<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
GENERAL CIGAR HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name(s) of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pur-
suant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
GENERAL CIGAR HOLDINGS, INC.
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 16, 1998
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of General Cigar
Holdings, Inc. ("General Cigar") will be held in the Auditorium on the 11th
floor of the offices of the Corporate Headquarters of Chase Banking Corporation,
270 Park Avenue, New York, N.Y. on the 16th day of April 1998, at 10:00 A.M.,
local time, to consider and act upon:
1. The election of directors of General Cigar;
2. The approval of the selection of General Cigar's independent accountants
for 1998; and
3. Such other business as may properly be brought before the Annual Meeting
or any adjournment thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
Only stockholders of record at the close of business on February 25, 1998
are entitled to notice of, and to vote at, the Annual Meeting.
A. ROSS WOLLEN
SECRETARY
Dated: March 12, 1998
<PAGE>
GENERAL CIGAR HOLDINGS, INC.
387 PARK AVENUE SOUTH
NEW YORK, NEW YORK 10016-8899
------------------------
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of General Cigar
Holdings, Inc. ("General Cigar") in connection with the solicitation by the
Board of Directors of proxies for the Annual Meeting of Stockholders to be held
on April 16, 1998 at 10:00 A.M., local time, in the Auditorium on the 11th Floor
of Chase Banking Corporation, 270 Park Avenue, New York, N.Y., for the purposes
set forth in the accompanying notice of meeting.
GENERAL
This solicitation is being made on behalf of the Board of Directors of
General Cigar. The initial distribution of proxy materials is expected to be
made on or about March 12, 1998. Any proxy received in the accompanying form may
be revoked by the person executing it at any time before the authority thereby
granted is exercised. Proxies received by the Board of Directors in such form
will be voted at the meeting or any adjournment thereof as specified therein by
the person giving the proxy; if no specification is made, the shares represented
by such proxy will be voted (i) for the election of directors as described in
this Proxy Statement; and (ii) for approval of the selection of Price Waterhouse
LLP as independent accountants for General Cigar for 1998. For voting purposes
(as opposed to for purposes of establishing a quorum) abstentions and broker
non-votes will not be counted in determining whether the directors standing for
election have been elected or whether the other matters to be voted on have been
approved. Proposals by stockholders for General Cigar's 1999 Annual Meeting of
Stockholders must be received by General Cigar before November 1, 1998.
Management knows of no matters which may be brought before the Annual
Meeting or any adjournment thereof other than those described in the
accompanying notice of meeting and routine matters incidental to the conduct of
the meeting. However, if any other matter should come before the meeting or any
adjournment thereof, it is the intention of the persons named in the
accompanying form of proxy or their substitutes to vote the proxy in accordance
with their judgment on such matters.
The cost of solicitation of proxies by the Board of Directors will be borne
by General Cigar. Such solicitation will be made by mail and in addition may be
made by officers and employees of General Cigar personally or by telephone,
facsimile or telegram. Proxies and proxy material will also be distributed
through brokers, custodians and other similar parties.
<PAGE>
Each holder of a share of Class A Common Stock, par value $0.01 per share,
of General Cigar (the "Class A Common Stock") will be entitled to one vote for
each share held of record by such person at the close of business on February
25, 1998 (the "Record Date"), which is the record date fixed by the Board of
Directors for the determination of stockholders entitled to notice of, and to
vote at, the Annual Meeting or any adjournment thereof. Each holder of a share
of Class B Common Stock, par value $0.01 per share, of General Cigar (the "Class
B Common Stock" and, together with the Class A Common Stock, the "Common Stock")
will be entitled to ten votes for each share held of record by such person at
the close of business on the Record Date. As of such date, General Cigar had
outstanding 12,290,060 shares of Class A Common Stock (none of which are shares
of treasury stock) and 15,293,898 shares of Class B Common Stock (none of which
are shares of treasury stock). 9,935,888 shares of Class B Common Stock,
representing 65.0% of the outstanding shares of Class B Common Stock, are held
by members of the Cullman & Ernst Group (See "Security Ownership of Management
and Principal Holders"). The Cullman & Ernst Group beneficially owns shares of
Common Stock representing approximately 60.1% of the total voting power of the
outstanding Common Stock. Although no formal voting arrangement exists among the
members of the Cullman & Ernst Group, certain members of the Cullman & Ernst
Group have informed General Cigar that they will vote for the election of the
nominees for election to the Board of Directors identified herein and for the
ratification of Price Waterhouse LLP as General Cigar's independent public
accountants. The affirmative vote of all of the members of the Cullman & Ernst
Group would be sufficient, without the concurring vote of any other stockholder
of General Cigar, to approve and adopt each of the proposals to be considered at
the Annual Meeting.
The Class A Common Stock trades on the New York Stock Exchange under the
symbol MPP. Each share of Class B Common Stock is convertible into a share of
Class A Common Stock at the option of the holder and automatically upon sale.
As used herein, the term "Company" refers to General Cigar Holdings, Inc.
and its predecessor, Culbro Corporation ("Culbro") and their respective
subsidiaries, including the principal operating subsidiary, General Cigar Co.,
Inc. On August 29, 1997, Culbro merged with and into General Cigar (the
"Merger"), with General Cigar as the surviving corporation. Prior to the initial
public offering of Class A Common Stock in February 1997 (the "IPO"), General
Cigar was a wholly-owned subsidiary of Culbro.
2
<PAGE>
I. ELECTION OF DIRECTORS
At the 1998 Annual Meeting of Stockholders, eleven (11) directors (which
will comprise the entire Board) are to be elected. The Board of Directors
proposes the nominees listed below for election as directors to serve until the
1999 Annual Meeting of Stockholders and until their successors are duly elected
and qualified. All of the nominees have served as directors since May 1997. All
of the nominees except Susan R. Cullman also served as directors of Culbro for
more than six years and from the time of its last annual meeting of shareholders
until the consummation of the Merger. The directors must be elected by a
plurality of the votes cast in person or by proxy by stockholders entitled to
vote at the meeting. If for any reason any nominee or nominees become
unavailable for election, the proxy holders will vote for such substitute
nominee or nominees as may be designated by the Board of Directors.
