SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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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-11c
or Section 240.14a-12
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Cooper Tire & Rubber Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
The 2002 Annual Meeting of Stockholders will be held at Urbanskis, 1500
Manor Hill Road, Findlay, Ohio on Tuesday, May 7, 2002, at 10:00 a.m. Eastern
Daylight Time, for the following purposes:
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(1)
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To elect three (3) Directors of the Company.
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(2)
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To consider approval and adoption of the 2002 Non-Employee
Directors Stock Option Plan, which will provide for the issuance of
up to 500,000 shares of Common Stock under the Plan.
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(3)
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To transact such other business as may properly come before the
meeting or any adjournment thereof.
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Only holders of Common Stock of record at the close of business on March
4, 2002 are entitled to notice and to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Richard D. Teeple
Secretary
Findlay, Ohio
March 27, 2002
Please mark, date and sign the enclosed proxy and return it promptly in
the enclosed addressed envelope, which requires no postage. In the
alternative, you may vote by Internet or telephone. See page 2 of the proxy
statement for additional information on voting by Internet or telephone. If
you are present and vote in
person at the meeting, the proxy will not be used.
TABLE OF CONTENTS
TABLE OF CONTENTS
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PAGE
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GENERAL INFORMATION AND VOTING
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1
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AGENDA ITEM 1 -
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Election of Directors
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2
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Nominees for Director
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3
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Directors Who Are Not Nominees
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4
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AGENDA ITEM 2 -
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Proposal to Approve and Adopt the 2002 Non-Employee
Directors Stock Option Plan
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6
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EXECUTIVE COMPENSATION AND RELATED INFORMATION
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8
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Compensation Committee Report
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8
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Summary of Cash and Certain Other Compensation
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12
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Stock Option Grants
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13
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Option Exercises and Holdings
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14
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Long-Term Performance Cash Plan
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14
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Pension Plans
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15
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Employment Agreements
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16
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Compensation of Directors
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17
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Five-Year Stockholder Return Comparison
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18
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MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
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19
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RELATIONSHIP WITH INDEPENDENT AUDITORS
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20
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AUDIT COMMITTEE REPORT
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21
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BENEFICIAL OWNERSHIP OF SHARES
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22
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SECURITY OWNERSHIP OF MANAGEMENT
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23
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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24
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STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING IN 2003
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24
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SOLICITATION AND OTHER MATTERS
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24
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APPENDIX A -
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2002 Non-Employee Directors Stock Option Plan
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A-1
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COOPER TIRE & RUBBER COMPANY
701 Lima Avenue, Findlay, Ohio 45840
March 27, 2002
PROXY STATEMENT
GENERAL INFORMATION AND VOTING
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cooper Tire & Rubber Company (the
Company) to be used at the Annual Meeting of Stockholders of the Company,
which will be held on May 7, 2002, at 10:00 a.m. Eastern Daylight Time, at
Urbanskis, 1500 Manor Hill Road, Findlay, Ohio. This proxy statement and the
related form of proxy were first mailed to stockholders on or about March 27,
2002.
Purpose of Meeting
The purpose of the Annual Meeting is to obtain stockholder action on the
matters outlined in the notice of meeting on the cover page of this proxy
statement. These matters include the election of three directors and
consideration of a non-employee directors stock option plan, which will provide
for the issuance of up to 500,000 shares of Common Stock under the plan.
Voting
Only stockholders who owned their shares at the close of business on March
4, 2002 (the record date) will be able to vote at the Annual Meeting. As of
the record date, there were 72,807,331 shares of Common Stock outstanding. Each
stockholder will be entitled to one vote for each share owned.
The holders of a majority of the Common Stock present in person or
represented by proxy constitute a quorum. The nominees for election as
Directors who receive the greatest number of votes will be elected Directors.
Under applicable New York Stock Exchange rules, approval of the 2002
Non-Employee Directors Stock Option Plan requires the affirmative vote of a
majority of the shares of Common Stock represented in person or by proxy and
entitled to vote at the Annual Meeting, provided that the total vote cast
(whether for, against or abstain) on the proposal represents a majority
of the Common Stock outstanding and entitled to vote at the Annual Meeting.
Abstentions with respect to a proposal will be counted as votes cast with
respect to the proposal. Abstentions and broker non-votes will also be
counted to determine whether a
quorum is present at the Annual Meeting, provided such shares are voted on any
proposal presented to the Annual Meeting. Broker non-votes occur when certain
nominees holding shares for beneficial owners do not vote those shares on a
particular proposal because the nominees do not have discretionary authority to
do so, and have not received voting instructions with respect to the proposal
from the beneficial owners.
1
Proxy Matters
Stockholders may vote either by completing, properly signing, and
returning the accompanying proxy card, or attending and voting at the meeting.
Stockholders of record and participants in certain defined contribution plans
sponsored by the Company or a subsidiary of the Company (see below) may also
vote by telephone, by using a touch-tone telephone to call 1-800-542-1160, or
by Internet, by accessing the following website: http://www.votefast.com.
Voting instructions, including your personal identification number, are
contained on the accompanying proxy or, in the case of participants in the
following defined contribution plans sponsored by the Company or a subsidiary
of the Company, voting instruction card:
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Thrift and Profit Sharing Plan
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Pre-Tax Savings Plan (Findlay)
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Pre-Tax Savings Plan (Texarkana)
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Pre-Tax Savings Plan (Auburn)
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Cooper-Standard Automotive
(Gaylord, MI Plant) UAW Local 388
Savings and Retirement Plan
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Cooper-Standard Automotive
(Reid Division) USW Local 3586
Savings and Retirement Plan
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Pre-Tax Savings Plan (Bowling Green Seal)
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Pre-Tax Savings Plan (Bowling Green Hose)
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Pre-Tax Savings Plan (Clarksdale)
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Pre-Tax Savings Plan (El Dorado)
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Cooper-Standard Automotive
(Athens, GA Plant) USW Local 871
Savings and Retirement Plan
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Nishikawa Standard Company
Retirement Plan
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Those stockholders of record who choose to vote by telephone or Internet must
do so by not later than 11:59 p.m. Eastern Daylight Time on May 6, 2002. A
stockholder may revoke a proxy by filing a notice of revocation with the
Secretary of the Company, or submitting a properly executed proxy bearing a
later date. A stockholder may also revoke a previously executed proxy by
attending and voting at the meeting, after requesting that the earlier proxy be
revoked. If the shares are held in the name of a bank, broker or other holder
of record, the stockholder must obtain a proxy executed in his or her favor
from the holder of record, to be able to vote at the meeting.
Agenda Item 1
ELECTION OF DIRECTORS
The Bylaws of the Company provide for the Board of Directors to be divided
into three classes. Three Directors are to be elected to the class having terms
expiring this year. If elected, each shall serve for a three-year term expiring
in 2005 and until their respective successors are elected and qualified.
Each of the nominees has consented to stand for election to a three-year
term. In the event that any of the nominees becomes unavailable to serve as a
Director, the Board of Directors shall designate a new nominee, and the persons
named as proxies will vote for that substitute nominee.
The Board of Directors recommends that stockholders vote FOR the three nominees
for Director.
2
NOMINEES FOR DIRECTOR
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EDSEL D. DUNFORD
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Former President and
Chief Operating Officer, TRW Inc.
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Mr. Dunford, age 66, was elected President and Chief
Operating Officer, and a director of TRW, Inc., a diversified
manufacturer of products primarily for the automotive and
aerospace industries, in 1991. After joining TRW in 1964, Mr.
Dunford held a variety of technical and management positions,
including Executive Vice President and general manager of
TRWs space and defense businesses. Mr. Dunford has been
retired from TRW for more than five years. He holds a
B.S.E.E. degree from the University of Washington and a
Masters of Engineering degree from the University of
California at Los Angeles, and has completed the Executive
Program at Stanford University. Mr. Dunford is also a
director of National Steel Corporation.
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Director Since
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1994
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Nominee for Term to Expire
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2005
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JOHN F. FIEDLER
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Chairman and Chief Executive Officer,
BorgWarner Inc.
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Mr. Fiedler,
age 63, has been Chairman of the Board of
BorgWarner Inc. since 1996 and Chief Executive Officer since
1995. He also served as President from 1994 through March
1996. BorgWarner is a worldwide producer of highly engineered
components and systems for motor vehicle powertrain
applications. Prior to joining BorgWarner, Mr. Fiedler spent
29 years with Goodyear Tire & Rubber
Company, where he held numerous sales and marketing positions
in the United States and the Far East, and served as
President of Retread Systems Company and Kelly Springfield
Tire Company, both divisions of Goodyear. In his last
position at Goodyear, he was Executive Vice President, North
American Tires. Mr. Fiedler graduated from Kent State
University with a B.S. in Chemistry and received an M.B.A.
from the Massachusetts Institute of Technology, where he was
a Sloan Fellow. Mr. Fiedler is a director of Dal-Tile
International, Inc. and Roadway Express, Inc.
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Nominee for Term to Expire
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2005
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DENNIS J. GORMLEY
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Former Chairman and Chief Executive Officer,
Federal-Mogul Corporation
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Mr. Gormley, age 62, joined Federal-Mogul Corporation,
an automotive parts manufacturer, in 1963. He held sales
management, corporate planning and marketing positions before
being named Executive Vice President in 1975. He was elected
President, Chief Operating Officer and a director in 1988,
Chief Executive Officer in 1989, and Chairman in 1990. Mr.
Gormley retired from Federal-Mogul in 1996. Mr. Gormley
graduated from Rensselaer Polytechnic Institute with a
B.S.M.E. degree.
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Director Since
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1991
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Nominee for Term to Expire
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2005
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3
DIRECTORS WHO ARE NOT NOMINEES
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ARTHUR H. ARONSON
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Former Executive Vice President,
Allegheny Teledyne Incorporated
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Mr. Aronson, age 66, joined Allegheny Ludlum
Corporation, a specialty steel producer, in 1988 as Executive
Vice President and was elected a director in 1990. He was
elected President and Chief Executive Officer in 1994, and in
1996 was named Executive Vice President of the successor
corporation, Allegheny Teledyne Incorporated, where he also
served as President of the Metals Segment. Mr. Aronson
retired in 1998. Mr. Aronsons prior business experience
includes service as President and Chief Operating Officer of
Lukens Steel and as Chief Executive Officer of Cold Metal
Products. Mr. Aronson has a Ph.D. degree in Metallurgy from
Rensselaer Polytechnic Institute and a B.S. Degree in
Metallurgy from the Massachusetts Institute of Technology.
He is a trustee of Carnegie Mellon University and a director
of National Steel Corporation.
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Director Since
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1995
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Expiration of Term
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2004
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THOMAS A. DATTILO
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Chairman of the Board,
President and Chief Executive Officer
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Mr. Dattilo, age 50, became employed by the Company as
President and Chief Operating Officer and was named a
director on January 4, 1999. Effective April 28, 2000, he was
elected Chairman of the Board, President and Chief Executive
Officer. He had previously been employed at Dana Corporation,
an automotive parts manufacturer, since 1977, having been
appointed President, Sealing Products in 1998 after serving
in senior management positions since 1985. He earned a B.A.
degree from Ohio State University and a J.D. degree from the
University of Toledo, and has also completed the Harvard
Advanced Management Program. Mr. Dattilo is a director of
Harris Corporation, the Rubber Manufacturers Association and
Manufacturers Alliance.
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Director Since
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1999
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Expiration of Term
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2004
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JOHN F. MEIER
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Chairman and Chief Executive Officer,
Libbey Inc.
