<PAGE>
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
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 Rule 14a-11(c) or Rule 14a-12
PANAVISION INC.
- -------------------------------------------------------------------------------
(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:
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(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:
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| | Fee paid previously with preliminary materials.
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| | 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 number, or the Form or Schedule and the
date of its filing.
-----------------------------------------------------------------------
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
<PAGE>
PANAVISION INC.
6219 DE SOTO AVENUE
WOODLAND HILLS, CALIFORNIA 91367
TEL: 818-316-1000
March 31, 2000
To Our Stockholders:
You are cordially invited to attend the 2000 Annual Meeting of
Stockholders of Panavision Inc. to be held at the Hotel Plaza Athenee, 37 East
64th Street, New York, New York, on Thursday, May 25, 2000, at 10:00 a.m. local
time.
The business of the meeting will be to elect directors and ratify the
selection of independent auditors for 2000. Information on each of these matters
can be found in the accompanying Proxy Statement.
While stockholders may exercise their right to vote their shares in
person, we recognize that many stockholders may not be able to attend the Annual
Meeting. Accordingly, we have enclosed a proxy which will enable you to vote
your shares on the issues to be considered at the Annual Meeting even if you are
unable to attend. If you desire to vote in accordance with management's
recommendations, you need only sign, date and return the proxy in the enclosed
postage-paid envelope to record your vote. Otherwise, please mark the proxy to
indicate your vote; date and sign the proxy; and return it in the enclosed
postage-paid envelope as soon as conveniently possible.
Sincerely,
John S. Farrand
President and Chief Executive Officer
<PAGE>
PANAVISION INC.
6219 DE SOTO AVENUE
WOODLAND HILLS, CALIFORNIA 91367
TEL: 818-316-1000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
Panavision Inc.:
Notice is hereby given that the 2000 Annual Meeting of Stockholders of
Panavision Inc., a Delaware corporation (the "Company"), will be held on the
25th day of May 2000 at 10:00 a.m., local time, at the Hotel Plaza Athenee, 37
East 64th Street, New York, New York, for the following purposes:
1. To elect the nominees for the Board of Directors of the
Company to serve until the next annual meeting and until such
directors' successors are duly elected and shall have
qualified.
2. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for 2000.
3. To transact such other business as may properly come before
the Annual Meeting or at any adjournments or postponements
thereof.
A Proxy Statement describing the matters to be considered at the Annual
Meeting is attached to this notice. Only stockholders of record at the close of
business on March 27, 2000 (the "Record Date") are entitled to notice of, and to
vote at, the Annual Meeting and at any adjournments thereof. A list of
stockholders entitled to vote at the Annual Meeting will be located at the
offices of the Company at 6219 De Soto Avenue, Woodland Hills, California 91367,
at least ten days prior to the Annual Meeting and will also be available for
inspection at the Annual Meeting.
To ensure that your vote will be counted, please complete, date and
sign the enclosed proxy card and return it promptly in the enclosed prepaid
envelope, whether or not you plan to attend the Annual Meeting. Since proxies
may be revoked at any time, any stockholder attending the Annual Meeting may
vote in person even if that stockholder has returned a proxy.
By Order of the Board of Directors
PANAVISION INC.
MARCH 31, 2000
PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
THIS WILL ENSURE THAT YOUR SHARES ARE VOTED
IN ACCORDANCE WITH YOUR WISHES.
<PAGE>
PANAVISION INC.
------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 2000
------------------------------------
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors (the "Board of Directors") of Panavision
Inc., a Delaware corporation (the "Company"), of proxies to be voted at the 2000
Annual Meeting of Stockholders to be held on the 25th day of May 2000 at 10:00
a.m., local time, at the Hotel Plaza Athenee, 37 East 64th Street, New York, New
York, and at any adjournments or postponements thereof (the "Annual Meeting").
This Proxy Statement and the enclosed proxy are first being sent to stockholders
on or about March 31, 2000.
At the Annual Meeting, the Company's stockholders will be asked: (1) to
elect the nominees for the Board of Directors of the Company until the Company's
next annual meeting and until such directors' successors are duly elected and
shall have qualified: Ronald O. Perelman, John S. Farrand, Howard Gittis, James
R. Maher, Joseph P. Page, Martin D. Payson, William C. Scott and Kenneth
Ziffren; (2) to ratify the selection of Ernst & Young LLP as the Company's
independent auditors for 2000; and (3) to transact such other business as may
properly come before the Annual Meeting or at any adjournments or postponements
thereof.
The principal executive offices of the Company are located at 6219 De
Soto Avenue, Woodland Hills, California 91367 and the telephone number is
818-316-1000.
SOLICITATION AND VOTING OF PROXIES; REVOCATION
All proxies duly executed and received by the Company will be voted on
all matters presented at the Annual Meeting in accordance with the instructions
given therein by the person executing such proxy or, in the absence of such
instructions, will be voted FOR the election of the nominees for the Board of
Directors of the Company identified in this Proxy Statement and FOR the
ratification of Ernst & Young LLP as the Company's auditors. The submission of a
signed proxy will not affect a stockholder's right to attend, or vote in person
at, the Annual Meeting. Any stockholder may revoke his or her proxy at any time
before it is voted by written notice to such effect received by the Company at
6219 De Soto Avenue, Woodland Hills, California 91367, Attention: Secretary, by
delivery of a subsequently dated proxy or by attending the Annual Meeting and
voting in person (although attendance at the Annual Meeting will not in and of
itself constitute a revocation of a proxy).
