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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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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.
[ ] 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 30, 1998
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
which will be held on Thursday, May 7, 1998, 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 1999 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, 1998. 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 7, 1998, at 10:00 a.m., local time, for the following purposes:
1. To elect twelve Directors to serve until the 1999 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, 1998;
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 9, 1998, 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 9, 1998, will be available for inspection during
normal business hours from April 24, 1998 through May 7, 1998, at the office of
the Maritime Aquarium at Norwalk, 3rd floor, 10 North Water Street, Norwalk,
Connecticut.
By Order of the Board of Directors
/s/ Karl H. Ziegler
-------------------
Karl H. Ziegler
Secretary
Darien, Connecticut
March 30, 1998
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 HIS OR HER 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 7, 1998
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 7, 1998, 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 30, 1998.
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 1999 Annual Meeting of Stockholders, in voting by proxy, stockholders may
vote in favor of all nominees or withhold their votes as to all or 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. The Directors will be elected
by the affirmative vote of a plurality of the votes cast by holders of the
shares of Class A and Class B Common Stock of the Company (voting as one class)
present in person or by proxy at the Annual Meeting of Stockholders and entitled
to vote thereon. The appointment of Coopers & Lybrand L.L.P. as independent
auditors will be ratified by the affirmative vote of a majority of the votes
cast by holders of the shares of Class A and Class B Common Stock of the Company
(voting as one class) present in person or by proxy at the Annual Meeting of
Stockholders and entitled to vote thereon. 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 9, 1998, 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 9, 1998, there were
5,850,000 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 1999 Annual Meeting 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 1999 ANNUAL MEETING OF STOCKHOLDERS, AND
UNTIL HIS OR HER SUCCESSOR IS ELECTED AND QUALIFIES. EACH PROXY RECEIVED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS THE STOCKHOLDERS SPECIFY A CONTRARY
CHOICE IN THEIR PROXIES.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Cynthia Z. Brighton (Age 38) has been Treasurer, Vice President-Financial
Services and a 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 51) has been Executive Vice President, Chief
Financial Officer and a Director of the Company since October 1996. Prior
thereto, he had been Vice President and Chief Financial Officer of the Company
since November 1995. 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 60) has been 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 55) 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 LLC, an investment banking firm, and a co-manager of the
initial public offering of the shares of the Company's Class A Common Stock in
1996 (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 high technology services company
and as a director and as Co-Chairman of the Board of U.S. Diagnostics, Inc., an
operator of diagnostic imaging centers. 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 66) has been a Director of the Company since
November 1995. He is also Chairman of the Board of 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 production of
2
<PAGE>
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 55) has been President of the Company since 1986 and a
Director since 1995. 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 named a Dean of the Industry. Mr. Mann is a
member of the Executive Committee.
Donald E. McNicol (Age 76) has been a Director of the Company since
November 1995. He has been of counsel to the law firm of Schnader Harrison Segal
& Lewis LLP since 1996. Mr. McNicol was a partner of the law firm of Hall,
McNicol, Hamilton & Clark from 1956 to 1992 and of counsel to its successor
firm, 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 70) has been a Director of the Company since
February 1997. Mr. Mullen retired in 1992 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. Prior thereto, he was Chairman of American
Cigar, a former subsidiary 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 50) has been Executive Vice President-Marketing
and Sales of the Company since April 1995 and a Director since November 1995.
From 1985 to 1994, Mr. Ryan was President of Helme Tobacco Company, a former
subsidiary which was merged into the Company in 1994 ('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 68) 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 42) has been the Chief Operating Officer and a
Director of the Company since November 1995. From 1991 to 1994, Mr. Ziegler
served as Director of Corporate Development for Helme. From 1986 to 1990, Mr.
Ziegler served as Product Manager for Helme. Mr. Ziegler is the chairman of the
Executive Committee.
