-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Raxs6nUbsA0TnoGABh0op7XeOt8cxcQ4E5C92OXaJ2bnxHd1CtKYvp6sbV2YteFQ gCYV1pCzw+tWLyNkSTIadA== 0000950124-04-001127.txt : 20040324 0000950124-04-001127.hdr.sgml : 20040324 20040324100742 ACCESSION NUMBER: 0000950124-04-001127 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20040428 FILED AS OF DATE: 20040324 EFFECTIVENESS DATE: 20040324 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TECUMSEH PRODUCTS CO CENTRAL INDEX KEY: 0000096831 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 381093240 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-00452 FILM NUMBER: 04686260 BUSINESS ADDRESS: STREET 1: 100 E PATTERSON ST CITY: TECUMSEH STATE: MI ZIP: 49286 BUSINESS PHONE: 5174238411 MAIL ADDRESS: STREET 1: 100 EAST PATTERSON STREET CITY: TECUMSEH STATE: MI ZIP: 49286 DEF 14A 1 k83522def14a.txt DEFINITIVE PROXY STATEMENT OMB APPROVAL -------------------------- OMB Number: 3235-0059 Expires: February 28, 2006 Estimated average burden hours per response...12.75 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 [X] 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 TECUMSEH PRODUCTS COMPANY - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the 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)(4) 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: - -------------------------------------------------------------------------------- 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) [TECUMSEH PRODUCTS COMPANY LOGO] [TECUMSEH LOGO] March 24, 2004 Dear Shareholder: We cordially invite you to attend our 2004 annual meeting of shareholders next month in Tecumseh, Michigan. Only Class B shareholders will vote at the meeting. However, all shareholders are most welcome to attend. Starting today, we are sending the enclosed proxy statement to all our shareholders and a form of proxy to Class B shareholders only. If you are a Class B shareholder, your vote is very important. Even if you plan to attend in person, please complete and mail the enclosed proxy, or vote by telephone or on the Internet, at your earliest convenience. Thank you. Sincerely, /s/ TODD W. HERRICK Chairman of the Board of Directors, President and Chief Executive Officer [TECUMSEH PRODUCTS COMPANY LETTERHEAD] [TECUMSEH PRODUCTS LOGO] NOTICE OF ANNUAL MEETING OF SHAREHOLDERS Date: Wednesday, April 28, 2004 Time: 9:00 a.m. Location: Tecumseh Country Club Tecumseh, Michigan From the center of Tecumseh, go north on the Tecumseh-Clinton Road about one mile to Burt Street. Turn right. Tecumseh Country Club is on the south side of Burt Street about one mile east of the Tecumseh-Clinton Road. The purposes of this year's annual meeting are: - To elect directors for the following year. - To consider any other matters properly presented at the meeting. All shareholders are most welcome to attend the meeting, but only those who held Class B shares at the close of business on March 5, 2004 will be entitled to vote. If you are a Class B shareholder, you will find enclosed a form of proxy solicited by our Board of Directors. Whether or not you plan to attend the meeting, please take the time to vote by completing and mailing the enclosed proxy or by voting by telephone or on the Internet. Even if you sign a proxy or vote by telephone or on the Internet, you may still attend the meeting and vote in person. You may revoke your proxy any time before the voting begins. YOUR VOTE IS VERY IMPORTANT. Thank you. TECUMSEH PRODUCTS COMPANY Daryl P. McDonald General Counsel and Secretary March 24, 2004 PROXY STATEMENT The Board of Directors of Tecumseh Products Company is soliciting proxies to vote Class B shares at our 2004 annual meeting of shareholders. This proxy statement contains information that may help you decide whether and how to vote. Please read this proxy statement carefully. Appendices A, B, C, and D contain important information about share ownership, executive compensation, market performance, and audit fees. You can obtain more information about Tecumseh Products Company from our 2003 annual report to shareholders on Form 10-K and from the other public documents that we file with the SEC. VOTING We have two classes of common stock: Class B, which has full voting rights, and Class A, which generally has no voting rights. Nothing on the agenda for this year's annual meeting will require a vote by Class A shareholders so we are only soliciting proxies from Class B shareholders. At the close of business on March 5, 2004 (the record date for the meeting), 5,077,746 Class B shares were outstanding and entitled to vote, and 13,401,938 Class A shares were outstanding. To have a quorum, a majority of the outstanding Class B shares entitled to vote must be present at the meeting -- either in person or by proxy. Instead of signing and returning a proxy, if you hold your shares in your own name, you may vote by telephone or on the Internet by following the instructions attached to your proxy. If your shares are held through a broker, bank, or other nominee, you must contact the broker, bank, or other nominee to find out whether you will be able to vote by telephone or on the Internet. If you complete the enclosed proxy and return it before the meeting, or if you vote by telephone or on the Internet, the persons named will vote your shares as you specify. You may revoke a proxy any time before voting begins at the meeting. A later proxy by any means will cancel any earlier proxy. For example, if you vote by telephone and later vote differently on the Internet, the Internet vote will count, and the telephone vote will be canceled. If you wish to change your vote by mail, you should write our Secretary to request a new proxy. The last proxy we receive before the meeting will be the one we use. You also may change your vote by voting in person at the meeting. ELECTION OF DIRECTORS ELECTION PROCEDURE Our bylaws authorize the Board of Directors to determine the number of directors that will make up the full board. Shareholders elected seven directors at last year's annual meeting. In September, the board increased the number of directors to eight and appointed David M. Risley to fill the newly created vacancy. In October, the board increased the number of directors to nine and appointed Virginia A. Kamsky to fill that new vacancy. In November, Ralph W. Babb, Jr. resigned from the board, and the board reduced the number of directors to eight. Mr. Babb resigned because new rules emanating from the Sarbanes-Oxley Act of 2002 impaired his status as an independent director and prohibited his participation on key committees of the board due to the substantial amount of our stock held by Comerica Bank in various fiduciary capacities. On March 15, 2004, David W. Kay resigned as our Chief Financial Officer and from the board in order to pursue other business opportunities. Stephen L. Hickman has decided not to run for reelection so his term will expire at this year's annual meeting. His decision was based upon a desire to reduce participation on boards to spend more time enjoying