SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TRANSPRO, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
[TRANSPRO LOGO OMITTED]
March 28, 2003
Dear Fellow Stockholder:
You are cordially invited to attend our annual meeting of stockholders
which will be held at The Yale Club of New York City, 50 Vanderbilt Avenue, New
York, New York on Thursday, May 1, 2003 at 11:00 a.m. This year you are being
asked to elect seven directors to the Board and approve our auditors for the
year ending December 31, 2003, all as described in the accompanying notice and
proxy statement.
We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at
the meeting, it is important that your shares be represented. Accordingly, you
are requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Sincerely yours,
/S/ Barry R. Banducci
Barry R. Banducci
Chairman of the Board
TRANSPRO, INC.
--------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
--------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of
Transpro, Inc. will be held on Thursday, May 1, 2003 at 11:00 a.m., at The Yale
Club of New York City, 50 Vanderbilt Avenue, New York, New York, for the
following purposes:
(1) To elect seven directors to serve for the ensuing year;
(2) To consider and vote on the approval of PricewaterhouseCoopers LLP
as our independent auditors for the year ending December 31, 2003;
and
(3) To transact such other business as may properly come before the annual
meeting or any adjournments of the annual meeting.
Stockholders of record at the close of business on March 5, 2003 will be
entitled to notice of and to vote at the annual meeting or any adjournments of
the annual meeting. All stockholders are cordially invited to attend the annual
meeting in person. Stockholders who are unable to attend the annual meeting in
person are requested to complete and date the enclosed form of proxy and return
it promptly in the envelope provided. No postage is required if mailed in the
United States. Stockholders who attend the annual meeting may revoke their
proxy and vote their shares in person.
RICHARD A. WISOT
Secretary
New Haven, Connecticut
March 28, 2003
TRANSPRO, INC.
100 GANDO DRIVE
NEW HAVEN, CONNECTICUT 06513
---------------------
PROXY STATEMENT
---------------------
GENERAL INFORMATION
PROXY SOLICITATION
This proxy statement is furnished to the holders of common stock of
Transpro, Inc. in connection with the solicitation by our Board of Directors of
proxies for use at the annual meeting of stockholders to be held on Thursday,
May 1, 2003, or at any adjournments of the annual meeting. The purposes of the
meeting and the matters to be acted upon are described in the accompanying
Notice of Annual Meeting of Stockholders. The Board of Directors is not
currently aware of any other matters that will come before the meeting.
Proxies for use at the meeting are being solicited by our Board of
Directors. Proxies will be mailed to stockholders on or about March 31, 2003
and will be solicited chiefly by mail. We will make arrangements with brokerage
houses and other custodians, nominees and fiduciaries to send proxies and proxy
material to the beneficial owners of the shares and will reimburse them for
their expenses in so doing. Should it appear desirable to do so in order to
ensure adequate representation of shares at the meeting, our officers, agents
and employees may communicate with stockholders, banks, brokerage houses and
others by telephone, e-mail, facsimile, or in person to request that proxies be
furnished. We will pay all expenses incurred in connection with this
solicitation.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the annual meeting and a return envelope for
the proxy are enclosed. Stockholders may revoke the authority granted by their
execution of proxies at any time before their effective exercise by filing with
our Secretary a written notice of revocation or a duly executed proxy bearing a
later date, or by voting in person at the meeting. Shares of common stock
represented by executed and unrevoked proxies will be voted in accordance with
the choice or instructions specified. If no specifications are given, the
proxies intend to vote the shares represented to approve Proposals No. 1 and 2
as described in the accompanying Notice of Annual Meeting of Stockholders and
in accordance with their best judgment on any other matters which may properly
come before the meeting.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on March 5, 2003 are
entitled to notice of and to vote at the annual meeting or any adjournments of
the annual meeting. On March 5, 2003 there were 7,106,023 shares of common
stock outstanding; each share is entitled to one vote on each of the matters to
be presented at the annual meeting. The holders of a majority of the
outstanding shares of common stock, present in person or by proxy, will
constitute a quorum at the annual meeting. Abstentions and broker non-votes
will be counted for purposes of determining the presence or absence of a
quorum. "Broker non-votes" are shares held by brokers or nominees which are
present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner. Under Delaware law, the effect of broker non-votes on a
particular matter depends on whether the matter is one as to which the broker
or nominee has discretionary voting authority under the applicable rule of the
New York Stock Exchange. The effect of broker non-votes on the specific items
to be brought before the annual meeting is discussed under each item.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
Seven directors, constituting the entire Board, are to be elected at the
annual meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the next annual meeting of
stockholders and until their successors have been duly elected and qualified.
Each person named below is now a director of Transpro. In the event any of
these nominees will be unable to serve as a director, the shares represented by
the proxy will be voted for the person, if any, who is designated by the Board
of Directors to replace the nominee. All nominees have consented to be named
and have indicated their intent to serve if elected. The Board of Directors has
no reason to believe that any of the nominees will be unable to serve or that
any vacancy on the Board of Directors will occur.
The nominees, their ages, the year in which each first became a director
of Transpro and their principal occupations or employment during the past five
years are:
YEAR FIRST
BECAME PRINCIPAL OCCUPATION
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
----------------------------- ---- ----------- -----------------------------------------------------------
Barry R. Banducci ........... 67 1995 Chairman of the Board of Transpro, Inc. since
September 1995; from 1984 to 1996, Vice Chairman of
the Board and a director of The Equion Corporation, a
manufacturer of automotive products; from 1988 to
1994, President and Chief Executive Officer of Equion
and from 1984 to 1988, President and Chief Operating
Officer of Equion; currently a director of Advanced
Accessory Systems, LLC and Dexmet Corporation.
