<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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 sec. 240.14a-11(c) or sec. 240.14a-12
BEC Group
- --------------------------------------------------------------------------------
(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):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(l) 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):
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(4) Proposed maximum aggregate value of transaction:
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(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.:
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(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[BEC GROUP, INC. LETTERHEAD]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on July 10, 1997
To the Stockholders of BEC Group, Inc.:
You are cordially invited to attend the Annual Meeting of
Stockholders of BEC GROUP, INC. (the "Company"), to be held on JULY 10, 1997 at
10:00 A.M., local time, in Suite A, 555 Theodore Fremd Avenue, Rye, New York,
or any adjournment or postponement thereof (the "Meeting") for the following
purposes:
1. To elect seven directors.
2. To ratify the selection of Price Waterhouse LLP as
the Company's independent accountants for the year ending December 31, 1997.
3. To transact such other business as may properly come
before the Meeting.
Only holders of record of Common Stock at the close of
business on June 18, 1997 will be entitled to notice of and to vote at the
Meeting. Please sign, date and mail the enclosed proxy card so that your
shares may be represented at the Meeting if you are unable to attend and vote
in person.
By Order of the Board of Directors,
Peter H. Trembath
Secretary
June 19, 1997
<PAGE> 3
[BEC GROUP, INC. LETTERHEAD]
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 10, 1997
INTRODUCTION
This Proxy Statement and the enclosed form of proxy are being furnished to the
holders of Common Stock, par value $.01 (the "Common Stock"), of BEC Group,
Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Stockholders to be held on July 10, 1997 and at any
adjournment or postponement thereof (the "Meeting").
At the Meeting, holders of Common Stock ("Stockholders") will be asked:
1. To elect seven directors.
2. To ratify the selection of Price Waterhouse LLP as
the Company's independent accountants for the year ending December 31, 1997.
3. To transact such other business as may properly come
before the Meeting.
The Board of Directors has fixed the closed of business on June 18,
1997 as the record date (the "Record Date") for the determination of
Stockholders entitled to notice of and to vote at the Meeting. Each such
Stockholder will be entitled to one vote for each share of Common Stock held on
all matters to come before the Meeting (or at any adjournment or postponement
thereof) and may vote in person or by proxy authorized in writing.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING FORM OF PROXY IN THE ENCLOSED ENVELOPE.
Common Stock represented by properly executed proxies received by the Company
and not revoked will be voted at the Meeting in accordance with instructions
contained therein. ANY PROXY RETURNED WITHOUT INSTRUCTION WILL BE VOTED FOR
EACH NOMINEE FOR DIRECTOR NAMED HEREIN (PROPOSAL NO. 1). ANY PROXY NOT
SPECIFYING THE CONTRARY WILL BE VOTED FOR PROPOSAL NO. 2. A Stockholder who so
desires may revoke his or her proxy at any time before it is voted at the
Meeting by giving notice to the Company in writing (attention: Secretary), by
duly executing a proxy bearing a later date or by attending the Meeting and
voting in person. Attendance at the Meeting will not in and of itself
constitute a revocation of an executed proxy.
This Proxy Statement and the accompanying form of proxy are
first being sent to Stockholders on or about June 19, 1997.
<PAGE> 4
THE MEETING
The Meeting will be held on July 10, 1997, at 10:00 A.M., local time,
at 555 Theodore Fremd Avenue, Suite A, Rye, New York, 10580.
MATTERS TO BE CONSIDERED
At the Meeting, Stockholders will be asked to vote to elect seven
directors (Proposal No. 1); and, to ratify the selection of Price Waterhouse
LLP as the Company's independent accountants for 1997 (Proposal No. 2). The
Board of Directors knows of no matters that are to be brought before the
Meeting other than as set forth in the Notice of Meeting. If any other matters
properly come before the Meeting, the persons named in the enclosed form of
proxy or their substitutes will vote in accordance with their best judgment on
such matters.
RECORD DATE; SHARES OUTSTANDING AND ENTITLED TO VOTE
Only Stockholders as of the Record Date (i.e., the close of business
on June 18, 1997) are entitled to notice of and to vote at the Meeting. As of
the Record Date, there were 17,631,092 shares of Common Stock outstanding and
entitled to vote, with each share entitled to one vote.
REQUIRED VOTES
A plurality of the votes cast by the holders of the shares of Common
Stock present in person or represented by proxy at the Meeting is required for
the election of a nominee for director. Only shares of Common Stock that are
voted in favor of a nominee will be counted toward that nominee's achievement
of a plurality. Shares of Common Stock held by Stockholders present in person
at the Meeting that are not voted for a nominee or shares held by Stockholders
represented at the Meeting by proxy from which authority to vote for a nominee
has been properly withheld (including broker non-votes) will not be counted
toward that Nominee's achievement of a plurality.
The affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy at the Meeting is
required for ratification of the selection of Price Waterhouse LLP as the
Company's independent accountants for the year ending December 31, 1997
(Proposal No. 2). With respect to an abstention of this matter, the shares
will be considered present at the Meeting for the particular matter and (since
it is not an affirmative vote for the matter) they will have the same effect as
votes against the matter. With respect to a broker non-vote on this matter,
for such matter such shares will not be considered present at the Meeting and
(since they will not be counted in respect of the matter) the broker non-votes
will have the practical effect of reducing the number of affirmative votes
required to achieve a majority vote for the matter by reducing the total number
of shares from which the majority is calculated.
The ratification of the selection of Price Waterhouse LLP as
independent accountants for 1997 (Proposal No. 2) is being submitted to
Stockholders as a matter of sound corporate practice. If the Stockholders do
not ratify the selection, the selection of independent accountants will be
reconsidered by the Board of Directors. If the Stockholders ratify the
selection, the Board of Directors, in its discretion, may still direct the
appointment of new independent accountants at any time during the year if the
Board of Directors believes that such a change would be in the best interests
of the Company.
All of the directors and executive officers of the Company have
indicated that they will cause all the shares of Common Stock beneficially
owned by them to be voted in favor of the election as a director of each
nominee named herein and for Proposal No. 2. Such directors and officers own
approximately 9.45% of the currently issued and outstanding Common Stock.
2
<PAGE> 5
PROXY SOLICITATION
The Company will bear the costs of solicitation of proxies for the
Meeting. In addition to solicitations by mail, directors, officers and regular
employees of the Company may solicit proxies from Stockholders by telephone,
telegram, personal interview or otherwise. Such directors, officers and
employees will not receive additional compensation, but may be reimbursed for
out-of-pocket expenses in connection with such solicitation. Brokers,
nominees, fiduciaries and other custodians have been requested to forward
soliciting material to the beneficial owners of Common Stock held of record by
them, and such custodians will be reimbursed for their reasonable expenses.
