SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Commission only (as permitted by
Rule 14a-6(e)(2).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
Tower Automotive, Inc.
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(Name of Registrant as Specified in Its Charter)
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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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TOWER AUTOMOTIVE, INC.
27175 HAGGERTY ROAD
NOVI, MICHIGAN 48377-3626
April 16, 2004
To Our Stockholders:
You are cordially invited to attend Tower Automotive, Inc.'s 2004 Annual
Meeting of Stockholders which will be held on May 20, 2004, at 1:00 p.m. local
time, at One Financial Place, 440 S. LaSalle Street, 2nd Floor Conference
Center, Chicago, Illinois 60605.
The official Notice of Meeting, Proxy Statement and Proxy are included with
this letter. The proposal listed in the Notice of Meeting is more fully
described in the Proxy Statement.
Whether or not you plan to attend the Meeting in person, and regardless of
the number of shares you own, please complete, sign, date and return the
enclosed card promptly in the enclosed envelope. This will ensure that your
shares are voted as you wish and that a quorum will be present.
Sincerely,
-s- S.A. Johnson
S. A. Johnson
Chairman of the Board
TOWER AUTOMOTIVE, INC.
NOTICE OF
2004 ANNUAL MEETING OF STOCKHOLDERS
TIME: 1:00 p.m. local time, May 20, 2004.
PLACE: One Financial Place, 440 S. LaSalle Street, 2nd Floor
Conference Center, Chicago, Illinois 60605.
PROPOSALS: (1) Election of nine directors;
(2) Amendment to the Tower Automotive, Inc. Colleague Stock
Discount Plan; and
to transact any other proper business.
RECORD DATE: Only holders of record at the close of business on April 6,
2004, are entitled to notice of and to vote on all proposals
presented at the meeting and at any adjournments or
postponements thereof. A list of such holders will be available
prior to the meeting at our corporate office, located at 27175
Haggerty Road, Novi, Michigan 48377-3626, for examination by
any stockholder for any purpose germane to the meeting.
By Order of the Board of Directors,
-s- James N. DeBoer
James N. DeBoer
Secretary
Dated: April 16, 2004
YOUR VOTE IS IMPORTANT!
TO VOTE YOUR SHARES, PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY
CARD.
TOWER AUTOMOTIVE, INC.
27175 HAGGERTY ROAD
NOVI, MICHIGAN 48377-3626
-------------------------
PROXY STATEMENT
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2004 ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 2004
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This Proxy Statement and accompanying Proxy are being furnished to our
holders of common stock in connection with the solicitation of Proxies on behalf
of our Board of Directors for the Annual Meeting of Stockholders (the "Annual
Meeting"), to be held on May 20, 2004, at 1:00 p.m. local time at One Financial
Place, 440 S. LaSalle Street, 2nd Floor Conference Center, Chicago, Illinois
60605, and at any adjournments and postponements thereof. These Proxy materials
are being mailed on or about April 16, 2004, to holders of record, on April 6,
2004, of our common stock.
When you sign and return the enclosed Proxy and if no direction is
indicated, your proxy will be voted FOR the slate of directors described below,
FOR the amendment to the Company's Colleague Stock Discount Plan and, as to any
other business as may properly be brought before the Annual Meeting and any
adjournments or postponements thereof, in the discretion of the Proxy holders.
Returning your completed Proxy will not prevent you from voting in person
at the Annual Meeting should you be present and wish to do so. In addition, you
may revoke your Proxy any time before it is voted, by written notice to our
Secretary prior to the Annual Meeting, or by submission of a later-dated Proxy,
or by the withdrawal of your Proxy and voting in person at the Annual Meeting.
On April 6, 2004, there were 57,341,805 shares of our common stock
outstanding. Each outstanding share of common stock entitles the holder thereof
to one vote per share. The presence in person or by Proxy of at least 51% of
such shares constitutes a quorum. Under Delaware law, abstentions are treated as
present and entitled to vote and therefore have the effect of a vote against a
matter. A broker non-vote on a matter is considered not entitled to vote on that
matter and therefore is not counted in determining whether a matter requiring
approval of a majority of the shares present and entitled to vote has been
approved. Votes cast at the meeting or submitted by Proxy will be counted by
inspectors of the meeting who will be appointed by us.
ELECTION OF DIRECTORS
Our Board of Directors is currently comprised of nine members. Our Board
has nominated and recommends the election of each of the nine nominees set forth
below as a director, to serve until the next annual meeting of stockholders or
until their successors are duly elected and qualified. Each of the nominees is
an incumbent director, previously elected by our stockholders, except for Ms.
Kathleen Ligocki, the Company's CEO, who was appointed to the Board on August
18, 2003, at the time of her election as CEO. Our Board of Directors expects all
nominees named below to be available for election. If any nominee is not
available, the Proxy holders may vote for a substitute unless the Board of
Directors reduces the number of directors.
Directors will be elected at the Annual Meeting by a plurality of the votes
cast at the meeting by the holders of shares represented in person or by Proxy.
Accordingly, the nine individuals who receive the greatest number of votes cast
by our stockholders will be elected as directors. There is no right to
cumulative voting on any matter.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
TO THE BOARD OF DIRECTORS.
The following sets forth information as to each nominee for election at the
Annual Meeting, including the nominee's age as of April 1, 2004, principal
occupation and employment for a minimum of the past five years, directorships in
other publicly held companies, and period of service as a director of Tower
Automotive.
S. A. (Tony) Johnson, 63, has served as Chairman and as a Director since
April 1993. Mr. Johnson is the founder of Hidden Creek Industries ("Hidden
Creek"), a private industrial management company based in Minneapolis which has
provided certain management and other services to Tower Automotive. Mr. Johnson
is also the Managing Partner of J2R Partners ("J2R"), an investment partnership
that participated in the acquisition of R. J. Tower Corporation. Prior to
forming Hidden Creek, Mr. Johnson served from 1985 to 1989 as Chief Operating
Officer of Pentair, Inc., a diversified industrial company. From 1981 to 1985,
Mr. Johnson was President and Chief Executive Officer of Onan Corp., a
diversified manufacturer of electrical generating equipment and engines for
commercial, defense and industrial markets. Mr. Johnson currently serves as a
director of Dura Automotive Systems, Inc., a manufacturer of mechanical
assemblies and integrated systems for the automotive industry, and served as
Chairman and a director of Automotive Industries Holding, Inc., a supplier of
automotive interior trim components, from May 1990 until its sale to Lear
Corporation in August 1995.
Anthony G. Fernandes, 58, has served as a Director since May 2003. Mr.
Fernandes was Chairman, Chief Executive Officer and President of Philip Services
Corporation, an industrial services and integrated metals recovery company, from
1999 to 2003. Prior to joining Philip Services, Mr. Fernandes worked at Atlantic
Richfield Company for more than 30 years, including from 1994 to 1999 as
Executive Vice President and director, and from 1987 to 1990 as Corporate
Controller. In addition, from 1997 to 1998, he was chairman of ARCO Chemical, a
publicly traded company owned 80% by Atlantic Richfield. Mr. Fernandes is a
director of Baker Hughes Corporation, Cytec Industries, Inc., and Black and
Veatch.
Juergen M. Geissinger, 44, has served as a Director since May 2000. Dr.
Geissinger has served as President and Chief Executive Officer of INA Holding
Schaeffler KG, a global manufacturer of bearings, linear guidance systems,
automotive transmissions and engine systems since November 1998. From 1992 to
October 1998, Dr. Geissinger served in various positions at ITT Automotive, most
recently as Senior Vice President, with responsibility for the Brakes and
Chassis Division worldwide.
Ali Jenab, 41, has served as a Director since January 2001. Mr. Jenab is
the President and Chief Executive Officer of VA Software Corporation. From
February 2001 until July 2003, he served as its Chief Operating Officer. From
August 2000 until February 2001, Mr. Jenab served as that company's Senior Vice
President and General Manager, Systems Division. From 1983 through August 2000,
Mr. Jenab held various positions at Amdahl Corporation, a provider of high-end
integrated computing solutions.