The accompanying form of proxy is being solicited on behalf of the
Board of Directors. The solicitation of proxies may be made by mail and may also
be made by personal interview, telephone and facsimile transmission, and by
directors, officers and regular employees of the Company without special
compensation therefor. The Company will bear the costs incurred in
<PAGE>
connection with the solicitation of proxies and expects to reimburse banks,
brokers and other persons for their reasonable out-of-pocket expenses in
handling proxy materials for beneficial owners.
RECORD DATE; OUTSTANDING SHARES; VOTING AT THE ANNUAL MEETING
Only holders of record of the Company's common stock, par value $0.01
(the "Common Stock"), at the close of business on March 27, 2000 (the "Record
Date") will be entitled to notice of and to vote at the Annual Meeting. On that
date, there were issued and outstanding 8,055,619 shares of Common Stock, each
of which is entitled to one vote. The presence, in person or by properly
executed proxy, of the holders of a majority of the shares of Common Stock
outstanding and entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Any stockholder present (including
broker non-votes) at the Annual Meeting but who abstains from voting shall be
counted for purposes of determining whether a quorum exists. With respect to all
matters considered at the Annual Meeting (other than the election of directors),
an abstention (or broker non-vote) has the same effect as a vote against the
proposal. Abstentions from voting on the election of directors (including broker
non-votes) will have no effect on the outcome of the vote.
The affirmative vote of a plurality of the votes cast is required to
elect the nominees for the Board of Directors of the Company. The affirmative
vote of a majority of the shares of Common Stock present in person or
represented by proxy is required to ratify the selection of Ernst & Young LLP.
PX Holding Corporation ("PX Holding"), which beneficially owns
7,320,225 shares or 90.87% of the outstanding Common Stock as of the Record
Date, has informed the Company of its intention to vote its shares of Common
Stock FOR each of the matters to be acted on at the Annual Meeting
(collectively, the "Proposals"). Accordingly, the affirmative vote of PX Holding
is sufficient, without the concurring vote of any other stockholder of the
Company, to approve each of the Proposals to be considered at the Annual
Meeting. PX Holding is wholly owned by Mafco Holdings Inc. ("Mafco Holdings"),
the sole stockholder of which is Ronald O. Perelman, Chairman of the Board of
Directors of the Company.
PROPOSAL 1 - ELECTION OF DIRECTORS
All of the Company's directors will be elected at the Annual Meeting to
serve until the next succeeding Annual Meeting of stockholders and until their
successors are duly elected and shall have qualified. All of the nominees listed
herein are currently members of the Board of Directors and, except as herein
stated, the proxies solicited hereby will be voted FOR the election of the
nominees listed herein. All nominees, if elected, are expected to serve until
the next succeeding Annual Meeting. Directors of the Company will be elected by
a plurality vote of the outstanding shares of Common Stock present in person or
represented by proxy at the Annual Meeting. Under applicable Delaware law, in
tabulating the vote, abstentions from voting
2
<PAGE>
on the election of directors (including broker non-votes) will be disregarded
and have no effect on the outcome of the vote.
The Board of Directors has been informed that all persons listed below
are willing to serve as directors, but if any of them should decline or be
unable to act as a director, the individuals named in the proxies will vote for
the election of such other person or persons as they, in their discretion, may
choose. The Board of Directors has no reason to believe that any such nominees
will be unable or unwilling to serve.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED HEREIN FOR DIRECTOR.
DIRECTOR NOMINEES
The name, age (as of March 31, 2000), principal occupation, selected
biographical information and period of service as a director of the Company of
each director nominee is set forth hereafter.
RONALD O. PERELMAN (57) has been Chairman of the Board of Directors and
a director of the Company since 1998 and has been Chairman of the Board of
Directors and Chief Executive Officer of Mafco Holdings and MacAndrews & Forbes
Holdings Inc. (together with Mafco Holdings, "MacAndrews & Forbes"), diversified
holding companies, and various affiliates since 1980. Mr. Perelman also is
Chairman of the Executive Committee of the Board of M & F Worldwide Corp. ("M &
F Worldwide") and Chairman of the Board of Revlon Consumer Products Corporation
("Revlon Products") and Revlon, Inc. ("Revlon"). Mr. Perelman is a director of
the following corporations which file reports pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"): Golden State Bancorp Inc., Golden
State Holdings Inc., M & F Worldwide, Revlon Products, Revlon, and REV Holdings
Inc. ("REV Holdings"). (On December 27, 1996, Marvel Entertainment Group Inc.,
Marvel Holdings Inc., Marvel (Parent) Holdings Inc. and Marvel III Holdings
Inc., of which Mr. Perelman was a director on such date, filed voluntary
petitions for reorganization under Chapter 11 of the United States Bankruptcy
Code.)
JOHN S. FARRAND (55) has been the President and Chief Executive Officer
of the Company since January 1999 and was President and Chief Operating Officer
of the Company from 1985 to 1998. He has been a director of the Company since
1996. From 1980 to 1985, Mr. Farrand was employed by Warner Communications Inc.
in several senior executive positions. He was President of its Atari
Coin-Operated Games Division and subsequently was appointed President and Chief
Operating Officer of Atari Holdings, Inc. Prior to 1980, Mr. Farrand spent 14
years with Music Hire Group Limited, a U.K. company specializing in
coin-operated music systems (juke boxes), and from 1973 to 1980 served as
Managing Director. Mr. Farrand is a member of the Academy of Motion Picture Arts
and Sciences, a member of the Society of Motion Picture and Television Engineers
and an associate member of the American Society of Cinematographers.