INDEPENDENT ACCOUNTANTS
The Company has been advised that representatives of Price Waterhouse
LLP, the Company's independent accountants for 1996, will attend the Meeting,
will have an opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions.
3
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, to the knowledge of BEC and as of June 16, 1997
(unless otherwise indicated), (i) the number of shares of Common stock owned of
record or beneficially, or both, by each person who owned of record, or is
known by BEC to have beneficially owned, individually, or with his associates,
more than 5% of such shares then outstanding; (ii) the number of shares owned
beneficially by each director of the Company; and (iii) the number of shares
owned beneficially by all directors and executive officers as a group. Unless
otherwise noted, each person holds sole voting and investment power with
respect to the shares shown opposite his name.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
- ------------------------------------ -------------------- -----
<S> <C> <C>
Martin E. Franklin................................. 1,420,564(2) 8.1%
555 Theodore Fremd Avenue
Suite B-302
Rye, New York
Ian G.H. Ashken.................................... 275,000(3) 1.6%
Nora Bailey........................................ 17,500(4) *
Richard Hanselman.................................. 7,286(4) *
David Moore........................................ 17,850(4) *
William T. Sullivan................................ 378,095(5) 2.1%
Dr. Charles F. Sydnor.............................. 54,883(4) *
All Executive Officers and Directors............... 2,171,178(6) 12.0%
as a group (7 persons)
Millbrook Partners, L.P. .......................... 2,655,200(7) 15.2%(7)
2102 Sawgrass Village Dr., Ponte Vedra Beach
Florida 32082
Marvin Schwartz.................................... 1,362,000(8) 7.72%(8)
c/o Neuberger & Berman, LLC,
605 Third Avenue, New York, NY 10158-3698
Palisade Capital Management, L.L.C. ............... 1,226,313(9) 6.49%(9)
One Bridge Plaza, Ste. 695, Fort Lee, NJ 07204
</TABLE>
* Less than 1%.
4
<PAGE> 7
(1) Shares not outstanding but deemed beneficially owned by virtue of the
right of an individual to acquire them within 60 days upon the
exercise of an option are treated as outstanding for purposes of
determining beneficial ownership and the percent beneficially owned by
such individual and for the executive officers and directors as a
group.
(2) Includes 125,000 shares that Mr. Franklin has a right to acquire within
60 days upon the exercise of options. Excludes 15,383 shares held in
trust for Mr. Franklin's minor children, as to which shares Mr.
Franklin disclaims beneficial ownership.
(3) Includes 75,000 shares that Mr. Ashken has a right to acquire within 60
days upon the exercise of options. Excludes 12,500 shares held in
trust for Mr. Ashken's minor children, as to which shares Mr. Ashken
disclaims beneficial ownership.
(4) Includes 2,500 shares that the Director has a right to acquire within
60 days upon the exercise of options.
(5) Includes 295,000 shares that Mr. Sullivan has a right to acquire within
60 days upon the exercise of options and 1,697 shares with respect to
which Mr. Sullivan shares voting and investment power with his spouse.
(6) Includes 505,000 shares that members of the group have a right to
acquire within 60 days upon the exercise of options. Excludes 17,883
shares held in trust for directors' children, as to which they disclaim
beneficial ownership.
(7) In a Schedule 13D filed March 31, 1997, Millbrook Partners, L.P.
("Millbrook") and Mark M. Mathes, its general partner, reported that,
as of December 31, 1996 they held an aggregate 2,655,200 shares of the
Company's common stock, or 15.2% of the shares then outstanding.
Millbrook and Mr. Mathes reported that they shared voting and
dispositive power with respect to 2,577,200 of such shares, or 14.7%
of the shares then outstanding, while Mr. Mathes holds sole voting
and dispositive poser with respect to 78,000 of such shares.
(8) In a Schedule 13D dated January 22, 1997, Marvin Schwartz, acting in
his personal capacity and not as a principal of Neuberger & Berman, LLC
("N&B"), reported that he is the beneficial owner of 1,362,000 shares
of the Company's common stock, constituting 7.72% of the total shares
outstanding as of that date. Mr. Schwartz reported that 831,600 of
such shares are held in his personal account; 242,500 of such shares
are owned by the N&B Profit Sharing Trust (the "Plan") and are held in
a securities account in the Plan's name with N&B; and, 287,900 of such
shares are held in accounts for the benefit of Mr. Schwartz's family.
Mr. Schwartz reported that he holds sole voting power and sole
disposition power over 1,074,100 of such shares and shared disposition
power over 287,900 of such shares. Mr. Schwartz reported that N&B has
no voting or disposition power over any of such shares.
(9) In a Schedule 13G dated February 1, 1997, Palisade Capital Management,
L.L.C. ("Palisade") reported that it is the beneficial owner of
1,226,313 shares of the Company's common stock, constituting 6.49% of
the total shares outstanding as of December 31, 1996. Palisade
reported that such shares include 449,913 shares of the Company's
common stock issuable upon conversion of BEC Group, Inc. 8% Convertible
Notes held by Palisade. Palisade reported that all such shares are
held on behalf of Palisade's clients, in accounts over which Palisade
has complete investment discretion.
5
<PAGE> 8
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's By-Laws provide that the Company shall have at least two
(2) and no more than twelve (12) directors, as determined by the Board of
Directors from time to time. The Board of Directors has determined that there
will be seven (7) directors for the ensuing year. At the Meeting, seven (7)
directors are to be elected to serve until the next annual meeting or until
their successors are elected and qualified. The persons identified below as
the Company's current directors and executive officers have been nominated for
election at the Meeting. See "Information Concerning Directors and Executive
Officers". The persons named in the enclosed form of proxy have advised that,
unless contrary instructions are received, they intend to vote FOR the election
of the nominees. The Board of Directors does not expect that any of the
nominees will be unavailable for election as a director. If by reason of an
unexpected occurrence, one or more of the nominees is not available for
election, however, the persons named in the form of proxy have advised that
they will vote for such substitute nominees as the Board of Directors of the
Company may propose.