Kathleen Ligocki, 47, has served as our President and Chief Executive
Officer since August 18, 2003. Ms. Ligocki joined us from Ford Motor Company
where she had most recently served as a corporate officer and Vice President,
Ford Customer Service Division. During her five year tenure at Ford, Ms. Ligocki
held various other positions, including President and CEO, Ford of Mexico, Vice
President, North American Marketing, and Director, Business Strategy. From 1994
to 1998, Ms. Ligocki worked for United Technologies Corporation, initially at
Carrier Corporation, as the Director of Manufacturing and Purchasing in Paris,
France, subsequently at UT Automotive as the Vice President of Worldwide Sales
and as Vice President, Motors Division. Ms. Ligocki worked for General Motors
from 1979 to 1994 at Delco Electronics Corporation.
F. Joseph Loughrey, 54, has served as a Director since November 1994. Mr.
Loughrey joined Cummins, Inc. in 1974 and has served as President -- Engine
Business since October 1999. Before then, Mr. Loughrey served as Executive Vice
President and Group President -- Industrial and Chief Technical Officer from
1996 to 1999. Mr. Loughrey is also a director of Sauer-Danfoss, Inc., a
worldwide leader in the design, manufacture and sale of engineered hydraulic
systems and components.
James R. Lozelle, 58, has served as a Director since May 1994. Mr. Lozelle
served as Executive Vice President for Tower, with responsibility for our
operations in Milwaukee, Wisconsin and Roanoke, Virginia, from April 1997 to
January 1999. From the acquisition of Edgewood Tool and Manufacturing Company
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("Edgewood") in May 1994 until March 1997, Mr. Lozelle served at the Tower
Automotive Technical Centers, with responsibility for advanced product
development and customer service. Mr. Lozelle served as President of Edgewood
from 1982 until it was acquired by us.
Georgia R. Nelson, 54, has served as a director since May 2001. Ms. Nelson
has served as President of Midwest Generation EME, LLC, an Edison International
company since it was established in 1999 as a subsidiary of Edison Mission
Energy. Midwest Generation is a wholesale power generation company. Since
January 1, 2003, Ms. Nelson has served as General Manager of Edison Mission
Energy -- Americas, a global independent power operating, development and
trading company. From 1996 to 1999, Ms. Nelson was Senior Vice President of
Worldwide Operations and Division President of the Americas region of Edison
Mission Energy. From 1993 to 1996, she served as Senior Vice President of
Southern California Edison, a large U.S. electric utility.
Enrique Zambrano, 48, has served as a Director since December 1997. Mr.
Zambrano has served as Chief Executive Officer and a director of Proeza, S.A. de
C.V., a diversified international company that has operations primarily in the
automotive and citrus juice processing industries, since 1988. Mr. Zambrano is
also a director of IMSA, a steel processing company, SENDA, a leading regional
transportation company, XIGNUX, a Mexican private industrial conglomerate, and
ITESM, the largest private University in Mexico.
There are no family relationships between any of the directors, nominees,
or any of our executive officers.
CORPORATE GOVERNANCE AND BOARD MATTERS
CORPORATE GOVERNANCE GUIDELINES
For many years, our Board of Directors has been committed to sound and
effective corporate governance practices. This past year the Board documented
those practices by adopting our Corporate Governance Guidelines. These
Guidelines address director responsibilities, the composition of the Board,
periodic performance evaluations, stock ownership guidelines and other corporate
governance matters. Under our Guidelines, a substantial majority of the members
of our Board must qualify as independent under the rules established by the New
York Stock Exchange (NYSE) stock market on which our stock trades. Our
Guidelines also require the Board to have an audit committee, compensation
committee and a nominating and corporate governance committee, and that each
member of those committees qualify as a independent under the NYSE rules. Our
Corporate Governance Guidelines, as well as the charters of each of the
foregoing committees are available for review on our website at
www.towerautomotive.com.
CODE OF BUSINESS CONDUCT AND ETHICS AND CODE OF ETHICS FOR SENIOR FINANCIAL
OFFICERS
Our Board has also adopted a Code of Business Conduct and Ethics that
applies to all of our colleagues, officers and directors. In addition, our Board
adopted a Code of Ethics for Senior Financial Officers, which includes our
principal executive officer, principal financial officer and controller. Each of
these codes are posted on our website. Any changes to or waivers of either code
will be disclosed on our website.
DETERMINATION OF INDEPENDENCE OF BOARD MEMBERS
As required by our Corporate Governance Guidelines, our Board has
determined that each of the following directors qualifies as an "Independent
Director", as such term is defined in the NYSE listing standards, and that none
of those directors has a material relationship with Tower Automotive: Anthony
Fernandes, Juergen Geissinger, Ali Jenab, F. Joseph Loughrey, James Lozelle and
Georgia Nelson. The Board's determination was made as a result of its review of
completed individual questionnaires addressing the nature and extent of each
member's relationship with the Company and taking into consideration the
definition of "Independent Director" under the NYSE rules. Our Board also
determined that each member of the audit committee, compensation committee and
nominating and corporate governance committee meets the independence
requirements applicable to those committees as prescribed by the NYSE listing
standards,
3
and, as to the audit committee, the applicable rules of the Securities and
Exchange Commission. As required by our Corporate Governance Guidelines, the
Chairman of our Board is a non-executive chairman.
MEETING ATTENDANCE
Each of our directors is expected to attend all meetings of the Board,
applicable committee meetings, and our annual meeting of stockholders. Each of
our directors attended our 2003 annual stockholder meeting. During 2003, the
Board held seven meetings; each director attended at least 75% of the aggregate
number of meetings of our Board and Board committees on which they served.
Consistent with the requirements of our Guidelines, our Board met in executive
sessions, without the presence of management, following the conclusion of each
regularly scheduled Board meeting. These meetings were chaired by Mr. Loughrey,
who has been selected as the presiding director of our Board's executive
sessions.
COMMUNICATIONS WITH THE BOARD
Stockholders and other parties interested in communicating directly with
our presiding director or with non-management directors as a group may do so by
writing to Tower Automotive, Inc., attention Corporate Governance Officer, 27175
Haggerty Road, Novi, Michigan 48377-3626. The Corporate Governance Officer has
been directed to promptly forward all communications to the full Board or the
specific director indicated in the letter.
BOARD COMMITTEES
Our Board has four standing committees. They are as follows:
Executive Committee. The Executive Committee consists of S.A. Johnson
(Chairman) and Kathleen Ligocki. The Executive Committee has all the power and
authority vested in or retained by the Board of Directors, and may exercise such
power and authority in such manner as it shall deem for our best interest in all
cases in which specific direction shall not have been given by the Board of
Directors, and subject to any specific limitations imposed by law or a
resolution of the Board of Directors. The Executive Committee met four times
during the preceding fiscal year.
Compensation Committee. The Compensation Committee consists of F. Joseph
Loughrey (Chairman), Juergen M. Geissinger, Ali Jenab, and Georgia Nelson.
During the last fiscal year, the Compensation Committee made recommendations to
the Board of Directors with respect to salaries, compensation and benefits of
our directors and executive officers. The Compensation Committee met five times
during the preceding fiscal year.
Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee (formerly the Nominating Committee) consists of
Georgia Nelson (Chairperson), F. Joseph Loughrey, and James R. Lozelle and
Anthony Fernandes. This Committee is responsible for assisting the Board in
recommending qualifications and standards to serve as a director of our Company,
identifying and recommending individuals qualified to become one of our
directors and developing, recommending and reviewing corporate governance
standards and policies. This Committee met seven times last year.
Audit Committee. The Audit Committee consists of James R. Lozelle
(Chairman), Ali Jenab, and Anthony Fernandes. Mr. Fernandes is qualified as an
"audit committee financial expert" within the meaning of SEC regulations, and
the Board has determined that he has accounting and related financial management
expertise within the meaning of the NYSE listing standards. The primary function
of this Committee is to assist the Board by overseeing (1) the quality and
integrity of our accounting, auditing and reporting practices, (2) the
performance of our internal audit function and independent auditor, and (3) our
disclosure controls and system of internal controls regarding finance,
accounting, legal compliance, and ethics that management and the Board of
Directors have established. The Committee is also responsible to appoint the
independent public accountants to audit our financial statements. The full
responsibilities of the Committee are set forth in its Audit Committee Charter
(a copy of which is attached as Appendix A to this Proxy Statement), which
4
was amended and restated by the Board of Directors on February 18, 2004. The
Audit Committee met thirteen times during 2003.
On February 18, 2004, the Audit Committee submitted to the Board the
following report:
We have reviewed and discussed with management the Company's audited
financial statements as of and for the year ended December 31, 2003.
