(3) |
These numbers include shares over which the
listed person is legally entitled to share voting or dispositive power
by reason of joint ownership, trust or other contract or property right,
and shares held by spouses, children or other relatives over whom the listed
person may have substantial influence by reason of relationship. |
- -4-
BOARD OF DIRECTORS
The Company's Board of Directors currently consists of nine directors,
three of whom are standing for reelection. The Board of Directors is divided
into three classes, with each class as nearly equal in number as possible.
Each class of directors serves a successive three-year term.
Biographical information concerning the Company's directors and nominees
who are nominated for election to the Board of Directors is presented below.
Except as otherwise indicated, all directors and nominees for director
have had the same principal employment for over five years.
Nominees for Election as Directors to Terms Expiring in 2003
John E. Sztykiel (age 43) has been a director since 1988.
Mr. John Sztykiel has been President and Chief Operating Officer of the
Company since December 1992. Mr. John Sztykiel previously served as the
Executive Vice President and Vice President of Sales of the Company from
1989 to 1990. From 1985 to 1989, Mr. John Sztykiel was the Director of
Marketing-Diversified Products Group of the Company. Mr. John Sztykiel
is the son of Mr. George Sztykiel, Chairman of the Board, Chief Executive
Officer and a director of the Company.
Charles E. Nihart (age 63) has been a director since 1984.
Mr. Nihart, a certified public accountant consultant, established the certified
public accounting firm of Nihart and Nihart, P.C., in 1972. The Lansing
offices of Nihart and Nihart merged with Maner, Costerison and Ellis, P.C.,
C.P.A. on January 1, 1989. Mr. Nihart is currently affiliated with the
firm on a consulting basis. Mr. Nihart also is the owner and President
of AARO Rentals, Inc., in Lansing, Michigan, a rental company of heavy
duty equipment in Lansing, Michigan.
James C. Penman (age 42) has been a director since March
1997. Mr. Penman has served as Director of Corporate Finance with Roney
& Co., a regional investment banking firm, since April 1993. From April
1993 until April 1995, Mr. Penman was a Senior Vice President of Investment
Banking with First of Michigan Corporation.
Directors with Terms Expiring in 2001
Anthony G. Sommer (age 41) has been a director since 1988.
Mr. Sommer has been the Executive Vice President of the Company since December
1992. Mr. Sommer previously served as Chief Financial Officer of the Company
from December 1992 until October 1996. From 1987 to December 1992 Mr. Sommer
served as Corporate Secretary/Treasurer of the Company and, from 1982 to
1987, as Controller of the Company.
George Tesseris (age 68) has been a director since 1984.
Mr. Tesseris has been a practicing partner with the law firm of Tesseris
and Crown, P.C., since 1981. From 1972 to 1981, Mr. Tesseris was a partner
in the law firm of Church, Wyble, Kritselis and Tesseris.
David R. Wilson (age 64) has been a director since 1996.
Mr. Wilson is an independent consultant to the automotive and commercial
vehicle industry. From 1982 to 1993, Mr. Wilson was Vice President of Volvo
GM Heavy Duty Truck Corporation and from 1979 to 1982, Mr. Wilson served
as general manager of field operations for Mercedes Benz of North America.
- -5-
Directors with Terms Expiring in 2002
George W. Sztykiel (age 70) has been a director since
1975. Mr. George Sztykiel is a founder of the Company and has served as
Chairman of the Board and Chief Executive Officer of the Company since
December 1992. Mr. George Sztykiel served as President of the Company from
September 1975 to December 1992. Mr. George Sztykiel is the father of Mr.
John Sztykiel, President, Chief Operating Officer and a director of the
Company.
William F. Foster (age 58) has been a director since 1978.
Mr. Foster, a firefighter for over 34 years, is a founder of the Company
and has served as Staff Engineer and Vice President since 1976. From 1965
to 1975, Mr. Foster served as a designer draftsman for Diamond Reo Trucks,
Inc.
Richard J. Schalter (age 46) has been a director since
August 12, 1999. Mr. Schalter, a certified public accountant, has served
as Secretary, Treasurer and Chief Financial Officer since November 1996.
From June 1989 until November 1996, Mr. Schalter served as Treasurer and
Director of Finance and Administration of Great Lakes Hybrids, an international
distributor and subsidiary of KWS a.g. From March 1986 to June 1989, Mr.
