,124
|
601,405
|
721,686
|
841,967
|
|
1,550,000
|
385,968
|
514,624
|
643,280
|
771,936
|
900,592
|
Assuming
continued employment until age sixty-five, the estimated credited years of
service under the Salaried Pension Plan for Messrs. Rayburn, Richardson,
Katzfey, and Rulseh are 15.3, 3.1, 19.2, and 29.0 years, respectively. As stated
above, the credited service under the Salaried Pension Plan will be frozen
at
April 1, 2006.
Pension
benefits under the Salaried Pension Plan are subject to possible limitations
imposed by the Employee Retirement Income Security Act of 1974 and subsequent
amendments thereto. To the extent that an individual employee's retirement
benefit exceeds these limits, the excess will be paid pursuant to the Executive
Supplemental Retirement Plan from general operating funds of the
Company.
Employees,
including officers, may also qualify for long-term disability payments of
approximately sixty percent of their base salary, up to a maximum of $15,000
per
month, if they become disabled.
Employment
Agreements, Termination and Change in Control Arrangements
The
Company entered into an employment contract effective May 16, 2001 with Mr.
Rayburn covering his employment for a thirty-six month term. After the effective
date, the employment contract automatically and continuously extends for an
additional day, unless either party gives written notice of termination to
the
other party, in which case the term would become a thirty-six month period
beginning on the date such notice was received.
The
Company is permitted to terminate Mr. Rayburn's employment contract for "Cause,"
as that term is defined in the contract, and Mr. Rayburn is permitted to
terminate the employment contract upon the occurrence of any of the following
events: failure to elect or re-elect him to the offices he holds; a significant
change in the scope of his authority, duties, or reduction in compensation;
a
breach by the Company of any provision of the employment contract; and the
liquidation, dissolution, consolidation, or merger of the Company.
In
the
event of a termination by the Company other than for Cause or a termination
by
Mr. Rayburn as described above, the Company is obligated to remit, as liquidated
damages, severance pay to Mr. Rayburn an amount equal to his "Average Annual
Earnings" during the term under the employment agreement. "Average Annual
Earnings" means the arithmetic average of annual compensation includable in
Mr.
Rayburn's gross income in the five taxable years preceding the year of
termination. Mr. Rayburn would continue to receive all employee benefits plus
supplements to his retirement pension and 401(k) benefits designed to provide
him with benefits that otherwise are reduced by statutory limitations on
qualified benefit plans. In the event of disability, salary continuation would
be provided at a level of one hundred percent for the first twelve months and
up
to sixty percent for the remainder of the employment term.
In
the
event of a "Change in Control," as defined in Mr. Rayburn's Change in Control
Agreement and Termination Agreement, amended and restated effective May 20,
1999, at any time during the 24 months after a change in control occurs, if
Mr.
Rayburn is terminated without "Good Cause" or if Mr. Rayburn terminates the
Agreement for any reason, a 36-month "Severance Period" would be triggered
during which Mr. Rayburn would be entitled to receive an amount equal
to
three times the greater of: (A) the sum of his base salary and target
bonus
or (B) the sum of his five-year average base salary and five-year average
actual bonus, payable in a lump sum within 60 days after the date of termination
of employment. In addition, Mr. Rayburn would receive an amount equal
to
the pro-rata portion of the target bonus for the calendar year in which his
employment terminated and applicable benefits and credited service for
pension purposes for the 36-month period.
In
the
event of Mr. Rayburn’s death, such amounts would be payable to his estate. Any
stock options or stock awards would immediately vest, or restrictions lapse,
as
the case may be, on the date of termination. In the event a change in control
occurred, and if payments made to Mr. Rayburn were subject to the excise tax
provisions of Section 4999 of the Internal Revenue Code, Mr. Rayburn would
be
entitled to receive a lump sum payment, sufficient to cover the full cost of
such excise taxes and his federal, state and local income and employment taxes
on the additional payment.
Effective
May 12, 2003, the Company entered into an employment agreement with Mr.
Richardson, the terms of which are substantially identical to Mr. Rayburn's
employment agreement as described above.
As
of
February 26, 1997, the Company entered into separate Change in Control and
Termination Agreements with the Named Executive Officers and certain other
key
employees. These agreements were amended and restated May 20, 1999. Mr.
Rayburn's agreement is described above. The Company entered into a Change in
Control and Termination Agreement with Mr. Richardson dated as of May 12, 2003.
In
the
event of a "change in control," as defined in those Agreements, as amended
and
restated, certain key executives (including the Named Executive Officers other
than Mr. Rayburn, whose agreement is addressed above), if terminated by the
Company for any reason other than "Good Cause," or if terminated by the
executive for "Good Reason" within 24-months after the change in control occurs,
or if terminated by the executive for any reason during the 13th month after
the
change in control, will trigger a 24-month "Severance Period" during which
the
executive is entitled to receive an amount equal to two times the greater of:
(A) the sum of the executive's base salary and target bonus or (B) the sum
of
the executive's five-year average base salary and five-year average actual
bonus, payable in a lump sum within 60 days after the date of termination of
employment. In addition, the executive would receive an amount equal to the
pro-rata portion of the target bonus for the calendar year in which the
executive's employment terminated and applicable benefits and credited service
for pension purposes for the 24-month period.
In
the
event of the executive's death, such amounts will be payable to the executive's
estate. Any stock option or stock awards will immediately vest, or restrictions
lapse, as the case may be, on the date of termination. In the event a change
in
control occurs, and if payments made to the executive are subject to the excise
tax provisions of Section 4999 of the Internal Revenue Code, the executive
will
be entitled to receive a lump-sum payment, sufficient to cover the full cost
of
such excise taxes and the executive's federal, state, and local income and
employment taxes on the additional payment.
Performance
Graph
The
following graph compares the cumulative five-year total return on the Company’s
common stock with similar returns on the Russell 2000® Index and the Standard
& Poor’s (S&P) MidCap 400 Industrials Index, as well as with similar
returns on the two indices presented in the previous year’s proxy performance
graph - the S&P 500 Index and the NASDAQ U.S. Index. The graph assumes a
$100 investment and reinvestment of dividends.
We
have
selected two new indexes because the Company’s common stock is included in both
the Russell 2000® Index and the S&P MidCap 400 Index but not in the S&P
500 Index. In addition, because of its diversified thermal management market,
customer and product portfolio, the Company believes its common stock should
be
compared more specifically with a group of U.S. industrial stocks with which
it
shares a common index. In October 2004, the Company’s common stock listing was
moved to the New York Stock Exchange from the NASDAQ National Market. As a
result, the Company has elected to replace last year’s S&P 500 Index and
NASDAQ U.S. Index with the Russell 2000® Index and the S&P MidCap 400
Industrials Index in this performance graph to provide a more direct cumulative
total return comparison with its common stock. In the Proxy Statement for the
2004 Annual Meeting of Shareholders, the industry index was identified as the
NASDAQ Industrials Stock Index (non-financial index) but was actually the NASDAQ
U.S. Index, also shown below.
|
INDEXED
RETURNS
|
||||||
|
Base
|
Years
Ending
|
|||||
|
Period
|
||||||
|
Company
/ Index
|
Mar00
|
Mar01
|
Mar02
|
Mar03
|
Mar04
|
Mar05
|
|
MODINE
MANUFACTURING CO
|
100
|
106.64
|
115.71
|
65.90
|
117.12
|
134.50
|
|
RUSSELL
2000 INDEX
|
100
|
84.67
|
96.51
|
70.49
|
115.48
|
121.73
|
|
S&P
MIDCAP 400 INDUSTRIALS INDEX
|
100
|
92.67
|
114.41
|
86.83
|
125.17
|
139.91
|
|
S&P
500 INDEX
|
100
|
78.32
|
78.51
|
59.07
|
79.82
|
85.16
|
|
NASDAQ
U.S. INDEX
|
100
|
40.03
|
40.34
|
29.61
|
43.71
|
44.00
|
Certain
Transactions
In
the
regular course of business since April 1, 2004, the Company has had transactions
with corporations or other firms of which certain non-employee directors are
executive officers or otherwise principally involved. Such transactions were
in
the ordinary course of business and at competitive prices and terms. The Company
anticipates that similar transactions will occur in fiscal 2006.