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Mr. Meier, age 54, has been Chairman and Chief Executive
Officer of Libbey Inc., a producer of glass tableware and
china, since 1993, when it was spun off by Owens-Illinois
Inc., and became a separate public company. From December
1990 to June 1993, he was a Vice President of Owens-Illinois,
Inc. and Executive Vice President and General Manager of its
subsidiary, Libbey Glass Inc. His service at Owens-Illinois
began in 1970 and included various marketing and sales
positions. Mr. Meier received a B.S. degree in Business
Administration from Wittenberg University and an M.B.A.
degree from Bowling Green State University. He is a trustee
of Wittenberg University.
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Director Since
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1997
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Expiration of Term
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2003
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4
DIRECTORS WHO ARE NOT NOMINEES (CONT.)
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BYRON O. POND
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President and Chief Executive Officer,
Amcast Industrial Corporation
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Mr.
Pond, age 65, has been President and Chief Executive
Officer of Amcast Industrial Corporation since February 2001.
Amcast Industrial Corporation is a producer of aluminum
wheels for the automotive industry and copper fittings form
the construction industry. He is the former Chairman of the
Board of Arvin Industries, Inc., an automotive parts
manufacturer. Mr. Pond joined Arvin in 1986 when it
acquired Maremont Corporation, where he served as Chairman,
President and Chief Executive Officer. He was appointed
Executive Vice President and a director of Arvin in 1990, was
elected President and Chief Operating Officer in 1991, became
Arvins President and Chief Executive Officer in 1993, and
became Chairman of the Board in 1998. Mr. Pond holds a B.S.
degree in Business Administration from Wayne State
University. He is a director of Precision Castparts
Corporation and GSI Lumonics Inc.
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Director Since
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1998
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Expiration of Term
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2004
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JOHN H. SHUEY
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Former Chairman, President and
Chief Executive Officer,
Amcast Industrial Corporation
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Mr. Shuey, age 56, joined Amcast Industrial Corporation
in 1991 as Executive Vice President. He was elected
President and Chief Operating Officer in 1993, a director in
1994, Chief Executive Officer in 1995, and Chairman in 1997.
Mr. Shuey served as Chairman, President and Chief Executive
Officer through February 2001. Amcast Industrial Corporation
is a producer of aluminum wheels for the automotive industry
and copper fittings for the construction industry. Prior to
joining Amcast, he held executive positions at The Trane
Company, American Standard, and AM International. Mr. Shuey
has a B.S. degree in Industrial Engineering and an M.B.A.
degree, both from the University of Michigan.
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Director Since
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1996
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Expiration of Term
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2003
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Note: The beneficial ownership of the Directors and nominees in the Common
Stock of the Company is shown in the table at page 23 of this proxy
statement.
5
Agenda Item 2
PROPOSAL TO APPROVE AND ADOPT
THE 2002 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Company desires to establish a new stock option plan for its
non-employee directors in order to further advance the interests of the Company
and its stockholders by attracting and retaining well-qualified directors, and
by providing those directors with stock options as a part of their compensation
package, which will allow them to benefit financially from increases in the
value of the Companys stock over time. For this purpose, the stockholders are
being asked to approve the Cooper Tire & Rubber Company 2002 Non-Employee
Directors Stock Option Plan (the Option Plan), which will provide for the
issuance of up to 500,000 shares of Common Stock under the Option Plan. The
Board adopted the Option Plan, effective upon its approval by the Companys
shareholders at the Annual Meeting. The Option Plan is intended to replace the
1991 Non-Employee Directors Stock Option Plan, which expired in accordance with
its terms on May 7, 2001.
Approval of the Option Plan requires an affirmative vote of the majority
of the shares of Common Stock represented in person or by proxy at the Annual
Meeting and entitled to vote on the subject matter.
The complete text of the Option Plan is attached to this proxy statement
as Appendix A. The following is a summary of the key terms of the Option Plan,
which is qualified in its entirety by reference to the text of the Option Plan.
The persons eligible to participate in the Option Plan are those members
of the Board of Directors who are not employed by the Company. There are
presently seven such individuals.
SUMMARY OF OPTION PLAN
General Terms.
Under the Option Plan, eligible directors will be granted
2,000 stock options per year on the first business day following the Annual
Meeting of Stockholders for that year. In addition, the Board of Directors or
a committee of directors appointed by the Board, shall have the right to grant
additional stock options from time to time to eligible directors. All stock
options granted under the Option Plan shall be non-qualified stock options,
which means that they shall not qualify for the tax benefits provided by
options granted under Section 422A of the Internal Revenue Code of 1986, as
amended. Such options can only be granted to employees.
Shares Available Under the Plan.
The Company shall have the ability to
issue up to 500,000 shares of its Common Stock under the Option Plan, subject
to adjustment for stock splits, stock dividends, mergers, consolidations or
other events affecting the Common Stock. Shares issued under the Option Plan
may be newly issued or treasury shares or a combination of both.
On March 4, 2002, the closing price of the Common Stock reported by the
New York Stock Exchange was $20.00.
Terms of Stock Options.
Stock Options granted under the Plan shall be
non-qualified stock options. The options granted entitle the optionee to
purchase shares of Common Stock at a price per share equal to the fair market
value of the Common Stock (which is defined as the last sale price of the
Common Stock on the date preceding the date on which the underlying option was
granted). Each grant will specify that the exercise price is to be payable (1)
in cash at the time of exercise or (2) by the transfer to the Company of shares
of Common Stock owned by the optionee for at least six months, having a value
at the time of exercise equal to the exercise price. Grants may provide for
the deferred payment of the exercise price from the proceeds of sale through a
broker on the date of exercise of some or all of the shares of Common Stock to
which the exercise relates.
No Stock Options may be exercisable more than ten years from the date of
grant. Each grant will specify that 50% of the grant will become exercisable
one year after the date on which it is granted, and the remaining 50% will
become exercisable two years after the
date of the grant. In addition, options granted under the Option Plan will
provide for the immediate exercise of an option, in the event of a change in
control or other similar event, or the death or disability of the optionee.
6
Under the terms of the Option Plan, each non-employee Director will
receive a grant of 2,000 stock options per year, which shall be granted on the
first business day following the Companys Annual Meeting of Stockholders. In
addition, the Board of Directors (or a committee designated by the Board) shall
have the discretion to grant additional stock options to eligible directors
upon the same terms and conditions. No options granted under the Option Plan
shall be transferable by the optionee, except by will or the applicable laws of
descent and distribution.
The Option Plan shall become effective upon its approval by the
shareholders at the 2002 Annual Meeting of Stockholders. Option grants may be
made under the Option Plan until the second business day following the 2012
Annual Meeting of Shareholders. The termination of the Option Plan on that
date shall not affect any outstanding options which were granted prior to the
date of termination.
The Board of Directors may at any time amend, suspend or terminate the
Option Plan. However, no amendment which would require the approval of the
Companys stockholders under the rules of the New York Stock Exchange shall be
made without such approval having first been obtained. In addition, without
the written consent of the optionee, no amendment, suspension or termination of
the Option Plan shall affect any option previously granted under the Plan.
FEDERAL INCOME TAX CONSEQUENCES
Nonqualified Stock Options. The grant of a non-qualified stock option has
no immediate federal income tax effect. The participant will not recognize
taxable income and the Company will not receive a tax deduction. When the
participant exercises the option, he or she will recognize ordinary income in
an amount equal to the excess of the fair market value of the Common Stock on
the date of exercise over the exercise price, and the Company will generally
receive a tax deduction equal to the amount of income recognized. Any gain or
loss upon a subsequent sale or exchange of Common Stock will be short or
long-term capital gain or loss, depending on the holding period of the Common
Stock.
To the extent that a participant recognizes ordinary income in the
circumstances described above, the Company will generally be entitled to a
corresponding deduction, provided, among other things, that the income meets
the test of reasonableness, is an ordinary and necessary business expense, and
is not an excess parachute payment, and that any applicable withholding
obligations are satisfied.
The Board of Directors recommends that stockholders vote FOR the 2002
Non-Employee Directors Stock Option Plan.
7
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Compensation Committee Report on Executive Compensation
This report is submitted by all members of the Compensation Committee (the
Committee), to explain the Committees policies with respect to the
compensation of the Companys executive officers in 2001, including the
relationship between their compensation and the performance of the Company.
General Philosophy
The Compensation Committee has determined that to maximize shareholder
value, the Companys executive compensation program should meet the following
objectives:
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Attracting and retaining outstanding executive talent
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Providing superior financial rewards when the Company achieves superior financial performance
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Providing incentives through cash bonus payments to meet both the Companys short and longer-term performance objectives
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Aligning the interests of the Companys executive officers with
those of its shareholders with incentive compensation arrangements
that reward executives with cash bonuses when aggressive financial
performance targets that are likely to drive shareholder value are
met or exceeded over annual and longer-term periods, and with stock
options that will provide significant financial rewards as
shareholder value is created through increases in the Companys stock
price
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To accomplish these objectives, the Companys executive compensation
program consists of four key elements: base salary; incentive compensation
based upon meeting designated performance targets over a one-year period;
incentive compensation based upon meeting longer-term performance targets over
a three-year period; and equity-based compensation, consisting primarily of
stock options.
Executive Compensation Policies in 2001
Following the dramatic changes in the Company as a result of the
acquisitions of The Standard Products Company in 1999 and the Siebe Automotive
Division of Invensys p.l.c. in January 2000, the Committee undertook a review
of how the Companys executive compensation programs should be revised to
better support the requirements of a much larger, more global and more
diversified organization. As a result of this review, a number of changes were
made to the executive compensation program, all of which were in
place during 2001. Where relevant, these changes are within the boundaries of
the 1998 Incentive Compensation Plan approved by stockholders in 1998. The
changes include:
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Targeting the base pay element of the Companys executive
compensation program at median levels for comparable positions at
U.S. industrial companies with a comparable level of revenues
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Targeting annual and long-term incentive elements of the
program at levels based on survey data for publicly held U. S.
industrial companies or their component operations comparable in size
to those managed by each executive officer.
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Replacing return on equity with return on invested capital as
the performance measure for corporate officers in the annual bonus
plan
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Replacing return on equity for corporate officers and return on assets
managed for division officers with a growth element based on generation of
operating cash flow as the performance measure in the long-term cash incentive
plan
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For most executives of the Company, these changes have resulted in
increased base salaries and reduced target annual incentive awards. In general,
the performance targets under the annual and long-term incentive compensation
programs will be set at higher levels than in the years prior to 2000, which
will have the effect of more closely tying aggregate executive compensation to
the creation of shareholder value. The Committee believes these changes
reflect the current requirements of the organization and provide a competitive,
performance-based compensation system that will not only attract and retain
superior management talent, but will motivate and reward those managers to
create superior shareholder value.
8
Salaries and Annual Bonuses
The base salary of each executive officer of the Company for a particular
calendar year, including the year 2001, is determined by the Committee. Each
base salary is targeted to be at the median (50th percentile) for the position
at U.S. industrial companies similar in size to the Company. The Committee has
retained an executive compensation consultant to assist it in determining
median compensation levels. The group of industrial companies used as a
comparison for determining the base salaries of the Companys executive
officers, as well as the other elements of their compensation package, may
include some of the same companies that make up the index that is used in the
performance graph set out on page 19 of the proxy statement, but is not the
same as the group of companies that make up the index. Variations from the
median in the base pay of certain executive officers, if any, are based upon
the specific job responsibilities of the position, the job performance of the
individual holding the position, the individuals tenure in the position, and
any internal equity considerations that the Committee determines are
appropriate.
