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
SWISHER INTERNATIONAL GROUP INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule14a-6(i)(3).
[ ] 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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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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:
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<PAGE>
[SWISHER INTERNATIONAL GROUP INC. LOGO]
March 31, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held on Thursday, May 1, 1997, at 10:00 a.m., local time, at the
Maritime Aquarium at Norwalk, 3rd Floor, 10 North Water Street, Norwalk,
Connecticut.
The enclosed notice and proxy statement contain details concerning the
business to come before the meeting. You will note that the Board of Directors
of the Company recommends a vote 'FOR' the election of twelve Directors to serve
until the 1998 Annual Meeting of Stockholders and 'FOR' the ratification of
Coopers & Lybrand L.L.P. as independent auditors of the Company for the year
ending December 31, 1997. Please sign and return your proxy card in the enclosed
envelope at your earliest convenience to assure that your shares will be
represented and voted at the meeting even if you cannot attend.
I look forward to seeing you at the Annual Meeting of Stockholders.
Sincerely,
/s/ William Ziegler, III
William Ziegler, III
Chairman of the Board and
Chief Executive Officer
<PAGE>
[SWISHER INTERNATIONAL GROUP INC. LOGO]
20 THORNDAL CIRCLE
DARIEN, CONNECTICUT 06820
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------------
TO THE OWNERS OF CLASS A COMMON STOCK AND CLASS B COMMON STOCK OF SWISHER
INTERNATIONAL GROUP INC.:
The Annual Meeting of Stockholders of Swisher International Group Inc., a
Delaware corporation (the 'Company'), will be held at the Maritime Aquarium at
Norwalk, 3rd Floor, 10 North Water Street, Norwalk, Connecticut, on Thursday,
May 1, 1997, at 10:00 a.m., local time, for the following purposes:
1. To elect Directors to serve until the 1998 Annual Meeting of
Stockholders;
2. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
auditors of the Company to serve for the year ending December 31, 1997;
and
3. To transact such other business as may properly come before the meeting
and any adjournments or postponements thereof.
Stockholders of record as of the close of business on March 21, 1997, are
entitled to notice of and to vote at the meeting and any adjournments or
postponements thereof. A list of stockholders of record of the Company as of the
close of business on March 21, 1997, will be available for inspection during
normal business hours from April 18, 1997 through April 30, 1997, at the office
of Schnader Harrison Segal & Lewis, 14th Floor, 330 Madison Avenue, New York,
New York.
By Order of the Board of Directors
/s/ Karl H. Ziegler
KARL H. ZIEGLER
Secretary
Darien, Connecticut
March 31, 1997
EACH STOCKHOLDER IS URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY
PROMPTLY. IN THE EVENT A STOCKHOLDER DECIDES TO ATTEND THE MEETING, HE OR SHE
MAY, IF SO DESIRED, REVOKE THE PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE>
SWISHER INTERNATIONAL GROUP INC.
20 THORNDAL CIRCLE
DARIEN, CONNECTICUT 06820
---------------------------
PROXY STATEMENT
---------------------------
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 1, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Swisher International Group Inc.
(Swisher International Group Inc. and its subsidiaries are referred to herein as
the 'Company') to be voted at the Annual Meeting of Stockholders of the Company
to be held at the Maritime Aquarium at Norwalk, 3rd Floor, 10 North Water
Street, Norwalk, Connecticut, on May 1, 1997, at 10:00 a.m., local time, and at
any adjournments or postponements thereof.
All proxies delivered pursuant to this solicitation are revocable at any
time at the option of the persons executing them by giving written notice to the
Secretary of the Company, by delivering a later dated proxy or by voting in
person at the Annual Meeting of Stockholders.
The mailing address of the principal executive offices of the Company is 20
Thorndal Circle, Darien, Connecticut 06820. The approximate date on which this
Proxy Statement and form of proxy are first being sent or given to stockholders
is March 31, 1997.
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting of Stockholders in accordance
with the directions given. Regarding the election of Directors to serve until
the 1998 Annual Meeting of Stockholders, in voting by proxy, stockholders may
vote in favor of all nominees or withhold their votes as to specific nominees.
With respect to other proposals to be voted upon, stockholders may vote in favor
of a proposal, against a proposal or may abstain from voting. Stockholders
should specify their choices on the enclosed form of proxy. If no specific
instructions are given with respect to the matters to be acted upon, the shares
represented by a signed proxy will be voted 'For' the election of all nominees
and 'For' the proposal to ratify the appointment of Coopers & Lybrand L.L.P. as
independent auditors. Directors will be elected by a majority of the outstanding
shares of Class A Common Stock and Class B Common Stock entitled to vote at the
Annual Meeting of Stockholders. The appointment of Coopers & Lybrand L.L.P. as
independent auditors will be ratified by a majority of the votes cast 'For' or
'Against' the proposal by holders of Class A Common Stock and Class B Common
Stock of the Company voting on the proposal in person or by proxy at the Annual
Meeting of Stockholders. In the case of ratification of the appointment of
independent auditors, abstentions and broker non-votes, while not included in
calculating vote totals, will have the practical effect of reducing the number
of votes 'For' needed to approve the proposal.
Only owners of record of shares of Class A Common Stock and Class B Common
Stock of the Company at the close of business on March 21, 1997, are entitled to
vote at the meeting or adjournments or postponements thereof. Each owner of
record of Class A Common Stock on the record date is entitled to one vote for
each share of Class A Common Stock of the Company so held. Each owner of record
of Class B Common Stock of the Company is entitled to ten votes for each share
of Class B Common Stock of the Company so held. On March 21, 1997, there were
6,000,000 shares of Class A Common Stock and 28,100,000 shares of Class B Common
Stock of the Company issued and outstanding.
<PAGE>
ELECTION OF DIRECTORS
(ITEM 1)
BOARD OF DIRECTORS
The Board of Directors of the Company, pursuant to the Amended and Restated
Bylaws of the Company, has fixed the number of Directors of the Company at
twelve.
Cynthia Z. Brighton, Robert A. Britton, Nicholas J. Cevera, Jr., C. Keith
Hartley, Alfred F. La Banca, Timothy Mann, Donald E. McNicol, Charles H. Mullen,
J. Thomas Ryan, III, John R. Tweedy, William T. Ziegler and William Ziegler, III
have been nominated for election to serve until the 1998 Annual Meeting of
Stockholders and until their successors are elected and qualify.
Should any one or more of these nominees become unable to serve for any
reason, or for good cause will not serve, which is not anticipated, the Board of
Directors may, unless the Board by resolution provides for a lesser number of
Directors, designate substitute nominees, in which event the persons named in
the enclosed proxy will vote proxies that would otherwise be voted for all named
nominees for the election of such substitute nominee or nominees.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE 'FOR' EACH NOMINEE
AS A DIRECTOR TO HOLD OFFICE UNTIL THE 1998 ANNUAL MEETING OF STOCKHOLDERS, AND
UNTIL HIS OR HER SUCCESSOR IS ELECTED AND QUALIFIES. PROXIES RECEIVED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXY A
CONTRARY CHOICE.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Cynthia Z. Brighton (Age 37) has been Treasurer, Vice President-Financial
Services and Director of the Company since November 1995. From 1986 to 1993, Ms.