Schalter served as Treasurer and financial administrator for Martin Systems,
Inc., a worldwide supplier of electrical controls and machine operating
systems.
BOARD MEETINGS AND COMMITTEES
The Company's Board of Directors held five meetings during 1999. Each
director attended at least 75% of the aggregate of (a) the total number
of Board of Directors meetings and (b) the total number of meetings held
by all committees of the Board of Directors on which each served (during
the periods that each served).
The Board of Directors has the following standing committees:
Audit Committee. The Audit Committee is responsible for
the following activities: (a) recommending to the Board of Directors the
selection of independent auditors; (b) reviewing and approving the scope
of the yearly audit plan and proposed budget for audit fees; (c) reviewing
the results of the annual audit with the independent auditors; (d) reviewing
the Company's internal controls with the independent auditors; (e) reviewing
non-audit services and special engagements to be performed by independent
auditors; and (f) reporting to the Board of Directors on the Audit Committee's
activities and findings and making recommendations to the Board of Directors
on these findings. Messrs. Nihart (Chairman), Tesseris and Penman are members
of the Audit Committee. The Audit Committee met twice during 1999.
Compensation Committee. The responsibilities of the Compensation
Committee include: (a) recommending the cash and other incentive compensation,
if any, to be paid to the Company's executive officers; (b) reviewing and
making recommendations to the Board of Directors regarding stock options
awarded under the 1994 Incentive Stock Option Plan, the 1988 Nonqualified
Stock Option Plan and the Stock Option and Restricted Stock Plan of 1998;
and (c) reviewing all material proposed option plan changes. The Compensation
Committee determines the key employees to whom options will be granted,
the number of shares covered by each option, the exercise price of each
option and other matters associated with option awards. Messrs. Tesseris
(Chairman), Nihart and Penman are members of the Compensation Committee.
The Compensation Committee met once during 1999.
The Board of Directors does not have a standing nominating committee.
The Company will consider nominees for election to the Board of Directors
submitted by shareholders. The Company's Bylaws provide that any shareholder
entitled to vote generally in the election of directors may nominate one
or
- -6-
more persons for election as directors at a meeting only if written
notice of such shareholder's intent to make such nomination or nominations
has been given to the Secretary of the Company not less than 120 days before
the date of notice of the meeting in the case of an annual meeting, and
not more than seven days following the date of notice of the meeting in
the case of a special meeting. Each such notice to the Secretary shall
set forth: (a) the name, age, business address and residence address of
each nominee proposed in the notice; (b) the principal occupation or employment
of each nominee; (c) the number of shares of capital stock of the Company
which are beneficially owned by each nominee; (d) a statement that the
nominee is willing to be nominated; and (e) such other information concerning
each nominee as would be required under the rules of the Securities and
Exchange Commission in a proxy statement soliciting proxies for the election
of such nominees.
COMPENSATION OF DIRECTORS
Directors receive a $1,000 quarterly retainer fee plus an expense reimbursement
of $100 for each meeting of the Board of Directors that the director attends.
EXECUTIVE COMPENSATION
Compensation Summary
The following table shows certain information concerning the compensation
earned during each of the last three fiscal years in the period ended December
31, 1999, by the Chief Executive Officer and each of the Company's
four most highly compensated executive officers who served in positions
other than the Chief Executive Officer (the "named executive officers")
at the end of the last completed fiscal year:
SUMMARY COMPENSATION TABLE
|
|
|
Annual
Compensation
|
|
Long-Term
Compensation
Awards
|
|
|
Name and Principal Position
|
Year
|
|
Salary
(1)
|
|
Bonus
(2)
|
|
Number of
Securities
Underlying
Options
|
|
All Other
Compensation
(3)
|
|
|
|
|
|
|
|
|
|
|
George W. Sztykiel
Chairman of the Board, Chief
Executive Officer and Director |
1999
1998
1997
|
$
|
121,192
117,507
107,061
|
$
|
66,026
77,692
47,216
|
|
12,500
12,500
12,500
|
$
|
2,349
2,349
2,205
|
|
|
|
|
|
|
|
|
|
|
John E. Sztykiel
President, Chief Operating
Officer and Director |
1999
1998
1997
|
|
148,210
143,750
131,787
|
|
93,671
111,178
67,461
|
|
15,000
15,000
15,000
|
|
2,896
2,896
2,726
|
|
|
|
|
|
|
|
|
|
|
Anthony G. Sommer
Executive Vice President
and Director |
1999
1998
1997
|
|
133,145
129,685
118,309
|
|
68,166
79,831
47,811
|
|
12,500
12,500
12,500
|
|
2,600
2,600
2,441
|
|
|
|
|
|
|
|
|
|
|
Richard J. Schalter
Secretary, Treasurer, Chief
Financial Officer and Director |
1999
1998
1997
|
|
121,470
116,352
104,869
|
|
58,924
68,813
33,528
|
|
12,500
7,500
7,500
|
|
2,325
2,325
1,739
|
_________________
- -7-
(1) |
Includes director fees paid by the Company. |
|
|
(2) |
Includes payments under the Company's Quarterly
Bonus Program in which all employees of the Company participate. |
|
|
(3) |
Consists solely of the Company's contribution
to its profit-sharing plans. |
The Company's stock option plans are administered by the Compensation
Committee of the Board of Directors which has authority to determine the
individuals to whom and the terms upon which options will be granted, the
number of shares to be subject to each option and the form of consideration
that may be paid upon the exercise of an option.
