SCHEDULE 14A INFORMATION
(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
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14a-6(e)(2))
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
(Name of Registrant as Specified in Its Charter)
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
7800 Woodley Avenue
Van Nuys, California 91406
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 10, 2004
To the Shareholders of
SUPERIOR INDUSTRIES INTERNATIONAL, INC.:
The Annual Meeting of Shareholders of SUPERIOR INDUSTRIES INTERNATIONAL,
INC. will be held at the Airtel Plaza Hotel, 7277 Valjean Avenue, Van Nuys,
California 91406 on Monday, May 10, 2004 at 10:00 A.M. Pacific Time for the
following purposes:
(1) To elect Sheldon I. Ausman and V. Bond Evans to Class II of the
Board of Directors;
(2) To reaffirm an Incentive Bonus Plan for Louis L. Borick;
(3) To approve an Incentive Bonus Plan for Steven J. Borick; and
(4) To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
Only shareholders of record at the close of business on March 29, 2004 are
entitled to notice of and to vote at the Annual Meeting. On any business day
from April 30, 2004 until May 10, 2004, during ordinary business hours,
shareholders may examine the list of shareholders for any purpose relevant to
the Annual Meeting at the Company's executive offices at 7800 Woodley Avenue,
Van Nuys, California 91406.
You are urged to execute the enclosed proxy and return it in the
accompanying envelope at your earliest convenience. Such action will not affect
your right to vote in person should you find it possible to attend the Annual
Meeting.
By Order of the Board of Directors
Daniel L. Levine
Secretary
Van Nuys, California
Dated: April 12, 2004
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WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
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SUPERIOR INDUSTRIES INTERNATIONAL, INC.
7800 Woodley Avenue
Van Nuys, California 91406
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PROXY STATEMENT
----------
ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 10, 2004
This Proxy Statement is furnished to the shareholders of Superior
Industries International, Inc., a California corporation ("Superior" or the
"Company"), in connection with the solicitation of proxies by the Company's
Board of Directors for use at the Annual Meeting of Shareholders to be held at
the Airtel Plaza Hotel, 7277 Valjean Avenue, Van Nuys, California 91406 on
Monday, May 10, 2004 at 10:00 A.M. Pacific Time and at all postponements and
adjournments thereof (the "Annual Meeting"). The cost of such solicitation will
be borne by Superior. The solicitation will be by mail, telephone, or oral
communication with shareholders. Following the original mailing of the proxies
and other soliciting materials, the Company will request that brokers,
custodians, nominees and other record holders forward copies of the Proxy
Statement and other soliciting materials to persons for whom they hold shares of
Superior common stock and request authority for the exercise of proxies. In such
cases, the Company will reimburse such record holders for their reasonable
expenses.
The matters to be considered and voted upon at the Annual Meeting are set
forth in the Notice of Annual Meeting which accompanies this Proxy Statement.
A proxy for use at the Annual Meeting is enclosed. A proxy, if properly
executed, duly returned and not revoked, will be voted in accordance with the
instructions contained thereon. If the proxy is executed and returned without
instruction, the proxy will be voted FOR the election as directors of the
individuals named below and FOR the approval of the Incentive Bonus Plans for
Louis L. Borick and Steven J. Borick. If the proxy is not returned, your vote
will not be counted. Any shareholder who executes and delivers a proxy has the
right to revoke it at any time before it is exercised, by filing with the
Secretary of Superior a written notice revoking it or a duly executed proxy
bearing a later date, or, if the person executing the proxy is present at the
meeting, by voting his shares in person.
The approximate date on which Superior anticipates first sending this
Proxy Statement and form of proxy to its shareholders is April 12, 2004. The
address of the principal executive offices of the Company is 7800 Woodley
Avenue, Van Nuys, California 91406.
VOTING SECURITIES AND PRINCIPAL HOLDERS
There were issued and outstanding 26,684,141 shares of Superior's common
stock, par value $0.50 per share, on March 29, 2004, which has been set as the
record date for the purpose of determining the shareholders entitled to notice
of and to vote at the Annual Meeting. Each holder of common stock will be
entitled to one vote, in person or by proxy, for each share of common stock
standing in his name on the books of Superior as of the record date; votes may
not be cumulated. To constitute a quorum for the transaction of business at the
Annual Meeting, there must be present, in person or by proxy, a majority of the
shares entitled to vote.
3
The following table sets forth information known to Superior as of March
1, 2004, with respect to beneficial ownership of the Company's common stock by
each person known to the Company to be the beneficial owner of more than 5% of
the Company's common stock, by each director, by the Named Officers (as defined
under "Executive Compensation"), and by all directors and officers of Superior
as a group:
Amount Percent
Beneficially Of
Name and Address(+) of Beneficial Owner Owned Class
--------------------------------------- ------------ -------
Louis L. Borick 3,908,823(3)(4) 14.6%
Franklin Advisors(1) 3,227,301 12.1%
One Parker Plaza
Fort Lee, NJ 07024
Mac-Per-Wolf Company(2) 2,680,730 10.0%
310 South Michigan Avenue, Suite 2600
Chicago, IL 60604
Juanita A. Borick 5.2%
1,389,033
Steven J. Borick 213,816(3)(4) *
James M. Ferguson 43,503(3)(4) *
Michael J. O'Rourke 30,141(4) *
Raymond C. Brown 26,394(3) *
Jack H. Parkinson 16,600(3) *
Sheldon I. Ausman 14,000(3) *
Philip W. Colburn 13,930(3) *
V. Bond Evans 11,000(3) *
R. Jeffrey Ornstein 6,550(3)(4) *
Superior's Directors and Officers 4,326,541(5) 16.2%
As a Group (16 persons)
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+ All persons have the Company's principal office as their address, except
as indicated.
* Less than 1%.
(1) Based on information provided by the shareholder in Schedule 13G filed
with the Securities and Exchange Commission on February 9, 2004.
(2) Based on information provided by the shareholder in Schedule 13G filed
with the Securities and Exchange Commission on March 10, 2004.
(3) Includes 330,951, 103,704, 14,000, 11,000, 9,000, 9,000, 8,352, 8,352,
8,000 and 2,407 shares for Messrs. L. Borick, S. Borick, Ausman, Evans,
Colburn, Parkinson, Ferguson, O'Rourke, Brown and Ornstein, respectively,
of which they have the right to acquire beneficial ownership through the
exercise within 60 days from March 1, 2004 of non-statutory stock options
that have been previously granted.
(4) Includes 26,796, 22,733, 19,773, 19,049, 5,000, and 3,843 shares for
Messrs. S. Borick, Ferguson, O'Rourke, L. Borick, Brown and Ornstein,
respectively, of which they have the right to acquire beneficial ownership
through the exercise within 60 days from March 1, 2004 of incentive stock
options that have been previously granted.
(5) Includes 641,000 shares of which the directors and officers have the right
to acquire beneficial ownership through the exercise within 60 days from
March 1, 2004 of stock options that have previously been granted.
Excluding Mr. L. Borick, the directors and officers beneficially own
417,418 shares, or 1.6% of the class. Each of such directors and officers
has sole investment and voting power over his shares.
A copy of Superior's annual report on Form 10-K, as filed with the
Securities and Exchange Commission ("SEC"), will be furnished to any shareholder
without charge on written request to R. Jeffrey Ornstein, Vice President & Chief
Financial Officer, Superior Industries International, Inc., 7800 Woodley Avenue,
Van Nuys, California 91406.
4
ELECTION OF DIRECTORS
One of the purposes of the Annual Meeting is to elect two persons to Class
II of the Board of Directors in accordance with the Company's Articles of
Incorporation. Unless instructed to the contrary, the persons named in the
accompanying proxy will vote the shares for the election of the nominees named
herein to Class II of the Board of Directors as described below. Although it is
not contemplated that any nominee will decline or be unable to serve, the shares
will be voted by the proxy holders in their discretion for another person if
such a contingency should arise. The term of each person elected as a director
will continue until the director's term has expired and until his or her
successor is elected and qualified. The two persons receiving the largest number
of affirmative votes shall be elected as Class II directors. Since there is no
particular percentage of either the outstanding shares or the shares represented
at the meeting required to elect a director, abstentions and broker non-votes
will have the same effect as the failure of shares to be represented at the
Annual Meeting, except that the shares subject to such abstentions or non-votes
will be counted in determining whether there is a quorum for taking shareholder
action, under California law and the Company's Articles of Incorporation and
Bylaws.
The Company's Articles of Incorporation provides that its eight directors
be divided into three classes. The term of office of those directors in Class I
expires at the 2006 Annual Meeting of Shareholders; the term of office of those
directors in Class II expires at the 2004 Annual Meeting of Shareholders; and
the term of office of those directors in Class III expires at the 2005 Annual
Meeting of Shareholders. Directors elected to succeed those directors whose
terms expire are elected for a term of office to expire at the third succeeding
annual meeting of shareholders after their election.
Information Regarding Director Nominees
Messrs. Ausman and Evans are currently serving as directors in Class II
and were elected at the 2001 Annual Meeting of Shareholders for a term of office
expiring at the 2004 Annual Meeting of Shareholders. All the nominees were
recommended for re-election by the Board of Directors. The name, age and
principal business or occupation of each nominee and each of the other directors
who will continue in office after the 2004 Annual Meeting, the year in which
each first became a director of the Company, committee memberships, ownership of
equity securities of the Company and other information are shown below in the
brief description of each of the nominees and incumbent directors and in the
tables elsewhere in this Proxy Statement.