Brighton served as a director and corporate secretary of American Fructose
Corporation, an affiliate of American Maize-Products Company ('AMPCo') and as
the corporate secretary of AMPCo from 1992 to 1994. Ms. Brighton is a member of
the Pension Committee.
Robert A. Britton (Age 50) was named Executive Vice President, Chief
Financial Officer and Director in October 1996. He was Vice President and Chief
Financial Officer of the Company from November 1995 to October 1996. From 1990
to 1995, Mr. Britton was Treasurer and Vice President of AMPCo. Mr. Britton is a
member of the Pension Committee.
Nicholas J. Cevera, Jr. (Age 59) has been the Executive Vice
President-Operations of the Company since July 1986 and a Director since
November 1995. Mr. Cevera joined the Company as Vice President of Manufacturing
in April 1980. Mr. Cevera is a Director of the First Coast Manufacturers
Association and the Cigar Association of America.
C. Keith Hartley (Age 54) has been a director of the Company since November
1995. Since August 1995 he has been the Managing Partner-Corporate Finance at
Forum Capital Markets L.P., an investment banking firm, and a co-manager of the
initial public offering of the shares of the Company's Class A Common Stock (the
'Offering'). From May 1991 to August 1995, Mr. Hartley was an independent
financial consultant. From February 1990 to May 1991, Mr. Hartley served as
Managing Director of Peers & Co., a merchant banking firm. Mr. Hartley also
serves as a director of Comdisco, Inc., a lessor of high technology equipment,
U.S. Diagnostics, Inc., an operator of diagnostic imaging centers, and Phoenix
Shannon p.l.c., a manufacturer of dental instruments. Mr. Hartley is the
chairman of the Audit Committee and is a member of the Executive Committee, the
Compensation Committee and the Pension Committee.
Alfred F. La Banca (Age 65) has been a Director of the Company since
November 1995. He is also Chairman of the Board of the Mailex Corporation in
Stamford, Connecticut and of Action Letter, Inc. in New York City, which he
founded in 1961. Both Mailex Corporation and Action Letter, Inc. specialize in
the
2
<PAGE>
production of direct mail, data processing and outsource management for client
firms. Mr. La Banca is the chairman of the Compensation Committee and is a
member of the Audit Committee.
Timothy Mann (Age 54) has been a Director since November 1995 and President
of the Company since 1986. Mr. Mann is Vice President of the Cigar Association
of America, and serves on its Board of Directors. He is also a Director of the
Tobacco Merchants' Association and a member of the National Association of
Wholesale Marketers by whom he was recently named Dean of the Industry. Mr. Mann
is a member of the Executive Committee.
Donald E. McNicol (Age 75) has been a Director of the Company since
November 1995. He is presently of counsel to the firm of Schnader Harrison Segal
& Lewis. Mr. McNicol was a partner of Hall, McNicol, Hamilton & Clark from 1956
to 1992 and of counsel to the firm of Keck, Mahin & Cate from 1992 to 1996. Mr.
McNicol served as a Director and General Counsel of AMPCo from 1964 to 1992. Mr.
McNicol is the chairman of the Pension Committee and is a member of the
Executive Committee, the Compensation Committee and the Audit Committee.
Charles H. Mullen (Age 69) has been a Director of the Company since
February 1997. Mr. Mullen retired as Chairman and Chief Executive Officer of the
American Tobacco Company, which was a subsidiary of American Brands, Inc. He was
also Vice President-Tobacco and a member of the Board of Directors of American
Brands, Inc. Mr. Mullen also serves as a director of Standard Commercial
Corporation. Mr. Mullen is a member of the Compensation Committee and the Audit
Committee.
J. Thomas Ryan, III (Age 49) has been a Director of the Company since
November 1995 and Executive Vice President since April 1995. From 1985 to 1994,
Mr. Ryan was President of Helme Tobacco Company ('Helme'). Mr. Ryan serves on
the boards of the Cigar Association of America, the Smokeless Tobacco Council,
the Smokeless Tobacco Research Council, and the Tobacco Institute.
John R. Tweedy (Age 67) has been a Director of the Company since November
1995. Mr. Tweedy served in various management positions at AMPCo and its
affiliates from 1972 until he retired as Senior Vice President of AMPCo in 1993.
Mr. Tweedy is a member of the Compensation Committee and the Audit Committee.
William T. Ziegler (Age 41) has been a Director and Chief Operating Officer
of the Company since November 1995. From 1991 to 1994, Mr. William T. Ziegler
served as Director of Corporate Development for Helme. From 1986 to 1990, Mr.
William T. Ziegler served as Product Manager for Helme. Mr. William T. Ziegler
is the chairman of the Executive Committee.
William Ziegler, III (Age 68) has been a Director, Chief Executive Officer
and Chairman of the Board since November 1995. From 1958 to 1995, Mr. Ziegler
served as a Director of AMPCo, from 1964 to 1995 as Chairman of the Board of
AMPCo and as Chief Executive Officer from 1976 to 1993. Mr. Ziegler is President
of the E. Matilda Ziegler Foundation for the Blind (a private foundation) and
also has served as Trustee of Connecticut College and as a member of the Board
of Directors of the Maritime Aquarium at Norwalk. Mr. Ziegler is Chairman of the
Board and is a member of the Executive Committee.
OWNERSHIP OF SHARES
The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A Common Stock and Class B Common Stock as of
March 21, 1997 by (i) each person known by the Company to own beneficially more
than 5% of the outstanding shares of either Class A Common Stock or Class B
Common Stock, (ii) each of the Company's directors, (iii) each of the executive
officers whose name appears in the summary compensation table and (iv) all
directors and executive officers as a group (17 persons). Except as set forth in
the notes to the table, the business address of each person is 20 Thorndal
Circle, Darien, CT 06820. As described in the notes to the table, voting and/or
investment power with respect to certain shares of common stock is shared by the
named individuals or entities. Consequently, such shares are shown as
beneficially owned by more than one person.
3
<PAGE>
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK(1)
----------------------- ------------------------
NUMBER PERCENT OF NUMBER PERCENT OF
NAME OF SHARES CLASS OF SHARES CLASS
- ----------------------------------------------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Hay Island Holding Corporation (2)............................... -- -- 28,100,000 100.0%
First Union Bank of Connecticut, as trustee (3)(18).............. -- -- 24,907,840 88.6%
Fidelity Management & Research Company (4)....................... 750,000 12.5% -- --
Zweig-DiMenna entities(5)........................................ 590,900 9.8% -- --
Delaware Management Co., Inc.(6)................................. 300,000 5.0% -- --
Cynthia Z. Brighton (7).......................................... 1,750 * -- --
Robert A. Britton (8)(19)........................................ 1,000 * -- --
Nicholas J. Cevera, Jr. (9)(19).................................. 1,000 * -- --
C. Keith Hartley (10)............................................ 1,500 * -- --
Alfred F. La Banca (11).......................................... 500 * -- --
Timothy Mann (12)(19)............................................ 1,000 * -- --
Donald E. McNicol (13)........................................... 1,000 * -- --
Charles H. Mullen (14)........................................... 500 * -- --
J. Thomas Ryan, III (15)(19)..................................... 1,000 * -- --
John R. Tweedy (16).............................................. 100 * -- --
William T. Ziegler (17).......................................... 2,250 * -- --
William Ziegler, III, individually and as trustee (3)(18)........ 200 * 28,100,000 100.0%
All directors and executive officers as a group (20)............. 21,800 * 28,100,000 100.0%
</TABLE>
- ------------------
* Less than 1%
<TABLE>
<S> <C>
(1) Each share of Class B Common Stock is convertible at the option of the holder into one share of Class A
Common Stock and is automatically converted into a share of Class A Common Stock upon transfer to a person
who is not a Ziegler Family Member (as defined below). The number of shares of Class A Common Stock and
percentages contained under this heading do not account for such conversion right.