(1)(3)
William J. Abraham, Jr. ..... 55 1995 Partner with Foley & Lardner, a law firm in Milwaukee,
Wisconsin, since 1980; formerly Chairman of the
Business Law Department of Foley & Lardner and a
member of its Management Committee; currently a
director of The Vollrath Company, Inc., Park Bank,
Phillips Plastics Corporation and Windway Capital
Corp. (1)
Philip Wm. Colburn .......... 74 1995 Chairman of the Board of Allen Telecom Inc. since
December 1988 and a director of Allen since 1973; from
March 1988 to February 1991, Chief Executive Officer
of Allen; currently a director of Superior Industries
International, Inc. (2)
Charles E. Johnson .......... 57 2001 Since March 2001, President and Chief Executive Officer
of Transpro, Inc.; from 1996 to March 2001, President
and Director, and from 1997 to March 2001, Chief
Executive Officer, of Canadian General-Tower Ltd., a
producer of polymer films and composite materials to
the automotive and other markets; from 1984 to 1996,
various positions at The Equion Corporation, including
President and Chief Operating Officer from 1993 to
1996. (3)
Paul R. Lederer ............. 63 1995 Currently a director of R&B Inc., O'Reilly Automotive,
Inc. and Icarz.com, and a member of the advisory
boards of Richco Inc. and The Wine Discount Center;
prior to retirement in October 1998, Executive Vice
President -- Worldwide Aftermarket of Federal-Mogul
Corporation since February 1998; from November 1994
to February 1998, President and Chief Operating Officer
of Fel-Pro Inc., which was acquired by Federal-Mogul
Corporation. (1)(3)
2
YEAR FIRST
BECAME PRINCIPAL OCCUPATION
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
------------------------- ----- ----------- ---------------------------------------------------------
Sharon M. Oster ......... 54 1995 Frederic D. Wolfe Professor of Management and
Entrepreneurship at the School of Management, Yale
University since 1992; from 1992 to 1994, Associate
Dean of Yale's School of Management; from 1983 to
1994, Professor of Economics and Management at
Yale's School of Management; currently a director of
HealthCare REIT, Inc. and The Aristotle Corporation.
(2)
F. Alan Smith ........... 71 1995 Chairman of Advanced Accessory Systems, LLC since
September 1995; Chairman of Mackie Automotive
Systems from May 1998 to December 2001, and a
director of 3M from 1986 to 2001; retired from General
Motors Corporation in 1992 after 36 years of service;
from 1981 to 1992, Executive Vice President and a
member of the Board of Directors of GM. (2)
----------
(1) Member of the Nominating, Governance and Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Management Committee.
INFORMATION REGARDING THE BOARD OF DIRECTORS
The business and affairs of Transpro are managed under the direction of
our Board of Directors, whose members are elected annually by the stockholders.
Our Board of Directors has designated a Nominating, Governance and Compensation
Committee, an Audit Committee and a Management Committee. Messrs. Lederer,
Abraham and Banducci are the members of the Nominating, Governance and
Compensation Committee; Messrs. Smith, Colburn and Ms. Oster are the members of
the Audit Committee; and Messrs. Banducci, Johnson and Lederer are the members
of the Management Committee. In October 2002, Mr. Abraham and Ms. Oster
switched committees, with Mr. Abraham leaving the Audit Committee and joining
the Nominating, Governance and Compensation Committee, while Ms. Oster left the
Nominating, Governance and Compensation Committee and joined the Audit
Committee.
The Nominating, Governance and Compensation Committee recommends to the
Board salaries and incentive compensation awards for our officers; reviews and
approves guidelines for the administration of incentive compensation programs
for other management employees; makes recommendations to the Board with respect
to major compensation programs; administers our 1995 Stock Plan and our 1995
Nonemployee Directors Stock Option Plan (the "Directors Plan"), grants stock
options and restricted shares of common stock under the 1995 Stock Plan; and
issues the Report on Executive Compensation required to be included in our
proxy statement by the rules of the Securities and Exchange Commission. This
committee also oversees corporate governance issues in accordance with
applicable law and New York Stock Exchange rules, selects and recommends to the
Board nominees for election as directors and considers the performance of
incumbent directors in determining whether to recommend them for nomination for
re-election. The Nominating, Governance and Compensation Committee has
recommended each of the seven returning incumbent directors for re-election at
the annual meeting. The Nominating, Governance and Compensation Committee will
consider nominees recommended by stockholders for election at the 2004 Annual
Meeting of Stockholders that are submitted prior to the end of 2003 to our
Secretary at Transpro's offices, 100 Gando Drive, New Haven, Connecticut 06513.
Any recommendation must be in writing and must include a detailed description
of the business experience and other qualifications of the recommended nominee
as well as the signed consent of the nominee to serve if nominated and elected.
3
The Audit Committee is directly responsible for the appointment,
compensation and oversight of the audit and related work of our independent
auditors. The Audit Committee reviews the degree of their independence;
approves the scope of the audit engagement, including the cost of the audit;
reviews any non-audit services rendered by the auditors and the fees for these
services; reviews with the auditors and management our policies and procedures
with respect to internal accounting and financial controls and, upon completion
of an audit, the results of the audit engagement; and reviews internal
accounting and auditing procedures with our financial staff and the extent to
which recommendations made by the independent auditors have been implemented.
All members of the Audit Committee are independent as defined in the listing
standards of the New York Stock Exchange. The Board of Directors has adopted an
Audit Committee Charter that meets the requirements of the Securities and
Exchange Commission and the New York Stock Exchange.
The Management Committee serves as an advisory resource for Transpro
management with regard to industry-specific strategic issues and the condition
of the marketplace in which we operate. The Management Committee was
established to assist management in its oversight of our operations through the
experience and knowledge of its members, rather than to take specific action
with regard to any particular area of corporate governance.
During 2002, the Board of Directors held seven meetings, the Nominating,
Governance and Compensation Committee held four meetings, the Audit Committee
held eight meetings and the Management Committee held five meetings. During
2002, each director attended at least 75% of the meetings of the Board of
Directors held and of all committees of the Board of Directors on which he or
she served while he or she was director or a member of a committee of the Board
of Directors.
COMPENSATION OF DIRECTORS
The Chairman of the Board of Directors is paid an annual retainer of
$48,000 per year for his services as Chairman and $1,000 for each meeting of
the Board of Directors attended. The Chairman does not receive any additional
compensation for committee participation. All other nonemployee directors are
paid $16,000 per year for their services as a director and $1,000 for each
meeting of the Board of Directors attended. Each nonemployee member of the
Audit, Compensation or Management Committee is paid $2,000 per year for his or
her service as a member ($4,000 if Chairman of the committee), and each
committee member is paid $500 for each meeting of a committee attended.
Directors are not paid fees for actions by unanimous written consent but are
compensated for attendance at telephonic meetings. Each director and committee
member is reimbursed for travel and related expenses incurred in attending
meetings.
Under our 1995 Nonemployee Directors Stock Option Plan, the Chairman and
each nonemployee director are automatically entitled to a grant of options to
purchase 3,200 and 1,500 shares of common stock, respectively, on an annual
basis, on the first Friday following our annual meeting of stockholders.