The annual bonus of each executive officer is determined by two factors:
1) the percentage of base salary which that particular officer will receive if
the performance target established by the Committee at the beginning of the
year for the business unit at which the executive officer is employed is met
(this is known as the target bonus percentage), and 2) the performance of
that business unit relative to the performance target established for the unit
by the Committee. For 2001, the performance target was based upon the
Companys return on invested capital (ROIC), rather than return on equity
(ROE), for executive officers with primarily corporate responsibilities.
ROIC is calculated by dividing net operating profit after tax by of the sum of
long-term debt and shareholders equity, as calculated in accordance with a
pre-determined formula. For executive officers employed in a business unit of
the Company, the performance target is based upon that business units return
on assets managed (ROAM). ROAM is calculated by dividing (a) income before
interest, foreign currency gains or losses, and federal income taxes, by (b) an
average of controlled assets. ROAM, like ROIC, is a measurement of employees
success in utilizing capital resources but, unlike ROIC, focuses on specific
assets.
The change in 2000 (which continued in 2001) to ROIC from ROE as the
performance measurement for the annual bonuses paid to corporate executives was
the result of the Committees determination that, given the capital structure
of the Company following the two large acquisitions, improvements in
shareholder value were more likely to result from a high level of ROIC than
from commensurate improvements in ROE.
The performance target for a given year is determined at the beginning of
that year by the Committee, based upon its determination of what would
constitute an appropriate level of performance for the Company or the business
unit. In making that determination, the Committee takes into account the
following principal factors:
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the economic environment in which the Company expects to operate during the year
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expected performance based upon the annual operating plan of the Company, which is reviewed and approved by the Board of Directors
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the achievement of financial returns sufficient to enhance shareholder value
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If the performance target applicable to a particular business unit is met,
each officer in that business unit will receive his or her target bonus
percentage. If the actual performance of the business unit varies from the
performance target established by the Committee, the bonus payment will be
greater or lesser than the target bonus percentage, depending upon whether
actual performance exceeds or falls short of the performance target. If actual
performance is less than 80% of the performance target, no bonus will be paid.
If actual performance equals 80% of the
performance target, a bonus equal to 50% of the target bonus percentage will be
paid. The amount paid will increase by 2.5% for each percentage point increase
in the actual performance of the unit as a percentage of the performance
target. If the performance target is exceeded, an additional 5% of the target
bonus percentage will be paid for each percentage point by which actual
performance exceeds the performance target. The target bonus percentage is
determined for each position based on survey data for publicly held U. S.
industrial companies or their component operations comparable in size to that
managed by each executive officer.
In 2001, the actual corporate performance was less than 80% of target
performance, resulting in no cash bonuses to corporate executive officers. No
payouts were made to participants in any business units but one. In that one
unit, payouts equaled 211.9% of the target bonus percentage for that unit. Of
the 28 executives who are participants in the annual incentive compensation
plan for senior executives, one received a bonus in 2001.
9
Long Term Incentive Compensation
1. Cash Bonuses
In addition to annual cash bonuses, the Company provides its executive
officers with an opportunity to earn additional incentive compensation based
upon meeting performance targets established for a three-year period.
Under the program applicable for 2001 grants, a target cash amount is
established each year for each participant, which will be paid in the year
following the end of a three-year performance cycle, if performance targets
established by the Committee at the beginning of the cycle are met. If the
actual performance of a business unit varies from the performance target
established for that business unit by the Committee, the actual cash bonus
payable will be greater or lesser than the target cash amount, depending upon
whether actual performance exceeds or falls short of the performance target.
If actual performance is less than 90% of the performance target, no bonus will
be paid. If the actual performance equals 90% of the performance target, a
bonus equal to 50% of the target cash amount will be paid. That amount will
increase by 5% for each percentage point increase in the actual performance of
the unit as a percentage of the performance target. If the performance target
is exceeded, an additional 10% of the target cash amount will be paid for each
percentage point by which the actual performance exceeds the performance
target. The target cash amount for each position is generally determined in
accordance with survey data for publicly held U. S. industrial companies or
their component operations comparable in size to that managed by each executive
officer.
Payouts made in February 2002 under the 1999 grants for the performance
cycle ending December 31, 2001 were based upon ROE over a three-year period,
for officers with corporate responsibilities, and ROAM for officers employed in
a business unit of the Company. Beginning with the 2000-2002 performance
cycle, the performance targets for all participants, whether employed at the
corporate or business unit level, are based upon the generation of operating
cash flow (net operating profit after tax plus depreciation and amortization)
calculated for the Company or a business unit, whichever is applicable to a
particular participant, in relation to the operating cash flow targets set by
the Committee for the Company and each of its business units. The Committee
has determined that improvements in operating cash flow over longer periods of
time correlate to increases in shareholder value, and thus has adopted this
performance measure for its long-term incentive compensation plan. To provide
a greater incentive for outstanding performance, the performance targets have
been set at higher levels than were previously the case, and the amounts
attainable if the targets are met have also been set at a higher level.
Grants during 1999 provided for lower target cash amounts and utilized
lower performance targets than those utilized with respect to the 2000 and
2001 grants. Payouts made in 2002 for the 1999-2001 cycle equaled 154.1% of
the target cash amount for participants whose performance targets were based on
ROE, and from 175.5% to 341.6% of the target cash amount for participants whose
performance targets were based on the ROAM of the business units.
2. Stock Options
Key employees of the Company, including executive officers, are eligible
for stock option grants in accordance with plans approved by the stockholders.
In awarding stock options to the Companys key executives, the Committee
intends to provide those executives with a direct opportunity to benefit from
long-term increases in shareholder value as reflected in the Companys stock
price. Options under the plan are generally granted for ten-year terms and
become exercisable in two equal installments, one and two years after they are
granted, respectively.
The number of options granted to executive officers in 2001 was designed
to provide a benefit equal in value to approximately 70% of the total value of
the long-term incentive compensation award made to executive officers. In
arriving at this figure, the options granted have been determined using the
Black-Scholes valuation method as a guideline.
The aggregate value of the two elements comprising long-term incentive
compensation is intended to deliver competitive compensation for each position
and is based on survey data for publicly held U. S. industrial companies or
their component operation comparable in size to that managed by each executive
officer.
10
Compensation of Chief Executive Officer
For the year 2001, Mr. Dattilos annualized base salary was $725,000, an
increase from $650,000 for the period in 2000 during which he served as Chief
Executive Officer. The increase was based upon the Committees determination
that the complexities of the Companys business in 2001, which included dealing
with product liability and other tire-related litigation, and with extreme
pricing pressures in the Companys automotive business, as well as what it
determined was outstanding performance by the Company relative to its peers in
the tire and automotive parts businesses, warranted the level of increase in
Mr. Dattilos base salary that was provided. In addition, the Committee
reviewed survey data provided by its executive compensation consultant for the
compensation levels of chief executive officers of publicly traded U.S.
industrial corporations comparable in size to the Company. The Committee also
took into account the leadership provided by Mr. Dattilo in formulating a
complex and far-reaching restructuring plan, in continuing to integrate the
acquisitions and in changing the cultures of the Company to better acclimate
the Company to the different business environment created by having made two
large acquisitions.
Mr. Dattilo received no annual bonus for the year 2001. The target bonus
percentage
applicable to Mr. Dattilo was 65% for the year 2001. Mr. Dattilo also received
a target payout of $650,000 under the long-term incentive cash compensation
plan for the 2001-2003 performance period. The amount to be received by Mr.
Dattilo under that plan will be calculated in accordance with the same formula
as that applicable to all executive officers. Mr. Dattilo was also granted
stock options in 2001 to purchase 100,000 shares of the Companys common stock.
The levels of base compensation, annual bonus, and long-term incentive
compensation, consisting of both stock options and cash compensation for
performance over a three-year period, awarded to Mr. Dattilo for the year 2001
were each determined using substantially the same criteria as for other
executive officers.
Deductibility of Compensation Over $1 Million
Regulations issued under Section 162(m) of the Internal Revenue Code
provide that compensation in excess of $1 million paid to the Chief Executive
Officer and other executive officers named in the proxy statement will not be
deductible unless it meets specified criteria for being performance-based.
The Committee believes the 1998 Incentive Compensation Plan includes provisions
which comply with the performance-based criteria and accordingly should
result in the Company retaining the tax deductibility of any amounts earned
under this plan in future years.
Submitted by the Compensation Committee of the Companys Board of Directors:
Byron O. Pond, Chairman
Edsel D. Dunford
John F. Meier
11
Summary of Cash and Certain Other Compensation
The following table shows, for the fiscal years ending December 31, 1999,
2000, and 2001, the cash compensation paid by the Company, as well as certain
other compensation paid or accrued for those years, to Mr. Dattilo, Chairman,
President, and Chief Executive Officer, and the four most highly compensated
officers other than Mr. Dattilo who were serving as executive officers as of
December 31, 2001 (the Named Executive Officers).
SUMMARY COMPENSATION TABLE
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Annual
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Long-Term
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All Other
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Compensation
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Compensation
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Compensation
(1)
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Restricted Stock
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Number of
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and Restricted
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shares
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Stock Unit
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underlying stock
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LTIP
(3)
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Name and Principal Position
(2)
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Year
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Salary
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Bonus
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Awards
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option awards
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Payout
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Thomas A. Dattilo
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2001
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$
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725,000
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$
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100,000
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$
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231,101
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$
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6,179
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Chairman of the Board,
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2000
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633,470
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336,277
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100,000
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57,783
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President and Chief
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1999
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375,000
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550,188
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$
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613,125
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(4)(8)
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150,000
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Executive Officer
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James S. McElya
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2001
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420,000
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50,000
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5,100
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Vice President
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2000
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334,891
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212,921
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40,000
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5,100
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1999
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Roderick F. Millhof
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2001
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350,000
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40,000
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194,664
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4,346
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Vice President
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2000
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320,000
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120,023
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35,000
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165,042
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25,817
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1999
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239,614
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246,203
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32,625
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(5)(8)
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12,000
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29,209
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Philip G. Weaver
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2001
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335,000
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50,000
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61,627
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3,037
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Vice President and
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2000
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300,000
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115,833
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50,000
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28,038
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24,966
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Chief Financial Officer
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1999
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185,000
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167,784
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48,938
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(6)(8)
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9,000
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22,717
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Richard D. Teeple
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2001
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302,000
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40,000
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87,818
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3,185
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Vice President,
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2000
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287,000
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110,814
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40,000
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80,090
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24,079
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General Counsel and
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1999
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214,765
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194,780
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48,938
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(7)(8)
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9,000
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23,819
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Corporate Secretary
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(1)
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Includes total amounts paid or accrued for the indicated fiscal years,
consisting of Company matching contributions to the Thrift and Profit
Sharing Plan (the Siebe Automotive Employees Profit Sharing Plan 401(k),
in the case of Mr. McElya) and allocations to the Nonqualified
Supplementary
Benefit Plan, which provides benefits otherwise denied participants in the
Thrift and Profit Sharing Plan because of Internal Revenue Code limitations
on qualified benefits.
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(2)
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Mr. Dattilo has served in the listed capacity since April 28, 2000.
Prior to that date he served as President and Chief Operating Officer. Mr.
McElya became employed by the Company on January 28, 2000, when Siebe
Automotive was acquired by the Company. In addition to the corporate
officer titles disclosed below for the Named Executive Officers, Messrs.