(2) Includes shares beneficially owned by Hay Island Holding Corporation ('Hay Island') as follows: 28,100,000
shares of Class B Common Stock directly and with respect to which it has sole voting and investment power.
(3) Includes shares beneficially owned or deemed to be owned beneficially by First Union Bank of Connecticut as
follows: 24,907,840 shares of Class B Common Stock owned by Hay Island. Hay Island is wholly owned by
William Ziegler, III, individually and as co-trustee with First Union Bank of Connecticut of the Trust
under the Will of William Ziegler, Jr. and the Trust under the Will of Helen M. Rivoire (the 'Ziegler
Trusts'), with respect to which it shares investment power with William Ziegler, III. First Union Bank of
Connecticut's business address is 300 Main Street, Stamford, Connecticut 06904.
(4) Includes shares beneficially owned or deemed to be owned beneficially by Fidelity Management & Research
Company as follows: 750,000 shares of Class A Common Stock directly and with respect to which it has sole
voting and investment power. Fidelity Management & Research Company's business address is 82 Devonshire
Street, Boston, Massachusetts 02109.
(5) Includes shares beneficially owned as disclosed in Amendment No. 1 to the Schedule 13D dated February 24,
1997, and its accompanying materials of Zweig-DiMenna Special Opportunities, L.P., Zweig-DiMenna
International Limited, Zweig-DiMenna International Managers, Inc., on behalf of a discretionary account and
Gotham Advisors, Inc., on behalf of a discretionary account. Such Schedule 13D stated that each
beneficially owned shares of Class A Common Stock, as follows: (a) Zweig-DiMenna Special Opportunities,
L.P. - 90,900 (1.5%) shares directly and with respect to which it has sole voting and investment power; (b)
Zweig-DiMenna International Limited - 374,400 (6.2%) shares directly and with respect to which it has sole
voting and investment power; (c) Zweig-DiMenna International Managers, Inc., on behalf of a discretionary
account - 85,000 (1.4%) shares directly and with respect to which it has sole voting and investment power
and (d) Gotham Advisors, Inc., on behalf of a discretionary account - 40,600 (0.7%) shares directly and
with respect to which it has sole voting and investment power. Each of the foregoing entities' business
address is c/o Zweig-DiMenna Associates LLC, 900 Third Avenue, 30th Floor, New York 10022.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
(6) Includes shares beneficially owned or deemed to be owned beneficially by Delaware Management Co., Inc. as
follows: 300,000 shares of Class A Common Stock directly and with respect to which it has sole voting and
investment power. Delaware Management Co., Inc.'s business address is One Commerce Square, Philadelphia,
Pennsylvania 19103.
(7) Includes shares beneficially owned or deemed to be owned beneficially by Cynthia Z. Brighton as follows:
1,750 shares of Class A Common Stock directly and with respect to which she has sole voting and investment
power.
(8) Includes shares beneficially owned or deemed to be owned beneficially by Robert A. Britton as follows:
1,000 shares of Class A Common Stock directly and with respect to which he has sole voting and investment
power.
(9) Includes shares beneficially owned or deemed to be owned beneficially by Nicholas J. Cevera, Jr. as
follows: 1,000 shares of Class A Common Stock directly and with respect to which he has sole voting and
investment power. Mr. Cevera's business address is 459 East 16th Street, Jacksonville, Florida 32206.
(10) Includes shares beneficially owned or deemed to be owned beneficially by C. Keith Hartley as follows: 1,500
shares of Class A Common Stock directly and with respect to which he has sole voting and investment power.
Mr. Hartley's business address is Forum Capital Markets L.P., 53 Forest Avenue, Old Greenwich, Connecticut
06870.
(11) Includes shares beneficially owned or deemed to be owned beneficially by Alfred F. La Banca as follows: 500
shares of Class A Common Stock directly and with respect to which he has sole voting and investment power.
Mr. La Banca's business address is Mailex Corporation, 11 Elm Court, Stamford, Connecticut 06902.
(12) Includes shares beneficially owned or deemed to be owned beneficially by Timothy Mann as follows: 1,000
shares of Class A Common Stock directly and with respect to which he has sole voting and investment power.
Mr. Mann's business address is 459 East 16th Street, Jacksonville, Florida 32206.
(13) Includes shares beneficially owned or deemed to be owned beneficially by Donald E. McNicol as follows:
1,000 shares of Class A Common Stock directly and with respect to which he has sole voting and investment
power. Mr. McNicol's business address is Schnader Harrison Segal & Lewis, 330 Madison Avenue, New York, New
York 10017.
(14) Includes shares beneficially owned or deemed to be owned beneficially by Charles H. Mullen as follows: 500
shares of Class A Common Stock directly and with respect to which he has sole voting and investment power.
Mr. Mullen's business address is 26 Winding Lane, Darien, Connecticut 06820.
(15) Includes shares beneficially owned or deemed to be owned beneficially by J. Thomas Ryan, III as follows:
1,000 shares of Class A Common Stock directly and with respect to which he has sole voting and investment
power. Mr. Ryan's business address is 459 East 16th Street, Jacksonville, Florida 32206.
(16) Includes shares beneficially owned or deemed to be owned beneficially by John R. Tweedy as follows: 100
shares of Class A Common Stock directly and with respect to which he has sole voting and investment power.
Mr. Tweedy's business address is 205 Poverty Hollow Road, Redding, Connecticut 06896.
(17) Includes shares beneficially owned or deemed to be owned beneficially by William T. Ziegler as follows:
2,250 shares of Class A Common Stock directly and with respect to which he has sole voting and investment
power.
(18) Includes shares beneficially owned or deemed to be owned beneficially by William Ziegler, III as follows:
200 shares of Class A Common Stock directly and with respect to which he has sole voting and investment
power; 28,100,000 shares of Class B Common Stock owned by Hay Island. Hay Island is deemed to be
beneficially owned by William Ziegler, III, individually and as co-trustee with First Union Bank of
Connecticut of the Ziegler Trusts, with respect to which he shares voting and investment power with First
Union Bank of Connecticut.