retirement related activities. The board has determined to reduce the number of directors to six when Mr. Hickman's term expires and, based on the Governance, Compensation, and Nominating Committee's recommendation, has nominated all of the other six incumbent directors for reelection. If you return a proxy or vote by telephone or on the Internet, your shares will be voted for all of the board's nominees or, if you specify otherwise, as you specify. If a nominee becomes unable to serve, which we do not expect to happen, your 1 proxy will be voted for a substitute determined in the best judgment of the proxy holders. From the persons duly nominated, directors will be elected by plurality vote of the Class B shareholders present or represented at the meeting. This means that this year, regardless of the number of Class B shares not voted for a nominee, the nominees who receive the highest through sixth highest numbers of votes will be elected. NOMINEES FOR DIRECTOR Todd W. Herrick (director since 1973, age 61). Chairman of the Board of Directors (since 2003), President, and Chief Executive Officer, Tecumseh Products Company. Mr. Herrick is a member of the Board of Directors of Comerica Incorporated and a member of the Boards of Trustees of Howe Military School and Herrick Foundation. He also is a member of the Advisory Boards to the School of Business of the University of Michigan and the School of Business of the University of Notre Dame. Mr. Herrick serves on our Pension and Investment and Strategic Planning Committees. J. Russell Fowler (Lead Director, director since 1967, age 85). Retired; Chairman Emeritus (1992 to 1994) and Chairman of the Board of Directors and Chief Executive Officer (1982 to 1992), Jacobson Stores, Inc. (mercantile business). Mr. Fowler is a member of the Boards of Directors of Butterfield Investment Company and Quanta, Inc. As our Lead Director, Mr. Fowler is responsible for calling, establishing agendas for, and moderating executive sessions of independent directors. He also serves on our Governance, Compensation, and Nominating Committee and our Audit and Strategic Planning Committees. Peter M. Banks (director since 1991, age 66). President (since February 2004), Institute for the Future (non-profit technology forecasting and research organization); Partner (September 2000 to February 2004), XR Ventures, L.L.C. (investments); Senior Executive (January 2000 to April 2000), Veridian Corporation (research and development); President and Chief Executive Officer (1997 to January 2000), ERIM International, Inc. (research and development); President and Chief Executive Officer (1995 to 1997), Environmental Research Institute of Michigan (government research and development services); Professor and Dean of the College of Engineering (1990 to 1994), University of Michigan. Dr. Banks is a member of the Boards of Directors of X-Rite Corp., HandyLab, Inc., Chaos Technology, Inc., and Triformix, Inc. He serves on our Governance, Compensation, and Nominating Committee and our Pension and Investment and Strategic Planning Committees and attends our research laboratory engineering review meetings. Jon E. Barfield (director since 1993, age 52). Chairman, President, and Chief Executive Officer, The Bartech Group, Inc. (professional staffing, information technology, and outsourced vendor management services). Mr. Barfield is a member of the Boards of Directors of National City Corporation, Granite Broadcasting Corporation, BMC Software, Inc., and Pantellos Group Limited Partnership, Inc. He also is a Trustee Emeritus of Princeton University, a member of the Boards of Trustees of Kettering University and The Henry Ford, and a director of Blue Cross and Blue Shield of Michigan and Detroit Renaissance. He serves on our Governance, Compensation, and Nominating Committee and our Audit, Pension and Investment, and Strategic Planning Committees. David M. Risley (director since 2003, age 59). Senior Vice President and Chief Financial Officer (since 2001), La-Z-Boy Incorporated (residential furniture); self-employed consultant (2000 to 2001); Vice President Finance and Chief Financial Officer (1991 through 1999), Aeroquip-Vickers, Inc. (hydraulic pumps, motors, valves, hoses, and fittings for industrial, automotive, and aerospace markets and plastic components for automotive). Mr. Risley is a member of the Board of Directors of VL Dissolution Corporation, formerly known as Vari-L Company, Inc. He serves on our Audit and Strategic Planning Committees. Virginia A. Kamsky (director since 2003, age 50). Chairman and Chief Executive Officer (since 1980), Kamsky Associates, Inc. (consulting); Executive Vice President (2003 to January 2004), Foamex International, Inc. (specialty chemicals). Ms. Kamsky serves on our Governance, Compensation, and Nominating Committee and our Audit and Strategic Planning Committees. 2 DIRECTOR COMPENSATION We do not pay employees any separate compensation for serving as directors. We pay all other directors a monthly retainer of $1,000, a $1,500 fee for each board meeting attended, and a $1,000 fee for each committee meeting attended, and we pay Dr. Banks $1,000 for each research laboratory engineering review meeting that he attends. We also reimburse those directors for travel expenses. Beginning in 2003, our non-employee directors became eligible for phantom share awards under our Director Retention Phantom Share Plan, which is administered by the Governance, Compensation, and Nominating Committee. Under the plan, each non-employee director is eligible to receive an annual award, denominated in phantom Class A shares, in an amount of up to 50% of his or her annual retainer fee. The Board of Directors makes the awards at its organizational meeting following each annual meeting of shareholders on the basis of our actual return on equity for the preceding year as compared to a target established by the committee for that year. We credit awards to directors' accounts, together with deemed dividends on the phantom shares in the accounts. Subject to some limitations, when a director leaves the board, or if there is a "change in control" of Tecumseh Products Company, we pay the director cash in an amount equal to the fair market value of the phantom shares in his or her account at that time. We compute all dollar amounts using the average of the high and low sales prices of our Class A shares on the Nasdaq Stock Market on the date of computation. In 2003, based on our return on equity for 2002, non-employee directors received phantom share awards valued at 6.7% of their 2002 annual retainer fees. When Mr. Babb resigned from the board in November 2003, we paid him $1,432, which represented 100% of the value of the phantom shares in his account at that time. DIRECTORS' MEETINGS AND STANDING COMMITTEES We held ten board meetings during 2003. The Audit Committee met 11 times. We realigned the functions of our other standing committees twice during the year. We began the year with a Governance and Executive Compensation Committee (which met twice during 2003) and