INFORMATION CONCERNING OFFICERS AND DIRECTORS
The following table provides information concerning the Company's Directors and
Executive Officers, all of whom are nominees is as of the Record Date:
<TABLE>
<CAPTION>
NAME AGE OFFICE
- ---- --- ------
<S> <C> <C>
Martin E. Franklin(1)(2) 32 Chairman of the Board of Directors and
Chief Executive Officer
Ian G. H. Ashken(1)(2) 37 Executive Vice President of Finance and
Administration, Chief Financial Officer,
Assistant Secretary and Director
Nora A. Bailey(3) 55 Director
Richard W. Hanselman(3)(4) 69 Director
David L. Moore(3)(4) 40 Director
William T. Sullivan 53 Director
Charles F. Sydnor(2)(4) 54 Director
</TABLE>
- --------------------------------------------------------------------------------
(1) Member of Executive Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
(4) Member of Compensation Committee
6
<PAGE> 9
Directors of the Company are elected annually at the Annual Meeting of
Stockholders. Their respective terms of office continue until the next Annual
Meeting of Stockholders and until their successors have been elected and
qualified in accordance with the Company's Restated By-laws. There are no
family relationships among any of the directors or executive officers of the
Company.
Martin E. Franklin was elected Chairman of the Board and Chief Executive
Officer of the Company in December 1995. Mr. Franklin was Chairman of the
Board and Chief Executive officer of the Company's predecessor, Benson Eyecare
Corporation ("Benson") from October 1992 to May 1996 and President from
November 1993 to May 1996. Mr. Franklin has been the Chairman and Chief
Executive Officer of Pembridge Holdings, Inc. since 1990. From 1988 to 1990,
Mr. Franklin was Managing Director of Pembridge Associates, Inc. Both
Pembridge Associates, Inc. and Pembridge Holdings, Inc. specialized in
merchant banking and related services. Mr. Franklin has been Chairman and
Chief Executive Officer of Marlin Holdings, Inc., the general partner of Marlin
Capital, L.P., since October 1996. Mr. Franklin is non-executive Chairman and
a director of Eyecare Products plc and also serves on the boards of Specialty
Catalog Corp. and certain private companies. Mr. Franklin received his B.A. in
Political Science from the University of Pennsylvania.
Ian G.H. Ashken, A.C.A. was elected Executive Vice President, Chief Financial
Officer, Assistant Secretary and a Director of the Company in December 1995.
Mr. Ashken was Chief Financial Officer of Benson and a director of Benson from
October 1992 to May 1996. Mr. Ashken also served as Benson's Executive Vice
President from October 1994 to May 1996; Secretary from October 1992 to
December 1993; and, Assistant Secretary from December 1993 to May 1996. Mr.
Ashken has been the Executive Vice President and a director of Pembridge
Holdings, Inc. since 1990. Since October 1996, Mr. Ashken has been Vice
Chairman of Marlin Holdings, Inc., the general partner of Marlin Capital, L.P.
Mr. Ashken is a director of Eyecare Products plc. Mr. Ashken received his B.A.
(Hons) in Economics and Accounting from the University of Newcastle in England.
Nora A. Bailey, Esq. became a member of the Company's Board of Directors in May
1996. Ms. Bailey is a federal income tax attorney with a specialty in mergers
and acquisitions and has many multinational clients. Ms. Bailey and her firm
from time to time have been engaged to provide legal advice to the Company.
Until 1993, she was a partner in Ivins, Phillips & Barker in Washington D.C.,
which she joined in 1972. Ms. Bailey received her J.D. from The University of
Michigan Law School.
Richard W. Hanselman, was elected a director of Benson in August 1994, and of
BEC Group, Inc. in May 1996. Mr. Hanselman also serves on the board of Arvin
Industries, Inc.; Becton, Dickinson and Company; The Bradford Funds, Inc.;
Foundation Health Corporation; Gryphon Holdings, Inc.; Healthtrust, Inc.; Incom
Recycling, Inc.; and, Daisy Manufacturing Co. From 1981 to 1986, Mr. Hanselman
was Chairman, President and Chief Executive Officer and director of Genesco,
Inc., a diversified footwear and apparel business. Mr. Hanselman also served
as Genesco's President and Chief Operating Officer from 1980 to 1981. Prior to
that time, Mr. Hanselman held senior management posts at the Beatrice
Companies, Samsonite Corporation, RCA and RCA Sales Corporation, and the
Crosley-Bendix divisions of AVCO.
David L. Moore became a member of the Company's Board of Directors in May 1996.
Mr. Moore is President and Chief Executive Officer of Century 21 Home
Improvements, Garden State Brickface, Inc., a leading New York metropolitan
area residential and commercial remodeling firm. Mr. Moore received his B.A.
in Economics from Amherst College and his M.B.A. from Harvard University.
Mr. Sullivan became a member of the Company's Board in May 1996. Mr. Sullivan
served as an executive officer of Benson and then the Company from October
1994 through March 1997. Upon Benson's acquisition of Optical Radiation
Corporation ("ORC") in October 1994, Mr. Sullivan was appointed Benson's
Executive Vice President of Operations. Mr. Sullivan served as President and
Chief Operating Officer of the Company form April 2, 1996 through March 29,
1997. From July 1993 to October 1994, Mr. Sullivan served as the President of
the Consumer Optical Group of ORC and from August 1987 through July 1993 he
served as Group Vice President of the Consumer Optical Group of ORC. Prior to
joining ORC, Mr. Sullivan was President of Pearle Vision Centers.
7
<PAGE> 10
Charles F. Sydnor, M.D., was elected a director of Benson in October 1992, and
of BEC Group, Inc. in May 1996. Dr. Sydnor has practiced general
ophthalmology and neuro-ophthalmology in Burlington, North Carolina since 1982.
Dr. Sydnor served on the faculty at Duke University for eight years before
going into private practice in 1982. Dr. Sydnor is a member of the American
Academy of Ophthalmology's Managed Care Committee and is a consultant to the
Academy's Secretariat for Governmental Relations. He also is the immediate
past Chairman of the legislative committee and President of Excellence in
Primary Eye Care, Inc. Dr. Sydnor is President of Alamance Eye Center P.A.
INFORMATION CONCERNING MEETINGS OF THE BOARD OF
DIRECTORS AND BOARD COMMITTEES AND DIRECTOR COMPENSATION
During 1996, the Board of Directors held seven (7) meetings.
The Board of Directors has standing Audit, Nominating, and
Compensation Committees. From time to time the Board of Directors may appoint
special committees for specific purposes.
The functions of the Audit Committee are to recommend to the Board of
Directors the appointment of independent accountants for the Company, to
analyze the reports and recommendations of such accountants and to review
internal audit procedures and controls. The Audit Committee, which met twice
in 1996, currently comprises Messrs. Hanselman (Chairman), Ms. Bailey and Mr.
Moore.