(19) Excludes stock options in respect of shares of Class A Common Stock granted to the executive under 1996
Stock Option Plan as follows: Mr. Mann (275,000); Mr. Cevera (200,000), Mr. Ryan (200,000) and Mr. Britton
(150,000).
(20) Excludes stock options in respect of an aggregate of 350,000 shares of Class A Common Stock granted to the
executive officers whose names do not appear in this table.
</TABLE>
5
<PAGE>
ADDITIONAL INFORMATION REGARDING THE BOARD OF DIRECTORS
BOARD COMMITTEES
The Board of Directors established four committees--the Executive
Committee, the Audit Committee, the Pension Committee and the Compensation
Committee.
The Executive Committee has all powers and rights necessary to exercise the
full authority of the Board of Directors in the management of the business and
affairs of the Company when necessary between meetings of the Board of
Directors. The members of the Executive Committee are Messrs. Ziegler, William
T. Ziegler, Mann, McNicol and Hartley. Mr. William T. Ziegler serves as chairman
of the Executive Committee.
The Audit Committee's responsibilities include (i) making recommendations
to the Board of Directors of the Company with respect to the Company's financial
statements and the appointment of independent auditors, (ii) reviewing
significant accounting policies and practices of the Company, (iii) meeting with
the Company's independent auditors concerning, among other things, the scope of
audits and reports and (iv) reviewing the performance of accounting and
financial controls of the Company. The Audit Committee must include at least two
Directors who are neither officers nor employees of the Company. The members of
the Audit Committee are Messrs. Hartley, La Banca, McNicol, Mullen and Tweedy.
Mr. Hartley serves as chairman of the Audit Committee.
The Compensation Committee has the responsibility of reviewing the
performance of the executive officers of the Company and recommending to the
Board of Directors of the Company annual salary and bonus amounts for all
officers of the Company. The Compensation Committee must consist of at least two
Directors who are 'outside directors' within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the 'Code'). The members of the
Compensation Committee are Messrs. La Banca, Tweedy, McNicol, Mullen and
Hartley. Mr. La Banca serves as chairman of the Compensation Committee.
The Pension Committee has the responsibility for overseeing the
administration of the Company's pension plans. The members of the Pension
Committee are Ms. Brighton and Messrs. McNicol, Hartley and Britton. Mr. McNicol
serves as chairman of the Pension Committee.
BOARD AND BOARD COMMITTEE MEETINGS
In 1996, there were five meetings (including four meetings by written
consent) held by the Board of Directors of the Company. The Company's
Compensation Committee met once in 1996. The total combined attendance for all
of the Company's Board and Committee meetings was 91%. Prior to October 23,
1996, the Board of Directors of Swisher International, Inc. directed the
Company's business. In 1996, the Board of Directors of Swisher International,
Inc. held seven meetings (including one meeting by written consent). Swisher
International, Inc.'s Executive Committee met nine times in 1996. Swisher
International, Inc.'s Compensation Committee, Audit Committee and Pension
Committee each met three times in 1996. The total combined attendance for all of
Swisher International, Inc.'s Board and Committee meetings was 93%.
COMPENSATION OF DIRECTORS
Directors who do not receive compensation as full-time officers or
employees of the Company or any of its affiliates are paid an annual retainer
fee of $25,000 and a fee of $1,000 for each meeting of the Board of Directors or
any Committee thereof they attend. All Directors are reimbursed for expenses
incurred in connection with attendance at meetings of the Board of Directors or
any Committee thereof.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. McNicol is of counsel to the firm of Schnader Harrison Segal & Lewis
which receives fees from the Company for professional services rendered. Mr.
Hartley is the Managing Partner-Corporate Finance of Forum Capital Markets L.P.,
an investment banking firm that acted as co-manager of the Offering. Forum
Capital Markets L.P. received fees in connection with the Offering and in
connection with the redemption of a minority interest in Hay Island held by
Cerestar USA and may receive fees for other services in the future.
6
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH HAY ISLAND
As a result of Hay Island's stock ownership of the Company, the Company's
Board of Directors is, and is expected to continue to be, comprised entirely of
designees of Hay Island, and Hay Island is, and is expected to continue to be,
able to direct and control the policies of the Company and its subsidiaries,
including with respect to mergers, sales of assets and similar transactions. Hay
Island is deemed to be beneficially owned by William Ziegler, III, individually
and as trustee.
TAX SHARING AGREEMENT
The Company and Hay Island have been, for federal income tax purposes,
members of an affiliated group of corporations of which Hay Island is the common
parent (the 'Tax Group'). As a result of such affiliation, the Company and Hay
Island are included in a consolidated federal income tax return.
A tax sharing agreement was entered into between the Company and Hay Island
(the 'Tax Sharing Agreement') pursuant to which the Company is required to pay
to Hay Island with respect to each tax year an amount equal to the consolidated
federal income taxes that would have been incurred by the Company had it not
been included in the consolidated federal income tax returns filed by the Tax
Group.
Under existing federal income tax regulations, each of the Company and Hay
Island is liable for the consolidated federal income taxes of the Tax Group for
any taxable year in which each is a member of the Tax Group. Pursuant to the Tax
Sharing Agreement, each of Hay Island and the Company will agree to indemnify
the other for any and all claims, demands, actions (including liens, levies,
audits, investigations and assessments), causes of action, suits, proceedings,
damages, liabilities, and costs and expenses incident thereto relating to
federal and state taxes on account of the actions or failure to act of the other
party.
MANAGEMENT SERVICES AGREEMENT
The Company and Hay Island entered into a Management Services Agreement
('MSA'), effective January 1, 1997. The services provided by Hay Island to the
Company include, among other things, treasury and cash management, risk
management (including obtaining liability, property and casualty insurance),
human resource management, marketing support, long-term strategic planning,
business development and investor relations.
The MSA has a term of five years and will automatically renew thereafter
for successive one-year terms. After the initial five-year term, the MSA may be
terminated at any time by either party upon six months' prior written notice.
The MSA is terminable by either the Company or Hay Island upon six months'
written notices if Hay Island ceases to own shares of common stock of the
Company representing more than 50% of the combined voting power of the common
stock of the Company.
The amount payable under the MSA for the year ending December 31, 1997 is
$925,000, payable in twelve monthly installments. The MSA provides that the
amounts payable thereunder will be reviewed on an annual basis and, based on an
agreed upon allocation of Hay Island's costs for the services performed, the
amount payable thereunder will be increased or decreased, provided that any
increase in such amount will be limited to a percentage increase based upon the
change in the Consumer Price Index for all Urban Consumers, Northeast for the
preceding twelve month period.
Each party agreed to indemnify the other, except in certain limited
circumstances, against liabilities that the other may incur that are caused by
or arise in connection with such party's failure to fulfill its material
obligations under the MSA.