Each of the following persons is nominated for election to Class II of the
Board of Directors (to serve a three-year term ending at the 2007 Annual Meeting
of Shareholders and until their respective successors are elected and
qualified). The Board of Directors recommend that you vote FOR the following
nominees:
Sheldon I. Ausman
Mr. Ausman is a founding partner of Cambridge Capital Partners, a private
equity firm with offices in Los Angeles, Chicago and New York. For 34 years
until his retirement, Mr. Ausman was with the international firm of Arthur
Andersen, accountants and auditors. He retired as the Managing Partner of the
Southern California, Honolulu and Las Vegas offices. He also served as a member
of the firm's Board of Partners in various other committees. Prior to reaching
retirement age, Mr. Ausman served on the Board of Northern Trust Bank of
California, and is currently a director of several nonprofit and privately owned
companies. Mr. Ausman serves on the Stock Option, Audit, Compensation,
Nominating and Corporate Governance and Long Range Financial Planning Committees
of the Board of Directors of the Company.
V. Bond Evans
Mr. Evans has over 35 years of domestic and international experience in
engineering, manufacturing and general management disciplines, primarily in the
aluminum industry. He graduated from General Motors Institute of Technology and
Management and began his career with General Motors Diesel Ltd. Canada. In 1960
he joined Kawneer Company Canada Limited. He became President with
responsibility for Canadian and European operations in 1968. He was named
President of the parent company in 1970 with responsibility for worldwide
operations. Following the acquisition of Kawneer, Inc. by Alumax, Inc. (NYSE) he
held a succession of upper management positions in Alumax, becoming President
and Chief Executive Officer of the company in 1991. During his career Mr. Evans
served as a Director and Committee Chairman in the Aluminum Association and the
International Primary Aluminum Institute. Mr. Evans serves on the Compensation,
Nominating and Corporate Governance, and Stock Option Committees of the Board of
Directors of the Company.
5
Selection of Nominees for Director
It is the policy of the Board, as set forth in the Company's Corporate
Governance Guidelines, to select director nominees who possess personal and
professional integrity, sound business judgment, a willingness to devote the
requisite time and energies to their duties as director, and relevant experience
and skills to be an effective director in conjunction with the full Board in
collectively serving the long-term interests of the Company's shareholders.
Board members are evaluated and selected based on their individual merit as well
as in the context of the needs of the Board as a whole.
The Nominating and Corporate Governance Committee is responsible for
identifying, reviewing, and recommending for the Board's selection qualified
individuals to be nominated for election or reelection to the Board, consistent
with the criteria set forth in the Company's Corporate Governance Guidelines.
The Nominating and Corporate Governance Committee, in conducting such
evaluation, may also take into account such other factors as it deems relevant.
Prior to nominating an existing director for re-election to the Board, the
Nominating and Corporate Governance Committee considers and reviews the existing
director's Board and committee meeting attendance and performance, length of
Board service, independence, as well as the experience, skills and contributions
that the existing director brings to the Board. Further, the Nominating and
Corporate Governance Committee receives disclosures relating to a director's
independence and assists the Board in making determinations as to the
independence of the directors. The Nominating and Corporate Governance Committee
also conducts an annual review of the composition and structure of the Board as
a whole.
From time to time, the Nominating and Corporate Governance Committee may
engage outside search firms to assist it in identifying and contacting qualified
director candidates.
Any shareholder entitled to vote in the election of directors generally
may nominate one or more persons for election as director at a meeting by
providing written notice of such shareholder's intent to make such nomination or
nominations, either by personal delivery or by United States mail, postage
prepaid, to the Secretary of the Company not later than 120 days in advance of
an annual meeting of shareholders, and with respect to an election to be held at
a special meeting of shareholders for the election of directors, the close of
business on the seventh day following the date on which notice of such meeting
is first given to shareholders. A shareholder notice must contain the following
information: the name and address of the shareholder who intends to make the
nomination and of the person or persons to be nominated; a representation that
the shareholder is a holder of record of stock of the corporation entitled to
vote at such meeting and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice; a description of all
arrangements or understandings between the shareholder and each nominee and any
other person or persons (naming such person or persons) pursuant to which the
nomination or nominations are to be made by the shareholder; such other
information regarding each nominee proposed by such shareholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the SEC, had the nominee been nominated, or intended to be nominated, by the
board of directors; and the consent of each nominee to serve as a director of
the corporation if so elected. The chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedures, which nomination shall be void.
The directors nominated by the Board for election at the Annual Meeting
were recommended by the Nominating and Corporate Governance Committee, with the
nominees abstaining. The Board has determined that Messrs. Ausman and Evans are
both independent directors as defined by the Corporate Governance Rules of the
New York Stock Exchange.
The Company's policies and procedures regarding the selection of director
nominees are described in detail in the Company's Corporate Governance
Guidelines and the Nominating and Corporate Governance Committee Charter, which
are available on the Company's website at www.supind.com. In addition, printed
copies of such Corporate Governance Guidelines and Nominating and Corporate
Governance Committee Charter are available upon written request to the Company's
Secretary at Superior Industries International, Inc., 7800 Woodley Avenue, Van
Nuys, California 91406.
Incumbent Directors
Directors in the other two classes of directors whose terms are not
currently expiring are as follows:
Class III -- serving until the 2005 Annual Meeting of Shareholders and until
their respective successors are elected and qualified:
6
Louis L. Borick
Mr. L. Borick has been Chairman of Superior's Board of Directors and was
President since 1957 and has been responsible for the formation of the overall
corporate policy of the Company and its subsidiaries. Mr. L. Borick was
appointed Chief Executive Officer and Chairman of the Board of the Company
effective January 1, 2003, and at that time, his son, Steven J. Borick, who also
serves on Superior's Board of Directors, became President and Chief Operating
Officer of Superior. Mr. L. Borick also serves as a member of the Long Range
Financial Planning Committee of the Board of Directors of the Company.
Steven J. Borick
Mr. S. Borick, who is a son of Louis L. Borick, was appointed President
and Chief Operating Officer, effective January 1, 2003. He joined the Company in
January, 1999, after serving on Superior's Board for 18 years, and was appointed
Vice President, Strategic Planning on March 19, 1999 and Executive Vice
President on January 1, 2000. Prior to joining Superior, he was engaged in the
oil exploration business for over 20 years in his capacity as President of
Texakota, Inc. and general partner of Texakota Oil Co. Mr. S. Borick also serves
on the Board of Directors of M.D.C. Holdings, Inc., a New York Stock Exchange
Company. He serves on the Long Range Financial Planning Committee of the Board
of Directors of the Company.
Raymond C. Brown
Mr. Brown retired from the Company in 1998 after a distinguished career
spanning thirty years of service. Mr. Brown joined the Company in 1967 and
became Senior Vice President in 1975. His duties included strategic and product
planning and involvement in all of the Company's major projects. He was directly
responsible for marketing and sales of products for original equipment
manufacturers and was also responsible for Corporate Quality.
Class II -- serving until the 2006 Annual Meeting of Shareholders and until
their respective successors are elected and qualified:
Jack H. Parkinson
Mr. Parkinson has more than 50 years experience in the automotive
industry. He retired from Chrysler Corporation after 24 years in its
international organization. He was Managing Director of Chrysler's Mexico
operations from 1974 to 1982 and was Executive Vice President of Sunroad
Enterprises, an entity involved in real estate development, banking and car
dealerships, from 1983 to 1994. He serves on the Audit, Long Range Financial
Planning and Compensation Committees of the Board of Directors of the Company.
Philip W. Colburn
Mr. Colburn has more than 40 years experience in the automotive industry.
Prior to the merger with Andrew Corporation in July , 2003, he was the Chairman
of Allen Telecom, Inc., a New York Stock Exchange listed manufacturer of
wireless equipment to the global telecommunications industry. He held this
position since March 1988 and served as a member of the Board of Directors of
Allen since 1975. Mr. Colburn serves on the Stock Option, Audit, Long Range
Financial Planning, and Nominating and Corporate Governance Committees of the
Board of Directors of the Company. Mr. Colburn is now a Director of Andrew
Corporation, and also a Director of TransPro, Inc.
R. Jeffrey Ornstein
Mr. Ornstein, a certified public accountant, joined the Company in June
1984 as Vice President, Finance and Treasurer and is Chief Financial Officer of
the Company. He became Vice President and Chief Financial Officer in 1995. Mr.
Ornstein serves as an ex officio member on the Long Range Financial Planning
Committee of the Board of Directors of the Company.
7
The names of, and certain information with respect to, the nominees and
the incumbent directors are as follows:
First
Elected
Name Age Principal Occupation as a Director
---- --- -------------------- -------------
Nominees
Sheldon I. Ausman 70 Partner, Cambridge Capital Partners 1992
V. Bond Evans 68 Retired President and Chief Executive 1994
Officer, Alumax, Inc.
Incumbents
Louis L. Borick 80 Chairman of the Board and Chief 1957
Executive Officer
Steven J. Borick 51 President and Chief Operating Officer 1981
Raymond C. Brown 75 Retired Senior Vice President 1972
Jack H. Parkinson 76 Retired Executive Vice President, 1983
Sunroad Enterprises
Philip W. Colburn 75 Retired Chairman, Allen Telecom, Inc. 1991
R. Jeffrey Ornstein 61 Vice President and Chief Financial 1991
Officer
Committees and Meetings of the Board of Directors
The Board of Directors of the Company held five regularly scheduled
meetings in 2003. Each of the directors attended at least 75% of the aggregate
number of meetings of the Board of Directors and meetings of the committees of
the Board on which he served. Although the Company has no formal policy with
regard to Board members' attendance at its annual meetings of shareholder, it is
customary for the Company's directors to attend. All of the Company's directors
attended the Company's 2003 Annual Meeting of Shareholders. In addition to
meeting as a group to review the Company's business, certain members of the
Board of Directors also devote their time and talents to certain standing
committees. Significant committees of the Board of Directors of the Company and
the respective members are set forth below.