McElya and Millhof also hold the following operating positions: Mr. McElya
- President, Cooper-Standard Automotive; and Mr. Millhof Executive Vice
President, Cooper-Standard Automotive.
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(3)
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The amounts shown in the 2001 column represent payouts for the 1999-2001
performance period, and the amounts shown in the 2000 column represent
payouts for the 1998-2000 period. Mr. McElya did not receive a payout
for 2001 because he was not employed by the Company in 1999, when
long-term incentive grants for the 1999-2001 performance period were made,
and neither he nor Mr. Dattilo received payouts for 2000, because neither
was employed by the Company in 1998, when long-term incentive grants for
the 1998-2000 performance period were made.
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12
(4)
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In January 1999, Mr. Dattilo received a grant of 30,000 restricted common
shares in connection with the inception of his employment with the
Company. The dollar amount shown in the table is the market value on the
date of the grant of the shares awarded to him. The award provided for
vesting of the restricted shares in equal annual installments in January
2000, 2001, and 2002. On November 18, 1999, Mr. Dattilo surrendered his
restricted shares in exchange for a grant of 30,000 restricted stock
units, the market value of which was $489,375 on the date of grant. The
restricted stock unit award provides for vesting on the same dates as the
restricted stock would have vested.
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(5)
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In November 1999, Mr. Millhof received a grant of 2,000 restricted stock
units. The dollar amount shown in the table is the market value on the
date of the grant of the shares underlying the units awarded to him. Mr.
Millhofs grant vested in November 2000.
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(6)
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In November 1999, Mr. Weaver received a grant of 3,000 restricted stock
units. The dollar amount shown in the table is the market value on the
date of the grant of the shares underlying the units awarded to him. Mr.
Weavers grant vested in November 2000.
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(7)
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In November 1999, Mr. Teeple received a grant of 3,000 restricted stock
units. The dollar amount shown in the table is the market value on the
date of the grant of the shares underlying the units awarded to him.
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(8)
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All grants of restricted stock units were made under agreements that
provide for accrual of dividend equivalents and deferral of the receipt of
the underlying shares until a date (or dates) selected by the executive at
the time of the grant. Each executives restricted stock unit account
will be settled through delivery to the executive on the date(s) selected
of a number of shares of common stock of the Company corresponding to the
number of restricted stock units awarded to the executive, plus shares
representing the value of dividend equivalents. At December 31, 2001, the
number of restricted stock units outstanding and the related market values
of those units were: Mr. Dattilo 32,331 units at $516,003; and Mr.
Millhof 2,160 units at $34,474; and Mr. Weaver 3,237 units at $51,663.
Mr. Teeple has previously exercised his right to convert his restricted
stock units into shares of Common Stock and no longer has any restricted
stock units outstanding.
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Stock Option Grants
The following table contains information concerning the grant of stock
options to the Named Executive Officers during the 2001 fiscal year. All grants
were made under the 1998 Incentive Compensation Plan. In addition, in
accordance with rules of the Securities and Exchange Commission (the SEC), a
valuation is assigned to each reported option as of the grant date. The
ultimate actual value will be determined only by the market value of the
Companys Common Stock at a future date.
OPTION GRANTS IN LAST FISCAL YEAR
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Grant Date
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Individual Grants
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Value
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Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shares
|
|
Percent of total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
underlying
|
|
options granted
|
|
Exercise
|
|
|
|
|
|
|
|
|
|
|
options
|
|
to employees
|
|
price
|
|
Expiration
|
|
Grant date
|
Name
|
|
granted
(1)
|
|
in fiscal year
|
|
per share
|
|
date
(2)
|
|
present value
(3)
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Dattilo
|
|
|
100,000
|
|
|
|
7.9
|
%
|
|
$
|
13.47
|
|
|
February 8, 2011
|
|
$
|
341,965
|
|
|
|
|
|
James S. McElya
|
|
|
50,000
|
|
|
|
3.9
|
|
|
|
13.47
|
|
|
February 8, 2011
|
|
|
223,455
|
|
|
|
|
|
Roderick F. Millhof
|
|
|
40,000
|
|
|
|
3.2
|
|
|
|
13.47
|
|
|
February 8, 2011
|
|
|
158,727
|
|
|
|
|
|
Philip G. Weaver
|
|
|
50,000
|
|
|
|
3.9
|
|
|
|
13.47
|
|
|
February 8, 2011
|
|
|
223,455
|
|
|
|
|
|
Richard D. Teeple
|
|
|
40,000
|
|
|
|
3.2
|
|
|
|
13.47
|
|
|
February 8, 2011
|
|
|
158,727
|
|
(1)
|
|
50% of the options became exercisable on the first anniversary of the
date of grant and the remaining 50% become exercisable on the second
anniversary of the date of grant.
|
|
(2)
|
|
Subject to earlier expiration if the executive ceases to be an employee
of the Company, with specified periods for exercise after termination provided
in the event of termination without cause, retirement, or death.
|
|
(3)
|
|
Calculated using the Black-Scholes option pricing model. Assumptions
used in calculating the reported values include (a) an expected volatility
based on the daily change in the share price of the Companys Common Stock
for the period February 1, 1996 through February 8, 2001, (b) a weighted
average risk-free rate of return of 4.9%, (c) a dividend yield of 2.25%,
and (d) a time of exercise based on the earlier of the historical exercise
pattern of each individual or the latest permissible date. No adjustments
were made for non-transferability or forfeiture.
|
13
Option Exercises and Holdings
The following table sets forth information with respect to the Named
Executive Officers
concerning the exercise of options during 2001 and unexercised options held as
of the end of 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares
|
|
Value of unexercised
|
|
|
|
|
|
|
|
|
|
|
underlying unexercised
|
|
in-the-money options
(1)
|
|
|
Shares
|
|
|
|
|
|
options at fiscal year-end
|
|
at fiscal year-end
|
|
|
acquired
|
|
Value
|
|
|
|
|
Name
|
|
on exercise
|
|
realized
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas A. Dattilo
|
|
|
|
|
|
$
|
|
|
|
|
200,000
|
|
|
|
150,000
|
|
|
$
|
174,560
|
|
|
$
|
436,060
|
|
|
|
|
|
James S. McElya
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
70,000
|
|
|
|
69,824
|
|
|
|
200,574
|
|
|
|
|
|
Roderick F. Millhof
|
|
|
|
|
|
|
|
|
|
|
46,100
|
|
|
|
57,500
|
|
|
|
61,096
|
|
|
|
165,696
|
|
|
|
|
|
Philip G. Weaver
|
|
|
|
|
|
|
|
|
|
|
43,900
|
|
|
|
75,000
|
|
|
|
87,280
|
|
|
|
218,630
|
|
|
|
|
|
Richard D. Teeple
|
|
|
|
|
|
|
|
|
|
|
50,100
|
|
|
|
60,000
|
|
|
|
69,824
|
|
|
|
174,424
|
|
(1)
|
|
In accordance with SEC rules, this value is based upon the average of the
high and low market prices on the New York Stock Exchange on the last
trading day of the fiscal year, which was $16.085, less the exercise
price. Whether any actual profits will be realized will depend upon
whether the shares acquired are sold and the amount received upon any such
sale.
|
Long-Term Performance Cash Plan
The following table sets forth information with respect to the Named
Executive Officers concerning the grant of long-term performance cash awards
under the Companys 1998 Incentive Compensation Plan during the 2001 fiscal
year.
LONG-TERM INCENTIVE PLANS AWARDS IN LAST FISCAL YEAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance or
|
|
|
|
|
|
|
|
|
|
|
Other Periods Until
|
|
Threshold
|
|
Target
|
Name
|
|
Maturation or Payout
(1)
|
|
Payouts
(2)
|
|
Payouts
(2)
|
|
|
|
|
|
|
|
Thomas A. Dattilo
|
|
1/1/2001 through 12/31/2003
|
|
$
|
325,000
|
|
|
$
|
650,000
|
|
|
|
|
|
James S. McElya
|
|
1/1/2001 through 12/31/2003
|
|
|
60,000
|
|
|
|
120,000
|
|
|
|
|
|
Roderick F. Millhof
|
|
1/1/2001 through 12/31/2003
|
|
|
45,000
|
|
|
|
90,000
|
|
|
|
|
|
Philip G. Weaver
|
|
1/1/2001 through 12/31/2003
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
|
|
Richard D. Teeple
|
|
1/1/2001 through 12/31/2003
|
|
|
42,500
|
|
|
|
85,000
|
|
(1)
|
|
Participant must be an employee at the end of the Performance Period to
receive the proceeds of the grant, except that if such participant dies,
retires or becomes disabled prior to the end of the Performance Period, he
will receive a prorated award earned based on the portion of the
Performance Period during which he was an employee, and the actual
performance of the applicable business for the portion of the Performance
Period through the end of the year in which the executives employment
terminates.
|
|
(2)
|
|
Payouts of awards are tied to the achievement over a three-year period of
specified levels of Operating Cash Flow, which the Company defines as
net operating profit after tax plus depreciation and amortization. The
specified levels for a year are set each year by the Compensation
Committee. Performance versus the specified level is determined by
dividing the sum of the actual performance for each of the three years of
the performance period by the sum of the target performance levels for
each of the three years of the performance period. The targeted levels
for Messrs. Dattilo, Weaver, and Teeple are based on the Operating Cash
Flow of the entire Company. The targeted levels for Messrs. McElya and
Millhof are based upon the Operating Cash Flow of the Automotive Group. No
payout will be made unless 90% of the Operating Cash Flow target is met.
If that occurs, a payout equal to 50% of the target payout set forth in
the table will be made. That amount is reflected in the Threshold
Payout column of the table. The percentage of the target payout made will
increase by 5% for each additional 1% increase in Operating Cash Flow, up
to 100% of the Operating Cash Flow target. For each additional 1% by
which Operating Cash Flow exceeds the specified target, the executive will
receive an additional 10% of his target payout. The maximum payout that
can be received by any one individual in respect of a particular award is
$6,000,000, less the aggregate amounts of annual bonus received for each
of the three years of the performance period.
|
14
Pension Plans
Effective January 1, 2002, the Company established a form of defined
benefit pension plan known as a cash balance plan (a cash balance plan is a
type of non-contributory defined benefit pension plan in which a participants
benefit is determined as if an individual account had been established for him
or her) for all of its non-union employees in the United States, other than
those participants in the Companys existing defined benefit plans who had
reached age 40 and had at least 15 years of service with the Company as of
January 1, 2002. The new plan provides for a participant to have credited to a
hypothetical account established for him or her under the plan a percentage of
his or her compensation (as defined in the plan) each year, and to have
earnings credited each year on the participants hypothetical account balance
at an interest rate equal to the 30-year Treasury bill rate. The percentage of
the participants compensation that is credited to his or her hypothetical
account each year is based upon the participants age and years of service, and
increases in increments as the participants total age and years of service
increase. Participants whose age and years of service do not exceed 35 will be
credited with 3% of their compensation. Those whose total age and years of
service total between 36 and 50 shall be credited with 4% of their
compensation, those whose total of age and years of service is between 51 and
65 shall be credited with 5.5% of their compensation, those whose total age and
years of service is between 66 and 80 shall be credited with 7.5% of their
compensation, and
those whose total age and years of service exceeds 80 will be credited with 10%
of compensation. A participant in the cash balance plan who was a participant
in one of the Companys prior defined benefit pension plans will have credited
to his or her hypothetical account in the plan on January 1, 2002 the actuarial
equivalent lump sum of the participants frozen retirement benefit in the
former plan, calculated as of January 1, 2002. Upon retirement, a
participants benefit under the cash balance plan shall be paid in the form of
annuity, or in a lump sum, upon the election of the participant. A participant may receive the amount of his or her benefit in a lump sum
payment upon termination of employment at any time. Payment of the benefit in
an annuity form may not generally commence until the participant has reached
age 55. The amount payable shall not be reduced by any Social Security benefits
payable to the participant.