William Ziegler, III (Age 69) has been the Chief Executive Officer and
Chairman of the Board and a Director of the Company 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,
Connecticut. Mr. Ziegler 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 and Class B Common Stock as of March 9, 1998
by (i) each person known by the Company to own beneficially more than 5% of the
outstanding shares of either Class A 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 (18 persons). Except as set forth in the notes to the table, the
business address of each person is 20 Thorndal Circle, Darien, CT 06820. The
information set forth in the table and the notes thereto is based solely upon
information provided to the Company directly by such stockholders. As described
in the notes to the table, voting and/or dispositive power with respect to
certain shares of common stock is shared by the named individuals or entities.
In these cases, such shares are shown as beneficially owned by each of those
sharing voting and/or dispositive power.
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)(20)......................... -- -- 28,100,000 100.0%
First Union Bank of Connecticut, as trustee (2)(20)............ -- -- 28,100,000 100.0%
Scudder Kemper Investments, Inc.(3)............................ 1,039,000 17.76% -- --
Lazard Freres & Co. LLC.(4).................................... 631,800 10.80% -- --
Warburg, Pincus Asset Management, Inc. (5)..................... 499,600 8.54% -- --
Aegon USA Investment Management, Inc.(6)....................... 459,600 7.86% -- --
Fidelity Management & Research Company (7)..................... 417,800 7.14% -- --
Marsh & McLennan Companies, Inc. (8)........................... 337,200 5.76% -- --
Cynthia Z. Brighton (9)........................................ 1,750 * -- --
Robert A. Britton (10)(21)..................................... 1,000 * -- --
Nicholas J. Cevera, Jr. (11)(21)............................... 1,000 * -- --
C. Keith Hartley (12).......................................... 1,500 * -- --
Alfred F. La Banca (13)........................................ 500 * -- --
Timothy Mann (14)(21).......................................... 2,000 * -- --
Donald E. McNicol (15)......................................... 1,000 * -- --
Charles H. Mullen (16)......................................... 500 * -- --
J. Thomas Ryan, III (17)(21)................................... 1,000 * -- --
John R. Tweedy (18)............................................ 700 * -- --
William T. Ziegler (19)........................................ 2,250 * -- --
William Ziegler, III, individually and as trustee (2)(20)...... 200 * 28,100,000 100.0%
All directors and euxecutive officers as a group (22).......... 24,850 * 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) All 28,100,000 of the outstanding shares of the Class B Common Stock of
the Company are owned by Hay Island Holding Corporation ('Hay Island').
Hay Island is wholly-owned by William Ziegler, III, individually and by
trusts established under the wills of his parents, William Ziegler, Jr.
and Helen M. Rivoire, (the 'Ziegler Trusts') of which Mr. Ziegler is the
beneficiary. Mr. Ziegler and First Union Bank of Connecticut are the
co-Trustees of the Ziegler Trust and therefore share voting and
dispositive power over all 28,100,000 shares of the Company's Class B
Common Stock. First Union Bank of Connecticut's business address is 300
Main Street, Stamford, Connecticut 06904.
(3) Consists of 1,039,000 shares of Class A Common Stock beneficially owned
or deemed to be owned beneficially by Scudder Kemper Investment, Inc.
('Scudder'), an Investment Advisor registered with the SEC. Scudder has
sole voting power over and shares dispositive power with respect to all
1,039,000 of said shares. Scudder's business address is 345 Park Avenue,
New York, New York 10154.
(4) Consists of 631,800 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by Lazard Freres & Co. LLC ('Lazard').
Lazard is an Investment Advisor registered with the SEC and has sole
dispositive power over all such shares and sole voting power over 580,100
of such shares. Sole voting power over the remaining 51,700 shares is
held by customers whose accounts are managed by Lazard. Lazard's business
address is 30 Rockefeller Plaza, New York, New York 10020.
(5) Consists of 499,600 shares of Class A Common Stock owned by accounts
managed by Warburg, Pincus Asset Management, Inc. ('Warburg'), an
Investment Advisor registered with the SEC. Warburg is deemed the
beneficial owner of such shares and has sole voting and dispositive power
over such shares. Warburg's business address is 466 Lexington Avenue, New
York, New York 10017.
(6) Consists of 459,600 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by Aegon USA Investment Management, Inc.