FAMILY RELATIONSHIPS
William Ziegler, III is the Chief Executive Officer and Chairman of the
Board of Directors of the Company. His son, William T. Ziegler, is the Chief
Operating Officer and Chairman of the Executive Committee of the Board of
Directors of the Company. His daughter, Cynthia Z. Brighton, is a Director and
Vice President--
7
<PAGE>
Financial Services and Treasurer of the Company. His son, Karl H. Ziegler, is
the Secretary of the Company. His son, Peter M. Ziegler, is Vice
President--Corporate Planning of the Company. His daughter, Helen Z. Benjamin,
is the Assistant Secretary of the Company. William T. Ziegler's wife,
Jackqueline B. Ziegler is Vice President-- Marketing Development of the
Company's wholly owned subsidiary, Swisher International, Inc. Effective January
1, 1997, William Ziegler, III, William T. Ziegler, Cynthia Z. Brighton, Karl H.
Ziegler, Peter M. Ziegler, Helen Z. Benjamin and Jackqueline B. Ziegler became
employees of Hay Island, and will be compensated for their positions with the
Company through the MSA.
As used in this Proxy Statement, the term 'Ziegler Family Members' includes
only the following persons: (A) Mr. William Ziegler, III and his estate,
guardian, conservator or committee; (B) each descendant of Mr. William Ziegler,
III (a 'Ziegler Descendant') and their respective estates, guardians,
conservators or committees; (C) each Family Controlled Entity; and (D) the
trustees, in their respective capacities as such, of each Family Controlled
Trust. For purposes of this Proxy Statement, the term 'Family Controlled Entity'
shall mean (A) any not-for-profit corporation if at least 80% of its board of
directors is composed of Mr. William Ziegler, III and/or Ziegler Descendants;
(B) any other corporation if at least 80% of the value of its outstanding equity
is owned by Ziegler Family Members; (C) any partnership if at least 80% of the
value of its partnership interests are owned by Ziegler Family Members; and (D)
any limited liability or similar company if at least 80% of the value of the
company is owned by Ziegler Family Members. For purposes of this Proxy
Statement, the term 'Family Controlled Trust' shall mean (A) the Ziegler Trusts
and (B) any trust the primary beneficiaries of which are Mr. William Ziegler,
III, Ziegler Descendants and/or charitable organizations (collectively, 'Ziegler
Beneficiaries').
REGISTRATION RIGHTS AGREEMENT
Hay Island and the Company are parties to a Registration Rights Agreement
(the 'Registration Rights Agreement'), pursuant to which Hay Island and certain
transferees of Common Stock held by Hay Island (Hay Island and such permitted
transferees being referred to herein as the 'Permitted Holders') will have the
right to require the Company to register under the Securities Act (a 'Demand
Registration') all or part of the Class A Common Stock issuable upon conversion
of the Class B Common Stock owned by such Permitted Holders; provided that the
Company (i) will not be required to and will not effect a Demand Registration
prior to June 22, 1997 unless Merrill Lynch & Co. has given its consent and (ii)
may postpone giving effect to a Demand Registration for up to a period of 60
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. Hay Island has advised the Company that it
does not have any present intention to request any such registration. In
addition, the Holders will have the right to participate in registrations by the
Company of its Class A Common Stock (a 'Piggyback Registration'). The Company
will pay any expenses incurred in connection with any Demand Registration or
Piggyback Registration, except for underwriting discounts, commissions and
certain expenses attributable to the shares of Class A Common Stock sold by such
Permitted Holders.
OTHER AGREEMENTS
On February 1, 1996, Donald E. McNicol, a director of the Company and
counsel to Schnader Harrison Segal & Lewis, entered into an agreement with the
Company regarding his services to the Company. Payments to Mr. McNicol under
this agreement will not commence until February 1, 2001. Immediately prior to
the Offering, Mr. McNicol assumed the responsibilities of Vice President of Hay
Island and resigned as Vice Chairman of the Company. Hay Island assumed all
obligations under such agreement.
During 1996, the Company was the owner and sole beneficiary of a
second-to-die life insurance policy on the lives of William Ziegler, III and
Jane Ziegler, his wife. Immediately prior to the Offering, all ownership and
beneficial rights under the policy and the obligation to pay the $281,000 annual
premium were assigned to and assumed by Hay Island.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation awarded or
paid to or earned by the chief executive officer and the four other most highly
compensated executive officers of the Company in the last fiscal year for
services rendered in all capacities to the Company (including its subsidiaries)
for the year ended December 31,1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION (F)
--------------------------------------- SECURITIES
(A) (E) UNDERLYING (G)
NAME AND (B) (C) (D) OTHER ANNUAL OPTIONS/SARS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) # COMPENSATION(3)
- ------------------------------- ---- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
William Ziegler, III (1)....... 1996 $360,000 $410,400 $ 9,810 -- --
Chairman of the Board and Chief
Executive Officer
William T. Ziegler (1)......... 1996 240,000 246,240 46,566 -- --
Chief Operating Officer
Timothy Mann................... 1996 271,833 282,200 78,390 275,000 $ 500,000
President
J. Thomas Ryan, III............ 1996 218,400 174,300 21,843 200,000 400,000
Executive Vice President,
Sales and Marketing
Nicholas J. Cevera, Jr......... 1996 199,500 159,200 18,248 200,000 400,000
Executive Vice President,
Operations
</TABLE>
- ------------------
<TABLE>
<S> <C>
(1) Effective January 1, 1997, William Ziegler, III and William T. Ziegler became employees of Hay Island, and
will be compensated, along with other similar employees, for their positions with the Company through the
MSA. (See 'Certain Relationships and Related Transactions-Management Services Agreement' and '-Family
Relationships').
(2) Includes (i) imputed income for executive life insurance for Messrs. William T. Ziegler, Mann, Ryan and
Cevera of $572, $34,500, $2,134 and $985, respectively, (ii) imputed income for group term life insurance for
Messrs. Cevera of $1,688, (iii) imputed income for use of a Company car for Messrs. Ziegler, William T.
Ziegler, Mann, Ryan and Cevera of $5,294, $8,837, $7,657, $9,916 and $6,321, respectively, and (iv)
reimbursement of taxes in connection with imputed income derived from payment by the Company of premiums on
life insurance policies, imputed income derived from the use of a Company car, imputed income derived from
the aggregate payment of Medicare taxes by the Company in regard to accruals under supplemental pension
programs, and other perquisites for Messrs. Ziegler, William T. Ziegler, Mann, Ryan and Cevera of $4,516,
$37,157, $36,233, $9,793 and $9,255, respectively.
(3) Represents special, one-time bonuses paid in connection with the Offering.
</TABLE>
9
<PAGE>
OPTION GRANTS IN 1996
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF %OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
GRANTED (#)(1) YEAR ($/SH) DATE VALUES($)(2)
-------------- ------------ -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
William Ziegler, III............................ -- -- -- -- --
William T. Ziegler.............................. -- -- -- -- --
Timothy Mann.................................... 275,000 17.6% 17.00 12/17/05 1,771,275
J. Thomas Ryan, III............................. 200,000 12.8% 17.00 12/17/05 1,288,200
Nicholas J. Cevera, Jr.......................... 200,000 12.8% 17.00 12/17/05 1,288,200
</TABLE>
- ------------------
<TABLE>
<S> <C>
(1) The options granted in fiscal 1996 to the named executive officers have a term of 10 years, vest annually in
one-third increments and were granted pursuant to the 1996 Stock Option Plan.