a Nominating Committee (which met once). In April, the board redistributed the functions of those committees between a Governance and Nominating Committee (which met three times during the year) and a Compensation Committee (which did not meet), and in November, the board combined their functions into a single Governance, Compensation, and Nominating Committee (which met once during the year). All members of the Audit Committee and the Governance, Compensation, and Nominating Committee are independent within the meaning of the applicable NASD rules. Each incumbent director attended at least 75% of the total of all board meetings and all meetings of board committees on which he or she served that were held during his or her period of service. AUDIT COMMITTEE The board has adopted a written charter specifying the powers and duties of the Audit Committee. We included a copy of the charter as an appendix to the proxy statement for our 2003 annual meeting of shareholders. The Board of Directors has determined that the chairman of the committee, David M. Risley, is an audit committee financial expert, as defined in the SEC's rules. Mr. Risley and all of the other committee members are independent, as independence is defined in the applicable SEC rules. AUDIT COMMITTEE REPORT Our committee oversees Tecumseh Products Company's financial reporting process on behalf of the Board of Directors and is comprised of outside directors who are independent within the meaning of, and meet the experience requirements of, the applicable rules of the NASD. Management has primary responsibility for the financial statements, reporting processes, and system of internal controls. In fulfilling our oversight responsibilities, we reviewed the audited financial statements for the fiscal year ended December 31, 2003 and discussed them with management, including a discussion of the quality, not just the acceptability, of the accounting principles, reasonableness of 3 significant judgments, and clarity of disclosures in the financial statements. In performing our oversight function, we also discussed with the independent accountants the matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standards, AU sec. 380), as amended, and considered whether their provision of non-audit services is compatible with maintaining their independence. In addition, we received from the independent accountants the written disclosures and letter required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and we discussed their independence with them. In reliance on the reviews and discussions referred to above and such other considerations as we determined to be appropriate, we recommended to the Board of Directors (and the board approved) that the audited financial statements for the fiscal year ended December 31, 2003 be included in the annual report to shareholders and Form 10-K for that year. Mr. Risley joined our committee as chairman on September 24, 2003, Ms. Kamsky joined on October 29, 2003, and the other current members served throughout 2003. Ralph W. Babb, Jr. was a member until his resignation from the Board of Directors on November 26, 2003. Presented by the members of the Audit Committee of the Board of Directors David M. Risley, Chairman Jon E. Barfield J. Russell Fowler Virginia A. Kamsky GOVERNANCE, COMPENSATION, AND NOMINATING COMMITTEE The overall mission of the Governance, Compensation, and Nominating Committee is to assist the board in conducting our business successfully so as to maximize long-term benefits to shareholders, including optimizing long-term financial success. Its functions include: - Actively developing and recommending to the board strategies for achieving those goals. - Monitoring and reporting to the board on the effectiveness of management policies and decisions. - Annually reporting to the board the committee's assessment of the board's performance in light of the objectives described above. - Annually reviewing with the board the appropriate skills and characteristics required of board members in the context of the then current composition and needs of the board, including issues of diversity, age, and skills. - Making recommendations to the Board of Directors concerning candidates for nomination to the board. - Reviewing our policies for compensating outside directors and, if appropriate, making recommendations for changes. - Annually fixing the salaries of our Chief Executive Officer and other executive officers, considering, developing, reviewing, and making recommendations about programs for annual and long-term incentive compensation for those executives and for other key employees, and administering those programs, including our Management Incentive Plan and our Director Retention Phantom Stock Plan. The board has adopted a written charter for the committee, a current copy of which is available to security holders at the Investor Relations section of our website at www.tecumseh.com. DIRECTOR NOMINATIONS One function of the Governance, Compensation, and Nominating Committee is to make recommendations on nominations for the Board of Directors. The committee will consider shareholder suggestions for nominees for director (other than self-nominations). If you wish to make a suggestion, you should submit it in writing to Daryl P. McDonald, General Counsel & Secretary, Tecumseh Products Company, 100 E. Patterson Street, Tecumseh, Michigan 49286. The committee will consider suggestions received before December 31, 2004 4 before we mail the proxy materials for next year's annual meeting. In the past, the committee has identified potential nominees through recommendations made by executive officers and non-management directors and has evaluated them based on their resumes and through references and personal interviews. No shareholder other than an officer or director has ever submitted a suggestion for a nominee, but if the committee were to receive such a suggestion, it expects it would evaluate that potential nominee in substantially the same manner. REPORT ON EXECUTIVE COMPENSATION Compensation Philosophy and Objectives We follow a "pay for performance" philosophy designed to accomplish three primary objectives: - Encouraging teamwork among members of management and excellence in the performance of individual responsibilities. - Aligning the interests of key managers with the interests of shareholders by offering an incentive compensation vehicle that is based on growth in return on equity and shareholder value. - Attracting, rewarding, and retaining strong management. Our "pay for performance" strategy is intended to enhance shareholder value: - In the short term, by focusing management's attention on return on equity, cash return on assets, and other measures of current financial performance so as to challenge each business group to achieve and maintain positions of market leadership, to reduce costs where appropriate, and to continually seek to maintain and enhance Tecumseh Products Company's reputation for excellence in product quality and customer service. - In the longer