('Aegon'), an Investment Advisor registered with the SEC. Aegon has
shared voting power over and sole dispositive power with respect to all
459,600 of said shares. Aegon's business address is 4333 Edgewood Road,
N.E., Cedar Rapids, Iowa 52499.
(7) Consists of 417,800 shares of Class A Common Stock beneficially owned or
deemed to be owned
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
beneficially by Fidelity Management & Research Company ('FMR'), with
respect to which it has sole voting and investment power. FMR Corp's.
business address is 82 Devonshire Street, Boston, Massachusetts 02109.
(8) Consists of 337,200 shares of Class A Common Stock owned by clients of
Putnam Investment Management, Inc. ('PIM') and clients of The Putnam
Advisory Company, Inc. ('PAC'), both of which are Investment Advisors
registered with the SEC and wholly owned subsidiaries of Putnam
Investments Inc. ('PII'), a subsidiary of Marsh & McLennan Companies,
Inc. PAC is deemed the beneficial owner of the 168,200 shares of such
Class A Common Stock owned by its clients and shares voting and
dispositive power over said shares with its said clients. PIM is deemed
the beneficial owner of the 209,000 shares of such Class A Common Stock
owned by its clients and shares dispositive power over said shares with
its clients; PIM's clients have retained full voting power over such
shares. PII is deemed to share with PAC and PIM any voting and
dispositive power which PAC and PIM may have over their respective
clients' shares of such Class A Common Stock and PII is deemed a
beneficial owner of all of such shares beneficially owned by PIM and PAC.
Nevertheless, both PII and Marsh & McLennan Companies, Inc. disclaim
beneficial ownership of all such shares. Marsh & McLennan Companies,
Inc.'s business address is 1166 Avenue of the Americas, New York, NY
10036. PIM, PAC and PII share the following business address: One Post
Office Square, Boston, Massachusetts 02109.
(9) Consists of 1,750 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by Cynthia Z. Brighton directly and with
respect to which she has sole voting and dispositive power.
(10) Consists of 1,000 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by Robert A. Britton directly and with
respect to which he has sole voting and dispositive power.
(11) Consists of 1,000 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by Nicholas J. Cevera, Jr. directly and
with respect to which he has sole voting and dispositive power; but does
not include 4,000 shares of Class A Common Stock owned by Mr. Cevera's
wife and with respect to which he disclaims beneficial ownership. Mr.
Cevera's business address is 459 East 16th Street, Jacksonville, Florida
32206
(12) Consists of 1,500 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by C. Keith Hartley directly and with
respect to which he has sole voting and dispositive power. Mr. Hartley's
business address is Forum Capital Markets LLC, 53 Forest Avenue, Old
Greenwich, Connecticut 06870.
(13) Consists of 500 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by Alfred F. La Banca directly and with
respect to which he has sole voting and dispositive power. Mr. La Banca's
business address is Mailex Corporation, 11 Elm Street, Stamford,
Connecticut 06902.
(14) Consists of 2,000 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by Timothy Mann directly and with respect
to which he has sole voting and dispositive power. Mr. Mann's business
address is 459 East 16th Street, Jacksonville, Florida 32206.
(15) Consists of 1,000 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by Donald E. McNicol directly and with
respect to which he has sole voting and dispositive power. Mr. McNicol's
business address is Schnader Harrison Segal & Lewis LLP, 330 Madison
Avenue, New York, New York 10017.
(16) Consists of 500 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by Charles H. Mullen directly and with
respect to which he has sole voting and dispositive power. Mr. Mullen's
business address is 26 Winding Lane, Darien, Connecticut 06820.
(17) Consists of 1,000 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by J. Thomas Ryan, III directly and with
respect to which he has sole voting and dispositive power. Mr. Ryan's
business address is 459 East 16th Street, Jacksonville, Florida 32206.
(18) Consists of 700 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by John R. Tweedy directly and with
respect to which he has sole voting and dispositive power. Mr. Tweedy's
business address is 205 Poverty Hollow Road, Redding, Connecticut 06896.
