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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement.
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2)).
[X] Definitive Proxy Statement.
[ ] Definitive Additional Materials.
[ ] Soliciting Material Pursuant to Section 240.14a-12
WABASH NATIONAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[ ] 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:
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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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:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
WABASH NATIONAL CORPORATION
1000 SAGAMORE PARKWAY SOUTH
LAFAYETTE, INDIANA 47905
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2003 Annual Meeting of Stockholders of Wabash National Corporation
will be held at University Inn, 3001 Northwestern Avenue, West Lafayette,
Indiana, 47906 on Monday, June 2, 2003, at 10:00 a.m. for the following
purposes:
1. To elect five members of the Board of Directors.
2. To consider and act upon such other matters as may properly come
before the meeting.
IMPORTANT: Whether or not you expect to attend the meeting, you are
requested to mark, sign, date, and return the enclosed proxy as promptly as
possible in the enclosed stamped envelope.
By Order of the Board of Directors
/s/ CYNTHIA J. KRETZ
----------------------------------
CYNTHIA J. KRETZ
Secretary
Lafayette, Indiana
April 29, 2003
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS--JUNE 2, 2003
This Proxy Statement is furnished on or about April 29, 2003, to
stockholders of Wabash National Corporation (the "Corporation"), 1000 Sagamore
Parkway South, Lafayette, Indiana 47905, in connection with the solicitation by
the Board of Directors of the Corporation of proxies to be voted at the Annual
Meeting of Stockholders to be held at the University Inn, 3001 Northwestern
Avenue, West Lafayette, Indiana, 47906 on Monday, June 2, 2003, at 10:00 a.m.
The stockholder giving the proxy has the power to revoke the proxy at any time
before it is exercised. This right of revocation is not limited by or subject to
compliance with any formal procedures.
The cost of soliciting proxies will be borne by the Corporation. Copies
of solicitation material may be furnished to brokers, custodians, nominees and
other fiduciaries for forwarding to beneficial owners of shares of the
Corporation's common stock, and normal handling charges may be paid for such
forwarding service. Solicitation of proxies may be made by mail, personal
interview, telephone and facsimile by officers and other management employees of
the Corporation, who will receive no additional compensation for their services.
At the close of business on April 18, 2003, there were 25,721,165
shares of the common stock and 352,000 shares of Series B 6% Cumulative
Convertible Exchangeable Preferred Stock of the Corporation outstanding and
entitled to vote at the meeting. Only stockholders of record on April 18, 2003,
will be entitled to vote at the meeting, and each share will have one vote.
ELECTION OF DIRECTORS
At the meeting, five directors are to be elected for terms of one year
or until their successors are duly elected and qualified. Proxies representing
shares held on the record date which are returned duly executed will be voted,
unless otherwise specified, in favor of the five nominees for the Board of
Directors named below. Each of the nominees has consented to be named herein and
to serve on the Board if elected.
The name, age, business experience, current committee memberships, and
directorships of each nominee for director are as follows:
David C. Burdakin .....Member - Audit, Compensation, Nominating & Corporate
Governance Committees
Age 48
Director of the Corporation since February 2002. Mr.
Burdakin is President of HON Company, a manufacturer of
office furniture, since February 2000 and Executive Vice
President of HON Industries, a diversified manufacturer,
since February 2001. Previously, Mr. Burdakin was
President of the HON Group and has held a variety of
positions of increasing responsibility with HON since
1993.
William P. Greubel ....Member - Executive Committee
Age 51
President and Chief Executive Officer of the Corporation
since May, 2002. Director of the Corporation since May,
2002. Mr. Greubel was a Director and Chief Executive
Officer of Accuride Corporation, a manufacturer of wheels
for trucks and trailers, from 1998 until April 2002 and
served as President of Accuride Corporation from 1994 to
1998. Previously, Mr. Greubel was employed by
AlliedSignal Corporation from 1974 to 1994 in a variety
of positions of increasing responsibility, most recently
as Vice President and General Manager of the
Environmental Catalysts and Engineering Plastics business
units.
1
John T. Hackett........Member - Audit, Compensation, Nominating & Corporate
Governance, and Executive Committees
Age 70
Director of the Corporation since November 1991 and
Chairman of the Board of Directors since October 2001.
Mr. Hackett was Managing General Partner of CID Equity
Partners, L.P., a private investment partnership, from
1991 until his retirement in 2001. He previously served
as Vice President - Finance and Administration of Indiana
University from 1988 to 1991 and Executive Vice
President, Chief Financial Officer and Director of
Cummins Engine Corporation from 1964 to 1988. Mr. Hackett
is also a director of Irwin Financial Corporation and
Ball Corporation.
Dr. Martin C. Jischke..Member - Audit, Compensation, and Nominating and
Corporate Governance Committees
Age 61
Director of the Corporation since January 2002. Dr.
Jischke is President of Purdue University, West
Lafayette, Indiana, since August 2000. Previously, Dr.
Jischke was President of Iowa State University from
1991-2000, Chancellor of the University of Missouri-Rolla
from 1986-1991, and served in various capacities at the
University of Oklahoma between 1968 and 1986, including
Dean and Interim President. Dr. Jischke also serves as a
Director of Kerr-McGee Corporation.
Ludvik F. Koci Member - Audit and Compensation Committees
Age 65
Director of the Corporation since December 1993. Mr. Koci
was Chairman and Chief Executive Officer of Detroit
Diesel Corporation from 1997 until his retirement in
2002. He had previously served as President and Chief
Operating Officer from December 1989 and continues as a
consultant to Detroit Diesel Corporation. Mr. Koci also
serves on the Board of Directors of Penske Corporation,
Truck-Lite Co., Inc., American Transportation Research
Institute, Focus: HOPE, St. Mary's College, Mary's
Children Family Center (of Michigan) and BarronCast, Inc.
The Corporation's Bylaws provide that its Board of Directors shall be
comprised of not less than three nor more than twelve directors, with the exact
number to be fixed by resolution of the Board of Directors. The Board has
currently fixed the authorized number of directors at five. The Certificate of
Designation for the Corporation's Series B 6% Cumulative Convertible
Exchangeable Preferred Stock provides that upon nonpayment of required dividends
to holders of Series B Preferred Stock for six financial quarters, the number of
directors on the Board of Directors will be automatically increased by two
directors. The holders of Series B Preferred Stock, voting as a single class,
would then be entitled to fill the newly created directorships. This right to
vote as a single class to elect two directors continues until all dividends in
default are paid in full. As a result of dividend restrictions under the
Corporation's debt agreements, the Corporation has not paid dividends since the
first quarter of 2002. Accordingly, if the Corporation does not resume the
payment of dividends prior to the third quarter of 2003, the holders of the
Series B Preferred Stock will have the right to appoint two directors to serve
on the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE DIRECTORS
LISTED ABOVE.
2
BOARD COMMITTEES
The Board of Directors has established a Search Committee, Compensation
Committee, Executive Committee, Audit Committee, and a Nominating and Corporate
Governance Committee.
The Nominating and Corporate Governance Committee is responsible for
making periodic recommendations to the Board of Directors with respect to
nominees for election to the Board of Directors, monitoring a process to assess
board effectiveness and developing and implementing the Corporation's corporate
governance guidelines. This committee met four times during 2002.
The Compensation Committee is responsible for determining the
Corporation's compensation policies for executive officers and for administering
the Corporation's 1992 and 2000 Stock Option Plans, the 1997 Stock Bonus Plan,
and the 2001 Stock Appreciation Rights Plan, pursuant to the provisions of the
Plans. This Committee met six times during 2002.
The Executive Committee is responsible for exercising the authority of
the Board of Directors, to the extent permitted by law and the Bylaws of the
Corporation, in the interval between meetings of the Board when an emergency
issue or scheduling makes it difficult to convene all directors. This Committee
did not meet during 2002.
The Audit Committee is responsible for:
- reviewing the independence of the independent auditors and making
decisions regarding engaging and discharging independent
auditors;
- reviewing with the independent auditors the plan and results of
auditing engagements;
- reviewing and pre-approving non-audit services provided by the
independent auditors and the range of audit and non-audit fees;
- reviewing the scope and results of the Corporation's internal
audit procedures and the adequacy of the system of internal
controls;
- overseeing special investigations;
- reviewing the Corporation's financial statements and financial
reports filed with the SEC;
- overseeing the Corporation's efforts to assure that its business
and operations are conducted in compliance with the highest legal
and regulatory standards applicable to it, as well as ethical
business practices;
- overseeing the Corporation's internal reporting system regarding
compliance by the Corporation with Federal, state and local laws;
- establishing and implementing procedures for confidential
communications for "whistleblowers" and others who have concerns
with the Corporation's accounting, internal accounting controls
and audit matters; and
- reviewing significant accounting policies of the Corporation.