Pursuant to the Directors Plan, Messrs. Abraham, Colburn, Lederer, Ms. Oster
and Mr. Smith were each granted options to purchase 1,500 shares of common
stock on May 3, 2002 at an exercise price of $4.72 per share. Mr. Banducci
received options to purchase 3,200 shares of common stock on such date at the
same exercise price. Each option expires 10 years from date of grant and is
exercisable 50 percent after two years from date of grant, 75 percent after
three years from date of grant and 100 percent after four years from date of
grant.
We maintain a matching gift program for the benefit of our directors.
Pursuant to the matching gift program, in 2002, we matched gifts to charitable
organizations made by the directors in amounts up to $2,500 for each director.
During the final three months of 2000 and prior to the hiring of Charles
E. Johnson as President and Chief Executive Officer in March 2001, Mr. Banducci
took on many of the day-to-day management responsibilities typically associated
with the position of President and Chief Executive Officer. In consideration
for these additional services, in June 2001 the Board approved the payment
$96,562.50 in cash in twelve monthly installments beginning July 1, 2001 and
the issuance of 30,175 shares of common stock to Mr. Banducci.
4
We are party to an employment agreement with Charles E. Johnson, our
President and Chief Executive Officer, and a director. For a description of the
terms of this agreement, see "Executive Compensation -- Employment, Termination
of Employment and Change of Control Arrangements."
VOTE REQUIRED
The seven nominees receiving the affirmative vote of holders of a majority
of the shares of common stock issued, outstanding and entitled to vote, present
or represented at the meeting, a quorum being present, shall be elected as
directors. Broker non-votes with respect to this matter will be treated as
neither a vote "for" or a vote "against" the matter, although they will be
counted in determining if a quorum is present. However, instructions on the
accompanying proxy card to withhold authority to vote for one or more nominees
will be considered in determining the number of votes required to attain a
majority of the shares present or represented at the meeting and entitled to
vote. Accordingly, an instruction to withhold authority by a stockholder
present in person or by proxy at the meeting has the same legal effect as a
vote "against" the nominee because it represents a share present or represented
at the meeting and entitled to vote, thereby increasing the number of
affirmative votes required to approve the nominee.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 1 -- ELECTION OF DIRECTORS" TO
BE IN THE BEST INTERESTS OF TRANSPRO AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
"FOR" APPROVAL OF THIS PROPOSAL.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Nominating, Governance and Compensation Committee (the "Compensation
Committee") is comprised of three independent non-employee directors. As
members of the Compensation Committee, it is our responsibility to administer
Transpro's executive compensation programs, monitor corporate performance and
its relationship to compensation of executive officers, and make appropriate
recommendations concerning matters of executive compensation.
Compensation Policies
We have formulated a compensation philosophy that is designed to enable us
to attract, retain and reward capable employees who can contribute to the
success of Transpro, principally by (i) setting base salaries at the median of
the marketplace, (ii) creating an annual incentive opportunity with target
award levels somewhat above median marketplace practices and (iii) creating a
significant long term incentive opportunity for senior management. We believe
that implementation of a system of compensation that emphasizes
performance-based compensation provides a strong alignment to stockholders'
interests. Five key principles serve as the guiding framework for compensation
decisions for all employees of Transpro:
o To attract and retain the most highly qualified management and
employee team.
o To pay competitively compared to similar automotive companies.
o To encourage superior employee performance by aligning rewards with
stockholder interests, especially through the use of tangible
performance targets.
o To motivate senior executives to achieve Transpro's annual and
long-term business goals by providing leveraged equity-based incentive
opportunities.
o To strive for fairness in administration by emphasizing performance
related contributions as the basis for pay decisions.
To implement these policies, we have designed the framework for a
four-part executive compensation program consisting of base salary, annual
incentive plan, long-term incentive opportunities for senior management, and
other employment benefits.
Base Salary. We will seek to maintain levels of compensation that are
competitive with similar automotive companies. Base salary represents the fixed
component of the executive compensation
5
program. Transpro's philosophy regarding base salaries is conservative, and
will seek to maintain salaries for the aggregate officer group at approximately
the competitive industry average. Periodic increases in base salary will relate
to individual contributions evaluated against established objectives, length of
service, and the industry's annual competitive pay practice movement. We
believe that base salary for 2002 for our Chief Executive Officer and for the
other executive officers was generally at the competitive industry average.
Annual Incentive Plan. We have designed an annual incentive plan pursuant
to which key Transpro employees will be eligible to receive performance bonuses
in a range based upon a percentage of their annual base salary. Payment of the
performance bonuses is based upon performance measures set by the Compensation
Committee that incorporate overall corporate, strategic business unit and
personal targets. In general, with regard to senior executives, a greater
degree of emphasis is placed on the long-term incentives described below.
Long-Term Incentives. We believe that the pay program should provide
senior executives with an opportunity to increase their ownership and
potentially gain financially from Transpro stock price increases. By this
approach, the best interests of stockholders and senior executives will be
closely aligned. Therefore, senior executives are eligible to receive
restricted stock and are also eligible to receive stock options, giving them
the right to purchase shares of common stock at a specified price in the
future. We believe that the use of restricted stock and stock options as the
basis for long-term incentive compensation meets our defined compensation
strategy and business needs by achieving increased value for stockholders and
retaining key employees.
Other Benefits. Our philosophy is to provide competitive health- and
welfare-oriented benefits to executives and employees, but to maintain a
conservative posture relative to executive benefits. Consistent with industry
practices, we provide a company automobile or automobile allowance to executive
officers.
Compliance with Section 162(m) of the Internal Revenue Code
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to a public corporation for compensation over $1 million paid to a
corporation's chief executive officer and four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the cap if certain requirements are met. We intend to structure the
compensation of our executive officers in a manner that should ensure that
Transpro does not lose any tax deductions because of the $1 million
compensation limit in the foreseeable future.
The salaries for our highest paid executives will be set, in part based on
independent studies, at levels approximating the average for companies of
comparable size in similar industries and are not expected to approach $1
million in the foreseeable future. We are a proponent of using more performance
and equity-based compensation, which can often be designed to ensure that tax
deductibility is not compromised.
Our 1995 Stock Plan incorporates maximum limitations on individual annual
stock option and restricted stock grants so as to meet the requirements of
Section 162(m). The 1995 Stock Plan also identifies performance measures to be
used if we decide to use performance-based vesting restricted stock in the
future to meet the requirements of Section 162(m).