We have discussed with the independent auditors the matters required
to be discussed by Statement on Accounting Standards No. 61, Communication
with Audit Committees, as amended, by the Auditing Standards Board of the
American Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter
from the independent auditors required by Independence Standard No. 1,
Independence Discussions with Audit Committees, as amended, by the
Independence Standards Board, and have discussed with the auditors the
auditors' independence.
Based on the reviews and discussions referred to above, we recommend
to the Board of Directors that the financial statements referred to above
be included in the Company's Form 10-K Report for the year ended December
31, 2003.
In issuing this report, we note that management is responsible for the
Company's financial reporting process, including its systems of internal
control, and for the preparation of financial statements in accordance with
generally accepted accounting principles. The Company's independent
auditors are responsible for auditing those financial statements. Our
responsibility is to monitor and review these processes. It is not our duty
or our responsibility to conduct auditing or accounting reviews or
procedures. We have relied, without independent verification, on
management's representation that the financial statements have been
prepared in conformity with U.S. generally accepted accounting principles
and on the representations of the independent auditors included in their
report on the Company's financial statements. Our discussions with
management and the independent auditors do not assure that the financial
statements are presented in accordance with generally accepted accounting
principles, that the audit of our Company's financial statements has been
carried out in accordance with generally accepted auditing standards or
that the Company's independent accountants are in fact "independent."
James R. Lozelle (Chairman)
Ali Jenab
Anthony Fernandes
DIRECTOR NOMINATIONS
Our Bylaws contain certain procedural requirements applicable to
stockholder nominations of directors. Stockholders may nominate a person to
serve as a director if they provide written notice to us not later than sixty
and no more than ninety days prior to the first anniversary date of the
preceding year's annual meeting. The notice must include (1) the name and
address of the stockholder who intends to make the nomination and of the person
or persons nominated, (2) a representation that the stockholder is a current
record holder and will continue to hold those shares through the date of the
meeting and intends to appear in person or by proxy at the meeting, (3) a
description of all arrangements between the stockholder and each nominee, (4)
the information regarding each nominee as would be required to be included in a
proxy statement filed under Regulation 14A of the Exchange Act had the nominee
been nominated by the Board of Directors, and (5) the consent of each nominee to
serve as director.
Our governance committee is not currently utilizing the services of any
third party search firm to assist in the identification or evaluation of board
member candidates. However, the committee has in the past, and may in the
future, use the services of such a firm as it deems necessary or appropriate.
Our governance committee is responsible for reviewing the qualifications
and independence of the members of the Board. However, it has not established
specific, minimum qualifications for director nominees.
5
This Committee does assess the skills, experience and background of
prospective candidates. In light of these general requirements, our governance
committee reviews the suitability of each person nominated to our Board. In the
past, through the board evaluation process, the Committee has determined whether
there were any skills or experience that needed to be added to the Board and
used that information to help establish criteria for Board member searches and
candidate evaluation.
The committee has not received any recommended nominations from any of our
stockholders in connection with our 2004 annual meeting. The nominees who are
standing for election as directors at the 2004 annual meeting are incumbent
directors recommended by the committee and nominated by the Board.
COMPENSATION OF DIRECTORS
For service in 2003, our nonemployee directors ("Outside Directors") each
received an annual retainer of $75,000. Board compensation for 2004 will remain
at the sum level. The Chairman of the Board's Audit Committee receives
additional compensation in the amount of $10,000, and the Chairman of the
Board's Compensation Committee and the Chairman of the Board's Nominating and
Corporate Governance Committee each receive additional compensation in the
amount of $5,000. No additional fees are paid to directors for attendance at
Board meetings. All, none, or a portion of the retainer, but in increments of
not less than 25%, may be deferred under our Director Deferred Stock Purchase
Plan. Deferred amounts are payable only in shares of our common stock. In
addition, we paid Mr. Johnson an annual fee of $200,000 for his services as
Chairman of the Board, and reimbursed him approximately $63,000 for office and
travel expenses.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our officers, directors, and persons who beneficially own more than 10% of a
registered class of our equity securities, to file reports of securities
ownership and changes in such ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors, and greater than 10% beneficial
owners also are required by rules promulgated by the SEC to furnish us with
copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to us, or
written representations that no Form 5 filings were required, we believe that
during the period from January 1, 2003, through December 31, 2003, all Section
16(a) filing requirements applicable to our officers, directors, and greater
than 10% beneficial owners were complied with, except for (1) one late report
each by directors Fernandes, Geissinger, Jenab, Johnson, Nelson, and Zambrano,
relating to the acquisition of deferred stock units in lieu of director fees
under our Director Deferred Stock Purchase Plan, (2) one late report each by Mr.
Pitser covering the grant of an employee stock option and stock grant under our
Long-Term Incentive Plan, and by Ms. Johnston, Mr. Zarate, Mr. Vincent Pairet,
Mr. Richard Burgess, and Mr. Daniel Webber covering the grant of employee stock
options and stock grants under our Long-Term Incentive Plan and the acquisition
of deferred stock units in lieu of compensation under our Key Leadership
Deferred Income Stock Purchase Plan.
PROPOSAL TO APPROVE THE AMENDMENT TO THE TOWER AUTOMOTIVE, INC.
COLLEAGUE STOCK DISCOUNT PURCHASE PLAN
In 1994, our Board adopted, and our stockholders approved, the Tower
Automotive, Inc. Colleague Stock Discount Purchase Plan (the "Plan"). The Plan
allows our colleagues to purchase shares of our stock at a discount from
prevailing market prices.
A total of 1,400,000 shares is currently reserved for issuance under the
Plan. As of March 31, 2004, we did not have any shares of our common stock
available for future purchases under this Plan. Our Board has approved an
amendment to the Plan, subject to stockholder approval, to make an additional
400,000 shares available for purchase under the Plan. At the Annual Meeting, our
stockholders are being requested to consider and approve this amendment. The
following summarizes the material features of the Plan, as amended and restated.
6
Description of the Plan. All of our active colleagues, except certain
part-time colleagues, are eligible to participate in the Plan on the first day
of any Plan Quarter following employment with us. A Plan Quarter begins on the
first day of each calendar quarter and ends on the last day of that quarter. No
colleague is entitled to purchase shares of common stock under the Plan if he or
she is, or would be, after the purchase, the holder of five percent (5%) or more
of our total voting power.
The Plan allows eligible colleagues to purchase shares of our stock at
price equal to eighty-five percent (85%) of the lower of (a) the closing price
of our common stock on the first day of the Plan Quarter, or (b) the last day of
that Plan Quarter, during which money was contributed to the Plan. Colleagues
who have elected to participate in the Plan may contribute a minimum of $10 per
week, and a maximum of $12,000 in market value of the Company's stock (the
"Maximum Amount"), to purchase shares under the Plan. Purchases of shares are
made within 30 days after the end of each Plan Quarter.
A participant may terminate participation in the Plan at any time by giving
written notice to us. Shares purchased under the plan after January 1, 1997,
must be held for at least two years from the date of purchase before resale is
authorized, except for shares distributed upon termination of employment. Rights
under the Plan are nontransferrable. Any termination of employment, including
death and retirement, terminates participation. Our Board has the right to
terminate the Plan at any time as of the end of any Plan Quarter.
Summary of Federal Income Tax Consequences. The Plan is intended to be a
qualified "Employee Stock Purchase Plan," as defined in Section 423 of the Code.
The following paragraph summarizes the consequences of the acquisition and
disposition of shares of our common stock for federal income tax purposes, based
on management's understanding of existing federal income tax laws.
Funds contributed by colleagues through payroll deductions are a part of
current compensation taxable as ordinary income, although not actually received
by colleagues. As of the purchase date, on the last business day of each Plan
Quarter, a participating colleague will be considered to have been granted an
option to purchase shares and to have simultaneously exercised that option with
respect to the shares purchased on that date.
If the colleague does not dispose of such shares for a period of two (2)
years after the date of the grant of the option (the "Holding Period"), upon
subsequent disposition of the shares upon death, the colleague will realize
compensation, taxable as ordinary income, equal to the lesser of (a) the amount
by which the fair market value of the shares at the time of disposition or death
exceeds the option exercise price, or (b) the amount by which the fair market
value of the shares at the time the option was granted exceeded the option
exercise price. If (b) is the lesser amount, the difference between the fair
market value of the shares at the time of disposition or death and the fair
market value of the shares at the time the option was granted will be taxed as a
capital gain. If the Holding Period requirement described above is not met, the
amount to be treated as compensation on disposition of the shares by the
colleague is the difference between the option exercise price and the fair
market value of the shares at the time the option is exercised. In the event the
Holding Period requirement is not met, we will be entitled to a deduction for
federal income tax purposes equal to the amount recognized as compensation by
the colleague. In all other events, we will not be entitled to any deduction for
federal income tax purposes with respect to shares to an employee pursuant to
exercise of an option granted under the Plan.