(19) Consists of 2,250 shares of Class A Common Stock beneficially owned or
deemed to be owned beneficially by William T. Ziegler directly and with
respect to which he has sole voting and dispositive power.
(20) 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 dispositive
power; and 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.
</TABLE>
5
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<TABLE>
<S> <C>
(21) Excludes stock options in respect of shares of Class A Common Stock
granted to the executive under the 1996 Stock Option Plan as follows: Mr.
Britton (227,333); Mr. Cevera (227,333), Mr. Mann (312,583) and Mr. Ryan
(227,333).
(22) Excludes stock options in respect of an aggregate of 889,998 shares of
Class A Common Stock granted to officers whose names do not appear in
this table.
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
On September 30, 1997, Mr. Britton was granted stock options under the
Company's 1996 Stock Option Plan and, accordingly, was required to file a Form 4
under Rule 16a-3 by October 10, 1997. Mr. Britton filed such Form 4 on November
5, 1997.
ADDITIONAL INFORMATION REGARDING THE BOARD OF DIRECTORS
BOARD COMMITTEES
There are four standing committees of the Board of Directors: the Executive
Committee, the Audit Committee, the Pension Committee and the Compensation
Committee. There is no Nominating Committee of the Board of Directors (see
'CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS--Relationships with Hay
Island').
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 between meetings of the Board of Directors as permitted
by law. The members of the Executive Committee are Messrs. William Ziegler, III,
William T. Ziegler, Hartley, Mann and McNicol. 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 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. Britton, Hartley and McNicol. Mr. McNicol
serves as chairman of the Pension Committee.
The Compensation Committee has the responsibility of (i) designing,
implementing and administering the Company's management incentive plan, (ii)
approving grants under the 1996 Stock Option Plan, and (iii) reviewing the
performance of the President and Executive Vice Presidents of the Company and
recommending to the Board of Directors of the Company annual salary and bonus
amounts for such officers. 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. Hartley, La Banca, McNicol, Mullen and
Tweedy. Mr. La Banca serves as chairman of the Compensation Committee.
BOARD AND BOARD COMMITTEE MEETINGS
In 1997, there were eight meetings held by the Board of Directors of the
Company. In 1997, the Company's Executive Committee met five times, its Audit
Committee met twice, its Pension Committee met three times and its Compensation
Committee met three times. The total combined attendance for all of the
Company's Board and
6
<PAGE>
Committee meetings was approximately 99%. During 1997, no director attended
fewer than 75% of the aggregate of the total number of meetings held by the
Board and by the committees of which he or she was a member.
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
LLP, which receives fees from the Company for professional services rendered.
Mr. Hartley is the Managing Partner-Corporate Finance of Forum Capital Markets
LLC, an investment banking firm that acted as co-manager of the Offering in
1996. Forum Capital Markets LLC received no fees for services in 1997.
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 those 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 notice if
7
<PAGE>
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, 1998 is
$937,730, 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. William T. Ziegler is Chief Operating Officer
and Chairman of the Executive Committee of the Board of Directors of the
Company. Cynthia Z. Brighton is a Director, Vice President--Financial Services
and Treasurer of the Company. Karl H. Ziegler is Secretary of the Company.
William Ziegler, III is the father of William T. Ziegler, Cynthia Z. Brighton
and Karl H. Ziegler; all four of them are also employees of Hay Island and were
compensated during 1997 solely by Hay Island for their services to the Company
(See 'EXECUTIVE COMPENSATION--Summary Compensation Table').
As used in this Proxy Statement, the term 'Ziegler Family Members' includes
only the following persons: (A) William Ziegler, III and his estate, guardian,
conservator or committee; (B) each descendant of William Ziegler, III (a
'Ziegler Descendant') and their respective estates, guardians, conservators or
committees; (C) each Family Controlled Entity (defined below); and (D) the
trustees, in their respective capacities as such, of each Family Controlled
Trust (defined below). 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 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 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
permitted 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 of
1933, as amended (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 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 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.