3
<PAGE>
HOWARD GITTIS (66) has been a director of the Company since 1998. Mr.
Gittis has been a director, Vice Chairman and Chief Administrative Officer of
MacAndrews & Forbes and various affiliates since 1985. Mr. Gittis is a director
of the following corporations which file reports pursuant to the Exchange Act:
Golden State Bancorp Inc., Golden State Holdings Inc., Jones Apparel Group,
Inc., Loral Space & Communications Ltd., M & F Worldwide, Revlon Products,
Revlon, REV Holdings and Sunbeam Corporation.
JAMES R. MAHER (50) has been a director of the Company since 1998. Mr.
Maher has held executive positions with MacAndrews & Forbes and various
affiliates since 1995 and has been a director and President since 1998. Mr.
Maher was Chairman of the Board of Laboratory Corporation of America Holdings
("Lab Corp."), a clinical laboratory company, from 1995 to 1996 and was
President and Chief Executive Officer of National Health Laboratories Holdings
Inc., a clinical laboratory company and a predecessor to Lab Corp, from 1992 to
1995. Mr. Maher was Vice Chairman of First Boston Corporation, an investment
bank, from 1990 to 1992 and a Managing Director of First Boston Corporation from
1982 to 1990. Mr. Maher is a director of the following corporation which files
reports pursuant to the Exchange Act: M & F Worldwide Corp.
JOSEPH P. PAGE (46) has been a director and Vice Chairman and Chief
Administrative Officer of the Company since 1998. Mr. Page was Executive Vice
President and Chief Financial Officer of The Coleman Company, Inc. from 1997 to
1998 and was Executive Vice President and Chief Financial Officer of New World
Communications Group Incorporated from 1994 to 1997. Prior to that, Mr. Page was
a partner in the accounting firm of Price Waterhouse for more than five years.
MARTIN D. PAYSON (64) has been a director of the Company since 1996. He
was Vice Chairman and a director of Time Warner Inc., an entertainment company,
from 1990 through 1992 when he retired. Prior to 1990, Mr. Payson was President
and General Counsel of Warner Communications Inc. Mr. Payson is a director of
the following corporations which file reports pursuant to the Exchange Act:
Classic Communications, Inc., Delta Financial Corp. and Global Decisions Group,
LLC.
WILLIAM C. SCOTT (65) has been a director of the Company since 1988 and
was Chairman and Chief Executive Officer of the Company, including its
predecessors in business, from 1988 through 1998. From 1972 until 1987, Mr.
Scott was President and Chief Operating Officer of Western Pacific Industries
Inc. Prior to 1972, Mr. Scott was a Group Vice President of Cordura Corporation
(a business information company) for three years, a Vice President of Booz Allen
& Hamilton Inc. (management consulting firm) for five years and an
owner/operator of several small businesses for eight years. Mr. Scott is a
director of the following corporation which files reports pursuant to the
Exchange Act: Edison Control Corporation and Four Media Company.
4
<PAGE>
KENNETH ZIFFREN (59) has been a partner with the law firm of Ziffren,
Brittenham, Branca & Fischer LLP since 1979. Mr. Ziffren is a director of the
following corporation which files reports pursuant to the Exchange Act: City
National Corp.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has an Executive Committee, an Audit Committee
and a Compensation and Stock Option Committee (the "Compensation Committee"); it
does not have a Nominating Committee.
The Executive Committee consists of Messrs. Perelman, Gittis, Maher and
Scott. The Executive Committee may exercise all of the powers and authority of
the Board of Directors, except as otherwise provided under the Delaware General
Corporation Law. The Audit Committee, consisting of Messrs. Payson and Ziffren,
makes recommendations to the Board of Directors regarding the engagement of the
Company's independent auditors, reviews the plan, scope and results of the
audit, reviews with the auditors and management the Company's policies and
procedures with respect to internal accounting and financial controls and
reviews changes in accounting policy and the scope of the non-audit services
which may be performed by the Company's independent auditors. The Compensation
Committee, consisting of Messrs. Gittis, Maher and Ziffren, makes
recommendations to the Board of Directors regarding compensation, benefits and
incentive arrangements for officers and other key managerial employees of the
Company. The Compensation Committee considers and grants awards of options to
purchase shares of Common Stock pursuant to the Company's stock option plans as
from time to time in effect and approves participation in the Executive
Incentive Compensation Plan.
During 1999, the Board of Directors held four meetings and the Audit
Committee held three meetings. During 1999, the Executive Committee acted twice
by unanimous written consent and the Compensation Committee acted once by
unanimous written consent.
COMPENSATION OF DIRECTORS
Directors who are not currently receiving compensation as officers or
employees of the Company or any of its affiliates are paid an annual $20,000
retainer fee, payable in quarterly installments, plus reasonable out-of-pocket
expenses and a fee of $1,000 for each meeting of the Board of Directors or any
committee thereof they attend.
Mr. Scott has a consulting agreement with the Company for a four year
term ending on December 31, 2002, pursuant to which he has agreed to consult
with management of the Company concerning its business generally and growth
opportunities. The agreement calls for Mr. Scott to devote up to 20 hours per
month to such services. Mr. Scott will be paid a fee of $150,000 per year and
the Company will pay all of the expenses associated with an office and
secretarial assistance for Mr. Scott.
