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))
[X ] Definitive Proxy Statement
[ ] 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]
March 29, 2004
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 6, 2004 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, 2004, 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 6, 2004 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, 2004;
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 9, 2004 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 29, 2004
TRANSPRO, INC.
100 GANDO DRIVE
NEW HAVEN, CONNECTICUT 06513
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PROXY STATEMENT
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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 6, 2004, 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 April 5, 2004
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. In addition, we have retained Morrow & Co., Inc. to aid in the
solicitation of proxies. The anticipated fee of Morrow & Co., Inc. is $5,000
plus out-of-pocket fees and expenses.
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 9, 2004 are
entitled to notice of and to vote at the annual meeting or any adjournments of
the annual meeting. On March 9, 2004 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
American 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 ........... 68 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 Dexmet
Corporation. (1)
William J. Abraham, Jr. ..... 56 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,
Quad/Graphics, Inc., Phillips Plastics Corporation and
Windway Capital Corp. (1)
Philip Wm. Colburn .......... 75 1995 Chairman of the Board of Allen Telecom Inc. from
December 1988 to July 2003 and a director of Allen
from 1973 to July 2003; from March 1988 to February
1991, Chief Executive Officer of Allen; currently a
director of Superior Industries International, Inc. and
Andrew Corporation. (2)
Charles E. Johnson .......... 58 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.
Paul R. Lederer ............. 64 1995 Currently a director of Maximus, Inc., Vita Food
Products, Inc., R&B Inc. and O'Reilly Automotive,
Inc.; 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)
2
YEAR FIRST
BECAME PRINCIPAL OCCUPATION
NOMINEE AGE DIRECTOR DURING THE PAST FIVE YEARS
------- --- -------- --------------------------
Sharon M. Oster ......... 55 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 ........... 72 1995 Chairman of Advanced Accessory Systems, LLC from
September 1995 to April 2003; 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)
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(1) Member of the Nominating, Governance and Compensation Committee.
(2) Member of the Audit 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 and an Audit Committee. Messrs. Lederer, Abraham and Banducci are the
members of the Nominating, Governance and Compensation Committee; and Messrs.
Smith, Colburn and Ms. Oster are the members of the Audit Committee. Each
member of the Audit Committee is independent under Rule 10A-3 of the Securities
and Exchange Commission and AMEX listing standards. The Board of Directors has
determined that Mr. Smith, Chairman of the Audit Committee, and Mr. Colburn are
each an "audit committee financial expert" as that term is defined in Item
401(h) of Regulation S-K of the Securities and Exchange Commission. Each member
of the Nominating, Governance and Compensation Committee is independent as
provided under AMEX listing standards.
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 American 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 charter of the Nominating, Governance and Compensation
Committee is posted on our website at www.transpro.com.
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;
approves any
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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. The
Audit Committee has adopted a charter that meets the requirements of the
Securities and Exchange Commission and the American Stock Exchange. A copy of
the Audit Committee charter is attached as Exhibit A to this proxy statement.
During 2003, the Board of Directors held five meetings, the Nominating,
Governance and Compensation Committee held three meetings and the Audit
Committee held eight meetings. During 2003, 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, except for Ms. Oster, who
attended nine of the thirteen Board and applicable committee meetings.
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
or Nominating, Governance and Compensation 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 participation in 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.
However, as there were insufficient shares remaining available for grant
pursuant to the Directors Plan, no option grants were made to directors in
2003.
We maintain a matching gift program for the benefit of our directors.
Pursuant to the matching gift program, in 2003, we matched gifts to charitable
organizations made by the directors in amounts up to $2,500 for each director.
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."
COMMUNICATIONS WITH DIRECTORS
In order to provide our security holders and other interested parties with
a direct and open line of communication to the Board of Directors, the Board of
Directors has adopted the following procedures for communications to directors.
Transpro security holders and other interested persons may communicate with the
chairmen of the Company's Nominating, Governance and Compensation Committee, or
Audit Committee or with the non-management directors of the Company as a group
by sending an email to directors@transpro.com. The email should specify which
of the foregoing is the intended recipient. Communications may also be sent by
mail addressed in care of the corporate Secretary, Transpro, Inc., 100 Gando
Drive, New Haven, CT 06513.