INFORMATION CONCERNING DIRECTORS
<TABLE>
<CAPTION>
NAME (LETTERS (AGE) AND
REFER TO DATE SINCE PRINCIPAL
COMMITTEE WHICH HAS OCCUPATION AND ALSO SERVES AS A
MEMBERSHIPS, CONTINUOUSLY BUSINESS DIRECTOR OF THE
IDENTIFIED SERVED AS A EXPERIENCE DURING FOLLOWING
BELOW) DIRECTOR(1) PAST FIVE YEARS(2) CORPORATIONS
- -------------------------------- ------------ -------------------------------- --------------------------------
<S> <C> <C> <C>
Bruce A. Barnet................. (52) 1990 President and Chief Executive American Business Press;
(a, b, g) Officer of Cahners Publshing Batteries, Batteries Inc.;
Company (1996); President and Mainspring Communications; Reed
Chief Executive Officer of Elsevier, Inc.
Cowles Enthusiast Media
(1993-1996)
John L. Bernbach................ (53) 1988 Chairman and Chief Executive Avenue China, Inc.; North
(a, f, g) Officer of The Bernbach Group, American Television, Inc.;
Inc.-- consulting (1994); Northbridge Programming, Inc.;
Chairman and Chief Executive Wemco, Inc.
Officer of North American
Television, Inc.--television
distribution; Vice Chairman of
DDB Needham Worldwide, Inc.
(1993-1994)
Edgar M. Cullman (3)............ (80) 1961 Chairman of the Board of Centaur Communications Limited;
(c, d, e) Directors (1996); Chief Bloomingdale Properties, Inc.;
Executive Officer of Culbro The Eli Witt Company (5);
Corporation (1962-1996) Griffin Land & Nurseries, Inc.
Edgar M. Cullman, Jr. (3)....... (52) 1982 President and Chief Executive Bloomingdale Properties, Inc.;
(c, d, f, g) Officer (1996); Chief Executive Doral Financial Corporation; The
Officer of Culbro Corporation Eli Witt Company (5)
(1996-1997); President and Chief
Operating Officer of Culbro
Corporation (1984-1996);
President of Culbro Land
Resources, Inc. (1995)
(1992-1993)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
NAME (LETTERS (AGE) AND
REFER TO DATE SINCE PRINCIPAL
COMMITTEE WHICH HAS OCCUPATION AND ALSO SERVES AS A
MEMBERSHIPS, CONTINUOUSLY BUSINESS DIRECTOR OF THE
IDENTIFIED SERVED AS A EXPERIENCE DURING FOLLOWING
BELOW) DIRECTOR(1) PAST FIVE YEARS(2) CORPORATIONS
- -------------------------------- ------------ -------------------------------- --------------------------------
<S> <C> <C> <C>
Susan R. Cullman (3)............ (48) 1997 Director; President of The National Cathedral School
(c, f, g) Republican Coalition for Choice,
a non-profit advocacy coalition
(1995)
John L. Ernst (4)............... (57) 1983 Chairman of the Board and Doral Financial Corporation;
(b, c, e) President of Bloomingdale Griffin Land & Nurseries, Inc.
Properties, Inc.
Thomas C. Israel................ (53) 1989 Chairman of A.C. Israel
(a, g) Enterprises, Inc.-- investments
Dan W. Lufkin................... (66) 1976 Private investor Allen & Co., Inc.; Syratech,
(a, b, c, d, e) Inc.
Graham V. Sherren............... (60) 1987 Chairman and Chief Executive Angerstein Plc; Duplo
(g) Officer of Centaur International Ltd.; Gieves Group
Communications Ltd.; Hundred Acre Securities
Limited--publisher of magazines Ltd.; InType Ltd.
and trade periodicals in the
United Kingdom
Peter J. Solomon................ (59) 1980 Chairman of Peter J. Solomon Centennial Cellular Corporation;
(b, d) Company Limited and Peter J. Century Communications
Solomon Securities Company Corporation; Charette
Limited Corporation; Monro Muffler
Brake, Inc.; Office Depot, Inc.;
Phillips-Van Heusen Corporation
Francis T. Vincent, Jr. ........ (59) 1992 Vincent Enterprises; Private Oakwood Homes Corp.; Time
(a, b, g) investor; senior advisor to Warner, Inc.; Westfield America,
Peter J. Solomon Company Limited Inc.
(1993-1994)
</TABLE>
- ------------------------
Member of the: (a) Audit Committee; (b) Compensation Committee; (c) Executive
Committee; (d) Finance Committee; (e) Nominating Committee; (f) Public Policy
Committee; and (g) Strategic Planning Committee
FOOTNOTES APPEAR ON THE FOLLOWING PAGE.
4
<PAGE>
(1) Except for Susan R. Cullman, who was elected as a director of General Cigar
in 1997, each director shown as serving on the Board of Directors prior to
1997 served as a director of Culbro, which was merged into General Cigar.
(2) Except as otherwise indicated each director has had the same principal
occupation during the past five years. Positions not otherwise identified
are with the Company.
(3) Mr. Cullman is the father of Mr. Cullman, Jr. and Ms. Cullman.
(4) Mr. Ernst is the nephew of Mr. Edgar M. Cullman.
(5) The Eli Witt Company filed for relief from its creditors under Chapter 11 of
the Federal Bankruptcy Code in November 1996.
The Board of Directors held 8 meetings during 1997. The Company has the
following Committees of the Board of Directors: Audit, Compensation, Executive,
Finance, Nominating, Public Policy and Strategic Planning. Committee memberships
of the Board of Directors are indicated in the above table. Directors as a whole
attended approximately 89% of the aggregate of all Board and Committee meetings
(of Committees of which they were members). No Director attended less than 75%
of the aggregate of all Board and Committee meetings.
Members of the Board of Directors who are not employees of the Company
received $20,000 per year and $900 for each Board and Committee meeting attended
in 1997. Committee chairpersons received $1,300 for each Committee meeting
attended, except for the chairpersons of the Audit and Compensation Committees
who received $1,600. Reduced amounts were paid if more than one meeting was held
on any day. Non-employee Directors who are not members of the Cullman & Ernst
Group participate in the Company's stock option plans for non-employee
Directors.
The Audit Committee, whose Chairman is Mr. Israel, reviews audit reports and
the scope of audit by both the Company's internal audit staff and its
independent accountants and related matters pertaining to the preparation and
examination of the Company's financial statements. From time to time such
Committee makes recommendations to the Board of Directors with respect to the
foregoing matters as well as with respect to the appointment of the Company's
independent accountants. The Audit Committee held 1 meeting in 1997 and
recommended to the Board of Directors the selection of Price Waterhouse LLP (See
"Selection of Independent Accountants").