5
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth as of the date hereof the executive
officers of the Company.
NAME POSITION
- ---- --------
John S. Farrand President and Chief Executive Officer
Joseph P. Page Vice Chairman and Chief Administrative Officer
Barry F. Schwartz Executive Vice President and General Counsel
Scott L. Seybold Executive Vice President and Chief Financial Officer
For biographical information about Messrs. Page and Farrand, see
"Director Nominees."
BARRY F. SCHWARTZ has been Executive Vice President and General Counsel
of the Company since 1998. He has been Executive Vice President and General
Counsel of MacAndrews & Forbes and various affiliates since 1993 and was Senior
Vice President from 1989 to 1992. (On December 27, 1996, Marvel Holdings Inc.,
Marvel (Parent) Holdings Inc. and Marvel III Holdings Inc., of which Mr.
Schwartz was an executive officer on such date, filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code.)
SCOTT L. SEYBOLD has been Executive Vice President and Chief Financial
Officer of the Company since 1999. Immediately prior to joining the Company, Mr.
Seybold was Director, Corporate Planning for Harman International, Inc. From
1981 to 1994, he held various financial management positions with Allergan, Inc.
and Smith International, Inc.
6
<PAGE>
EXECUTIVE COMPENSATION
The compensation paid by the Company for services during each of the
years ended December 31, 1997, 1998 and 1999 to its Chief Executive Officer and
each of the Company's other most highly compensated executive officers was as
follows:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-
TERM
COMPEN-
SATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------------------------------------------
Number of
Securities
Underlying All
Other Options/ Other
Name and Annual Com- SARs Compen-
Principal Position Year Salary ($)(a) Bonus ($)(b) pensation ($) (#) sation ($)(c)
- ------------------ ---- ------------- ------------ ------------- --- -------------
<S> <C> <C> <C> <C> <C> <C>
John S. Farrand (d) 1999 800,000 706,000 8,500 200,000 10,470
President and Chief Executive 1998 646,298 0 10,200 0 9,709
Officer 1997 600,000 300,000 10,200 0 9,330
Joseph P. Page (e) 1999 700,000 355,250 0 200,000 0
Vice Chairman and Chief Ad- 1998 100,000 0 0 0 0
ministrative Officer
Scott L. Seybold(f) 1999 116,615 55,000 3,500 20,000 5,206
Executive Vice President and
Chief Financial Officer
</TABLE>
- ----------------------
(a) Includes salary paid or accrued during year indicated.
(b) Includes bonus accrued during the applicable year. Bonuses are paid
pursuant to the Executive Incentive Compensation Plan.
(c) The amounts reported include payments for life insurance premiums and
matching contributions by the Company under its 401(k) plan.
(d) Mr. Farrand served as President and Chief Operating Officer through
December 31, 1998. He was elected President and Chief Executive Officer
effective January 1, 1999.
(e) Mr. Page was elected to these offices effective November 20, 1998.
(f) Mr. Seybold joined the Company in May 1999.
7
<PAGE>
STOCK OPTION TRANSACTIONS IN 1999
The following table shows the number of stock options granted in 1999
to executive officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
Percent of Total
Number of Shares Options/SARs
Underlying Granted to Em-
Options/SARs ployees in Fiscal Exercise Price Grant Date
Name Granted Year ($/Share) Expiration Date Present Value ($)(a)
---- ------- ---- --------- --------------- --------------------
<S> <C> <C> <C> <C> <C>
John S. Farrand 200,000 17.21% $10.00 10/7/2009 $214,000
Joseph P. Page 200,000 17.21% $10.00 10/7/2009 $214,000
Scott L. Seybold 20,000 1.7% $10.00 10/7/2009 $ 21,400
</TABLE>
- ------------------------
(a) The present value of the options is based on the Black-Scholes option
pricing model using the following weighted average assumptions: (i)
stock price volatility of 37.6%, (ii) risk-free rate of 6.05%, (iii) a
dividend yield of 0%, (iv) an exercise price equal to ten dollars, (v)
a stock price at date of grant equal to five and one eighth dollars,
(vi) an expected life of five years and (vii) no discounts for
forfeiture or limited transferability.
These stock options are transferable by will, by the laws of decent and
distribution, and to members of the optionee's immediate family.
AGGREGATED OPTION/SAR EXERCISES IN 1999 AND YEAR END 1999 OPTION/SAR VALUES
The following table shows, for 1999, the number of stock options
exercised and the 1999 year-end value of unexercised stock options held by the
executive officers named in the Summary Compensation Table:
<TABLE>
<CAPTION>
Number of Shares Value of Unexercised
Underlying Unexer- In-the-Money Op-
cised Options/SARs tions/SARs at Year
Shares Acquired on Value at Year End Exercis- End Exercis-
Name Exercise (#) Realized ($) able/Unexercisable able/Unexercisable
---- ------------ ------------ ------------------ ------------------
<S> <C> <C> <C> <C>
John S. Farrand 0 0 0/200,000 0/0
Joseph P. Page 0 0 0/200,000 0/0
Scott L. Seybold 0 0 0/20,000 0/0
</TABLE>
8
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is comprised of Messrs. Gittis, Maher and
Ziffren. The Committee's duties include determination of the Company's
compensation and benefit policies and practices for executive officers and key
managerial employees. In accordance with rules established by the Securities and
Exchange Commission (the "SEC"), the Company is required to provide certain data
and information in regard to the compensation provided to the Company's Chief
Executive Officer and the other most highly compensated executive officers. The
Committee has prepared the following report for inclusion in this Proxy
Statement.