Equity
Compensation Plan Information
The
following table sets forth required information about equity compensation plans
as of March 31, 2005.
|
Plan
Category (1)
|
(a)
Number
of shares to be
issued
upon exercise of
outstanding
options,
warrants
or rights
|
(b)
Weighted-average
exercise
price
of outstanding options,
warrants
and rights
|
(c)
Number
of shares remaining
available
for future issuance
(excluding
securities reflected
in
Column (a))
|
|
Equity
Compensation Plans approved by security holders (2)
|
2,802,365
|
$24.68
|
2,053,555
|
|
Equity
Compensation Plans not approved by security holders (3)
|
242,000
|
$25.74
|
258,000
|
|
Total
|
3,044,365
|
$24.76
|
2,311,555
|
|
(1)
|
The
referenced plans contain standard anti-dilution provisions that provide
for adjustment of the number of shares covered by the plan in the
event of
stock dividends, stock splits or similar transactions or in the event
the
Company acquires an entity which has issued, and has outstanding,
stock
options or rights. Any such adjustments shall be made to prevent
substantial dilution or enlargement of the benefits granted to, or
available for, participants.
|
|
(2)
|
Includes
the following shareholder-approved plans: 1985 Incentive Stock Plan;
1985
Stock Option Plan for Non-Employee Directors and Directors Emeriti;
1994
Incentive Compensation Plan; 2002 Incentive Compensation Plan; 1994
Stock
Option Plan for Non-Employee Directors; Modine Manufacturing Company
Stock
Option Plan for Thermacore Employees under the DTX Corporation 1995
Stock
Option Plan; and Modine Manufacturing Company Stock-Based Compensation
Plan for Thermacore Employees under the DTX Corporation 1997
Plan.
|
|
(3)
|
Includes
the 2000 Stock Option Plan for Non-Employee Directors, which was
approved
by the Board of Directors on May 17, 2000 and effective after June
30,
2000. Under the 2000 Plan, upon election and each re-election to
the
Board, a non-employee director automatically receives a grant of
6,000
non-qualified stock options for each year of his/her new
term.
|
ITEM
2 - APPROVAL OF THE AMENDED AND RESTATED 2000 STOCK INCENTIVE PLAN FOR
NON-EMPLOYEE DIRECTORS
The
shareholders of the Company are being asked to approve the Amended and Restated
2000 Stock Incentive Plan for Non-Employee Directors (the “Amended Directors’
Plan”), a copy of which is attached to this proxy statement as Appendix A. The
changes resulting from the proposed amendment and restatement are shown with
deletions indicated by strike-outs and additions indicated by underlining in
Appendix A. The Amended Directors’ Plan, which was adopted by the Board of
Directors on March 16, 2005 subject to shareholder approval, would give
discretion to the Board or a committee of the Board to grant stock options
and
stock awards to non-employee directors. Currently, under the existing plan,
within 30 days after election and each re-election to the Board, each
non-employee director so elected or re-elected is automatically granted an
option for the number of shares equal to the product of 6,000 times the number
of years in the term to which such director has been so elected or re-elected.
The current plan, the 2000 Stock Option Plan for Non-Employee Directors, which
was implemented in 2000 does not provide for the award of shares of
stock.
The
Amended Directors’ Plan is designed to provide for equity-based awards
consisting of stock options and shares of stock to the non-employee directors,
of which the Company currently has eight, in order to promote a greater unity
of
interests between the directors and the other shareholders. The Amended
Directors’ Plan also furthers the Company’s objective of increasing the
equity-based portion of the directors’ compensation and allows the exercise of
discretion to adjust the level of equity-based compensation in relation to
the
price of the stock. The existing plan does not allow for adjustment in the
number of shares subject to the formula option grant.
The
following summary description of the material terms of the Amended Directors’
Plan is not complete. Please read the Amended Directors’ Plan (attached as
Appendix A) to understand all of the terms of the Amended Directors’ Plan.
Administration
The
plan
will be administered by the Board or by the Officer Nomination &
Compensation Committee of the Board (the “Committee”). The charter of the
Committee will be amended immediately after the shareholders approve the Amended
Directors’ Plan to give the Committee the authority to administer director
compensation, as well as officer compensation. The Board or the Committee,
as
appropriate, has broad authority to (1) select the directors who will receive
awards at a particular time; (2) grant awards; (3) determine the number and
types of awards to be granted; (4) subject to the terms of the plan, determine
the terms, conditions, vesting periods and restrictions applicable to stock
awards; (5) adopt, alter and repeal administrative rules and practices governing
the plan; (6) interpret the terms and provisions of the plan and any awards
granted under the plan; (7) prescribe the forms of any notices of awards or
other instruments relating to the plan and (8) otherwise supervise the
administration of the plan. All decisions, determinations and interpretations
of
the Board or the Committee with respect to the Amended Directors’ Plan are final
and binding.
The
Committee, at its meeting in March 2005, approved, subject to the approval
of
the Amended Directors’ Plan by the shareholders, the grant of unrestricted stock
awards to the three directors elected or re-elected at the annual meeting.
The
Committee determined that the award for fiscal 2006 would equal $38,000 a year
for each of the years in the term to which the director has been elected or
re-elected. Therefore, the dollar value of the shares of unrestricted stock
that
each non-employee director would receive on the date of the annual meeting
at
which he or she is elected or re-elected is $114,000. The number of shares
of
unrestricted stock would equal $114,000 divided by the closing market price
of
the Company’s common stock on the date of award.
Eligibility
Any
member of the Board of Directors who is not an employee or officer of the
Company or any subsidiary of the Company is eligible to participate in the
Amended Directors’ Plan.
Stock
Option Awards
Stock
options will consist of nonqualified stock options to purchase shares of the
Company’s common stock. The Committee will, among other things, establish the
number of shares subject to the option, the time or times at which options
may
be exercised and whether all of the options may be exercisable at one time
or in
increments over time. The option price will not be less than the closing market
price of the Company’s common stock on the date of the grant. A stock option may
be exercised in whole at any time or in part from time to time. On June 7,
2005,
the closing price of Company common stock on the New York Stock Exchange was
$30.98 per share.
Stock
Awards
The
Board
or the Committee, as applicable, has broad discretionary authority to set the
terms of awards of stock under the Amended Directors’ Plan. Shares granted under
the Amended Directors’ Plan may or may not be subject to restrictions as
determined by the Committee. Participants will receive all dividends on, and
will have all voting rights with respect to, such shares.
Shares
Available
There
were originally 500,000 shares of Company common stock reserved for issuance
under the 2000 Directors’ Plan and 258,000 shares remain available for the grant
of awards under the Amended Directors’ Plan. Management does not propose any
change to the number of shares available for the grant of awards under the
Amended Directors’ Plan. Shares subject to awards that lapse become available
again for award under the plan.
Adjustments
and Change in Control
In
the
event the Company at any time changes the number of issued shares of common
stock without new consideration to the Company (by way of stock dividends,
stock
splits, or similar transactions), the total number of shares reserved for
issuance under the Amended Directors’ Plan and the number of shares covered by
each outstanding award will be adjusted so that the aggregate consideration
payable to the Company, if any, and the intrinsic value of each such award
will
not be changed.