(2) In accordance with Securities and Exchange Commission rules, the Black-Scholes option pricing model was
chosen to estimate the Grant Date Present Value of the options set forth in this table. The Company's use of
this model should not be construed as an endorsement of its accuracy at valuing options. All stock option
models require a prediction about the future movement of the stock price. The following assumptions were made
for purposes of calculating Grant Date Present Values: expected time of exercise of five years, volatility of
30%, dividend yield of 0.0% and interest rate of 6.14%. The real value of the options in this table depends
upon the actual performance of the Company's stock during the applicable period and upon when they are
exercised.
</TABLE>
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND
FISCAL 1996 YEAR-END OPTION VALUES (1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUES OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END($)(2)
---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William Ziegler, III....................................... -- -- -- --
William T. Ziegler......................................... -- -- -- --
Timothy Mann............................................... 0 275,000 0 0
J. Thomas Ryan, III........................................ 0 200,000 0 0
Nicolas J, Cevera, Jr...................................... 0 200,000 0 0
</TABLE>
- ------------------
(1) No options were exercised in 1996.
(2) The closing price on December 31, 1996, the last trading day in 1996, was
$15.875.
MANAGEMENT INCENTIVE PLAN
The Company maintains a management incentive plan ('MIP') to compensate
eligible full-time employees for their contributions to the Company's
performance in revenue growth, improved operating profit, cost control and
production facility utilization. Bonuses under the MIP are based on achievement
of financial performance targets and individual performance goals that are
developed for each participant at the beginning of each year by management and
such participant and are approved by the Compensation Committee. Each
participant in the MIP has a target bonus opportunity that is expressed as a
percentage of base salary. The percentage varies based on the potential of the
position to have a positive impact on the performance of the Company. The actual
award is based on management's recommendation and must be approved by the
Compensation Committee. In 1997, the Company paid bonuses of approximately $2.9
million under the MIP for the year ended December 31, 1996.
For 1996, the bonuses under the MIP for William Ziegler, III, William T.
Ziegler, Timothy Mann, J. Thomas Ryan, III and Nicholas J. Cevera, Jr. are set
forth in the Summary Compensation Table.
10
<PAGE>
1996 STOCK OPTION PLAN
The Company adopted, and Hay Island, as the sole stockholder of the
Company, approved, the 1996 Stock Option Plan, effective December 17, 1996. The
aggregate number of shares of Class A Common Stock which may be made subject to
awards of stock options or stock appreciation rights ('Awards') under the 1996
Stock Option Plan shall not exceed at any time 10% of the then outstanding
shares of Common Stock. Unless otherwise determined by the Board of Directors,
the 1996 Stock Option Plan will be administered by the Compensation Committee of
the Board of Directors. Awards may be made under the 1996 Stock Option Plan
(subject to specified aggregate limits and annual individual limits on certain
types of awards) to selected employees, consultants and directors of the
Company. On December 17, 1996, the Company granted 1,564,000 options under the
1996 Stock Option Plan at the initial public offering price ($17 per share) of
the Class A Common Stock.
The Compensation Committee and the Board of Directors each has authority,
subject to the terms of the 1996 Stock Option Plan, to determine, among other
things, when and to whom to grant Awards under the 1996 Stock Option Plan, the
number of shares to be covered by Awards, the types and terms of stock options
and stock appreciation rights granted and the exercise price of the stock
options and stock appreciation rights and to prescribe, amend and rescind the
rules and regulations relating to the 1996 Stock Option Plan.
Stock options granted under the 1996 Stock Option Plan may be either
'incentive stock options,' as such term is defined in Section 422 of the Code,
or nonqualified stock options. The exercise price of nonqualified stock options
must equal or exceed the fair market value per share of Class A Common Stock on
the date of grant. With respect to any participant who owns stock possessing
more than 10% of the voting power of all classes of the Company's outstanding
capital stock (a '10% Stockholder'), the exercise price of any incentive stock
option granted must equal at least 110% of the fair market value of the Class A
Common Stock on the date of the grant. The exercise price of incentive stock
options for all other employees must equal or exceed the fair market value per
share of Class A Common Stock on the date of the grant. The maximum term of any
incentive stock option granted under the 1996 Stock Option Plan is ten years
(five years in the case of an incentive stock option granted to a 10%
Stockholder). Stock options granted under the 1996 Stock Option Plan generally
will vest in annual one-third increments.
Stock appreciation rights may be granted alone or in tandem with stock
options under the 1996 Stock Plan. A stock appreciation right is a right to be
paid an amount equal to the excess of the fair market value of the Class A
Common Stock on the date of exercise over the base price. Settlement of stock
appreciation rights may be in cash, Class A Common Stock or both, as specified
in the award agreement or as otherwise determined by the Compensation Committee
or the Board of Directors.
No person may be granted stock options or stock appreciation rights under
the 1996 Stock Option Plan in any calendar year representing an aggregate of
more than 2.5% of the then outstanding shares of Common Stock. Stock options and
stock appreciation rights shall be exercisable at the times and upon the
conditions that the Compensation Committee or the Board of Directors may
determine, as reflected in the applicable award agreement.
Unless otherwise provided in a grantee's award agreement, (i) upon
termination of such grantee's employment or service as a consultant or a
director due to death or disability, any unvested options and stock appreciation
rights shall vest in full and shall remain exercisable for a period of one year
and shall terminate thereafter and (ii) upon termination of such grantee's
employment or service as a consultant or a director for any reason other than
death or disability, any unvested options and stock appreciation rights shall
terminate and all vested options and stock appreciation rights shall remain
exercisable for a period of three months and shall terminate thereafter.
Unless otherwise provided in a grantee's award agreement, awards granted
under the 1996 Stock Option Plan may be transferred by the grantee only by will
or by the laws of descent and distribution, and may be exercised only by the
grantee during his or her lifetime. The 1996 Stock Option Plan may, at any time
and from time to time, be altered, amended, suspended or terminated by the Board
of Directors, in whole or in part, provided, that no amendment which requires
stockholder approval in order for the 1996 Stock Option Plan to continue to
comply with Section 162(m) of the Code will be effective unless such amendment
has received the requisite approval by the Company's stockholders. In addition,
no amendment may be made which adversely
11
<PAGE>
affects any of the rights of the grantee under any Award theretofore granted
without such grantee's consent. No awards will be made under the 1996 Stock
Option Plan following the tenth anniversary of the date of adoption of the 1996
Stock Option Plan.
BENEFIT PLANS
Capital Accumulation Plan--401(k). The Company sponsors The Capital
Accumulation Plan (the 'CAP'), a tax qualified 401(k) defined contribution plan,
effective October 31, 1995, which covers eligible salaried employees employed at
the Company's locations within the United States. The CAP permits participants
to contribute up to 15% of their base salary to the plan (highly compensated
employees, including all officers, are limited to 6%). The Company may make a
matching contribution, depending on profits. The Company also makes a
contribution of 1% of base salary. Participant contributions are 100% vested
when made and Company contributions vest ratably over four years. Participants
may direct the investment of all contributions among the funds offered by the
CAP. The amount of base salary that may be used under the CAP to determine
employer matching contributions is limited to $150,000 for 1996.