All communications received in accordance with these procedures will be
reviewed initially by our corporate Secretary. The Secretary will relay all
such communications to the appropriate director or directors unless the
Secretary determines that the communication:
o does not relate to the business or affairs of Transpro or the
functioning or constitution of the Board of Directors or any of its
committees;
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o relates to routine or insignificant matters that do not warrant the
attention of the Board of Directors;
o is an advertisement or other commercial solicitation or communication;
o is frivolous or offensive; or
o is otherwise not appropriate for delivery to directors.
The director or directors who receive any such communication will have
discretion to determine whether the subject matter of the communication should
be brought to the attention of the full Board of Directors or one or more of
its committees and whether any response to the person sending the communication
is appropriate. Any such response will be made only in accordance with
applicable law and regulations relating to the disclosure of information.
Our Secretary will retain copies of all communications received pursuant
to these procedures for a period of at least one year. The Nominating,
Governance and Compensation Committee of the Board of Directors will review the
effectiveness of these procedures from time to time and, if appropriate,
recommend changes.
We have not established a formal policy regarding director attendance at
our annual meetings of stockholders, but our directors generally do attend the
annual meeting. The Chairman of the Board presides at the annual meeting of
stockholders, and the Board of Directors holds one of its regular meetings in
conjunction with the annual meeting of stockholders. Accordingly, unless one or
more members of the Board are unable to attend, all members of the Board are
present for the annual meeting. Five of the seven members of the Board at the
time of the Company's 2003 annual meeting of stockholders attended that
meeting.
NOMINATION OF DIRECTORS
The Nominating, Governance and Compensation Committee has adopted
specifications applicable to members of the Board of Directors, and nominees
for the Board of Directors recommended by the Nominating, Governance and
Compensation Committee must meet these specifications. The specifications
provide that a candidate for director should:
o Have a reputation for industry, integrity, honesty, candor, fairness and
discretion;
o Be knowledgeable in his or her chosen field of endeavor, which field
should have such relevance to our businesses as would contribute to the
company's success;
o Be knowledgeable, or willing and able to become so quickly, in the
critical aspects of our businesses and operations; and
o Be experienced and skillful in serving as a competent overseer of, and
trusted advisor to, senior management of a publicly held corporation.
In addition, nominees for the Board of Directors should contribute to the
mix of skills, core competencies and qualifications of the Board through
expertise in one or more of the following areas: accounting and finance, the
automotive industry, international business, mergers and acquisitions,
leadership, business and management, strategic planning, government relations,
investor relations, executive leadership development, and executive
compensation.
The Nominating, Governance and Compensation Committee will consider
nominees recommended by stockholders for election at the 2005 Annual Meeting of
Stockholders that are submitted prior to the end of 2004 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, so
that the candidate may be properly considered. All stockholder recommendations
will be reviewed in the same manner as other potential candidates for Board
membership.
The Nominating, Governance and Compensation Committee has not received any
nominees for election to the Board from any stockholder or group that has held
more than 5% of our common stock for a period of one year.
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CODE OF ETHICS
Our Board of Directors has approved a Code of Business Conduct in
accordance with the rules of the Securities and Exchange Commission and the
American Stock Exchange that governs the conduct of each of our employees and
directors, including our principal executive officer, principal financial
officer, principal accounting officer and controller. Our Code of Business
Conduct is maintained on our website at www.transpro.com.
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.
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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 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 2003
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 an 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).
2003 Compensation for the Chief Executive Officer
In 2003, 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 and was increased to $395,000 effective March 3, 2003. See
"Executive Compensation -- Employment, Termination of Employment and Change of
Control Arrangements." Mr. Johnson did not receive an annual performance bonus
pursuant to the Annual Incentive Plan for 2003. Mr. Johnson did not receive any
options to purchase common stock during 2003, as the Compensation Committee
believes that prior option grants to Mr. Johnson were adequate to implement its
compensation principles.
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Summary
The Compensation Committee believes that we have implemented a
comprehensive compensation program for Transpro executives that is appropriate
and competitive with the total compensation programs provided by other similar
automotive companies with which we compete. We believe our compensation
philosophy ties compensation to stockholder returns and thereby links
compensation to the achievement of annual and longer-term operational results
of Transpro on behalf of our stockholders. We look forward to providing the
stockholders with an update in our next annual report to you.