8
<PAGE>
OTHER AGREEMENTS
On February 1, 1996, Donald E. McNicol, a director of the Company and of
counsel to Schnader Harrison Segal & Lewis LLP, 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.
EXECUTIVE COMPENSATION
The following table sets forth a summary of all compensation awarded or
paid by or on behalf of the Company to the chief executive officer and the four
other most highly compensated executive officers of the Company for services
rendered in all capacities to the Company (including its subsidiaries) for the
periods covered:
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)....... 1997 -- -- -- -- --
Chairman of the Board and Chief 1996 $360,000 $410,400 $ 9,810 -- --
Executive Officer
Timothy Mann................... 1997 $316,250 $372,525 $82,777 37,583 --
President 1996 $271,833 $282,200 $78,390 275,000 $ 500,000
J. Thomas Ryan, III............ 1997 $251,160 $230,108 $18,146 27,333 --
Executive Vice President, 1996 $218,400 $174,300 $21,843 200,000 $ 400,000
Sales and Marketing
Nicholas J. Cevera, Jr. ....... 1997 $229,425 $210,194 $16,898 27,333 --
Executive Vice President, 1996 $199,500 $159,200 $18,248 200,000 $ 400,000
Operations
Robert A. Britton.............. 1997 $208,650 $204,542 $17,225 77,333 --
Executive Vice President and 1996 $160,500 $146,376 $19,066 150,000 $ 300,000
Chief Financial Officer
</TABLE>
- ------------------
<TABLE>
<S> <C>
(1) William Ziegler, III is an employee of Hay Island and, as such, has been
compensated exclusively by Hay Island since January 1, 1997. He received
no compensation from the Company in 1997; however, under the MSA, the
Company paid $925,000 to Hay Island in 1997, some of which may have been
used by Hay Island to compensate Mr. Ziegler. (See 'CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS--Management Services Agreement' and '--Family
Relationships').
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
(2) Includes for Messrs. Mann, Ryan, Cevera and Britton respectively, (a)
imputed income for executive life insurance premiums paid by the Company
in 1997 of $34,500, $1,848, $1,968 and $2,412 and in 1996 of $34,500,
$2,134, $985 and $2,253; (b) imputed income for use of a Company car in
1997 of $12,030, $8,097, $6,768 and $6,848 and in 1996 of $7,657, $9,916,
$6,321 and $8,187; and (c) reimbursement of taxes in connection with
imputed income derived from payment by the Company of premiums on
executive life insurance policies, imputed income derived from use of a
Company car, imputed income derived from the the aggregate payment of
Medicare taxes by the Company in regard to accruals under supplemental
pension programs and other perquisites for 1997 of $36,247, $8,201, $8,162
and $7,965 and for 1996 of $36,233, $9,793, $9,255 and $8,626. Includes
for William Ziegler, III in 1996, imputed income for use of a Company car
of $5,294 and reimbursement of taxes in connection with imputed income
derived from payment by the Company of premiums on executive life
insurance policies, derived from the use of a Company car, derived from
aggregate payment of Medicare taxes by the Company in regard to accruals
under supplemental pension programs and other perquisites of $4,516. Also
includes for Mr. Cevera in 1996 imputed income for group term life
insurance of $1,687.
(3) Represents special, one-time bonuses paid in connection with the Offering.
</TABLE>
OPTION GRANTS IN 1997
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF %OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
GRANTED (#)(1) YEAR ($/SH) DATE VALUES($)(2)
-------------- ------------ -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
William Ziegler, III........................... -- -- -- -- --
Timothy Mann................................... 37,583 11.72 $17.000 1/2/07 $ 214,975
J. Thomas Ryan, II............................. 27,333 8.53 $17.000 1/2/07 $ 156,345
Nicholas J. Cevera, Jr. ....................... 27,333 8.53 $17.000 1/2/07 $ 156,345
Robert A. Britton.............................. 20,500 6.39 $17.000 1/2/07 $ 117,260
Robert A. Britton.............................. 56,833 17.73 $17.875 9/17/07 $ 415,222
</TABLE>
- ------------------
(1) The options granted in fiscal 1997 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 SEC 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%
with respect to the grant on January 2, 1997, and 35% with respect to the
grant or September 17, 1997; dividend yield of 0.0% and interest rate of
6.30% with respect to the grant on January 2, 1997, and 5.96% with respect
to the grant on September 17, 1997. The 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.
AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND
FISCAL 1997 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....................................... -- -- -- --
Timothy Mann............................................... 91,666 220,917 0 0
J. Thomas Ryan, III........................................ 66,666 160,667 0 0
Nicolas J. Cevera, Jr. .................................... 66,666 160,667 0 0
Robert A. Britton.......................................... 50,000 177,333 0 0
</TABLE>
- ------------------
(1) No options were exercised in 1997.
(2) The closing price on December 31, 1997, the last trading day in 1997, was
$17.00.
10
<PAGE>
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 1998, the Company paid bonuses of approximately $2.8
million under the MIP for the year ended December 31, 1997.
For 1997, the bonuses under the MIP for Timothy Mann, J. Thomas Ryan, III,
Nicholas J. Cevera, Jr. and Robert A. Britton are set forth in the Summary
Compensation Table. William Ziegler, III was an employee of Hay Island for all
of 1997 and received no bonus under the MIP.
1996 STOCK OPTION PLAN
In 1996, the Company adopted, and Hay Island, as the sole stockholder of
the Company, approved, the 1996 Stock Option Plan, which provides that 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') shall not exceed
at any time 10% of the then outstanding shares of Common Stock. The 1996 Stock
Option Plan is administered by the Compensation Committee of the Board of
Directors. Awards may be made thereunder (subject to specified aggregate limits
and annual individual limits on certain types of awards) to selected employees,
consultants and directors of the Company. On January 2, 1998, the Company
granted under the 1996 Stock Option Plan 213,747 options at a exercise price of
$17 per share and on September 17, 1998, the Company granted 106,833 options at
an exercise price of $17.875 per share.
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 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
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.
11
<PAGE>
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 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 may make a
contribution of 1% of base salary. Participant contributions are 100% vested
when made and Company contributions vest ratably over 4 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 was limited to $160,000 for 1997.
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 5 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 shall not be protected from the claims of creditors.
12
<PAGE>
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 $ 3,918 $ 7,836 $ 11,754 $ 15,672 $ 19,590 $ 23,508 $ 23,508
75,000 6,525 13,049 19,574 26,099 32,623 39,148 39,148
100,000 9,131 18,263 27,394 36,525 45,657 54,788 54,788
200,000 19,558 39,116 58,674 78,232 97,790 117,348 117,348
300,000 29,985 59,969 89,954 119,939 149,923 179,908 179,908
400,000 40,411 80,823 121,234 161,645 202,056 242,468 242,468
500,000 50,838 101,676 152,514 203,352 254,190 305,028 305,028
600,000 61,265 122,529 183,794 245,058 306,323 367,588 367,588
700,000 71,691 143,382 215,074 286,765 358,456 430,147 430,147
800,000 82,118 164,236 246,354 328,472 410,589 492,707 492,707
900,000 92,545 185,089 277,634 370,178 462,723 555,267 555,267
</TABLE>
Benefits under the Retirement Plan are subject to the maximum limitations
imposed by federal law on pension benefits. For 1997, these limitations include
a maximum straight life annuity at age 65 of $125,000 per year, $10,417 per
month and a maximum annual compensation of $160,000.
As of December 31, 1997, the years of employment recognized by the
Retirement Plan and SERP for Messrs. Mann, Ryan, Cevera and Britton were 19.13,
11.80, 17.68, and 20.04 (including 17.95 years of service with a predecessor
company), respectively. Mr. Ziegler does not participate in the Company's
Retirement Plan or SERP. 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, 1997, at least $1,000,000 of coverage is provided to 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 1997 for the covered Named Executive
Officers was, in the aggregate, approximately $140,000.