Each such member of the Audit Committee is independent within the
meaning of the rules of the New York Stock Exchange. This Committee met ten
times during 2002.
ATTENDANCE AT MEETINGS
During 2002, the Board of Directors of the Corporation held four
meetings. All directors of the Corporation, except Mr. Harrison and Mr. Koci,
attended 75% or more of all Board meetings and meetings of committees on which
they served in that year. Mr. Harrison attended 67% of all Board meetings and
meetings of committees on which he served in 2002. Mr. Koci attended 74% of all
Board meetings and meetings of committees on which he served in 2002.
DIRECTORS' FEES
Directors who are not officers or otherwise affiliated with the
Corporation receive total compensation of $10,000 per calendar quarter (paid 1/3
in cash and 2/3 in common stock of the Corporation) and $1,000 for each
Committee meeting attended.
3
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and 10% stockholders to file reports
of ownership of equity securities of the Corporation. To the Corporation's
knowledge, based solely on review of the copies of such reports furnished to the
Corporation related to the year ended December 31, 2002, all such reports were
made on a timely basis, except that due to clerical oversights by the
Corporation, (i) Richard Dessimoz, former Executive Officer of the Corporation,
did not timely report one transaction on Form 4.
(THIS SPACE INTENTIONALLY LEFT BLANK)
4
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of April 18, 2003
(unless otherwise specified), with respect to the beneficial ownership of the
Corporation's Common Stock by each person who is known to own beneficially more
than 5% of the outstanding shares of Common Stock, each person currently serving
as a director, each nominee for director, each Named Officer (as defined below),
and all directors and executive officers as a group:
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) OF CLASS
------------------------------------------------ --------------- ----------
Perkins, Wolf, McDonnell & Corporation
310 South Michigan Avenue, Suite 2600
Chicago, IL 60604................................................... 3,320,500(2) 12.91%
Berger Omni Investment Trust
210 University Boulevard, Suite 800
Denver, CO 80206.................................................... 2,100,000(3) 8.16%
State of Wisconsin Investment Board
P.O. Box 7842
Madison, WI 53707................................................... 2,067,300(4) 8.04%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401.............................................. 1,743,440(5) 6.78%
Schneider Capital Management
460 East Swedesford Road, Suite 1080
Wayne, PA 19087..................................................... 1,482,700(6) 5.76%
David C. Burdakin....................................................... 4,417 *
Richard E. Dessimoz..................................................... 43,050(7) *
Rodney P. Ehrlich....................................................... 73,517(8) *
Richard J. Giromini..................................................... 7,000 *
William P. Greubel...................................................... 30,000 *
John T. Hackett......................................................... 27,298(9) *
E. Hunter Harrison...................................................... 50,498(10) *
Mark R. Holden.......................................................... 80,585(11) *
Martin C. Jischke....................................................... 4,417 *
Ludvik F. Koci.......................................................... 25,998(12) *
Derek L. Nagle.......................................................... 53,750(13) *
All Executive Officers and Directors as a group (9 persons)............. 303,729 *
5
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable
within 60 days of April 18, 2003 are deemed outstanding for purposes of
computing the percentage ownership of the person holding such options
but are not deemed outstanding for purposes of computing the percentage
ownership of any other person. Except where indicated otherwise, and
subject to community property laws where applicable, the persons named
in the table above have sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by them.
(2) Based solely on a Schedule 13G filed January 31, 2003.
(3) Based solely on a Schedule 13G filed March 14, 2003.
(4) Based solely on a Schedule 13G filed February 14, 2003.
(5) Based solely on a Schedule 13G filed February 3, 2003.
(6) Based solely on a Schedule 13G filed February 12, 2003.
(7) Includes currently exercisable options to purchase 43,000 shares.
(8) Includes currently exercisable options to purchase 54,867 shares.
(9) Includes currently exercisable options to purchase 18,000 shares.
(10) Includes currently exercisable options to purchase 18,000 shares.
(11) Includes currently exercisable options to purchase 79,534 shares.
(12) Includes currently exercisable options to purchase 18,000 shares.
(13) Includes currently exercisable options to purchase 49,250 shares.
EXECUTIVE OFFICERS OF THE REGISTRANT
In addition to Mr. Greubel, who is identified above under the heading
"Election of Directors", the following are the Executive Officers of the
Corporation:
NAME AGE POSITION
---- --- --------
Rodney P. Ehrlich.............. 56 Senior Vice President--Product Development
Richard J. Giromini............ 50 Senior Vice President--Chief Operating Officer
Mark R. Holden................. 43 Senior Vice President--Chief Financial Officer
Rodney P. Ehrlich. Mr. Ehrlich has been Senior Vice President - Product
Development of the Corporation since October 2001. Mr. Ehrlich was Vice
President - Engineering and has been in charge of the Corporation's engineering
operations since the Corporation's founding.
Richard J. Giromini. Mr. Giromini has been Senior Vice President -
Chief Operating Officer since joining the Corporation on July 15, 2002. Prior to
that, Mr. Giromini was with Accuride Corporation from April 1998 to July 2002,
where he served in capacities as Senior Vice President - Technology and
Continuous Improvement; Senior Vice President and General Manager - Light
Vehicle Operations; and President and CEO of AKW LP. Previously, Mr. Giromini
was employed by ITT Automotive, Inc. from 1996 to 1998 serving as the Director
of Manufacturing.
Mark R. Holden. Mr. Holden has been Senior Vice President - Chief
Financial Officer since October 2001 and has also served as a member of the
Office of the C.E.O. Mr. Holden has served as Vice President - Chief Financial
Officer and Director of the Corporation since May 1995 to October 2001 and Vice
President - Controller of the Corporation from 1992 until May 1995.
6
COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation
for services in all capacities to the Corporation for the fiscal years ended
December 31, 2002, 2001, and 2000 of the present and former Chief Executive
Officers and the other four most highly compensated executive officers of the
Corporation as of December 31, 2002 (together, the "Named Officers").
SUMMARY COMPENSATION TABLE
LONG -TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------- --------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
SALARY BONUS (2) AWARDS(3) OPTIONS COMPENSATION(4)
NAME AND PRINCIPAL POSITION(1) YEAR ($) ($) ($) (#) ($)
------------------------------ ---- --------- --------- ------------ ----------- ----------------
William P. Greubel .............................. 2002 $ 393,461 $ 200,000 $262,500 250,000 $ 21,945
President and Chief Executive Officer
Mark R. Holden .................................. 2002 $ 349,167 $ 150,000 $ 0 145,000 $ 23,000
Senior Vice President - Chief Financial 2001 $ 287,500 $ 0 5,000 $ 2,675
Officer 2000 $ 287,500 $ 0 10,000 $ 3,965
Richard J. Giromini ............................. 2002 $ 150,208 $ 235,264 $ 70,000 125,000 $ 13,816
Senior Vice President - Chief Operating
Officer
Richard E. Dessimoz ............................. 2002 $ 142,290 $ 500 $ 0 20,000 $ 198,267
Acting Chief Executive Officer 2001 $ 264,500 $ 0 10,000 $ 39,796
2000 $ 264,500 $ 0 10,000 $ 5,255
Derek L. Nagle .................................. 2002 $ 275,000 $ 200 $ 0 20,000 $ 3,240
Senior Vice President of the 2001 $ 275,000 $ 0 5,000 $ $4,144
Corporation and 2000 $ 275,000 $ 0 8,000 $ 4,972
President - NOAMTC, Inc.
Rodney P. Ehrlich ............................... 2002 $ 251,275 $ 0 $ 0 0 $ 5,790
Senior Vice President - Product 2001 $ 251,275 $ 0 0 $ 5,183
Development 2000 $ 251,275 $ 0 10,000 $ 8,841
(1) Mr. Greubel became Chief Executive Officer on May 6, 2002. Mr. Giromini
became the Corporation's Chief Operating Officer on July 15, 2002. Mr.