COMPENSATION PHILOSOPHY. The Company's compensation program is designed
to attract, reward and retain highly qualified executives and to encourage the
achievement of business objectives and superior corporate performance. The
program seeks to assure the Board of Directors and stockholders that (1) the
achievement of the overall goals and objectives of the Company can be supported
by adopting an appropriate executive compensation policy and implementing it
through an effective total compensation program and (2) the total compensation
program and practices of the Company are designed with full consideration of all
accounting, tax, securities law and other regulatory requirements.
The Company's executive compensation program consists of two key
elements: (1) an annual compensation component composed of base salary and
bonus, and (2) a long-term compensation component composed of equity-based
awards pursuant to the Company's stock option plans as from time to time in
effect.
ANNUAL COMPENSATION. Base salaries are determined by considering the
responsibilities associated with the position being evaluated and the
individual's overall level of experience. In addition, the compensation of the
Chief Executive Officer determined by the Compensation Committee was subject to
the terms of Mr. Farrand's employment agreement. Annual salary adjustments will
be determined by giving consideration to the Company's performance and the
individual's contribution to that performance.
Bonuses are paid pursuant to the Executive Incentive Compensation Plan,
in which the Chief Executive Officer and other employees selected by the
Compensation Committee are eligible to participate. The plan allows participants
to earn bonuses up to a stated percentage of their base salary. The bonuses are
paid in part based on the Company's achievement of operating results, and in
part based on achievement of individual goals established for the participant.
LONG-TERM COMPENSATION. In order to align stockholder and executive
officer interests, the long-term component of the Company's executive
compensation program utilizes equity-based awards whose value is directly
related to the value of the Common Stock. These equity-based awards are granted
by the Compensation Committee pursuant to the Company's stock option plans as
from time to time in effect. Individuals to whom equity-based awards are to be
granted and the amount of Common Stock related to equity-based awards are
determined solely at the
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<PAGE>
discretion of the Compensation Committee. Because individual equity-based award
levels are based on a subjective evaluation of each individual's overall past
and expected future contribution, no specific formula is used to determine such
awards for any executive.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mr.Farrand has served as
President and Chief Executive Officer of the Company since January 1, 1999 and
from 1985 until that date served as President and Chief Operating Officer. Mr.
Farrand's compensation, which is set forth in his employment agreement, was
determined to be appropriate in accordance with the compensation philosophy set
forth above and the guidelines of the Compensation Committee. Accordingly, Mr.
Farrand was paid a base salary of $800,000 in 1999 and will be paid a base
salary of $900,000 in 2000. Options on 200,000 shares of the Company's common
stock were awarded to Mr. Farrand in 1999 in accordance with the terms of his
employment agreement. He earned a bonus of $406,000 on account of service to the
Company in 1999 pursuant to the formula set forth in the Executive Incentive
Compensation Plan, which plan was approved by the Compensation Committee and the
full Board of Directors and ratified by the stockholders at the 1999 Annual
Meeting. In addition, Mr. Farrand received a bonus of $300,000 early in 1999 in
connection with the signing of his employment agreement.
The Compensation Committee believes that Mr. Farrand's compensation was
appropriate in light of the experience and leadership he brings to the position,
including his 15 years of service with the Company and knowledge of the emerging
digital image capture, editing, storage and projection technologies. The
Committee also believes Mr. Farrand's compensation to be appropriate considering
compensation levels of chief executive officers of comparable companies
including, but not limited to, companies with emerging technologies and those
with which the Company competes for executive talent. No specific weight is
given by the Compensation Committee to any of the foregoing factors.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") limits the tax
deductibility of compensation in excess of $1 million paid to certain members of
senior management, unless the payments are made under a performance-based plan
as defined in Section 162(m). The Company's general policy is to structure its
compensation programs to preserve the tax deductibility of compensation paid to
its executive officers and other members of management. All compensation
realized on the exercise of stock options granted pursuant to the Company's
stock option plans as from time to time in effect is intended to be exempt from
the application of Section 162(m). While the Company currently intends to pursue
a strategy of maximizing deductibility of senior management compensation, it
also believes it is important to maintain the flexibility to take actions it
considers to be in the best interests of the Company and its stockholders, which
may be based on considerations in addition to Section 162(m).
The Compensation and Stock Option Committee
Howard Gittis
James R. Maher
Kenneth Ziffren
10
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of Messrs. Gittis, Maher and
Ziffren, none of whom is an officer or employee of the Company or any of its
subsidiaries.