The Audit Committee's functions include to be directly responsible for the
appointment, compensation, retention and oversight of the work of any
independent public accounting firm engaged to audit the Company's financial
statements or to perform other audit, review or attest services for the Company;
to discuss with the independent auditors their independence; to review and
discuss with the Company's independent auditors and management the Company's
audited financial statements; and to recommend to the Company's Board of
Directors whether the Company's audited financial statements should be included
in the Company's Annual Report on Form 10-K for the previous fiscal year for
filing with the SEC. The Audit Committee is composed of Sheldon I. Ausman, Jack
H. Parkinson and Philip W. Colburn. Mssrs. Ausman, Parkinson and Colburn are
independent as that term is defined in Section 303A.02 of the New York Stock
Exchange's Corporate Governance Rules and Rule 10A-3(b)(ii) of the Securities
Exchange Act of 1934, as amended. The Board has determined that Mr. Ausman is an
"audit committee financial expert" as defined by SEC rules based upon, among
other things, his accounting background. The Audit Committee met four times in
2003. See "Audit Committee Report" located elsewhere in this Proxy Statement.
The Nominating and Corporate Governance Committee's functions include
assisting the Board in identifying qualified individuals to become directors,
recommending to the Board qualified director nominees for election at the
shareholders' annual meeting, determining membership on the Board committees,
recommending a set of Corporate Governance Guidelines, oversight of annual
self-evaluations by the Board, and reporting annually to the Board on the Chief
Executive Officer succession plan. The Nominating and Corporate Governance
Committee is composed of Sheldon I. Ausman, V. Bond Evans and Philip W. Colburn.
As indicated above, Messrs. Ausman, Evans and Colburn are independent as that
term is defined in Section 303A.02 of the New York Stock Exchange's Corporate
Governance Rules. The Nominating and Corporate Governance Committee did not meet
in 2003.
8
The Compensation Committee's functions include review and approval of
non-stock compensation for the Company's officers and key employees. The
committee consists of Sheldon I. Ausman, V. Bond Evans and Jack H. Parkinson. As
indicated above, Messrs. Ausman, Evans and Colburn are independent as that term
is defined in Section 303A.02 of the New York Stock Exchange's Corporate
Governance Rules. The Compensation Committee met twice during 2003. See
"Compensation Committee Report" located elsewhere in this Proxy Statement.
The Long Range Financial Planning Committee's functions include review of
the Company's long-term strategic financial objectives and the methods to
accomplish them. The committee consists of Steven J. Borick, Sheldon I. Ausman,
Louis L. Borick, Philip W. Colburn, Jack H. Parkinson and R. Jeffrey Ornstein as
an ex officio member. The Long Range Financial Planning Committee met once
during 2003.
The Stock Option Committee administers the Company's stock option plans.
It is composed of Sheldon I. Ausman, Philip W. Colburn and V. Bond Evans. As
indicated above, Messrs. Ausman, Evans and Colburn are independent as that term
is defined in Section 303A.02 of the New York Stock Exchange's Corporate
Governance Rules. The Stock Option Committee met twice during 2003.
The Board of Directors has adopted a written charter for each of the Audit
Committee, the Compensation Committee and the Nominating and Corporate
Governance Committee, which are available on the Company's website at
www.supind.com. Printed copies of these documents are also available upon
written request to the Company's Secretary, Superior Industries International,
Inc., 7800 Woodley Avenue, Van Nuys, California 91406.
Communications with Directors
Shareholders wishing to communicate directly with the Board of Directors,
the Chairman of the Board, the Chair of any committee, or the non-management
directors as a group about matters of general interest to shareholders are
welcome to do so by writing the Company's Secretary at Superior Industries
International, Inc., 7800 Woodley Avenue, Van Nuys, California 91406. The
Secretary will forward these communications as directed.
Code of Business Conduct and Ethics
The Company has adopted a Code of Business Conduct and Ethics, a code of
ethics that applies to all of the Company's directors, officers and employees,
including the Company's Chief Executive Officer and Chief Financial Officer. The
Code of Business Conduct and Ethics is publicly available on the Company's
website at www.supind.com and in print upon written request to the Company's
Secretary at Superior Industries International, Inc., 7800 Woodley Avenue, Van
Nuys, California 91406. Any amendments to the Code of Business Conduct and
Ethics or grant of any waiver from a provision of the code to any director or
officer will be disclosed on the Company's website within five days of a vote of
the Board of Directors or a designated board committee that such an amendment or
waiver is appropriate, and shall otherwise be disclosed as required by
applicable law or New York Stock Exchange rules.
Certain Relationships and Related Transactions
Superior's main office and manufacturing facilities located at 7800
Woodley Avenue, Van Nuys, California, are leased from Mr. L. Borick, who is a
director and officer of the Company, and Juanita A. Borick, who is Mr. L
Borick's former spouse. One of the two buildings on the property is a casting
plant containing approximately 85,000 square feet and the other is a combined
office, manufacturing and warehouse structure. The offices comprise
approximately 24,000 square feet and the manufacturing and warehouse area
236,000 square feet. During fiscal 2003, Superior paid $1,332,936 in rentals
under the lease.
Superior leases the plant and office facilities at 14721 Keswick Street,
Van Nuys, California from Keswick Properties, owned jointly by Steven J. Borick,
who is a director and officer of the Company, and two other of Mr. L. Borick's
children. During fiscal 2003, Superior paid Keswick Properties $292,102 in
rentals under the lease.
Based upon independent appraisals, the Company believes the related party
transactions described above were fair to the Company and could have been
obtained on similar terms from an unaffiliated third party.
There are no personal loans or other extensions of credit to directors or
executives.
9
Employment Agreements
On January 1, 1994, Superior renewed its employment agreement with Mr. L.
Borick. The agreement provides for a five-year evergreen term, an annual base
compensation, use of a company automobile, life insurance and other customary
employee benefits. Mr. L. Borick's annual base salary in effect from January 1,
1996 through December 31, 2003 has been $1,000,001. The agreement provided for
life insurance under a split dollar arrangement with Mr. L. Borick for a face
value of $2,500,000, however, as a result of the Sarbanes-Oxley Act, the Company
has decided not to pay such premiums, but rather to reimburse Mr. L. Borick for
his payment of the premiums. The agreement also provides, in the event of Mr. L.
Borick's death or disability during the employment term, for a payment over 60
months of the balance of Mr. L. Borick's compensation under the agreement at the
time of his death or disability. Upon an early termination of the agreement or
Mr. L. Borick's retirement, he will receive one-twelfth of his annual base
compensation during each of the ensuing 60 months and one-half such amount
during each of the 120 months following. Mr. L. Borick is also entitled to a
cash bonus. See "Compensation Committee Report" located elsewhere in this Proxy
Statement for more discussion regarding Mr. L. Borick's compensation. There is
also a proposed incentive bonus plan for Mr. L. Borick, as outlined in Proposal
2 in this proxy statement.
On March 18, 2004, Superior entered into an employment agreement with Mr.
S. Borick. The agreement provides for a one-year evergreen term, an annual base
compensation, an automobile allowance, life insurance and other customary
employee benefits. Mr. S. Borick's annual base salary in effect on January 1,
2004 was $650,000. Upon an early termination of the agreement by the Company
without cause, Mr. S. Borick will receive one year's base compensation in the
form of twelve monthly payments. Upon Mr. S. Borick's termination of employment
due to a "change in control" as defined in the agreement, Mr. S. Borick shall
receive three years' base compensation in the form of thirty-six monthly
payments. There is also a proposed incentive bonus plan for Mr. S. Borick, as
outlined in Proposal 3 in this proxy statement.
Salary Continuation Benefits
The Company entered into agreements with its directors, executive officers
and certain of its key employees, which provide for Superior to pay to the
individual, upon ceasing to be employed by the Company for any reason, after
having reached his specified vesting date (not payable until age 65), or in the
event of his death while in the employ of the Company prior to separation from
service, a monthly benefit up to 30% of his final average compensation over the
preceding 36 months. Such payments are to continue through the later of 120
months or, if subsequent to his retirement, the individual's death. Final
average compensation only includes base salary for employees and directors' fees
for non-employee directors.
Compensation of Directors
During 2003, all non-employee directors of the Company were each
compensated $25,000 for services as directors and $1,000 for each Board meeting
attended. In addition, they receive $1,000 for each committee meeting attended
or $1,500 for each committee meeting chaired. Management members of the Board of
Directors are not compensated for their service as directors.
EXECUTIVE COMPENSATION
The following table shows information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
2001 through 2003 of those persons who were, at December 31, 2003, (i) the chief
executive officer and (ii) the other four most highly compensated executive
officers of the Company (the "Named Officers").
10
Summary Compensation Table Long-Term
Annual Compensation(1) Compensation-
Fiscal ------------------------- Number of Stock All Other
Name and Principal Position Year Salary Bonus Options Compensation(2)
--------------------------- ------ ----------- ----------- --------------- ---------------
Louis L. Borick 2003 $ 1,000,001 $ 1,892,000 -0- $ 145,153
Chairman of the Board and 2002 1,000,001 2,581,000 -0- 99,605
Chief Executive Officer 2001 1,000,001 1,433,000 200,000 117,135
Steven J. Borick 2003 $ 595,979 $ 650,000 200,000 $ 6,766
President and Chief Operating Officer 2002 430,914 500,000 50,000 2,000
2001 350,092 300,000 60,000 1,700
R. Jeffrey Ornstein 2003 $ 246,349 $ 200,000 5,000 $ 6,000
Vice President and Chief Financial Officer 2002 241,883 200,000 5,000 6,000
2001 236,172 180,000 5,000 5,100
James M. Ferguson 2003 $ 223,572 $ 125,000 15,000 $ 6,000
Senior Vice President, 2002 212,163 120,000 10,000 6,000
Global Sales and Marketing 2001 205,654 99,000 10,000 5,100
Michael J. O'Rourke 2003 $ 167,891 $ 160,000 15,000 $ 6,000
Senior Vice President, 2002 156,770 150,000 10,000 6,000
Sales and Administration 2001 142,571 117,000 10,000 5,100
----------
(1) While the executive officers enjoy certain perquisites, such perquisites
do not exceed the lesser of $50,000 or 10% of such officer's salary and
bonus, and, accordingly, are not reflected on this table.
(2) These amounts represent the Company's contributions to the employee
retirement savings plans covering substantially all of its employees. In
fiscal 2003, the contribution for Mr. L. Borick was $6,000. That year Mr.