Dessimoz' employment with the Corporation ended on May 23, 2002. Mr. Nagle
retired from the Corporation on December 31, 2002.
(2) See the Report on Executive Compensation for a description of the Bonus
Plan. In addition, certain Named Officers were eligible to receive
additional amounts outside of the Bonus Plan. In 2002, these payments
consisted of (i) amounts paid pursuant to executive employment agreements
on behalf of certain Named Officers. In 2002 these payments consisted of
$200,000 in respect of Mr. Greubel, $150,000 in respect of Mr. Holden and
$235,264 (consisting of $85,264 signing bonus and $150,000 bonus
compensation for fiscal year 2002) in respect of Mr. Giromini and (ii)
amounts paid for service anniversary awards in 2002 consisting of $200 in
respect to Mr. Nagle.
7
(3) As of December 31, 2002, the value of the 44,492 shares of restricted
common stock of the Corporation held by Mr. Greubel was $372,843, and the
value of the 13,592 shares of restricted common stock of the Corporation
held by Mr. Giromini was $113,901. Pursuant to their employment agreements,
Messrs. Greubel and Giromini received the shares of restricted stock as
compensation for the loss of equity in their former employer that each
incurred when he accepted his current position with the Corporation. The
total number of shares awarded to Messrs. Greubel and Giromini were 44,492
and 13,592, respectively. Mr. Greubel's restricted stock vests 100% on the
earlier of March 31, 2005 or the termination of Mr. Greubel's employment by
the Corporation without cause or by Mr. Greubel as a result of a material
diminishment of his position, duties or responsibilities, the assignment by
the Corporation to Mr. Greubel of substantial additional duties or
responsibilities which are inconsistent with the duties or responsibilities
then being carried out by him and which are not duties of an executive
nature, a material breach of his employment agreement by the Corporation
that is not corrected within twenty (20) business days of the receipt of a
written notice specifying the breach, material fraud on the part of the
Corporation or the discontinuance of the active operation of business of
the Corporation or its insolvency or bankruptcy within 180 days following a
change in control of the Corporation. Mr. Giromini's restricted stock vests
100% on the earlier of July 15, 2003 or the termination of Mr. Giromini's
employment by the Corporation without cause or by Mr. Giromini as a result
of a material diminishment of his position, duties or responsibilities, the
assignment by the Corporation to Mr. Giromini of substantial additional
duties or responsibilities which are inconsistent with the duties or
responsibilities then being carried out by him and which are not duties of
an executive nature, a material breach of his employment agreement by the
Corporation that is not corrected within twenty (20) business days of the
receipt of a written notice specifying the breach, material fraud on the
part of the Corporation or the discontinuance of the active operation of
business of the Corporation or its insolvency or bankruptcy. Messrs.
Greubel and Giromini have the right to receive dividends on the shares of
restricted common stock to the extent any are declared generally on the
common stock of the Corporation.
(4) "All Other Compensation" consists of (i) contributions to the Corporation's
401(k) Plan on behalf of all of the Named Officers. In 2002, these payments
consisted of $2,700 in respect of Mr. Holden, $4,500 in respect of each Mr.
Ehrlich and Mr. Dessimoz, and $2,550 in respect of Mr. Nagle.; (ii)
payments by the Corporation with respect to term life insurance for the
benefit of the Named Officers. In 2002, these payments consisted of $451 in
respect of Mr. Greubel, $300 in respect of Mr. Holden, $208 in respect of
Mr. Giromini, $538 in respect of Mr. Dessimoz, $690 in respect of Mr. Nagle
and $1,290 in respect of Mr. Ehrlich.; (iii) payments by the Corporation
with respect to the Executive Life Insurance Plan (which provides employees
with a bonus to pay for a universal life insurance policy that is fully
owned by the employee), In 2002, these payments consisted of $20,000 in
respect of Mr. Holden; (iv) reimbursement of relocation expenses incurred
by the Named Officers. In 2002, these payments consisted of $21,494 in
respect of Mr. Greubel and $13,608 in respect of Mr. Giromini, and; (v)
payments made by the Corporation with respect to severance on behalf of the
Named Officers. In 2002, these payments consisted of $193,229 in respect of
Mr. Dessimoz.
8
OPTION GRANTS
Shown below is information on grants of stock options during the year
ended December 31, 2002, to the Named Officers pursuant to the Corporation's
2000 Stock Option and Incentive Plan, the Corporation's Amended 1992 Stock
Option and Incentive Plan, which terminated in July, 2002, and inducement
options granted which are, by definition, outside of any Corporate Plan.
INDIVIDUAL GRANTS
-------------------------------------------------------------------------
PERCENTAGE POTENTIAL REALIZABLE
OF VALUE AT
NUMBER OF TOTAL ASSUMED ANNUAL RATE OF
SECURITIES OPTIONS EXERCISE OR STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO BASE PRICE FOR OPTION TERM(5)
OPTIONS EMPLOYEES (PER EXPIRATION ---------------------------
NAME GRANTED IN 2002 SHARE)(4) DATE 5% ($) 10% ($)
-------------------------- ----------- ----------- ------------ ------------ ---------- -----------
William P. Greubel............. 250,000(1) 39% $ 10.01 05/06/12 $1,573,809 $3,988,341
Mark R. Holden................. 20,000(2) 3% $ 10.00 05/02/12 $ 125,779 $ 318,748
125,000(3) 19% $ 7.79 06/14/12 $ 612,386 $1,551,907
Richard J. Giromini............ 125,000(3) 19% $ 8.65 07/15/12 $ 679,992 $1,723,234
Derek L. Nagle................. 20,000(2) 3% $ 10.00 05/02/12 $ 125,779 $ 318,748
Richard E. Dessimoz............ 20,000(2) 3% $ 10.00 05/02/12 $ 125,779 $ 318,748
Rodney P. Ehrlich.............. -- -- -- -- -- --
(1) Options granted to Mr. Greubel become exercisable ratably beginning one
year from date of grant through three years of date of grant.
(2) Options granted to Messrs. Holden, Nagle and Dessimoz become exercisable
50% as of the date of grant and 50% one year from the date of grant.
Pursuant to the Severance Agreements negotiated between the Corporation and
Messrs. Nagle and Dessimoz all options outstanding at the time of
separation became fully vested.
(3) Options granted to Messrs. Giromini and Holden become exercisable 67% two
years from the date of grant and the remainder vesting three years of date
of grant.
(4) Options were granted having exercise prices at fair market value on the
date of grant.
(5) The dollar amounts set forth under these columns are the result of
calculations of assumed annual rates of stock price appreciation from the
date of grant to the date of expiration of such options of 5% and 10%.
These assumptions are not intended to forecast future appreciation of the
Corporation's stock price. The Corporation's stock price may increase or
decrease in value over the time period set forth above.
9
OPTION FISCAL YEAR-END VALUES
Shown below is information with respect to the unexercised options to
purchase the Corporation's Common Stock granted under the Corporation's Amended
1992 Stock Option and Incentive Plan, 2000 Stock Option Plans and inducement
options granted which are, by definition outside of any Corporate Plan. None of
the Named Officers exercised any stock options during the fiscal year ended
December 31, 2002.
NUMBER OF SECURITIES
UNDERLYING OPTIONS VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
HELD AT DECEMBER 31, 2002 AT DECEMBER 31, 2002(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------- ----------- ------------- ------------ -------------
William P. Greubel............................. 0 250,000 $ 0 $ 0
Mark R. Holden................................ 69,534 154,666 $ 6,667 $ 77,083
Richard Giromini.............................. 0 125,000 $ 0 $ 0
Richard E. Dessimoz........................... 108,700 0 $ 10,050 $ 0
Derek L. Nagle................................ 49,250 0 $ 8,000 $ 0
Rodney P. Ehrlich............................. 54,867 14,333 $ 6,667 $ 3,333
(1) Based on the closing price on the New York Stock Exchange-Composite
Transactions of the Corporation's Common Stock on December 31, 2002 ($8.38
per share).
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2002 with
respect to shares of Company common stock that may be issued under our existing
equity compensation plans and arrangements.