The functions of the Compensation Committee are to recommend to the
Board of Directors the compensation and benefits of the Company's executive
officers and other key managerial personnel and to administer and to grant and
administer awards pursuant to the Company's 1996 Stock Incentive Plan. The
Compensation Committee met once during 1996. The Compensation Committee
currently consists of Dr. Sydnor (Chairman), Mr. Hanselman and Mr. Moore.
The functions of the Nominating Committee include recommending
nominees for election to the Board of Directors. The Nominating Committee,
which did not meet in 1996, currently comprises Messrs. Franklin and Ashken.
In addition to their regular and special meetings, both the Board of
Directors and the committees from time to time take action by unanimous written
consent, as permitted under applicable law, the Company's Restated Certificate
of Incorporation and the Company's By-laws.
In 1996, all of the Directors attended 75% or more of the aggregate
meetings of the Board and all committees thereof on which they served.
8
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Table sets forth all compensation paid to, deferred or accrued
for the benefit of the Company's Chief Executive Officer and of all other
executive officers of the Company who earned total compensation for 1996
exceeding $100,000 (the "Executive Group"). Except as disclosed below, no
executive officer of the Company had a total annual salary and bonus for 1996
exceeding $100,000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
---------------------- --------
OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SARS(2) COMPENSATION
- --------------------------- ---- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Martin E. Franklin(3) 1996 $277,455 $602,477 550,000 $5,700 (8)
Chairman, Chief Executive 1995 $300,000 $50,000 -0- -0-
Officer 1994 $131,610 $250,000 -0- -0-
Ian G.H. Ashken(3) 1996 $212,981 $86,813 275,000 $132,275 (8)
Chief Financial Officer, 1995 $190,000 -0- -0- -0-
Executive Vice President of 1994 $145,620 $67,000 100,000 (7) -0-
Finance and Administration,
and Assistant Secretary
William T. Sullivan(2)(4) 1996 $212,981 $84,775 372,250 $961,618 (8)
Chief Operating Officer and 1995 $195,000 -0- 40,000 (7) $106,340 (6)
President 1994 (5) -0- 304,000 (7) -0-
</TABLE>
(1) Included in the table are amounts received as compensation from Benson
during the periods in question and prior to the spinoff on May 3,
1996.
(2) All awards reflected in this column represent stock options granted
under the Company's 1996 Stock Incentive Plan.
(3) In addition to compensation reflected in this or any other table
below, the Company maintains "split dollar" life insurance policies
for Messrs. Franklin and Ashken, respectively, in amounts of $5
million and $3 million. Bonus earned by Mr. Franklin in 1996 included
a one time bonus of $400,000 in recognition of Mr. Franklin's
successful efforts in connection with the Merger and Spinoff.
(4) Mr. Sullivan served as an executive officer of Benson and the Company
from October 17, 1994 through March 29, 1997; prior to that time he
served as an executive officer of ORC. Compensation earned by Mr.
Sullivan as an executive officer of ORC prior to its acquisition and
his employment by Benson is not included.
(5) Less than $100,000.
(6) Includes reimbursed relocation expenses of $101,890 and a contribution
to the ORC profit sharing plan of $4,450.
9
<PAGE> 12
(7) These figures represent stock options granted under the former Benson
stock option plan, all of which were canceled in connection with the
Merger and Spinoff. Options granted in 1996 under the Company's 1996
Stock Incentive Plan included options granted in replacement of such
canceled options. See "Options/SAR Grant Table", below.
(8) Includes an employer matching contribution in the amount of $5,700 to
each member of the Executive Group under the Company's 401(k)
Retirement Plan. The remainder (if any) represents cash payments in
connection with the cancellation on May 3, 1996 of then outstanding
Benson stock options upon the consummation of the Merger and Spinoff.
OPTIONS/SAR GRANTS TABLE
Except as stated below, no stock options or stock appreciation rights (SARs)
were granted in 1996 to the named executive officers.
<TABLE>
<CAPTION>
Potential
Realizable Value
Individual Grants at Assumed
----------------- Rates of Stock
Number of % of Total Appreciation for
Securities Options Option Term(2)
Underlying Grant to Exercise --------------
Options Employees in or Base Expiration
Name Granted (#)(1) Fiscal Year Price ($/sh) Date(3) 5% 10%
---- -------------- ----------- ------------ ------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Martin E. Franklin 500,000(3) 24% $5.05 05/03/2003 73,540 165,283
50,000(4) 2% $4.25 12/16/2003 129,561 251,001
Ian G.H. Ashken 50,000(5)(6) 2% $4.08 05/03/2003 153,149 280,977
200,000(3) 10% $5.05 05/03/2003 29,416 66,113
25,000(4) 1% $4.25 12/16/2003 64,780 125,500
William T. Sullivan 26,100(5)(7) 1% $2.11 05/03/2003 N/A N/A
13,050(5)(7) (9) $2.90 05/03/2003 N/A N/A
26,100(5)(7) 1% $2.19 05/03/2003 N/A N/A
12,000(5)(7) (9) $3.87 05/03/2003 N/A N/A
75,000(5) 4% $3.87 09/30/1998 161,240 206,163
20,000(5) 1% $4.57 09/30/1998 11,245 16,542
200,000(8) 10% $5.05 09/30/1998 7,998 15,155
</TABLE>
- ---------------------------
(1) For additional information concerning stock options, see "Executive
Compensation-Compensation Under Plans."
(2) These columns illustrate the hypothetical appreciation of the stock
options under the assumption that each option appreciates at the rate
of 5% and 10%, respectively, compounded annually until the date of
expiration.
(3) These options vest annually in equal quarterly installments from May
3, 1997 through May 3, 2000.
(4) These options vest annually in equal quarterly installments from
December 16, 1997 through December 16, 2000.
(5) These options represent options granted in replacement of Benson
options canceled in connection with the Merger and Spinoff. Options
granted in replacement of vested Benson options were vested at the
time of grant, and unless otherwise noted were fully vested at May 3,
1996. Exercise prices of all such options were adjusted in relation
to the exercise prices of the prior Benson options.
10
<PAGE> 13
(6) These options vest annually in equal quarterly installments from
August 10, 1995 through August 10, 1998.
(7) These options were exercised during 1996. See following table.
(8) These options will be fully vested as of March 31, 1997.
(9) Less than 1%.