Nominating, Governance and Compensation
Committee of the Board of Directors
-- Paul R. Lederer, Chairman
-- William J. Abraham, Jr.
-- Barry R. Banducci
ANNUAL AND LONG-TERM EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation paid
or accrued by Transpro and its subsidiaries to those persons who were the Chief
Executive Officer and the other four most highly compensated executive officers
at the end of 2003 (collectively, the "named executive officers"), for services
rendered by them in all capacities in which they served Transpro and its
subsidiaries during 2001, 2002 and 2003.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION (A) AWARDS
-------------------------- ------------------------
SECURITIES ALL
UNDERLYING OTHER
BONUS OPTIONS/ COMP.
NAME AND PRINCIPAL POSITION YEAR SALARY ($) ($) SARS (#) ($)(B)
----------------------------------- ------ ------------ ----------- ------------ ---------
Charles E. Johnson (c) ............ 2003 $391,890 $ 0 0 $ 9,817
President and Chief Executive 2002 $381,812 $242,000 35,000 $10,123
Officer 2001 $280,275 $ 81,000 100,000 83,722
Richard A. Wisot (d) .............. 2003 $205,255 $ 0 0 $ 6,323
Vice President, Treasurer, 2002 $194,778 $ 60,000 15,000 $ 3,069
Secretary and Chief Financial 2001 $104,013 $ 20,000 25,000 $ 1,976
Officer
David Albert (e) .................. 2003 $234,998 $ 0 0 $10,547
Vice President -- Operations 2002 $200,858 $ 70,000 25,000 $27,016
2001 $115,188 $ 22,000 25,000 $84,595
Jeffrey L. Jackson ................ 2003 $166,546 $ 0 0 $ 3,354
Vice President -- 2002 $157,403 $ 53,000 26,433 $ 3,028
Human Resources and Process 2001 $148,132 $ 23,000 10,000 $ 4,208
Kenneth T. Flynn, Jr. (f) ......... 2003 $142,808 $ 0 0 $ 4,569
Vice President and Corporate 2002 $132,138 $ 27,000 10,000 $ 3,859
Controller 2001 $ 64,511 $ 18,000 0 $ 1,915
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(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 2001, 2002 and 2003, respectively, (i)
contributions made by Transpro to each named executive officer under its
defined contribution plan in the following amounts: Mr. Johnson -- $3,214,
$9,064 and $8,638; Mr. Wisot -- $922, $2,010 and $5,144; Mr. Albert --
$1,414, $2,260 and $2,211; Mr. Jackson -- $2,949, $2,752 and $3,072; and
Mr. Flynn -- $672, $2,800 and $3,390; and (ii) insurance premiums paid by
Transpro in 2001, 2002 and 2003 for the benefit of the named executive
officers in the following amounts: Mr. Johnson -- $1,987, $1,059 and
$1,179; Mr. Wisot -- $1,054, $1,059 and $1,179; Mr. Albert -- $977, $1,059
and $1,179; Mr. Jackson -- $1,259, $276 and $282; and Mr. Flynn -- $1,243,
$1,059 and $1,179. 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 and 2003 for Mr. Albert in the
amounts of $23,697 and $7,157, respectively.
(c) Mr. Johnson joined Transpro in March 2001.
(d) Mr. Wisot joined Transpro in June 2001.
(e) Mr. Albert joined Transpro in April 2001.
(f) Mr. Flynn joined Transpro in June 2001.
8
There were no grants of stock options made during the year ended December
31, 2003 to the named executive officers.