NUMBER OF
SECURITIES REMAINING
AVAILABLE FOR FUTURE
NUMBER OF SECURITIES TO WEIGHTED AVERAGE EXERCISE ISSUANCE UNDER EQUITY
BE ISSUED UPON EXERCISE PRICE OF OUTSTANDING COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- ----------------------- ---------------------- ------------------------
(A) (B) (C)
Equity Compensation plans approved
by security holders(1) .... 1,133,545 $19.92 0
Equity Compensation plans not
approved by security holders(2) 712,689 $7.92 2,464,024
Total 1,846,234 $16.94 2,464,024
(1) Consists of shares to be issued upon exercise of outstanding options
granted under the Wabash National Corporation Amended 1992 Stock Option
Plan. There are no securities that are currently issuable under The Wabash
National Corporation Directors and Executives Deferred Compensation Plan
and the number of securities available for grant under that plan is
indeterminable as that number is dependent upon future deferrals by
eligible participants.
(2) Consists of shares to be issued upon exercise of outstanding options
granted under the Wabash National Corporation 2000 Stock Option and
Incentive Plan, shares to be issued under the Wabash National Corporation
Stock Bonus Plan, common stock to be issued under the Wabash National
Corporation Employee Stock Purchase Plan, and inducement options granted
which are, by definition outside of any Corporate Plan.
10
2000 STOCK OPTION AND INCENTIVE PLAN
The Corporation's Board of Directors adopted the 2000 Stock and Option
Incentive Plan in November 2000. This plan provides for the grant of
non-qualified stock options and restricted stock in order to attract, retain and
compensate directors, highly qualified officers, key employees and other
persons. There were 2,000,000 shares of stock originally authorized for issuance
under the plan. The exercise price for each option granted is set by the
Compensation Committee, but is required to be at least the aggregate fair market
value of the shares subject to the option. The Compensation Committee sets the
vesting schedule for each option granted and sets the restricted period for each
grant of restricted stock. Upon a change in control of the Corporation, all
outstanding shares subject to options vest and all restrictions and conditions
applicable to shares subject to restricted stock lapse. The term of the plan is
10 years, unless earlier terminated by the Board of Directors.
EMPLOYEE STOCK PURCHASE PLAN
The Corporation's Board of Directors adopted the Employee Stock
Purchase Plan in June 1993. This plan provides for the purchase of the
Corporation's common stock by certain employees in order to increase the
employee's interest in the Corporation's growth and success and to retain the
employee's services. The employee purchases the stock by electing to have
deducted from his or her payroll a whole percentage amount of at least two
percent and no more than 15 percent of the employee's daily compensation. There
were 200,000 shares of common stock originally authorized for issuance under the
Employee Stock Purchase Plan. The purchase price for each share of common stock
is the fair market value of the common stock on the last day of the applicable
period. The Board of Directors may terminate this plan at any time.
STOCK BONUS PLAN
The Corporation's Board of Directors adopted the Stock Bonus Plan in
January 1, 1997. This plan provides that stock may be awarded as supplementary
compensation as an incentive and reward to eligible long service employees who,
through industry, ability and exceptional service, contribute materially to the
success of the Corporation. There were 500,000 shares of stock originally
authorized for issuance under the Stock Bonus Plan. The Board of Directors has
the authority to determine, in its sole discretion, the amount of individual
stock bonus awards. This plan may be amended, suspended or terminated by the
Board of Directors at any time.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 2002, decisions on cash compensation and stock options of the
Corporation's executive officers were made by the Compensation Committee of the
Board of Directors, which has furnished the following report on its policies.
This report is not deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission (the "SEC") or subject to the SEC's proxy
rules or to the liabilities of Section 18 of the Securities Exchange Act of
1934, as amended (the "1934 Act"), and the report shall not be deemed to be
incorporated by reference into any prior or subsequent filing by the Corporation
under the Securities Act of 1933, as amended or the 1934 Act.
COMPENSATION POLICIES TOWARD EXECUTIVE OFFICERS
The Corporation's executive compensation policies are intended to
provide competitive levels of compensation that reflect the Corporation's annual
and long-term performance goals, reward superior corporate performance, and
assist the Corporation in attracting and retaining qualified executives. Total
compensation for each of the Named Officers as well as the other executive
officers is comprised of three principal components: base salary, annual
incentive compensation and grants of options to purchase the Corporation's
Common Stock.
Base Salary. Each year the Compensation Committee determines the base
salaries of each of the executive officers and that of the Chief Executive
Officer based on available competitive compensation data and the Compensation
Committee's assessment of each officer's past performance and its expectation as
to future contributions.
11
Annual Bonus Plan. The amount of annual bonuses paid to the executive
officers under the Corporation's bonus program (the "Bonus Plan") depends
primarily upon whether, and the extent to which, the Corporation achieved
certain pre-established working capital, profit and specific strategic
objectives. Under the Bonus Plan, the Corporation has established for each
participant a percentage of his annual base salary which is to be the
participant's standard bonus percentage (the "Standard Bonus Percentage"). The
Standard Bonus Percentages are reviewed each year by the Compensation Committee
and changes are made when deemed necessary.
Generally, if the Corporation achieves its working capital, profit and
specific strategic objectives, each Bonus Plan participant will accrue a bonus
for the year which is equal to his Standard Bonus Percentage of his base pay for
the year. If the Corporation's performance is 10%, 20%, 30%, 40%, or 50% above
its objectives, each participant accrues a bonus equal to 120%, 140%, 160%, 180%
or 200% of his Standard Bonus Percentage of base pay, respectively. Bonuses are
prorated for Corporation performance which falls between these achievement
percentages. After the bonus percentage is computed for each Bonus Plan
participant, the Compensation Committee may in its discretion increase or
decrease the percentage, based upon individual performance. Bonuses are paid to
participants in the calendar year following the year in which bonuses are
accrued by the participants.
In addition, certain Executives may receive bonus amounts pursuant to
an executive employment agreement. Bonuses for 2000, 2001 and 2002 for each of
the Named Officers appear under the caption "Bonus" in the Summary Compensation
Table.
SEVERANCE AGREEMENTS
The Corporation has adopted a policy of providing severance
arrangements for senior management employees, including the Named Executive
Officers, pursuant to which in the event of any such employee's termination
"without cause" or by the employee in certain circumstances "for good reason"
(as defined therein) the Corporation will pay such employee from one to three
years of salary dependent upon the individual grade level and employment
agreement. Further detail on severance arrangements is contained in the
description of the employment agreements described elsewhere in the
Corporation's proxy statement in which this report is included.
LONG TERM COMPENSATION THROUGH STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
Under the Corporation's 2000 Stock Options Plan options may be granted
to officers and other key employees of the Corporation and its subsidiaries to
purchase shares of common stock at a price not less than market price at the
date of grant. Options granted under the 2000 Stock Option Plan typically become
exercisable in annual installments of three years and options granted under the
Corporations Amended 1992 Stock Option Plan, under which grants may no longer be
made, typically become exercisable in annual installments of five years. Option
grants to non-employee Directors of the Corporation, however, are fully vested
on the date of grant and are exercisable six months thereafter. All options
granted expire ten years after the date of grant. The 2000 Stock Option Plan
also provides for the award of restricted stock to directors and officers of the
Corporation and key employees of the Corporation and its subsidiaries. In 2001,
the Corporation adopted a Stock Appreciation Rights Plan, under which stock
appreciation rights may be granted to officers and key employees of the
Corporation and its subsidiaries. The Corporation has not made any grants in
2002 under the Stock Appreciation Rights Plan.
CHIEF EXECUTIVE OFFICERS' 2002 COMPENSATION.
The Chief Executive Officer of the Corporation generally participates
in the same executive compensation plans and arrangements available to the other
senior executives. Accordingly, the compensation of the Chief Executive Officer
consists of annual base salary, annual bonus and grants of options. The
Compensation Committee's general approach in setting compensation of the Chief
Executive Officer is to be competitive with other companies in the industry, but
to have a large portion of compensation based upon the Corporation's
performance.
In determining Mr. Dessimoz' compensation, the Compensation Committee
took into account that for the first part of the year, Mr. Dessimoz served as
the Corporation's Acting Chief Executive Officer. In April, 2002, Mr. Greubel
became the Chief Executive Officer of the Corporation. Mr. Greubel's
compensation is a result of a negotiated agreement between Mr. Greubel and the
Corporation's Board of Directors and provides for an initial salary of $600,000
per year, a bonus for fiscal 2002, payable in 2003, of $200,000, a grant of an
option to purchase 250,000 shares of the Corporation's common stock, and a grant
of restricted stock for foregone equity in his previous
12
employer. This agreement is described in further detail elsewhere in the proxy
statement in which this report is included. In negotiating Mr. Greubel's
compensation, the Board of Directors considered the criteria contained in this
report, his qualifications and experience, his previous compensation levels,
foregone awards and other compensation at his prior employer, and the
competitive marketplace for executive talent. In additional, they considered
that a substantial equity award was warranted and necessary in order to attract
an executive such as Mr. Greubel, and to provide him a strong incentive to
increase shareholder value.