Retirement Plan. The Company sponsors the Retirement Plan for Salaried
Employees of Swisher International, Inc. (the 'Retirement Plan'), a tax
qualified defined benefit plan effective December 31, 1959, which covers
eligible salaried employees employed at the Company's locations within the
United States. The Retirement Plan benefits are based on credited service (up to
35 years) with Swisher International, Inc., and may include credited service
with members of a controlled group of corporations of which Swisher
International, Inc. was a part, and the participant's compensation (base pay and
regular annual performance bonus) for such service averaged over the 60
consecutive months out of the 120 months prior to termination of employment
which produces the highest average. The Retirement Plan's benefits are reduced
to partially reflect social security benefits received by the participant.
Benefits are paid at Normal Retirement Date (age 65), and vest after five years
of service.
Supplemental Pension Program. The Company established a Supplemental
Pension Program, effective October 31, 1995 (the 'SERP'), to restore retirement
benefits under the Retirement Plan and contributions under the CAP limited by
the Employee Retirement Income Security Act of 1974, as amended ('ERISA') and by
Treasury regulations relating to maximum retirement benefits, contributions and
compensation (which may be used in calculating benefits and contributions). The
SERP also provides an increased level of retirement benefits for certain
executives of the Company. All other SERP provisions follow those of the
Retirement Plan and CAP. The SERP is a nonqualified, unfunded plan under ERISA
and the Code. The Company may make contributions to a trust established for the
benefit of the SERP participants or establish a reserve on its books against
future benefit obligations. However, the assets of any such trust or any amount
so reserved are not protected from the claims of creditors.
The following illustration shows the annual benefits under the Retirement
Plan and the SERP, expressed as straight life annuities beginning at age 65.
<TABLE>
<CAPTION>
5 YEAR
AVERAGE ANNUAL 5 YEARS 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
COMPENSATION OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE
- -------------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 3,994 $ 7,988 $ 11,983 $ 15,977 $ 19,971 $ 23,965 $ 23,965
75,000 6,601 13,202 19,803 26,403 33,004 39,605 39,605
100,000 9,208 18,415 27,623 36,830 46,038 55,245 55,245
200,000 19,634 39,268 58,903 78,537 98,171 117,805 117,805
300,000 30,061 60,122 90,183 120,243 150,304 180,365 180,365
400,000 40,487 80,975 121,462 161,950 202,437 242,925 242,925
500,000 50,914 101,828 152,742 203,657 254,571 305,485 305,485
600,000 61,341 122,682 184,022 245,363 306,704 368,045 368,045
700,000 71,767 143,535 215,302 287,070 358,837 430,605 430,605
800,000 82,194 164,388 246,582 328,776 410,970 493,165 493,165
900,000 92,621 185,241 277,862 370,483 463,104 555,724 555,724
</TABLE>
12
<PAGE>
Benefits under the Retirement Plan are subject to the maximum limitations
imposed by federal law on pension benefits. For 1996 these limitations include a
maximum straight life annuity at age 65 of $120,000 per year, $10,000 per month
and a maximum annual compensation of $150,000.
As of December 31, 1996, the years of employment recognized by the
Retirement Plan and SERP for Messrs. Ziegler, III, William T. Ziegler, Mann,
Ryan, Cevera were 1.17, 8.17, 18.13, 10.80 and 16.68, respectively. Special
incentive payments such as those described in the Summary Compensation Table are
excluded from pensionable earnings. As the Company's Management Incentive Plan
is based on the performance of the Company, it is possible that the total of an
executive's base pay and regular annual performance bonus may be more or less
than the total of base pay and regular annual performance bonus in the prior
year by more than 10%. See 'Management Incentive Plan.'
Executive Life Insurance. The Company sponsors a life insurance program,
which replaces the group plan for certain selected officers, that provides the
participants with policies that continue coverage into retirement. As of
December 31, 1996, $2,000,000 of coverage is provided to William T. Ziegler and
$1,000,000 of coverage is provided to other covered officers. The Company pays
the policy premiums and makes payments to the executives to enable their payment
of any taxes resulting from imputed income on the premiums. The cost of this
program for 1996 for William T. Ziegler and the covered Named Executive Officers
is, in the aggregate, approximately $230,000.
EMPLOYMENT AGREEMENTS
Each of Timothy Mann, J. Thomas Ryan, III and Nicholas J. Cevera, Jr.
entered into employment agreements with the Company, dated as of October 23,
1996. The term of each employment agreement is three years. Each employment
agreement may be terminated by the Company at any time. In the case of
termination without Cause (as defined in the employment agreements), the Company
is required to pay the executive salary and provide the executive with certain
perquisites for the remainder of the term. In addition, the Company will be
obligated to pay the executive's target bonus pro-rated for the year in which
the termination occurs. An executive may terminate his employment agreement at
any time upon two weeks' notice. Any such termination will result in the
forfeiture by the executive of any further payments or benefits pursuant to the
employment agreement as of such termination. Also, each employment agreement
contains a non-compete provision extending for twelve months following voluntary
termination by the executive or termination for cause or for any period during
which severance is being paid to such executive. Pursuant to his respective
employment agreement, commencing on January 1, 1997, Messrs. Mann, Ryan and
Cevera will receive an annual salary of $316,250, $251,160 and $229,425,
respectively, and certain current perquisites (including tax reimbursement for
certain perquisites). Each executive is entitled to participate in the Company's
management incentive plan. ('See Management Incentive Plan.') Pursuant to his
employment agreement, each executive is entitled to participate in the Company's
1996 Stock Option Plan. See '1996 Stock Option Plan.'
COMPENSATION COMMITTEE REPORT
COMPENSATION OVERVIEW
The Compensation Committee of the Board of Directors has the responsibility
for the design, implementation and administration of the Company's executive
compensation program. The Compensation Committee is comprised entirely of
outside independent directors.
The objective of the Company's executive compensation program is to attract
and retain the management talent necessary to maximize long-term profitability
and shareholder value. The program is designed to accomplish this objective
through plans that (i) motivate senior managers, and align their interests with
those of the Company's shareholders, by tying incentive compensation to Company
profitability and individual performance and (ii) provide a base level of
compensation that is competitive with similar businesses as well as a cross
section of general industry.
13
<PAGE>
ELEMENTS OF COMPENSATION
The three principal components of the Company's executive compensation
program are salary, annual incentives and stock options, each of which is
discussed in detail below.
1. Salary
Of the three elements of executive compensation, salary is the least
affected by the Company's performance; although it is very much dependent on
individual performance. Salary is intended to provide a base level of
compensation that is competitive at the market median with similar companies.
The Compensation Committee reviews and approves salary levels and increases for
all employees of the Company and its subsidiaries whose base salary exceeds
$100,000.
Following a procedure used for all salaried employees of the Company, each
of the executive officers is assigned a salary range for his or her particular
job. The range is set at 80% to 120% of the median market value of the position.