EMPLOYMENT AGREEMENTS
Each of Timothy Mann, J. Thomas Ryan, III, Nicholas J. Cevera, Jr. and
Robert A. Britton 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's 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, 1998, Messrs. Mann, Ryan, Cevera
and Britton will receive an annual salary of $338,150, $268,760, $245,525 and
$223,255 respectively, and certain current perquisites (including tax
reimbursement for certain perquisites). Each executive is entitled to
participate in the Company's MIP (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').
13
<PAGE>
COMPENSATION COMMITTEE REPORT
COMPENSATION OVERVIEW
The Compensation Committee of the Board of Directors (the 'Committee') has
the responsibility for the design, implementation and administration of the
Company's executive compensation including the MIP, awards under the 1996 Stock
Option Plan and compensation of the President and Executive Vice Presidents of
the Company. The 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.
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
the President and the Executive Vice Presidents.
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.
Salaries for the President and Executive Vice Presidents of the Company 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-nine
(39) 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
14
<PAGE>
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, generally disallows a tax deduction to any
public company for compensation over $1 million paid to such company'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.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Ziegler's compensation is paid entirely by Hay Island. See 'EXECUTIVE
COMPENSATION-- Summary Compensation Table'.
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 500 Index and a market weighted index of
publicly traded peers for the period from December 17, 1996 through December 31,
1997. 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, Inc., General Cigar Company Inc. and
United States Tobacco Company.
Measurement Period Swisher S&P 500 Peer Companies
- ------------------ ------- ------- --------------
12/17/96 100.0 100.0 100.0
12/31/96 93.4 102.0 96.8
3/31/97 86.0 104.3 99.7
6/30/97 101.5 121.9 118.3
9/30/97 106.3 130.5 136.7
12/31/97 100.0 133.7 112.2
15
<PAGE>
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, 1998,
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
has any financial interest, direct or indirect, in the Company.
One or more representatives of Coopers & Lybrand L.L.P. will (a) be present
at the 1998 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 and Class B Common Stock of the Company voting (as one class) in person
or by proxy at the 1998 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, 1998. PROXIES RECEIVED BY THE BOARD
OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A CONTRARY CHOICE IN
THEIR PROXIES.
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 1999 Annual
Meeting of Stockholders must be received by the Company on or before November
30, 1998, to be eligible for inclusion in the Company's Proxy Statement and
proxy relating to that meeting.
16
<PAGE>
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 SEC, 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 30, 1998
-----------------------------------
THE ANNUAL REPORT TO STOCKHOLDERS OF THE COMPANY FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997, WHICH INCLUDES FINANCIAL STATEMENTS, HAS BEEN MAILED TO
STOCKHOLDERS OF RECORD AS OF MARCH 9, 1998 OF THE COMPANY. THE ANNUAL REPORT
DOES NOT FORM ANY PART OF THE MATERIAL FOR THE SOLICITATIONS OF PROXIES.
-----------------------------------
17
<PAGE>
PROXY
SWISHER INTERNATIONAL GROUP INC.
CLASS A COMMON STOCK
ANNUAL MEETING OF STOCKHOLDERS - MAY 7, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby constitutes and
appoints William Ziegler, III, William T. Ziegler and Karl H. Ziegler, or any of
them acting singly, proxies with full power of substitution to vote for the
undersigned all shares of Class A Common Stock of Swisher International Group
Inc. which the undersigned is entitled to vote at the Annual Meeting of the
Stockholders to be held, at the Maritime Aquarium at Norwalk, 3rd Floor, 10
North Water Street, Norwalk, Connecticut, on May 7, 1998 at 10:00 a.m. (local
time), and at any adjournment thereof, upon such business as may properly come
before the Meeting including the matters listed on the reverse side.
You are encouraged to specify your choices by marking the appropriate
boxes (SEE REVERSE SIDE), but you need not mark any box if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxies cannot vote
your shares unless you sign and return this card.
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.
<PAGE>
[SWISHER INTERNATIONAL GROUP INC. LOGO]
SWISHER INTERNATIONAL GROUP INC.