term, by causing a substantial portion of each executive's potential compensation to be directly tied to market performance of the Class A shares. Management Incentive Plan Awards The principal tool for implementing our "pay for performance" philosophy is the Management Incentive Plan, which covers approximately 70 key executives, including all executive officers. (We also have a plan for awarding annual cash bonuses based on similar performance criteria, which covers lower level management employees.) The Management Incentive Plan is structured to provide both a short-term incentive tied to achievement of company-wide and business unit annual performance goals and a long-term incentive tied to the market performance of the Class A shares. Some plan awards we granted in the past were payable in cash, and the remainder were denominated in phantom stock units considered for record keeping purposes as equivalents to Class A shares and valued accordingly. Phantom stock units granted under past awards vest after a specified number of years. Except in cases of earlier employment termination due to death, disability, or retirement, or in the event of a "change in control" (as defined in the plan), unless our committee decides otherwise, these phantom stock units are subject to forfeiture if the grantee does not remain with us until the units vest. As cash dividends are paid on Class A shares, additional phantom stock units (also subject to forfeiture), equal in value to the dividends paid, are credited to employee accounts under the plan. Thus, the potential payout on an award, although payable only in cash, is tied directly to the market value performance of Class A shares over the specified periods. For purposes of computations under the plan, units are valued at the average of the closing prices for the Class A shares on the first trading day of the month over the eleven months preceding the valuation date rather than by the method required by the SEC for the Summary Compensation Table. The Management Incentive Plan affords us broad discretion to determine the amounts of awards granted, subject only to a limitation setting the maximum number of units awardable during a given year at 2% of the number of Class A shares outstanding at the end of the year. We also have broad discretion under the plan to establish criteria under which otherwise eligible employees may receive awards. In general, however, as was 5 true for 2003, before or early in each year, we expect to establish objective company-wide and business group performance criteria and, after year-end, to use actual performance (measured against these criteria) as the principal basis for award decisions for that year. For 2003, the company-wide criteria established for the Corporate Office Group, which includes Todd W. Herrick, David W. Kay, and Michael R. Forman, related to return on equity, both in absolute terms and in relation to historical performance. The same company-wide return on equity criteria also applied to our business units, and additional group criteria relating to cash return on assets (both absolute and relative to prior performance) also were established for each business unit. Under the plan as implemented for 2003, depending on the extent to which actual return on equity for that year (and, for employees in a business unit, the extent to which the unit's actual cash return on assets for the year) fell within or exceeded our pre-approved ranges, each covered employee could have received an award of up to 80% of his or her 2003 salary. Applying the criteria we established at the beginning of the year to these measures of actual 2003 performance resulted in no plan awards for our executive officers. We believe that result was appropriate in view of last year's performance and that the plan is continuing to function as intended. Salaries In keeping with our "pay for performance" philosophy, we believe executive officers should receive salaries that are reasonable, but modest, in light of their experience, skills, and responsibilities, and that the opportunity to achieve significantly greater total compensation should be tied to Tecumseh Products Company's short- and long-term performance through the potential for awards under the Management Incentive Plan. When we considered 2003 executive salaries, it was our shared perception, based on our general business knowledge and without review of any data specifically collected by us for that purpose, that existing salary levels for the CEO and our other executive officers were too low given their responsibilities. Fiscal 2002 performance also was a factor, but not a controlling factor, in our decisions on 2003 salaries, due to our belief that short-term performance generally is not appropriate for consideration with respect to that form of compensation. In our salary deliberations, we considered the CEO's recommendations for increases for other executive officers and his strong recommendation that his own salary not be increased in light of 2002 performance. Based on these considerations, we decided to establish the 2003 salary for each executive officer at the level reported in the Summary Compensation Table. Except as described above, we made our salary determinations on the same basis for all executive officers. Concluding Observations We expect to continue our "pay for performance" strategy for the foreseeable future. We intend to continue to closely monitor the impact of compensation philosophy on financial performance and shareholder value and to consider additional ways in which current plans and policies might be improved. Section 162(m) of the Internal Revenue Code generally prohibits the deduction of certain compensation in excess of $1 million per year paid by a publicly-held corporation to any individual named in the corporation's summary compensation table for the year. The compensation paid to each of our executive officers was well below $1 million for 2003, and we expect the same will be true for the current year. Therefore, we have decided to defer consideration of any compensation policies related to Section 162(m) for the present. Ralph W. Babb, Jr. left our committee on April 30, 2003 and did not take part in our determination that executive officers were not entitled to Management Incentive Plan awards for 2003. Mr. Barfield joined our committee on April 30, 2003, and Ms. Kamsky joined on November 26, 2003, so neither of them took part in our deliberations concerning 2003 salaries or 6 establishing 2003 Management Incentive Plan performance standards. Presented by the members of the Governance, Compensation, and Nominating Committee of the Board of Directors (formerly, the Compensation Committee and, before that, the Governance and Executive Compensation Committee) Jon E. Barfield, Chairman Peter M. Banks J. Russell Fowler Stephen L. Hickman Virginia A. Kamsky COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Ralph W. Babb, Jr. served on our former Governance and Executive Compensation Committee until its compensation functions were transferred