Awards
may also contain provisions for their continuation, acceleration, immediate
vesting, or for other equitable adjustments after changes in the common stock
resulting from the reorganization, sale, merger, consolidation, dissolution,
liquidation, changes in control or similar occurrences.
Term
The
term
of the Amended Directors’ Plan expires on May 16, 2010. No award may be granted
after that date. No award made under the Amended Directors’ Plan may have a term
of more than ten years from the date of grant or award and an award will
terminate no later than three years after termination of director status for
any
reason other than death.
Amendment
The
Board
or the Committee may amend, alter or discontinue the Amended Directors’ Plan but
no such action may be made that will impair prior grants or rights of a director
without his or her consent or, if material, be made without shareholder
approval.
Federal
Income Tax Consequences Relating to the Plan
The
following is a brief summary of the Company’s understanding of the principal
federal income tax consequences of grants made under the Amended Directors’ Plan
based upon the applicable provisions of the Internal Revenue Code in effect
on
the date hereof.
Nonqualified
Stock Options:
An
optionee generally will not recognize any taxable income at the time he or
she
is granted a nonqualified option; however, upon its exercise, the optionee
will
recognize ordinary income for federal income tax purposes measured by the excess
of the then fair market value of the shares over the exercise price. On a
subsequent sale or exchange of shares acquired pursuant to the exercise of
a
nonqualified stock option, the optionee will recognize a taxable gain or loss,
measured by the difference between the amount realized on the disposition and
the tax basis of such shares. The tax basis will, in general, be the amount
paid
for the shares plus the amount treated as compensation income at the time the
shares were acquired pursuant to the exercise of the option. The Company will
be
entitled to a deduction for federal income tax purposes at the time and in
the
same amount as the optionee is considered to have recognized ordinary income
in
connection with the exercise of a nonqualified stock option.
Stock
Awards:
The
fair market value of the stock will constitute ordinary income to the
participant. Subject to the applicable provisions of the Internal Revenue Code,
a deduction for federal income tax purposes will be allowable to the Company
in
an amount equal to the compensation received by the participant.
Accounting
Treatment of Options
Under
existing accounting rules, the Company incurs no compensation expense upon
the
grant of a stock option with an exercise price at least equal to the fair market
value of Company common stock on the date of grant. However, in the footnotes
to
the Company’s annual financial statements, the Company sets forth pro forma net
income and earnings per share smounts which are calculated as if the Company
had
elected to recognize compensation expense equal to the fair value of the option
on the grant date based on the Black-Scholes option pricing model. On December
16, 2004, the Financial Accounting Standards Board (FASB) issued FAS 123(R),
to
be known as Share-Based
Payment.
The new
standard will require companies to recognize compensation cost for stock options
and other stock-based awards based on their fair value, generally measured
at
the date of grant. Under the amended compliance dates adopted by the SEC, the
Company is required to adopt FAS 123(R) in the first fiscal quarter beginning
after April 1, 2006.
Required
Vote
Approval
of this proposal requires the affirmative vote of the holders of a majority
of
the shares represented at the meeting, in person or by proxy, and entitled
to
vote thereon, provided that the total vote cast on the proposal represents
over
50% in interest of all shares entitled to vote on the proposal. Abstentions
will
have the same effect as a vote against this proposal; broker non-votes will
have
no effect on the outcome of the voting on this proposal so long as enough votes
are cast to satisfy the 50% requirement.
Consequence
of a Negative Vote
In
the
event that the shareholders do not approve the Amended and Restated 2000
Incentive Stock Plan for Non-Employee Directors, the 2000 Stock Option Plan
for
Non-Employee Directors would continue in effect in accordance with its current
terms and the directors elected or re-elected at the 2005 Annual Meeting will
receive stock options for 6,000 shares for each year of the term to which he
or
she is elected.
The
Board of Directors unanimously recommends a vote FOR the approval of the Amended
Directors’ Plan.
New
Incentive Plan Benefits
|
NEW
PLAN BENEFITS
|
|
Amended
and Restated 2000 Stock Incentive Plan for Non-Employee
Directors
|
The
table
below identifies anticipated grants to be made under the Amended and Restated
2000 Stock Incentive Plan for Non-Employee Directors for fiscal 2006, if the
Amended Directors’ Plan is approved.
|
Name
and Position
|
Dollar
Value ($)(a)
|
Number
of Shares of Stock
|
|
D.
B. Rayburn
|
0
|
0
|
|
B.
C. Richardson
|
0
|
0
|
|
C.
R. Katzfey
|
0
|
0
|
|
J.
R. Rulseh
|
0
|
0
|
|
K.
A. Feldman
|
0
|
0
|
|
Executive
Group
|
0
|
0
|
|
F.
P. Incropera
|
114,000
|
(b)
|
|
V.
L. Martin
|
114,000
|
(b)
|
|
M.
L. Williams
|
114,000
|
(b)
|
|
F.
W. Jones
|
0
|
0
|
|
D.
J. Kuester
|
0
|
0
|
|
M.
T. Yonker
|
0
|
0
|
|
R.
J. Doyle
|
0
|
0
|
|
G.
L. Neale
|
0
|
0
|
|
Executive
Group
|
0
|
0
|
|
Non-Executive
Officer
Employee
Group
|
342,0000
|
(b)
|
| (a) |
An
award under the Amended and Restated 2000 Stock Incentive Plan for
Non-Employee Directors would be made at the time of election or
re-election to the Board and would, therefore, cover a three year
period.
|
| (b) |
The
number of shares awarded shall be equal to $114,000 divided by the
closing
market price of the Company’s common stock on the date of
grant.
|
ITEM
3. - APPROVAL OF THE COMPANY’S AMENDED AND RESTATED ARTICLES OF
INCORPORATION
Background
of Proposal
The
Board
of Directors approved and proposed for adoption by the shareholders Amended
and
Restated Articles of Incorporation.
The
purposes of the amendment and restatement are:
| · |
to
remove unnecessary and outdated references regarding the Company’s purpose
(Article III);
|
| · |
to
update the description of capital stock (Article
IV);
|
| · |
to
delete the business combination restrictions in the Restated Articles
of
Incorporation and rely upon those in the Wisconsin Business Corporation
Law (“WBCL”)(Article VII);
|
| · |
to
expressly state in the Amended and Restated Articles of Incorporation
the
shareholder vote required for certain actions under the provisions
of the
WBCL applicable to the Company (Article VII);
and
|
| · |
to
eliminate the designation of the Series A Preferred
Stock.
|
If
this
proposal is adopted, the Amended and Restated Articles of Incorporation will
not
significantly expand or contract the rights of shareholders as they currently
exist under the WBCL and the Company’s current Restated Articles of
Incorporation.
Purpose
and Effect of the Amendments
As
part
of its overall review of the Company’s corporate governance practices, the Board
has reviewed and evaluated its corporate governance documents, including the
Restated Articles of Incorporation. The substance of the Company’s Restated
Articles of Incorporation has largely been left unchanged since last restated
on
July 17, 1969. Since that date, the Company has undergone a number of
significant corporate changes, and the WBCL, under which the Company is
organized, was thoroughly revised and updated effective as of January 1, 1991.
In general, the revised WBCL applies to any Wisconsin corporation with capital
stock, regardless of when the corporation was organized. Under the revised
WBCL,
statutory provisions concerning certain matters remained essentially unaltered,
and as to other matters were updated to provide additional flexibility. The
revised WBCL grandfathered certain other provisions. Modine was incorporated
in
Wisconsin in 1916 and, therefore, was grandfathered under these provisions
of
the revised WBCL. The Board now seeks shareholder approval for its Amended
and
Restated Articles of Incorporation to remove unnecessary and outdated references
and to conform the articles to certain provisions of the WBCL.