The Nominating Committee, whose Chairman is Mr. Ernst, recommended to the
Board of Directors the election of the director-nominees proposed in this Proxy
Statement for election by the stockholders. The Nominating Committee reviews
incumbent directors and the qualifications of candidates suggested from all
sources, including Board members, management and stockholders. Stockholders
desiring to recommend candidates for election as directors at the Company's 1999
Annual Meeting of Stockholders should submit names and appropriate biographical
information to the Secretary of the Company before November 1, 1998.
For information about the Compensation Committee, see Compensation Committee
Report on Executive Compensation--Interlocks and Insider Participation.
5
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL HOLDERS
The following table lists the number of shares and exercisable options to
purchase shares of Common Stock of the Company beneficially owned or held by (i)
each person known by the Company to beneficially own more than 5% of the
outstanding shares of Class A Common Stock or Class B Common Stock (ii) the
nominees for election as directors (who are all current directors), (iii) the
Named Executive Officers (as defined) and (iv) all directors and executive
officers of the Company collectively. Information with respect to the Class A
Common Stock held by each person or group of persons includes shares of Class A
Common Stock issuable upon conversion of shares of Class B Common Stock held by
such person or group of persons. Unless otherwise indicated, information is
provided as of November 29, 1997:
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
---------------------------- ---------------------------
<S> <C> <C> <C> <C>
SHARES SHARES
BENEFICIALLY PERCENT OF BENEFICIALLY PERCENT OF
NAME AND ADDRESS (1) OWNED (2) TOTAL(3) OWNED (2) TOTAL(3)
- ------------------------------------------------------------- ------------- ------------- ------------ -------------
Edgar M. Cullman (4)......................................... 4,242,783 25.7% 4,242,574 27.7%
Edgar M. Cullman, Jr. (4).................................... 3,896,960 24.1 3,896,923 25.5
Louise B. Cullman (4)........................................ 3,662,153 23.0 3,662,129 23.9
Susan R. Cullman (4)......................................... 3,372,452 21.5 3,372,424 22.1
Lucy C. Danziger (4)......................................... 4,573,136 27.1 4,573,106 29.9
John L. Ernst (4)............................................ 1,860,784 13.1 1,860,772 12.2
B. Bros. Realty Limited Partnership (5)...................... 1,039,339 7.8 1,039,338 6.8
FMR Corp. (6)................................................ 876,000 *
Gabelli Funds, Inc. (7)...................................... 2,793,229 14.5 2,664,229 17.4
Wellington Management Company, LLP (8)....................... 2,164,736 17.6
Bruce A. Barnet.............................................. 18,226 * 444 *
John L. Bernbach............................................. 2,667 * 2,667 *
Thomas C. Israel............................................. 40,010 * 22,228 *
Dan W. Lufkin................................................ 62,237 * 62,237 *
Graham V. Sherren............................................ 2,222 * 2,222 *
Peter J. Solomon............................................. 22,227 * 4,445 *
Francis T. Vincent, Jr....................................... 22,227 * 4,445 *
Austin T. McNamara........................................... 112,702 *
Edward B. Polite............................................. 30,061 * 58 *
A. Ross Wollen............................................... 166,355 * 75,859 *
All directors and executive officers collectively, consisting
of 15 persons (9) 10,791,049 87.8 10,113,604 66.1
</TABLE>
- ------------------------
* Less than 1%
(1) Unless otherwise indicated, the address of each person listed is c/o General
Cigar Holdings, Inc., 387 Park Avenue South, New York, New York 10016.
Excluded from the table is the Zweig-DiMenna entities, c/o Zweig-DiMenna
Associates LLC, 900 Third Avenue, 30th Floor, New York, New York 10022,
which reported ownership of less than 5% of the outstanding shares of Common
Stock as of February 25, 1998.
(2) This information reflects the definition of beneficial ownership adopted by
the Securities and Exchange Commission. Beneficial ownership reflects sole
investment and voting power, except as reflected in footnote 4. Where more
than one person shares investment and voting power in the same shares, such
shares may be shown more than once. Such shares are reflected only once,
however, in the total for all directors and officers. Includes under Class A
Common Stock options exercisable within 60 days. Excluded are shares held by
charitable foundations and trusts of which members of the Cullman and Ernst
families, including persons referred to in footnote 4, are officers and
directors. As
6
<PAGE>
of November 27, 1997, a group (the "Cullman & Ernst Group") consisting of
Edgar M. Cullman, Edgar M. Cullman, Jr., Susan R. Cullman, direct members of
their families and trusts for their benefit; John L. Ernst, his sister and
direct members of their families and trusts for their benefit; a partnership
in which members of the Cullman and Ernst families hold substantial direct
and indirect interests and charitable foundations and trusts of which
members of the Cullman and Ernst families are directors or trustees, owned
an aggregate of approximately 9,935,888 shares of the Class B Common Stock
(approximately 65% of the outstanding shares of Class B Common Stock). Among
others, Edgar M. Cullman, Edgar M. Cullman, Jr., their wives, Susan R.
Cullman and Mr. Ernst hold investment and voting power or shared investment
and voting power over such shares. Certain of such shares are pledged as
security for loans payable under standard pledge arrangements. A form filed
with the Securities and Exchange Commission on behalf of the Cullman & Ernst
Group states that there is no formal agreement governing the group's holding
and voting of such shares but that there is an informal understanding that
the persons and entities included in the group will hold and vote together
the shares owned by each of them in each case subject to any applicable
fiduciary responsibilities.
(3) The Cullman & Ernst Group beneficially owns shares of Common Stock
representing approximately 60.1% of the total voting power of the
outstanding Common Stock.
(4) Included within the shares shown as beneficially owned by Edgar M. Cullman
are 3,749,401 shares of Class B Common Stock in which he holds shared
investment and/or voting power; included within the shares shown as
beneficially owned by John L. Ernst are 1,828,544 shares of Class B Common
Stock in which he holds shared investment and/or voting power; included
within the shares shown as beneficially owned by Edgar M. Cullman, Jr. are
3,262,664 shares of Class B Common Stock in which he holds shared investment
and/or voting power; and included within the shares shown as beneficially
owned by Susan R. Cullman are 2,982,259 shares of Class B Common Stock in
which she holds shared investment and/or voting power. Included within the
shares shown as beneficially owned by Louise B. Cullman are 3,202,413 shares
of Class B Common Stock in which she holds shared investment and/or voting
power; and included within the shares shown as beneficially owned by Lucy C.