The following table sets forth information with respect to unexercised
options to purchase Transpro common stock held by the named executive officers
at December 31, 2003. No options to purchase common stock were exercised in
2003 by these persons.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END # FISCAL YEAR-END($) (A)
------------------------------- ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------- ------------- --------------- ------------- --------------
Charles E. Johnson ............ 88,750 46,250 $91,200 $25,800
Richard A. Wisot .............. 16,250 23,750 $12,375 $12,375
David Albert .................. 18,750 31,250 $12,375 $12,375
Jeffrey L. Jackson ............ 16,850 19,583 $14,930 $11,116
Kenneth T. Flynn, Jr. ......... 2,500 7,500 $ 0 $ 0
----------
(a) Computed based upon the difference between the closing price of Transpro
common stock on December 31, 2003 ($4.19) and the exercise price.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information concerning our equity
compensation plans as of December 31, 2003:
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE ISSUANCE UNDER EQUITY
BE ISSUED UPON EXERCISE EXERCISE PRICE OF COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS ($) REFLECTED IN LEFT COLUMN)
--------------------------------------- ------------------------- ----------------------------- -----------------------------
Equity compensation plans approved
by security holders:
1995 Stock Plan ...................... 432,359 $ 3.85 132,004
Directors' Plan ...................... 99,200 $ 7.50 800
Equity compensation plans not
approved by security holders ......... 0 -- 0
------- ------ -------
Total ................................. 531,559 $ 4.53 132,804
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
YEARS OF SERVICE CREDIT ACCOUNT WITH % OF PAY OF 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 of employment 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
9
rate on the first day of October, November and December of the previous calendar
year multiplied by his or her accountbalance 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
$6,903, $6,676, $8,773, $12,555, and $6,999, respectively.
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. As of December 31, 2003, our accrued
obligation to Mr. Johnson with respect to his supplemental pension benefit was
$15,699. The employment agreement also 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 and was increased in March 2003 to $395,000.
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 Nominating, Governance and Compensation Committee currently consists of
three non-employee directors - Messrs. Lederer, Abraham and Banducci. Under our
1995 Nonemployee Directors Stock Option Plan, the Chairman and each nonemployee
director, including members of the Nominating, Governance and Compensation
Committee, 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. However, as there were
insufficient shares remaining available for grant pursuant to the Directors
Plan, no option grants were made to directors in 2003.
10
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
2003 were approximately $33,871. Mr. Abraham is a partner at Foley & Lardner.
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 American 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 2003 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, 1999, compared to the returns of the
American Stock Exchange Market Value Index, 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. Both the New York Stock Exchange
Market Value Index and the American Stock Exchange Market Value Index are
included pursuant to applicable SEC regulations since the listing of Transpro's
common stock was moved from the New York Stock Exchange to the American Stock
Exchange in October 2003.
11
TRANSPRO, INC.
COMPARISON OF CUMULATIVE TOTAL RETURN 1/99-12/03
VS. NYSE MARKET VALUE INDEX, AMEX MARKET VALUE INDEX
AND SIC -- MOTOR VEHICLE PARTS AND ACCESSORIES INDEX
[GRAPHIC OMITTED]
Assumes $100 invested January 1, 1999 in Transpro common stock, AMEX
Market Value Index, NYSE Market Value Index and SIC -- Motor Vehicle Parts and
Accessories Index; assumes dividend reinvestment.
1/99 12/99 12/00 12/01 12/02 12/03
------ ------------ ----------- ----------- ------------ -----------
TRANSPRO ......................... $100 $ 136.74 $ 55.51 $ 67.14 $ 121.28 $ 90.75
AMEX MARKET VALUE INDEX .......... $100 $ 124.67 $ 123.14 $ 117.47 $ 112.78 $ 153.50
NYSE MARKET VALUE INDEX .......... $100 $ 109.50 $ 112.11 $ 102.12 $ 83.42 $ 108.07
SIC INDEX ........................ $100 $ 80.93 $ 61.41 $ 74.54 $ 70.13 $ 101.46
12
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS
The following tables set forth information as of March 9, 2004 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 ....................... 1,254,200(a) 17.6%
GAMCO Investors, Inc.
MJG Associates, Inc.
Gabelli Advisers, Inc.
One Corporate Center
Rye, NY 10580
Ironwood Capital Management, LLC ......... 888,175(b) 12.5%
Warren J. Isabelle
Richard L. Droster
Donald Collins
21 Custom House Street
Boston, MA 02110
Towle & Co. .............................. 529,915(c) 7.5%
12855 Flushing Meadow Drive
St. Louis, MO 63131
Paul S. Wilhide .......................... 497,413(d) 7.0%
2121 North Fielder Road
Arlington, TX 76012
Athena Capital Management, Inc. .......... 454,400(e) 6.4%
Minerva Group, LP
David P. Cohen
4 Tower Bridge, #222
200 Barr Harbor Drive
West Conshohocken, PA 19428
Dimensional Fund Advisors Inc. ........... 447,500(f) 6.3%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
----------
(a) This figure is based on information set forth in a Schedule 13D Amendment
No. 16 filed with the SEC on June 11, 2003. GAMCO Investors, Inc. ("GAMCO")
holds sole voting and dispositive power over 691,500 shares of common
stock. Gabelli Funds, LLC holds sole voting and dispositive power over an
aggregate of 396,400 shares of common stock. MJG Associates, Inc. ("MJG")
holds sole voting and dispositive power over 9,000 shares of common stock.