If
this
proposal is adopted, the Amended and Restated Articles of Incorporation will
be
as set forth in Appendix B to this proxy statement. The changes resulting from
the proposed amendment and restatement are shown with deletions indicated by
strike-outs and additions indicated by underlining in Appendix B. If adopted,
the Amended and Restated Articles of Incorporation will become effective upon
filing with the Wisconsin Department of Financial Institutions, which the
Company would do promptly after the annual meeting. If the shareholders approve
the proposal, at the Board meeting following the annual meeting the Board will
consider amendments to the Company’s Restated Bylaws that would, among other
things, make the Restated Bylaws consistent with the Amended and Restated
Articles of Incorporation.
The
proposed changes relate primarily to: Article III, Purpose; Article IV,
Description of Common Stock; and Article VII, Shareholder Vote Requirement
for
Certain Actions.
Proposed
Changes:
Article
III. Purpose
The
changes contained in Article III delete references relating to the specific
purposes and conduct of Modine’s business and eliminate unnecessary, obsolete,
and possibly restrictive provisions regarding the issuance of debt and the
repurchase of stock.
Article
IV. Description of Capital Stock
The
proposed changes in Article IV provide the Board with greater flexibility in
establishing the terms of a series of preferred stock, as permitted by the
WBCL.
For example, the proposed changes would permit the Board to issue a series
of
preferred stock with voting rights that are different from another series of
preferred stock.
Article
VII. Shareholder Vote Required for Certain Actions
Deletion
of Business Combination Restrictions
The
proposed changes to Article VII delete the business combination restrictions
contained in the Restated Articles of Incorporation that were adopted prior
to
the enactment of certain anti-takeover statutes included in the WBCL.
The
WBCL
now contains several provisions that may have the effect of discouraging certain
takeover proposals or business combinations with respect to a “resident domestic
corporation,” such as Modine. These provisions, which apply to Modine now,
include: (i) limiting the voting power of shareholders who own more than 20%
of
a company’s stock (§180.1150); (ii) requiring a supermajority vote of
shareholders, in addition to any vote otherwise required, to approve business
combinations with a 10% shareholder not meeting adequacy of price standards
(§§180.1130-33); (iii) limiting actions that can be taken while a takeover offer
is being made or after a takeover offer has been publicly announced (§180.1134);
and (iv) prohibiting a business combination between a company and a 10%
shareholder for a period of three years, unless the combination or the
acquisition of the 10% interest was approved by the Board of Directors prior
to
the time the shareholder became a 10% or greater beneficial owner of shares.
Following
this period, the WBCL permits a business combination with an interested
stockholder only if:
| · |
The
board of directors approved the acquisition of the stock prior to
the
acquisition date;
|
| · |
The
business combination is approved by a majority of the outstanding
voting
shares not beneficially owned by the interested
stockholder;
|
| · |
The
consideration to be received by stockholders meets statutory fair
price
and form requirements; or
|
| · |
The
business combination is of a type specifically excluded from the
coverage
of the statute. (§§180.1140-44).
|
Under
the
WBCL, a “resident domestic corporation” is defined as a Wisconsin corporation
that has a class of voting stock registered under Section 12 of the Securities
Exchange Act of 1934 that, as of the stock acquisition date in question, has:
(i) its principal offices located in Wisconsin; (ii) significant business
operations located in Wisconsin; (iii) more than 10% of the holders of record
of
its stock who are residents of Wisconsin; or (iv) more than 10% of its shares
held of record by residents of Wisconsin. Modine meets the statutory definition
of a resident domestic corporation (because it is a publicly held Wisconsin
corporation with its principal offices located in Wisconsin). Therefore, the
provisions contained in Article VII of the Restated Articles of Incorporation
are not necessary since the statutory takeover protections will apply
automatically to Modine as long as it meets the definition of a resident
domestic corporation.
Existing
Supermajority Voting Provisions
Under
the
grandfathering provisions of the WBCL, a two-thirds shareholder vote requirement
for certain fundamental corporate transactions is applicable to corporations
organized before January 1, 1973, such as Modine, that have not amended their
articles to elect otherwise. The proposed changes to Article VII would expressly
set forth the grandfathered statutory two-thirds shareholder vote requirements
applicable to Modine for fundamental corporate transactions, such
as:
| · |
amendments
to the articles of incorporation;
|
| · |
mergers
and share exchanges;
|
| · |
sales
of assets;
|
| · |
dissolution
of the corporation, and
|
| · |
revocation
of dissolution.
|
Proposed
Article VII would amend the Restated Articles of Incorporation by expressly
reflecting and retaining the grandfathered statutory two-thirds shareholder
vote
requirement applicable to Modine for these actions, and not adopt the lower
statutory majority vote, standard for these fundamental transactions that
applies to corporations that are not so grandfathered and do not adopt a greater
vote requirement.
Additionally,
the proposed changes to Article VII include a provision that certain Bylaw
provisions (removal of a director from office or amending provisions of the
Bylaws) may require a greater shareholder vote than is otherwise required by
the
WBCL or the Restated Articles. Such Bylaw provisions, unless grandfathered
as
Modine’s are now, must be authorized by the articles of incorporation. Since
Modine is amending its Restated Articles of Incorporation, it is appropriate
to
include such authority in the Amended and Restated Articles of Incorporation
to
eliminate any doubt regarding the validity of such provisions.
Although
these shareholder voting requirements need not be officially preserved in the
Amended and Restated Articles of Incorporation since they are grandfathered
under applicable law, the Board of Directors believes that setting forth these
rights in the Amended and Restated Articles of Incorporation is advisable
because it puts interested parties on notice of such rights and will avoid
uncertainty and confusion about the applicable voting requirements in the
future.
Eliminate
the Designation of the Series A Preferred Stock
The
Amended and Restated Articles of Incorporation would also remove the designation
of the 76,000 shares of Series A Preferred Stock relating to Modine’s former
shareholder rights agreement, terminated by the Board on July 17, 2002. The
change would delete an obsolete series designation and restore the shares to
authorized but unissued shares of Preferred Stock.
Summary
Comparison of Proposed Changes to Restated Articles of
Incorporation
|
Article
|
Proposed
Change
|
Reasons
for Changes
|
|
Article
III - Purpose
|
Remove
references to the specific purposes and conduct of Modine’s
business.
|
Change
would eliminate unnecessary, obsolete and possibly restrictive provisions
regarding the issuance of debt and the repurchase of
stock.
|
|
Article
IV - Description of Capital Stock
|
Remove
restrictions relating to the establishment of the terms of series
of
preferred stock.
|
The
WBCL provides greater flexibility in establishing the terms of a
series of
preferred stock than is currently provided for in the Restated Articles
of
Incorporation.
|
|
Article
VII - Shareholder Vote Required for Certain Actions
|
Delete
the business combination restrictions contained in the Restated Articles
of Incorporation.
|
The
WBCL contains provisions that have the effect of discouraging certain
takeover proposals or business combinations.
The
business combination restrictions contained in the Restated Articles
of
Incorporation were adopted prior to the enactment of certain anti-takeover
statutes included in the WBCL.
The
provisions in the Restated Articles of Incorporation may conflict
with the
provisions of the current WBCL.
|
|
Article
VII - Shareholder Vote Required for Certain Actions
|
Expressly
retain two-thirds shareholder vote requirement applicable to Modine
for
fundamental corporate transactions, such as article amendments, mergers
and share exchanges.
|
Under
WBCL statutory grandfathering provisions, two-thirds vote requirement
remains even if not stated in articles, unless and until changed
by
amendment to articles.
Provides
public notice of vote requirement.
Provides
certainty as to the vote required.
|
|
Article
VII - Shareholder Vote Required for Certain Actions
|
Authorize
certain bylaw provisions to require a greater shareholder vote than
is
otherwise required by the WBCL or the Amended and Restated Articles
of
Incorporation.
|
Certain
provisions in Modine’s Bylaws contain greater shareholder vote
requirements than currently provided in the WBCL.