The following table sets forth information regarding stock options granted
to the Chief Executive Officer and the named executive officers during
the fiscal year ended December 31, 1999:
OPTIONS GRANTS IN LAST FISCAL YEAR
|
Individual Grants
|
|
|
|
Number of
Securities
Underlying
|
|
Percent
of Total
Options
Granted to
|
|
Exercise
Price
|
|
|
|
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
for Option Term
|
Name
|
Options
Granted(1)
|
|
Employees in
Fiscal Year
|
|
Per
Share
|
|
Expiration
Date
|
|
0%
|
|
5%
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George W. Sztykiel |
12,500
|
|
2.4%
|
$
|
5.75
|
|
June 30, 2009
|
$
|
0
|
$
|
45,202
|
$
|
114,550 |
John E. Sztykiel |
15,000
|
|
2.9%
|
|
5.75
|
|
June 30, 2009
|
|
0
|
|
54,242
|
|
137,460 |
Anthony G. Sommer |
12,500
|
|
2.4%
|
|
5.75
|
|
June 30, 2009
|
|
0
|
|
45,202
|
|
114,550 |
Richard J. Schalter |
12,500
|
|
2.4%
|
|
5.75
|
|
June 30, 2009
|
|
0
|
|
45,202
|
|
114,550 |
____________________
(1) |
On June 30, 1999, the Company granted options
to purchase shares of the Company's
common stock over a 10-year period. Executive officers of the Company are
entitled to exercise their options at a price determined by the Compensation
Committee, which was at least 85% of the fair market value of common stock
on June 30, 1999. Options terminate, subject to certain limited exercise
provisions, in the event of death or termination of employment or directorship. |
The following table summarizes the total number of options held by the
Chief Executive Officer and the named executive officers as of December
31, 1999:
- -8-
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR(1)
|
|
Number of Securities
Underlying Unexercised
Options at Fiscal Year-End
|
|
  Name  
|
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
George W. Sztykiel |
$
|
90,000
|
|
--
|
John E. Sztykiel |
|
125,895
|
|
--
|
Anthony G. Sommer |
|
105,000
|
|
--
|
Richard J. Schalter |
|
32,500
|
|
--
|
___________________
(1) |
No named executive officer exercised any stock
options in 1999. |
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
develops and recommends to the Board of Directors the executive compensation
policies of the Company. The Committee also administers the Company's executive
compensation program and recommends for approval to the Board of Directors
the compensation to be paid to the Chief Executive Officer and other named
executive officers. The Committee consists of three directors, none of
whom is a current or former employee of the Company.
Compensation Philosophy
The Committee's executive compensation philosophy is to provide competitive
levels of compensation as well as incentives to achieve superior financial
performance. The Committee's policies are designed to achieve the following
five primary objectives: (a) integration of management's compensation with
the achievement of the Company's annual and long-term performance goals;
(b) reward above-average corporate performance; (c) recognition of individual
initiative and achievement; (d) attracting and retaining qualified management;
and (e) alignment of the interests of management with those of shareholders
to encourage achievement of continuing increases in shareholder value.
The Committee sets management compensation at levels which the Committee
believes are consistent with other companies in the Company's industry.