to the newly formed Compensation Committee on April 30, 2003, at which time Mr. Barfield replaced him on the new committee. Ms. Kamsky joined when the compensation functions of the Compensation Committee were transferred to the newly formed Governance, Compensation, and Nominating Committee on November 26, 2003. Except for those changes, all current members have served continuously on the committee performing compensation functions throughout the period covered by the Report on Executive Compensation. No one who served on any of those committees is or ever has been an officer or employee of Tecumseh Products Company or any of its subsidiaries. Mr. Babb is an executive officer of Comerica Bank. In the normal course of its business, Comerica has various banking relationships (both credit and non-credit) with Tecumseh Products Company and with some of our executive officers. We employ Kent B. Herrick, the son of Todd W. Herrick, as Vice President and Assistant to the President and CEO. His 2003 compensation was $80,000. RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS DECISION TO CHANGE ACCOUNTANTS On April 11, 2003, our Audit Committee determined to dismiss Ciulla, Smith & Dale, LLP as our independent accountants to audit our books for fiscal year 2003. Ciulla, Smith & Dale, LLP continued in their role as our independent accountants through the completion of their normal quarterly review of our first quarter 2003 financial statements, which was completed on May 8, 2003. The audit reports issued by Ciulla, Smith & Dale, LLP on our consolidated financial statements as of and for each of the two years ended December 31, 2001 and 2002 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. For the years ended December 31, 2001 and 2002 and during the subsequent interim period until their work was completed, we had no disagreements with Ciulla, Smith & Dale, LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Ciulla, Smith & Dale, LLP would have caused Ciulla, Smith & Dale, LLP to make reference to the subject matter of the disagreement in connection with its reports. During the same periods, there were no "reportable events" defined in Item 304(a)(1)(v) of the SEC's Regulation S-K. ENGAGEMENT OF NEW ACCOUNTANTS On April 11, 2003, our Audit Committee approved engaging PricewaterhouseCoopers LLP to serve as our independent accountants for fiscal year 2003. During the two years ended December 31, 2001 and 2002, and during the subsequent interim period prior to our engaging them, we did not consult with PricewaterhouseCoopers LLP on the application of accounting principles to a specific transaction, the type of opinion that may be rendered on our consolidated financial statements, or any other matters listed in Item 304(a)(2) of Regulation S-K. 7 Foreign offices of PricewaterhouseCoopers LLP served as auditors of some of our foreign subsidiaries for the year ended December 31, 2002. ATTENDANCE AT ANNUAL MEETING PricewaterhouseCoopers LLP, our independent accountants for the fiscal year ended December 31, 2003, will continue to serve for the fiscal year ending December 31, 2004. A representative of PricewaterhouseCoopers LLP will be present at the annual meeting and available to respond to appropriate questions from shareholders. The representative will have an opportunity to make a statement if he or she so desires. AUDIT AND NON-AUDIT FEES Please see Appendix D for information about the fees billed by our principal accountants for each of the last two fiscal years. COMMUNICATIONS WITH BOARD OF DIRECTORS You can find information about sending communications to our Board of Directors at the Investor Relations section of our website at www.tecumseh.com. We encourage our directors to attend our annual meetings of shareholders. All seven of the directors who held office at that time attended last year's meeting. OTHER MATTERS We know of no business to be acted on at the annual meeting other than the matters listed in the accompanying notice. If any other matter does properly come before the meeting, the proxy holders will vote on it in accordance with their judgment. SHAREHOLDER PROPOSALS IN OUR 2005 PROXY STATEMENT In order for shareholder proposals for the 2005 annual meeting of shareholders to be eligible to be included in our proxy statement, they must be received at our principal office no later than November 24, 2004. We retain the right to omit any proposal if it does not satisfy the requirements of SEC Rule 14a-8. ADVANCE NOTICE REQUIREMENTS Our bylaws contain advance notice procedures which a shareholder must follow to nominate a person for election to our board or to present any other proposal at an annual meeting of shareholders. In general, these provisions require notice of a nomination or other proposal expected to be made at an annual meeting to be in writing, to contain specified information about the nominee or other proposal and the shareholder proponent, and to be delivered or sent by first class U.S. mail to our Secretary and received at our principal office. Except when an annual meeting is called for a date that is not within 20 days before or after the first anniversary of the prior year's annual meeting (in which case other time limits apply), we must receive the nomination or proposal no later than 60 days nor earlier than 90 days before the first anniversary of the prior year's annual meeting. This means that any nomination or proposal for next year's annual meeting must be received no later than February 27, 2005 and no earlier than January 28, 2005. Management proxies for the 2005 annual meeting may confer discretionary authority to vote on an untimely proposal without express direction from shareholders giving the proxies. PROXY SOLICITATION EXPENSES We will pay the expenses of this solicitation. We have engaged Georgeson Shareholder Communications Inc. to assist in soliciting proxies, for which we will pay approximately $8,000 plus out-of-pocket expenses. We also may pay brokers, nominees, fiduciaries, custodians, and other organizations performing similar functions their reasonable expenses for sending proxy material to principals and obtaining their instructions. In addition to solicitation by mail, our directors, officers, and employees may solicit proxies in person or by telephone, fax, or similar means. 8 YOUR VOTE IS VERY IMPORTANT. If you are a Class B shareholder, please complete and return the enclosed proxy, or vote by telephone or on the Internet, as soon as possible, even if you currently plan to attend the annual meeting in person. By Order of the Board of Directors, /s/ DARYL P. McDONALD Daryl P. McDonald General Counsel and Secretary Tecumseh, Michigan March 24, 2004 9 APPENDIX A SHARE OWNERSHIP 5% CLASS B SHAREHOLDERS This table shows the Class B shares held by persons we know to be beneficial owners of more than 5% of the class. We obtained the information about Comerica Bank, AXA, and Franklin Resources, Inc. (which is as of December 31, 2003) from the Schedules 13G they filed with the SEC. The other information is as of March 5, 2004.