Danziger are 4,209,272 shares of Class B Common Stock in which she holds
shared investment and/or voting power. Excluded in each case are shares held
by charitable foundations and trusts in which such persons or their families
or trusts for their benefit are officers and directors. Messrs. Cullman,
Ernst and Cullman, Jr. and Susan R. Cullman disclaim beneficial interest in
all shares over which there is shared investment and/or voting power and in
all excluded shares. Louise B. Cullman is the wife of Edgar M. Cullman;
Susan R. Cullman and Lucy R. Danziger are the daughters of Edgar M. Cullman
and Louise B. Cullman.
(5) The address of B. Bros. Realty Limited Partnership is 641 Lexington Avenue,
New York, New York 10022.
(6) The address of such person is 82 Devonshire Street, Boston, Massachusetts
02102.
(7) The address of such person is Gabelli Funds, Inc., One Corporate Center,
Rye, New York, New York 10580. A form filed with the Securities and Exchange
Commission in September 1991 by Gabelli Funds, Inc., as subsequently amended
indicates that the securities have been acquired by Gabelli Funds, Inc. and
its wholly-owned subsidiaries on behalf of their investment advisory
clients. The Company has been informed that no individual client of Gabelli
Funds, Inc. has ownership of more than 5% of the Company's outstanding
Common Stock.
(8) The address of Wellington Management Company, LLP ("WMC") is 75 State
Street, Boston, Massachusetts 02109. A form filed with the Securities and
Exchange Commission on January 13, 1998 by WMC indicates that the securities
are owned by WMC on behalf of its investment advisory clients. The Company
has been informed that no individual client of WMC has ownership of more
than 5% of the Company's outstanding Common Stock.
7
<PAGE>
(9) Excluding shares held by certain charitable foundations the officers and/or
directors of which include certain officers and directors of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of its Common Stock, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission and the New York Stock Exchange. Such
persons are required by regulation to furnish the Company with copies of all
Section 16(a) forms they file. Based upon its involvement in the preparation of
certain of such forms, a review of the copies of other such forms received by it
and the written representations from certain reporting entities that no Form 5
was required for each such entity, the Company believes that with respect to
1997 all such Section 16(a) filing requirements were satisfied.
INTERESTS IN CERTAIN TRANSACTIONS
For the information of stockholders, attention is called to the following
transactions between the Company and other parties in which the persons
mentioned below might have had a direct or indirect interest.
1. Frederick M. Danziger, a member of the Cullman & Ernst Group, was Of
Counsel to the law firm of Latham & Watkins from December 1, 1995 until July 3,
1997. During the Company's 1997 fiscal year, such firm received fees and
disbursements of approximately $2,250,000 for services rendered to Culbro and
General Cigar in connection with: (i) the IPO; (ii) the Merger; (iii) the
distribution by Culbro to its shareholders of all the common stock of Griffin
Land & Nurseries, Inc. ("Griffin") in July 1997; and (iv) the acquisition by the
Company of Villazon & Company (the transactions described in clauses (i), (ii),
(iii) and (iv) are referred to herein collectively as the "Reorganization"). See
"Security Ownership of Management and Principal Holders."
2. The interior design firm of Cullman & Kravis, which is owned by a member
of the Cullman & Ernst Group, provided interior design services for the
Company's Club Macanudo cigar bar expected to open in Chicago, Illinois in the
spring of 1998, and for renovations to the Company's Club Macanudo New York City
facilities. In 1997, a total of approximately $81,540 was paid such firm in fees
and commissions (other than reimbursements for furnishings purchased for the
Company). Elissa Cullman, owner of the firm, is the wife of Edgar M. Cullman,
Jr.
3. The Company entered into an agreement with John L. Bernbach in 1997
pursuant to which Mr. Bernbach provides consulting services to the Company with
respect to its international operations. During the Company's 1997 fiscal year,
Mr. Bernbach received advisory fees of $75,000 pursuant to such agreement.
4. Messrs. Cullman are members of the Board of Directors of Bloomingdale
Properties, Inc. of which Mr. Ernst is Chairman and President.
See Compensation Committee Interlocks and Insider Participation on page 15,
for certain other interests.
The information given in this Proxy Statement with respect to the five-year
business experience of each director, beneficial ownership of stock, interlocks
and the respective interests of persons in transactions to which the Company or
any of its subsidiaries was a party (other than as appears from the records of
the Company), is based upon statements furnished to the Company by its directors
and officers.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation for the
Company's Chief Executive Officer and the four highest-paid executive officers
(collectively, the "Named Executive Officers"), as well as the total
compensation paid to each individual during the Company's last three calendar
years, except where otherwise noted.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
- -------------------------------------------------------------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C>
SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING
POSITION(1) YEAR SALARY BONUS COMPENSATION(2) OPTIONS
- ------------------------------------------------- --------- ---------- ------------ ---------------- -----------
Edgar M. Cullman................................. 1997 $ 400,000 $ 440,000(3) $ 12,756
Chairman of the Board 1996 400,000 17,256
1995 375,000 13,689
Edgar M. Cullman, Jr. ........................... 1997 440,000 456,676(4) 25,574
President and Chief Executive Officer 1996 400,000 30,012 444,557
1995 367,000 1,164,000 29,871
Austin T. McNamara............................... 1997 285,000 207,366(4) 15,763 100,000
Executive Vice President 1996 250,000 148,025 319,915 44,557
1995 200,000 375,629 15,712 66,684
Edward B. Polite (6)............................. 1997 285,000 386,641(5) 23,161 40,000
Executive Vice President
A. Ross Wollen................................... 1997 236,250 297,123(5) 25,561 25,000
Senior Vice President, General Counsel and 1996 225,000 55,000(4) 25,589 22,228
Secretary 1995 205,000 377,501 109,879 66,684
</TABLE>
- ------------------------
(1) Each of the executive officers identified was employed by Culbro or a
subsidiary of Culbro until August 29, 1997. Amounts shown exclude $259,592
and $218,624 being paid annually in each of fiscal year 1997, 1998 and 1999
to Messrs. Cullman, Jr. and Wollen, respectively, as a result of the
termination and payout of benefits under the 1995-1997 Long Term Performance
Plan. Amounts shown also exclude $439,530 paid in 1998 to Mr. McNamara as a
result of awards payable with respect to the performance period 1995-1997
under the Long Term Performance Plan with respect to General Cigar Co.,
Inc.'s performance. See "Employee Benefit Plans--Long Term Performance
Plan."