Although
grandfathered until amended, the WBCL now requires authorization
in the
articles of incorporation for such bylaw provisions.
Provides
certainty as to continuing validity of such bylaw
provisions.
|
|
Eliminate
the Designation of the Series A Preferred Stock
|
Remove
the designation of the 76,000 shares of Series A Preferred
Stock
relating to Modine’s former shareholder rights agreement.
|
Delete
an obsolete series designation and restore the shares to authorized
but
unissued shares of Preferred Stock.
|
Required
Vote
Approval
of this proposal requires the affirmative vote of at least two-thirds (66 2/3%)
of the shares of the Company’s common stock outstanding as of the Record Date
and entitled to vote on the proposal. Abstentions and broker non-votes will
have
the same effect as a vote against this proposal.
The
Board of Directors recommends a vote FOR the approval of the Amended and
Restated Articles of Incorporation.
ITEM
4 - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The
Audit
Committee of the Board has appointed PricewaterhouseCoopers LLP as the Company's
independent auditors for the fiscal year ending March 31, 2006 to audit the
consolidated financial statements of the Company. PricewaterhouseCoopers LLP
has
been the Company's independent certified public accountants since 1935. Before
the Audit Committee selected PricewaterhouseCoopers LLP, it carefully considered
the qualifications of that firm, including their performance in prior years
and
their reputation for integrity and for competence in the fields of accounting
and auditing.
At
the
2004 Annual Meeting, the Company’s shareholders ratified the appointment of
PricewaterhouseCoopers LLP as the independent auditors of the Company to audit
the consolidated financial statements of the Company for the next three fiscal
years. However, the Board of Directors has since determined to give the
shareholders the opportunity to ratify the appointment of the Company’s auditors
on an annual basis.
If
the
shareholders do not ratify the appointment of PricewaterhouseCoopers LLP, the
selection of our independent auditors will be reconsidered by the Audit
Committee. Approval of this proposal requires the affirmative vote of the
holders of a majority of the shares represented at the meeting, in person or
by
proxy, and entitled to vote thereon, provided a quorum is present. Abstentions
will have the same effect as a vote against this proposal.
If,
prior
to the 2005 Annual Meeting, PricewaterhouseCoopers LLP shall decline to act
or
its engagement shall be otherwise discontinued by the Board, the Board will
appoint other independent auditors whose engagement for any period subsequent
to
the meeting will be subject to ratification by the shareholders at the 2005
Annual Meeting.
Services
provided to the Company and its subsidiaries by PricewaterhouseCoopers LLP
in
fiscal 2005 and 2004 are described under Fees
to Independent Auditors for Fiscal 2005 and 2004
below.
Representatives
of PricewaterhouseCoopers LLP are expected to be present at the 2005 Annual
Meeting of Shareholders. They will have the opportunity to make a statement
if
they desire to do so and are expected to be available to respond to appropriate
questions after the meeting.
The
Board recommends that shareholders vote FOR ratification of the appointment
of
PricewaterhouseCoopers LLP as the Company's independent
auditors.
INDEPENDENT
AUDITORS’ FEES FOR FISCAL 2005 AND 2004
The
following table presents fees for professional audit services rendered by
PricewaterhouseCoopers LLP for the audit of the Company's annual financial
statements for the fiscal years ended March 31, 2005 and
March
31,
2004 and fees billed for other services rendered by PricewaterhouseCoopers
LLP
during those periods. Certain amounts for fiscal 2004 have been reclassified
to
conform to the fiscal 2005 presentation.
|
(Amount
in thousands)
|
||
|
Fiscal 2005
|
Fiscal 2004
|
|
|
Audit
Fees (a):
|
$2,757.9
|
$
827.6
|
|
Audit-Related
Fees (b):
|
$
-
|
$
303.6
|
|
Tax
Fees (c):
|
$
294.0
|
$
335.1
|
|
All
Other Fees (d):
|
$
20.3
|
$
5.8
|
|
Total
|
$3,072.3
|
$1,482.1
|
(a) Audit
Fees: Fees for professional services performed by PricewaterhouseCoopers LLP
for
the audit of the Company's annual financial statements included in the Company's
Form 10-K filings and review of financial statements included in Form 10-Qs,
for
the audit of the Company’s internal control over financial reporting with the
objective of obtaining reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects, for
the attestation of management’s report on the effectiveness of internal control
over financial reporting (the 2004 Sarbanes-Oxley Section 404 attestation),
and
services that are normally provided in connection with statutory and regulatory
filings or engagements.
(b) Audit-Related
Fees: Fees for assurance and related services performed by
PricewaterhouseCoopers LLP that are reasonably related to the performance of
the
audit or review of the Company's financial statements and review of the
Company's documentation of internal control over financial reporting and
advisory services for purposes of complying with Section 404 of the
Sarbanes-Oxley Act of 2002. This amount also includes reviews of employee
benefit and compensation plans, attestations by PricewaterhouseCoopers LLP
that
are not required by statute or regulation, and consulting on financial
accounting/reporting standards.
(c) Tax
Fees: Fees for professional services performed by PricewaterhouseCoopers LLP
with respect to tax compliance, tax advice, and tax planning. This includes
preparation of original and amended returns for the Company and its consolidated
subsidiaries, refund claims, payment planning, tax audit assistance, and tax
work stemming from "Audit-Related"
items.
(d) All
Other Fees: Fees for assistance related to services performed for the Company
in
response to a U.S. Customs inquiry for a NAFTA certificate of origin
verification. Fees for assistance related to services performed for the Company
in response to a U.S. Customs inquiry for a NAFTA certificate of origin
verification.
The
Audit
Committee has determined that the provision of services rendered above that
were
not related to its audit of the Company's financial statements were at all
times
compatible with maintaining PricewaterhouseCoopers LLP’s'
independence.
Pre-Approval
Policy
Consistent
with the rules of the SEC regarding auditor independence, the Audit Committee
has responsibility for appointing, setting compensation for, and overseeing
the
work of, the independent auditor. In recognition of this responsibility, the
Audit Committee has included in its charter that it will pre-approve all audit
and permitted non-audit services (including the fees and terms thereof) to
be
performed by the independent auditor. Alternatively, the Committee may form
and
delegate authority to subcommittees consisting of one or more members when
appropriate, including the authority to grant pre-approvals of audit and
permitted non-audit services, provided that decisions of such subcommittee
to
grant pre-approvals shall be presented to the full Audit Committee at its next
scheduled meeting. No fees were paid to the independent auditor pursuant to
the
"de minimis" exception to the foregoing pre-approval policy permitted under
the
Securities Exchange Act of 1934 and the SEC rules.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires the Company's executive
officers and directors, and persons who beneficially own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership of equity securities of Modine and derivative
securities of Modine with the SEC Those “reporting persons” are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based
upon a review of those filings and other information furnished by the reporting
persons, we believe that all of the Company's reporting persons complied during
fiscal 2005 with the reporting requirements of Section 16(a) of the Exchange
Act
with the exception of Mr. Richardson, Mr. Rulseh and Ms. Kelsey, each of whom,
as a result of a communication error, inadvertently filed one report on Form
4
one day late (October 22, 2004) reporting the award of performance-based
shares.
ADDITIONAL
MATTERS
The
Board
of Directors is not aware of any other matters that will be presented for action
at the 2005 Annual Meeting. Should any additional matters come before the
meeting, the persons named in the enclosed proxy will vote on those matters
in
accordance with their best judgment.