OPTIONS/SAR EXERCISE AND FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table provides information on options/SARs exercised during
fiscal 1996 by the Executive Group and the value of each such officer's
unexercised options/SARs as of the end of such fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
---------------------------------------------------
AND FISCAL YEAR-END OPTIONS/SAR VALUES
--------------------------------------
SHARES ACQUIRED ON NUMBER OF UNEXERCISED IN- VALUE OF UNEXERCISED IN-THE-
------------------ ------------------------- ----------------------------
EXERCISE THE-MONEY OPTIONS/SARS AT FY-END (#) MONEY OPTIONS/SARS AT FY-END($)
-------- ------------------------------------ -------------------------------
VALUE
REALIZE
--------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --- --- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Martin E. Franklin -0- N/A -0- 550,000 N/A $81,250(2)
Ian G.H. Ashken -0- N/A 50,000 225,000 $52,250(3) $89,125(3)
William T. Sullivan 77,250 $193,597.50(1) 95,000 200,000 $105,225(4) $15,000(5)
</TABLE>
(1) Based on exercise prices ranging from $2.11 to $3.87 per share and a
market value per share on the date of exercise of $5.05, computed with
reference to the closing price of Benson common stock on the New York
Stock Exchange on such date, the date of the Spinoff and Merger.
(2) Based on the closing price of the Company's common stock on the New
York Stock Exchange on December 31, 1996 of $5.125 and the exercise
price of $4.25 to $5.05 per share.
(3) Based on the closing price of the Company's common stock on the New
York Stock Exchange on December 31, 1996 of $5.125 and the exercise
prices ranging from $4.08 to $5.05 per share.
(4) Based on the closing price of the Company's common stock on the New
York Stock Exchange on December 31, 1996 of $5.125 and the exercise
price ranging from $3.87 to $4.57 per share.
(5) Based on the closing price of the Company's common stock on the New
York Stock Exchange on December 31, 1996 of $5.125 per share and an
exercise price of $5.05 per share.
11
<PAGE> 14
DIRECTORS' COMPENSATION
Except as stated below, the Company's directors received no
compensation in connection with their services as directors on the Board of
Directors in 1996. For services rendered in 1996, all non-executive directors
received fees or remuneration in the amount of $15,000; fees are paid
quarterly, in arrears. Ms. Bailey's law firm has received payment for legal
services from time to time provided to the Company, but such payments were not
made in consideration of Ms. Bailey's services as a director. Additionally,
all non-executive directors are entitled to receive automatic grants of stock
options of the Company's common stock in compensation for their services. See
"Compensation Under Plans-1996 Stock Incentive Plan."
EMPLOYMENT AGREEMENTS
Martin E. Franklin. Mr. Franklin has entered into an employment
agreement with the Company (the "Franklin Employment Agreement"), pursuant to
which he serves as Chief Executive Officer of the Company for an initial period
of three years, subject to annual renewal. Pursuant to the Franklin Employment
Agreement, Mr. Franklin receives an annual base salary which is subject to (i)
increase each year by a minimum of the annual rate of increase in the Consumer
Price Index, and (ii) discretionary increases determined by the Compensation
Committee of the Board of Directors from time to time; Mr. Franklin also may
receive a bonus based on performance criteria to be approved by the Board of
Directors. Mr. Franklin's annual base salary for 1997 has been set at
$257,700. The agreement may be terminated by either party upon at least 90
days' notice prior to the end of the initial term or any subsequent renewal
term. The Company may terminate the agreement with cause in the event of the
death, permanent disability or certain misconduct of Mr. Franklin. The Company
may terminate Mr. Franklin's employment without cause upon 30 days' notice, in
which event Mr. Franklin will be entitled to receive a severance payment equal
to one year's current base salary and his existing benefits for a period of one
year and any non-vested stock options then outstanding will automatically vest.
The agreement contains noncompetition and nonsolicitation restrictions
effective during the employment term and for a period of one year thereafter.
Ian G.H. Ashken. Mr. Ashken has entered into an employment agreement
with the Company. Under the agreement, Mr. Ashken serves as Chief Financial
Officer of the Company and receives an annual base salary which is subject to
(i) an increase each year by a minimum of the annual rate of increase in the
Consumer Price Index, and (ii) discretionary increases determined by the
Compensation Committee of the Board of Directors from time to time; Mr. Ashken
also may receive a bonus based on performance criteria to be determined by the
Board of Directors. Mr. Ashken's annual base salary for 1997 has been set at
$206,000. The other terms of Mr. Ashken's employment agreement are the same as
the terms of the Franklin Employment Agreement.
William T. Sullivan. In connection with Mr. Sullivan's resignation as
an executive officer and employee of the Company, effective March 29, 1997 Mr.
Sullivan received payment of $350,000. Additionally, all options previously
granted to Mr. Sullivan then outstanding vested at that date; all presently
unexercised options granted to Mr. Sullivan will remain exercisable through
September 30, 1998.
COMPENSATION UNDER PLANS
1996 STOCK INCENTIVE PLAN.
On April 2, 1996, the Company's Board of Directors adopted the
Company's 1996 Stock Incentive Plan (the "Plan") and on April 2, 1996 Benson,
as the then sole shareholder of BEC Group, approved the Plan, under which
4,350,000 shares of BEC Group common stock are reserved for issuance pursuant
to the grant of stock based awards under the Plan, subject to the restriction
that at no time shall the number of shares of BEC Group common
12
<PAGE> 15
stock issued pursuant to the Plan or subject to awards issued pursuant to the
Plan, except for the number of shares issued pursuant to the exercise of
options issued pursuant to the Plan, exceed fifteen percent of the total number
of shares of BEC Group common stock outstanding or ten percent on a fully
diluted basis. Pursuant to the Plan, employees and consultants of the Company
and its subsidiaries and affiliates (other than employees subject to a
collective bargaining agreement) are eligible to be selected by the
Compensation Committee as participants to receive discretionary awards of
various forms of equity-based incentive compensation, including stock options,
stock appreciation rights, restricted stock awards, performance share unit
awards and phantom stock unit awards, and awards consisting of combination of
such incentives. Approximately 150 persons are eligible to participate in the
Plan.
The Plan is administered by the Compensation Committee of the
Company's Board of Directors (the "Compensation Committee"). The Compensation
Committee, in its sole discretion, will determine which eligible employees and
consultants of the Company and its subsidiaries may participate in the Plan and
the type, extent and terms of the equity-based awards to be granted to them.
Members of the Compensation Committee, because of their status as non- employee
Directors, will receive automatic non-discretionary annual grants of stock
options pursuant to the Plan.