EMPLOYMENT ARRANGEMENTS
Mr. Farrand has an employment agreement with the Company which provides
for his employment as President and Chief Executive Officer for a stated term
commencing January 1, 1999 and ending December 31, 2001. The Company may give
notice of non-renewal at any time on or after December 31, 1999 and the term of
employment will end 24 months after the last day of the month in which such
notice is given. The agreement provides for a base salary of not less than
$800,000 in 1999, $900,000 in 2000 and $1,000,000 in 2001 and thereafter. The
agreement also provides for participation by Mr. Farrand in the Executive
Incentive Compensation Plan. In the event of Mr. Farrand's death, or termination
of his employment agreement by the Company as a consequence of his being
disabled and unable to perform his duties for more than six months, the
agreement terminates except that Mr. Farrand's estate in the case of death or
Mr. Farrand in the case of disability will continue to receive 60% of base
salary for the balance of the term or 24 months, whichever is longer. If the
Company terminates Mr. Farrand's employment other than for disability or cause
(as defined in the agreement) or if Mr. Farrand quits as a consequence of a
material breach of the agreement by the Company, for the balance of the term or
24 months, whichever is longer, Mr. Farrand will continue to receive base
salary, incentive compensation prorated to the date of termination and at a rate
equal to 50% of Base Salary thereafter, and fringe benefits, subject, however,
to a duty on his part to mitigate damages by seeking other employment. If the
Company terminates Mr. Farrand's employment for cause, or as a result of his
materially breaching the agreement, the agreement provides that Mr. Farrand is
to be paid through the date of termination only.
Mr. Page has an employment agreement with the Company which provides
for his employment as Vice Chairman and Chief Administrative Officer for a
stated term commencing January 1, 1999 and ending December 31, 2001. The Company
may give notice of non-renewal at any time on or after December 31, 1999 and the
term of employment will end 24 months after the last day of the month in which
such notice is given. The agreement provides for a base salary of not less than
$700,000 in 1999, $800,000 in 2000 and $900,000 in 2001 and thereafter. The
agreement also provides for participation by Mr. Page in the Executive Incentive
Compensation Plan. In the event of Mr. Page's death, or termination of his
employment agreement by the Company as a consequence of his being disabled and
unable to perform his duties for more than six months, the agreement terminates
except that Mr. Page's estate in the case of death or Mr. Page in the case of
disability will continue to receive 60% of base salary for the balance of the
term or 24 months, whichever is longer. If the Company terminates Mr. Page's
employment other than for disability or cause (as defined in the agreement) or
if Mr. Page quits as a consequence of a material breach of the agreement by the
Company, for the balance of the term or 24 months, whichever is longer, Mr. Page
will continue to receive base salary, incentive compensation pro-rated to the
date of termination and at a rate equal to 50% of Base Salary
11
<PAGE>
thereafter, and fringe benefits, subject, however, to a duty on his part to
mitigate damages by seeking other employment. If the Company terminates Mr.
Page's employment for cause, or as a result of his materially breaching the
agreement, the agreement provides that Mr. Page is to be paid through the date
of termination only.
Mr. Seybold has an employment agreement with the Company which provides
that if at any time his employment with Panavision is terminated by the Company
other than for cause, death or disability, he will be entitled to a lump sum
severance payment equal to the greater of (i) $200,000 or (ii) his annual base
salary in effect at that time.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act 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 on Forms 3, 4 and 5 with the SEC and The New York Stock Exchange.
Officers, directors and greater than ten percent owners are required to furnish
the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received and representations from certain reporting persons that they were not
required to file Forms 3, 4 or 5 for a specified fiscal year, the Company
believes that all its officers, directors and greater than ten percent
beneficial owners complied with all filing requirements applicable to them with
respect to transactions during 1999.
12
<PAGE>
COMMON STOCK PERFORMANCE
The Company's Common Stock commenced trading on The New York Stock
Exchange on November 21, 1996. The graph and table set forth below present a
comparison of cumulative shareholder return through December 31, 1999, assuming
reinvestment of dividends by an investor who invested $100 on November 21, 1996
in each of (i) the Common Stock, (ii) the S&P 500 Composite Index (the "S&P 500
Index") and (iii) the Russell 2000 Index.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
COMPANY COMMON STOCK, THE S&P 500 INDEX
AND THE RUSSELL 2000 INDEX
<TABLE>
<CAPTION>
Value of Initial $100 Investment 11/20/96 12/31/96 12/31/97 12/31/98 12/31/99
- -------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Panavision Inc. $100.00 $122.06 $151.84 $72.79 $23.44
S & P 500 Index 100.00 98.02 130.72 168.08 207.03
Russell 2000 Index 100.00 104.53 127.77 124.91 127.56
</TABLE>
13
<PAGE>
PROPOSAL 2 - RATIFICATION OF SELECTION OF AUDITORS
The Audit Committee has selected, subject to ratification by the
stockholders, Ernst & Young LLP to audit the accounts of the Company for the
fiscal year ending December 31, 2000. The ratification of the selection of Ernst
& Young LLP will require the affirmative vote of the holders of a majority of
the outstanding shares of Common Stock present in person or represented by proxy
at the Annual Meeting and entitled to vote. Under applicable Delaware law, in
tabulating the votes, abstentions from voting on the ratification of the
auditors (including broker non-votes) will be counted and will have the same
effect as a vote against the proposal.
Ernst & Young LLP representatives will be present at the Annual Meeting
and will have an opportunity to make a statement if they desire to do so and
will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR 2000.
14
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
The following table sets forth as of March 31, 2000 the total number of
shares of Common Stock beneficially owned, and the percent so owned, by each
director of the Company, by each person known to the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, by the
officers named in the summary compensation table and by all directors and
officers as a group. The number of shares owned are those "beneficially owned,"
as determined under the rules of the SEC, and such information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which a person has sole or
shared voting power or investment power and any shares of Common Stock which the
person has the right to acquire within 60 days through the exercise of any
option, warrant or right, through conversion of any security, or pursuant to the
automatic termination of power of attorney or revocation of trust, discretionary
account or similar arrangement.