L. Borick also received $132,168 in reimbursement of premiums paid for
life insurance, and $6,985 in non-cash benefits for the use of corporate
automobiles and aircraft, and Mr. S. Borick also received $4,766 in
non-cash benefits for the use of corporate aircraft.
Equity Compensation Plan Information
The following table sets forth information relating to equity securities
authorized for issuance under the Company's equity compensation plans as of
December 31, 2003.
Number of securities
remaining available for
Number of securities to Weighted-average future issuance under
be issued upon exercise exercise price of equity compensation plans
of outstanding options, outstanding options, (excluding securities
Plan Category warrants and rights warrants and rights reflected in column (a))
---------------------------------- ------------------- ------------------- ------------------------
(a) (b) (c)
Equity compensation plans approved
by security holders
Stock options (1)............. 1,711,642 $ 31.95 2,597,500
Equity compensation plans not
approved by security holders... 0 N.A. 0
------------- -------- -----------
Total............................. 1,711,642 $ 31.95 2,597,500
============= ======== ===========
----------
11
(1) Consists of shares of Superior Common Stock to be issued upon the exercise
of options granted pursuant to the Company's 1993 Stock Option Plan and
2003 Equity Incentive Plan .
Option Grants
The following table shows information on grants of stock options during
the fiscal year 2003 to the Named Officers.
Number of Percentage of Potential Realizable Value
Securities Total Options at Assumed Annual Rates of
Underlying Granted to Stock Price Appreciation for
Options Employees in Exercise Price Expiration Option Term(3)
or Base Price ----------------------------
Name Granted(1) Fiscal 2003 Per Share(2) Date 5% 10%
---- ---------- ----------- ------------ ---------- ------------ -----------
Louis L. Borick -0- N/A N/A N/A -0- -0-
Steven J. Borick................ 200,000 49.2% $ 42.87 12/19/13 $5,392,143 $2,884,674
R. Jeffrey Ornstein............. 5,000 1.2% 42.87 12/19/13 134,804 341,619
James M. Ferguson............... 15,000 3.7% 42.87 12/19/13 404,411 1,024,856
Michael J. O'Rourke............. 15,000 3.7% 42.87 12/19/13 404,411 1,024,856
----------
(1) All options granted are exercisable in cumulative equal installments
commencing one year from date of grant, with full vesting on the fourth
anniversary date. Vesting may be accelerated in certain events relating to
the change of the Company's ownership or certain corporate transactions.
(2) All stock options were granted at market value at the closing price on the
New York Stock Exchange of the Company's common stock on the date of
grant.
(3) Reported net of the option exercise price. These amounts represent certain
assumed rates of appreciation only. Actual gains, if any, on stock option
exercises are dependent on the future performance of the common stock,
overall stock conditions, as well as the option holders' continued
employment through the vesting period. The amounts reflected in this table
may not be indicative of the value that will actually be achieved or
realized.
Option Exercises and Fiscal Year-End Values
The following table shows information with respect to stock options
exercised during fiscal year 2003 and unexercised options to purchase the
Company's common stock for the Named Officers.
Number of Unexercised Value of Unexercised,
Options Held At In-the-Money Options
Shares December 31, 2003 At December 31, 2003(2)
Acquired on Value -------------------------- --------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------- ----------- ----------- ------------- ----------- -------------
Louis L. Borick................. 155,000 $ 1,709,650 350,000 100,000 $ 5,902,000 $ 1,412,000
Steven J. Borick................ -0- -0- 130,500 282,500 2,050,050 1,060,900
R. Jeffrey Ornstein............. 7,500 131,688 6,250 12,500 85,900 85,400
James M. Ferguson............... 7,500 180,900 31,125 29,375 536,620 164,350
Michael J. O'Rourke............. -0- -0- 28,125 29,375 482,060 164,350
----------
(1) Represents the difference between the market value on the date of exercise
and the option exercise price.
(2) Represents the difference between the market value at December 31, 2003
and the option exercise price.
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Ausman, Evans and Parkinson served on the Compensation Committee
from January 1, 2003 to December 31, 2003. No member of the Compensation
Committee was an officer or employee or former officer or employee of the
Company or its subsidiaries and no member has any interlocking relationships
with the Company that are subject to disclosure under the rules of the SEC
relating to compensation committees.
PROPOSAL 2
REAFFIRMATION OF AN INCENTIVE BONUS PLAN FOR LOUIS L. BORICK
(Item No. 2 on Proxy Card)
At the Annual Meeting, shareholders are being asked to approve the
reaffirmation of the Incentive Bonus Plan for Louis L. Borick (the "CEO Bonus
Plan").
The Board is seeking shareholder approval of the CEO Bonus Plan in order
for bonuses paid under the CEO Bonus Plan to constitute performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended ("Section 162(m)"). If such bonuses constitute "performance-based
compensation", they will not be subject to the $1,000,000 cap on deductible
compensation under section 162(m).
Description of the Bonus Plan
The following information includes a summary of the material provisions of
the CEO Bonus Plan. This information does not purport to be complete and is
qualified in its entirety by reference to the provisions of the CEO Bonus Plan.
Copies of the CEO Bonus Plan will be available at the Annual Meeting and may
also be obtained by making written request of the Company's Secretary.
The purpose of the CEO Bonus Plan is to provide Mr. L. Borick an
additional incentive to continue the extraordinary efforts, initiative and
judgment he has exercised on behalf of the Company and its shareholders by
establishing his yearly bonus on a specific formula basis. Under the CEO Bonus
Plan, the amount of Mr. L. Borick's annual bonus will equal 2.0% of the
Company's annual income before income taxes and before deducting any annual
awards under the CEO Bonus Plan or any other executive incentive arrangements.
However, if such annual income does not equal at least 90% of the planned level
for the year, as approved by the Compensation Committee, the 2.0% figure will be
reduced to 1.8%, ranging down to 1.0% at 70% of the planned level. In no event,
however, will Mr. Borick's annual bonus under the CEO Bonus Plan be less than
1.0% of annual income, as defined. The CEO Bonus Plan will expire by its terms
on May 10, 2009, such that the CEO Bonus Plan will only have a term of five
years from the date of this Annual Meeting, unless the CEO Bonus Plan is
re-approved by shareholders.
The Compensation Committee of the Board is responsible for the
administration of the CEO Bonus Plan. The Compensation Committee consists of two
or more members of the Board, each of whom is an "outside director" for purposes
of Section 162(m). The Compensation Committee will annually certify whether the
planned level has been achieved and what compensation is payable to Mr. L.
Borick. Mr. L. Borick's bonus award will be paid in cash. The benefits that may
be paid under the CEO Bonus Plan to Mr. L. Borick are not yet determinable for
the 2004 fiscal year. Mr. L. Borick received a bonus of $1,892,000 under the CEO
Bonus Plan in effect for the 2003 fiscal year.
Vote Required and Board Recommendation
The affirmative vote of a majority of shares represented and voting at the
Meeting at which a quorum is present, together with the affirmative vote of at
least a majority of the required quorum, shall be required to approve the
proposal. Shares that are voted "FOR", "AGAINST" or "ABSTAIN" on the proposal
are treated as being present at the Meeting for purposes of establishing the
quorum, but only shares voted "FOR" or "AGAINST" are treated as shares
"represented and voting" at the Meeting with respect to the proposal.
Accordingly, abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of the quorum for the transaction of
business, but will not be counted for purposes of determining the number
"represented and voting" with respect to the proposal. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" REAFFIRMATION OF THE INCENTIVE BONUS PLAN FOR LOUIS L.
BORICK.
13
PROPOSAL 3
APPROVAL OF AN INCENTIVE BONUS PLAN FOR STEVEN J. BORICK
(Item No. 3 on Proxy Card)
At the Annual Meeting, shareholders are being asked to approve the
adoption of an Incentive Bonus Plan for Steven J. Borick (the "COO Bonus Plan").
The Plan has been adopted by the Company's Board of Directors.
The Board is seeking shareholder approval of the COO Bonus Plan in order
for bonuses paid under the COO Bonus Plan to constitute performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended ("Section 162(m)"). If such bonuses constitute "performance-based
compensation", they will not be subject to the $1,000,000 cap on deductible
compensation under section 162(m).
Description of the Bonus Plan
The following information includes a summary of the material provisions of
the COO Bonus Plan. This information does not purport to be complete and is
qualified in its entirety by reference to the provisions of the COO Bonus Plan.
Copies of the COO Bonus Plan will be available at the Annual Meeting and may
also be obtained by making written request of the Company's Secretary.
The purpose of the COO Bonus Plan is to provide Mr. Steven Borick an
additional incentive to continue the extraordinary efforts, initiative and
judgment he has exercised on behalf of the Company and its shareholders by
establishing his yearly bonus on a specific formula basis. Under the COO Bonus
Plan, Mr. S. Borick is eligible to receive 100% of his annual base compensation
if the Company's annual earnings per share ("EPS") is equal to at least 90% of
the annual plan level as approved by the Compensation Committee. However, if
such EPS targets are not met, the award is reduced such that no bonus is awarded
if the EPS is less than 50% of the planned level. A pro rata interpolated rate
will be awarded between 50% and 90%. If the annual EPS is greater than plan, Mr.
S. Borick is eligible for awards that will be interpolated up to 120% of planned
level with a maximum award in any event of $1,000,000. The COO Bonus Plan will
expire by its terms on May 10, 2009, such that the COO Bonus Plan will only have
a term of five years from the date of this Annual Meeting, unless the COO Bonus
Plan is re-approved by shareholders.