Under the Plan, at the time of the Merger and Spinoff, each
non-employee Director automatically was granted an option to purchase 10,000
shares of the Company's common stock. Thereafter, on the date that a person
first becomes a non-employee Director, he or she will automatically be granted
an option to purchase 10,000 shares of the Company's common stock. Thereafter,
beginning in 1997, on the date of each annual meeting of stockholders of the
Company, each non-employee Director will automatically be granted an option to
purchase 2,500 shares of the Company's common stock. All such automatic grants
to non-employee Directors are hereafter called "Director Options." Each
Director Option has an exercise price per share equal to the fair market value
of one share of the Company's common stock on the date of grant and vests and
becomes Exercisable over a four year period beginning on the first anniversary
of the date of grant at the rate of 25% of each Director Option on each of the
four years immediately following the date of grant. These grants are the only
grants made to non-employee Directors under the Plan. The Compensation
Committee has no discretion to make any grants under the Plan to non-employee
Directors. All Director Options will be NQSO's (as defined below).
Stock options granted by the Compensation Committee under the Plan may
be "incentive stock options" (ISOs"), within the meaning of Section 422 of the
Code, or "non qualified stock options" ("NQSO's"). The exercise price of the
options will be determined by the Compensation Committee when the options are
granted, subject to a minimum price in the case of ISOs of the fair market
value of the Company's common stock on the date of grant, unless the
Compensation Committee, in its sole discretion, determines to grant a discount
NQSO in lieu of a reasonable amount of salary or cash bonus, in which case 85%
of the fair market value of the Company's common stock on the date of grant.
The option exercise price for all options granted under the Plan may be paid in
cash or in shares of the Company's common stock having a fair market value on
the date of exercise equal to the exercise price or, in the discretion of the
Compensation Committee, by delivery to the Company of (i) other property having
a fair market value on the date of exercise equal to the option exercise price,
or (ii) a copy of irrevocable instructions to a stockbroker to deliver promptly
to the Company an amount of sale or loan proceeds sufficient to pay the
exercise price.
An SAR may be granted by the Compensation Committee as a supplement to
a related stock option or may be granted independent of any option. SARs
granted in connection with an option will become exercisable and lapse
according to the same vesting schedule and lapse rules that are established for
the corresponding option. SARs granted independent of any option will vest and
lapse according to the terms and conditions set by the Compensation Committee.
An SAR will entitle is holder to be paid an amount equal to the excess of the
fair market value of the Company's common stock subject to the SAR on the date
of exercise over the exercise price of the related stock options, in the case
of an SAR granted in connection with an option, or the fair market value of the
Company's common stock on the date of grant in the case of an SAR granted
independent of an option.
Shares of the Company's common stock covered by a restricted stock
award will not be issued to the recipient at the time the award is granted but
will be deposited with an escrow agent until the end of the restricted
13
<PAGE> 16
period set by the Compensation Committee. During the restricted period,
restricted stock will be subject to transfer restrictions and forfeiture in the
event of termination of employment with the Company or a subsidiary and other
restrictions and conditions established by the Compensation Committee at the
time the award is granted.
A phantom stock unit award will provide for the future payment of cash
or the issuance of shares of the Company's common stock to the recipient if
continued employment or other conditions established by the Compensation
Committee at the time of grant are attained.
A performance share unit award will provide for the future payment of
cash or the issuance of shares of the Company's common stock to the recipient
upon the attainment of certain corporate performance goals established by the
Compensation Committee over three to five year performance award periods. At
the end of each performance award period, the Compensation Committee decides
the extent to which the corporate performance goals have been attained and the
amount of cash or the Company's common stock to be distributed to the
participant.
1996 EMPLOYEE STOCK PURCHASE PLAN.
The Company has authorized the 1996 Employee Stock Purchase Plan (the
"Stock Purchase Plan") for persons who have been employed full-time by the
Company or its subsidiaries for at least one year, pursuant to which 500,000
shares of common stock will be reserved for issuance, subject to adjustment.
Eligible employees will be able to contribute, for each semi-annual period
beginning on the first business day after January 1 and July 1 (each, an
"Enrollment Date") and ending excess of $10,000 per semi-annual period, to
purchase shares of common stock on the Exercise Date. The purchase price for
each share of common stock purchased pursuant to the 1996 Employee Stock
Purchase Plan will be the lesser of 85% of the fair market value of the common
stock on the Enrollment Date or 85% of the fair market value of the common
stock on the Exercise Date. The Stock Purchase Plan has not yet been formally
implemented, and consequently no shares of common stock have been issued
thereunder.
OTHER
The Company does not maintain a pension plan or other actuarial or
defined benefit retirement plan for its named executive officers. The Company
does not maintain any long term incentive plans, and there were no repricings of
outstanding options or SARs held by any of the Company's executive officers
during fiscal year 1996. The Company's named executive officers are eligible
to participate in benefit plans generally available to the Company's employees,
including a 401(k) savings plan and the health and life insurance programs.
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee is composed of Mr. Hanselman, Mr.
Moore and Dr. Sydnor, who serves as Committee Chairman. For information
concerning certain transactions between members of the Compensation Committee
and the Company, see "Executive Compensation-Directors' Compensation."
14
<PAGE> 17
REPORT OF THE COMPENSATION COMMITTEE
This report is made by the Compensation Committee of the Board of
Directors. The Compensation Committee of the Company's Board of Directors is
composed of Mr. Hanselman, Mr. Moore and Dr. Sydnor, who serves as Committee
Chairman. The committee is responsible for setting and administering the
Company's policies governing annual compensation of key employees, managers,
officers and executive officers, including setting individual annual base
salaries or salary guidelines, annual bonus plans and individual participation
levels, and participation in the Company's 1996 Incentive Stock Plan. See
"Information Concerning Meetings of the Board of Directors and Board
Committees" and "Director Compensation". Compensation of executive officers,
including compensation of the Chief Executive Officer, is subject to approval
of the Board of Directors. The proposed compensation of any member of the
Compensation Committee who also is an executive officer would be subject to
ratification by the disinterested members of the Board of Directors; none of
the present members of the committee are or have been executive officers of the
Company, and it is the Company's policy to appoint only non-employee directors
as members of the Committee.
COMPLIANCE WITH FEDERAL TAX LAW
The committee has considered the potential impact of Section 162(m)
(the "Section") of the Internal Revenue Code, as amended. The Section
disallows a tax deduction for any publicly-held corporation for individual
compensation exceeding $1 million in any tax year for any executive officer,
unless compensation is based on performance. The Company maintains executive
cash compensation significantly below the $1 million threshold, and the Company
believes that any options granted under the 1996 Stock Incentive Plan to any of
its executive officers will qualify as performance-based compensation, to the
extent that any of the same may result in compensation in excess of the
threshold. Consequently, the committee does not believe that the Section will
have any impact on the deductibility to the Company of any compensation paid to
executive officers.