Annual Meeting Of Stockholders
May 7, 1998, 10:00 a.m. (local time)
Maritime Aquarium at Norwalk
3rd Floor
10 North Water Street
Norwalk, Connecticut
[X] Please mark votes as in this example.
This Proxy, when properly executed, will be voted as directed by the undersigned
stockholder. If no specification is given, this Proxy will be voted (i) FOR the
election of each of the listed nominees for director, (ii) FOR the proposal to
ratify the appointment of auditors, and (iii) at the discretion of the Proxy
holders, with respect to any other matter that may come before the meeting or
any adjournment thereof.
ITEM 1. Election of twelve(12) Directors:
Nominees:
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.
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ] [ ]
[ ]
For all nominees except as noted above
ITEM 2. Proposal to ratify appointment of
Coopers & Lybrand L.L.P. as the Company's
independent auditors for the year ending
December 31, 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
MARK HERE MARK HERE
FOR ADDRESS [ ] IF YOU PLAN [ ]
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
Please mark, date and sign exactly as your name appears hereon and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by duly authorized officer. If shares are
held jointly, each stockholder named should sign.
DATED: _________________________________________, 1998
_______________________________________________________
SIGNATURE(S) OF STOCKHOLDER(S)
_______________________________________________________
SIGNATURE(S) OF JOINT STOCKHOLDER(S)
_______________________________________________________
TITLE
<PAGE>
PROXY
SWISHER INTERNATIONAL GROUP INC.
CLASS B COMMON STOCK
ANNUAL MEETING OF STOCKHOLDERS - MAY 7, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby constitutes and
appoints William Ziegler, III, William T. Ziegler and Karl H. Ziegler, or any of
them acting singly, proxies with full power of substitution to vote for the
undersigned all shares of Class B Common Stock of Swisher International Group
Inc. which the undersigned is entitled to vote at the Annual Meeting of the
Stockholders to be held at the Maritime Aquarium at Norwalk, 3rd Floor, 10 North
Water Street, Norwalk, Connecticut, on Thursday, May 7, 1998 at 10:00 a.m.
(local time), upon such buisness as may properly come before the Meeting or any
adjournment thereof, including the matters listed below.
You are encouraged to specify your choices by marking the appropriate
boxes (See below), but you need not mark any box if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxies cannot vote
your shares unless you sign and return this card.
Please mark
[ ] vote as in
this example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED
STOCKHOLDER IF NO SPECIFICATION IS GIVEN, THIS PROXY WILL BE VOTED (i) FOR THE
ELECTION OF EACH OF THE LISTED NOMINEES FOR DIRECTOR, (ii) FOR THE PROPOSAL TO
RATIFY THE APPOINTMENT OF AUDITORS AND (iii) AT THE DISCRETION OF THE
PROXYHOLDERS, WITH RESPECT TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C> <C>
ITEM 1. Election of twelve (12) Directors: ITEM 2. Proposal to ratify appointment
of Coopers & Lybrand L.L.P. [ ] [ ] [ ]
Nominees: Cynthia Z. Brighton, Robert A. Britton, as the Company's independent
Nicholas J. Cevera, Jr., C. Keith Hartley, Alfred F. auditors for the year ending
La Banca, Timothy Mann, Donald E. McNicol, December 31, 1998.
Charles H. Mullin, J. Thomas Ryan, III, John R.
Tweedy, William T. Ziegler and William Ziegler, III
</TABLE>
<TABLE>
<S> <C> <C> <C>
For Withheld
All From All MARK HERE MARK HERE
Nominees Nominees FOR ADDRESS [ ] IF YOU PLAN [ ]
CHANGE AND TO ATTEND
[ ] [ ] NOTE AT LEFT THE MEETING
</TABLE>
<TABLE>
<S> <C>
Please mark, date and sign exactly as your name(s)
appear hereon and return in the enclosed
[ ]_______________________________________ envelope. If acting as executor, administrator,
For all nominees except as noted above trustee, guardian, etc., you should so indicate
when signing. If the signer is a corporation,
please sign the full corporation name, by duly
authorized officer. If shares are held jointly,
each stockholder named should sign.
</TABLE>