Shareholder
Proposals for 2006
Shareholder
proposals for the 2006 Annual Meeting of Shareholders of the Company must be
received no later than February 10, 2006 at the Company's principal executive
office, Modine Manufacturing Company, 1500 DeKoven Avenue, Racine, Wisconsin
53403, directed to the attention of the Corporate Secretary, in order to be
considered for inclusion in next year's annual meeting proxy material under
the
proxy rules of the SEC. Written notice of shareholders proposals for the 2006
Annual Meeting of Shareholders of the Company that are not intended to be
considered for inclusion in next year's annual meeting proxy material
(shareholder proposals submitted outside the processes of Rule 14a-8) must
be
received no later than April 26, 2006 at such offices, directed to the attention
of the Corporate Secretary.
Annual
Report
A
copy of the Company's Annual Report for the fiscal year ended March 31, 2005
has
been provided with this Proxy Statement. The Company will provide to any
shareholder, without charge, upon written request of such shareholder, a copy
of
the Company's Form 10-K (without exhibits). Such requests should be addressed
to: Director of Shareholder Relations, Modine Manufacturing Company, 1500
DeKoven Avenue, Racine, Wisconsin, 53403-2552. A copy of the Company's Form
10-K
will be available on our website at www.modine.com after it is filed with the
SEC.
The
foregoing notice and Proxy Statement are sent by order of the Board of
Directors.
D.
R.
ZAKOS, Secretary
Appendix
A
Material
to be deleted from the existing 2000 Stock Option Plan for Non-Employee
Directors is shown as struck
through,
and
material to be added is shown as double
underlined
on the
paper version of this proxy statement, however, it only shows as single
underlined
on the
electronic version.
MODINE
MANUFACTURING COMPANY
2000
STOCK OPTIONINCENTIVEPLAN
FOR
NON-EMPLOYEE DIRECTORS
Amended
and Restated as of March 16, 2005
1. PURPOSEPurpose.
The Modine Manufacturing Company 2000 Stock OptionIncentive
Plan for
Non-Employee Directors as
amended and restated as of March 16, 2005(the
"“Directors'’
Plan"”)
is
intended to promote the interests of Modine Manufacturing Company (the
"“Company"”)
and its
stockholdersshareholdersby
providing potentialequity-based
compensation as
described herein(“Awards”)for
the
non-employee members of the Company's Board of Directors(the
“Directors”),
thereby assisting the Company in its efforts to attract and retain well
qualified individuals to serve as its directors. Options
granted under the Directors' Plan are intended to be
of a type that does
not meet all of the requirements of Section 422A of the Internal Revenue Code
of
1986 as heretofore and hereafter amended, and the Directors' Plan shall be
construed so as to carry out that intention.
2. Administration.
(a) Procedure;
Disinterested Directors.
The
Board will administer the Directors’Plan;
provided, however, that the Board may appoint a
committee (the "the
Officer Nomination & CompensationCommittee")
of two (2) or more directorsof
the
Board (the“Committee”)
to
administer the Directors’Plan
if
deemed necessary or advisable in order to comply with the exemptive rules
promulgated pursuant to Section 16(b) of the Securities Exchange Act of 1934,
as
amended (the "Exchange
Act"). “Exchange
Act”), and such Committee is constituted in such a manner that satisfies all
applicable legal requirements including an independence standard contained
in
the listing requirements of the New York Stock Exchange. A majority of members
of the Committee shall constitute a quorum, and all determinations of the
Committee shall be made by a majority of its members. Any determination of
the
Committee under the Directors’ Plan may be made without notice or meeting of the
Committee, by a writing signed by a majority of the Committee
members.
(b) Powers.
Subject to the provisions of the Directors’ Plan, the Board or Committee shall
have the authority, in its discretion, to (i) select the Directors who will
receive Awards; (ii) grant Awards; (iii) determine the number and types of
Awards to be granted to Directors; (iv) subject to the terms of the Directors’
Plan, determine the terms, conditions, vesting periods and restrictions
applicable to Awards; (v) adopt, alter and repeal administrative rules and
practices governing the Directors’ Plan; (vi) interpret the terms and provisions
of the Directors’ Plan and any Awards granted under the Directors’ Plan; (vii)
prescribe the forms of any notices of Awards or other instruments relating
to
Awards; and (viii) otherwise supervise the administration of the Directors’
Plan.
(c) Determinations
and Interpretations. All determinations and interpretations pursuant to the
provisions of the Directors’ Plan shall be binding and conclusive upon the
individual Director involved and all persons claiming under
them.
A-1
(e) Form
of
Award. Except as otherwise provided herein, a particular form of Award may
be
granted to a Director either alone or in addition to other Awards hereunder.
The
provisions of particular forms of Award need not be the same with respect to
each recipient.
(f) Delegation.
To the extent permitted by law, the Committee may delegate any of its authority
to any other person or persons that it deems appropriate, provided the
delegation does not cause the Directors’ Plan or any Awards granted under the
Directors’ Plan to fail to qualify for the exemption provided by Rule 16b-3 or
violate any independence standard contained in the New York Stock Exchange
listing requirements.
(g) Governing
Law. The Directors’ Plan and all action taken under it shall be governed by the
laws of the State of Wisconsin without giving effect to the principles of
conflict of laws thereof.
(h) Electronic
Signature. The Committee may permit or require any Director to exercise any
Stock Option by means of electronic signature.
3. PARTICIPANTSDirectors.
Participants shall consist of all present or future directors of the Company
who are not employees of the Companyor
any
subsidiary of the Company.
5. Awards.
(a) Types
of Awards.
Awards
under the Directors’ Plan may be granted in any one or a combination
of:
(1) Stock
Options.
(i) Nonqualified
Stock Options.
One or
more Stock Options may be granted to any Director. Each Stock Option so granted
shall be subject to such terms and conditions as the Committee imposes.
Stock
Options
granted under the Directors' Plan are intended to be
of a
type that do
not meet
all of the requirements of Section 422A of the Internal Revenue Code of 1986
as
heretofore and hereafter amended, and the Directors' Plan shall be construed
so
as to carry out that intention.
(bii) Exercise.
An
optionA
Stock Option
may be
exercised in whole at any time or in part from time to time.
A-2
(2) Shares
of Stock.
(i) Terms.
Shares
of Stock will consist of shares of Common Stock that are transferred to the
Director. In the discretion of the Board or Committee, the stock awards may
carry restrictions such as a prohibition against disposition or an option to
repurchase upon the happening of certain events, including termination of Board
service, and may be subject to a substantial risk of forfeiture. Shares of
Stock
may be granted to the Director at no charge, or they may be sold to the
Director. Restrictions, if any, on the shares of stock may lapse over a period
of time. As the restrictions, if any, lapse, the Director has unrestricted
shares that then may be sold or transferred. If, however, the restrictions
are
violated prior to their lapse, those shares still subject to such restrictions
are forfeited by the Director, and must be returned to the
Company.
(ii) Evidence
of Award.
Any
shares of Common Stock issued hereunder may be evidenced in such manner as
the
Board or Committee may determine in its sole discretion deems appropriate,
including, without limitation, book-entry registration or issuance of a stock
certificate or certificates.
(b) Written
Agreement. Each Award
will
be
evidenced by an appropriate written agreement, the form of which shall be
consistent with the terms and conditions of the Directors' Plan and applicable
law, and which shall be signed by one or more designated members of the Board
or
Committee and the Director.
8. Adjustment
Provisions.
A-3
(a) Changes
in Capitalization.
If the
Company shall at any time change the number of issued shares of Common Stock
without new consideration to the Company (by stock dividends, stock splits,
or
similar transactions), the total number of shares reserved for issuance under
(b) Reorganizations,
sale, etc. Directors'
Stock OptionsAwardsmay
also
contain provisions for their continuation, acceleration, immediate vesting,
or
for other equitable adjustments after changes in the Common Stock resulting
from
reorganization, sale, merger, consolidation, dissolution,
liquidation,change
in control
or
similar occurrences.