In 1994, the Company engaged Management Resource Center, Inc., a compensation
consulting firm, to review its compensation policies and competitive compensation
levels. The Committee has and currently intends to continue to consider
the recommendations of Management Resource Center, Inc. in developing the
Company's executive compensation program and making specific compensation
decisions.
Executive compensation consists of both cash and equity, and includes:
(a) base salary; (b) profit-sharing incentive bonus; and (c) long-term
incentive through participation in stock option plans. In addition, the
Company provides various benefits to its employees, including the Company's
executive officers.
In 1993, Congress amended the Internal Revenue Code of 1986 to add Section
162(m) which provides that publicly held corporations may not deduct compensation
paid to certain executive officers in excess of $1 million annually, with
certain exemptions. The Company has examined its executive compensation
policies in light of Section 162(m) and the regulations adopted by the
Internal Revenue Service to
- -9-
implement this section. It is not expected
that any portion of the Company's deduction for employee remuneration will
be disallowed in 2000 or in future years by reason of awards granted in
2000.
Base Salary
To attract and retain well qualified executives, it is the Committee's
policy to establish base salaries at levels and provide benefit packages
that are considered to be competitive. Base salaries for executive officers
are determined initially by evaluating the responsibilities of the position
and the experience of the individual, and by reference to the competitive
marketplace for management talent, including a comparison of base salaries
for comparable positions at similar companies within the custom chassis
industry. Some of the companies used for this comparison are included in
the indices used in the Stock Price Performance Graph presented in this
Proxy Statement.
The Committee believes that base salaries should approximate the mid-point
of the range of salaries paid for similar positions by companies in similar
industries. The Committee may recommend adjustments on a periodic basis
to maintain the desired levels of base salaries for the Company's executives.
The Committee determines annual salary adjustments by evaluating the
competitive marketplace, the performance of the Company and the executive
officer, as well as any increased responsibilities assumed by the executive
officer. Salary adjustments are determined and implemented generally on
a 12-month cycle.
Annual Incentive Bonus
The Committee selects members of management to participate in the Company's
incentive bonus program. The Committee considers several factors in determining
the annual incentive bonus, if any, paid to management, including achievement
of the Company's strategic and operating goals and an individual's achievement
of personal goals. In addition, the Company considers factors such as net
earnings per share, revenues, return on assets and return on equity.
Stock Option Plans
The Company currently grants stock options under the 1994 Incentive
Stock Option Plan and the Stock Option and Restricted Stock Plan of 1998.
The Company's stock option plans allow officers and key employees to purchase
common stock of the Company at a price established on the date of grant.
Options granted under the Stock Option and Restricted Stock Plan of 1998
that do not qualify as incentive stock options under Section 422(b) of
the Internal Revenue Code must have an exercise price equal to at least
85% of the fair market value of the Company's common stock. Incentive stock
options granted under the 1994 Incentive Stock Option Plan or the Stock
Option and Restricted Stock Plan of 1998 must have an exercise price equal
to at least 100% of the fair market value. The Committee administers all
aspects of the plans and reviews, modifies (to the extent appropriate)
and approves management's recommendations for awards.
Absent unusual circumstances, the Committee historically has granted
stock options on an annual basis to officers, key employees and directors
who are employees of the Company and on a biannual basis to directors who
are not employees of the Company. The Company's stock option plans are
designed to encourage long-term investment in the Company by participating
executives and key employees, more closely align executive and shareholder
interests and reward executive officers and other key employees for building
shareholder value. The Committee believes stock ownership by management
and other key employees is beneficial.
- -10-
In determining the number of options to be awarded to an officer or
key employee, the Committee takes into consideration the levels of responsibility
and compensation of the individual. The Committee also considers the recommendations
of management (other than awards to the Chief Executive Officer), the individual
performance of the officer or employee and the number of shares or other
compensation awarded to the officer or employee at other companies. Generally,
both the number of shares granted and their proportion relative to the
total number of shares granted increase corresponding to the level of a
participant's responsibility. Although the Committee also may consider
the number of options already held by an officer or employee, this factor
is not considered to be particularly important by the Committee in determining
the amounts of awards.
Chief Executive Officer
The Chief Executive Officer's compensation is based upon the policies
and objectives outlined above for all executive officers. Mr. George Sztykiel's
base salary in 1999 was approximately 3.1% above his 1998 salary. Mr. Sztykiel's
annual incentive bonus award for 1999 was $66,026 which includes the Company's
quarterly bonus program and his annual incentive bonus. During 1999, Mr.