Non-union employees who were participants in a defined benefit pension
plan sponsored by the Company or a subsidiary prior to January 1, 2002, and who
had reached age 40 and had 15 or more years of service as of that date, will
continue to be covered by the terms of such prior plan. Of the Named Executive
Officers, only Mr. Teeple remains covered by a prior plan. The plan in which
Mr. Teeple participates provides a pension based primarily upon the
participants level of compensation during the last ten years of his or her
employment and the number of years of service. The following table shows the
amount of pension that a participant can expect to receive upon retirement at
age 65 under that plan, and with an election to receive the pension in the form
of a straight life annuity, rather than under any of the survivor options
contained in the plan. Receiving the benefit under a survivor option would
reduce the amount payable to the participant by an actuarially calculated
amount, but would permit a surviving spouse or other beneficiary to continue to
receive payments under the plan after his or her death. Benefits are not
subject to deduction for Social Security or other offset amounts.
15
PENSION PLAN TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Of Service
|
|
|
|
|
|
Remuneration
|
|
15
|
|
20
|
|
25
|
|
30
|
|
35
|
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
300,000
|
|
|
$
|
167,500
|
|
|
$
|
90,000
|
|
|
$
|
112,500
|
|
|
$
|
135,000
|
|
|
$
|
157,500
|
|
|
$
|
180,000
|
|
|
|
|
|
|
350,000
|
|
|
|
78,750
|
|
|
|
105,000
|
|
|
|
131,250
|
|
|
|
157,500
|
|
|
|
183,750
|
|
|
|
210,000
|
|
|
|
|
|
|
400,000
|
|
|
|
90,000
|
|
|
|
120,000
|
|
|
|
150,000
|
|
|
|
180,000
|
|
|
|
210,000
|
|
|
|
240,000
|
|
|
|
|
|
|
450,000
|
|
|
|
101,250
|
|
|
|
135,000
|
|
|
|
168,750
|
|
|
|
202,500
|
|
|
|
236,250
|
|
|
|
270,000
|
|
|
|
|
|
|
500,000
|
|
|
|
112,500
|
|
|
|
150,000
|
|
|
|
187,500
|
|
|
|
225,000
|
|
|
|
262,500
|
|
|
|
300,000
|
|
|
|
|
|
|
550,000
|
|
|
|
123,750
|
|
|
|
165,000
|
|
|
|
206,250
|
|
|
|
247,500
|
|
|
|
288,750
|
|
|
|
330,000
|
|
|
|
|
|
|
600,000
|
|
|
|
135,000
|
|
|
|
180,000
|
|
|
|
225,000
|
|
|
|
270,000
|
|
|
|
315,000
|
|
|
|
360,000
|
|
|
|
|
|
|
650,000
|
|
|
|
146,250
|
|
|
|
195,000
|
|
|
|
243,750
|
|
|
|
292,500
|
|
|
|
341,250
|
|
|
|
390,000
|
|
|
|
|
|
|
700,000
|
|
|
|
157,500
|
|
|
|
210,000
|
|
|
|
262,500
|
|
|
|
315,000
|
|
|
|
367,500
|
|
|
|
420,000
|
|
|
|
|
|
|
750,000
|
|
|
|
168,750
|
|
|
|
225,000
|
|
|
|
281,250
|
|
|
|
337,500
|
|
|
|
393,750
|
|
|
|
450,000
|
|
|
|
|
|
|
800,000
|
|
|
|
180,000
|
|
|
|
240,000
|
|
|
|
300,000
|
|
|
|
360,000
|
|
|
|
420,000
|
|
|
|
480,000
|
|
|
|
|
|
|
850,000
|
|
|
|
191,250
|
|
|
|
255,000
|
|
|
|
318,750
|
|
|
|
382,500
|
|
|
|
446,250
|
|
|
|
510,000
|
|
|
|
|
|
|
900,000
|
|
|
|
202,500
|
|
|
|
270,000
|
|
|
|
337,500
|
|
|
|
405,000
|
|
|
|
472,500
|
|
|
|
540,000
|
|
|
|
|
|
|
950,000
|
|
|
|
213,750
|
|
|
|
285,000
|
|
|
|
356,250
|
|
|
|
427,500
|
|
|
|
498,750
|
|
|
|
570,000
|
|
|
|
|
|
|
1,000,000
|
|
|
|
225,000
|
|
|
|
300,000
|
|
|
|
375,000
|
|
|
|
450,000
|
|
|
|
525,000
|
|
|
|
600,000
|
|
Remuneration in the table above is the average of a participants annual
compensation during the highest five out of the last ten years of employment.
Annual compensation for
purposes of the plan includes generally, for executives of the Company, the
amount of base salary and annual and long-term incentive compensation earned in
a particular year. For purposes of determining a participants annual
compensation, long-term incentive compensation payments for a particular
performance period are considered to have been earned ratably over the
performance period. As a result, the compensation of Messrs. Millhof and Teeple
covered by the plan for the years 1999 and 2000 is increased by approximately
$120,000 and $56,000, respectively, and for the year 2001, approximately
$65,000 higher for Mr. Millhof, or more than 10% from that shown for these
individuals in the Annual Compensation portion of the Summary Compensation
Table found on page 12 of this proxy statement, due to the allocation of their
long-term incentive payouts (see the applicable column in the Summary
Compensation Table) over the three years of the performance periods for which
they were earned.
Any amount shown in the table which exceeds the level of benefits permitted
to be paid from a tax-qualified pension plan under the Internal Revenue Code
are payable from an unfunded, non-qualified supplemental pension plan sponsored
by the Company, such that participants will receive the total pension benefit
calculated using the above table. The non-qualified, supplemental plan contains
terms which provide to certain participants in the cash balance plan who are
covered by Board-approved executive employment agreements any difference
between the amount of pension payable under the cash balance plan and the
amounts that they would have received had they remained covered by the defined
benefit pension plan in which they were participating immediately prior to
January 1, 2002. Those terms are applicable to Messrs. McElya, Millhof and
Weaver, all of whom were participating in a Company-sponsored defined benefit
pension plan immediately prior to January 1, 2002.
The completed full years of service credited under the applicable pension plan
for each of the Named Executive Officers is as follows: Mr. Dattilo 3; Mr.
McElya 6; Mr. Millhof 13; Mr. Weaver 11; and Mr. Teeple 25. The
estimated monthly pension benefit payable to Mr. Dattilo commencing upon his
retirement from the Company at age 65, and payable in the form of a straight
life annuity, is $22,353. This assumes a 4% annual increase in his compensation
(defined as base salary, 80% of his annual bonus target and 50% of his
long-term incentive payout target) from the amount calculated for 2002, and an
interest rate credit of 5.3 percent per year each year until he retires.
Because the actual amount of his pension is dependent upon his level of
compensation during each of his years of employment and the actual interest
rate credited to his hypothetical account in the cash balance plan each year,
the actual pension payment to him could be substantially different from what is
disclosed here.
16
Employment Agreements
The Company has entered into employment agreements with Messrs. Dattilo,
McElya, Millhof, Weaver and Teeple. Under the agreements, each executive shall
remain employed in his present capacity for a specified time, at a base salary
not lower than his present base salary and generally with all benefits
available to executives of the Company as of the date on which the agreements
became effective. The initial term of each agreement is four years for Mr.
Dattilo and three years for each of the other Named Executive Officers. The
term of each agreement shall automatically extend for one additional year each
January 1, unless either the Company or the executive gives prior notice of a
desire not to extend the term. In no event will the term extend beyond the
executives 65th birthday. The agreements contain a non-compete provision
which extends for two years after any termination of employment.
The agreements provide that upon involuntary termination of employment without
Cause or resignation for Good Reason prior to the end of the term of the
agreement, the executive shall be entitled to a lump sum payment equal to the
amount that he would have received over the remainder of the term of his
agreement, had he been paid during that period at the rate of his average
compensation. Average compensation shall mean the average of the base salary
and annual and long-term incentive compensation received by the executive over
the five-year period prior to the year in which his employment terminates.
In addition, the agreements provide that the executive shall be entitled to (i)
continuation of Company-sponsored life, accident and health insurance benefits
for the remainder of the term; (ii) a lump sum payment equal to the actuarial
equivalent of the difference between (a) the pension benefits which would have
accrued under the qualified and non-qualified pension plans of the Company in
which he is participating had he continued his employment through the remainder
of the term of the agreement, and been fully vested at that time, and (b) the
amount of the pension benefits actually accrued at the date of termination;
(iii) a lump sum payment equal to the difference between the exercise price of
stock options held by the executive officer, regardless of whether they had
vested, and the fair market value of the stock subject to such options at the
time of termination; and (iv) full vesting and a cash payment equal to the
value at the time of termination of any restricted stock units held by the
executive. Because of its desire to retain Mr. Dattilo in his present position,
the Board amended his agreement to provide that upon the termination of his
employment after December 31, 2003 for any reason other than Cause, he
shall be entitled to a retention payment, which shall be $125,000 if he leaves
the Company at any time in 2004, and shall increase each year thereafter, to a
payment of $2,750,000 if he leaves in 2015, the year in which he will reach age
65.
In addition, the agreements provide that upon termination of the executives
employment by the Company without Cause, or resignation by the executive for
Good Reason during the remaining period of the executives employment term
which follows a change in control of the Company, as the term change in
control is defined in the agreements, the executive is entitled to a lump sum
payment equal to the greater of 1) the amount that he would have received over
the remainder of the term of his agreement, had he been paid during that period
at the rate of his average compensation, as defined above, and 2) three times
his annual base salary plus target annual incentive compensation for the year
prior to the year in which the change in control occurs. In addition, the
executive shall receive all of the benefits described in the previous
paragraph, plus lifetime retiree medical and life insurance benefits and
outplacement services.
Cause under the agreements generally includes the willful failure of the
executive to substantially perform his duties, the commission of a felony, or
the engaging by the executive in willful misconduct which is materially
injurious to the Company. Good Reason generally includes any reduction in
salary or benefits, an alteration of the executives responsibilities or
status, relocation of the executive, the failure of any successor of the
Company or its businesses to assume the agreements, or voluntary resignation
for any reason within 365 day after a change in control, in the case of Mr.
Dattilo, and during a 30-day period commencing six months after the change in
control, in the case of Messrs. McElya, Millhof, Weaver and Teeple.
The agreements provide for a tax gross-up for any excise tax due under the
Internal Revenue Code for post-termination payments made following a change in
control. In addition, all post-termination payments made to an executive under
the agreements are conditioned upon the execution by the executive of a release
of all claims against the Company.