(a) By
or
tothe
executor or administrator of the estate of the deceased participant
Directoror
the
person or persons to whom the deceased participantDirector's
rights under the Director's
Stock OptionAward
shall
pass by will or the laws of descent and distribution; and
(b) To
the
extent, if any, that the deceased participantDirector
was
entitled at the date of histhe
Director'sdeath.
11. Term;
Termination; and Amendments.
(a) Term.
No
Director's
Stock Option shallAward
may
be
granted more than ten years after the date of adoption of thistheDirectors'
Plan(i.e.
after May 16, 2010);provided,
however, that the terms and conditions applicable to Directors'
Stock OptionsAwardsgranted
within such period may thereafter be amended or modified by mutual agreement
between the Company and the participantDirectoror
such
other person as may then have an interest therein. Also, by mutual agreement
between the Company and a participantDirectorhereunder,
or under any future plan of the Company, Directors'
Stock OptionsAwardsmay
be
granted to such participantDirector
in
substitution and exchange for and in cancellation of, any Directors'
Stock OptionsAwards
previously granted such participantDirectorunder
thistheDirectors'
Plan.
(b) Termination.
The
Directors’Plan
may
be terminated at any time by the Board orCommitteeor
by
the
approval by the holders of a majority of the shares of the Common Stock present,
or represented, and entitled to vote at a meeting held for such
purpose;
provided that the total vote cast on the termination proposal represents
over
50% in interest of all shares entitled to vote on such proposal.
A-4
(c) Amendment.
The
Directors’Plan
may
be amended by the Board or Committee; provided however, that (i) no amendment
12. Other
Provisions.
The
grant of any Award
under
the Directors' Plan may also be subject to such other provisions (whether or
not
applicable to the Award
granted to any other Director) as the Board or
Committee determines appropriate, including without limitation,
provisions for the forfeiture of, or restriction on resale or other disposition
of shares acquired under Awards,
provisions giving the Company the right to repurchase shares acquired under
the
Awards in the event the Director
elects
to dispose of such shares, provisions to comply with federal and state tax
or
securities laws, or understandings or conditions as to the length of the
Director's
term
as a director in addition to those specifically provided for under the
Directors' Plan.
13. Effective
Date.
The
Modine Manufacturing Company 2000 Stock Option Plan for Non-Employee Directors
was originally adopted by the Board of Directors on May 17, 2000, and was
effective as of July 1, 2000. The Directors’ Plan, as amended and restated, was
adopted and approved by the Board of Directors on March 16, 2005, and shall
be
effective, if approved by the shareholders of the Company, as of July 20,
2005.
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A-5
Material
to be deleted from the existing Modine Manufacturing Company Articles of
Incorporation is shown as struck
through,
and
material to be added is shown as double
underlined
on the
paper version of this proxy statement, however, it only shows as single
underlined
on the
electronic version.
AMENDED
AND RESTATED
ARTICLES
OF INCORPORATION
OF
MODINE
MANUFACTURING COMPANY
These
Amended and Restated Articles of Incorporation of Modine Manufacturing Company,
a corporation incorporated under Chapter 180 of the Wisconsin Statutes, the
Wisconsin Business Corporation Law,
supersede and take the place of the existing
Restated Articles of Incorporation and all prior amendments
thereto.
ARTICLE
I. NAME
The
name
of this Corporation shall be:
ARTICLE
II. EXISTENCE
The
period of existence of this Corporation shall be perpetual.
ARTICLE
III. PURPOSE
The
purpose or purposes for which this Corporation is organized is to engage in
any
lawful activity within the purposes for which corporations may be organized
under the Wisconsin Business Corporation Law. In
particular, but without limitation thereto by reason of such enumeration, this
Corporation may and shall have as its powers, objects and purposes to
manufacture, buy, sell, deal in, engage in, conduct and carry on the business
of
manufacturing of all kinds of goods, wares, products, com-modities, supplies
and
merchandise of every description; and to acquire, own, use, convey, pledge,
lease, exchange, sell, mortgage, encumber and otherwise dispose of real and
personal property, improvements or chattels, real, tangible and intangible
property, property of mixed characteristics, patents, franchises, privileges,
and rights of any and all kinds and wheresoever situated.
B-1
ARTICLE
IV. DESCRIPTION OF CAPITAL STOCK
The
aggregate number of shares of Capital Stock which the Corporation shall have
authority to issue is ninety-six million (96,000,000) shares, of which eighty
million (80,000,000) shares shall be shares of Common Stock (hereinafter called
“Common
Stock”)
of the
par value of Sixty-two and one/half cents ($0.625) per share, and sixteen
million (16,000,000) shares shall be shares of Preferred Stock (hereinafter
called “Preferred
Stock”)
of the
par value of Two and one/half Cents ($0.025) per share.
Shares
of
Preferred Stock may be divided into and issued in series, from time to time,
with each such series to be so designated as to distinguish the shares thereof
from the shares of all other series of Preferred Stock. All shares of Preferred
Stock shall be identical except as to the following rights and preferences,
as
to which there may be variations between different series: The rate of
dividend,;
the
price at and the terms and conditions on which shares of Preferred Stock may
be
redeemed; the amount payable upon shares of Preferred Stock in event of
voluntary or involuntary liquidation; sinking fund provisions for redemption
or
purchase of shares of Preferred Stock; and
the
terms
and conditions on which shares of Preferred Stock may be converted into other
series or classes of capital stock, if the shares of any series of Preferred
Stock are issued with the privilege of conversion.;
voting rights, if any; and any other rights or preferences as to which
the
laws ofthe State of Wisconsin, as in effect at the time of the
determination thereof, permit variations between different series of Preferred
Stock. Each
such
series of Preferred Stock shall have suchonly
such
voting rights, if any, preemptive rights, if any, and such
other
designations, preferences, limitations and relative rights as shall be stated
and expressed in the resolution or resolutions providing for the issue of such
series of Preferred Stock adopted by the Board of Directors of the
Corporationor
as
may be required by law,
subject
to the limitations prescribed by law and in accordance with the provisions
hereof, the Board of Directors being hereby expressly vested with authority
to
adopt any such resolution or resolutions as they may deem advisable
thereon.
The
holders of shares of the Preferred Stock of each series shall be entitled to
receive, when and as declared by the Board of Directors, out of funds legally
available for the payment of dividends, dividends at the rates fixed by the
Board of Directors for such series, and no more, before any dividends, other
than dividends payable in Common Stock, shall be declared and paid, or set
apart
for payment, on the Common Stock with respect to the same dividend
period.
Whenever,
at any time, dividends on the then outstanding Preferred Stock as may be
required with respect to any series outstanding shall have been paid or declared
and set apart for payment on the then outstanding Preferred Stock, the Board
of
Directors may, subject to the provisions of the resolution or resolutions
creating any series of Preferred Stock, declare and pay dividends on the Common
Stock, and the holders of shares of Preferred Stock shall not be entitled to
share therein.
B-2
The
holders of shares of the Preferred Stock of each series shall be entitled upon
liquidation or dissolution or upon the distribution of the assets of the
Corporation to such preference as provided in the resolution or resolutions
creating such series of Preferred Stock, and no more, before any distribution
of
the assets of the Corporation shall be made to the holders of the shares of
the
Common Stock. Whenever the holders of shares of Preferred Stock shall have
been
paid the full amounts to which they shall be entitled, the holders of shares
of
the Common Stock shall be entitled to share ratably in all assets of the
Corporation remaining.No
holder
of shares of CapitalCommonStock
of this Corporation,
as
such,
shall
have any pre-emptivepreemptive,
preferential or other right to subscribe for or purchase any part of the
unissued Capital Stock or Capital Stock of this Corporation held in the
Corporate Treasury, whether now or hereafter authorized, or of other securities
of this Corporation of any type or class which are convertible into Capital
Stock of this Corporation
excepting as the Preferred Stock hereinabove provided may be convertible into
shares of the Common Stock of this Corporation.