- -------------------------------------------------------------------------------------------------------------------- Amount and Nature of Beneficial Ownership -------------------------------------------------------- Sole Sole Shared Shared Voting Investment Voting Investment Percent Power Power Power Power Total of Class ------ ---------- ------ ---------- ----- -------- Herrick Foundation 150 W. Jefferson Suite 2500 Detroit, MI 48226 1,367,525 1,367,525 1,367,525 26.9% Kenneth G. Herrick Tecumseh Products Co. 100 E. Patterson St Tecumseh, MI 49286 888,113 888,113 888,113 17.5% Todd W. Herrick Tecumseh Products Co. 100 E. Patterson St Tecumseh, MI 49286 21,906 21,906 1,440,075 1,440,075 1,461,981 28.8% Comerica Bank One Detroit Center Detroit, MI 48275 5,800 11,090 1,162,509 1,157,219 1,168,309 23.0% Michael A. Indenbaum 150 W. Jefferson Suite 2500 Detroit, MI 48226 888,113 888,113 888,113 17.5% AXA 25, avenue Matignon 75008 Paris, France 285,093 431,893 431,893 8.5% Franklin Resources, Inc. One Franklin Parkway San Mateo, CA 94403 300,000 300,000 300,000 5.9% - --------------------------------------------------------------------------------------------------------------------
Todd W. Herrick, who is a director and nominee for director, Michael A. Indenbaum, a principal in Miller, Canfield, Paddock and Stone, P.L.C., and Kenneth G. Herrick are the members of the Board of Trustees of Herrick Foundation. Kenneth G. Herrick's shares are held as a trustee of trusts for the benefit of himself and his descendants. The shares for which Mr. Indenbaum is shown as having shared voting and investment power are held as a trustee of the Kenneth G. Herrick trusts. Comerica Bank's shares include shares it held on the date of its Schedule 13G as a trustee of the Kenneth G. Herrick trusts and of other trusts. A-1 Of the shares for which Todd W. Herrick is shown as having shared voting and investment power, 72,550 are held as a member of the Board of Trustees of Howe Military School and 1,367,525 are held as a member of the Board of Trustees of Herrick Foundation. The Schedule 13G filed by AXA and related entities states that AXA filed as a parent holding company with respect to the holdings of its subsidiary, AXA Rosenberg Investment Management LLC, and that AXA Financial, Inc. filed as a parent holding company with respect to the holdings of its subsidiaries, Alliance Capital Management L.P. and the Equitable Life Assurance Society of the United States. The Schedule 13G also states that AXA owns AXA Financial, Inc. and that the following entities, as a group, control AXA: AXA Assurances I.A.R.D. Mutuelle, AXA Assurances Vie Mutuelle, and AXA Courtage Assurance Mutuelle. The Schedule 13G filed by Franklin Resources, Inc. and related entities states that Franklin Resources, Inc. filed as a parent holding company with respect to the holdings of one or more investment companies or other managed accounts advised by subsidiaries of Franklin Resources Inc., including Franklin Balance Sheet Investment Fund, a series of Franklin Value Investors Trust, and that Franklin Advisory Services, LLC holds the voting and investment power with respect to the shares shown in the table. The Schedule 13G also states that Charles B. Johnson and Rupert H. Johnson, Jr. are the principal shareholders of Franklin Resources, Inc. A-2 MANAGEMENT'S BENEFICIAL OWNERSHIP
-------------------------------------------------------------------------------------------------------------- Shares Beneficially Owned as of March 5, 2004 ---------------------------------------------------------------------------- Sole Voting Shared Voting Class of and and Common Investment Investment Stock Power Power Total Percentage -------- ----------- ------------- ----- ---------- Peter M. Banks Class B............... 100 -0- 100 * Class A............... -0- -0- -0- -0- Jon E. Barfield Class B............... -0- -0- -0- -0- Class A............... 659 -0- 659 * J. Russell Fowler Class B............... 1,300 1,300 2,600 * Class A............... 900 900 1,800 * Todd W. Herrick Class B............... 21,906 1,440,075 1,461,981 28.8% Class A............... -0- 561,324 561,324 4.2% Stephen L. Hickman Class B............... 100 -0- 100 * Class A............... 300 -0- 300 * Virginia A. Kamsky Class B............... -0- -0- -0- -0- Class A............... -0- -0- -0- -0- David W. Kay Class B............... 50 -0- 50 * Class A............... -0- -0- -0- -0- David M. Risley Class B............... -0- -0- -0- -0- Class A............... -0- -0- -0- -0- Michael R. Forman Class B............... -0- -0- -0- -0- Class A............... -0- -0- -0- -0- All current directors and Class B............... 23,506 1,441,375 1,464,881 28.8% current executive officers Class A............... 1,859 562,224 564,083 4.2% as a group (9 persons) ---------------------- * less than 1% --------------------------------------------------------------------------------------------------------------
The shares for which Mr. Fowler is shown as having shared voting and investment power are owned by his wife. Herrick Foundation, of which Todd W. Herrick is one of the three co-trustees, owns 1,367,525 Class B shares and 458,347 Class A shares. The shared voting and investment power column includes those shares for Mr. Herrick. He disclaims beneficial ownership of Herrick Foundation's shares. Todd W. Herrick is a member of the Board of Trustees of Howe Military School, which owns 72,550 Class B shares and 102,977 Class A shares. The shared voting and investment power column includes those shares for Mr. Herrick. He disclaims beneficial ownership of Howe Military School's shares. In addition to the shares shown in the chart, Todd W. Herrick is an income beneficiary of trusts that hold 888,113 Class B shares and 454,441 Class A shares. Mr. Kay resigned from his positions as a director and Chief Financial Officer on March 15, 2004, at which time James S. Nicholson became interim Chief Financial Officer. Therefore, the shares shown for all current directors and current executive officers as a group include Mr. Nicholson's shares and exclude Mr. Kay's. Mr. Nicholson owns 100 Class B shares with sole voting and investment power. A-3 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Directors, certain officers, and beneficial owners of more than 10% of the Class B shares are required to file reports about their ownership of our equity securities under Section 16(a) of the Securities Exchange Act of 1934 and to provide copies of the reports to us. Based on the copies we received and on written representations from the persons we know are subject to these requirements, we believe all 2003 filing requirements were met. A-4 APPENDIX B EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE This table provides compensation information for our Chief Executive Officer and each other person who served as an executive officer at any time during 2003 and whose total salary and bonus for that year exceeded $100,000.