Gabelli Advisers, Inc. holds sole voting and dispositive power over 157,300
shares of common stock. Mario J. Gabelli is the chief investment officer of
each of the reporting persons and is the sole shareholder of MJG.
(b) This figure is based on information set forth in a Schedule 13G filed with
the SEC on February 17, 2004. Each of the listed parties holds shared
voting power over 646,975 shares and shared dispositive power over all of
the indicated shares.
(c) This figure is based on information set forth in a Schedule 13D filed with
the SEC on May 7, 2003. Towle & Co. holds sole voting and dispositive power
over 156,600 shares, and shared dispositive power over 373,315 shares.
13
(d) 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.
(e) This figure is based on information set forth in a Schedule 13G filed with
the SEC on February 4, 2004. Athena Capital Management, Inc. holds shared
voting and dispositive power over 250,400 shares and Minerva Group, LP
holds sole voting and dispositive power over 204,100 shares. David P. Cohen
is deemed to have beneficial ownership of all of the indicated shares.
(f) This figure is based on information set forth in a Schedule 13G filed with
the SEC on February 6, 2004. Dimensional Fund Advisors Inc. holds sole
voting and dispositive power over the indicated shares, and acts as an
investment advisor or manager to various investment companies, trusts and
accounts that own the shares. Dimensional Fund Advisors Inc. disclaims
beneficial ownership of the indicated shares.
DIRECTORS AND OFFICERS
The following table sets forth information as of March 9, 2004, 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, 2003
(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 ............................. 153,975(a) 2.2%
Charles E. Johnson ............................ 194,554(b) 2.7%
William J. Abraham, Jr. ....................... 69,375(c)(d) 1.0%
Philip Wm. Colburn ............................ 38,313(c) *
Paul R. Lederer ............................... 15,875(c)(e) *
Sharon M. Oster ............................... 20,736(c) *
F. Alan Smith ................................. 27,875(c) *
David Albert .................................. 35,499(f) *
Kenneth T. Flynn, Jr. ......................... 5,000(g) *
Jeffrey L. Jackson ............................ 58,704(h) *
Richard A. Wisot .............................. 31,000(i) *
All directors and executive officers as a group
(11 persons) ................................ 650,906(j) 8.8%
----------
* Less than 1%
(a) Includes 26,800 shares issuable upon exercise of options. Also includes
53,000 shares held by The Banducci Family LLC.
(b) Includes 12,604 shares held by the trustee under the Transpro, Inc. 401(k)
Savings Plan and 117,500 shares issuable upon exercise of options.
(c) Includes 12,875 shares issuable upon exercise of options.
(d) Includes 13,100 shares held in Mr. Abraham's Keogh account.
(e) Includes 3,000 shares held by the Paul R. Lederer Revocable Trust.
14
(f) Includes 7,999 shares held by the trustee under the Transpro, Inc. 401(k)
Savings Plan and 25,000 shares issuable upon exercise of options.
(g) Consists of shares issuable upon exercise of options.
(h) Includes 30,711 shares held by the trustee under the Transpro, Inc. 401(k)
Savings Plan and 24,767 shares issuable upon exercise of options.
(i) Includes 20,000 shares issuable upon exercise of options.
(j) Consists of 316,150 shares owned by or on behalf of directors and executive
officers; 51,314 shares held on behalf of certain executive officers by the
trustee under the Transpro, Inc. 401(k) Savings Plan; and 283,442 shares
issuable upon exercise of options.
PROPOSAL NO. 2 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Audit Committee of our Board of Directors has selected
PricewaterhouseCoopers LLP as our independent auditors for the year ending
December 31, 2004, and has directed that the selection of independent auditors
be submitted for ratification by stockholders at the annual meeting.
PricewaterhouseCoopers LLP and its predecessor Coopers & Lybrand L.L.P. has
audited our financial statements since 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 Audit Committee 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 Audit Committee will
reconsider whether or not to retain that firm. Even if the selection were
ratified, the Audit Committee in its discretion may direct the appointment of a
different independent accounting firm at any time during the year if the Audit
Committee 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.