17
Compensation of Directors
The Company paid each Director who was not an employee of the Company an
annual retainer in 2001 of $20,000, together with a $3,000 per diem fee for
attendance at Board meetings and at Committee meetings not held on the same day
as a Board meeting. Directors who are employees of the Company receive no
additional compensation for serving as Directors. For 2002, the fee for
participation in a telephonic meeting of the Board or any committee of the
Board has been reduced to $1,500. During 2001, Board meetings were held on
seven days, the Audit Committee met on three days other than on the day of a
Board meeting, the Compensation Committee met on two days other than the day of
a Board meeting, and the Nominating and Governance Committee met twice on days
other than the day of a Board meeting. In addition, commencing in 2001 and
continuing each year thereafter, the Chair of the Audit Committee will receive
$5,000 for serving in that capacity, and the Chairs of the Compensation and
Nominating and Governance Committees will each receive $4,000 for serving as
the heads of those committees. These amounts reflect the increased importance
of the Committees in the Boards governance of the Company.
Until May 7, 2001, when the plan expired, non-employee Directors
participated in the 1991 Stock Option Plan for Non-Employee Directors, which
was approved by stockholders at the 1991 Annual Meeting. The purpose of the
plan is to provide a stock-based component to the Directors compensation
package to more closely align their compensation with the interests of the
Companys
stockholders. Under the plan, Non-Employee Directors could receive up to 1,000
stock options each year, with the number determined in accordance with a
formula which provides that the dollar value of the option grant will be equal
to a fixed percentage of each Non-Employee Directors compensation for the
previous fiscal year, based upon the Companys return on equity for that year.
The exercise price for each option is equal to the fair market value of a share
of Common Stock on the grant date. Options granted under the plan become
exercisable one year after the date of grant and remain exercisable until ten
years after the grant date. Information regarding unexercised options for each
Director is indicated in the table on page 23 of this proxy statement. The
Board of Directors has adopted the 2002 Non-Employee Directors Stock Option
Plan, which will become effective if approved by the Companys shareholders at
the Annual Meeting of Stockholders. See page 6 of this proxy statement for an
explanation of the plan. Under that plan, Directors will receive 2,000 stock
options each year. The Board has also instituted a minimum stock ownership
requirement for all Directors. All Directors are required to own at least
5,000 shares of the Companys Common Stock, excluding options. Directors who
do not meet the ownership requirement will have until the end of their second
full term as a Director to do so.
In 1998, stockholders approved the 1998 Non-Employee Directors
Compensation Deferral Plan, which permits Non-Employee Directors to defer some
or all of the fees payable to them for
service on the Board. Amounts deferred and dividend equivalents are converted
into phantom stock units and credited to a bookkeeping account established for
this purpose. The number of phantom stock units credited is determined by
dividing the amount of the Directors deferred fees by the fair market value of
a share of Company Common Stock as of the date of crediting. A Directors
account will be settled through the delivery of a corresponding number of
shares of Common Stock to the Director on the payment date or dates selected by
the Director at the time of the Directors initial deferral election. Payment
must commence on the date specified in the deferral election form (or earlier
if the Director ceases to be a member of the Board) and be made in either a
lump sum or through no more than five annual installments.
Five-Year Stockholder Return Comparison
The SEC requires that the Company include in its proxy statement a line
graph presentation comparing cumulative five-year stockholder returns on an
indexed basis with the Standard & Poors (S&P) 500 Stock Index and either a
published industry or line-of-business index or an index of peer companies
selected by the Company. The Company in 1993 chose what is now the S&P Auto
Parts & Equipment 500 Index as the most appropriate of the nationally
recognized industry standards and has used that index for its stockholder
return comparisons in all of its proxy statements since that time. The Company
has reviewed the appropriateness of continuing to use this index following the
acquisitions of The Standard Products Company and Siebe Automotive, and has
concluded that it remains the most appropriate index, in part because it
includes both automotive parts and tire companies.
The following chart assumes three hypothetical $100 investments on
December 31, 1996, and shows the cumulative values at the end of each
succeeding year resulting from appreciation or depreciation in the stock market
price, assuming dividend reinvestment.
18
The Compensation Committee Report on Executive Compensation, which commences on
page 8 of this proxy statement, the Comparison of Five-Year Cumulative Total
Return Among the Company, S&P 500 Index and S&P Auto Parts
& Equipment - 500
Index set forth above, and the Audit Committee Report found on page 21 of this
proxy statement shall not be deemed to be incorporated by reference by any
general statement incorporating this proxy statement by reference into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
acts.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
During 2001, the Companys Board of Directors held five Board meetings
(two of which were two-day meetings), seven meetings of its Audit Committee,
five meetings of its Compensation Committee and three meetings of its
Nominating and Governance Committee. Each Director attended more than 75% of
the aggregate number of meetings of the Board of Directors and meetings of
Committees on which such Director served during the past fiscal year.
The Companys Audit Committee consists of Directors Fretz (Chair),
Aronson, Gormley and Shuey. All have been determined to be independent, as
defined and required by Sections 303.01 (B) and 303.02 (D) of the New York
Stock Exchange listing standards. The functions of this Committee, which are
set forth in an Audit Committee Charter adopted by the Board on May 2, 2000 and
most recently
reviewed on February 6, 2002, include overseeing the Companys financial
reporting process on behalf of the Board of Directors, recommending the
engaging and discharging of the Companys independent auditors, directing and
supervising special investigations, reviewing with the independent auditors the
plan for and results of the audit engagement, reviewing the independence of the
independent auditors, reviewing the scope and results of the Companys
procedures for internal auditing, approving
professional services provided by the independent auditors, evaluating whether
the provision of any non-audit service is incompatible with the independence
of the auditors, considering the range of audit and non-audit fees, reviewing
the adequacy of the Companys system of internal accounting
controls, reviewing the Charter of the Committee, reviewing the financial
statements of the Company and its periodic filings with the Securities and
Exchange Commission and taking such other actions as are required of the
Committee by the rules of the New York Stock Exchange, United States Securities
and Exchange Commission, and Independence Standards Board.
19
The Compensation Committee is composed of Directors Pond (Chairman),
Dunford and Meier. This Committee approves the remuneration arrangements for
the Companys officers, considers, approves, and administers the Companys
executive benefit plans, employment agreements, and other executive
compensation arrangements, approves the performance criteria against which
incentive awards are measured, and grants cash and stock-based awards, stock
options, and other benefits as authorized under any of such plans.
The Nominating and Governance Committee is composed of Directors Meier
(Chairman), Dunford and Shuey. The Committee is responsible for establishing
policies and practices in accordance with the governance guidelines adopted by
the Board of Directors in December 2000, considering the adoption of practices
that are beneficial to the proper governance of the Company, and acting on
matters arising from time to time which affect the governance of the Company.
The nominating functions of the Committee include searching for, evaluating and
proposing to the Board for nomination qualified candidates for Board
membership. The Committee will consider candidates proposed by stockholders of
the Company or other parties. Any recommendation must be in writing,
accompanied by a description of the proposed nominees qualifications and other
relevant biographical information, and an indication of the consent of the
proposed nominee to serve. The recommendation should be addressed to the
Nominating and Governance Committee of the Board of Directors, Attention:
Secretary, Cooper Tire & Rubber Company, 701 Lima Avenue, Findlay, Ohio 45840.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP served as Companys independent auditor for 2001 and
will continue in that capacity during 2002. Ernst & Young LLP has advised the
Company that neither the firm nor any of its members or associates has any
direct or indirect financial interest in the Company. During 2001, Ernst &
Young LLP rendered both audit services, including an audit of the Companys
annual financial statements, and certain non-audit services. There is no
understanding or agreement between the Company and Ernst & Young LLP that
places a limit on audit fees since the Company pays only for services actually
rendered and at what it believes are customary rates. Professional services
rendered by Ernst & Young LLP auditors are reviewed by the Audit Committee both
as to the advisability and scope of the service, and also to consider whether
such service would affect Ernst & Young LLPs continuing independence.
Audit Fees
Ernst & Young LLPs audit fees for the audit of the Companys annual
financial statements for the fiscal year ended December 31, 2001, including
quarterly reviews of the interim financial statements included in the Companys
Form 10-Qs filed during the fiscal year ended December 31, 2001, were
$1,409,000.
Financial Information System Design and Implementation Fees
The Company did not pay Ernst & Young LLP for any financial information
system design and implementation services as described in Paragraph (c)(4)(ii)
of Rule 2-01 of Regulation S-X during the fiscal year ended December 31, 2001.
All Other Fees
Ernst & Young LLP has billed the Company $4,841,000 in the aggregate, for
all services rendered by Ernst & Young LLP, other than those covered above
under the captions Audit Fees and Financial Information Systems Design and
Implementation Fees, during the fiscal year ended December 31, 2001. Of
this amount, $460,000 is attributable to audit related services, while the
remainder consists of consulting services, the majority of which relate to a
global tax planning initiative undertaken during the year. Audit related
services generally include fees for pensions and certain statutory audits,
accounting consultation, internal audit support, and SEC registration
statements.
A representative of Ernst & Young LLP will be present at the Annual
Meeting of Stockholders and will be available to respond to appropriate
questions and to make a statement if he desires to do so.
20
AUDIT COMMITTEE REPORT
This report is submitted by all members of the Audit Committee, for
inclusion in this proxy statement, with respect to the matters described in the
report.
The Audit Committee oversees the Companys financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities, the Committee
reviewed the audited financial statements in the Annual Report with management,
including a discussion of the quality, not just the acceptability, of the
accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the
financial statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Companys accounting principles
and such other matters as are required to be discussed with the Committee under
generally accepted auditing standards. In addition, the Committee has discussed
with the independent auditors the auditors independence from management and
the Company, including the matters in the written disclosures required by the
Independence Standards Board, and
considered the compatibility of non-audit services with the auditors
independence.
The Committee discussed with the Companys internal and independent
auditors the overall scope and plans for their respective audits. The Committee
meets with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, their evaluations of the
Companys internal controls, and the overall quality of the Companys financial
reporting. The Committee held seven meetings during fiscal year 2001.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2001 for filing with the Securities and
Exchange Commission.