For purposes of the COO Bonus Plan, the EPS level will be established
by the Compensation Committee. EPS is calculated by dividing net income,
subject to certain adjustments described below, by the budgeted number of
weighted average common shares outstanding plus the dilutive effect of the
Company's outstanding stock options ("weighted average shares outstanding"),
which will be set annually by the Compensation Committee. The Compensation
Committee has the discretion to exclude from net income extraordinary,
non-recurring gains and losses, and will exclude from net income the expense
associated with all bonuses paid to executive officers of the Company. As a
result of these adjustments to net income and the number of weighted average
shares outstanding by which it is divided, while the Compensation Committee
believes EPS as so adjusted is relevant and useful for purposes of achieving the
benefits to the Company from the COO Bonus Plan, it is not a measure of
financial performance under generally accepted accounting principles.
If Mr. S. Borick's employment is terminated prior to the end of the plan
period due to death, disability or retirements as determined by the Board of
Directors, he or his estate shall, after determination of EPS achieved for the
applicable year, be entitled to receive a payment of a pro-rated portion of the
award for such year.
The Company may discontinue, suspend or amend the COO Bonus Plan at any
time, provided that no such action will (i) adversely affect the right of Mr. S.
Borick to a bonus that was previously awarded under the plan but not yet paid,
(ii) be effective in the fiscal year in which such action is taken, unless it is
taken within the first three months of the fiscal year or (iii) increase any
award determined in accordance with the COO Bonus Plan.
The Compensation Committee of the Board is responsible for the
administration of the COO Bonus Plan. The Compensation Committee consists of two
or more members of the Board, each of whom is an "outside director" for purposes
of Section 162(m). The Compensation Committee will annually certify whether the
planned level has been achieved and what compensation is payable to Mr. S.
Borick. Mr. S. Borick's bonus award will be paid in cash.
14
Outside compensation consultants were engaged to review and research
competitive market salary and bonus data for the COO Bonus Plan. Based on
multiple sources of published compensation survey data compiled by recognized
large prestigious companies in the field of compensation, even if Mr. S. Borick
were to receive the maximum payout under this plan, his total cash compensation
would fall between the 50th and 75th percentile of all salaries, meaning that
his cash compensation will fall within expected market level compensation. The
benefits that may be paid under the COO Bonus Plan to Mr. S. Borick are not yet
determinable for the 2004 fiscal year. Mr. S. Borick would have received
$536,000 under the COO Bonus Plan for the 2003 fiscal year if the COO Bonus Plan
had been in effect.
Vote Required and Board Recommendation
The affirmative vote of a majority of shares represented and voting at the
Meeting at which a quorum is present, together with the affirmative vote of at
least a majority of the required quorum, shall be required to approve the
proposal. Shares that are voted "FOR", "AGAINST" or "ABSTAIN" on the proposal
are treated as being present at the Meeting for purposes of establishing the
quorum, but only shares voted "FOR" or "AGAINST" are treated as shares
"represented and voting" at the Meeting with respect to the proposal.
Accordingly, abstentions and broker non-votes will be counted for purposes of
determining the presence or absence of the quorum for the transaction of
business, but will not be counted for purposes of determining the number
"represented and voting" with respect to the proposal.THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" APPROVAL OF THE INCENTIVE BONUS PLAN FOR STEVEN J.
BORICK.
AUDIT FEES
The aggregate fees billed by the Company's outside auditor,
PricewaterhouseCoopers, for professional services in connection with the annual
audit and reviews of the quarterly financial statements during the fiscal years
ended December 31, 2003 and 2002 were $223,000 and $217,000, respectively.
AUDIT RELATED FEES
There were no fees billed by the Company's outside auditor during the
fiscal years ended December 31, 2003 and 2002 for professional services in
connection with other audit related matters.
TAX FEES
The aggregate fees billed by the Company's outside auditor for
professional tax services rendered in 2003 and 2002 were $193,000 and $250,000,
respectively. Tax fees consist of fees billed for professional services rendered
for tax compliance, advice and planning. Such services included review of tax
provisions, tax asset and liability accounts, original and amended tax returns
refund claims.
ALL OTHER FEES
There were no fees billed by the Company's outside auditor for any other
services provided by the Company's outside auditors during the fiscal years
ended December 31, 2003 and 2002, respectively.
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended December 31,
2003, and the notes thereto.
Review with Management
The Audit Committee reviewed and discussed with management the Company's
audited financial statements for the fiscal year ended December 31, 2003 and the
notes thereto.
15
Review and Discussions with Independent Accountants
The Audit Committee discussed with, PricewaterhouseCoopers LLP, the
independent auditors for the Company, the matters required to be discussed by
Statement on Accounting Standards No. 61 (Communications with Audit Committees.
The Audit Committee also received and discussed with PricewaterhouseCoopers LLP
the matters required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) including the independence of
PricewaterhouseCoopers LLP from the Company.
Conclusion
Based on the review and discussions referred to above, the Audit Committee
recommended to the Company's Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2003.
SUBMITTED BY THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Philip W. Colburn - Committee Chair
Sheldon I. Ausman
Jack H. Parkinson
March 29, 2004
COMPENSATION COMMITTEE REPORT
The Compensation Committee (the "Committee") is composed of Messrs.
Ausman, Evans and Parkinson, each of whom meet the independence requirements as
promulgated by the New York Stock Exchange. The Committee's responsibilities
include developing and making recommendations to the full Board with respect to
executive compensation. Also, the Committee establishes the annual compensation
of the Company's Chairman and Chief Executive Officer ("CEO") and reviews the
compensation policy related to the Company's other executive officers. The
Committee's executive compensation philosophy is to set levels of overall
compensation that will allow the Company to successfully compete for exceptional
executives, to tie part of each executive's compensation to the success of the
Company in attaining its short and long-term objectives, and to recognize
individual effort and achievement.
The Committee considers the competitiveness of overall compensation,
solely, and evaluates the performance of the executive officers and adjusts
salaries accordingly. For individuals other than the CEO and Steven J. Borick,
the Chief Operating Officer ("COO"), adjustments are made without regard to a
specified formula based on subjective recommendations of the CEO to the
Committee of the individual executive's performance and also take into account
the profitability of the Company. The Committee believes these criteria for
salary adjustments are in accordance with sound overall compensation guidelines.
Pursuant to this philosophy, the Committee reviews published compensation
surveys covering a wide array of public companies, both larger and smaller than
the Company. Periodically the Committee reviews the compensation paid and to be
paid to each of the Company's executive officers and receives an evaluation of
their performance from the Company's CEO. The Company's CEO and COO have
employment contracts which are discussed under "Employment Agreements."
The compensation surveys utilized for CEO compensation are published in
national magazines and contain certain of the companies comprising the peer
group (see "Common Stock Performance Graph") and include a variety of other
public companies. Compensation levels for the CEO were not solely based by
reference to peer company compensation levels.
The Committee does not specifically target a level of compensation
relative to comparative compensation data collected for the CEO or other
executive officers, but rather refers to this data for subjective review and
confirmation of reasonableness of salaries paid to executives.
In 1994, the Board of Directors and the shareholders approved an Incentive
Bonus Plan (the CEO Bonus Plan described in Proposal 2) for Mr. L. Borick, the
Company's CEO. The purpose of the CEO Bonus Plan is to provide Mr. L. Borick an
additional incentive to continue the extraordinary efforts, initiative and
judgment he has exercised on behalf of the Company and its shareholders by
establishing his yearly bonus on a specific formula basis. Under the CEO Bonus
Plan, the amount of Mr. L. Borick's annual bonus
16
will equal 2.0% of the Company's annual income before income taxes and before
deducting any annual awards under the CEO Bonus Plan or any other executive
incentive arrangements. However, if such annual income does not equal at least
90% of the planned level for the year, as approved by the Committee, the 2.0%
figure will be reduced to 1.8%, ranging down to 1.0% at 70% of the planned
level. In no event, however, will Mr. Borick's annual bonus under the CEO Bonus
Plan be less than 1.0% of annual income, as defined. As outlined in Proposal 2
in this proxy statement, the CEO Bonus Plan is being submitted to shareholders
for reaffirmance.
The Committee administers the CEO Bonus Plan and determines the amount
payable under it in accordance with its terms. The Committee has the right to
amend or terminate the CEO Bonus Plan at any time, but may not increase the
amount of bonus payable in excess of that provided for under the Plan formula.
The 2003 bonus paid to Mr. L. Borick pursuant to the CEO Bonus Plan was
$1,892,000.
Section 162(m) limits the deductibility by the Company of the annual
compensation paid over $1,000,000 to the Named Officers, unless such
compensation was "performance-based" as defined in Section 162(m). Historically,
the intent of the Committee has been that compensation paid under the CEO Bonus
Plan qualify as performance-based compensation under Section 162(m). The
Committee has recommended performance-based bonus plans for Mr. L. Borick (see
"Proposal 2" on page 13 of this proxy statement) and Mr. S. Borick (see
"Proposal 3" on page 14 of this proxy statement) for approval by the
shareholders with the intent that the compensation paid under such plans
continues to qualify as performance-based.
The overall amount of the bonus pool is approximately 6.8% of pre-tax
income. The bonus pool is utilized for all employee bonuses including the CEO
Bonus Plan. The determination as to the portion of the bonus pool awarded to
each executive, other than the CEO and the COO, is entirely subjective and
discretionary based on an evaluation of their performance and contribution for
the year. The Committee approved the establishment of the bonus pool and the
amount; and individual bonus awards, other than for the CEO and the COO, are
based on recommendations of the CEO and reviewed and approved by the Committee.
The stock option awards to each executive, as determined by the Stock
Option Committee, are determined subjectively based on an evaluation of their
performance and contribution to the Company and also take into account the
relative financial performance of the Company without regard to any specified
formula.
Base salaries are generally reviewed no sooner than every 12 months and
adjusted when deemed necessary. The last salary review for each of the Named
Officers is as follows: Mr. L. Borick (December 11, 1995), Mr. S. Borick
(January 1, 2004), Mr. Ornstein (March 4, 2003), Mr. Ferguson (March 4, 2003)
and Mr. O'Rourke (March 4, 2003).