7
Participation in the Plan. The following table sets forth the number of
shares purchased under the Plan during 2003 by each of (i) our Named Executive
Officers, (ii) all executive officers as a group, and (iii) all colleagues,
including all officers who are not currently executive officers, as a group.
Non-employee directors are not eligible to participate in the Plan.
NUMBER OF SHARES
PURCHASED UNDER THE
NAME AND PRINCIPAL POSITION PLAN IN 2003
--------------------------- -------------------
Kathleen Ligocki, President and Chief Executive Officer..... -0-
Tom G. Pitser, Vice President............................... 5,818
Jim Arnold(1)............................................... -0-
Kathy Johnston, Vice President.............................. -0-
Antonio Zarate, Vice President.............................. -0-
Dug Campbell, Former President and Chief Executive
Officer................................................... -0-
All executive officers as a group........................... 5,818
All employees, including all officers who are not executive
officers, as a group...................................... 172,801
-------------------------
(1) Mr. Arnold's employment with the Company terminated as of December 31, 2003.
Required Vote for Approval. The affirmative vote of a majority of our
Common Stock voted at the Annual Meeting, by person or by proxy, is required to
approve the Amendment. While broker nonvotes will not be treated as votes cast
on the approval of and Amendment, shares voted as abstentions will be counted as
votes cast. Since a majority of the votes cast is required for approval, the sum
of any negative votes and abstentions will necessitate offsetting affirmative
votes to assure approval. Unless otherwise directed by marking the accompanying
proxy, the proxy holders named therein will vote for the approval of the
Amendment.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PROPOSED
AMENDMENT.
INDEPENDENT PUBLIC ACCOUNTANTS
On June 20, 2002, our Board of Directors, with the unanimous recommendation
of our Audit Committee dismissed Arthur Andersen LLP ("Andersen") as our
independent public accountants. The audit reports of Andersen on our
consolidated financial statements for the fiscal year ended December 31, 2001
did not contain any adverse opinion or disclaimer of opinion, nor were they
qualified or modified as to uncertainty, audit scope or accounting principles.
During our fiscal year ended December 31, 2001, and through the date of
Andersen's dismissal (a) there were no disagreements with Andersen on any matter
of accounting principle or practice, financial statement disclosure, or auditing
scope or procedure which, if not resolved to Andersen's satisfaction, would have
caused Andersen to make reference to the subject matter of such disagreement in
connection with Andersen's report on our consolidated financial statements for
such years; and (b) there were no reportable events as listed in Item
304(a)(1)(v) of Regulation S-K.
We provided Andersen with a copy of the foregoing disclosures, and Andersen
in turn provided a letter, dated June 20, 2002, stating its agreement with such
statements.
Also on June 20, 2002, our Board of Directors, with the unanimous
recommendation of our Audit Committee, appointed Deloitte & Touche LLP, as our
independent public accountant for our fiscal year ended December 31, 2002.
During fiscal 2001, and through the date we appointed Deloitte & Touche LLP as
our accountant, neither us nor anyone acting on our behalf consulted Deloitte &
Touche LLP with respect to the application of accounting principles to a
specified transaction, either completed or proposed, or the type of audit
opinion that might be rendered on our consolidated financial statements, or any
other matters or reportable events listed in Item 304(a)(2)(ii) of Regulation
S-K.
8
We have appointed Deloitte & Touche LLP, as independent public accountants,
to audit our consolidated financial statements for the year ending December 31,
2004, and to perform other appropriate and permitted services as directed by our
management and the Board of Directors. Representatives of Deloitte & Touche LLP
will be present at the annual meeting with the opportunity to make a statement
if they desire and will be available to respond to questions following the
conclusion of the meeting.
DISCLOSURE OF FEES PAID TO INDEPENDENT AUDITORS
Aggregate fees billed to us for the fiscal years ended December 31, 2003
and 2002 by our principal accounting firm, Deloitte & Touche LLP, the member
firms of Deloitte Touche Tohmatsu, and their respective affiliates
(collectively, the "Deloitte Entities"), were as follows:
2003 2002
---- ----
1. Audit Fees............................................... $1,556,006 $1,072,250
2. Audit Related Fees(a).................................... 125,462 62,029
3. Tax Fees(b).............................................. 821,645 953,737
4. All Other Fees........................................... 0 0
-------------------------
(a) Includes fees for (1) financial accounting and reporting consultations on
proposed transactions, and (2) advisory and internal accounting
control-related services related to the implementation of Section 404 of
the Sarbanes-Oxley Act.
(b) Consists primarily of fees paid for tax compliance and tax planning
services. It includes services regarding sales and use, property and other
tax return assistance, assistance with tax return filings in certain
foreign jurisdictions, assistance with tax audits and appeals, preparation
of expatriate tax returns, and general U.S. and foreign tax advice.
Our Audit Committee adopted a policy regarding the approval of audit and
permissible non-audit services provided by our independent auditor. A copy of
that policy is available on our website. The policy requires specific approval
by the committee of audit, audit related and other permissible services. The
policy authorizes the Committee to delegate to one or more of its members
pre-approval authority with respect to permitted services.
OTHER BUSINESS
At the date of this Proxy Statement, we have no knowledge of any business
other than that described above that will be presented at the Annual Meeting. If
any other business should properly be brought before the Annual Meeting and any
adjournments or postponements of the meeting, the Proxies will be voted in the
discretion of the proxy holders.
9
OWNERSHIP OF TOWER AUTOMOTIVE COMMON STOCK
Unless otherwise noted, the following table sets forth certain information
regarding ownership of common stock as of April 1, 2004, by (i) the beneficial
owners of more than 5% of our common stock, (ii) each director, director
nominee, and named executive officer, and (iii) all of our directors and
executive officers as a group. To our knowledge, each of such stockholders has
sole voting and investment power as to the shares shown unless otherwise noted.
Beneficial ownership of the common stock listed in the table has been determined
in accordance with the applicable rules and regulations promulgated under the
Securities Exchange Act of 1934.
BENEFICIAL OWNERSHIP OF
COMMON STOCK(1)
------------------------
NUMBER OF PERCENT OF
DIRECTORS, OFFICERS AND 5% STOCKHOLDERS SHARES CLASS
--------------------------------------- --------- ----------
Kathleen Ligocki............................................ 100,000 *
Tom G. Pitser(2)............................................ 181,752 *
Jim Arnold(3)............................................... 36,108 *
Kathy Johnston.............................................. 135,221 *
Antonio Zarate(2)........................................... 47,485 *
Anthony G. Fernandes........................................ 27,855 *
Juergen M. Geissinger(2).................................... 21,895 *
Ali Jenab(2)................................................ 14,727 *
S. A. Johnson(2)............................................ 351,247 *
F. Joseph Loughrey(2)....................................... 82,298 *
James R. Lozelle(2)......................................... 314,371 *
Georgia Nelson(2)........................................... 47,585 *
Enrique Zambrano(2)......................................... 44,335 *
Dugald Campbell(4).......................................... 931,570 1.6%
Barclays Global Investors NA(5)............................. 3,640,555 6.3%
Dimensional Fund Advisors, Inc.(6).......................... 3,830,000 6.7%
FMR Corp(7)................................................. 5,678,700 9.9%
State of Wisconsin Investment Board(8)...................... 2,425,000 4.2%
Strong Capital Management, Inc.(9).......................... 3,088,845 5.4%
All Directors and executive officers as a group (19
persons).................................................. 2,633,335 4.6%
-------------------------
* Less than one percent.
(1) The number of shares includes shares that may be purchased under options
that are exercisable in 60 days. The percent of class is calculated based on
the number of shares outstanding plus such option shares.
(2) Includes the following number of shares issuable as deferred compensation
for the following individuals: Mr. Pitser -- 4,885; Mr. Arnold -- 36,108;
Ms. Johnston -- 32,337; Mr. Zarate -- 17,484; Mr. Fernandes -- 27,855; Dr.