The median market value is established by an evaluation of the degree of
accountability, expertise and problem solving required in each position and the
results of salary surveys conducted by major compensation consultants and
associations. The salary ranges are reviewed annually using current survey data
to determine the amount of adjustment, if any.
Individual salaries are reviewed annually. The timing and amount of any
increase to salaried employees, including executive officers, are both dependent
upon (i) the performance of the individual and, to a lesser extent (ii) the
relationship of his or her actual salary to the midpoint of the salary range.
Executive officer salaries are recommended by the Chief Executive Officer
and reviewed and approved by the Compensation Committee. The Chief Executive
Officer's recommendations on the amount of increase are based on his subjective
evaluation of each individual's performance in his or her respective functional
area.
2. Annual Incentives
The executive officers of the Company all participate in a Management
Incentive Plan (see 'Management Incentive Plan' above) under which annual cash
bonuses are paid, based on the achievement of specific financial and/or
operational targets and each participant's individual performance.
3. Stock Options
Stock options are designed to provide long-term incentives and rewards tied
to increases in the price of the Company's Class A Common Stock. The Committee
believes that stock options, which provide value to the participants only when
the Company's shareholders benefit from stock price appreciation, are an
integral component of the Company's executive compensation program. Thirty eight
(38) key employees, including the executive officers, participate in the
stockholder-approved 1996 Stock Option Plan. The factors considered in awarding
the specific number of options to each participant included the individual's
total compensation, organizational level, and his or her potential for
contributing to the successful operations of the Company. The options granted
were all incentive stock options except where the limits of the plan and
Treasury regulations required the granting of non-qualified options. (See '1996
Stock Option Plan' above).
COMPLIANCE WITH SECTION 162(M) OF THE CODE
Section 162(m) of the Code, effective in 1994, generally disallows a tax
deduction to public companies for compensation over $1 million paid to the
corporation's Chief Executive Officer and four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. Absent
extraordinary circumstances, the Company's current compensation programs are not
likely to trigger the $1 million limit on deductibility. The Company will
consider whether new compensation programs should be structured in a manner that
would be exempt from the deduction limit at the time such programs are designed.
14
<PAGE>
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Ziegler's compensation reflects the performance of the Company in 1996.
It also reflects his standing in the industry and his long-term commitment to
the success of the Company. Mr. Ziegler's bonus reflects the operation of his
bonus formula, consisting solely of objective elements, principally net
earnings.
MEMBERS OF THE COMPENSATION COMMITTEE
Alfred F. La Banca (Chairman)
C. Keith Hartley
Donald E. McNicol
Charles H. Mullen
John R. Tweedy
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return (stock
price appreciation plus dividends) on the Company's Class A Common Stock with
the cumulative total return of the S&P 400 Index and a market weighted index of
publicly traded peers for the period from December 17, 1996 (the date the Class
A Common Stock was priced in connection with the Company's initial public
offering) through December 31, 1996. The returns are calculated by assuming an
investment in the Class A Common Stock and each index of $100 on December 17,
1996. The publicly traded companies in the peer group are: Consolidated Cigar
Holdings, Inc., Culbro Corporation and UST Inc.
Measurement Period Swisher S&P 400 Peer Companies
- ------------------ ------- ------- --------------
12/18/97 100 100 100
12/19/97 94.9 101.6 101.1
12/20/97 92.8 101.9 100.9
12/23/97 95.7 101.7 100.7
12/24/97 97.1 102.3 100.9
12/26/97 95.7 103.0 103.6
12/27/97 94.2 103.1 103.8
12/30/97 91.3 102.6 104.9
12/31/97 92.0 101.0 103.9
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2)
The Board of Directors of the Company, upon recommendation of the Audit
Committee, has appointed the firm of Coopers & Lybrand L.L.P. to serve as
independent auditors of the Company for the year ending December 31, 1997,
subject to ratification of this appointment by the stockholders of the Company.
Coopers & Lybrand L.L.P. has served as independent auditors of the Company for
many years and is considered by management of the Company to be well qualified.
The Company has been advised by that firm that neither it nor any member thereof
have any financial interest, direct or indirect, in the Company.
One or more representatives of Coopers & Lybrand L.L.P. (a) will be present
at the 1997 Annual Meeting of Stockholders, (b) have an opportunity to make a
statement if he desires to do so and (c) be available to respond to appropriate
questions.
Ratification of the appointment of the independent auditors requires the
affirmative vote of a majority of the votes cast by the holders of the shares of
Class A Common Stock and Class B Common Stock of the Company voting in person or
by proxy at the 1997 Annual Meeting of Stockholders. If the stockholders do not
ratify the appointment of Coopers & Lybrand L.L.P., the Board of Directors will
reconsider the appointment.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE 'FOR' THE PROPOSAL
TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT AUDITORS OF
THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1997. PROXIES RECEIVED BY THE BOARD
OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXIES A
CONTRARY CHOICE.
PROXY PROCEDURE AND EXPENSES OF SOLICITATION
The Company will hold the votes of all stockholders in confidence from the
Company, its Directors, officers and employees except: (i) as necessary to meet
applicable legal requirements and to assert or defend claims for or against the
Company; (ii) in case of a contested proxy solicitation; (iii) in the event that
a stockholder makes a written comment on the proxy card or otherwise
communicates his/her vote to management; or (iv) to allow the independent
inspectors of election to certify the results of the vote. The Company will also
retain an independent tabulator to receive and tabulate the proxies and
independent inspectors of election to certify the results.
All expenses incurred in connection with the solicitation of proxies will
be borne by the Company. The Company will reimburse brokers, fiduciaries and
custodians for their costs in forwarding proxy materials to beneficial owners of
Common Stock held in their names.
Solicitation may be undertaken by mail, telephone and personal contact by
Directors, officers and employees of the Company without additional
compensation.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company on or before November
15, 1997, to be eligible for inclusion in the Company's Proxy Statement and
proxy relating to that meeting.
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OTHER INFORMATION
Management of the Company does not know of any matters other than those
referred to in the accompanying Notice of Annual Meeting of Stockholders which
may properly come before the meeting or other matters incident to the conduct of
the meeting. As to any other matter or proposal that may properly come before
the meeting, including voting for the election of any person as a Director in
place of a nominee named herein who becomes unable to serve or for good cause
will not serve and voting on a proposal omitted from this Proxy Statement
pursuant to the rules of the Securities and Exchange Commission, it is intended
that proxies received will be voted in accordance with the discretion of the
proxy holders.
The form of proxy and the Proxy Statement have been approved by the Board
of Directors and are being mailed and delivered to stockholders by its
authority.
/s/ Karl H. Ziegler
Karl H. Ziegler
Secretary
Darien, Connecticut
March 31, 1997
-----------------------------------
THE ANNUAL REPORT TO STOCKHOLDERS OF THE COMPANY FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996, WHICH INCLUDES FINANCIAL STATEMENTS, HAS BEEN MAILED TO
STOCKHOLDERS OF RECORD AS OF MARCH 21, 1997 OF THE COMPANY. THE ANNUAL REPORT
DOES NOT FORM ANY PART OF THE MATERIAL FOR THE SOLICITATIONS OF PROXIES.
-----------------------------------
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