(2) Amounts shown under Other Annual Compensation include matching contributions
made by Culbro under its Savings Plan and other miscellaneous cash benefits,
but do not include funding for or receipt of retirement plan benefits (See
"Employee Benefit Plans"). No executive officer who would otherwise have
been includable in such table resigned or terminated employment during 1997.
The amount shown in 1996 for Mr. McNamara includes value of $303,169
realized upon exercise of options.
(3) Special bonus awarded to Edgar M. Cullman as a result of the Company's
performance in 1997.
(4) Annual and long-term bonuses were paid in 1996 with respect to performance
in 1995 and the 1993-95 cycle, respectively.
(5) Includes special bonuses of $150,000 each paid to Mr. Polite in connection
with his election as Chief Operating Officer and to Mr. Wollen in connection
with the Reorganization.
(6) Mr. Polite became an officer of General Cigar in February 1997.
9
<PAGE>
EMPLOYEE BENEFIT PLANS
1997 STOCK PLAN
General Cigar adopted a new Stock Plan (the "1997 Stock Plan") in February
1997. A total of 3,300,000 shares of Class A Common Stock were authorized to be
made available for issuance under the 1997 Stock Plan. Options granted under the
1997 Stock Plan are either incentive stock options or nonqualified options. The
1997 Stock Plan contains a limitation on the dollar amount of incentive stock
options which may be granted to any employee and restrictions pertaining to any
grant to an employee who beneficially owns 10% or more of the outstanding Common
Stock. In connection with the IPO, more than 40 Company employees were granted
incentive stock options to purchase shares of General Cigar's Common Stock under
the 1997 Stock Plan. Such options have an exercise price equal to $18.00 per
share (which was the price per share in the IPO) and become exercisable in three
equal cumulative annual installments on each of the third, fourth and fifth
anniversaries of the date of grant. As of November 29, 1997 there were
approximately 2,208,618 shares of Class A Common Stock reserved for issuance
under the 1997 Stock Plan. Such approximately 2,208,618 shares included
approximately 661,600 shares of Class A Common Stock issuable upon exercise of
options granted by General Cigar during 1997 and approximately 1,547,018 shares
of Class A Common Stock issuable upon exercise of options that were originally
granted by Culbro to key employees and non-employee directors and were assumed
by General Cigar in connection with the Merger.
STOCK OPTION INFORMATION
The following table sets forth the number of stock options granted to each
of the Named Executive Officers during fiscal 1997. Neither Edgar M. Cullman nor
Edgar M. Cullman, Jr. was granted any options during fiscal 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------
PERCENTAGE POTENTIAL REALIZABLE VALUE
OF TOTAL AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE TEN YEAR OPTION TERM
OPTIONS IN 1997 PRICE EXPIRATION ----------------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% 10%
- --------------------------------- ----------- ------------- ----------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
A. Ross Wollen................... 25,000 4.0% $ 18.00 2/27/07 $ 282,500 $ 717,500
Austin T. McNamara............... 100,000 16.0 18.00 2/27/07 1,130,000 2,870,000
Edward B. Polite................. 40,000 6.4 18.00 2/27/07 452,000 1,148,000
</TABLE>
Edgar M. Cullman did not hold any options at 1997 fiscal year end. The
following table presents the value of options exercised in fiscal 1997 and the
value of unexercised options held by the other Named Executive Officers at
November 29, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING OPTIONS HELD IN-THE-MONEY OPTIONS AT
SHARES ACQUIRED VALUE AT FISCAL YEAR END (#) FISCAL YEAR END (1)
ON EXERCISE REALIZED -------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- --------------- ------------ ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Edgar M. Cullman, Jr (2)....... -- -- -- 444,738 -- $ 4,066,696
Edward B. Polite............... 65,346 $ 1,994,034 30,003 92,675 $ 611,581 1,162,843
A. Ross Wollen................. 95,561 2,099,063 40,362 114,177 818,237 1,843,137
Austin T. McNamara............. -- -- 68,702 211,392 1,397,170 2,472,860
</TABLE>
- ------------------------
(1) The amounts presented in this column have been calculated based upon the
difference between the fair market value of $23.50 of General Cigar Common
Stock on November 29, 1997 and the exercise price of each stock option.
10
<PAGE>
(2) Edgar M. Cullman, Jr. was granted an option to purchase 100,000 shares of
Culbro common stock in March 1996, which option was converted into an option
to purchase 444,738 shares of General Cigar's Common Stock as a result of
the Reorganization. Such option is exercisable in equal annual installments
over five years beginning on February 21, 1999 and ending on February 21,
2003. The option was originally granted by Culbro at the exercise prices of
$66.00, $66.00, $72.60, $72.60 and $80.00 for the years 1999, 2000, 2001,
2002 and 2003, respectively, which exercise prices were reformulated as a
result of the Reorganization to be approximately $13.27, $13.27, $14.60,
$14.60 and $16.08 for such years, respectively.
ANNUAL INCENTIVE COMPENSATION PLAN
The Compensation Committee meets during the first quarter of each year to
assess the performance during the preceding fiscal year of the officers of the
Company and to recognize and reward meritorious performance by payment of
incentive compensation with respect to such year. Pursuant to a plan approved
for 1997 by the Board of Directors, such annual incentive compensation was based
upon predetermined percentages of each recipient's annual salary and depended
upon the achievement of specified subjective (30%) and Company financial (70%)
goals. The Company's 1997 financial goal of actual results compared to plan was
achieved at 128.5%. Incentive compensation is payable in cash subject to
deferral under the Company's Deferred Incentive Compensation Plan. The Company's
1997 annual plan resulted in the payments described in the Summary Compensation
Table. Employees who do not participate in the incentive compensation plan may
be eligible for annual bonus payments at the discretion of the Committee.
LONG TERM PERFORMANCE PLAN
The Long Term Performance Plan for 1995-1997 as it related to the corporate
executives of the Company (and, in 1995-1996, Culbro) was based upon the stock
price of Culbro Common Stock. In late 1996, the Culbro Board of Directors, on
the recommendation of the Culbro Compensation Committee, approved the full
vesting and termination of the 1995-1997 Performance Plan as it pertained to
Culbro corporate executives. These awards totalled approximately $3.4 million
and are being paid by the Company in three equal annual installments from 1997
to 1999. Such payments made in fiscal 1997 to the Named Executive Officers are
set forth in footnote 1 to the Summary Compensation Table.