Amount and Nature
of Beneficial Percent of
Ownership(a) Class
----------------- ----------
Ronald O. Perelman (b) 7,520,225 93.35%
35 East 62nd Street
New York, NY 10021
William C. Scott 39,231 *
John S. Farrand 200,078 2.48%
Howard Gittis 5,000 *
James R. Maher 200,000 2.48%
Joseph P. Page 133,333 1.66%
Martin D. Payson 5,000 *
Scott L. Seybold 13,333 *
Kenneth Ziffren 0 *
All directors and executive officers 8,116,200 100.75%
as a group (9 persons)
- ---------------------------------
* Less than 1%.
(a) Includes Common Stock and options exercisable within 60 days. Of the
shares shown for each individual listed, the following amounts represent
options exercisable within 60 days: Mr. Perelman - 200,000, Mr. Farrand -
166,666, Mr. Maher - 200,000, Mr. Page - 133,333, Mr. Seybold - 13,333.
(b) Of such shares of Common Stock, 7,320,225 shares are indirectly owned by
Mr. Perelman through Mafco Holdings. The shares so owned and shares of
intermediate holding companies are or may from time to time be pledged to
secure obligations of Mafco Holdings or its affiliates.
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RECAPITALIZATION AGREEMENT. On December 18, 1997, PX Holding, a wholly
owned subsidiary of Mafco Holdings, PX Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of PX Holding ("PX Merger"), and the
Company entered into an Agreement of Recapitalization and Merger (the
"Recapitalization Agreement"), providing for the merger (the "Merger") of PX
Merger with and into the Company, whereupon the separate existence of PX Merger
would cease and the Company would continue as the surviving corporation.
The Merger and the transactions contemplated thereby were consummated
on June 4, 1998, at which time (i) PX Merger merged with and into the Company
and (ii) PX Holding acquired 5,784,199 shares of Common Stock.
After giving effect to the Merger, the members of the board of
directors of the Company included Messrs. Perelman, Scott, Farrand, Gittis,
Maher, Page, Payson and Ziffren.
In connection with entering into the Recapitalization Agreement, Mafco
Holdings, the Company and Warburg, Pincus Capital Company, L.P., a Delaware
limited partnership ("Warburg") entered into the Voting and Stockholders
Agreement, dated December 18, 1997, as amended and restated on April 16, 1998
(the "Stockholders Agreement"). Pursuant to the terms of the Stockholders
Agreement, Warburg agreed to vote the shares of Common Stock then owned by it in
favor of the Merger and also granted certain officers of Mafco Holdings an
irrevocable proxy with respect to such shares of Common Stock. Pursuant to the
Stockholders Agreement, after giving effect to the Merger, Mafco Holdings had an
option to purchase at $30.00 per share of Common Stock, 1,526,040 shares of
Common Stock (the "Warburg Shares") from Warburg and Warburg had an option to
sell at $25.00 per share of Common Stock, the Warburg Shares. Each such option
was exercisable in whole, but not in part, during the period beginning June 4,
1999 and ending June 4, 2000. On February 1, 1999, PX Holding and Warburg
entered into a stock purchase agreement, pursuant to which (i) the provisions of
the Stockholders Agreement relating to the options in favor of Mafco and
Warburg, respectively, were terminated and (ii) PX Holding agreed to purchase
and Warburg agreed to sell the Warburg Shares at a price of $23.34 per share for
an aggregate price of approximately $35.6 million. The transaction closed on
February 1, 1999.
Concurrently with the Merger, (i) the certificate of incorporation of
the Company was amended and restated in accordance with the terms of the
Recapitalization Agreement and (ii) the bylaws of PX Merger as in effect at the
effective time of the Merger became the bylaws of the Company.
16
<PAGE>
REGISTRATION RIGHTS AGREEMENT. Following the Merger pursuant to the
Recapitalization Agreement, the Company and PX Holding entered into a
Registration Rights Agreement dated as of June 5, 1998 (the "Registration Rights
Agreement") pursuant to which PX Holding and certain transferees of Common Stock
held by PX Holding (the "Holders") have the right to require the Company to
register all or part of the Common Stock owned by such Holders under the
Securities Act of 1933 (a "Demand Registration"). The Company may postpone
giving effect to a Demand Registration for up to a period of 30 days if the
Company believes such registration might have a material adverse effect on any
plan or proposal by the Company with respect to any financing, acquisition,
recapitalization, reorganization or other material transaction, or the Company
is in possession of material non-public information that, if publicly disclosed,
could result in a material disruption of a major corporate development or
transaction then pending or in progress or in other material adverse
consequences to the Company. In addition, the Holders will have the right to
participate in registrations by the Company of its Common Stock (an "Incidental
Registration") subject, however, to certain rights in favor of the Company to
reduce, or eliminate entirely, the number of shares of Common Stock the Holders
may have registered in an Incidental Registration. The Company will pay all
out-of-pocket expenses incurred in connection with a Demand Registration or an
Incidental Registration, except for underwriting discounts, commissions and
related expenses attributable to the shares of Common Stock sold by such
Holders.