Geissinger -- 14,255; Mr. Jenab -- 10,691; Mr. Johnson -- 35,637; Mr.
Loughrey -- 17,298; Mr. Lozelle -- 1,946; Ms. Nelson -- 47,545; Mr.
Zambrano -- 35,637; and Mr. Campbell -- 454,890.
(3) Mr. Arnold's employment with the Company terminated as of December 31, 2003.
(4) Mr. Campbell resigned as our CEO on August 18, 2003. Includes 256,861 shares
held in trusts, of which Mr. Campbell or his wife are the trustees. Mr.
Campbell disclaims beneficial ownership of the shares held in trust.
(5) Barclays Global Investors, NA, on behalf of itself and its affiliates
reported as of February 13, 2004, sole voting and dispositive power with
respect to 3,439,579 shares of Common Stock. The address for Barclays Global
Investors, NA is 45 Fremont Street, San Francisco, California 94105.
(6) Dimensional Fund Advisors, Inc. reported as of February 6, 2004, sole voting
and dispositive power with respect to 3,830,000 shares of Common Stock. The
address for Dimensional Fund Advisors, Inc. is 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401.
(7) FMR Corp reported as of March 10, 2004, sole dispositive power with respect
to 5,678,700 shares of Common Stock. The address for FMR Corp is 82
Devonshire Street, Boston, Massachusetts 02109.
(8) The State of Wisconsin Investment Board reported as of February 16, 2004,
sole voting and dispositive power with respect to 2,425,000 shares of Common
Stock. The address of the Board is P.O. Box 7842, Madison, Wisconsin 53707.
10
(9) Strong Capital Management, Inc. reported as of February 16, 2004, shared
voting and shared dispositive power with respect to 3,088,845 shares of
Common Stock. The address of Strong Capital Management, Inc. is 100 Heritage
Reserve, Menominee Falls, Wisconsin 53051.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation packages for the years ended
December 31, 2003, 2002, and 2001 for the persons who served as our chief
executive officer during 2003 and the four other most highly compensated
executive officers (the "Named Executive Officers").
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------- ----------------------------------
RESTRICTED
OTHER ANNUAL STOCK OPTIONS ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS GRANTED LTIP COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($) ($) (#)(3) PAYOUTS(4) ($)(5)
------------------ ---- ------ ------ ------------ ---------- ------- ---------- ------------
Kathleen Ligocki............. 2003 $291,667 $ 0 $ 0 $395,000(7) 0 0 $ 681
President and Chief 2002 0 0 0 0 0 0 0
Executive Officer(6) 2001 0 0 0 0 0 0 0
Tom G. Pitser................ 2003 $332,968 $ 0 $ 78,666 $ 22,120(8) 17,500 79,160 $ 21,199
Vice President 2002 271,667 205,000 0 0 35,000 56,527 20,372
2001 256,873 161,250 0 0 22,000 0 7,835
Jim Arnold................... 2003 $287,500 $ 0 $ 15,742 $ 18,960(8) 15,000 37,500 $ 19,897
Vice President(9) 2002 264,583 139,500 0 0 30,000 0 883
2001 273,150 250,000 21,140 0 22,000 0 10,668
Kathy Johnston............... 2003 $255,000 $ 0 $ 14,802 $ 15,800(8) 12,500 25,000 $ 17,690
Vice President 2002 244,375 124,500 0 0 20,000 0 18,589
2001 240,450 130,000 0 0 15,000 0 10,569
Antonio Zarate............... 2003 $312,994 $ 0 $ 0 $ 18,960(8) 15,000 0 $145,297
Vice President 2002 262,917 184,000 0 0 30,000 0 162,926
2001 260,000 200,000 0 0 22,000 0 145,297
Dugald K. Campbell(10)....... 2003 $790,000 $ 0 $392,005 $104,280(8) 82,500 349,558 $ 63,668
2002 697,917 735,885 0 0 165,000 0 62,442
2001 637,083 805,000 0 0 165,700 0 19,124
-------------------------
(1) Includes amounts deferred by employees under our 401(k) employee savings
plan, pursuant to Section 401(k) of the Internal Revenue Code.
(2) Represents amounts earned under our annual bonus plan, but excludes amounts
foregone at the election of the Named Executive Officer and payable in
shares of our Common Stock under our Key Leadership Deferred Income Stock
Purchase Plan ("DISPP"), as reported in the Long-Term Incentive Plan table.
(3) The options vest ratably over four years commencing with the first
anniversary of the grant date.
(4) Represents payout for performance under the Long-Term Performance Cash Plan
for the 2001-2002 period, but excludes amounts earned but deferred under
our DISPP, payable solely in shares of our Common Stock. Fifty percent of
any bonus for that period is payable in 2003, and the balance is payable in
2004. Also includes the value of our shares of Common Stock distributed
under our DISPP, based upon the fair market value of our Common Stock on
the date of distribution.
11
(5) The amounts disclosed in this column include: (a) amounts contributed to
our 401(k) plan and supplement retirement plan, and (b) dollar value of
premiums paid by us for term life insurance on behalf of the named
executive officers as follows:
2003 2002 2001
---- ---- ----
K. Ligocki.................................................. (a) $ 0 $ 0 $ 0
(b) 681 0 0
T. Pitser................................................... (a) $ 20,200 $ 19,467 $ 6,800
(b) 999 905 1,035
J. Arnold................................................... (a) $ 18,940 $ 0 $ 9,717
(b) 957 883 951
K. Johnston................................................. (a) $ 16,840 $ 17,775 $ 9,600
(b) 850 814 969
A. Zarate................................................... (a) $137,000 $137,000 $137,000
(b) 8,297 25,926 8,297
D. Campbell................................................. (a) $ 61,035 $ 60,117 $ 16,700
(b) 2,633 2,325 2,424
(6) Ms. Ligocki became our CEO on August 18, 2003.
(7) Represents the grant of 100,000 shares of our Common Stock to Ms. Ligocki
under our Long Term Incentive Plan, based upon the fair market value of our
stock ($3.95) on August 18, 2003, the date of grant. The shares vest at the
rate of 50% of the shares granted on the first and second anniversary of
the grant date. As of December 31, 2003, the value of Ms. Ligocki's
restricted stock was $683,000, based upon the fair market value of our
stock on that date ($6.83). Holders of restricted stock grants are entitled
to vote the shares and to receive dividends thereon prior to the date of
vesting.
(8) Represents the grant of 7,000, 6,000, 5,000, 6,000, and 33,000 shares of
restricted stock to Mr. Pitser, Mr. Arnold, Ms. Johnston, Mr. Zarate, and
Mr. Campbell, respectively, under our Long Term Incentive Plan. Subject to
certain pro rata vesting due to termination for death, disability, and
retirement, the shares vest on the third anniversary of the grant date. As
of December 31, 2003, the value of the restricted shares owned by the
foregoing executives was $47,810, $40,980, $34,150, $40,980, and $255,390,
respectively, based upon the value of our stock on that date ($6.83).
Holders of restricted stock are entitled to vote the shares and to receive
dividends thereon prior to the date of vesting.
(9) Mr. Arnold's employment with the Company terminated as of December 31,
2003.
(10) Mr. Campbell resigned as our CEO on August 18, 2003.
OPTION GRANT TABLE
The following table shows all grants of options to acquire shares of our
common stock to the Named Executive Officers under the Stock Option Plan during
the last fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES % OF TOTAL ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(2)
GRANTED EMPLOYEES IN PRICE EXPIRATION ------------------------------
NAME (#)(1) FISCAL YEAR (PER SHARE) DATE 5% 10%
---- ---------- ------------ ----------- ---------- -- ---
K. Ligocki.............. -0- -- -- -- -- --
T. Pitser............... 17,500 3.09% $3.16 05/22/13 $ 34,778 $ 88,134
J. Arnold............... 15,000 2.65% $3.16 05/22/13 $ 29,810 $ 75,543
K. Johnston............. 12,500 2.21% $3.16 05/22/13 $ 24,841 $ 62,953
A. Zarate............... 15,000 2.65% $3.16 05/22/13 $ 29,810 $ 75,543
D. Campbell............. 82,500 14.58% $3.16 05/22/13 $163,953 $415,489
-------------------------
(1) These options vest ratably over four years commencing one year from the date
of grant.