The Long Term Performance Plan for 1995-1997 as it related to officers of
General Cigar Co., Inc. was based upon its return on net assets compared to plan
and was achieved at 177.5%. The Long Term Performance Plan resulted in a total
payout of $1,913,000 to 12 officers including Mr. McNamara whose payment is set
forth in footnote 1 to the Summary Compensation Table.
DEFERRED INCENTIVE COMPENSATION PLAN
The Company's Deferred Incentive Compensation Plan (the "Plan") was assumed
from Culbro in connection with the Merger. The Plan is administered by the
Compensation Committee, pursuant to which recipients of compensation, incentive
compensation and directors' fees may elect to defer receipt thereof under a
defined contribution arrangement. Amounts deferred earn interest, compounded
quarterly, at the prime rate less 1%. Such amounts are not intended to be
recognized for tax purposes until received. Participating recipients may
designate the amount and the time periods of deferral. Participants have no
vested rights in deferred amounts credited to their accounts and are general
creditors of the Company until such amounts actually are paid. The Plan provides
for the immediate payout of all deferred incentive compensation upon a "change
of control" (as defined in the Plan).
11
<PAGE>
SAVINGS PLAN
The Culbro Board of Directors adopted a Savings Plan in 1982 (the "Savings
Plan"), which Savings Plan was assumed by General Cigar in connection with the
Merger. The Savings Plan covers salaried and hourly employees of the Company and
its participating subsidiaries who are employed in the U.S., are over age 21 and
have six months of service. In 1997, a participating employee could have (i)
saved up to 5% of annual base salary through payroll deductions, with the
Company contributing $0.40 on each dollar contributed and (ii) saved an
additional 10% of annual base salary without receiving any matching
contributions. Highly compensated employees are limited to an additional 3% of
annual base salary without receiving any matching contributions. Contributions
made in 1997 through payroll deductions not in excess of $9,500 per employee may
have been accumulated as pre-tax savings pursuant to Section 401(k) of the
Internal Revenue Code. Participants are permitted to choose to allocate their
contributions among several alternative investment options.
During the period from January 1, 1997 to December 31, 1997, the Company's
matching contributions under the Savings Plan for the accounts of the
individuals named under "Summary Compensation Table" are included under Other
Annual Compensation.
RETIREMENT PLAN
Retirement benefits are payable under the Company's Employees Retirement
Plan (the "Retirement Plan") for officers and other employees of the Company and
its participating subsidiaries, which Retirement Plan General Cigar assumed from
Culbro in connection with the Merger. Directors who are not employees do not
participate. Benefits are accrued under the Plan on a career-average earnings
basis and through 1997, the pension credit is 1.1% for annual compensation up to
the individual's covered compensation as determined from published Social
Security tables and 1.65% for annual compensation above said amounts.
Compensation is the base rate of earnings as of the first business day of each
plan year payable for service during the plan year excluding overtime, bonuses,
incentive compensation or other additional compensation. The estimated annual
benefits payable as a life annuity upon retirement at normal retirement age,
which assumes service will continue until age 65 at 1997 base salaries, for
Messrs. Cullman, Jr., Polite, Wollen and McNamara are $101,732, $40,978, $65,099
and $58,639, respectively. The retirement benefit of $175,143, subject to
certain inflation adjustments, for Edgar M. Cullman reflects the fact that he
deferred receipt since age 65 from 1983 to 1989.
INSURANCE AND HEALTH PROGRAMS
The Company maintains a variety of employee welfare benefit plans providing
life, hospitalization, medical and long-term disability insurance for its
salaried and certain hourly paid employees, which plans were assumed from Culbro
in connection with the Merger. In addition, the Company provides life,
hospitalization and medical insurance for certain of its retired employees,
which were also assumed from Culbro in connection with the Merger. The Company's
aggregate contributions for such employee welfare benefit plans in fiscal 1997
amounted to approximately $2.9 million.
In 1976, Culbro adopted an Executive Life Insurance Program (the "Program")
pursuant to which insurance was purchased for middle and senior level officers
and employees. Insurance coverage of $20,000 was provided for each $10,000
salary increment in excess of $50,000 and additional coverage of $10,000 was
provided for each $10,000 salary increment in excess of $100,000 up to a maximum
insurance coverage of $250,000. As of July 1, 1988 the Program was suspended and
all benefits remain as they were as of that date. No new participants have been
offered benefits under this Program since its suspension. In connection with the
Merger, General Cigar assumed responsibility for the suspended benefits. The
aggregate face amount of such coverage through November 29, 1997 was
approximately $2.8 million. The amounts paid by the Company in fiscal 1997 as
premiums totaled approximately $80,000, which was paid in part from loans
against the cash value of said insurance policies and the balance in cash.
12
<PAGE>
EMPLOYMENT AGREEMENT WITH NAMED EXECUTIVE OFFICER
Mr. Wollen and the Company entered into an Employment Agreement (the
"Agreement"), dated June 6, 1997, pursuant to which the Company agreed to employ
Mr. Wollen in his current position and salary, subject to annual increases,
until June 6, 2000. The Agreement specifies that if Mr. Wollen is terminated for
any reason, other than "for cause" as defined, he would be paid 300% of his then
current annual salary and would be vested in the Company employee benefit plans
in which he then participated.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION-INTERLOCKS AND INSIDERS
PARTICIPATION
The Compensation Committee, whose Chairman is Mr. Ernst, supervises
management compensation and employee benefits and administers the Company's
pension, stock option, savings, health, incentive compensation and other
employee benefit plans. It held three meetings in 1997 and one in early 1998.
The Committee sets compensation for the executive officers of General Cigar and
the senior officers of its principal subsidiary, General Cigar Co., Inc., upon
the recommendations of the President of General Cigar Co., Inc.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
GENERAL
Pursuant to its authority to designate committees to exercise the powers and
authority of the Board, the Board of Directors has designated the Compensation
Committee to review, consider and approve the recommendations of management as
to all compensation paid by the Company and its subsidiaries exceeding $75,000
per annum.