Stock Option Repricing
On July 5, 2001, Transpro offered to exchange all outstanding options
granted under our 1995 Stock Plan that had an exercise price in excess of $4.00
per share and were held by option holders who were employees on the date of
tender and through the future grant date, for new options to purchase shares of
our common stock. The number of shares of common stock subject to new options
to be granted to each option holder was equal to: (i) one-half of the number of
shares subject to the options tendered and accepted for exchange if the
exercise price of the tendered option was greater than $4.00 but less than
$6.00, and (ii) one-third of the number of shares subject to the options
tendered and accepted for exchange if the exercise price of the tendered option
was equal to or greater than $6.00. The offer expired
6
on August 2, 2001. We accepted for exchange options to purchase an aggregate of
69,176 shares of common stock. Subject to the terms and conditions of the
offer, on February 6, 2002, we granted new options to purchase an aggregate of
28,614 shares of common stock in exchange for the tendered options. The
exercise price per share of the new options is $3.39, which was the fair market
value of the Common Stock on the date of grant as reported on the New York
Stock Exchange.
The Board of Directors considered many factors prior to approving the
tender offer to reprice those employee stock options that had an exercise price
in excess of $4.00 per share. The Board of Directors considered that the
primary purpose of issuing the options was to provide Transpro employees with
additional incentive to perform at high levels and to continue their employment
with the company. The Board of Directors noted that at the time of its approval
many outstanding options, whether or not they were currently exercisable, had
exercise prices that were significantly higher than the current market price of
Transpro common stock. The Board of Directors believed these options were
unlikely to be exercised in the foreseeable future. By offering to exchange
outstanding options for new options that would have an exercise price equal to
the market value of Transpro common stock on the grant date, the Board of
Directors intended to provide the employees with the benefit of owning options
that over time may have a greater potential to increase in value and provide
performance incentives for employees, thereby increasing stockholder value. The
Board of Directors noted that only one member of senior management was eligible
to participate and that the number of shares likely to be tendered was only
approximately 1% of the outstanding Transpro common stock. In addition, to
promote the equitable nature of the tender offer, tendered options were
replaced on less than a one-to-one ratio, resulting in an anti-dilutive
transaction if Transpro stock were to appreciate above certain levels.
2002 Compensation for the Chief Executive Officer
In 2002, Charles E. Johnson was entitled to receive base salary payments
at a rate of $360,000 per year, pursuant to the terms of his employment
agreement with the Company. His base salary was increased to $374,400 effective
March 11, 2002. As Mr. Johnson took a voluntary 20% pay cut from October 2001
through December 2001 that was reimbursed in 2002, his actual base salary
received in 2002 was $381,812. See "Executive Compensation - Employment,
Termination of Employment and Change of Control Arrangements." Mr. Johnson
earned an annual performance bonus of $242,000 pursuant to the Annual Incentive
Plan for 2002, based upon the achievement of certain goals set by the
Compensation Committee. In May 2002, Mr. Johnson was granted an option to
purchase 35,000 shares of common stock at an exercise price of $4.72 per share,
which was the market price for the common stock on the date of grant. This
option grant was made in accordance with the Compensation Committee's
compensation practices.
Summary
The Compensation Committee believes that we have implemented a
comprehensive compensation program for Transpro executives that is appropriate
and competitive with the total compensation programs provided by other similar
automotive companies with which we compete. We believe our compensation
philosophy ties compensation to stockholder returns and thereby links
compensation to the achievement of annual and longer-term operational results
of Transpro on behalf of our stockholders. We look forward to providing the
stockholders with an update in our next annual report to you.
Nominating, Governance and Compensation
Committee of the Board of Directors
- PAUL R. LEDERER, CHAIRMAN
- WILLIAM J. ABRAHAM, JR.
- BARRY R. BANDUCCI
7
ANNUAL AND LONG-TERM EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation paid
or accrued by Transpro and its subsidiaries to those persons who were the Chief
Executive Officer and the other four most highly compensated executive officers
at the end of 2002 (collectively, the "named executive officers"), for services
rendered by them in all capacities in which they served Transpro and its
subsidiaries during 2000, 2001 and 2002.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION (a) AWARDS
-------------------------- -------------------------
SECURITIES ALL
UNDERLYING OTHER
BONUS OPTIONS/ COMP.
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($) SARS (#) ($)(b)
----------------------------------- ------ ------------ ----------- ------------ ----------
Charles E. Johnson (c) ............ 2002 $381,812 $242,000 35,000 $10,123
President and Chief Executive 2001 $280,275 $ 81,000 100,000 $83,722
Officer 2000 -- -- -- --
Richard A. Wisot (d) .............. 2002 $194,778 $ 60,000 15,000 $ 3,069
Vice President, Treasurer, 2001 $104,013 $ 20,000 25,000 $ 1,976
Secretary and Chief Financial 2000 -- -- -- --
Officer
David Albert (e) .................. 2002 $200,858 $ 70,000 25,000 $27,016
Vice President -- Operations 2001 $115,188 $ 22,000 25,000 $84,595
2000 -- -- -- --
Jeffrey L. Jackson ................ 2002 $157,403 $ 53,000 26,433 $ 3,028
Vice President -- 2001 $148,132 $ 23,000 10,000 $ 4,208
Human Resources 2000 $146,420 $ 0 0 $ 4,322
Kenneth T. Flynn, Jr. (f) ......... 2002 $132,138 $ 27,000 10,000 $ 3,859
Vice President and Corporate 2001 $ 64,511 $ 18,000 0 $ 1,915
Controller 2000 -- -- -- --
----------
(a) The aggregate amount of perquisites and other personal benefits is less
than the lesser of $50,000 or 10% of the total salary and bonus reported
for each indicated named executive officer.
(b) All Other Compensation includes for 2000, 2001 and 2002, respectively, (i)
contributions made by the Company to each executive officer under its
defined contribution plan in the following amounts: Mr. Johnson -- $0,
$3,214 and $9,064; Mr. Wisot -- $0, $922 and $2,010; Mr. Albert -- $0,
$1,414 and $2,260; Mr. Jackson -- $3,513, $2,949 and $2,752; and Mr. Flynn
-- $0, $672 and $2,800; and (ii) insurance premiums paid by Transpro in
2000, 2001 and 2002 for the benefit of the named executive officers in the
following amounts: Mr. Johnson -- $0, $1,987 and $1,059; Mr. Wisot -- $0,
$1,054 and $1,059; Mr. Albert -- $0, $977 and $1,059; Mr. Jackson -- $809,
$1,259 and $276; and Mr. Flynn -- $0, $1,243 and $1,059. Also includes
reimbursement of grossed-up moving expenses in 2001 for Messrs. Johnson and
Albert in the amounts of $78,521 and $82,204, respectively, and in 2002 for
Mr. Albert in the amount of $23,697.