FURNISHED BY THE COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS
Sheldon I. Ausman - Committee Chair
V. Bond Evans
Jack H. Parkinson
March 29, 2004
Common Stock Performance Graph
The following graph compares the five year cumulative total return of the
Company's common stock to that of the Dow Jones Equity Market Index and the Dow
Jones Automobile Parts and Equipment Excluding Tire and Rubber Makers Index.
17
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
[INSERT PERFORMANCE GRAPH]
Superior Industries Dow Jones Equity Market Dow Jones Industry Group
International, Inc. Index Index
------------------- ----------------------- ------------------------
1998 100.00 100.00 100.00
1999 116.42 122.72 102.59
2000 138.84 111.35 71.91
2001 179.34 98.08 97.99
2002 185.96 76.43 88.36
2003 198.03 99.92 125.66
----------
* Assumes that the value of the investment in Superior common stock and each
Index was $100 on December 31, 1998, and that all dividends were
reinvested.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Superior's
officers and directors, and persons who beneficially own more than 10% of a
registered class of Superior's equity securities, to file reports of beneficial
ownership and changes in beneficial ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than 10% beneficial owners are required by SEC regulation
to furnish Superior with copies of all Forms 3, 4 and 5 that they file. Based
solely on Superior's review of the copies of such forms it has received and
written representation from certain reporting persons confirming that they were
not required to file Forms 5 for specified fiscal years, Superior believes that
all its officers, directors and greater than 10% beneficial owners complied with
all filing requirements applicable to them with respect to transactions during
fiscal year 2003.
SHAREHOLDER PROPOSALS FOR THE 2005 ANNUAL MEETING OF SHAREHOLDERS
Shareholders who wish to present proposals for action complying with
appropriate SEC and proxy rules at the 2005 Annual Meeting of Shareholders must
give written notice thereof to the Secretary of the Company at 7800 Woodley
Avenue, Van Nuys, California 91406. SEC rules currently require that such notice
be given by December 13, 2004, in order to be included in the Company's Proxy
Statement and form of proxy relating to that meeting. With respect to proposals
to be brought before the shareholders at the 2005 Annual Meeting of
Shareholders, the Company must have notice of such proposals by February 26,
2005 or the Company's proxy for such meeting will confer discretionary authority
to vote for such matter.
ANNUAL REPORT TO SHAREHOLDER AND FORM 10-K
AND OTHER MATTERS
Management has selected PricewaterhouseCoopers LLP as the Company's
auditors for 2004. A representative of PricewaterhouseCoopers LLP is expected to
be present at the Annual Meeting and available to respond to appropriate
questions.
Management does not know of any matters to be presented to the Annual
Meeting other than those described above. However, if other matters properly
come before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote said proxy in accordance with their judgment on such
matters, and discretionary authority to do so is included in the proxy.
The Company's Annual Report to Shareholders, which was mailed to
shareholder with or preceding this Proxy Statement, contains financial and other
information about the Company, but is not incorporated into this Proxy Statement
and is not to be considered a part of these proxy soliciting materials or
subject to Regulation 14A or 14C or to the liabilities of Section 18 of the
Exchange Act. The information contained in the "Compensation Committee Report on
Executive Compensation," "The Audit Committee Report" and "Performance Graph"
shall not be deemed filed with the Securities and Exchange Commission or subject
to Regulations 14A or 14C
18
or to the liabilities of the Section 18 of the Exchange Act, and shall not be
incorporated by reference in any filing of the Company under the Securities Act
of 1933, as amended (the "1933 Act"), or the Exchange Act, whether made before
or after the date hereof and irrespective of any general incorporation language
in any such filing.
THE COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT TO
SHAREHOLDERS FOR 2003 AND ITS ANNUAL REPORT ON FORM 10-K INCLUDING THE FINANCIAL
STATEMENTS AND THE FINANCIAL STATEMENT SCHEDULES AND EXHIBITS, FILED WITH THE
SEC FOR FISCAL YEAR 2003 TO ANY BENEFICIAL OWNER OF SUPERIOR COMMON STOCK AS OF
THE RECORD DATE UPON WRITTEN REQUEST TO SUPERIOR INDUSTRIES INTERNATIONAL, INC.,
7800 Woodley Avenue, Van Nuys, California 91406 ATTENTION: COMPANY SECRETARY.
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
By: Louis L. Borick,
Chairman of the Board and Chief Executive Officer
APPENDIX A
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The Board of Directors (the "Board") of Superior Industries International, Inc.,
("Superior" or "the Company") previously established an Audit Committee. This
Restated Charter of the Audit Committee (the "Charter") restates the authority,
responsibilities and specific duties of the Company's Audit Committee (the
"Committee"). This Charter is to be reviewed, and if appropriate, approved by
the Board at least annually.
The purpose of the Committee shall be to assist Board oversight of the integrity
of the Company's financial statements, the Company's compliance with legal and
regulatory requirements, the independent auditor's qualifications and
independence and the performance of the Company's internal audit function and
independent auditors.
Primary responsibility for Superior's financial reporting and internal controls
is vested in Management. In performing its designated functions, described
herein, the Committee shall not assume or diminish Management's responsibility
for the content of the Company's financial statements or for other financial
information disseminated by the Company.
ORGANIZATION
A. Composition
The Committee shall be composed of three or more directors designated by
the Board. Whenever possible, the terms of the members of the Committee
should be staggered to enhance the continuity of the Committee. Each
member of the Committee shall be independent. To be independent, members
of the Committee must meet the following criteria:
o Committee members are barred from directly or indirectly accepting
any consulting, advisory, or other compensatory fee from the Company
or any of its subsidiaries, other than in the member's capacity as a
member of the board of directors and any board committee;
o Committee members may not be "affiliated persons" (as defined by
applicable SEC regulation) of the Company or any of its
subsidiaries, apart from his/her capacity as a member of the board
of directors or any board committee; and
o Committee members must meet the applicable independence requirements
of the New York Stock Exchange.
19
Each member of the Committee must be financially literate, as such
qualification is interpreted by the Board in its business judgement, or
must become financially literate within a reasonable period of time after
appointment to the Committee. At least one member of the Committee is to
have accounting or related financial management expertise as determined by
the Board in its business judgment. Committee members' backgrounds
should enable them to evaluate the information provided to them and ask
relevant questions, when appropriate, to facilitate their understanding of
such information. Each year, the Company shall disclose in its annual
report whether or not at least one member of the Audit Committee is an
"audit committee financial expert," as defined by SEC regulations.
B. Access and Resources
The Committee is to have unrestricted access to Superior's personnel and
records and to the Company's external auditors, shall have authority to
retain independent counsel and other advisers, and is to be given or have
available to it the resources necessary to discharge its responsibilities.
C. Meetings
The Committee is to meet on a regular basis, at least quarterly, and may
call additional meetings as required. Further, the Committee, at least
once during the year, shall hold separate executive sessions individually
with management, the internal auditors and the external auditors. A quorum
of the Committee shall consist of a simple majority.
D. Minutes
Minutes of each meeting are to be prepared and given to Committee members.
A permanent file of approved minutes is to be maintained by the individual
designated as secretary for the Committee.
E. Reporting to the Board
At least quarterly, the Committee shall report to the Board regarding its
activities. The Committee shall conduct and present to the Board an annual
performance evaluation of the Committee. The Committee shall also review
at least annually the adequacy of this Charter and recommend any proposed
changes to the Board for approval.
F. Indemnification
Each Committee member shall be indemnified by the Company to the maximum
extent permitted by California law, the Company's Certificate of
Incorporation, By-laws and resolutions of the Company's Board.
G. Compensation and Expense Reimbursement
The Committee shall be compensated for meeting attendance at a rate
determined by the Board. Travel and other out-of-pocket expenses incurred
by Committee members in connection with such meetings, shall be documented
and reimbursed by Superior in accordance with the Company's expense
reimbursement policies.
FUNCTIONS - EXTERNAL AUDIT MATTERS
A. Selection of External Auditors; Review Independence
The Audit Committee is responsible for the appointment, compensation,
retention, oversight, and termination of the registered public accounting
firm (including resolution of disagreements between management and the
auditor regarding financial reporting) engaged to prepare or issue an
audit report or other audit, review or attestation services. The auditor
will report directly to the Audit Committee in accordance with New York
Stock Exchange listing standards.
20
Periodically prior to completion of each annual audit, the Committee shall
obtain a formal written statement from the external auditors that
describes all relationships between the external auditors and the Company.
The Committee is responsible for engaging in an active dialogue with the
external auditors concerning any relationships or services disclosed in
the statement that may impact the objectivity or independence of the
outside auditors and for recommending that the Board take appropriate
action in response to the external auditors' statement necessary to
satisfy the Board of the external auditors' independence.
The Committee shall obtain and review at least annually a formal written
report from the external auditor describing its internal quality-control
procedures, any material issues raised by the most recent internal
quality-control review, or peer review, of the firm or by any inquiry or
investigation by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits carried
out by the firm, and any steps taken to deal with any such issues.
The Committee shall pre-approve all audit services and, subject to the de
minimus exception provided under Section 202 of the Sarbanes-Oxley Act,
all non-audit services by the Company's auditors and shall not engage the
Company's external auditors to perform non-audit services proscribed by
law or regulation. The Committee may delegate to any of its members the
authority to grant pre-approvals, provided that any such pre-approval
shall be presented to the full Committee at the next scheduled meeting.
All approvals by the Committee for allowed non-audit services to be
performed by the outside auditors shall be disclosed in the Company's
periodic reports filed with the Securities and Exchange Commission as
required by SEC regulations.
The Committee shall be responsible for review of the report of management
on the Company's internal controls over financial reporting made in
accordance with SEC regulations.
B. Review Annual Audit Plan
The Committee is to discuss with the Company's external auditors the
overall approach to, and scope of, the audit examination with particular
attention focused on those areas where any of the Committee, the Board,
Management or the external auditors believe special emphasis is desirable
or necessary. This review is to include a discussion of the effect of
significant changes in accounting principles, auditing standards and SEC
reporting requirements on the scope of the audit.