Edgar M. Cullman, the Chairman of the Board, and Edgar M. Cullman, Jr., the
chief executive officer and president, are both members of the Cullman & Ernst
Group which owns Common Stock representing approximately 60% of the total voting
power of the Company's Common Stock. For many years they have declined to
participate in the Company's Stock Option Plans and Edgar M. Cullman has never
participated in the Annual Plan or the Long Term Performance Plan. For the first
time in many years the Compensation Committee determined to pay a special bonus
to Edgar M. Cullman for the Company's exceptional fiscal year 1997 results. See
the "--Summary Compensation Table." In 1996, Mr. Cullman, Jr. was granted an
option to purchase 100,000 shares of Culbro Common Stock. See Note 2 to the
table presenting the value of options under "Stock Option Information."
POLICIES
The Committee intends that stock options and cash performance awards serve
as a significant part of executives' total compensation package, and thus they
are granted and awarded in consideration of present and anticipated performance
as well as past performance. Moreover, the stock options and cash performance
awards are intended to offer the top executives significant long-term incentives
to increase their efforts on behalf of the Company and to focus managerial
efforts on enhancing stockholder value. In March 1996, the Culbro Board of
Directors approved the adoption by the Culbro Compensation Committee of a
guideline which would require that all employees and directors retain, during
the period of their employment or service, not less than 50% of the aggregate of
all (i) options granted, (ii) shares issued upon the exercise of options granted
and (iii) shares awarded, in 1996 and thereafter, which guideline the Company's
Board of Directors continues to follow. As indicated above, the Committee's
compensation philosophy is to have long-term incentives that pay more for
superior performance and less if performance does not achieve that level. The
Committee, in making its determinations with respect to stock option and
performance award grants and awards to the individual senior executives, was
guided by the percentage of
13
<PAGE>
the individual's base salary that the estimated value of the stock options and
cash performance awards would comprise.
SALARY AND CASH BONUSES
The chief executive officer's salary was increased 10% in 1997. The
Committee does not believe it need now adopt any policy with respect to the
$1,000,000 deduction cap of Internal Revenue Code Section 162(m). While the
Compensation Committee will continue to give due consideration to the
deductibility of compensation payments on compensation arrangements with the
Company's executive officers, the Compensation Committee will make its
compensation decisions based on an overall determination of what it believes to
be in the best interests of the Company and its stockholders, and deductibility
will be only one among a number of factors used by the Compensation Committee in
making its compensation decisions.
STOCK OPTION PLANS
The Committee administers the plan described under "1997 Stock Plan." In
recent years options have been granted to approximately 15 employees including
the Company's senior management (other than Edgar M. Cullman, who has declined
to participate) and one or two senior officers at each of the Company's
operating companies. In connection with the IPO the Committee granted options to
approximately 40 officers and key employees of the Company.
LONG TERM PERFORMANCE PLAN
The Committee administers the Long Term Performance Plan which is based upon
financial performance of the Company over three-year cycles. Target goals in
each category were set and incentive compensation, as a percentage of salary,
was paid depending upon percentage of goal achieved. Earlier cycles resulted in
immaterial amounts being paid to any Named Executive Officer. The fourth cycle
(1995-1997) resulted in the payments described on pages 9 and 11.
In 1997 the Compensation Committee adopted the 1997-1999 Long Term
Performance Plan (the "Plan"). Awards under the Plan for the three year
performance period 1997-1999 are based upon appreciation in the price per share
of General Cigar's Common Stock. Each participant has been assigned a target
award percentage (expressed as a percentage of such participant's average base
salary during the period 1997-1999) which will be fully paid to such participant
if, after the release in early 2000 of the Company's 1999 fiscal year results,
the price per share of General Cigar's Common Stock is greater than or equal to
$37.25, which represents a compounded annual growth of 20% per year from the
average closing price of the General Cigar Common Stock when the Plan was
adopted. Lesser amounts would be paid if the stock price were to be between
$29.80 and $37.25. No amounts would be paid under the Plan if the price is less
than $29.80. Greater amounts are payable for prices up to $44.70 but any
payments above that price would be at the discretion of the Committee. The
predetermined target percentages of the Named Executive Officers are as follows:
Edgar M. Cullman, Jr. (75%), A. Ross Wollen (35%), Austin T. McNamara (50%) and
Edward B. Polite (50%). Edgar M. Cullman will not participate in the Plan.
Assuming a stock price of $44.70, the maximum percentage of salary of any Named
Executive Officer would be 112.5%.
ANNUAL INCENTIVE COMPENSATION PLAN
The Committee established and administers the Annual Incentive Compensation
Plan which is designed to recognize and reward meritorious performance during
the previous fiscal year. Such compensation is based upon predetermined
percentages of each recipient's annual salary and depends upon the achievement
of specified financial and subjective goals.
The Committee has approved a 1998 Annual Incentive Plan for the officers of
the Company. It follows the structure of the 1997 Annual Incentive Plan and
depends upon the achievement of specified
14
<PAGE>
Company financial (70%) and subjective (30%) goals. The predetermined
percentages of the Named Executive Officers are as follows: Edgar M. Cullman,
Jr. (50%), A. Ross Wollen (30%), Austin T. McNamara (40%) and Edward B. Polite
(50%).
As in the past, Edgar M. Cullman will not participate in the Annual
Incentive Plan. The Compensation Committee, however, intends to evaluate the
Company's performance in 1998 and consider awarding him a special bonus if
warranted, as it did for 1997.
<TABLE>
<CAPTION>
COMPENSATION COMMITTEE SECTION 162(M) SUBCOMMITTEE
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
John L. Ernst, Chairman Bruce A. Barnet
Bruce A. Barnet Dan W. Lufkin
Dan W. Lufkin Francis T. Vincent, Jr.
Peter J. Solomon
Francis T. Vincent, Jr.
</TABLE>
The Board Compensation Committee Report on Executive Compensation shall not
be deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933,
as amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such Acts.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Cullman are members of the Board of Bloomingdale Properties, Inc.,
of which Mr. Ernst, Chairman of the Company's Compensation Committee, is
Chairman and President. Mr. Cullman is Chairman of the Compensation Committee of
Centaur Communications Limited, of which Mr. Sherren is chief executive officer.
Mr. Sherren is a member of the Company's Board but does not serve on its
Compensation Committee.
Mr. Ernst, a member of the Compensation Committee, is a director of Griffin,
formerly a subsidiary of Culbro.
Mr. Solomon is Chairman of Peter J. Solomon Company Limited ("PJSC") which
provides the Company with strategic and financial advisory services as well as
specific transaction-related advisory services pursuant to an engagement letter
entered into by Culbro with PJSC and assumed by General Cigar in connection with
the Merger. In 1997, PJSC was paid a retainer of $150,000 for such advisory
services. In addition, at the request of the Company, Peter J. Solomon
Securities Company Limited, an affiliate of PJSC, was paid a fee of $700,000 by
the underwriters in the IPO.