(c) Mr. Johnson joined Transpro in March 2001.
(d) Mr. Wisot joined Transpro in June 2001.
(e) Mr. Albert joined Transpro in April 2001.
(f) Mr. Flynn joined Transpro in June 2001.
8
The following table sets forth the grants of stock options made during the
year ended December 31, 2002 to the named executive officers:
OPTION GRANS IN LAST FISCAL YEAR
NUMBER OF % OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME GRANTED (a) FISCAL PERIOD (b) PRICE DATE PRESENT VALUE (c)
------------------------------- ------------- ------------------- ---------- ------------ ------------------
Charles E. Johnson ............ 35,000 14.4% $ 4.72 5/4/2012 $94,850
Richard A. Wisot .............. 15,000 6.2% $ 4.72 5/4/2012 $40,650
David Albert .................. 25,000 10.3% $ 4.72 5/4/2012 $67,750
Jeffrey L. Jackson ............ 5,000 2.1% $ 3.39 2/8/2012 $ 9,700
3,833 1.6% $ 3.39 2/8/2012 $ 7,436
2,600 1.1% $ 3.39 2/8/2012 $ 5,044
15,000 6.2% $ 4.72 5/4/2012 $40,650
Kenneth T. Flynn, Jr. ......... 10,000 4.1% $ 4.72 5/4/2012 $27,100
----------
(a) The grant of options to Mr. Jackson to purchase 5,000 shares is exercisable
one-third after one year from date of grant, two-thirds after two years
from date of grant and 100 percent after three years from date of grant and
the grants of options to Mr. Jackson to purchase 3,833 and 2,600 shares are
each exercisable 100 percent after August 6, 2002. All other options
granted are exercisable 25 percent after one year from date of grant, 50
percent after two years from date of grant, 75 percent after three years
from date of grant and 100 percent after four years from date of grant.
(b) Options to purchase a total of 243,614 shares of common stock were issued
by Transpro to employees in fiscal 2002.
(c) Present value calculated using the Black Scholes model assuming a 4.86%
interest rate (the rate of treasury securities with a maturity date closest
to the expected life of the options) and 55.34% volatility (calculated
based upon the performance of the common stock from the date of the
spin-off through the grant date).
The following table sets forth information with respect to unexercised
options to purchase Transpro common stock held by the named executive officers
at December 31, 2002. No options to purchase common stock were exercised in
2002 by these persons.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT FISCAL
FISCAL YEAR-END # YEAR-END($) (a)
------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------- ------------- --------------- ------------- --------------
Charles E. Johnson ............ 40,000 95,000 $102,000 $186,000
Richard A. Wisot .............. 0 40,000 -- $ 73,200
David Albert .................. 0 50,000 -- $ 88,000
Jeffrey L. Jackson ............ 6,433 30,000 $ 14,217 $ 55,250
Kenneth T. Flynn, Jr. ......... 0 10,000 -- $ 8,800
----------
(a) Computed based upon the difference between the closing price of Transpro
common stock on December 31, 2002 ($5.60) and the exercise price.
9
The following table sets forth the number of shares covered by stock
options that (i) are held by any of our named executive officers during the
last ten fiscal years prior to December 31, 2002 and (ii) have been the subject
of a repricing. On July 5, 2001, we offered to exchange all outstanding options
granted under our 1995 Stock Plan that had an exercise price in excess of $4.00
per share and were held by option holders who were employees on the date of
tender and through the future grant date, for new options to purchase shares of
our common stock. The number of shares of common stock subject to new options
to be granted to each option holder was equal to: (i) one-half of the number of
shares subject to the options tendered and accepted for exchange if the
exercise price of the tendered option was greater than $4.00 but less than
$6.00, and (ii) one-third of the number of shares subject to the options
tendered and accepted for exchange if the exercise price of the tendered option
was equal to or greater than $6.00. The offer expired on August 2, 2001. We
accepted for exchange options to purchase an aggregate of 69,176 shares of
common stock. Subject to the terms and conditions of the offer, on February 6,
2002, we granted new options to purchase an aggregate of 28,614 shares of
common stock in exchange for the tendered options. The exercise price per share
of the new options is $3.39, which was the fair market value of the Common
Stock on the date of grant as reported on the New York Stock Exchange.
TEN-YEAR OPTION/SAR REPRICINGS
NUMBER OF LENGTH OF
SECURITIES ORIGINAL OPTION
UNDERLYING MARKET PRICE OF EXERCISE PRICE TERM REMAINING
OPTIONS STOCK AT TIME OF AT TIME OF NEW EXERCISE AT DATE OF
NAME DATE REPRICED REPRICING REPRICING PRICE REPRICING (a)
----------------------- ---------- ------------ ------------------ ---------------- -------------- ----------------
Jeffrey L. Jackson, 2/6/2002 5,000 $ 3.39 $ 5.50 $ 3.39 4/30/2009
Vice President -- 2/6/2002 3,833 $ 3.39 $ 7.50 $ 3.39 4/10/2006
Human Resources ...... 2/6/2002 2,600 $ 3.39 $ 7.75 $ 3.39 4/27/2007
----------
(a) Represents original expiration date.
RETIREMENT PLAN
Each of our named executive officers are covered by a non-contributory
defined benefit cash balance plan. We credit an amount, quarterly, to a
notional account for each participant under the plan equal to the sum of (i)
each participant's total compensation for the quarter (excluding bonus)
multiplied by a percentage factor plus (ii) each participant's total
compensation for the quarter (excluding bonus) in excess of a fraction of the
Social Security wage base multiplied by a percentage factor. The percentage
factors are determined under the following table:
PLUS % OF PAY ABOVE 1/12 OF
YEARS OF SERVICE CREDIT ACCOUNT WITH % OF PAY SOCIAL SECURITY TAXABLE WAGE BASE
---------------------------- ------------------------------ ----------------------------------
Less than 10 years ......... 2.25% 2%
10 to 20 years ............. 3.00% 2%
20 or more years ........... 4.00% 2%
Each year until each participant's normal retirement date (age 65), the
notional account balances will be credited quarterly with interest equal to the
average of the one-year Treasury bill rate on the first day of October,
November and December of the previous calendar year multiplied by his or her
account balance at the beginning of the quarter. Upon retirement, the notional
account balance will be paid in the form of a lump sum payment or converted to
an annuity to provide monthly benefit payments. Upon normal retirement at age
65, Messrs. Johnson, Wisot, Albert, Jackson, and Flynn's estimated annual
pension benefits under the cash balance plan are $6,604, $5,718, $6,978,
$11,288, and $7,317, respectively.