Submitted by the Audit Committee of the Companys Board of Directors:
|
Deborah M. Fretz, Chair
Arthur H. Aronson
Dennis J. Gormley
John H. Shuey
|
21
BENEFICIAL OWNERSHIP OF SHARES
The information which follows sets forth those persons known by the
Company to be holders of record, of, or who may be the beneficial owners of
more than 5% of any class of the Companys voting securities as of December 31,
2001.
|
|
|
|
|
|
|
|
|
|
|
Name and Address of
|
|
Amount and Nature of
|
|
Percent
|
Title of Class
|
|
Beneficial Owner
|
|
Beneficial Ownership
|
|
Of Class
|
|
|
|
|
|
|
|
Common Stock
|
|
National City Bank
(1)(2)
P.O. Box 5756
Cleveland, OH 44101-0756
|
|
8,889,204 shs
|
|
|
12.2
|
%
|
|
Common Stock
|
|
AXA Financial, Inc., 1290 Avenue
of the Americas, New York, New
York 10104; four French, mutual
insurance companies, AXA
Assurances I.A.R.D. Mutuelle, AXA
Assurances VIE Mutuelle, and AXA
Conseil Vie Assurance Mutuelle,
370, rue Saint Honore, 75001 Paris,
France and AXA Courtage
Assurance Mutuelle, 26, rue Louis le
Grand, 75002 Paris, France, as a group;
AXA; 25, avenue Matignon, 75008
Paris, France; and their subsidiaries,
including Alliance Capital
Management L.P
(3)
|
|
8,369,627 shs
|
|
|
11.5
|
%
|
|
(1)
|
Trustee for the Companys Thrift and Profit Sharing Plan, the
Pre-Tax Savings Plans at the Auburn, Bowling Green, Clarksdale,
Findlay, El Dorado, and Texarkana Plants, and certain profit
sharing plans for hourly employees of a subsidiary of the
Company.
|
|
|
(2)
|
National City Bank, in its fiduciary capacity as Trustee of
each Plan, has no investment powers and will vote the shares held
in such Plan in accordance with the written instructions from the
respective Plan participants. However, if no such instructions
are received by the close of business two (2) days prior to the
meeting date, the provisions of each Plan direct the Trustee to
vote such participant shares in the same manner in which the
Trustee was directed to vote the majority of the shares of the
other participants who gave directions as to voting.
|
|
|
(3)
|
According to a filing on Schedule 13G with the SEC dated
February 11, 2002, the nature of the beneficial ownership
consists of sole voting power with respect to 4,571,888 shares,
shared voting power with respect to 1,093,191 shares, sole
dispositive power with respect to 8,369,127 shares, and shared
dispositive power with respect to no shares. The filing indicates
that the shares are held solely for investment purposes on behalf
of client discretionary investment advisory accounts.
|
22
SECURITY OWNERSHIP OF MANAGEMENT
The information which follows is furnished as of March 4, 2002, to
indicate beneficial ownership by all executive officers and Directors of the
Company as a group, and each Named Executive Officer and Director individually,
of the Companys Common Stock.
|
|
|
|
|
|
|
|
|
|
|
Name of
|
|
Amount and Nature of
|
|
Percent
|
Title of Class
|
|
Beneficial Owner
|
|
Beneficial Ownership
(1)
|
|
of Class
|
|
|
|
|
|
|
|
Common Stock
|
|
All executive officers and
Directors as a group
|
|
1,064,459 shs
|
|
|
1.5
|
%
|
|
|
|
|
Common Stock
|
|
Arthur H. Aronson
|
|
15,593 shs
|
(2)(3)
|
|
|
*
|
|
|
|
|
Common Stock
|
|
Thomas A. Dattilo
|
|
336,115 shs
|
(2)(4)
|
|
|
*
|
|
|
|
|
Common Stock
|
|
Edsel D. Dunford
|
|
11,246 shs
|
(2)
|
|
|
*
|
|
|
|
|
Common Stock
|
|
Deborah M. Fretz
|
|
8,878 shs
|
(2)(3)
|
|
|
*
|
|
|
|
|
Common Stock
|
|
Dennis J. Gormley
|
|
5,411 shs
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(2)
|
|
|
*
|
|
|
|
|
Common Stock
|
|
James S. McElya
|
|
69,480 shs
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(2)
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|
|
*
|
|
|
|
|
Common Stock
|
|
John F. Meier
|
|
9,835 shs
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(2)(3)
|
|
|
*
|
|
|
|
|
Common Stock
|
|
Roderick F. Millhof
|
|
98,470 shs
|
(2)(4)
|
|
|
*
|
|
|
|
|
Common Stock
|
|
Byron O. Pond
|
|
13,491 shs
|
(2)(3)
|
|
|
*
|
|
|
|
|
Common Stock
|
|
John H. Shuey
|
|
12,481 shs
|
(2)(3)
|
|
|
*
|
|
|
|
|
Common Stock
|
|
Richard D. Teeple
|
|
94,118 shs
|
(2)(5)
|
|
|
*
|
|
|
|
|
Common Stock
|
|
Philip G. Weaver
|
|
111,082 shs
|
(2)(4)
|
|
|
*
|
|
*
|
Less than 1%
|
|
|
(1)
|
Includes 792,809 shares obtainable on exercise of stock options
within 60 days following March 4, 2002, which options have not
been exercised; 154,245 shares held in the Companys Thrift and
Profit Sharing Plan for the account of the executive officers of
the Company; 38,808 restricted stock units of which the holders
have neither voting nor investment power; and 41,180 phantom
stock units of which the holders have neither voting nor
investment power. Of the remaining shares, 960 are subject to
shared voting and investment power, and 35,057 are subject to
the sole voting and investment power of the holders thereof.
|
|
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(2)
|
Includes shares obtainable on exercise of stock options within 60
days following March 4, 2002, which options have not been
exercised, as follows: Arthur H. Aronson 3,449; Thomas A.
Dattilo 300,000; Edsel D. Dunford, 3,850; Deborah M. Fretz
3,268; Dennis J. Gormley 5,411; James S. McElya 65,000; John
F. Meier 2,461; Roderick F. Millhof 83,600; Byron O. Pond
2,234; John H. Shuey 3,036; Richard D. Teeple 90,100; and
Philip G. Weaver 93,900.
|
|
|
(3)
|
Pursuant to the 1998 Non-Employee Directors Compensation Deferral
Plan explained on page 18 of this proxy statement, the following
Directors deferred fees for service on the Board and have been
credited with the following number of phantom stock units;
Arthur H. Aronson 11,644; Deborah M. Fretz 4,960; John F.
Meier 5,374; Byron O. Pond 10,257; and John H. Shuey
8,945. The holders do not have voting or investment power over
these phantom stock units.
|
|
|
(4)
|
Includes the number of restricted stock units disclosed in
Footnote 8 to the Summary Compensation Table on page 12 of this
proxy statement. The holders do not have voting or investment
power over these restricted stock units.
|
|
|
(5)
|
Includes 1,400 shares owned by Mr. Teeples wife. Mr. Teeple
disclaims beneficial ownership of those shares.
|
23
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Companys Directors and executive officers, and persons who own more than ten
percent of a registered class of the Companys equity securities, to file with
the SEC and the New York Stock Exchange initial reports of ownership and
reports of changes in beneficial ownership of Common Stock of the Company.
Based upon a review of such reports and the representation of such Directors
and executive officers, we believe that all reports due during or for the year
2001 were timely filed.
STOCKHOLDER PROPOSALS FOR THE ANNUAL MEETING IN 2003
Any stockholder who intends to present a proposal at the Annual Meeting in
2003 and who wishes to have the proposal included in the Companys proxy
statement and form of proxy for that meeting must deliver the proposal to the
Secretary of the Company, at the Companys principal executive offices, so that
it is received not later than November 27, 2002.
SOLICITATION AND OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the meeting. However, if any other matters properly come before the
meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the proxy in accordance with their judgment on such matters.
The cost of soliciting proxies will be borne by the Company. In addition
to the solicitation by use of the mails, the Company has retained Georgeson
Shareholder Communications Inc., 17 State Street, New York, New York, to aid in
the solicitation of proxies, at an anticipated cost of approximately $7,500,
plus expenses. The Company will also reimburse brokers and other persons for
their reasonable expenses in forwarding proxy material to the beneficial owners
of the Companys stock. Solicitations may be made by telephone, telegram or by
personal calls, and it is anticipated that such solicitation will consist
primarily of requests to brokerage houses, custodians, nominees and fiduciaries
to forward soliciting material to the beneficial owners of shares held
of record by such persons. If necessary, officers and other employees of the
Company may by
telephone, telegram or personal interview, request the return of proxies.
Please mark, execute and return the accompanying proxy, or vote by
telephone or Internet, in accordance with the instructions set forth on the
proxy form, so that your shares may be voted at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Richard D. Teeple, Secretary
March 27, 2002
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IMPORTANT:
|
|
All stockholders are requested to mark, date, sign and mail promptly
the enclosed proxy for which an envelope is provided, or cast their
ballots by Internet or telephone.
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24
Appendix A
COOPER TIRE & RUBBER COMPANY
2002 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
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1.
|
|
Purpose.
The purpose of the Cooper Tire & Rubber Company 2002
Non-Employee Directors Stock Option Plan (the Plan) is to attract,
retain and compensate highly qualified individuals who are not current
employees of Cooper Tire & Rubber Company (the Company) as members
of the Board of Directors and to enable them to increase their
ownership of shares of Common Stock, $1.00 par value, of the Company
(Common Stock). The Plan will be beneficial to the Company and its
stockholders since it will allow these directors to have a greater
personal financial stake in the Company through the ownership of
Common Stock, in addition to underscoring their common interest and
identification with stockholders in increasing the value of Common
Stock.
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|
|
2.
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|
Shares Subject to Plan.
The total number of shares of Common
Stock with respect to which options may be granted under the Plan
shall not exceed 500,000 (as adjusted pursuant to Section 7 hereof).
Shares issued upon exercise of options granted under the Plan may be
either authorized and previously unissued shares, issued shares which
have been reacquired by the Company, or any combination thereof. In
the event that any option granted under the Plan shall terminate,
expire or, with the consent of the optionee, be canceled as to any
shares of Common Stock, without having been exercised in full, new
options may be granted with respect to such shares without again being
charged against the maximum share limitations set forth above in this
Section 2.
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|
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3.
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|
Administration.
The Plan shall be administered by the Board of
Directors, or any committee (the Committee), that may be appointed
by the Board of Directors of the Company consisting of such number of
directors, not less than [two], as shall be determined by the Board,
who shall serve at the pleasure of the Board, and each of whom shall
at the time of designation and service qualify under rule 16b-3 of the
Securities and Exchange Act of 1934, or any successor provision at the
time in effect (Rule 16b-3). Vacancies occurring in the membership
of the Committee shall be filled by appointment by the Board of
Directors. If for any reason the Committee is unable to perform its
functions and duties under the Plan, the Board of Directors may
perform any such functions and duties.
|
The Committee, from time to time, may adopt rules and regulations for
carrying out the provisions and purposes of the Plan. The interpretation and
construction by the Committee of any provisions of, and the determination of
any questions arising under, the Plan, any such rule or regulation, or any
agreement evidencing options under the Plan, shall be final, binding and
conclusive on all persons interested in the Plan. The Secretary of the Company
shall be authorized to implement the Plan in accordance with its terms and to
take such actions of a ministerial nature as shall be necessary to effectuate
the intent and purposes hereof. The validity, construction and effect of the
Plan and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware without regard to its
conflicts of law principles.
|
4.
|
|
Eligibility.
All members of the Companys Board of Directors who
are not current employees of the Company or any of its subsidiaries at
the time of option award (Non-Employee Directors) are eligible to
participate in the Plan.
|
|
|
5.
|
|
Option Awards.
|
|
(a)
|
|
Formula Awards.
Each Non-Employee Director shall be
granted an option to
purchase 2,000 shares of Common Stock (as adjusted pursuant to
Section 7 hereof) automatically on the first business day following
the Annual Meeting of Stockholders.
|
A-1
|
(b)
|
|
Discretionary Awards.
The Committee, in its sole
discretion, may grant additional options (Discretionary Awards)
to purchase shares of Common Stock to Non-Employee Directors at
such time or times and upon such conditions and for such numbers
of shares as the Committee shall determine.
|
|
|
(c)
|
|
Non-Statutory Stock
Options.
All options granted under
the Plan shall be non-statutory options not intended to qualify as
an incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the Code).
|
|
6.
|
|
Terms and Conditions of Options.
All options granted under the
Plan shall be evidenced by stock option agreements in writing
(hereinafter referred to as option agreements), in such form as the
Committee may from time to time approve, executed on behalf of the
Company by the [Chairman of the Board or President] of the Company.
Each option agreement shall be subject to the Plan, and, in addition
to such other terms and conditions as the Committee may deem
desirable, shall provide in substance as follows:
|
|
(a)
|
|
Purchase Price.