TAX SHARING AGREEMENT. The Company, for federal income tax purposes, is
included in the affiliated group of which Mafco Holdings is the common parent,
and the Company's federal taxable income and loss is included in such group's
consolidated tax return filed by Mafco Holdings. The Company also may be
included in certain state and local tax returns of Mafco Holdings or its
subsidiaries. As of February 1, 1999, the Company and certain of its
subsidiaries and Mafco Holdings entered into a tax sharing agreement (the "Tax
Sharing Agreement"), pursuant to which Mafco Holdings has agreed to indemnify
the Company against federal, state or local income tax liabilities of the
consolidated or combined group of which Mafco Holdings (or a subsidiary of Mafco
Holdings other than the Company or its subsidiaries) is the common parent for
taxable periods beginning on or after February 1, 1999 during which the Company
or a subsidiary of the Company is a member of such group. Pursuant to the Tax
Sharing Agreement, for all taxable periods beginning on or after February 1,
1999, the Company will pay to Mafco Holdings amounts equal to the taxes that the
Company would otherwise have to pay if it were to file separate federal, state
or local income tax returns (including any amounts determined to be due as a
result of a redetermination arising from an audit or otherwise of the
consolidated or combined tax liability relating to any such period which is
attributable to the Company), except that the Company will not be entitled to
carry back any losses to taxable periods ending prior to February 1, 1999. Since
the payments to be made under the Tax Sharing Agreement will be determined by
the amount of taxes that the Company would otherwise have to pay if it were to
file separate federal, state and local income tax returns, the Tax Sharing
Agreement will benefit Mafco Holdings to the extent Mafco Holdings can offset
the taxable
17
<PAGE>
income generated by the Company against losses and tax credits generated by
Mafco Holdings and its other subsidiaries.
ADDITIONAL INFORMATION
The Company will make available a copy of its Annual Report on Form
10-K for the fiscal year ended December 31, 1999 and any Quarterly Reports on
Form 10-Q filed thereafter, without charge, upon written request to the
Secretary, Panavision Inc., 6219 De Soto Avenue, Woodland Hills, California
91367. Each such request must set forth a good faith representation that, as of
the Record Date, March 27, 2000, the person making the request was a beneficial
owner of Common Stock entitled to vote.
In order to ensure timely delivery of such documents prior to the
Annual Meeting, any request should be received by the Company promptly.
STOCKHOLDER PROPOSALS
Under the rules and regulations of the SEC as currently in effect, any
holder of at least $2,000 in market value of Common Stock who has held such
securities for at least one year and who desires to have a proposal presented in
the Company's proxy material for use in connection with the Annual Meeting of
stockholders to be held in 2001 must transmit that proposal (along with his
name, address, the number of shares of Common Stock that he holds of record or
beneficially, the dates upon which the securities were acquired, documentary
support for a claim of beneficial ownership and a statement of willingness to
hold such Common Stock through the date of the 2001 meeting) in writing as set
forth below. Proposals of stockholders intended to be presented at the next
annual meeting must be received by the Secretary, Panavision Inc., 6219 De Soto
Avenue, Woodland Hills, California 91367, not later than November 30, 2000.
18
<PAGE>
OTHER BUSINESS
The Company knows of no other matters which may come before the annual
meeting. However, if any such matters properly come before the meeting, the
individuals named in the proxies will vote on such matters in accordance with
their best judgment.
March 31, 2000
BY ORDER OF THE BOARD OF DIRECTORS
PANAVISION INC.
19
<PAGE>
PANAVISION INC.
PROXY - ANNUAL MEETING OF STOCKHOLDERS - MAY 25, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints Glenn P. Dickes, Joseph P.
Page and Barry F. Schwartz, and each of them as proxies for the undersigned
each with the power to appoint his substitute, to represent and to vote, as
designated on the reverse side of this proxy, all of the shares of the common
stock of Panavision Inc. (the "Company") that the undersigned may be entitled
to vote at the annual meeting of stockholders to be held on May 25, 2000 and at
any adjournment or postponement thereof.
The undersigned stockholder hereby revokes any proxy heretofore given to
vote at said meeting and any adjournment thereof. Receipt of the Notice of
Annual Meeting of Stockholders, the Proxy Statement accompanying said Notice,
and the Annual Report to Stockholders for the fiscal year ended December 31,
1999 hereby is acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE PERSONS NOMINATED AS DIRECTORS BY THE BOARD OF
DIRECTORS AND FOR PROPOSAL 2 DESCRIBED ON THE REVERSE SIDE OF THIS PROXY.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED BELOW AND FOR
PROPOSAL 2.
Please mark
your votes as |X|
indicated in
this example.
1. ELECTION OF DIRECTORS
FOR all nominees WITHHOLD
listed below AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed below
| | | |
Instruction: To withhold authority to vote for any individual nominee, strike a
line through the name(s) of the nominee(s) in the list below.
Ronald O. Perelman, John S. Farrand, Howard Gittis, James R. Maher, Joseph P.
Page, Martin D. Payson, William C. Scott, Kenneth Ziffren
FOR AGAINST ABSTAIN
2. Proposal to ratify the selection of Ernst & Young LLP | | | | | |
as the Company's independent auditors for 2000.
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
I plan to attend meeting | |
Please sign exactly as the name or names
appear on the proxy. When shares are held by
joint tenants both should sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give your full
title as such. If a corporation please sign
in full corporate name by the President or
another authorized officer. If a
partnership, please sign in partnership name
by authorized person.
SIGNATURE SIGNATURE DATED , 2000
---------------------- ------------------- -------
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE. PLEASE MARK INSIDE THE BOXES SO THAT DATA PROCESSING EQUIPMENT WILL
RECORD YOUR VOTES.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- FOLD AND DETACH HERE -
[SEE OVER!]