C. Review Results of the Annual Audit
The Committee is to review the results of the annual audit. The Committee
is to discuss the annual report on Form 10-K and other financial reports
prepared by Management (including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and Results
of Operations") filed with the SEC, the New York Stock Exchange or sent to
stockholders, and the results of the audit with the Company's external
auditors and Management.
The Company's external auditors shall communicate with the Committee as to
the critical policies and practices of the Company, all alternative
treatments of financial information within generally accepted accounting
principles that have been discussed with management, and all other
material written communications between the Company's external auditors
and management.
The Committee shall review management's disclosure as to the effectiveness
of disclosure controls and procedures, all significant deficiencies in the
design or operation of the internal controls, and any fraud, whether
material or not, involving management or other employees who have a
significant role in internal controls.
D. Review of Recommendations for Improvements
The Committee is to discuss with the external auditors their perception of
strengths and weaknesses in the system of internal controls including the
external auditors' recommendations for improvements and proposed timetable
for implementation.
E. Quarterly Reviews and Discussions
21
Prior to filing with the SEC, the Committee shall review interim financial
statements that have been reviewed by the Company's external auditors, and
discuss with Management and the external auditors the interim financial
information included in the Company's Form 10-Q.
The Committee shall review management's disclosure as to the effectiveness
of disclosure controls and procedures, all significant deficiencies in the
design or operation of the internal controls, and any fraud, whether
material or not, involving management or other employees who have a
significant role in internal controls.
F. Release of Material Financial Information
Prior to the public release of material financial information, the
Committee shall discuss directly with the external auditors the results of
their examination. Although not necessarily in advance, the Committee
shall also discuss the Company's earnings press releases, as well as
financial information and earnings guidance provided to analysts and
rating agencies.
G. Review Second Opinion Issues
The Committee is to be notified by Management whenever a second opinion is
sought from an independent public accountant.
H. Review Management Representation Letters
The Committee is to periodically review management representation letters
given to the external auditors and may inquire of (i) Management as to any
difficulties encountered in preparing the letter; and (ii) the external
auditors as to any difficulties encountered in obtaining the letter.
FUNCTIONS - FINANCIAL REPORTING MATTERS
A. Related Party and Major Transactions
The Committee is to review material transactions, contracts and other
agreements and their effects on the financial statements. In addition,
Management is to inform the Committee of all related party transactions,
including relationships and dollar volume (if applicable).
B. Status of Income and Other Tax Reserves and Significant Disputes with
Taxing Authorities
The Corporate Secretary and Treasurer or the Chief Financial Officer are
to report to the Committee on the status of all income and other tax
reserves and deferrals and will update the Committee about new or ongoing
disputes with taxing authorities.
C. Other Significant Reserves
The Committee is to inquire of Management as to the existence of and
reasons for any other significant accounting accruals, reserves or
estimates that have or may have a material impact on the financial
statements.
D. Accounting Policies and Policy Decisions
The Committee is to review any significant new accounting policies and
policy decisions and other significant reporting issues, such as
significant changes in accounting estimates made by Management and shall
be informed of the reasons for such policies and interpretations.
FUNCTIONS - INTERNAL AUDITING MATTERS
A. Personnel Decisions
22
The Committee is to review in advance, all personnel decisions regarding
the Audit Services Department including, but not limited to, hiring,
termination and compensation arrangements.
The Committee shall set clear hiring policies for employees or former
employees of the independent auditors that meet SEC regulations and New
York Stock Exchange listing standards.
B. Audit Services Functions
The Committee is to periodically review the functions and goals of the
Audit Services Department and may review its findings with Management.
Possible topics include:
o proposed audit programs and their relationships to the external
audit;
o proposed scope of any special projects or investigations;
o reports generated by the Audit Services Department, particularly as
they relate to the system of internal controls, including perceived
strengths and weaknesses, recommendations for improvement and
proposed timetable for implementation. Where appropriate, these
reviews may include members of Management so that the Committee can
better assess the quality of the reports and recommendations
prepared by Audit Services; and o at least annually, the Committee
is to review and if appropriate, approve the general goals set forth
by the Audit Services Department for the coming year. This review is
also to encompass the anticipated schedule of audits for the
upcoming year.
FUNCTIONS - OTHER MATTERS
A. Review of Regulatory Reports
The Committee is to review with Management all significant reports sent to
regulatory agencies, including all SEC reports.
B. Receipt of Complaints
The Committee shall establish procedures for (1) the receipt, retention,
and treatment of complaints received by the Company regarding accounting,
internal accounting controls, or auditing matters, and (2) the
confidential, anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
C. Notification of Management Fraud or Other Serious Breakdowns in Internal
Control
The Committee is to be informed immediately by Management or the Audit
Services Department, as appropriate, of any perceived, alleged or proven
Management fraud or other serious breakdowns in internal control. Upon
being informed by Management or the Audit Services Department of such a
situation, the Committee shall:
o inform the Board; and
o oversee and approve Management's response to the situation.
D. Report of Audit Committee
The Committee is to prepare the Committee report to be included in the
Company's annual proxy statement in accordance with SEC regulations.
E. Risk Assessment
23
The Committee shall review and discuss periodically the Company's policies
with respect to risk assessment and risk management.
F. New York Stock Exchange Information
The Committee is to review and if appropriate, approve the annual written
affirmation to be provided to the New York Stock Exchange, including the
following matters:
o any determination of the Board regarding the independence of members
of the Committee pursuant to the standards set forth in this
Charter;
o the annual review and assessment of the adequacy of this Charter;
and
o any other matter required by New York Stock Exchange listing
standards.
24
APPENDIX B
EXECUTIVE Annual Incentive Plan
This Executive Annual Incentive Plan ("Incentive Plan"), effective as of April
1, 2004 and first applying with respect to the fiscal year ending December 31,
2004, subject to shareholder approval at the 2004 Annual Meeting of Shareholders
as described below, is between Superior Industries International, Inc.
("Superior", or the "Company") and Steven J. Borick ("Employee"). This Incentive
Plan and the performance hereunder shall be interpreted under the substantive
laws of the State of California.
1. Plan Purpose
The purpose of this Incentive Plan is to promote the success of the Company by
providing to the Employee a performance-based bonus opportunity. This Incentive
Plan operates in conjunction with, and does not supercede or amend, that certain
Employment Agreement between the Company and Employee dated March 18, 2004 (the
"Employment Agreement").
2. Term
This Incentive Plan shall continue in place until the fifth anniversary of the
effective date, unless earlier terminated by the Board of Directors of the
Company as provided in Section 12 (such period being the "Term"). No awards
shall be paid under the Incentive Plan unless and until the material terms
(within the meaning of Section 162(m)(4)(C) of the Internal Revenue Code of
1986, as amended (including proposed, temporary and final regulations
promulgated thereunder from time to time, the "Code") of the Incentive Plan are
disclosed to the Company's shareholders and are approved by the shareholders by
a majority of votes cast in person or by proxy.
3. Compensation
Employee's total compensation consists of base salary, variable compensation (as
further defined in this Incentive Plan, and medical and other benefits generally
provided to similarly situated employees of the Company. Any compensation paid
to Employee shall be pursuant to the Company's policies and practices for exempt
employees and shall be subject to all applicable laws and requirements regarding
the withholding of federal, state, and/or local taxes. Except as provided in the
Employment Agreement, compensation provided in this Incentive Plan is full
payment for the services of Employee and Employee shall receive no additional
compensation for extraordinary services unless otherwise authorized in writing
by the Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee").
Base Salary
Pursuant to the Employment Agreement, Superior has agreed to pay Employee an
annual base salary of six hundred fifty thousand dollars ($650,000), less
applicable withholdings, payable in equal installments no less frequently than
semi-monthly.
Variable Compensation
Employee shall be eligible for variable compensation, subject to applicable
withholdings and subject to the terms and conditions of this Incentive Plan.
4. Executive Annual Incentive Plan Description
Commencing on January 1, 2004, and continuing each 12 months thereafter (each
such anniversary date is referred to as the "Annual Bonus Period"), during the
Term, Employee shall be eligible to receive an annual bonus (the "Performance
Bonus") of up to One Million Dollars ($1,000,000), less applicable withholdings.
The Performance Bonus (if any) will be based upon annual Company Earnings Per
Share ("EPS") achievement in comparison to a planned level of EPS. Payments of
the Performance Bonus (if any) shall be made net of all applicable withholdings
and within seventy-five (75) calendar days following the end of the plan year
(December 31). The determination of the planned level of EPS for each Annual
Bonus Period shall be made by the Compensation Committee in its sole discretion.
The determination of whether the planned level of EPS for each Annual Bonus
Period has been achieved shall be made by the Compensation Committee, in its
sole discretion.
5. Eligibility
Participation for this Incentive Plan is limited to the President/COO position.
Employee must be actively employed with Superior through the end of the plan
year to qualify for that year's payout. The last day worked is the last day
Employee is considered active. For each fiscal year of the Company, the
participant entitled to share in the benefits of the Incentive Plan is a person
who is an "executive officer" of the Company, as such term is defined in Rule
3b-7 under the Securities Exchange Act of 1934, as amended (or any successor
rule or regulation), or who is a "covered employee" of the Company under Section
162(m)(3) of the Code. An executive whose employment or service relationship
with the Company is terminated for any reason prior to the end of any fiscal
year of the Company will not be entitled to participate in the Incentive Plan or
receive any benefits with respect to any later fiscal year, unless he or she
again becomes eligible to participate in the Plan under the first sentence of
this Section 5.
6. Right to Receive Award
Employee must, in addition to the eligibility requirements of Section 5, receive
an overall performance evaluation equivalent to Superior's Level 3 (Fully
Competent) - or better to be eligible for an award. This plan shall not be a
guarantee of employment; employment may be terminated by either the Company or
Employee at any time and for any reason, subject to the terms and conditions of
the Employment Agreement. If Employee is terminated prior to the end of the plan
period for a reason other than death, disability or retirement (as noted in
Section 11), Employee shall not be entitled to any payment for that period.