OVERVIEW
The Company's executive compensation program currently includes the
following key elements: base salary, cash bonuses and awards of stock options.
The Company's general executive officer compensation policy is intended to: (i)
support achievement of the Company's strategic goals; (ii) retain and reward
sufficiently committed and talented individuals prepared to invest their
talents for long term rather than short term gain; and, (iii) tie executive
officers' interests to Stockholder interests.
The Compensation Committee determines base salaries for new executive
officers and base salary adjustments for current executive officers by
evaluating the responsibilities of the position held, the experience of the
individual and individual performance. It determines stock option awards based
on the same factors. In reviewing executive compensation matters, the
committee may consult with the Company's human resources professionals and/or
independent compensation consultants. In determining executive officers' 1996
compensation, the Compensation Committee relied in part on survey information
prepared by Salomon Brothers, Inc. to the Company's predecessor, Benson. The
committee also may make use of independently available compensation survey data
and other publicly available information, including publicly-disclosed
compensation information of other companies of comparable size engaged in
similar industries, as well as information gained through their experience as
directors of other publicly and privately held corporations. The committee's
determinations also are made with reference to the Company's available
financial resources.
While the Company may make use of publicly available data and other
surveys in setting its general compensation policies, the Company is relatively
young and has experienced a period of rapid change. Consequently, it is not
possible to compare the Company or its compensation policies directly with more
established companies, and the Company's executive officer compensation is not
rigidly dominated by a lock-step approach to keeping executive compensation
competitive with compensation levels of companies of similar size or
15
<PAGE> 18
in comparable industries. Additionally, the Company's brief history combined
with the significant changes experienced by Benson, its predecessor for
accounting purposes, has rendered financial results difficult to compare from
one period to another. Therefore, achievement of financial goals set by the
Board on an annual basis is only one of the factors considered in setting the
Company's compensation policy; successful implementation of the Company's more
broadly-based strategic goals also is considered an important factor.
Moreover, the Company's focus on rapid internal growth and expansion through
acquisitions further affects its executive compensation policy by causing the
Company carefully to husband its resources. The committee believes that annual
cash compensation of its executive officers is below that which executives of
comparable ability and talent could receive competitively elsewhere.
It is the policy of the committee and the Company that a portion of an
executive officer's compensation be composed of long-term performance-based
compensation. In this way, the Company can conserve its financial resources
while aligning the executive group's interests more strongly with the interests
of the Company's Stockholders; at the same time, the Company thereby attracts
executives of proven skill and ability who are prepared to invest their talents
over the long term. In furtherance of this policy, the Company adopted, and
the Compensation Committee has made awards and grants pursuant to, the
Company's 1996 Stock Incentive Plan. In determining the number of stock
options granted during 1996, the committee considered the same criteria
discussed above with respect to base salaries.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Franklin, the Company's Chief Executive Officer, has entered into
an employment agreement, under which he received an annualized base salary for
1996 in the amount of $257,500, representing a reduction from his prior annual
base salary as Chief Executive Officer of Benson, a reduction accepted by Mr.
Franklin voluntarily in recognition of the reduction in the size of the
Company's business following its spin off by Benson in May, 1996. For 1997,
Mr. Franklin's base salary has been set at $275,000. Mr. Franklin is eligible
to participate in the bonus program for executive officers. See "Executive
Compensation--Employment Agreements". Bonus paid to Mr. Franklin for services
rendered in 1996 included a one time bonus in the amount of $400,000, awarded
in recognition of extraordinary services provided in effecting the spin off of
the Company by Benson and related transactions, whereby Mr. Franklin personally
helped to limit significantly transactional costs that otherwise would have
been paid to third parties. The committee believes that Mr. Franklin's
compensation under the employment agreement is consistent with the general
policies described above. Mr. Franklin's compensation for 1997 has been
determined also in recognition of the demands made upon Mr. Franklin in
effecting the strategic goals of the Company and his successful efforts in
positioning the Company for future growth.
COMPENSATION COMMITTEE
Charles F. Sydnor
Richard W. Hanselman
David L. Moore
16
<PAGE> 19
COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total Stockholder return on
the Company's Common Stock, based on the market price of the Common Stock, with
the cumulative total return of (i) companies included in the Wilshire Small Cap
Index and (ii) companies included in the Russell 1000 Index, assuming a $100
investment in the Company's Common Stock and in each such index on May 3, 1996.
The Company has chosen to present a comparison with the Wilshire Small Cap
Index, an index of companies with similiar market capitalizations, in lieu of a
comparison with an industry, line-of-business or peer group index because the
Company does not believe that it can reasonably identify a peer group, due to
the Company's management of two distinctly different businesses. The Company
was formed in December 1995 and the Company's Common Stock first began to
trade publicly on the New York Stock Exchange on May 3, 1996. Consequently,
the comparative information presented below corresponds only to the period
during which the Company's Common Stock has been registered under Section 12
of the Securities Exchange Act of 1934. The Company has never paid cash
dividends.
[GRAPH]
Cumulative Total Return Based on
Investment of $100 Beginning May 3, 1996
<TABLE>
<CAPTION>
WHILSHIRE
DATE COMPANY RUSSELL 1000 SMALL CAP
---- ------- ------------ ---------
<S> <C> <C> <C>
5/3/96 $100.00 $100.00 $100.00
5/31/96 $121.29 $103.95 $103.64
6/28/96 $ 89.11 $103.87 $ 98.97
7/31/96 $103.96 $ 98.74 $ 91.06
8/30/98 $ 99.01 $101.17 $ 96.37
9/30/96 $101.49 $106.69 $100.54
10/31/96 $ 96.53 $108.90 $ 99.98
11/29/96 $ 94.06 $116.66 $105.47
12/31/96 $101.49 $114.54 $107.27
</TABLE>
17
<PAGE> 20
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has entered into indemnification agreements with each of
its directors, officers and certain executives, pursuant to which the Company
has agreed to indemnify each indemnitee to the fullest extent authorized by law
against any and all damages, judgments, settlements and fines ("losses") in
connection with any action, suit, arbitration or proceeding or any inquiry or
investigation, whether brought by or in the right of the Company or otherwise,
whether civil, criminal, administrative, investigative or other, or any appeal
therefrom, by reason of an indemnitee's serving as a director of the Company.