(2) Amounts reflect certain assumed rates of appreciation set forth in the
executive compensation disclosure rules of the Securities and Exchange
Commission. Actual gains, if any, on stock option exercises depend on future
performance of our common stock and overall stock market conditions. No
assurances can be made that the amounts reflected in these columns will be
achieved.
12
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information on the exercise of stock options
during 2003 by the Named Executive Officers and the aggregate number and value
of unexercised options held by each Named Executive Officer, as of December 31,
2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION VALUES
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY
YEAR-END(#) OPTIONS YEAR-END($)
SHARES ------------- --------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ------------- -------------
K. Ligocki........................... -0- -0- 0/0 0/0
T. Pitser............................ -0- -0- 90,250/49,250 0/55,300
J. Arnold............................ -0- -0- 34,750/0 0/0
K. Johnston.......................... -0- -0- 61,250/46,250 0/39,500
A. Zarate............................ -0- -0- 72,750/59,250 0/47,400
D. Campbell.......................... -0- -0- 0/82,500 0/260,700
LONG-TERM INCENTIVE PLAN
The following table provides information on the number of restricted stock
units credited to the Named Executive Officers as the result of the deferral of
amounts otherwise payable in 2003 for bonuses earned in 2002.
NUMBER OF SHARES, PERFORMANCE OR OTHER
UNITS OR OTHER PERIOD UNTIL MATURATION
NAME RIGHTS(#)(1) OR PAYOUT
---- ----------------- -----------------------
K. Ligocki............................................... -0- --
T. Pitser................................................ -0- --
J. Arnold................................................ 24,960 (2)
K. Johnston.............................................. 19,762 (2)
A. Zarate................................................ 11,271 (2)
D. Campbell.............................................. 400,802 (2)
-------------------------
(1) Represents the number of units credited to a colleague's account under the
terms of our Key Leadership Deferred Income Stock Purchase Plan (the "DISP
Plan"). Under the terms of the DISP Plan, participants may elect to defer
all or a portion (but not less than 25%) of their cash bonus payment earned
under either our annual bonus program or our long-term bonus program.
Deferred amounts are credited in stock units, based on the value of our
stock as of the end of the month in which the bonus would have been paid to
the colleague. Stock units are payable only in shares of our common stock.
(2) Under the terms of the DISP Plan, the number of restricted stock units
credited to a participant's basic account is required to equal the amount of
the deferred bonus, divided by the value of a share of our Common Stock on
the last day of the month in which the cash bonus would otherwise be paid.
In addition, participants are concurrently credited with additional stock
units to a separate Premium Account equal to one-third of the number of the
restricted stock units credited to his or her basic account. Restricted
stock units credited to this Premium Account do not vest until the 15th day
of December of the second plan year following the year the units are
credited to a participant's account, provided that the participant is then a
colleague of the Company. The DISP Plan allows for accelerated vesting in
the event of a participant's death, disability, retirement or termination
during a period of 24 months following a change in control of the Company.
13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This Compensation Committee report shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that we specifically
incorporate this information by reference, and shall not otherwise be deemed
filed under such Acts.
The following has been submitted by the Compensation Committee:
GENERAL EXECUTIVE OFFICER COMPENSATION POLICIES
The Compensation Committee, which was established in connection with Tower
Automotive's initial public offering of Common Stock in August 1994, is
responsible for developing and recommending executive compensation policies to
the Board of Directors. The Compensation Committee believes that executive
compensation should be related to performance relative to the industry and to
creating long-term value for stockholders. The executive officer compensation
program has been designed to attract and retain highly qualified and motivated
colleagues and to reward superior performance.
The combination of both cash compensation (salary and bonus) and
equity-based compensation are intended to encourage and reward near-term
objectives, such as financial performance, and long-term goals, such as
continuous improvement in customer and colleague satisfaction, and the growth
and prosperity of the Company and its stockholders.
Salary and Bonus
In general, the base salaries of our executive officers are established at
market rates with appropriate adjustments for experience and performance. Each
year, to ascertain market rates, the Committee reviews compensation data
prepared by outside consultants, which consists of cash and equity compensation
paid to executive officers by a peer group of durable goods manufacturing
companies many of which are suppliers to the automotive industry. To provide
performance incentives annual cash bonus awards are payable based on performance
compared to certain predetermined goals established and approved by the Board of
Directors.
The annual bonus program is intended to provide incentives and reward
performance based on achievement of predetermined annual goals. For 2003, the
Committee established a target for each executive officer expressed as a
percentage of his or her salary, to be achieved by meeting predetermined goals
measured by the Company's return on invested capital ("ROIC"). ROIC is defined
as operating income as a percentage of average quarterly invested capital for
the year. The bonus is payable only if the minimum financial performance target
is achieved, which in 2003 was a ROIC of 6.0%. The bonus is also subject to
adjustment for individual performance, based upon predetermined leadership
development objectives, individual performance and other special circumstances.
For 2003, the Company's ROIC was below the minimum performance level of 6.0%,
and no bonus was earned by or paid to the executive officers.
Long-Term Incentive Plan
The long-term incentive plan is intended to provide incentive, reward
performance and create shareholder value. It is a multi-year plan comprised of a
Long-Term Performance Cash Plan and equity incentives.
The performance period under the current plan is two years, which began
January 1, 2003 and will end December 31, 2004 (the "2003-2004 Plan").
Performance under the Performance Cash Plan during this period is based upon the
achievement of predetermined targets measured against an internal scale of ROIC,
calculated as Operating Income as a percent of Invested Capital, weighted at
40%, and against an external scale comparing the Company's ROIC performance with
the ROIC performance of the Company's peer group, weighted at 60%. Operating
Income is defined as sales, less cost of sales, selling, general and
administrative expense, and amortization at the business unit level. Invested
Capital, the average of quarterly invested capital during the performance
period, is defined as total assets, except cash, less certain current
liabilities (such as accounts payable, accrued expenses and property taxes).
14
Fifty percent of any awards earned by participants under the 2003-2004 Plan
will be paid in 2005. The balance will be held by the Company in an interest
account and is subject to forfeiture. The balance is not payable to a
participant unless the colleague continues to be employed by the Company until
the date in 2006 when the payment is made. Amounts which become payable may be
paid in cash, installments or deferred either under the Company's Key Leadership
Deferred Income Stock Purchase Plan or the Supplemental Retirement Plan.
The long-term equity incentives issued pursuant to the 2003-2004 plan
consist of stock option and restricted share awards under the Tower Automotive,
Inc. Long-Term Incentive Plan, a plan approved by stockholders in 1999 and
administered by the Committee. Under this Plan, options are granted at an
exercise price equal to the price of Company stock on the date the options are
granted.
The Committee believes that equity awards align management's long-term
interests with stockholder interests. The Committee also believes the equity
awards are a cost effective method of providing key management with long-term
compensation. The Committee approves the colleagues who participate in the Plan,
based upon recommendations by the Chairman of the Board of Directors and the
Chief Executive Officer. The Committee determines the number of option shares
and restricted shares to be granted to each colleague based upon market survey
data, individual performance, and responsibility.
In May 2003, the existing nine executive officers were granted stock
options for an aggregate of 205,000 shares and were issued an aggregate of
82,000 shares of restricted stock. Restricted shares were issued at the rate of
one share per each 2.5 option shares. As contemplated by the 2003-2004 Plan, the
Committee intends to consider the grant of equity awards to executive officers
at its meeting in May 2004.
The income tax laws of the United States limit the amount the Company may
deduct for compensation paid to the Company's Named Executive Officers. Certain
compensation that qualifies as "performance-based" under IRS guidelines is not
subject to this limit. Stock options granted and restricted shares under the
Company's stock option plan, as well as the amounts earned under our Performance
Cash Plan, are designed to qualify as performance-based compensation, thereby
permitting the Company to deduct the related expenses. To maintain flexibility
in compensating executive officers in a manner that best incents our leaders,
the Committee has not adopted a policy that all compensation must be deductible.
However, the Compensation Committee will continue to work to structure
components of its executive compensation to achieve the maximum deductibility
under the Internal Revenue Code in a manner consistent with its compensation
goals and the Company's values.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Dugald Campbell stepped down as Chief Executive Officer of the Company
on August 18, 2003. He agreed to continue as an employee with transitioning and
consulting responsibilities until June 30, 2004, at which time he will retire.
His base salary of $790,000 per year, established at the market median in
October 2002, will continue until his retirement. In May 2003, Mr. Campbell was
awarded a stock option for 82,500 shares of Company common stock and 33,000
shares of restricted stock. No bonus was paid to Mr. Campbell for his services
in 2003.