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, 2003. The
15
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 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,
2003 be included for filing in Transpro's annual report on SEC Form 10-K for
the year ended December 31, 2003.
Audit Committee of the Board of
Directors
-- F. Alan Smith, Chairman
-- Philip Wm. Colburn
-- Sharon M. Oster
AUDIT FEES
Aggregate fees billed by PricewaterhouseCoopers LLP for professional
services rendered for the audit of our annual consolidated financial statements
included in the annual report on Form 10-K and the review of interim
consolidated financial statements included in quarterly reports on Form 10-Q
and the review and audit of the application of new accounting pronouncements
and SEC releases were $394,973 and $506,662 for the years ended December 31,
2003 and 2002, respectively.
AUDIT-RELATED FEES
Aggregate fees billed by PricewaterhouseCoopers LLP for assurance and
related services that are reasonably related to the performance of the audit or
review of our financial statements and that are not disclosed under "Audit
Fees" above were $56,120 and $129,970 for the years ended December 31, 2003
and 2002, respectively. These audit related services include primarily audits of
the Company's employee benefit plans and audits in connection with acquisitions.
TAX FEES
Aggregate fees billed by PricewaterhouseCoopers LLP for professional
services rendered to Transpro for tax compliance, tax advice and tax planning
were $26,320 and $15,902 for the years ended December 31, 2003 and 2002,
respectively. These tax related services include primarily tax compliance, tax
planning and advice, and assistance with tax appeals.
ALL OTHER FEES
Aggregate fees billed by PricewaterhouseCoopers LLP for all other products
and services provided to Transpro were $1,400 and $1,400 for the years
ended December 31, 2003 and 2002, respectively. These fees were for accounting
research software licence fees.
AUDIT COMMITTEE PRE-APPROVAL POLICY
Pursuant to its charter, the Audit Committee is responsible for selection,
approving compensation and overseeing the independence, qualifications and
performance of the independent accountants. The Audit Committee has adopted a
pre-approval policy pursuant to which certain permissible audit and non-audit
services may be provided by the independent accountants. Pre-approval is
generally provided for up to one year, is detailed as to the particular service
or category of services and may be subject to a specific budget. The Audit
Committee may also pre-approve particular services on a case-by-case basis. In
assessing requests for services by the independent accountants, the Audit
Committee considers whether such services are consistent with the auditor's
independence; whether the independent accountants are likely to provide the
most effective and efficient service based upon their familiarity with the
company; and whether the service could enhance our ability to manage or control
risk or improve audit quality.
16
All of the audit-related, tax and other services provided by
PricewaterhouseCoopers in fiscal year 2003 and related fees were approved in
advance by the Audit Committee as the pre-approval policy had not yet been
finalized.
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
2003 were approximately $33,871. 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 2005
annual meeting of stockholders and included in our proxy statement for that
meeting must be received by us no later than November 30, 2004 for inclusion
in our proxy statement and form of proxy relating to that meeting.
For business to be otherwise properly brought before the 2005 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 4, 2005 nor earlier than January 5, 2005. Our bylaws
contain additional requirements in connection with the content of such a
notice.
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 2003 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 29, 2004
17
EXHIBIT A
TRANSPRO, INC.
CHARTER OF THE AUDIT COMMITTEE
I. PURPOSES
The Audit Committee is appointed by the Board of Directors of Transpro,
Inc. (the "Company") to assist the Board in fulfilling its oversight
responsibilities with respect to financial reporting and the other matters
listed below. The Audit Committee's primary purposes are to:
o Assist Board oversight of the integrity of the Company's financial
statements.
o Assist Board oversight of the Company's compliance with legal and
regulatory requirements, including monitoring the integrity of the
Company's reporting standards and systems of internal controls regarding
finance, accounting and legal matters.
o Recommend to the Board of Directors for stockholder approval independent
auditors to conduct the annual audit.
o Assist Board oversight by monitoring the qualifications, independence,
performance and scope of examination of the Company's independent
external auditors.
o Assist Board oversight by monitoring the performance of the Company's
internal audit function.
o Provide an avenue of communication among the Company's independent
external auditors, management and the Board of Directors.
o Review the quarterly and annual financial statements and the annual
audit report.
o Annually prepare a report for inclusion in the Company's proxy
statement, in accordance with applicable rules and regulations.