7. Plan Metrics
The amount of EPS achieved in comparison to the planned level shall determine
all Performance Bonuses, if any. For illustrative purposes, the following
example is based upon a Plan Target EPS of $2.20 for an Annual Bonus Period. The
Performance Bonus will be calculated as a percentage of the Employee's base
salary as noted in Exhibit 1. For each subsequent Annual Bonus Period, the EPS
achievements listed under the column heading "EPS" in Exhibit 1 shall be
proportionately adjusted based on the planned level of EPS for each such Annual
Bonus Period. For purposes of plan calculation, the base salary effective date
will be January 1 of the Annual Bonus Period.
Exhibit 1 - Example of Incentive Plan Payout Levels
(Proportionately Adjusted Each Year For New EPS Target)
================================================================================================
% of Plan Target EPS % of Base Pay Maximum Bonus
------------------------------------------------------------------------------------------------
Below 50% $1.10 0% $0
------------------------------------------------------------------------------------------------
50% to 89% $1.98 90% $585,000
------------------------------------------------------------------------------------------------
90% to 100% $2.20 100% $650,000
------------------------------------------------------------------------------------------------
101% to 120% $3.39 154% $1,000,000
================================================================================================
There will be a performance threshold of 50% of planned target EPS. As such no
bonus will be earned if EPS is less than $1.10 per share. For performance
between 50% and 89% of the planned target, the incentive will be interpolated,
(or proportionately adjusted for different targets in later years) between 2.3%
and 87.8% of base salary based on plan achievement. For example, a performance
of 51% of Plan Target would equate to 2.3% of base pay, or $14,625. For each 1%
increment in percent of Plan Target, the Performance Bonus would increase by
$14,625, up to $585,000 at 89% of Plan Target.
EPS performance between 90% and 100% of planned target will result in target
payout of 100% of base salary. Performance between 101% and 120% of planned
target will be interpolated up to the plan cap of 154% of base pay, or
$1,000,000 based on plan achievement. For example, a performance of 101% of Plan
Target would equate to 102.7% of Base Pay, or $667,500. For each 1% increment in
percent of Plan Target, the Performance Bonus would increase by $17,500, up to a
maximum of $1,000,000 at 120% of Plan Target.
For bonus calculation purposes, EPS will be calculated by using the following
formula:
Net Income for the Annual Bonus Period (taking into account any adjustments
highlighted below)
26,700,000 (budgeted shares)
The Compensation Committee shall establish the number of budgeted shares, at the
same time it sets a planned level of EPS, in its sole discretion.
8. Discretion
The Compensation Committee has discretion to exclude from Net Income
extraordinary, non-recurring gains and losses in the judgment of the
Compensation Committee, such as gains or losses caused by a labor strike, loss
of business due to Force Majeure, or other factors. In addition, the EPS
calculation shall include the following adjustments:
> Budgeted shares shall be the weighted average common shares
outstanding plus the dilutive effect of the Company's outstanding
stock options.
> Executive Officer (as listed in the Company's Annual Report on Form
10-K) bonuses will be excluded from the net income calculation.
9. Bonus Provision
The Employee may receive a Performance Bonus only if the required EPS level is
attained in the applicable Annual Bonus Period. No bonus payment shall be made
under this Incentive Plan unless the Compensation Committee has certified, by
resolution or other appropriate action in writing, that the amount to be paid
has been accurately determined in accordance with the terms, conditions, and
limits of this Incentive Plan.
10. Annual Review of Plan
The Incentive Plan will be reviewed on an annual basis allowing for updates or
revisions to be considered.
11. Death, Disability, and Retirement
If Employee is terminated prior to the end of the Term period due to death,
disability or retirement as determined by the Board of Directors, the Employee
or the beneficiary's estate shall, after determination of EPS achieved for the
applicable Annual Bonus Period, be entitled to receive payment of a prorated
portion of the award for the year.
12. Discontinuance, Suspension, or Amendment of the Plan
The Company may discontinue the Incentive Plan at any time, suspend the
Incentive Plan at any time or for any interim, or amend the Incentive Plan in
any respect. In particular, but without limitation, the Board of Directors shall
have the authority to amend or modify the Incentive Plan from time to time in
order to reflect amendments to or regulations promulgated under Section 162(m)
of the Code. Notwithstanding the foregoing, in the event that any amendment or
other modification of or to the Plan would require stockholder approval in order
to continue the compliance of the Incentive Plan as a "performance-based" plan
under Section 162(m) of the Code, such amendment or modification shall be
contingent on the receipt of stockholder approval. However, no such action may:
> Cause Employee to be deprived of any bonus previously awarded but
not paid;
> Be effective in the fiscal year in which such action is taken unless
it is taken within the first three months of the fiscal year; or
> Increase any award determined in accordance with the Incentive Plan.
13. Administration of the Incentive Plan
The Incentive Plan shall be administered by the Compensation Committee of the
Board of Directors. Actions of the Compensation Committee with respect to the
administration of this Incentive Plan shall be taken pursuant to a majority vote
or by written consent of a majority of its members. The Compensation Committee
shall have the sole authority, subject to the provisions hereof, to construe and
interpret this Incentive Plan and any agreements defining the rights and
obligations of the Company and Employee under this Incentive Plan, further
define the terms used in his Incentive Plan, and, subject to Section 12 hereof,
prescribe, amend and rescind rules and regulations relating to the
administration of this Incentive Plan.
This Incentive Plan is intended to qualify as a "performance-based" plan as
described in Section 162(m)(4)(C) of the Code, and thereby secure the full
deductibility for federal income tax purposes of bonus compensation paid to
persons who are "executive officers" of the Company, or who are "covered
employees" of the Company or its subsidiary or affiliated corporations under
Section 162(m)(3) of the Code.
The Incentive Plan will be administered by the Compensation Committee of the
Company's Board of Directors consisting entirely of three or more persons who
are "outside directors" within the meaning of Section 162(m) of the Code. The
Compensation Committee is hereby vested with full powers of administration,
subject only to the provisions set forth herein. The Compensation Committee
shall report all actions taken by it to the Board of Directors.
14. Nonassignment
The interest of Employee in the Incentive Plan is not assignable either by
voluntary or involuntary assignment or operation of law (except that, in the
event of death, earned and unpaid amounts shall be payable to the legal
successor of an Employee).
15. Indemnification.
No employee, member of the Compensation Committee or director of the Company
will have any liability for any decision or action if made or done in good
faith, nor for any error or miscalculation unless such error or miscalculation
is the result of his or her fraud or deliberate disregard of any provisions of
the Incentive Plan. The Company will indemnify each director, member of the
Committee and any employee acting in good faith pursuant to this Incentive Plan
against any loss or expense arising therefrom.
16. Limitations; Participation in Other Plans.
This Incentive Plan is not to be construed as constituting a contract of
employment or for services. Nothing contained herein will affect or impair the
Company's right to terminate the employment or other contract for services of
Employee hereunder, or entitle Employee to receive any particular level of
compensation. The Company's obligation hereunder to make awards merely
constitutes the unsecured promise of the Company to make such awards from its
general assets, and Employee will have no interest in, or a lien or prior claim
upon, any property of the Company. Nothing herein nor the participation by
Employee shall limit the ability of Employee to participate in any other
compensatory plan or arrangement of the Company, or to receive a bonus from the
Company other than under this Plan.
The parties execute this Executive Annual Incentive Plan as of the date stated
above:
EMPLOYEE SUPERIOR INDUSTRIES INTERNATIONAL, INC.
By: By:
------------------------------- ------------------------------------
Name: Steven J. Borick Sheldon I. Ausman
Title: President and COO Chairman, Compensation Committee
NOTICE ADDRESS:
Superior Industries International, Inc.
7800 Woodley Avenue
Van Nuys CA 91406
REVOCABLE PROXY
SUPERIOR INDUSTRIES INTERNATIONAL, INC.
[_]PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS PROXY FOR ANNUAL
MEETING OF SHAREHOLDERS -- MAY 10, 2004
The undersigned hereby appoints R. JEFFREY ORNSTEIN and DANIEL L. LEVINE, and
each of them, the attorney, agent and proxy of the undersigned, with full power
of substitution, to vote all stock of SUPERIOR INDUSTRIES INTERNATIONAL, INC.,
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
of said corporation to be held at the Airtel Plaza Hotel, 7277 Valjean Avenue,
Van Nuys, California 91408 on Monday, May 10, 2004 at 10:00 A.M., and at any and
all postponements and adjournments thereof, as fully and with the same force and
effect as the undersigned might or could do if personally thereat.
With- For All
For hold Except
1. The election as directors. [ ] [ ] [ ]
Nominees: Sheldon I. Ausman V. Bond
Evans For Against Abstain
INSTRUCTION: To withhold authority to vote for any individual nominee, mark OFor
All ExceptO and write that nominee's name in the space provided below.
----------------------------------------
For Against Abstain
2. Reaffirmation of an Incentive Bonus [ ] [ ] [ ]
Plan for Lois L. Borick.
3. Approval of an Incentive Bonus Plan
for Steven J. Borick.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND
THE MEETING.
THE PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS INDICATED, THE
PROXY WILL BE VOTED FORTHE ELECTION OF ALL NOMINEES AS DIRECTORS AND FOR THE
APPROVAL OF PROPOS- ALS 2 AND 3.
THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY ON THE PROXIES TO VOTE AS TO ANY
OTHER MATTER THAT IS PROPERLY BROUGHT BEFORE THE ANNUAL MEETING THAT THE BOARD
OF DIRECTORS DID NOT HAVE NOTICE OF PRIOR TO FEBRUARY 24, 2004.
Please be sure to sign and
date this Proxy in the box below.
----------------------------------------
Date
----------------------------------------
Stockholder sign above
----------------------------------------
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
PLEASE ACT PROMPTLY SIGN, DATE & MAIL YOUR PROXY CARD TODAY SUPERIOR INDUSTRIES
INTERNATIONAL, INC.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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