The purchase price per share of Common
Stock for which each option is exercisable shall be equal to 100%
of the Fair Market Value of a share of Common Stock as of the date
such option is granted (Fair Market Value). Such Fair Market
Value shall be the last sale price of Common Stock on the date
next preceding such date as reported on the New York Stock
Exchange Composite Tape or, in the event that no sale shall have
taken place on the New York Stock Exchange on such next preceding
day, the last sale price of Common Stock on the next preceding day
on which there was a sale as reported on the New York Stock
Exchange Composite Tape, or if the Common Stock is no longer
traded on the New York Stock Exchange, the fair market value on
such date as determined by the Committee in accordance with
applicable law and regulations. The option price shall be subject
to adjustment as provided in Section 7 hereof.
|
|
|
(b)
|
|
Exercisability and Term of
Options.
Subject to Section
6(c) hereof, each option granted under the Plan shall be
exercisable 50 percent after one year from date of grant, and 100
percent after two years from date of grant. Each option granted
under the Plan shall expire 10 years from the date of grant and
shall be subject to earlier termination as hereinafter provided.
If a Non-Employee Director subsequently becomes an employee of the
Company while remaining a member of the Board of Directors, any
options held under the Plan by such individual at the time of such
commencement of employment shall not be affected thereby.
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(c)
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Change of Control;
Cessation of Service.
Except as
hereinafter set forth, no option shall be exercisable after the
date of cessation of an optionees service as a director of the
Company. Upon a change of control of the Company or similar event
(as may be defined in the applicable option agreement), or upon
the death or disability of an optionee at any time all of the then
outstanding options of such optionee shall become immediately
exercisable. If an optionees service ceases due to a change of
control or similar event or the disability of the Optionee, such
options may be exercised by the optionee within three months after
such cessation of service. If an optionee shall die within
such three-month period, or if cessation of his or her service
shall have been due to such optionees death, such options may be
exercised at any time within one year after such death by the
optionees executor or administrator or by his or her distributee
to whom such options may have been transferred by will or by the
laws of descent and distribution. In the event that an optionees
service as a director ceases for any reason other than for cause
or death, disability, a change in control or similar event, or
because the director reaches the mandatory retirement age for
service as a director as established by the Board of Directors,
the options granted to that optionee, to the extent exercisable on
the last day of the optionees service as a director, shall remain
exercisable for a period of time after the optionees last day of
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service as a director which is equal to the lesser of the
optionees period of service as a director or five years. If the
optionees service as a director ceases because he or she reaches
the mandatory retirement age established by the Board for service
as a director, then all options granted to that director which
have not expired as of such directors last day of service as a
director, shall become fully vested as of such date, and shall
remain exercisable for a period of time after the optionees last
day of service as a director which is equal to the lesser of the
optionees period of service as a director or five years.
Notwithstanding the foregoing, in no event shall the foregoing
provisions extend the period during which an option may be
exercised beyond the date it expires by its terms.
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(d)
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Manner of Exercise.
Each option agreement shall provide
that any option therein granted shall be exercisable only by
giving in each case written notice of exercise, accompanied by
full payment of the purchase price either (i) in cash (including
check, bank draft or money order, or wire or other transfer of
funds, or advice of credit to the Company), of (ii) in shares of
Common Stock owned by the Optionee for at least 6 months and
having a fair market value equal to the purchase price or a
combination of cash and shares of Common Stock which in the
aggregate are equal in value to such purchase price. The purchase
price of an option shall also be deemed to have been paid to the
extent that an Optionee
provides for payment from the proceeds of sale through a broker on a
date satisfactory to the Company of some or all of the shares to
which the option relates.
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(e)
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Nontransferability.
Except as otherwise determined by
the Committee, each option agreement shall provide that any option
therein granted is not transferable by the optionee other than by
will or by the laws of descent and distribution and that, during
the lifetime of the optionee, such option may be exercised only by
the optionee or such optionees legal representative.
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(f)
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Withholding of Taxes.
It shall be a condition to the
obligation of the Company to issue or transfer shares of Common
Stock upon the exercise of an option that the optionee pay to the
Company, upon its demand, such amount, if any, as may be requested
by the Company for the purpose of satisfying its liability to
withhold federal, state or local income or other taxes incurred by
reason of the exercise of such option or the transfer of shares
upon such exercise. If the amount requested is not paid, the
Company may refuse to issue or transfer shares of Common Stock
upon exercise of the option.
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7.
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Adjustment upon Changes in Stock.
The Board of Directors shall
make or provide for such adjustments in the option price and in the
number or kind of shares or other securities covered by outstanding
options as the Board of Directors in its sole discretion, exercised in
good faith, shall determine is equitably required to prevent dilution
or enlargement of rights of optionees that would otherwise result from
(a) any stock dividend, stock split, combination of shares, issuance
of rights or warrants to purchase stock, recapitalization or other
changes in the capital structure of the Company, (b) any merger,
consolidation, reorganization or partial or complete liquidation, or
(c) any other corporate transaction or event having an effect similar
to any of the foregoing. The Board of Directors also shall make or
provide for such adjustments in the number or kind of shares of the
Companys Common Stock or other securities which may be acquired
pursuant to options granted under this Plan and the number of such
securities to be awarded to each optionee as the Board of Directors in
its sole discretion, exercised in good faith, shall determine is
appropriate to reflect any transaction or event described in the
preceding sentence. The determination of the Board of Directors as to
what adjustments shall be made, and the extent thereof, shall be
final, binding and conclusive.
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8.
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Fractional Shares.
Except as otherwise determined by the
Committee, no fractional shares shall be issued pursuant to options
granted hereunder, and any fractional share resulting from an
adjustment pursuant to Section 7 hereof shall be eliminated.
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9.
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Government Regulations.
The Plan, the grant and exercise of
options hereunder, and the Companys obligation to sell and deliver
shares of stock pursuant to any such exercise, shall be subject to all
applicable federal and state laws, rules and regulations and to such
approvals by any regulatory or government agency as shall be required.
The Company shall not be required to issue or deliver any certificate
or certificates for shares of its Common Stock prior to (a) the
admission of such shares to listing on any stock exchange on which the
stock shall then be listed and (b) the completion of any registration
or other qualification of such shares under any state or federal law
or rulings or regulations of any government body, which the Company
shall, in its sole discretion, determine to be necessary or advisable.
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10.
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Term of the Plan.
The Plan shall become effective immediately
following approval by the stockholders of the Company at its 2002
Annual Meeting of Stockholders. The period during which option grants
shall be made under the Plan shall terminate on the second business
day following the 2012 Annual Meeting of Stockholders. Termination of
the Plan, however, shall not affect outstanding options which have
been granted prior to such termination, and all unexpired options
shall continue in full force and effect after termination of the Plan,
except as they shall lapse or terminate by their own terms, and the
terms of the Plan shall continue to apply to such options.
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11.
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Amendment, Suspension or Termination of the Plan.
The Board of
Directors at any time and from time to time may amend, suspend or
terminate the Plan; provided, however, that any amendment which must
be approved by the stockholders of the Company to comply with
applicable law or the rules of the principal stock exchange on which
the Common Stock is traded shall not be effective unless and until
such approval has been obtained. Without the written consent of the
optionee, no amendment, suspension or termination of the Plan shall
adversely affect any option previously granted under the Plan, but it
shall be conclusively presumed that any adjustment or change as
provided in Section 7 does not adversely affect any such
right.
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NOTICE
of Annual Meeting of Stockholders
and Proxy Statement
May 7, 2002
IMPORTANT:
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All stockholders are requested to mark, date,
sign and mail promptly the enclosed proxy for
which an envelope is provided, or cast their
ballots by Internet or telephone.
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COOPER TIRE & RUBBER COMPANY
Vote by Telephone
Have your proxy card available when you call the
Toll-Free
number
1-800-542-1160
using a touch-tone phone. You will be prompted to enter your
Control Number found on the reverse side and then you can follow the simple
prompts that will be presented to you to record your vote.
Vote by Internet
Have your proxy card available when you access the
website
http://www.votefast.com
. You will be prompted to enter your Control Number
found on the reverse side and then you can follow the simple prompts that will
be presented to you to record your vote.
Ohio law allows proxy voting by electronic means.
Vote by Mail
Please mark, sign and date your proxy card and return it in the
postage paid
envelope provided or return it to: Corporate Trust Services,
P.O. Box 535800, Pittsburgh, Pennsylvania 15230.
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Vote by Telephone
Call
Toll-Free
using a
touch-tone phone
1-800-542-1160
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Vote by Internet
Access the
Website
and
cast your vote
http://www.votefast.com
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Vote by Mail
Return your proxy
in the
postage-paid
envelope provided
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Vote 24 hours a day, 7 days a week!
Your telephone or internet vote
must be received by 11:59 P.M. Eastern Daylight
Time on May 6, 2002
to be counted in the final tabulation.
Your Control Number is printed on the reverse side.
Your telephone or internet vote authorizes the named proxies to vote your shares in
the same manner as if you had marked, signed, dated and returned your proxy card.
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COOPER TIRE & RUBBER COMPANY
This Proxy is Solicited on Behalf of the Board of Directors
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The undersigned hereby appoints Philip G. Weaver, Richard D. Teeple and
Richard N. Jacobson and each of them, Proxies with full power of substitution
to attend the Annual Meeting of Stockholders of Cooper Tire & Rubber Company to
be held at Urbanskis,
1500 Manor Hill Road, Findlay, Ohio, on May 7, 2002, and any adjournment
thereof and thereat to vote all shares of Common Stock registered in the name
of the undersigned at the close of business on March 4, 2002, upon the matters
set forth in the notice of said meeting and listed below. In their discretion,
the Proxies are authorized to vote upon such other business as may properly
come before the meeting or any adjournment thereof.
The Board of Directors recommends a vote FOR the nominees listed below:
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1.
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Election of Directors
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FOR
the nominees listed below:
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WITHHOLD
authority to vote for the nominees listed below:
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(01) Edsel D. Dunford
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(02) Dennis J. Gormley
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(03) John F. Fiedler
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(INSTRUCTION: To withhold authority to vote for an individual
nominee, write that nominees name in the space provided here.)
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The Board of Directors recommends a vote FOR Agenda Item 2.
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2.
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Action to approve and adopt the 2002 Non-Employee Directors Stock Option Plan
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FOR
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AGAINST
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ABSTAIN
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IMPORTANT: PLEASE SIGN AND DATE THE PROXY ON THE REVERSE SIDE.
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COOPER TIRE & RUBBER COMPANY
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You are now able to cast your vote by using a touch-tone telephone or by using the internet.
Instructions for voting are on the reverse side. Your Control Number for voting is noted above.
fold and detach here
IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED, SHARES REPRESENTED HEREBY WILL
BE VOTED. IF
A CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED ACCORDINGLY. IF NO INSTRUCTIONS
ARE GIVEN AS TO ANY AGENDA ITEM, THEY WILL BE VOTED FOR THE ELECTION OF THE
LISTED NOMINEES AS DIRECTORS, AND FOR AGENDA ITEM 2.
AFTER COMPLETING THE REVERSE SIDE OF THIS PROXY FORM, PLEASE SIGN
AND DATE BELOW AND RETURN PROMPTLY IN THE ENVELOPE PROVIDED.
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Date:
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, 2002
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SIGNATURE(S)
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SIGNATURE(S)
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Please date and sign
exactly as name
appears hereon. If any
shares are held by
joint tenants, both
should sign. When
signing as attorney,
as executor,
administrator or
custodian, please give
full title as such. If
a corporation, please
sign in full corporate
name by President or
other authorized
officer. If a
partnership, please
sign in partnership
name by authorized
person.
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