Ms. Kathleen Ligocki succeeded Mr. Campbell as Chief Executive Officer on
August 18, 2003. Her salary was established at the annual rate of $700,000,
which was slightly below market median. For 2003, she did not participate in the
Company's annual incentive bonus plan, but rather will be paid $250,000 as of
the time she would have received a bonus from her former employer (Ford Motor
Co.). To compensate for the value of an award of restricted shares to her by
Ford Motor Co., which would have vested in December 2003, Ms. Ligocki was
awarded 100,000 shares of restricted shares of the Company. The restrictions on
such shares will lapse 50% after one year and 50% after two years from the date
she was hired by the Company.
Ms. Ligocki was also offered a Change in Control Agreement, comparable to
those offered to other executive officers, providing a cash payout of three
times salary if she becomes entitled to a payout under the terms of the
Agreement. In addition, Ms. Ligocki's agreement provides that if her employment
is terminated within three years from date of hire for any reason other than
"cause," she will receive a severance equal to
15
one year of base salary plus an annual bonus equal to her target award under the
annual incentive plan. Neither Ms. Ligocki nor any of the other executive
officers have an employment agreement with the Company.
The foregoing report has been approved by all members of the Compensation
Committee.
Compensation Committee:
F. Joseph Loughrey, Chair
Juergen M. Geissinger
Ali Jenab
Georgia Nelson
CHANGE IN CONTROL AGREEMENTS
We have entered into Change in Control Agreements with certain of our key
colleagues, including our Named Executive Officers. These agreements provide
severance benefits if an individual's employment is terminated within thirty-six
months after change in control, or within six months before change in control.
For purposes of these agreements, a "change in control" is any occurrence of
nature that is reportable as such in a proxy statement under applicable rules of
the SEC, and would include, without limitation, the acquisition of the actual
ownership of 20% or more of our voting securities by any person, certain changes
in the composition of our Board of Directors, or a merger and consolidation in
which we are not the surviving entity, or our sale or liquidation.
Benefits under these Agreements are not payable if we terminate an
individual's employment for cause, if employment terminates due to the
individual's death or disability, or the individual resigns without "good
reason." A colleague may resign with "good reason" after change in control and
retain benefits if we reduce the individual's salary or bonus, assign duties in
consistent with the colleague's prior position, or make other material, adverse
changes in the terms or conditions of the colleague's employment. The agreements
are on self-renewing terms of one year each, unless we take action to terminate
further extensions at least six months prior to the annual expiration date.
These agreements provide severance benefits of up to three year's salary and
bonus and a continuation of benefits for up to three years.
RETIREMENT AGREEMENT
Effective August 18, 2003, Dug Campbell, our prior President and Chief
Executive Officer resigned as such. In recognition of his prior contributions
and our desire to ensure his continued consulting services, we entered into a
Retirement Agreement that obligates us to make certain payments during the three
year Advisory Period. At the time of the execution of the Agreement, we granted
Mr. Campbell 400,802 stock units under our Key Leadership Deferred Stock
Purchase Plan. We are obligated to pay Mr. Campbell $400,000 for the years 2005
and 2006, and to continue Mr. Campbell in our health plan until he reaches the
age of 65.
Mr. Campbell's benefits under our other plans will be determined as of the
actual date of his retirement with us, which is effective June 30, 2004. Among
other obligations, Mr. Campbell was required to surrender and forfeit options
providing for the purchase of up to 530,700 shares of our common stock.
16
PERFORMANCE GRAPH
The following graph compares our cumulative total stockholder return since
December 31, 1998, with the Standard & Poor's 500 Index and with the OEM
Automotive Supplier Composite Index. The OEM Automotive Supplier Composite Index
consists of the following: Amcast Industrial Corporation, Autoliv, Inc.,
ArvinMeritor, Inc., American Axle & Manufacturing Holdings, Borg-Warner
Automotive, Inc., Collins & Aikman Corporation, Dana Corporation, Decoma
International Inc., Delphi Automotive Systems, Dura Automotive Systems, Inc.,
Eaton Corporation, Gentex Corporation, Hayes Lemmerz International, Inc., Intier
Automotive, Inc., Intermet Corporation, Johnson Controls, Inc., Lear
Corporation, Magna International Inc., Methode Electronics, Inc., Modine
Manufacturing Company, Shiloh Industries, Inc., Stoneridge, Inc., STRATTEC
Security Corporation, Superior Industries International, Inc., Tesma
International, Inc., and Visteon Corporation. The comparison is based on the
assumption that $100.00 was invested on December 31, 1998, in each of the common
stocks, the Standard & Poor's 500 Index ("S&P 500 Index"), and the OEM
Automotive Supplier Composite Index with dividends reinvested.
COMPARISON OF TOTAL RETURN AMONG STANDARD & POOR'S 500 INDEX, OEM
AUTOMOTIVE SUPPLIER COMPOSITE INDEX AND TOWER AUTOMOTIVE, INC.
(PERFORMANCE GRAPH)
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-----------------------------------------------------------------------------------
TWR $100 $ 61.90 $ 36.09 $ 36.21 $ 18.05 $ 27.39
OEM Suppliers $100 97.84 75.43 110.12 107.90 176.49
S&P 500 $100 119.53 107.41 93.40 71.57 90.46
OTHER COMPENSATORY AGREEMENTS
S.A. Johnson serves as Chairman of Hidden Creek Industries. During 2003, we
made payments to Hidden Creek Industries for certain acquisition related
assistance, such as initiating contacts, due diligence, financing, contract
negotiation and modeling, and for various other management services, totaling
approximately $800,000.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 2005 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Annual Meeting in
2005 must be received by our secretary at 27175 Haggerty Road, Novi, Michigan
48377-3626, not later than December 17, 2004, to be considered for inclusion in
our 2005 Proxy materials. As of April 16, 2004, no proposals to be presented at
the 2004 Annual Meeting had been received by us. If we receive notice of a
stockholder proposal after March 2, 2004, the persons named as proxies for the
2004 Annual Meeting of Stockholders will have discretionary voting authority to
vote on that proposal at that meeting.
17
ADDITIONAL INFORMATION
This solicitation is being made by us. We will bear all expenses in
connection with this solicitation. We will request brokerage firms, nominees,
custodians and fiduciaries to forward Proxy materials to the beneficial owners
of shares held of record by such persons, and will reimburse such persons and
our transfer agent for their reasonable out-of-pocket expenses in forwarding
such materials.
We will furnish without charge to each person whose Proxy is being
solicited, upon the written request of any such person, a copy of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2003, as filed with
the SEC, including the financial statements. Requests for copies of such Annual
Report on Form 10-K should be directed to: Tower Automotive, Inc., 27175
Haggerty Road, Novi, Michigan 48377-3626.
PLEASE COMPLETE THE ENCLOSED PROXY AND MAIL IT IN THE ENCLOSED POSTAGE-PAID
ENVELOPE AS SOON AS POSSIBLE.
By Order of the Board of Directors,
-s- James N. DeBoer
James N. DeBoer
Secretary
Dated: April 16, 2004
18
APPENDIX A
TOWER AUTOMOTIVE, INC.
AMENDED AND RESTATED CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
(AS AMENDED THROUGH FEBRUARY 18, 2004)
I. PURPOSE
The primary function of the Audit Committee is to assist the Board by
overseeing (1) the quality and integrity of the Company's accounting, auditing
and reporting practices, (2) the performance of the Company's internal audit
function and independent auditor, and (3) the Company's disclosure controls and
system of internal controls regarding finance, accounting, legal compliance, and
ethics that management and the Board of Directors have established.
The Audit Committee shall provide an open avenue of communication among the
independent accountants, financial and senior management, the internal auditor
and the Board of Directors.
II. MEMBERSHIP
A. Independence -- The Audit Committee shall be comprised of three or more
members, each of whom (1) must qualify as an independent director under the
listing standards of the New York Stock Exchange and Section 301 of the
Sarbanes-Oxley Act, and (2) shall be free from any relationship to the Company
that, in the opinion of the Board, would interfere with the exercise of his or
her independent judgment as a member of the Committee. All members of the
Committee shall have a working familiarity with basic financial and accounting
practices and at least one member of the Committee shall be a "financial expert"
in compliance with the criteria established by the Securities and Exchange
Commission.