ARTICLE
V. BOARD OF DIRECTORS
The
Board
of Directors of this Corporation shall consist of such number of members as
the
By-Laws may provide, but not less than seven (7) members, divided into three
(3)
classes, (divided as evenly in number as possible) with not more than one class
of Directors to be elected at each annual meeting of shareholders, excluding
election to fill vacancies.
B-3
ARTICLE
VI. REGISTERED OFFICE AND AGENT
The
address of the registered office of this Corporation at the time of the adoption
of theseAmended
and
Restated
Articles of Incorporation is 1500 DeKoven Avenue, Racine, Wisconsin 53401,
and
the name of its registered agent at such address is W.
E. Pavlick[___________].
ARTICLE
VII. SHAREHOLDER VOTE REQUIRED FOR CERTAIN ACTIONS
Any
lawful amendment of these Amended and Restated Articles of Incorporation covered
by Section 180.1003(3) and any proposals concerning a subject covered by
Sections 180.1103(3), 180.1202(3), 180.1402(3) and 180.1404(2) of the Wisconsin
Business Corporation Law must be approved by two-thirds of all the votes
entitled to be cast on the proposal by all shares entitled to vote thereon
and,
if the shares of any one or more classes or series shall be entitled under
these
Amended and Restated Articles of Incorporation or otherwise by law to vote
and
be counted together collectively thereon (a “voting group”), by two-thirds of
all the votes entitled to be cast on the proposal by each such voting group,
all
subject, however, to any other voting requirements specifically set forth in
the
Wisconsin Business Corporation Law or these Amended and Restated Articles of
Incorporation, as they may be amended from time to time.
The
Bylaws of the Corporation may require a greater shareholder vote than would
otherwise be required by law for removal of a director from office or amending
provisions of the Bylaws of the Corporation.
shall
also refer to any successor provisions of those sections, as
appropriate.
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B-4 |
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B-5 |
|
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B-6 |
|
ARTICLE
VIII I.
EFFECT OF HEADINGS
B-7
The
descriptive headings in these Amended and Restated Articles of Incorporation
were formulated, used and inserted herein for convenience only and shall not
be
deemed to affect the meaning or construction of any of the provisions
hereof.
Notice
of
Meeting
and
Proxy
Statement
|
2005
|
Annual
Meeting
of
Shareholders
|
PRINTED
ON RECYCLED PAPER
ANNUAL
MEETING OF SHAREHOLDERS
Wednesday,
July 20, 2005
9:30
a.m. CDT
Modine
Manufacturing Company
1500
DeKoven Avenue
Racine,
Wisconsin 53403-2552
If
you
consented to access your proxy information electronically, you may view it
by
going to the Modine Manufacturing Company website, http://www.modine.com.
If
you
would like to access the proxy materials electronically next year, please
go to
the following website, http://econsent.com/mod/.
Modine
Manufacturing Company
1500
DeKoven Avenue, Racine, Wisconsin 53403-2552
Proxy
This
proxy is solicited on behalf of the Board of Directors.
The
undersigned hereby appoints D.B. Rayburn and D.R. Zakos, or either of them,
with
full power of substitution to each, as attorneys and proxies to represent
the
undersigned at the Annual Meeting of Shareholders of Modine Manufacturing
Company to be held at 1500 DeKoven Avenue, Racine, Wisconsin 53403-2552 on
July 20, 2005 at 9:30 a.m. CDT, and at any
adjournment(s) thereof, and to vote all shares of common stock which
the
undersigned may be entitled to vote at said meeting as directed with respect
to
the matters as set forth in the Proxy Statement. If any other business should
properly come before the meeting and/or at any adjournment(s) thereof,
the
shares represented by the proxies and voting instructions solicited thereby
may
be discretionarily voted on such business in accordance with the best judgment
of the proxy holders.
The
proxies cannot vote your shares unless you vote in accordance with the
instructions provided.
Modine
Employee Stock Ownership Plan and/or Modine 401(k) Retirement
Plan
Voting
Instructions to Trustee, Marshall & Ilsley Trust Company N.A., for the
Annual Meeting of Shareholders
As
a
participant in the Modine Employee Stock Ownership Plan and/or Modine 401(k)
Retirement Plan, you have the right to give instructions to the Trustee as
to
the voting of certain shares of Modine Manufacturing Company Common Stock
allocated to your account. The voting of those shares will occur at the Annual
Meeting of Shareholders or at any and all adjournments or postponements of
the
meeting. In this regard, please indicate your voting choices on this card,
sign
and date it, and return this card promptly in the enclosed postage prepaid
envelope or follow the instructions to record your vote by telephone or
Internet. If your instructions are not received at least five days prior
to the
meeting, or if you do not respond, shares held in your account for which
a proxy
is not received will be voted by the Trustee, Marshall & Ilsley Trust
Company N.A., in its own discretion and in accordance with ERISA.
IF
YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY
CARD
See
Reverse Side
COMPANY
#CONTROL #
Dear
Shareholder:
Modine
Manufacturing Company provides three
ways for you to vote your proxy.
Your
telephone or Internet vote authorizes the named Proxies to vote your shares
in
the same manner as if you marked, signed, dated and returned the proxy
card.
● On
a touch-tone telephone------call 1-800-560-1965------24 hours a day, 7 days
a
week, until 12:00 p.m. on July 19, 2005.
● Follow
the simple instructions the voice on the phone provides you.
VOTE
BY INTERNET -- http://www.eproxy.com/mod/ -- QUICK, EASY AND
IMMEDIATE
● Use
the Internet------log onto http://www.eproxy.com/mod/------24 hours a day,
7
days a week, until 12:00 p.m. on July 19, 2005.
● Follow
the simple instructions to obtain your records and create an electronic
proxy.
Note: As indicated in the Proxy Statement, you may choose to receive future
proxy statements and annual reports electronically by following the instructions
provided on this website.
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope
provided or return it to Modine Manufacturing Company, c/o Shareowner
ServicesSM,
P.O.
Box 64873, St. Paul, MN 55164-0873.
If
you vote by Phone or Internet, please do not mail your proxy
card.
The
Board of Directors Recommends a Vote FOR Items 1, 2, 3 and
4.
|
1. Election
of
Directors:
|
01
Frank P. Incropera
02
Vincent L. Martin
03
Marsha C. Williams
|
[
] Vote FOR all nominees listed
(except
as marked contrary below)
|
[
] WITHHOLD
Authority
For All
|
(Instructions:
To withhold authority to vote for any indicated nominee,
write
the numbers(s) of the nominee(s) in the box provided to the
right.)
2.
Approve the Amended and Restated 2000 Stock Incentive Plan for Non-Employee
Directors;
For
Against
Abstain
[ ] [ ] [ ]
3.
Approve the Company’s Amended and Restated Articles of Incorporation;
For
Against
Abstain
[ ] [ ] [ ]
4.
Ratify
the appointment of PricewaterhouseCoopers LLP as independent
auditors.
For
Against
Abstain
[ ] [ ] [ ]
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS
GIVEN, WILL BE
VOTED
FOR
ITEMS 1, 2, 3 and 4.
Address
Change? Mark Box [ ]
Indicate
changes below:
Date___________
, 2005
Signature(s)
in Box
Please
sign exactly as your name(s) appears on the proxy card. If held in joint
tenancy, all persons must sign. Trustees, administrators, etc., should
include
title and authority. Corporations should provide full name of
corporation
and title of authorized officer signing the proxy.
[ ]
I/We plan to attend the annual meeting of shareholders at Modine’s
headquarters on July 20, 2005