10
EMPLOYMENT, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
Charles E. Johnson
Effective March 12, 2001, we entered into an employment agreement with
Charles E. Johnson, our President and Chief Executive Officer. The agreement
has a two-year term with automatic one-year extensions upon each anniversary
date of the agreement unless either party gives at least 90 days' notice to the
contrary. The employment agreement can be terminated by Transpro for "serious
cause" (as defined in the employment agreement) or in the event Mr. Johnson
becomes disabled, and Mr. Johnson can terminate the agreement for "good reason"
(as defined in the agreement). The employment agreement provides annual pension
benefits, supplemental to the annual benefits paid under our retirement plans,
in an amount determined in accordance with the applicable Transpro retirement
plan, without giving effect to limits imposed by the Internal Revenue Code and
regulations of the IRS on the amount of benefits payable or compensation that
may be used in determining benefits that may be paid to an individual under a
Federal income tax qualified plan. The employment agreement provides for an
annual salary of $360,000 and a bonus of up to 150% of base salary determined
based upon performance targets set annually by the Board. Mr. Johnson's annual
base salary was increased in March 2002 to $374,400. In addition, under the
agreement, in March 2001 Mr. Johnson received options to purchase 60,000 shares
of common stock under our 1995 Stock Plan exercisable one third after one year
from date of grant, two-thirds after two years from date of grant and 100
percent after three years from date of grant. In June 2001, Mr. Johnson
received options to purchase an additional 40,000 shares that are exercisable
50% after March 12, 2002 and 100% after March 12, 2003. We also agreed to pay
Mr. Johnson's reasonable relocation expenses.
Mr. Johnson's employment agreement contains additional provisions which
provide that, in the event we terminate Mr. Johnson's employment other than for
"serious cause" or his disability, death or retirement, or if Mr. Johnson
terminates his employment for "good reason," we would pay him an amount equal
to his salary for one year and would provide his life, disability, accident,
medical and hospitalization insurance benefits during a period of one year
after termination. In addition, we would pay Mr. Johnson accrued vacation pay
and all other amounts to which he is entitled under the agreement prior to
termination.
Severance Agreements
Messrs. Wisot, Albert, Jackson and Flynn entered into severance agreements
with the Company. Pursuant to their respective severance agreements, if the
officer lost his current position (except for termination for "cause" as
defined in each severance agreement), or if during the term thereof should
there be a material change in ownership, or the sale of a portion of the
business, which results in his not having a position similar to his current
position including similar pay and benefits then his base salary will continue
to be paid until he either secures other full-time employment, or for one year,
whichever occurs first.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our Compensation Committee currently consists of three non-employee
directors -- Messrs. Lederer, Abraham and Banducci. Ms. Oster served on the
Compensation Committee until October 2002. Pursuant to the Directors Plan,
Messrs. Lederer, Abraham and Ms. Oster were each granted options to purchase
1,500 shares of common stock on May 3, 2002 at an exercise price of $4.72 per
share. Mr. Banducci received options to purchase 3,200 shares of common stock
on such date at the same exercise price. Each of the foregoing options expires
10 years from date of grant and is exercisable 50 percent after two years from
date of grant, 75 percent after three years from date of grant and 100 percent
after four years from date of grant. See "Compensation of Directors," above.
We have from time to time retained the law firm of Foley & Lardner to
perform legal services on our behalf. Payments made by us to Foley & Lardner in
2002 were approximately $18,216. Mr. Abraham is a partner at Foley & Lardner.
During the final three months of 2000 and prior to the hiring of Charles
E. Johnson as President and Chief Executive Officer in March 2001, Mr. Banducci
took on many of the day-to-day management
11
responsibilities typically associated with the position of President and Chief
Executive Officer. In consideration for these services, in June 2001 the Board
approved the payment $96,562.50 in cash in twelve monthly installments
beginning July 1, 2001 and the issuance of 30,175 shares of common stock to Mr.
Banducci.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers and directors, and persons who beneficially own more than
ten percent of our common stock, to file initial reports of ownership and
reports of changes in ownership with the SEC and The New York Stock Exchange.
Executive officers, directors and greater than ten percent beneficial owners
are required by the SEC to furnish us with copies of all Section 16(a) forms
they file.
Based upon a review of the copies of these forms furnished to us and
written representations from our executive officers and directors, we believe
that during fiscal 2002 all Section 16(a) filing requirements applicable to our
executive officers, directors and greater than ten percent beneficial owners
were complied with.
COMPANY PERFORMANCE
The following graph shows the cumulative total stockholder return on
Transpro common stock since January 1, 1998, compared to the returns of the New
York Stock Exchange Market Value Index, and a peer group consisting of the
reporting companies in SIC Code 3714 - Motor Vehicle Parts and Accessories.
12
TRANSPRO, INC.
COMPARISON OF CUMULATIVE TOTAL RETURN 1/98-12/02
VS. NYSE MARKET VALUE INDEX
AND SIC -- MOTOR VEHICLE PARTS AND ACCESSORIES INDEX
[GRAPHIC OMITTED]
Assumes $100 invested January 1, 1998 in Transpro common stock, NYSE
Market Value Index and SIC -- Motor Vehicle Parts and Accessories Index;
assumes dividend reinvestment.
1/98 12/98 12/99 12/00 12/01 12/02
------ ----------- ----------- ----------- ----------- -----------
TRANSPRO ......................... $100 $ 55.95 $ 76.51 $ 31.06 $ 37.57 $ 67.86
NYSE MARKET VALUE INDEX .......... $100 $ 118.99 $ 130.30 $ 133.40 $ 121.52 $ 99.27
SIC INDEX ........................ $100 $ 99.65 $ 80.65 $ 61.20 $ 74.28 $ 69.89
13
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS
The following tables set forth information as of March 5, 2003 with
respect to the only persons known to us to be the beneficial owners (for
purposes of the rules of the SEC) of more than 5% of the outstanding shares of
our common stock as of that date.