Section 162(m). Section 162(m) of the Internal Revenue Code limits tax
deductions for executive compensation to $1 million. There are several
exemptions to Section 162(m), including one for qualified performance-based
compensation. To be qualified, performance-based compensation must meet various
requirements including shareholder approval. The Committee intends to consider
annually whether it should adopt a policy regarding 162(m) and to date has
concluded that it was not appropriate to do so. One reason for this conclusion
is that, assuming the current compensation policies and philosophy remain in
place, Section 162(m) will not be applicable in the near term to any executive's
compensation.
Submitted by the
Members of the Compensation Committee
David C. Burdakin
John T. Hackett
E. Hunter Harrison
Martin C. Jischke
Ludvik F. Koci
EMPLOYMENT AND SEVERANCE AGREEMENTS
In April 2002, the Corporation entered into an employment agreement
with Mr. Greubel to serve as President and Chief Executive Officer of the
Corporation effective April 12, 2002 through March 31, 2005. The term of Mr.
Greubel's employment automatically renews for successive one-year periods unless
and until either party provides written notice, not less than 60 days prior to
the end of the then current term, of their intent not to renew the agreement.
The agreement requires the Corporation to use its commercially reasonable
efforts while Mr. Greubel is serving as the Chief Executive Officer to cause him
to be nominated for election to the Board of Directors. Pursuant to this
agreement, Mr. Greubel's initial salary was set at $600,000 per year, subject to
annual adjustment in connection with annual performance reviews and discussions
between Mr. Greubel and the Corporation. Mr. Greubel is also eligible for an
annual bonus targeted at 50% of his base salary and which may range from 0% to
100% of that year's base salary. This agreement provided that his bonus for 2002
would be at least $200,000. Pursuant to the terms of the agreement, the Board of
Directors granted Mr. Greubel an option to purchase 250,000 shares of the
Corporation's common stock at an exercise price of $10.01 per share. One-third
of these options will vest on the first anniversary of Mr. Greubel's employment
and on each of the next two anniversaries thereafter, an additional one-third of
these options will vest.
The employment agreement with Mr. Greubel also provides that the
Corporation pay for relocation expenses for Mr. Greubel and his family and
reimburses him up to $5,000 per month until such time as he is able to
consummate the sale of the home in which he previously lived. This agreement
also provided that if Mr. Greubel was unable to sell his previous home within
ninety days of putting it on the market then the Corporation would either buy
the home or cause it to be sold. This provision of his employment agreement was
amended in December, 2002, and now provides that the Corporation reimburse Mr.
Greubel $2,734 per month for the payment of principal and interest on his
mortgage on his former home and for the reasonable monthly electric, heating,
cooling and insurance expenses of the home. The amendment also provided that if
Mr. Greubel is unable to sell his former home for its fair market value, the
Corporation, in its sole discretion, may choose to buy the house or direct that
the house be sold to a third party. If the house is sold to a third party, the
Corporation is required to reimburse Mr. Greubel the difference between the
sales price and the fair market value.
13
In the event that the Corporation terminates Mr. Greubel's employment
without cause, or it is terminated by Mr. Greubel as a result of a material
diminishment of his position, duties or responsibilities, the assignment by the
Corporation to Mr. Greubel of substantial additional duties or responsibilities
which are inconsistent with the duties or responsibilities then being carried
out by him and which are not duties of an executive nature, a material breach of
this agreement by the Corporation, which is not corrected within twenty (20)
business days of the receipt of a written notice specifying the breach, material
fraud on the part of the Corporation, or the discontinuance of the active
operation of business of the Corporation or its insolvency or bankruptcy, the
Corporation will pay to him the sum of three times his then current base salary
if the termination is prior to or on March 31, 2003 and two times his salary if
after March 31, 2003. In addition, all unvested options then held by Mr. Greubel
shall become vested. If the Corporation terminates Mr. Greubel's employment
without cause, upon the attainment of corporate objectives, he is entitled to
receive a pro-rata portion of his bonus for the year in which he is terminated.
Mr. Greubel has agreed not to compete with the Corporation during the term of
his agreement and for a period of two years after termination for any reason.
In June 2002, the Corporation entered into an employment agreement with
Mr. Holden to serve as Chief Financial Officer of the Corporation effective June
14, 2002 through June 14, 2003. The term of Mr. Holden's employment
automatically renews for successive one-year periods unless and until either
party provides written notice, not less than 60 days prior to the end of the
then current term, of their intent not to renew the agreement. Pursuant to this
agreement, Mr. Holden's initial salary was set at $350,000 per year, subject to
annual adjustment in connection with annual performance reviews and discussions
between Mr. Holden and the Corporation. Mr. Holden is also eligible for an
annual bonus targeted at 50% of his base salary and which may range from 0% to
100% of that year's base salary. This agreement provided that his bonus for 2002
would be at least $150,000. Pursuant to the terms of the agreement, the Board of
Directors granted Mr. Holden an option to purchase 125,000 shares of the
Corporation's common stock at an exercise price of $7.79 per share. Two-thirds
of these options will vest on the second anniversary of Mr. Holden's execution
of his employment agreement and on the next anniversary thereafter the remaining
one-third of these options will vest.
The employment agreement with Mr. Holden also provides that the
Corporation pay the relocation expenses for Mr. Holden and his family if the
Corporation's headquarters is relocated more than 30 miles from the current
Lafayette, Indiana location.
In the event that the Corporation terminates Mr. Holden's employment
without cause, or it is terminated by Mr. Holden as a result of a material
diminishment of his position, duties or responsibilities, the assignment by the
Corporation to Mr. Holden of substantial additional duties or responsibilities
which are inconsistent with the duties or responsibilities then being carried
out by him and which are not duties of an executive nature, a material breach of
this agreement by the Corporation, which is not corrected within twenty (20)
business days of the receipt of a written notice specifying the breach, material
fraud on the part of the Corporation, or the discontinuance of the active
operation of business of the Corporation or its insolvency or bankruptcy, the
Corporation will pay to him the sum of two times his then current base salary.
In addition, all unvested options then held by Mr. Holden shall become vested.
If the Corporation terminates Mr. Holden's employment without cause, upon the
attainment of corporate objectives, he is entitled to receive a pro-rata portion
of his bonus for the year in which he is terminated. Mr. Holden has agreed not
to compete with the Corporation during the term of his agreement and for a
period of two years after termination for any reason.
In June 2002, the Corporation also entered into an employment agreement
with Mr. Giromini to serve as Chief Operating Officer of the Corporation
effective July 15, 2002 through July 15, 2003. The term of Mr. Giromini's
employment automatically renews for successive one-year periods unless and until
either party provides written notice, not less than 60 days prior to the end of
the then current term, of their intent not to renew the agreement. Pursuant to
this agreement, Mr. Giromini's initial salary was set at $325,000 per year,
subject to annual adjustment in connection with annual performance reviews and
discussions between Mr. Giromini and the Corporation. Mr. Giromini is also
eligible for an annual bonus targeted at 50% of his base salary and which may
range from 0% to 100% of that year's base salary. This agreement provided that
his bonus for 2002 would be at least $150,000. Pursuant to the terms of the
agreement, the Board of Directors granted Mr. Giromini an option to purchase
125,000 shares of the Corporation's common stock at an exercise price of $8.65
per share. Two-thirds of these options will vest on the second anniversary of
Mr. Giromini's employment and on the next anniversary thereafter, the remaining
one-third of these options will vest. Mr. Giromini was also issued a grant of
restricted stock for foregone equity in his previous employer. This agreement is
described in further detail elsewhere in the proxy statement in which this
report is included.
14
The employment agreement with Mr. Giromini provides that the
Corporation pay the relocation expenses for Mr. Giromini and his family for the
costs incurred in moving his residence to the Lafayette, Indiana area. The
agreement also provides that the Corporation reimburse Mr. Giromini up to $5,000
per month for six months for lodging, as well as reimburse him for the travel
expenses he incurs commuting on the weekends to his former home.