- -------------------------------------------------------------------------------------------------------- Long-Term Annual Compensation Compensation -------------------- ---------------- Awards ---------------- Restricted Stock All Other Name and Principal Position Year Salary Bonus Award Compensation - -------------------------------------------------------------------------------------------------------- Todd W. Herrick 2003 $475,000 $ -0- $ -0- $5,081 President & Chief 2002 475,000 10,608 21,216 6,000 Executive Officer 2001 475,000 -0- -0- 5,100 David W. Kay 2003 $240,000 $ -0- $ -0- $5,077 Vice-President, Treasurer 2002 200,000 4,467 8,933 6,000 & Chief Financial Officer 2001 147,381 -0- -0- 4,024 (from Oct. 1, 2001 to Mar. 15, 2004) Michael R. Forman 2003 $125,000 $ -0- $ -0- $3,615 Vice-President & Director 2002 120,000 2,680 5,360 3,803 of Corporate Human Resources 2001 108,004 -0- -0- 3,765 (since Oct. 1, 2001) - --------------------------------------------------------------------------------------------------------
Salary includes any amounts deferred at the officer's election and contributed on his behalf to our Retirement Savings Plan (a 401(k) plan). Bonus consists of the one-third of the 2002 awards under the Management Incentive Plan paid in cash. "Restricted Stock Awards" are restricted phantom stock units relating to Class A shares that were awarded under the Management Incentive Plan, which represent two-thirds of each total award for 2002. As more fully discussed in the Report on Executive Compensation, these awards and any deemed dividend reinvestments that may be credited on them generally are nontransferable and subject to forfeiture until three years (as to half of the phantom stock units awarded) or five years (as to the other half) after the end of the year for which they were granted. As required by SEC rules, for purposes of attributing a dollar value to the units reported, values have been calculated by multiplying the number of units awarded by the grant date closing price for a Class A share on the Nasdaq Stock Market. Please note, however, that plan awards are denominated in share units, not dollars, so that the potential payout on an award, when and if vested, is tied directly to the market value performance of Class A shares after the grant. Thus, the actual dollar amount ultimately realized will depend on our future performance and on general market conditions prevailing in the future. As cash dividends are paid on Class A shares, additional phantom stock units, which correspond to the dividends paid, are credited to employees' accounts. B-1 As of December 31, 2003, our named executives held phantom stock units under the plan (valued based on the Class A share closing price on the Nasdaq Stock Market on the last trading day of 2003) as follows: - Todd W. Herrick -- 7,495.87 share units valued at $363,025 - David W. Kay -- 305.58 share units valued at $14,799 - Michael R. Forman -- 1,679.51 share units valued at $81,339 Amounts shown under "All Other Compensation" are matching contributions to the Retirement Savings Plan. RETIREMENT PLANS Our retirement plan, which is a broad-based defined benefit and (since 1985) noncontributory plan, and our supplemental retirement plan, which covers certain executives, provide benefits in the event of normal (i.e., at age 65), early, deferred, or disability retirement. Upon a participant's death, these plans provide a surviving spouse pension and a refund of any pre-1985 employee contributions. Participants are vested after five years of credited service. As of January 1, 2004, our executives named in the Summary Compensation Table had the following years of credited service: - Todd W. Herrick -- 39.5 years - David W. Kay -- 4.2 years - Michael R. Forman -- 13.9 years These plans provide retirement benefits to a vested participant in the form of a life-time pension, the amount of which is equal to a percentage of the participant's average base salary over the 60 months immediately before his or her retirement date, multiplied by years of credited service (up to a maximum of 35 years), and reduced in the case of some benefits payable under the supplemental retirement plan by a percentage of Social Security benefits. B-2 The table below shows the estimated annual pension benefit (which is not subject to further deduction for Social Security benefits or other offset amounts) payable under the plans on a straight life annuity basis to executive officers retiring at age 65 in the earnings and years of service classifications specified, without considering any benefits which in some cases may be payable to a participant due to voluntary contributions made by the participant before 1985.
------------------------------------------------------------------------------------------------------------ Estimated Annual Benefit at Age 65 for Years of Service Indicated Average -------------------------------------------------------------------- Annual 35 or Base Salary 15 20 25 30 Longer ----------- -------- -------- -------- -------- -------- $ 90,000................... $ 16,875 $ 22,500 $ 28,125 $ 33,750 $ 39,375 100,000................... 18,750 25,000 31,250 37,500 43,750 125,000................... 23,437 31,250 39,062 46,875 54,688 150,000................... 28,274 37,699 47,123 56,548 67,798 175,000................... 33,899 45,199 56,498 67,798 80,293 200,000................... 39,524 52,699 65,873 79,048 94,048 225,000................... 45,149 60,199 75,248 90,298 107,173 250,000................... 50,774 67,699 84,623 101,548 120,298 275,000................... 56,399 75,199 93,998 112,798 133,423 300,000................... 62,024 82,699 103,373 124,048 146,548 400,000................... 84,524 112,699 140,873 169,048 199,048 450,000................... 95,774 127,699 159,623 191,548 225,298 500,000................... 107,024 142,699 178,373 214,048 251,548 550,000................... 118,274 157,699 197,123 236,548 277,302 600,000................... 129,524 172,699 215,873 259,048 304,048 ------------------------------------------------------------------------------------------------------------
B-3 APPENDIX C SHAREHOLDER RETURN PERFORMANCE PRESENTATION The graph which follows compares the performance over the last five years of our Class B shares (trading symbol TECUB) to the Standard & Poor's 500 Stock Index and to a composite industry group index made up of two Standard & Poor's indexes: Consumer Discretionary: Household Appliances (70%) and Industrials: Industrial Machinery (30%). The graph assumes an investment of $100 in the Class B shares and in each index on December 31, 1998 and reinvestment of all cash dividends in shares of the same class. COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG TECUMSEH PRODUCTS COMPANY, S&P 500 INDEX, AND S&P COMPOSITE INDUSTRY INDEX [GRAPH]
- ----------------------------------------------------------------------------------------------------------------- 1998 1999 2000 2001 2002 2003 - ----------------------------------------------------------------------------------------------------------------- TECUMSEH PRODUCTS COMPANY $100.00 $ 94.64 $ 89.98 $116.99 $104.05 $119.87 - ----------------------------------------------------------------------------------------------------------------- S&P 500 INDEX 100.00 121.04 110.02 96.95 75.52 97.18 - ----------------------------------------------------------------------------------------------------------------- S&P COMPOSITE INDUSTRY INDEX 100.00 112.80 105.63 117.18 107.39 140.22 - -----------------------------------------------------------------------------------------------------------------
C-1 APPENDIX D AUDIT AND NON-AUDIT FEES The table below shows the fees billed to us by our principal accountants for the last two fiscal years. All of the services either were performed under engagements approved by our Audit Committee before we entered into them or were "grandfathered" so as not to require pre-approval under the applicable SEC rules on accountant independence. The fees included in the Audit category are fees billed for the fiscal years for the audit of our annual consolidated financial statements included in our annual report to shareholders on Form 10-K and review of our consolidated financial statements included in Forms 10-Q and related matters within that category. The fees included in each of the other categories are fees billed in the fiscal years.