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNERS OWNERSHIP OF CLASS
----------------------------------------------------- --------------- ---------
Gabelli Funds, LLC ............................. 1,056,100 (a) 14.9%
GAMCO Investors, Inc.
Gabelli Performance Partnership, L.P.
Gabelli Advisers, Inc.
One Corporate Center
Rye, New York 10580
State of Wisconsin Investment Board ............ 792,000 (b) 11.1%
P.O. Box 7842
Madison, Wisconsin 53707
Ironwood Capital Management, LLC ............... 762,275 (c) 10.7%
Warren J. Isabelle
Richard L. Droster
Donald Collins
21 Custom House Street
Boston, Massachusetts 02109
Fidelity Management & Research Company ......... 649,625 (d) 9.1%
FMR Corp.
Edward C. Johnson 3d
Abigail P. Johnson
82 Devonshire Street
Boston, Massachusetts 02109
Paul S. Wilhide ................................ 497,413 (e) 7.0%
2121 North Fielder Road
Arlington, Texas 76012
----------
(a) This figure is based on information set forth in a Schedule 13D Amendment
No. 14 filed with the SEC on June 3, 2002. GAMCO Investors, Inc. ("GAMCO")
holds sole voting and dispositive power over 642,100 shares of common
stock. Gabelli Funds, LLC holds sole voting and dispositive power over an
aggregate of 393,000 shares of common stock. Gabelli Performance
Partnership, L.P. ("GPP") holds sole voting and dispositive power over
3,000 shares of common stock. Gabelli Advisers, Inc. holds sole voting and
dispositive power over 18,000 shares of common stock. Mario J. Gabelli is
the majority stockholder and Chairman of the Board of Directors and Chief
Executive Officer of Gabelli Asset Management Inc., which is the sole
parent of GAMCO and Gabelli Funds, LLC. Mr. Gabelli is also a portfolio
manager of GPP.
(b) This figure is based upon information set forth in a Schedule 13G Amendment
No. 8 filed with the SEC on February 13, 2003. The State of Wisconsin
Investment Board has sole voting and dispositive power over all of the
indicated shares.
(c) This figure is based on information set forth in a Schedule 13G filed with
the SEC on March 14, 2003. Each of the listed parties holds shared voting
power over 534,875 shares and shared dispositive power over all of the
indicated shares.
14
(d) This figure is based on information set forth in a Schedule 13G Amendment
No. 5 filed with the SEC on February 14, 2003. FMR Corp. ("FMR") and Edward
C. Johnson 3d have sole dispositive power over all of the indicated shares
but do not hold voting power over the shares. Fidelity Management &
Research Company, a wholly-owned subsidiary of FMR, holds sole voting power
over the indicated shares under written guidelines established by its Board
of Trustees.
(e) This figure is based on information set forth in a Schedule 13G filed with
the SEC on December 9, 2002. Mr. Wilhide holds sole voting and dispositive
power over all of the indicated shares. Mr. Wilhide also holds 12,781
shares of Transpro's Series B Convertible Redeemable Preferred Stock. Mr.
Wilhide's Series B preferred stock is convertible into common stock on a
ratio based on the prevailing market price of Transpro common stock;
provided that the aggregate Transpro common stock issued upon all Series B
preferred stock conversions shall not exceed 7% of the outstanding common
stock of Transpro after giving effect to the conversions. In December 2001,
Mr. Wilhide converted 11,080 shares of Series B preferred stock into
373,279 shares of Transpro common stock and in November 2002, Mr. Wilhide
converted an additional 6,139 shares of Series B preferred stock into
124,134 shares of Transpro common stock.
DIRECTORS AND OFFICERS
The following table sets forth information as of March 5, 2003, with
respect to shares of our common stock beneficially owned (for purposes of the
rules of the SEC) by each director and each executive officer named in the
Summary Compensation Table above and by all directors and current executive
officers as a group, except that the information with respect to shares held by
the trustee under Transpro's 401(k) Savings Plan is as of December 31, 2002
(the most recent practicable date for such information). Beneficial ownership
includes shares that may be obtained within 60 days through the exercise of
stock options.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS
---------------------------------------------------- --------------------- ---------
Barry R. Banducci ............................. 151,575(a) 2.1%
Charles E. Johnson ............................ 151,200(b) 2.1%
William J. Abraham, Jr. ....................... 53,000(c)(d) *
Philip Wm. Colburn ............................ 37,188(c) *
Paul R. Lederer ............................... 14,750(c)(e) *
Sharon M. Oster ............................... 19,611(c) *
F. Alan Smith ................................. 26,750(c) *
David Albert .................................. 10,258(f) *
Kenneth T. Flynn, Jr. ......................... 2,500(g) *
Jeffrey L. Jackson ............................ 47,015(h) *
Richard A. Wisot .............................. 11,250(i) *
All directors and executive officers as a group
(11 persons) ................................ 525,097(j) 7.2%
----------
* Less than 1%
(a) Includes 24,400 shares issuable upon exercise of options. Also includes
53,000 shares held by The Banducci Family LLC.
(b) Includes 88,750 shares issuable upon exercise of options.
(c) Includes 11,750 shares issuable upon exercise of options.
(d) Includes 10,000 shares held in Mr. Abraham's Keogh account.
(e) Includes 3,000 shares held by the Paul R. Lederer Revocable Trust.
(f) Consists of 4,008 shares held by the trustee under the Transpro, Inc.
401(k) Savings Plan and 6,250 shares issuable upon exercise of options.
(g) Consists of shares issuable upon exercise of options.
15
(h) Includes 27,273 shares held by the trustee under the Transpro, Inc. 401(k)
Savings Plan and 16,516 shares issuable upon exercise of options.
(i) Includes 3,750 shares issuable upon exercise of options.
(j) Consists of 292,900 shares owned by or on behalf of directors and executive
officers; 31,281 shares held on behalf of certain executive officers by the
trustee under the Transpro, Inc. 401(k) Savings Plan; and 200,916 shares
issuable upon exercise of options.
PROPOSAL NO. 2 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Our Board of Directors has selected PricewaterhouseCoopers LLP as our
independent auditors for the year ending December 31, 2003, and has directed
that management submit the selection of independent auditors for ratification
by stockholders at the annual meeting. PricewaterhouseCoopers LLP and its
predecessor Coopers & Lybrand L.L.P. has audited our financial statements since
we were spun-off from Allen Telecom Inc. (formerly The Allen Group Inc.) in
1995. A representative of PricewaterhouseCoopers LLP is expected to be present
at the annual meeting and will have an opportunity to make a statement if he or
she desires and will be available to respond to appropriate questions.