In the event that the Corporation terminates Mr. Giromini's employment
without cause, or it is terminated by Mr. Giromini as a result of a material
diminishment of his position, duties or responsibilities, the assignment by the
Corporation to Mr. Giromini of substantial additional duties or responsibilities
which are inconsistent with the duties or responsibilities then being carried
out by him and which are not duties of an executive nature, a material breach of
this agreement by the Corporation, which is not corrected within twenty (20)
business days of the receipt of a written notice specifying the breach, material
fraud on the part of the Corporation, or the discontinuance of the active
operation of business of the Corporation or its insolvency or bankruptcy, the
Corporation will pay to him the sum of two times his then current base salary.
In addition, all unvested options then held by Mr. Giromini shall become vested.
If the Corporation terminates Mr. Giromini's employment without cause, upon the
attainment of corporate objectives, he is entitled to receive a pro-rata portion
of his bonus for the year in which he is terminated. Mr. Giromini has agreed not
to compete with the Corporation during the term of his agreement and for a
period of two years after termination for any reason.
In May 2002, the Corporation entered into a severance agreement with
Mr. Dessimoz effective May 6, 2002 through May 6, 2004. The severance agreement
provides that if the Corporation terminates his employment without cause or it
is terminated by Mr. Dessimoz as a result of any prohibited reduction in Mr.
Dessimoz' base salary, fringe benefits or bonus eligibility, unless the
reduction of fringe benefits or bonus eligibility is generally applicable to
peer employees of the Corporation, Mr. Dessimoz has his responsibilities or
areas of supervision substantially reduced, Mr. Dessimoz has his
responsibilities or areas of supervision substantially increased without an
appropriate increase in his compensation or Mr. Dessimoz is required to move his
office more than 50 miles outside the metropolitan area in which Mr. Dessimoz'
office was located immediately prior to the move, the Corporation is required to
pay Mr. Dessimoz (i) the sum of Mr. Dessimoz' annual salary immediately prior to
his promotion as acting Chief Executive Officer, with such amount being not less
than $265,000, and any accrued vacation pay within 30 days of termination, (ii)
an amount equal to 1.5 times the sum of Mr. Dessimoz' annual salary immediately
prior to his promotion as acting Chief Executive Officer, with such amount being
not less than $265,000, and 25% of such salary and (iii) insurance and health
benefits for Mr. Dessimoz and his family for one and one-half years after the
date of termination. In addition, all unvested options then held by Mr. Dessimoz
become fully vested. Mr. Dessimoz' employment with the Corporation ended
effective May 23, 2002 and pursuant to the terms of this agreement, he received
in 2002, $193,229 of $496,875 cash compensation due.
In May 2002, the Corporation also entered into a severance agreement
with Mr. Nagle effective May 6, 2002 through May 6, 2004. The severance
agreement provides that if the Corporation terminates Mr. Nagle without cause or
it is terminated by Mr. Nagle as a result of any prohibited reduction in Mr.
Nagle's base salary, fringe benefits or bonus eligibility, unless the reduction
of fringe benefits or bonus eligibility is generally applicable to peer
employees of the Corporation, he has his responsibilities or areas of
supervision substantially reduced, he has his responsibilities or areas of
supervision substantially increased without an appropriate increase in his
compensation or he is required to move his office more than 50 miles outside the
metropolitan area in which his office was located immediately prior to the move,
the Corporation is required to pay Mr. Nagle (i) the sum of Mr. Nagle's current
annual salary or annual salary at the time of his termination, whichever is
greater, and any accrued vacation pay within 30 days of termination, (ii) an
amount equal to 1.5 times the sum of Mr. Nagle's current annual salary or annual
salary at the time of his termination, whichever is greater, and the annual
bonus that would be payable to him if all bonus plan performance targets were
met and (iii) insurance and health benefits for Mr. Nagle and his family for one
and one-half years after the date of termination. In addition, all unvested
options then held by Mr. Nagle become fully vested. Mr. Nagle resigned from the
Corporation as of December 31, 2002 and subject to a letter agreement entered
into by the Corporation and Mr. Nagle in July 2002, he is entitled to the
benefits described above, the cash compensation due totaling $515,625.
15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors in 2002 consisted
of Messrs. Hackett, Harrison, Koci, Burdakin and Jischke. None of these
individuals is currently, or was during 2002, an officer or employee of the
Corporation. In addition, none of these individuals serves as a member of the
Board of Directors or on the compensation committee of any corporation that has
an executive officer serving on the Board of Directors of the Corporation or its
Compensation Committee.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors in fiscal 2002 consisted
of Messrs. Hackett, Jischke, Burdakin and Koci. The Committee's responsibilities
are described in a written charter adopted by the Board of Directors which was
amended in February, 2003. The charter, as amended, is included as Appendix A to
this proxy statement.
As part of its ongoing activities, which are described above under
"Information Concerning the Board of Directors and Certain Committees--Audit
Committee," the Audit Committee has:
- Reviewed and discussed with management the Corporation's audited
consolidated financial statements for the fiscal year ended
December 31, 2002;
- Discussed with Ernst & Young, LLP, the Corporation's independent
auditors for fiscal 2002, the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit
Committees, as currently in effect;
- Received the written disclosures and the letter from the
independent auditors required by Independence Standards Board
Statement No. 1, Independence Discussions with Audit Committees,
as currently in effect, and has discussed with the independent
auditors their independence; and,
- Considered the compatibility of the non-audit services provided
by the auditors (which are described in the Corporation's proxy
statement under the heading "Independent Public Accountant") with
the auditors' independence.
The Audit Committee's job is one of oversight. The members of the Audit
Committee are not experts in the fields of accounting or auditing, including
auditor independence. It is not the duty of the Audit Committee to prepare the
Corporation's financial statements, to plan or conduct audits or to determine
that the Corporation's financial statements are complete and accurate and are in
accordance with generally accepted accounting principles. The Corporation's
management is responsible for preparing the Corporation's financial statements
and for maintaining the system of internal controls. The independent auditors
are responsible for auditing the financial statements and for expressing an
opinion as to the conformity of the audited financial statements with generally
accepted accounting principles.
On the basis of these reviews and discussions, the Audit Committee
recommended that the Corporation's audited consolidated financial statements be
included in the Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 2002, for filing with the Securities and Exchange Commission.
All Audit Committee members have approved this report.
Submitted by the
Members of the Audit Committee
David C. Burdakin
John T. Hackett
Martin C. Jischke
Ludvik F. Koci
16
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following graph shows a comparison of cumulative total returns for
an investment in the Common Stock of the Corporation, the S&P 500 Composite
Index and the Dow Jones Transportation Index. It covers the period commencing
December 31, 1996 and ended December 31, 2002. The graph assumes that the
value for the investment in the Common Stock of the Corporation and in each
index was $100 on December 31, 1996 and that all dividends were reinvested.
This graph is not deemed to be "soliciting material" or to be "filed" with the
SEC or subject to the SEC's proxy rules or to the liabilities of Section 18 of
the 1934 Act, and the graph shall not be deemed to be incorporated by
reference into any prior or subsequent filing by the Corporation under the
Securities Act of 1933, as amended, or the 1934 Act.
COMPARISON OF CUMULATIVE TOTAL RETURN TO SHAREHOLDERS
DECEMBER 31, 1996 THROUGH DECEMBER 31, 2002
AMONG WABASH NATIONAL CORPORATION, THE S&P 500 INDEX
AND THE DOW JONES TRANSPORTATION INDEX
(RETURN ASSUMES DIVIDEND REINVESTMENT)
WABASH S&P 500 DJ TRANS
------ ------- --------
1996 100 100 100
1997 154.52 130.47 144.37
1998 111.93 164.82 139.63
1999 82.90 194.44 131.99
2000 48.57 174.74 130.63
2001 48.95 151.95 117.04
2002 52.59 118.59 103.72
17
RELATED PARTY TRANSACTIONS
In July 2001, the Corporation entered into a three-year consulting and
non-compete agreement with Donald J. Ehrlich, former President and Chief
Executive Officer of the Corporation. At the time the agreement was executed,
Mr. Ehrlich was a director of the Corporation. The agreement provides for Mr.
Ehrlich to provide certain consulting services to the Corporation and precludes
Mr. Ehrlich from engaging in defined activities which are deemed competitive to
the interests of the Corporation. The agreement provides for payments to Mr.