The Company's independent external auditors should promptly consult with
the Chair of the Audit Committee if, at any time, any material concern or
matter arises which has not been promptly or appropriately addressed by the
management of the Company or which involves any illegal act or conflict of
interest or self-dealing on the part of the Company's senior management.
The Company's independent external auditors are directly accountable to
the Audit Committee. The Audit Committee has the authority to conduct any
investigation appropriate to fulfill its responsibilities and has direct access
to the independent external auditors as well as anyone in the organization.
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.
This is the responsibility of management and the independent external auditors.
Nor is it the duty of the Audit Committee to conduct investigations or to
assure compliance with laws and regulations. Members of the Audit Committee
shall not be deemed to have accepted a duty of care that is greater than the
duty of the directors generally.
The Chairman of the Board and the Chief Executive Officer shall provide
the Audit Committee with all of the resources, both internal and external,
which the Audit Committee deems necessary or advisable to meet its duties and
responsibilities and carry out its function. Without limiting the foregoing,
the Audit Committee may retain, at the Company's expense and without seeking
approval from the Board of Directors, such special legal, accounting or other
consultants or experts as it deems necessary in the performance of its duties.
The Audit Committee shall inform an executive officer of the Company promptly
of any actions by the Audit Committee, of which an executive officer of the
Company is not otherwise aware, that would result in the commitment or payment
of Company funds.
II. COMPOSITION AND MEETINGS
The Audit Committee shall be comprised of three or more directors as
determined by the Board of Directors, each of whom shall meet the independence
criteria set forth in Rule 10A-3 of the Securities
A-1
Exchange Act of 1934 and the independence and financial literacy requirements
of the American Stock Exchange. At least one member of the Audit Committee
shall be financially sophisticated as required by the American Stock Exchange.
Audit Committee members shall be appointed by the Board of Directors,
shall serve at the will of the Board of Directors, and may be removed with or
without cause by the affirmative vote of a majority of the members of the Board
of Directors. No Audit Committee member may simultaneously serve on the audit
committees of more than three public companies unless the Board of Directors
affirmatively determines that such service would not impair the ability of such
member to effectively serve on the Audit Committee. The Audit Committee Chair
may be rotated among members periodically at the discretion of the Board of
Directors. If practicable, the immediate past chair will continue as a member
of the Audit Committee for at least one year to ensure an orderly transition.
If an Audit Committee Chair is not designated or present at a meeting, the
members of the Audit Committee may designate a Chair for such meeting by
majority vote.
The Audit Committee shall meet on at least a quarterly basis, or more
frequently as circumstances dictate. The Audit Committee Chair shall prepare
and/or approve an agenda in advance of each meeting.
The Chair of the Audit Committee will regularly report the Audit
Committee's findings, conclusions and recommendations to the Board of
Directors.
III. RESPONSIBILITIES AND DUTIES
In discharging its duties, the Audit Committee shall:
Review Procedures
-----------------
1. Submit this Charter to the Board of Directors for approval and have
the document published in accordance with SEC regulations.
2. Review and discuss with management and the independent auditors the
Company's annual audited financial statements and related footnotes,
quarterly financial statements, and the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations."
3. Periodically meet separately with management, with internal auditors
(or other personnel responsible for the internal audit function) and
with the independent external auditors to discuss any matters that the
Audit Committee or each of these groups believe should be discussed.
4. Discuss with management and the independent external auditors any
significant issues regarding accounting principles, practices and
judgments reflected therein prior to any public release, filing or
distribution.
5. In consultation with management and the independent external auditors,
consider the integrity of the Company's financial reporting processes
and controls. Review significant findings prepared by the independent
external auditors together with management's responses and the status
of management's response to previous recommendations.
6. The Audit Committee shall review with management and independent
external auditors the Company's quarterly financial results prior to
the public release thereof and/or the company's quarterly financial
statements prior to any public release, filing or distribution.
7. Discuss generally the types of information to be disclosed in earnings
press releases, as well as the manner of presentation and the types of
financial information and earnings guidance provided to analysts and
rating agencies.