Stockholder ratification of the selection of PricewaterhouseCoopers LLP as
our independent auditors is not required by our Bylaws or otherwise. However,
the Board is submitting the selection of PricewaterhouseCoopers LLP to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Board will reconsider whether or
not to retain that firm. Even if the selection were ratified, the Board in its
discretion may direct the appointment of a different independent accounting
firm at any time during the year if the Board determines that such a change
would be in the best interests of Transpro and its stockholders.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of common
stock issued, outstanding and entitled to vote, present or represented at the
meeting, a quorum being present, is required for the adoption of this proposal.
Broker non-votes with respect to this matter will be treated as neither a vote
"for" or a vote "against" the matter, although they will be counted in
determining if a quorum is present. However, abstentions will be considered in
determining the number of votes required to attain a majority of the shares
present or represented at the meeting and entitled to vote. Accordingly, an
abstention from voting by a stockholder present in person or by proxy at the
meeting has the same legal effect as a vote "against" the matter because it
represents a share present or represented at the meeting and entitled to vote,
thereby increasing the number of affirmative votes required to approve this
proposal.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 2 -- RATIFICATION OF SELECTION
OF INDEPENDENT AUDITORS" TO BE IN THE BEST INTERESTS OF TRANSPRO AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL.
16
AUDITOR MATTERS
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews Transpro's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process. Transpro's independent
auditors are responsible for expressing an opinion on the conformity of our
audited financial statements to accounting principles generally accepted in the
United States.
In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors the audited financial statements for
the fiscal year ended December 31, 2002. The Audit Committee has discussed with
the independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees). In addition,
the Audit Committee has received from the independent auditors the written
disclosures and letter required by Independence Standards Board No. 1
(Independence Discussions with Audit Committees) and discussed with them their
independence from Transpro and its management. The Audit Committee has also
considered whether the independent auditors provision of information technology
services and other non-audit services to Transpro is compatible with the
auditor's independence.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements for the fiscal year ended December 31,
2002 be included for filing in Transpro's annual report on SEC Form 10-K for
the year ended December 31, 2002.
Audit Committee of the Board of
Directors
- F. ALAN SMITH, CHAIRMAN
- PHILIP WM. COLBURN
- SHARON M. OSTER
AUDIT FEES
The aggregate fees billed to Transpro by PricewaterhouseCoopers LLP for
professional services rendered in connection with the audit of our annual
financial statements for the 2002 fiscal year and the reviews of the interim
financial statements included in our quarterly reports on Form 10-Q were
$505,212.
ALL OTHER FEES
The aggregate fees billed to Transpro in 2002 by PricewaterhouseCoopers
LLP, for services not included above, which consisted primarily of transaction
services, employee benefit plan audits and tax consulting, were $150,872.
CERTAIN TRANSACTIONS
We have from time to time retained the law firm of Foley & Lardner to
perform legal services on our behalf. Payments made by us to Foley & Lardner in
2002 were approximately $18,216. William J. Abraham, one of our directors, is a
partner at Foley & Lardner.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the 2004
annual meeting of stockholders and included in our proxy statement for that
meeting must be received by us no later than December 1, 2003 for inclusion in
our proxy statement and form of proxy relating to that meeting.
For business to be otherwise properly brought before the 2004 annual
meeting of stockholders by a stockholder, the stockholder must deliver notice
in proper written form to our Secretary at our principal executive offices not
later than February 1, 2004 nor earlier than January 2, 2004. Our bylaws
contain additional requirements in connection with the content of such a
notice.
17
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
annual meeting. However, if any other business properly comes before the annual
meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
Our annual report, including financial statements, for the year 2002 is
enclosed with this proxy mailing but is not a part of the proxy soliciting
material.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend
the annual meeting, please sign the proxy and return it in the enclosed
envelope.
By Order of the Board of Directors
RICHARD A. WISOT
Secretary
Dated: March 28, 2003
18
Appendix A
TRANSPRO, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 1, 2003
Barry R. Banducci and Charles E. Johnson, and each of them, as the true and
lawful attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote all shares of
Common Stock of Transpro, Inc. held of record by the undersigned on March 5,
2003, at the Annual Meeting of Stockholders to be held at 11:00 a.m. on
Thursday, May 1, 2003, at The Yale Club of New York City, 50 Vanderbilt Avenue,
New York, New York and at any adjournments thereof. Any and all proxies
heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR PROPOSALS
NO. 1 AND 2.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
ANNUAL MEETING OF STOCKHOLDERS OF
TRANSPRO, INC.
MAY 1, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon as possible.
Please detach and mail in the envelope provided.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
"FOR" PROSPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BALCK INK AS SHOWN HERE [X]
--------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS
NOMINEES:
[ ] FOR ALL NOMINEES o Barry R. Banducci
o William J. Abraham, Jr.
[ ] WITHHOLD AUTHORITY o Philip Wm. Colburn
FOR ALL NOMINEES o Charles E. Johnson
o Paul R. Lederer
[ ] FOR ALL EXCEPT o Sharon M. Oster
(See instructions below) o F. Alan Smith.
INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark
"FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to
withhold, as shown here: o
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
To change the address on your account, please check the box at the right
and indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via this
method. [ ]
--------------------------------------------------------------------------------
Signature of the Stockholder_________________________ Date:_____________________
2. APPROVAL OF APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT AUDITORS:
FOR AGAINST ABSTAIN
DISCRETIONARY AUTHORITY IS HEREBY GRANTED WITH RESPECT TO SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND THE PROXY STATEMENT FURNISHED THEREWITH.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Signature of the Stockholder_________________________ Date:_____________________
NOTE: THIS PROXY MUST BE SIGNED EXACTLY AS THE NAME APPEARS HEREON. WHEN SHARES
ARE HOLD JOINTLY, EACH HOLDER SHOULD SIGN. WHEN SIGNING AS AN EXECUTOR,
ADMINISTRATOR, ATTORNEY, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.
IF THE SIGNER IS A CORPORATION, PLEASE SIGN FULL CORPORATE NAME BY DULY
AUTHORIZED OFFICER, GIVING FULL TITLE AS SUCH. IF SIGNER IS A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.