Ehrlich for consulting services rendered to the Corporation of $50,000 per month
during the first year of the agreement term, $41,667 per month during the second
year of the agreement term, and $33,333 per month during the third year of the
agreement term.
In April 2002, the Corporation entered into an employment contract with
William P. Greubel in connection with Mr. Greubel's employment as Chief
Executive Officer and President of Wabash National Corporation beginning in May,
2002. Mr. Greubel was formerly a Director and Chief Executive Officer of
Accuride Corporation, a manufacturer and supplier of wheels for medium and
heavy-duty trucks and trailers. During 2002, the Corporation purchased certain
products from Accuride Corporation, and the Corporation expects to make
additional purchases during 2003. All purchases made during 2002 were on an
arm's-length basis, and the Corporation expects that future purchases will be
made on an arm's-length basis.
In June 2002, the Corporation entered into an employment contract with
Richard J. Giromini in connection with Mr. Giromini's employment as Chief
Operating Officer of Wabash National Corporation beginning in July, 2002. Mr.
Giromini was formerly Senior Vice President/Technology and Continuous
Improvement of Accuride Corporation, a manufacturer and supplier of wheels for
medium and heavy-duty trucks and trailers. During 2002, the Corporation
purchased certain products from Accuride Corporation, and the Corporation
expects to make additional purchases during 2003. All purchases made during 2002
were on an arm's-length basis, and the Corporation expects that future purchases
will be made on an arm's-length basis.
In September 2002, the Corporation entered into a sixteen month
consulting and non-compete agreement with Charles Ehrlich, former Vice President
of Operations of the Corporation. Mr. Charles Ehrlich is the brother of Donald
J. Ehrlich, former President, Chief Executive Officer and Director. The
agreement provides for Mr. Ehrlich to provide certain consulting services to the
Corporation and precludes Mr. Ehrlich from engaging in defined activities which
are deemed competitive to the interests of the Corporation. The agreement
provides for payments to Mr. Ehrlich for consulting services rendered to the
Corporation of $21,243 per month during the first four months of the agreement
term, and $21,730 per month during the remaining twelve months of the agreement
term.
PROVISIONS OF THE CERTIFICATE OF INCORPORATION
WITH ANTI-TAKEOVER EFFECTS
AUTHORIZED SHARES OF CAPITAL STOCK
The Certificate of Incorporation authorizes the issuance of up to
75,000,000 shares of Common Stock, 25,721,165 shares of which were issued and
outstanding as of April 18, 2003, and up to 25,000,000 shares of Preferred
Stock, 352,000 shares of which were outstanding as of April 18, 2003. Additional
shares of Preferred Stock with voting rights could be issued and would then
represent an additional class of stock required to approve any proposed
acquisition. In addition, such shares of Preferred Stock, together with
authorized but unissued shares of Common Stock, could also represent additional
capital required to be purchased by an acquirer. Issuance of such additional
shares may also dilute the voting interest of the Corporation's stockholders.
On November 7, 1995, the Board of Directors adopted a Stockholder
Rights Plan (the "Plan"). The Plan is designed to deter coercive or unfair
takeover tactics, to prevent a person or group from gaining control of the
Corporation without offering fair value to all shareholders and to deter other
abusive takeover tactics which are not in the best interest of shareholders.
Under the terms of the Plan, each share of Common Stock is accompanied
by one right; each right entitles the shareholder to purchase from the
Corporation, one one-thousandth of a newly issued share of Series A Preferred
Stock at an exercise price of $120.
18
The rights become exercisable ten days after a public announcement that
an acquiring person or group (as defined in the Plan) has acquired 20% or more
of the outstanding Common Stock of the Corporation (the "Stock Acquisition
Date") or ten days after the commencement of a tender offer which would result
in a person owning 20% or more of such shares. The Corporation can redeem the
rights for $.01 per right at any time until ten days following the Stock
Acquisition Date (the 10-day period can be shortened or lengthened by the
Corporation). The rights will expire in November 2005, unless redeemed earlier
by the Corporation.
If, subsequent to the rights becoming exercisable, the Corporation is
acquired in a merger or other business combination at any time when there is a
20% or more holder, the rights will then entitle a holder to buy shares of the
Acquiring Corporation with a market value equal to twice the exercise price of
each right. Alternatively, if a 20% holder acquires the Corporation by means of
a merger in which the Corporation and its stock survives, or if any person
acquires 20% or more of the Corporation's Common Stock, each right not owned by
a 20% or more shareholder, would become exercisable for Common Stock of the
Corporation (or, in certain circumstances, other consideration) having a market
value equal to twice the exercise price of the right.
VOTING PROCEDURES
Shares can be voted only if the stockholder is present in person or by
proxy. Whether or not you plan to attend in person, you are encouraged to sign
and return the enclosed proxy card. The representation in person or by proxy of
at least a majority of the outstanding shares entitled to vote is necessary to
provide a quorum at the meeting. Directors are elected by a plurality of the
affirmative votes cast.
Abstentions and "non-votes" are counted as present in determining
whether the quorum requirement is satisfied. Abstentions and "non-votes" are not
counted for the election of director proposal. A "non-vote" occurs when a
nominee holding shares for a beneficial owner votes on one proposal, but does
not vote on another proposal because the nominee does not have discretionary
voting power and has not received instructions from the beneficial owner.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Ernst & Young, LLP has acted as the
Corporation's independent public accountants for the year ended December 31,
2002. Representatives of Ernst & Young, LLP are expected to be present at the
stockholders meeting and will have an opportunity to make a statement if they
desire and are expected to be available to respond to appropriate questions.
The fees paid by the Corporation to Ernst & Young, LLP for the fiscal
year ended December 31, 2002 were as follows:
Audit Fees. The aggregate fees billed for professional services
rendered for the audit of the Corporation's annual financial statements for the
fiscal year ended December 31, 2002 and the reviews of the financial statements
included in the Corporation's Forms 10-Q for the fiscal year ended December 31,
2002 were $647,500.
Financial Information Systems Design and Implementation Fees. No fees
were billed by Ernst & Young, LLP for financial information systems design and
implementation services during 2002.
All Other Fees. The aggregate fees billed for other professional
services rendered by Ernst & Young, LLP for the year ended December 31, 2002,
other than the services described above under "Audit Fees," equaled $411,179,
including audit-related fees of $80,026 and tax and other fees of $331,153.
Audit-related fees include audits of benefit plan audits, accounting
consultation, consents, and other audit services. Tax and other fees include,
tax compliance and consulting matters.
The Audit Committee has not yet selected the Corporation's auditors for
the year ending December 31, 2003. As part of the Corporation's ongoing process
of evaluating services and costs, the Audit Committee is evaluating its options.
19
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2004 Annual
Meeting of the Corporation (other than proposals submitted under Securities
Exchange Act Rule 14a-8) must be received at the Corporation's principal
executive offices no later than March 13, 2004. Stockholder proposals intended
to be presented under Rule 14a-8 must be received at the Corporation's
principal executive offices no later than December 26, 2003.
OTHER MATTERS
Management knows of no matters to be presented for action at the
meeting other than the matters mentioned above. However, if any other matters
properly come before the meeting, it is intended that the persons named in the
accompanying form of proxy will vote on such other matters in accordance with
their best judgment.
By Order of the Board of Directors
/s/ CYNTHIA J. KRETZ
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CYNTHIA J. KRETZ
Secretary
April 29, 2003
20
APPENDIX A
WABASH NATIONAL CORPORATION
AUDIT COMMITTEE CHARTER
PURPOSE
The purpose of the Audit Committee is to assist in Board oversight of the:
(1) integrity of the financial statements of the Company
(2) compliance by the Company with legal and regulatory requirements
(3) qualifications and independence of the Company's independent auditors
(4) performance of the Company's internal audit functions and independent
auditors.
COMMITTEE MEMBERSHIP
The Audit Committee shall consist of no fewer than three members of the Board
all of whom shall meet the independence, experience and expertise requirements
of the New York Stock Exchange and applicable rules and regulations. At all
times at least one member of the Audit Committee shall be a "financial expert"
within the meaning of Section 407 of the Sarbanes-Oxley Act of 2002 and
applicable rules and regulations of the Securities and Exchange Commission.