CIULLA, SMITH & DALE, LLP PRICEWATERHOUSECOOPERS LLP -------------------------- -------------------------- 2002 2003 2003 ---- ---- ---- Audit fees.................................... $405,100 $ 7,525 $1,322,558 Audit-related fees............................ 17,525 27,770 129,665 Tax fees...................................... -0- -0- 480,066 All other fees................................ -0- 124,100 201,058 -------- -------- ---------- Total......................................... $422,625 $159,395 $2,133,347
Audit fees were for professional services rendered for the audits of our consolidated financial statements, quarterly reviews of the financial statements included in our quarterly reports on Form 10-Q, and assistance with and review of documents we filed with the SEC. Audit-related fees billed by Ciulla, Smith & Dale, LLP were for audits of our pension and 401(k) plans, internal control reviews, consultation concerning financial accounting and reporting standards, and assistance with the transition to our new principal accountants. Audit-related fees billed by PricewaterhouseCoopers LLP were for assistance in identifying internal controls and compiling an internal control questionnaire to assist the Company in its readiness plan for compliance with the Sarbanes-Oxley Act of 2002 and for foreign pension and other regulatory services. Tax fees billed by PricewaterhouseCoopers LLP were for services related to U.S. customs law and foreign tax compliance and consulting services. All other fees billed by Ciulla, Smith & Dale, LLP were for management consulting services concerning internal controls, disclosure controls and procedures, and documentation practices relating to the requirements of the Sarbanes-Oxley Act of 2002. All other fees billed by PricewaterhouseCoopers LLP were for the completion of a needs assessment evaluation and assistance with the development of vendor selection criteria related to an information technology project, and for software licensing fees for accounting research software. The Audit Committee's current policy requires pre-approval of all audit and non-audit services provided by the independent accountants before the engagement of the independent accountants to perform them. Audit, tax, and some types of audit-related and other services may be pre-approved generally, through approval of frameworks of services to be rendered. Services not covered by a general pre-approval require specific pre-approval. The committee may delegate authority to its chairman to pre-approve the engagement of independent accountants when the entire committee is unable to do so. The chairman must report all such pre-approvals to the entire committee at the next committee meeting. D-1 2004 ANNUAL MEETING OF SHAREHOLDERS WEDNESDAY, APRIL 28, 2004 Tecumseh Country Club 5200 Milwaukee Road Tecumseh, MI 49286 [TECUMSEH PRODUCTS COMPANY LOGO] - -------------------------------------------------------------------------------- INSTRUCTIONS FOR VOTING YOUR PROXY This proxy covers all Class B shares of Tecumseh Products Company held of record. THERE ARE THREE WAYS TO VOTE YOUR PROXY TELEPHONE VOTING This method of voting is available for residents of the U.S. and Canada. On a touch tone telephone, call TOLL FREE 1-800-786-5219, 24 hours a day, 7 days a week. You will be asked to enter ONLY the CONTROL NUMBER shown below. Have your proxy card ready, then follow the prerecorded instructions. Your vote will be confirmed and cast as you directed. Available 24 hours a day, 7 days a week until 5:00 p.m. Eastern time on April 27, 2004. INTERNET VOTING Visit the Internet voting website at HTTP://PROXY.GEORGESON.COM. Enter the COMPANY NUMBER AND CONTROL NUMBER shown below and follow the instructions on your screen. You will incur only your usual Internet charges. Available 24 hours a day, 7 days a week until 5:00 p.m. Eastern Time on April 27, 2004. VOTING BY MAIL Simply mark, sign and date your proxy card and return it in the postage-paid envelope. If you are voting by telephone or the Internet, please do not mail your proxy card. -------------- -------------- COMPANY NUMBER CONTROL NUMBER -------------- -------------- TO VOTE BY MAIL, PLEASE DETACH PROXY CARD HERE - -------------------------------------------------------------------------------- [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. ELECTION OF DIRECTORS. FOR ALL FOR WITHHOLD EXCEPT Todd W. Herrick, J. Russell Fowler, Peter M. Banks, Jon E. Barfield, David M. Risley, Virginia A. Kamsky [ ] [ ] [ ] (INSTRUCTIONS: To withhold authority to vote for any individual nominee, check the "For All Except" box and write that nominee's name in the space provided below.) - -------------------------------------------------------------------------------- If you sign and return this proxy, the proxies will vote your shares as specified above. IF YOU DO NOT SPECIFY HOW TO VOTE, THE PROXIES WILL VOTE YOUR SHARES FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES LISTED ABOVE AND IN THEIR DISCRETION ON ANY OTHER MATTERS THAT MAY COME BEFORE THE MEETING. WE APPRECIATE YOUR PROMPT ACTION IN SIGNING AND RETURNING THIS PROXY. ---------------------------------------- Signature ---------------------------------------- Signature DATED: , 2004 ---------------------------- NOTE: Please sign exactly as your name(s) appear above. Joint owners should each sign. When signing as an attorney, executor, administrator, trustee or guardian, please give your full title. PLEASE PROMPTLY COMPLETE, DATE, SIGN AND RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE. If you have any questions or need assistance, please contact Georgeson Shareholder Communications Inc., our Proxy Solicitor, at 1-800-223-2064. - -------------------------------------------------------------------------------- PLEASE DETACH PROXY CARD HERE - -------------------------------------------------------------------------------- P R O X Y TECUMSEH PRODUCTS COMPANY THE BOARD OF DIRECTORS SOLICITS THIS PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 28, 2004 By signing on the reverse, I (or, if more than one person signs, we)-- - - authorize either of Todd W. Herrick or James S. Nicholson to act as my (or our) proxy at the Annual Meeting of Shareholders of Tecumseh Products Company to be held on Wednesday, April 28, 2004 and at any adjournments of that meeting, - - give each proxy full power to name another person to substitute for him as proxy, - - authorize each proxy to vote any and all shares of Tecumseh Products Company Class B Common Stock, $1.00 par value, registered in my name (or our names) or which for any reason I (or we) may be entitled to vote, and - - direct the proxies to vote as specified on the reverse side and to vote in their discretion on any other matters that may come before the meeting. CONTINUED AND TO BE VOTED AND SIGNED ON REVERSE -----END PRIVACY-ENHANCED MESSAGE-----