Sztykiel was awarded options to purchase 12,500 shares of the Company's
common stock.
All recommendations of the Committee attributable to 1999 compensation
were unanimous and were approved and adopted by the Board of Directors
without modification.
Respectfully submitted,
George Tesseris, Chairman
Charles E. Nihart
James C. Penman
- -11-
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
on Spartan's common stock to the CRSP Total Return Index for The Nasdaq
Stock Market ("CRSP NASDAQ") and the CRSP Total Return Index for Trucking
and Transportation Stocks reported on The Nasdaq Stock Market ("CRSP T&T"),
over a five-year period ended December 31, 1999, using 1994 as a base period.
The CRSP NASDAQ is a broad-based equity market index developed by the Center
for Research in Security Prices at the University of Chicago. The CRSP
T&T is comprised of companies with a market capitalization similar
to that of the Company and also is developed by the Center for Research
in Security Prices. The CRSP NASDAQ index and CRSP T&T index both assume
dividend reinvestment. Cumulative total shareholder return is measured
by dividing (a) the sum of: (i) the cumulative amount of dividends for
the measurement period, assuming dividend reinvestment; and (ii) the difference
between the share price at the end and the beginning of the measurement
period, by (b) the share price at the beginning of the measurement period.
COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL SHAREHOLDER RETURN
STOCK PERFORMANCE GRAPH
|
- -12-
The dollar values for total shareholder return plotted in the graph
above are shown in the table below:
FISCAL
YEAR-END
|
|
SPARTAN
|
|
CRSP NASDAQ
|
|
CRSP T&T
|
|
|
|
|
|
|
|
1994
|
$
|
100.00
|
$
|
100.00
|
$
|
100.00
|
1995
|
|
82.69
|
|
141.33
|
|
116.67
|
1996
|
|
51.07
|
|
173.89
|
|
128.79
|
1997
|
|
47.29
|
|
213.07
|
|
164.84
|
1998
|
|
44.36
|
|
300.25
|
|
148.30
|
1999
|
|
34.17
|
|
542.43
|
|
158.38
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
officers and persons who beneficially own more than 10% of the outstanding
shares of common stock to file reports of ownership and changes in ownership
of shares of common stock with the Securities and Exchange Commission.
Directors, officers and greater than 10% beneficial owners are required
by SEC regulations to furnish the Company with copies of all Section 16(a)
reports they file with the SEC. Based solely upon the Company's review
of the copies of such reports received by it, or written representations
from certain reporting persons that no reports on Form 5 were required
for those persons for the 1999 fiscal year, the Company believes that its
directors and officers complied with all applicable filing requirements
during the Company's last fiscal year.
SELECTION OF INDEPENDENT AUDITORS
Subject to the approval of shareholders, the Company has appointed Ernst
& Young LLP as independent auditors for the Company for its 2000 fiscal
year. Representatives of Ernst & Young LLP are expected to be present
at the annual meeting, will have the opportunity to make a statement if
they desire to do so and are expected to be available to respond to appropriate
questions from shareholders.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the annual meeting
of shareholders in the year 2001 and that a shareholder would like to have
included in the proxy statement and form of proxy relating to that meeting
must be received by the Company for consideration not later than January
12, 2001 to be considered for inclusion in the proxy statement and form
of proxy relating to that meeting. Such proposals of shareholders should
be made in accordance with Securities and Exchange Commission Rule 14a-8.
All other proposals of shareholders that are intended to be presented at
the annual meeting in the year 2000 must be received by the Company not
later than April 30, 2001 or they will be considered untimely.
- -13-
SOLICITATION OF PROXIES
Solicitation of proxies will be made initially by mail. In addition,
directors, officers and employees of the Company and its subsidiaries may
solicit proxies by telephone or facsimile or in person without additional
compensation. Proxies may be solicited by nominees and other fiduciaries
who may mail materials to or otherwise communicate with the beneficial
owners of shares held by them. The Company will bear all costs of the preparation
and solicitation of proxies, including the charges and expenses of brokerage
firms, banks, trustees or other nominees for forwarding proxy material
to beneficial owners.
By Order of the Board of Directors
/s/ Richard J. Schalter
Richard J. Schalter
Secretary, Treasurer, Chief Financial
Officer and Director
Charlotte, Michigan
May 12, 2000
- -14-