B. Appointment -- The members shall be nominated by the Nominating and
Corporate Governance Committee and appointed annually to one-year terms by the
Board. The Nominating and Corporate Governance Committee shall recommend, and
the Board shall designate, one member of the Audit Committee as Chair.
C. Limitations -- A member of the Audit Committee shall not simultaneously
serve on the audit committee of more than two other public companies.
III. MEETINGS
Meetings of the Audit Committee shall be subject to the Committee procedure
rules set forth in the Company's Bylaws, rules established by the Board, and its
own rules of procedure, which shall be consistent with those Bylaws and the
following:
A. The Audit Committee shall meet at least four (4) times annually and
more frequently as circumstances require. Each regularly scheduled meeting
of the Committee shall conclude with an executive session of the Committee,
absent members of management and on such terms and conditions as the
Committee may elect. In addition, the Committee will meet periodically with
management, the head of the Company's internal auditing department and the
independent auditors in separate executive sessions to discuss any matters
that the Audit Committee or the internal audit department or independent
auditors believe should be discussed privately.
B. Following each of its meetings, the Audit Committee shall deliver a
report on the meeting to the Board, including a description of all actions
taken by the Audit Committee.
C. The Audit Committee shall keep written minutes of its meetings,
which minutes shall be maintained with the books and records of the
Company.
A-1
IV. RESPONSIBILITIES, DUTIES AND AUTHORITY
The Audit Committee shall have the following responsibilities, duties and
authority:
A. Document and Report
1. Review and update this Charter periodically or as conditions
dictate (at least, annually).
2. Review the Company's annual financial statements and any reports
or other financial information submitted to any governmental body or to
the public, including any report issued by the independent accountants.
3. Review the summary report of the internal auditor and
management's response to such reports.
4. Recommend to the Board whether the financial statements should
be included in the Annual Report on Form 10-K.
5. Review with financial management and the independent auditors
the quarterly report on Form 10-Q prior to its filing.
6 Review earnings press releases with management prior to
dissemination.
7. Discuss with management financial information and earnings
guidance provided to analysts and rating agencies.
B. Independent Accountants
1. Appoint, approve the compensation of, and provide oversight of
the Company's independent auditor, including the removal of the
Company's independent auditors. The independent auditors shall report
directly to the Committee, and the Committee shall oversee the
resolution of any disagreements between management and the independent
auditors.
2. On an annual basis, (a) review and evaluate the qualifications
and performance of the independent auditors, and (b) review and discuss
with the independent auditors all significant relationships the auditors
have with the Company to determine the auditors' objectivity and
independence, undertaking or recommending appropriate action to ensure
and continue that independence.
3. Administer the Company's Policy Regarding the Approval of Audit
and Nonaudit Services Provided by the Independent Auditor.
4. Review the independent auditors' attestation and report on
management's internal control report and hold timely discussions with
the independent auditors regarding:
(a) All critical accounting policies and practices;
(b) All significant alternative treatments of financial
information within generally accepted accounting principles that have
been discussed with management, ramifications of the use of such
alternative disclosures and treatments, and the treatment preferred
by the independent auditor;
(c) Other material written communications between the
independent auditor and management including, but not limited to,
management letter and schedule of unadjusted differences; and
(d) An analysis of the auditor's judgment as to the quality of
the Company's accounting principles, setting forth significant
reporting issues and judgments made in connection with the
preparation of the financial statements.
A-2
5. At least annually, obtain and review a report by the independent
auditor describing:
(a) The firm's internal quality control procedures;
(b) Any material issues raised by the most recent internal
quality-control review, peer review 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; and
(c) All relationships between the independent auditor and the
Company.
6. Approve the hiring, by the Company, of any current employees or
partners of the independent auditor or any person who was an employee or
partner of the independent auditor during the three-year period
preceding the proposed first date of employment by the Company.
C. Financial Reporting Processes
1. Review the integrity of the Company's financial reporting
process, both internal and external, giving consideration to
consultation with management, the independent accountants and the
internal auditor.
2. Consider and approve, as appropriate, major changes to the
Company's auditing and accounting principles and practices as suggested
by the independent accountants, management or the internal auditor.
3. Review and approve all related party transactions.
4. Establish and maintain procedures for the receipt, retention and
treatment of complaints regarding accounting, or auditing matters,
including procedures necessary to receive and respond to confidential
and anonymous submissions by Company colleagues regarding questionable
accounting or auditing matters.
D. Internal Audit
1. Review activities, organizational structure and qualifications
of the Company's internal audit department.
2. Periodically review the head of the Company's internal audit
department and any significant difficulties, disagreements with
management or scope restrictions encountered in the course of that
department's work.
E. Ethical and Legal Compliance
1. Review the Tower Automotive, Inc.'s Mission, Vision, Values,
Goals, and Compliance Policies, including its Code of Business Conduct
and Ethics, approved by the Board of Directors, to ensure that
management has maintained a system to comply with expected ethical and
legal requirements.
2. Review, with the Company's counsel, legal compliance matters
including corporate securities trading policies.
3. Review, with the Company's counsel, any legal matter that could
have a significant impact on the Company's financial statements.
4. Discuss the Company's major financial and accounting risk
exposures and steps taken by management to control or mitigate those
exposures.
F. Other
1. Review with the independent auditors, the internal auditing
department and management the extent to which changes or improvement in
financial or accounting practices, as approved by the Audit Committee,
have been implemented.
A-3
2. Prepare the report that the SEC requires to be included in the
Company's annual Proxy Statement.
3. Perform an annual self-assessment relative to the Audit
Committee's purpose, duties and responsibilities set forth in this
Charter.
4. To the extent it deems appropriate, and with or without full
Board approval, obtain advice and assistance from outside legal,
accounting or other advisors as deemed appropriate to perform its duties
and responsibilities.
5. Perform any other activities consistent with this Charter, the
Company's Bylaws and governing law, as the Audit Committee or the Board
of Directors deems necessary or appropriate.
A-4
TOWER AUTOMOTIVE, INC.
ANNUAL MEETING OF STOCKHOLDERS
Thursday, May 20, 2004 at 1:00 PM, C.D.T.
One Financial Place
440 S. LaSalle Street
2nd Floor Conference Center
Chicago, Illinois 60605
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DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
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TOWER AUTOMOTIVE, INC. PROXY/VOTING INSTRUCTION CARD
=======================================================================
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING ON MAY 20, 2004.
R
The undersigned hereby appoints S.A. Johnson and Kathleen Ligocki, or
O either of them, proxies for the undersigned, each with full power of
substitution, to attend the Annual Meeting of Stockholders of Tower
X Automotive, Inc. to be held on May 20, 2004 at 1:00 p.m., Central Time,
and at any adjournments thereof, and to vote as specified in this Proxy
Y all the shares of stock of the Company which the undersigned would be
entitled to vote if personally present.
Your vote with respect to the election of Directors and the other
proposal may be indicated on the reverse. Nominees for Directors are:
S.A. Johnson, Kathleen Ligocki, A.G. Fernandes, J.M. Geissinger, Ali
Jenab, Joe Loughrey, J.R. Lozelle, G.R. Nelson, E. Zambrano.
YOUR VOTE IS IMPORTANT! PLEASE SIGN AND DATE ON THE REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
=======================================================================
Comments
---------------------------------------------------------------
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(IF YOU HAVE WRITTEN IN THE ABOVE SPACE, PLEASE MARK THE "COMMENTS"
BOX ON THE REVERSE OF THIS CARD.)
-----------
SEE REVERSE
SIDE
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TOWER AUTOMOTIVE, INC.
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8024
EDISON, NJ 68818-8024
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
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1887
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF DIRECTORS, AND FOR THE AMENDMENT TO THE REFERENCED PLAN.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS AND FOR THE APPROVAL OF THE PROPOSED PLAN AMENDMENT.
FOR AGAINST ABSTAIN
1. Election of Directors: 2. Amendment to the Company's Colleague Stock Discount [ ] [ ] [ ]
(see reverse) Plan
FOR WITHHELD
[ ] [ ] 3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
[ ]
--------------------------------------
For, except vote withheld from the Change of
above nominee(s) I plan to attend the Annual Meeting Address/Comments on
reverse side
YES NO
[ ] [ ] [ ]
Signature: Date: Signature: Date:
-------------------------------- --------------- --------------------------------- ----------------
Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee, guardian, officer, general partner, etc., please give full title as such.