Real estate management and advisory services have been provided to the
Company by an affiliate of Bloomingdale Properties, Inc., with which members of
the Cullman & Ernst Group (see "Security Ownership of Management and Principal
Holders") are associated. A fee of approximately $200,000 was paid by the
Company in 1997 for management of the Company's New York office building and for
other real estate advisory services. Mr. Ernst is Chairman and President of
Bloomingdale Properties, Inc.
See also Interests in Certain Transactions on page 8 for certain other
interests.
15
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the 1997 monthly percentage changes in the
cumulative total stockholder return on General Cigar's Common Stock with the
cumulative total return of the Russell 2000 Index (assuming the reinvestment of
dividends) and General Cigar's two public company competitors, Swisher
International Group, Inc. and Consolidated Cigar Holdings, Inc. from the end of
February 1997 (the time of the IPO) to November 1997. It is assumed in the graph
that the value of each investment was $100 at the end of February 1997.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GENERAL CIGAR HOLDINGS, INC.
<S> <C> <C> <C>
Index of Closing Share
Prices
February 1997 = 100
General Cigar Holdings, Swisher International Group,
Inc. Russell 2000 Index Inc.
Feb-97 100.00 100.00 100.00
Mar-97 96.74 95.14 90.00
Apr-97 102.72 95.26 96.92
May-97 128.26 105.75 112.31
Jun-97 127.99 110.09 106.15
Jul-97 107.07 115.12 98.46
Aug-97 94.02 117.6 95.77
Sep-97 125.54 126.04 111.15
Oct-97 125.82 120.33 121.92
Nov-97 102.17 119.41 95.38
Month Ending
<CAPTION>
GENERAL CIGAR HOLDINGS, INC.
<S> <C>
Index of Closing Share
Prices
February 1997 = 100
Consolidated Cigar Holdings,
Inc.
Feb-97 100.00
Mar-97 93.10
Apr-97 90.64
May-97 119.21
Jun-97 109.36
Jul-97 117.73
Aug-97 130.54
Sep-97 161.08
Oct-97 154.68
Nov-97 108.62
Month Ending
</TABLE>
16
<PAGE>
II. SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP as
independent accountants to audit the financial statements of the Company for the
fiscal year ending November 28, 1998. This selection was recommended by the
Audit Committee of the Board of Directors. Price Waterhouse LLP has been the
independent accountants for the Company for many years. The fees of Price
Waterhouse LLP approximated $1,550,000 for audit services (including in
connection with the Reorganization), $275,000 for tax services and $160,000 for
consulting services, in each case rendered to the Company with respect to its
1997 fiscal year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SELECTION OF PRICE
WATERHOUSE LLP.
The submission of this proposal to a vote of stockholders is not legally
required. If this selection of Price Waterhouse LLP is not approved, the Board
of Directors will reconsider its selection. A majority of the votes cast by the
holders of shares of Common Stock (in person or by proxy), provided that Common
Stock representing at least a majority of such votes is represented at the
meeting, is required to adopt this proposal.
A representative of Price Waterhouse LLP is expected to be present at the
Annual Meeting and will be given an opportunity to make a statement if so
desired and to respond to appropriate questions.
------------------------
A copy of the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission (the "Commission") is available to the Company's
stockholders without charge at the web site (http://www.sec.gov) maintained by
the Commission and at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549.
Copies also may be obtained at prescribed rates at the Commission's regional
office in New York located at 7 World Trade Center, 15th Floor, New York, New
York 10048. In addition, a limited number of copies are available to
stockholders at the Company's offices and may be obtained upon written request
to:
General Cigar Holdings, Inc.
387 Park Avenue South
New York, New York 10016-8899
Attention: Corporate Secretary
Dated: March 12, 1998
17
<PAGE>
General Cigar Holdings, Inc.
387 Park Avenue South
New York, N.Y. 10016-8899
[LOGO]
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS,
THURSDAY,
APRIL 16, 1998
AND PROXY STATEMENT
<PAGE>
GENERAL CIGAR HOLDINGS, INC. PROXY
- --------------------------------------------------------------------------------
387 PARK AVENUE SOUTH SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING
NY, NY 10016-8899 OF SHAREHOLDERS
The undersigned holder of Common Stock of General Cigar Holdings, Inc. (the
"Company") hereby authorizes and appoints Edgar M. Cullman, Edgar M. Cullman,
Jr. and John L. Ernst, or any one or more of them, as proxies with full power of
substitution in each, to represent the undersigned at the Annual Meeting of
Shareholders of the Company to be held in the Auditorium on the 11th floor of
the offices of the Corporate Headquarters of Chase Banking Corporation, 270 Park
Avenue, New York, N.Y. at 10:00 A.M., local time, on April 16, 1998 and any
adjournment or adjournments of said meeting and thereat to vote and act with
respect to all the shares of Common Stock of the Company that the undersigned
would be entitled to vote if then personally present in accordance with the
instructions listed on the reverse hereof.
Such proxies may vote in their discretion upon such other business as may
properly be brought before the meeting or any adjournment thereof.
Receipt of the Notice of Meeting and the related Proxy Statement is hereby
acknowledged.
(Continued, and to be signed, on the other side)
See Reverse
Side
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S><C>
Please mark
your votes as /X/
indicated in
this example
FOR ALL WITHHELD If no direction is given, this proxy will be voted FOR Items 1 and 2.
LISTED AS TO ALL The Board of Directors recommends a vote FOR Items 1 and 2.
NOMINEES NOMINEES
No. 1--ELECTION OF DIRECTORS. / / / /
NOMINEES ARE LISTED BELOW:
B.A. Barnet, J.L. Bernbach,
E.M. Cullman, E.M. Cullman, Jr.,
S.R. Cullman, J.L. Ernst,
T.C. Israel, D.W. Lufkin,
G.V. Sherren, P.J. Solomon and
F.T. Vincent, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
- --------------------------------------------------------------------------
YES
FOR AGAINST ABSTAIN
No. 2--Approval of Selection of Independent Accountants. / / / / / /
To vote in accordance with the Board of Directors recommendations just
sign below, no boxes need to be checked.
YES
I plan to attend the Annual Meeting. / /
</TABLE>
Signature(s) ________________________________________ Date ____________, 1998
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
FOLD AND DETACH HERE