An indemnitee is not entitled to indemnification for any losses that are (i)
based or attributable to the indemnitee gaining in fact any personal profit or
advantage to which the indemnitee is not entitled, (ii) for the return by the
indemnitee of any remuneration paid to the indemnitee without the previous
approval of the Stockholders of the Company which is illegal, (iii) for
violations of Section 16 of the Securities Exchange Act of 1934 or similar
provisions of state law, (iv) based upon knowingly fraudulent, dishonest or
willful misconduct and (v) not permitted to be covered by applicable law. The
agreements provide that the indemnification under the agreement is not
exclusive of any other rights the indemnitee may have under the Company's
Restated Certificate of Incorporation, Restated By-laws, applicable Delaware
corporate statutes or any agreement or vote of stockholders.
The Company's non-employee Directors receive automatically stock
option grants under the terms of the Company's 1996 Stock Incentive Plan. Mr.
Franklin, Mr. Ashken and Mr. Sullivan also have received stock option grants
under the terms of the 1996 Stock Incentive Plan. Messrs. Franklin and Ashken
have entered into employment agreements with the Company. Mr. Sullivan
received certain benefits from the Company in connection with his resignation
as an officer. See "Executive Compensation."
On December 12, 1996, in connection with the sale of the Foster Grant
Group by the Company, Marlin Capital, LP ("Marlin"), a Delaware limited
partnership, invested $2.5 million in convertible preferred stock of the buyer
Accessories Associates, Inc. ("AAi"); upon conversion, AAi common stock
received by Marlin would bear demand and piggyback registration rights. Marlin
Holdings, Inc. ("MH"), a Delaware corporation, is the general partner of
Marlin. Mr. Martin E. Franklin, the Company's Chairman and Chief Executive
Officer, is the Chief Executive Officer and principal stockholder of MH. Mr.
Ashken, the Company's Chief Financial Officer and a Director, also is a
stockholder and executive officer of MH. Mr. Franklin also has been named a
member of AAi's Board of Directors.
Ms. Nora Bailey, a member of the Company's Board of Directors since
May 1996, is an attorney specializing in federal tax law. In her professional
capacity she has rendered legal advice and related services to both the Company
and its predecessor, Benson. Ms. Bailey has rendered such services both prior
to and subsequent to her appointment to the Company's Board of Directors, and
it is anticipated that she from time to time in the future will be engaged to
provide similar legal services to the Company. All fees paid to Ms. Bailey in
connection with such services have been agreed in arms' length negotiations and
are in accordance with Ms. Bailey's usual and customary billing practices.
Fees paid to Ms. Bailey by the Company in connection with such services are not
paid in consideration of her services as a director. Aggregate fees billed to
Benson and the Company by Ms. Bailey during 1996 were approximately $73,500.
No other significant transactions, business relationships, or
indebtedness are known to exist between the Company and related parties
(defined as directors, executive officers, nominees for director, security
holders of more than 5% of the voting stock or any members of the immediate
family of any of the foregoing persons).
18
<PAGE> 21
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board recommends that the Stockholders ratify the selection of
Price Waterhouse LLP, certified public accountants, as independent accountants
to audit the accounts of the Company and its subsidiaries for the year ending
December 31, 1997. The selection of Price Waterhouse LLP was recommended to
the Board by the Board of its Audit Committee. Price Waterhouse LLP are
currently independent accountants for the Company.
The Board of Directors recommends a vote FOR this Proposal No. 2.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities to file reports of
ownership and changes in ownership in respect of the Company's securities with
the Securities and Exchange Commission. Such persons are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on the Company's review of the copies of such forms it
has received and written representations of certain of its directors and
officers, the Company believes that during 1996 all persons subject to the
reporting requirements of Section 16(a) filed the required reports on a timely
basis.
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders for 1996 has
previously been sent to Stockholders or, in the case of Stockholders who have
not received a copy previously, accompanies this Proxy Statement. Any
Stockholder who has not received a copy of the 1996 Annual Report to
Stockholders and who wishes to do so should contact the Company, Attention:
Investor Relations, by mail at the address set forth in the Notice of Annual
Meeting or by telephone at (914) 967-9400. The 1996 Annual Report to
Stockholders is not incorporated into this Proxy Statement and shall not be
considered part of this solicitation material.
19
<PAGE> 22
PROPOSALS BY STOCKHOLDERS
The persons named as proxies in the enclosed Proxy Statement have no
present intention of bringing before the Annual Meeting for action any matters
other than those specifically referred to above, nor has management any such
intention, and neither such persons nor management are aware of any such
matters which may be presented by others. If any other business should
properly come before the Annual Meeting, the persons named on the proxy intend
to vote thereon in accordance with their best judgment.
Any proposal of a Stockholder intended to be presented at the Annual
Meeting of Stockholders to be held in 1998, must be received by the Company no
later than February 20, 1998 to be considered for inclusion in the proxy
statement for the 1998 Annual Meeting of Stockholders. Proposals must comply
with Rule 14a-8 promulgated by the Securities and Exchange Commission pursuant
to the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934.
By Order of the Board of Directors,
Peter H. Trembath
Secretary
20
<PAGE> 23
- --------------------------------------------------------------------------------
PROXY
BEC GROUP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- JULY 10, 1997
The undersigned stockholder hereby appoints Martin E. Franklin and Ian G.H.
Ashken and each of them, the true and lawful attorneys and proxies of the
undersigned with full power of substitution, to vote all shares of Common Stock
of BEC Group, Inc. which the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Company to be held on July 10, 1997 and at any
and all adjournments and postponements thereof, for the transaction of such
business as may properly come before the Meeting, including the items set forth
on the reverse side hereof.
The shares represented by this proxy will be voted in the manner directed
herein, but if no direction is made with respect to the voting of Common Stock,
this Proxy will be voted FOR the election of all listed directors and FOR
Proposal 2, all as more fully described in the accompanying Proxy Statement.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD
OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU
SIGN AND RETURN THIS CARD.
[X] Please mark your votes as in this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSALS.
<TABLE>
<S> <C>
1. Election of Directors [ ] FOR all nominees listed below
[ ] WITHHOLD AUTHORITY to vote
for all nominees below.
</TABLE>
Martin E. Franklin, Ian G.H. Ashken, Nora A. Bailey
Richard W. Hanselman, David L. Moore, William T. Sullivan, Charles F. Sydnor
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name below.)
(Continued, and to be signed on other side)
- --------------------------------------------------------------------------------
<PAGE> 24
- --------------------------------------------------------------------------------
(Continued from other side)
2. Ratification of the selection of Price Waterhouse LLP as the Company's
independent accountants for the year ending December 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Date
--------------------------------
--------------------------------
Signature
--------------------------------
Signature
PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON. JOINT OWNERS
SHOULD EACH SIGN. WHEN SIGNING
AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH.
- --------------------------------------------------------------------------------