The members of the Audit Committee shall be appointed by the Board on the
recommendation of the Nominating and Corporate Governance Committee. Audit
Committee members may be removed and replaced by the Board.
COMMITTEE POWERS, AUTHORITY, DUTIES, AND RESPONSIBILITIES
1. The Audit Committee shall have the sole authority to:
a) appoint the independent auditors to be retained by the Company
b) approve the compensation of the independent auditors
c) be directly responsible, and have the sole authority, for the
discharge or replacement of the independent auditors.
2. The Audit Committee shall approve in advance ALL services provided by the
independent auditors whether or not related to the audit.
The Company shall provide for appropriate funding, as determined by the
Audit Committee, for payment of compensation to the independent auditors
retained by the Company for the purpose of rendering or issuing an audit
report.
3. The Audit Committee shall review the annual audited financial statements
with management and the independent auditors including:
a) major issues regarding accounting and auditing principles and
practices
b) the Company's disclosures under "Management's Discussion and
Analysis of Results of Operations and Financial Condition"
c) the adequacy of internal controls that could significantly affect
the Company's financial statements
d) any material correcting adjustments that have been identified by the
independent auditor
e) any material off-balance sheet transactions
f) arrangements, obligations and other relationships of the Company
with unconsolidated entities or other persons that may have a
material current or future effect on financial condition, changes in
financial condition, results of operations, liquidity, capital
expenditures, capital resources, or significant components of
revenues or expenses.
g) other matters related to the conduct of the audit which are to be
communicated to the Audit Committee under Statement on Auditing
Standards No. 61, Communications with Audit Committees.
i
4. The Audit Committee shall review analyses and reports prepared by
management and the independent auditors of:
a) significant financial reporting issues and judgments and critical
accounting policies and practices in connection with the preparation
of the company's financial statements
b) the ramifications of the use of alternative disclosures and
treatments
c) the treatment preferred by the independent auditors
d) other material written communications between the independent
auditors and management, any "management" or "Internal control"
letter issued, or proposed to be issued, by the audit firm to the
company or schedule of unadjusted differences.
5. The Audit Committee shall review with management and the independent
auditors the Company's quarterly financial statements and the Company's
disclosures under "Management's Discussion and Analysis of Results of
Operations and Financial Condition."
The Audit Committee shall also discuss earnings press releases, as well as
financial information and earnings guidance provided to analysts and rating
agencies.
6. The Audit Committee shall:
a) review policies and procedures with respect to Company transactions
in which officers or directors have an interest;
b) where appropriate, including when their review is requested by
management or the independent auditors:
1) review policies and procedures with regard to officers' expense
accounts and perquisites
2) review any officer or director use of corporate assets for
personal gain.
3) consider the results of any review of these areas by the
internal audit staff or independent auditors.
4) review all related party transactions and similar matters to the
extent required by the New York Stock Exchange to be approved by
an audit committee or comparable body.
7. The Audit Committee shall meet periodically with management, the senior
internal audit executive, and the independent auditors to review the
Company's major financial risk exposures and the steps management has taken
to monitor and control such exposures.
The Audit Committee shall also review and evaluate the Company's processes
for identifying and assessing key financial statement risk areas and for
formulating and implementing steps to address such risk areas.
8. The Audit Committee shall review major changes to the Company's auditing
and accounting principles and practices as suggested by the independent
auditor, internal auditors, or management.
9. The Audit Committee shall receive periodic reports, at least annually, from
the independent auditor regarding:
a) the auditors' independence
b) the auditors' internal quality-control procedures
c) any material issues raised by the most recent internal
quality-control review, or peer review, of the firm, or by any
inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or more
independent audits carried out by the firm, and any steps taken to
deal with any such issues
d) relationships between the independent auditors and the Company,
discuss such reports with the auditor, and take appropriate action
on any disclosed relationship to satisfy itself of the auditor's
independence.
The Audit Committee will also establish clear hiring policies for employees
or former employees of the independent auditor.
10. The Audit Committee shall evaluate the performance of the independent
auditor and, if so determined by the Audit Committee, have the exclusive
authority to terminate and replace the independent auditors (subject, if
deemed appropriate, to shareholder ratification).
11. The Audit Committee shall review the appointment, compensation and
replacement of the senior internal auditing executive.
12. The Audit Committee shall review the significant reports to management
prepared by the internal auditing department and management's responses
thereto
13. The Audit Committee shall meet with the independent auditor prior to the
audit to review the planning and staffing of the annual audit and other
examinations of the Company's quarterly, annual, and other financial
information. The Audit Committee shall also review with the senior internal
audit executive and the independent auditors the
ii
coordination of audit efforts to assure completeness of coverage, reduction
of redundant efforts and the effective use of internal and external audit
resources.
14. The Audit Committee shall inquire of the independent auditors as to whether
they are aware that Section 10A of the Securities Exchange Act of 1934 has
been implicated.
15. The Audit Committee shall review with the independent auditor any problems
or difficulties the auditor may have encountered and any management letter
provided by the auditor and the Company's response to any such problems or
difficulties and to any management letter. Such review should include:
a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
b) Any changes required in the planned scope of the internal audit.
c) the independent auditor's assessment of the Company's internal
control structure.
16. The Audit Committee shall prepare the report required by the rules of the
Securities and Exchange Commission to be included in the Company's annual
proxy statement and shall receive the information to be provided by the
independent auditors for inclusion in the proxy statement, including with
regard to fees relating to the audit.
17. The Audit Committee shall advise the Board with respect to the Company's
policies and procedures regarding compliance with applicable laws and
regulations and with the Company's Code of Conduct.
18. The Audit Committee shall review with the Company's general counsel legal
and regulatory matters that may have a material impact on the financial
statements, the Company's compliance policies and any material reports or
inquiries received from external counsel, regulators or governmental
agencies.
19. The Audit Committee shall establish procedures for the receipt, retention
and treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
20. The Audit Committee shall meet at least annually in separate executive
sessions with:
a) the chief financial officer and the members of management
b) the senior internal audit executive
c) the independent auditors
21. The Audit Committee may form and delegate authority to subcommittees if
determined to be necessary or advisable.
22. The Audit Committee shall make reports to the Board at the next regularly
scheduled meeting following the meeting of the Audit Committee accompanied
by any recommendation to the Board.
23. The Audit Committee shall review and reassess the adequacy of this Charter
annually and recommend any proposed changes to the Board for approval.
24. The Audit Committee shall annually review its own performance.
25. The Audit Committee shall have the authority to engage, and obtain advice
and assistance from, outside legal, accounting and other advisers, and the
Company shall provide appropriate funding therefore as determined by the
Audit Committee.
26. The Audit Committee shall have such other authority and responsibilities as
may be assigned to it from time to time by the Board.
27. While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. Nor is it the duty of the Audit Committee to conduct
investigations, to resolve disagreements, if any, between management and
the independent auditor or to assure compliance with laws and regulations
and the Company's Code of Conduct.
Adopted by the Board of Directors on February 19, 2003.
iii
DETACH CARD HERE
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WABASH NATIONAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 2, 2003
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John T. Hackett and Martin C. Jischke, or each
of them, as the proxies of the undersigned, to vote all shares of Common or
Preferred Stock of Wabash National Corporation which the undersigned is entitled
to vote at the Annual Meeting of Stockholders of the Company to be held June 2,
2003 or any adjournment thereof, as follows:
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSITION.
1. Election of five Directors by all Stockholders Nominees:
01 - DAVID C. BURDSKIN 02 - WILLIAM P. GREUBEL
03 - JOHN T. HACKETT 04 - MARTIN C. JISCHKE 05 - LUDVIK F. KOCI
[ ] FOR ALL [ ] WITHHOLD ALL
[ ] FOR ALL (Except Nominee(s) listed below)
--------------------------------------------------------------------------------
2. The proxies are authorized to vote in their discretion on any other matters
which may properly come before the Annual Meeting to the extent set forth in
the proxy statement.
YOUR VOTE IS IMPORTANT.
PLEASE VOTE, SIGN, DATE, AND RETURN THIS PROXY FORM PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
DETACH CARD HERE
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(Continued from the other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSITION I.
Dated: --------------- , 2003
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Signature(s)
------------------------------
Please sign exactly as name
appears in box on the left.
When signing as attorney,
executor, administrator,
trustee, or guardian, please
give title as such. If a
corporation, please sign
partnership name by authorized
person. If joint account,
please provide both
signatures.