8. Review and discuss any significant changes in the Company's accounting
principles and practices and any items required to be communicated by
the independent external auditors in accordance with Statements of
Auditing Standards 61 and 71, as amended from time to time.
9. Review annually the financial and accounting organizational structure,
including the responsibilities, budget and staffing of the Company's
internal audit function.
A-2
Independent Auditors
--------------------
10. Retain the Company's independent external auditors, who shall report
directly to the Audit Committee, and approve any discharge of
independent external auditors when circumstances warrant.
11. Review the qualifications, independence and performance of the
independent external auditors and annually recommend to the Board of
Directors the appointment of the independent external auditors.
12. Review and evaluate the lead audit partner of the independent auditor
and assure that the lead audit partner is rotated as required by
applicable law.
13. Pre-approve all audit engagement fees and terms, as well as all
non-audit engagements with the independent external auditors. The
Audit Committee shall have sole authority to approve such matters.
14. On at least an annual basis, ensure that the independent external
auditors submit a formal written statement delineating all of their
relationships with the Company consistent with Independent Standards
Board No. 1. Review and discuss with the independent external auditors
all significant relationships they have with the Company that could
impair their independence and, when warranted, recommend appropriate
action to the Board of Directors.
15. Review and discuss the independent external auditors' audit plan with
regard to its scope, staffing, locations, reliance upon management and
general audit approach.
16. Obtain and review, at least annually, a report by the independent
auditor describing: the firm's internal quality-control procedures;
any material issues raised by the most recent 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 independent audits carried out by the firm, and any
steps taken to deal with any such issues.
17. Consider and discuss with management the independent external
auditors' judgments about the quality and appropriateness of the
Company's accounting principles and underlying estimates used to
prepare the Company's financial statements, the clarity of the
Company's financial disclosure and whether the Company's accounting
principles are common practices or minority practices.
18. Consider whether, in order to assure continuing auditor independence,
there should be regular rotation of the audit firm itself.
19. Monitor hiring practices with respect to employees or former employees
of the Company's independent external auditors.
Legal Compliance
----------------
20. Review corporate policies relating to compliance with laws and
regulations, ethics, conflicts of interest and the investigation of
misconduct or fraud.
21. 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.
22. Review significant cases of employee conflict of interest, misconduct
or fraud.
23. Review in-house procedures for oversight of officers' expenses and
perquisites.
24. On at least an annual basis, meet with the Company's management and,
if necessary, the Company's outside counsel, to discuss any legal
matters that could have a significant impact on the financial
statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators or governmental
agencies.
A-3
Other Audit Committee Responsibilities
--------------------------------------
25. Annually prepare a report to shareholders as required by the SEC, to
be included in the Company's annual proxy statement.
26. Monitor the Company's risk assessment and risk management. Discuss
significant financial risk exposures and the steps management has
taken to monitor, control and report such exposures.
27. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Audit Committee or the
Board of Directors deems necessary or appropriate.
A-4
TRANSPRO, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 2004
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 9,
2004, at the Annual Meeting of Stockholders to be held at 11:00 a.m. on
Thursday, May 6, 2004, at The Yale Club of New York City, 50 Vanderbilt Avenue,
New York, New York and at any adjournment 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 6, 2004
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" PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
-------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS 2. APPROVAL OF APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
Nominees AS THE COMPANY'S INDEPENDENT AUDITORS:
[ ] FOR ALL NOMINEES ( ) Barry R. Banducci FOR AGAINST ABSTAIN
( ) William J. Abraham, Jr.
[ ] WITHHOLD AUTHORITY ( ) Philip Wm. Colburn DISCRETIONARY AUTHORITY IS HEREBY GRANTED WITH RESPECT TO
FOR ALL NOMINEES ( ) Charles E. Johnson SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
( ) Paul R. Lederer
[ ] FOR ALL EXCEPT ( ) Sharon M. Oster THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF
(See instructions below) ( ) F. Alan Smith. ANNUAL MEETING OF STOCKHOLDERS AND THE PROXY STATEMENT
FURNISHED THEREWITH.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
---------------------------------------------------------
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 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 Stockholder Date: Signature of Stockholder Date:
------------------- ------------- --------------------- -----------------
NOTE: THIS PROXY MUST BE SIGNED EXACTLY AS THE NAME APPEARS HEREON. WHEN
SHARES ARE HELD 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.